The Concept of Corporate Performance Management

Topic: Finance
Words: 552 Pages: 2

Planning is a crucial component for corporations. A key element of planning involves budgeting. A master budget is made up of smaller budgets within an organization. It serves the purpose of providing a benchmark upon which the company can align its objectives (Introduction to, 2014). Some lower-level budgets that constitute the master budget include the operating budget and the financial budget. The operating budget, in turn, comprises the sales budget, the cost of goods sold, the operating expenses budget, the purchases budget, and the proforma income statement (Fig 1). On the other hand, the financial budget comprises the capital budget, the cash budget, and the proforma balance sheet (Sales Budget, 2014). Budgets are estimates of revenues and expenses for an account for a specific fiscal year.

budget chart
Fig. 1. budget chart

The actualization of plans and strategies requires coordination between the various departments, such as sales and production. Corporate performance management is a part of business intelligence that consists of the methodologies and processes that an organization employs to attain the company’s success. It involves monitoring the key performance indicators such as revenues and costs. CPM is an essential framework for budgeting, financial analysis, and forecasting; it enables an organization to plan responsibly, control effectively and attain results (Notepirate, 2014). When organizations integrate business planning, marketing, sales, budgeting, and forecasting into human resources, finance, and other operations, it becomes easy to link their objectives with their plans and execution.

As organizations develop their strategies, it is important to be prepared for unforeseen circumstances that could necessitate a change in execution. An organization needs to adapt to different market landscapes and consumer needs. Changes in customer behavior are happening every day, and organizations need to keep up with these changes. Lack of flexibility on the business’s part will lead to loss of market share and eventual bankruptcy. Change management is a behavior where organizations may not need to change, but people need to. An organization’s managers have to have the instinct to recognize these changes and adjust their strategies accordingly.

One of the tools used in corporate processes management is the balanced scorecard technique. It is used by managers to monitor the execution of activities of staff and the track the consequences of these actions. Primarily, the ‘balanced scorecard’ is a performance management report that the management team uses to manage how strategies and operational activities are implemented. One key characteristic of a balanced scorecard is its focus on an organization’s strategic agenda. The other characteristic is that it is focused on measurements that monitor performance against goals. Moreover, it comprises both financial and non-financial components, namely, financial, internal process, customer and learning, and growth. Finally, a key component is that it is designed to affect performance.

There needs to be goal congruence among the employees of an organization to achieve objectives. One key rudimentary fact about employees is that they are a team. One way this teamwork can be fostered is by setting the all-important goals. Goal congruence is about aligning the objectives, which cannot happen without knowing what they are. These goals should also be achievable, and those that attain their goals should be rewarded, which helps in the retention of employees. Conflict is also inevitable in any team; for this reason, a successful organization needs a robust conflict resolution framework.


Edspira. (2014). Introduction to budgeting (managerial accounting) [Video file]. Web.

Notepirate. (2014). The master budget (managerial accounting tutorial #38) [Video file]. Web.

Edspira. (2014). The sales budget [Video file]. Web.

Walther, L. (2017). Chapter 21: Budgeting—Planning for Success.

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