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EXCLUSIVE RESEARCH
How CEOs sccessf overcome itera ctra barriers toimpemet effective performace maagemet
CEOs Confront aNew Age of Leadership
 THE PERFORMANCE MANAGEMENT EXCHANGEOCTObER 2007
in partnership with
THE POWER TO KNOW
 
in partnership with
THE POWER TO KNOW
Copyright © 2007 The McGraw-Hill Companies Inc. and SAS Institute Inc. All rights reserved.
Toda’s CEOs face a wider variet of chaeges tha everbefore. These hrdes icde game-chagig advaces itechoog, the psh to “go gree” ad the gobaizatio ofthe word’s ecoom.Oe too that ca hep CEOs maage their diversechaeges is performace maagemet (PM). I fact, mostCEOs ackowedge the vae of PM, otig that it’s a verimportat strategic iitiative, ad that it ca have a positiveimpact o sharehoder vae (see Chart 1, “CEOs VaePerformace Maagemet”).However, too ma compaies fai to beet from athat performace maagemet has to offer. Specica,CEOs sa that their biggest barriers to effective PM ivovectra factors, sch as a fear of accotabiit, rather thatechica factors ike the deveopmet of appropriatemetrics to measre.The good ews is that CEOs are we-sited to ead c-tra chages withi their orgaizatios, ad there are spe-cic techiqes the ca se to faciitate these chages.These are some of the digs of a ew research stdcodcted b BsiessWeek Research Services ad SAS.This std was codcted amog a tota sampe of 317CEOs, CFOs, CIOs, CMOs ad COOs withi arge admidsize compaies. I additio to exporig crret percep-tios, the std aso sheds ight o some PM best practicesthat CEOs ca se to commicate with the other membersof the C-site ad improve their corporate performace. Itma be time for CEOs ad their coeages to take a sec-od ook at performace maagemet.
CEO PRIORITIES
Wh do CEOs beieve that performace maagemetshod be a priorit? The aswer probab ies i corporateagiit. The vast majorit of CEOs beieve that their orga-izatios are deciet i their abiit to respod ad reactto market risks ad opportities. O two i 10 CEOsdescribe their compaies as beig “ver agie.” I additio,two-thirds of CEOs sa that it’s ver importat for their com-paies to become more agie i order to reach their strate-gic goas (see Chart 2, “CEOs See a Agiit Gap”).Accordig to or research rests, CEOs are the mem-bers of the C-site who are most iterested i improvigagiit. Specica, CEOs are the strogest advocates forivestig more resorces ito processes ad iitiatives thatwi icrease their orgaizatios’ resposiveess to marketcoditios. I additio, CEOs wat to improve their orgai-zatios’ itera coaboratio efforts ad workow processes,a of which are high reated to agiit (see Chart 3, “Co-cer with Fdametas That Drive Agiit”).Sice CEOs prse these kids of goas, it makessese that CEOs wat to prse better performace ma-agemet. After a, at their best, PM toos aow orgaiza-tios to everage data so that the ca forecast the ftre,eadig to better performace ad faster resposiveess.Specica, PM everages orgaizatioa data to deiverfact-based isight, which is sa vast sperior to de-cisios based o itera poitics or mere ititio. Adorgaizatios that impemet PM i a sstematic waca eveta deveop “predictive PM,” i which the rexperimets based o data to aticipate sitatios, proac-tive everage opportities ad maximize prots.
COMMOn CulTuRAl GROunD
CEOs aso wat to prse “smart growth,” or a kid ofgrowth that focses o both the top ie ad the bottom ie.Specica, more tha haf of CEOs sa that the wi focso a baace betwee top- ie ad bottom-ie growth drigthe ext two ears (istead of favorig oe or the other)(see Chart 4, “The Aggressive Prsit of Smart Growth”).
 THE PERFORMANCE MANAGEMENT EXCHANGE
CHART 
CEOs Value Performance Management
N=59 CEOsSource:
BusinessWeek Research Services and SAS, April 2007
 THE PERFORMANCE MANAGEMENT EXCHANGE
PM is a very importantstrategic initiativePM has a positive impact onshareholder value
59%80%
PM is believed to be very important and to have a positive impact on shareholder value
 
in partnership with
THE POWER TO KNOW
Copyright © 2007 The McGraw-Hill Companies Inc. and SAS Institute Inc. All rights reserved.
 How do CEOs pa to achieve smart growth? Or restsshow that, o average, CEOs beieve that performacemaagemet is a optima too for prsig a baace oftop-ie ad bottom-ie growth.To gai a better perspective o the overa impactof performace maagemet,
BusinessWeek 
ResearchServices compared the views of CEOs from compaiesthat are sccessf exectig PM with the views of CEOsfrom compaies that are ess sccessf with PM. Speci-ca, CEOs from PM-effective compaies are more ike toejo the foowig kids of corporate advatages: greateragiit ad resposiveess to opportities ad threats;ehaced iovatio practices; acqisitio of ew cs-tomers ad improved cstomer oat; ew distribtiochaes; improved bsiess aiaces ad parterships;improved itera coaboratio; ehaced p-seig adcross-seig; improved bsiess processes ad workow;improved orgaizatioa effectiveess; ad improved riskevaatio techiqes.Ad CEOs are ot the o members of the C-sitewho are iterested i achievig smart growth throghthe se of performace maagemet; the rest of theC-site shares the same goas. Therefore, the qest forsmart growth throgh effective PM ca provide commogrod withi the C-site, ad a wa for a members to geto the same page.
GEnERATInG CulTuRAl CHAnGE
As the eaders withi their orgaizatios, CEOs are perfectpaced to faciitate the ctra chages that are eeded iorder to execte effective PM. For exampe, CEOs caeverage the commo prsit of smart growth to fostergreater spport for PM iitiatives.Oe of the greatest barriers to effective performacemaagemet is a fear of accotabiit. Ma peope areafraid that if their performace becomes trasparet, thewi be pished for deciecies. However, to coter thesefears, exectives ca pbicize the kids of beets thatPM ca brig. After a, pschoogists ike B.F. Skier dem-ostrated og ago that it’s more effective to ispire peopethrogh the se of rewards tha b the threat of egativecoseqeces.Part of the orgaizatioa ctra chage process maivove covicig empoees that the estabished perfor-mace targets ad expected rewards are reaistic. ChrisMcCa, CEO of 1-800-FlOWERS.COM, sas that “therst chaege for s as a compa was gettig peope tobeieve that we cod achieve the rests [ad] targets that
 THE PERFORMANCE MANAGEMENT EXCHANGE
CHART 3
Concern with FundamentalsThat Drive Agility
Few CEOs are satisfed with the perormance o  specifc initiatives that can lead to agility 
N = 59 CEOsSource:
BusinessWeek Research Services and SAS, April 2007
 THE PERFORMANCE MANAGEMENT EXCHANGE
(% indicating satisaction with specifc initiative)
Internalcollaboration
28%33%
Businessprocesses andworkfow
CHART 
CEOs See an Agility Gap
N=59 CEOsSource:
BusinessWeek Research Services and SAS, April 2007
 THE PERFORMANCE MANAGEMENT EXCHANGE
Being agile/responsiveis “very important” tostrategic goalsCEOs who describe theircompany as “very agile”
20%
CEOs want to be agile, but see signifcant gaps
67%33%
Improved riskevaluationtechniques
of 00

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