Performance Management quick-reference checks for strategy, governance, ERM, cost, revenue, KPIs, incentives, controls, and recommendations.
Use this cheat sheet after reading the Performance Management guide pages. It compresses the response habits needed for strategy, governance, cost, revenue, operations, performance measures, incentives, and internal controls.
| Step | Question | Output |
|---|---|---|
| 1. Objective | What decision, problem, or performance target is management addressing? | Decision frame. |
| 2. Criteria | What mission, strategy, risk tolerance, KPI, cost driver, or stakeholder criterion matters? | Evaluation basis. |
| 3. Analysis | What financial, operational, behavioural, or control evidence supports the answer? | Applied analysis. |
| 4. Behaviour | What behaviour will the measure, incentive, or process create? | Behaviour consequence. |
| 5. Action | What should management do, who owns it, and how will success be measured? | Recommendation. |
[ \text{Contribution margin} = \text{Selling price} - \text{Variable cost} ]
[ \text{Variance} = \text{Actual result} - \text{Expected result} ]
[ \text{Relevant cost} = \text{Future cost that differs between alternatives} ]
[ \text{Performance result} = \text{Controllable outcome} - \text{Assigned target} ]
The answer should interpret the formula output as a management action, not simply report the number.
| Topic | Trigger | Response move |
|---|---|---|
| Financial Reporting Context | Management report, activity result, non-financial measure, sustainability effect, or operating decision appears. | Connect activity to financial and non-financial results and communicate the decision implication. |
| Strategy and Governance | Board, mission, strategy, alternative, compliance, sustainability, people, operations, or ERM fact appears. | Test alignment, risk, accountability, stakeholder impact, and implementation. |
| Management Accounting and Performance | Cost, revenue, pricing, process, system, KPI, variance, responsibility centre, or incentive issue appears. | Identify the driver, measure behaviour, evaluate alternatives, and recommend improvement. |
| Internal Control Context | System, control, deficiency, IT security, compensating control, or communication issue appears. | Explain how the control affects information reliability, accountability, and performance management. |
Performance Management responses should end with action that management can execute and monitor.
| Case cue | Ask next | Strong response |
|---|---|---|
| Strategic alternative | Does the option fit mission, objectives, risk tolerance, capacity, and stakeholders? | Rank alternatives and recommend the feasible option. |
| KPI, target, scorecard, or responsibility centre | What behavior will the measure create? | Keep or revise the measure based on alignment, controllability, fairness, and unintended effects. |
| Cost, revenue, pricing, or process issue | What driver explains the result? | Identify cause, financial effect, operational constraint, and action. |
| Incentive or compensation plan | Who can control the result and what will they optimize? | Redesign the incentive or add safeguards. |
| System, report, or control gap | How does the gap affect decision quality or accountability? | Recommend control, system, reporting, or monitoring improvement. |
Use these tests before recommending a measure.
| Test | Question | If weak, recommend |
|---|---|---|
| Alignment | Does the KPI support mission, strategy, and stakeholder priorities? | Replace or supplement the measure. |
| Controllability | Can the responsible manager influence the result? | Adjust responsibility, benchmark, or target. |
| Balance | Does it include financial and non-financial consequences? | Add quality, service, risk, sustainability, or people measures. |
| Behaviour | Could it encourage gaming, short-termism, underinvestment, or unethical conduct? | Add safeguards or revise the incentive. |
| Timeliness | Is it available quickly enough for management action? | Improve reporting cadence or system capture. |
| Verifiability | Can the data be checked, reconciled, or controlled? | Add control, owner, or documentation requirement. |
Recommendations should not stop at “choose option A.”
| Need | Question |
|---|---|
| Owner | Who is accountable for implementation and reporting back? |
| Timing | What should happen immediately, next quarter, or after a pilot? |
| System | Does the entity need better data, reporting, access control, or automation? |
| People | Is training, communication, staffing, or incentive redesign required? |
| Risk | What risk remains and how should management monitor it? |
| Follow-up | Which KPI, control, review date, or threshold proves the recommendation worked? |
| Mistake | Correction |
|---|---|
| Naming a framework without applying it. | Tie the framework to case facts and recommendation criteria. |
| Choosing KPIs that encourage the wrong behaviour. | Test controllability, fairness, sustainability, and alignment. |
| Calculating savings without implementation risk. | Add process, people, control, and follow-up requirements. |
| Listing risks without mitigation. | Assign owner, response, monitoring, and residual risk. |
| Recommending without measurement. | State the KPI or control that will show whether the action worked. |
| Need | Sentence frame |
|---|---|
| Objective | “Management is trying to [objective], so the recommendation should be judged against [criteria].” |
| Analysis | “[Case evidence] indicates [financial/operational/control/behavioral conclusion].” |
| Behaviour | “This measure or incentive may cause [behavior], which matters because [case effect].” |
| Risk | “The main implementation risk is [risk], so management should [mitigation].” |
| Recommendation | “Management should [action], assign [owner], and monitor [KPI/control/date].” |
Before a timed Performance Management case, run this sequence:
| Question | Purpose |
|---|---|
| What objective is management pursuing? | Prevents framework dumping. |
| What evidence supports or weakens the option? | Forces case use. |
| What behavior will the measure or decision create? | Prevents bad KPI recommendations. |
| What risk or control gap remains? | Forces mitigation. |
| Who owns implementation and how is success measured? | Forces practical advice. |
Before leaving a Performance Management response, confirm that each issue has an objective, criteria, evidence, behaviour effect, risk, implementation step, and follow-up measure.