This article is about the Idea to have a Performance Management System that is suitable for as many businesses as possible. But businesses are different. It's impossible to find two businesses equaling each other perfectly, even if they operate in the same Industry.

Every company has its own way to do business. Thus would it be possible to have a Performance Management System, which is able to compare businesses as if they would be just one business?

Many Experts would say no. But why? Most will refer to the differences between the companies, as they may measure things differently. Wait a Minute, businesses measure things differently? But that would be the most important issue about having a Performance Management System that suites nearly every company.

As companies are measuring things differently, they define the calculated Key Performance Indicators (KPIs) differently. So, that would only require to precisely define the way how things have to be measured and calculated!

That would mean that for example the KPI for Customer Satisfaction or Customer Loyality is calculated the same way among different businesses, thus making it possible to compare businesses, no matter how different these businesses would be.

However, that don't seems to be practical to define every available KPI clearly. Though the number of KPIs would have to be limited to small number. Therefore only KPIs would have to be used, which are common in many Industries. This would make it easier to create a One-Size-fits-All Performance Management System.

By reducing the number of KPIs to a minimum, would also have the advantage that companies could retrieve the values for these KPIs more easily.

That would make it possible to have a Performance Management System that fits nearly all businesses. A Performance Management System like the one described above would suite a great number of businesses, no matter which Industry the companies are operating in. Thus making it possible to compare businesses with each other.

This brings up the question “What will it be good for to compare businesses with each other?”. Well, it would be a kind of benchmark, which allows us to see how other businesses are developing. It's correct that there are solutions on the market which provide benchmarks based on Year-End-Figures. But that's not the same.

Comparing data from Year-End-Closings has the disadvantage that they include Valuations based on Legal Requirements or Accounting Principals the Year-End-Closing has been made under. This will bring up the problem, that even two businesses from the same Industry, with nearly the same size would have totally different Closing Data, which make comparison mostly useless.

Furthermore the Data from Year-End-Closings are backward orientated, as they represent past business activities. A good benchmark would be a more actual value, without any Valuations in it, based on a clearly defined ways to calculate the measurement value. Only that would show how businesses are developing, while compared to each other.

But the above mentioned question is not answered completely. Comparing businesses will help to find out, if a specific business is underperforming or overperforming versus other businesses of the same Industry. When you know that your business is underperforming, you are able to ask more questions, such as Why is your business underperforming? What could you do, to improve performance? and so on.

If you don't compare your business, you may ask one of these questions, but from a slightly different point of view. Your point of view would be more self-centered, that's not bad, but you may miss an additional perspective. However, you might feel comfortable about the performance of your business without a benchmark. But that depends on how good your business is performing, thus making it better could never be wrong.

Performance Management

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