In his book released this month, Performance: Creating the Performance-Driven Organization, Stiffler says organizations need to shift their focus from what new software can do to what processes need fixing.

Stiffler outlines the "alphabet soup of performance management methodologies" -- CPM, BPM, EPM, etc. -- and their common, critical flaw: "They lack the full complement of components and associated activities needed to make effective performance management a reality across the enterprise."

He argues that even the most popular methods, such as Six Sigma and Balanced Scorecard, provide an incomplete perspective on performance management.

"An enterprise that believes it can improve performance management by adopting only one of these approaches -- and more commonly, just one aspect of one of these approaches -- is likely to be disappointed. The problem is one of not having a complete, unified view of what performance management is and not understanding how it can be used to fundamentally and structurally change the way the organization operates. Nearly all organizations are failing to see the interrelationships among processes," he explains.

According to Stiffler, the many approaches to performance management can be separated into two categories:

• Approaches that refer to the performance of the organization -- the territory of CFOs and chief executives. The most common are: Corporate performance management (CPM), Business performance management (BPM), Enterprise performance management (EPM), Strategic enterprise management (SEM), and Strategic performance management (SPM).
  
  
• Approaches that refer to the performance of the employees of an organization -- primarily the world of human resources and sales management. The most common are: Employee performance management (EPM), Enterprise employee performance management (EEPM), Employee relationship management (ERM), Workforce performance management (WPM), and Human capital management (HCM).

While Stiffler defines each of these approaches in his book, his main motivation is to get people to change how they think about executive strategy. "It's not just about the performance of the organization, and it's not just about the performance of the individual employee; it is about both," he says.

Tips for financial managers: how to become performance driven.

The challenge for organizations that want to become truly performance-driven is to adopt a worldview that unifies the two sides of performance management (the organization and the individual) and addresses five linkages that are missing in most approaches to performance management.

To become performance driven, an organization must link:

• The objectives of the organization with the goals of its individuals
• The budgets and resources of the organization with the objectives of the organization
• The measurement of past performance with adjustments to the future direction
• The information in finance with the information in human resources
• The pay of each person in the organization with that individual's performance

For financial managers, it's important for them to understand that finance and human resources have widely differing views of performance management. Finance is concerned with numbers, with revenue, profits, and costs, with meeting organizational targets. Human resources is about people and the administrative processes associated with people. It's about employee satisfaction and motivation and performance appraisals.
 
In summary, Stiffler says the approaches of finance and HR need to come together. Finance needs to look at the smaller picture and think more about people, whereas HR needs to take a bigger picture view of things and think about what they do in the context of desired financial outcomes. For example, in performance reviews, HR must specifically tie employee ratings to progress that the company has made toward achieving its goals, including financial goals. Unless organizational priorities are reinforced in the employee performance evaluation process, employees will have little incentive to stray from doing only those things they do best, regardless of whether they are strategic.