Over the past decade companies increasingly have embraced the concept of performance management to help them respond effectively to a more challenging competitive environment. Performance management seeks to optimize business processes while ensuring they are aligned with the organization’s strategy.
Planning and budgeting are critical components of any company’s performance management initiative because they are a means of translating strategy into a coherent set of initiatives and provide a basis for objective assessment and alignment. Planning and budgeting should be a collaborative process – a structured dialogue on the future direction of the company.
Planning should be the basis for objective assessments of performance and for assessing the efforts of all corporate units and individual employees.