Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)

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Learn How to Setup, Implement & Monitor Effective Benchmarks for Departmental and Corporate Growth Using Result-Driven KPI Initiatives

KPI Measurements for Employee & Performance
Know how to effectively use KPI to manage people and
their performance. This will mean you can effectively set
goals, measure their performances, provide feedback as
well as giving all a clear picture of what is important.

KPI Measurements for Departments & Company
Learn how you can use KPI to improve various functions
in your organization including for departments, business
units including new or existing business ventures

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Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)

  1. 1. http://totallyunrelatedrandomanddebatable .blogspot.com/ Developing Effective Key Performance Indicators Main Slides Compilation Kenny Ong -WORKBOOK- http://totallyunrelatedrandomanddebatable.blogspot.com
  2. 2. Page 2 of 76 Role of facilitator Role of participants Conduct of subgroup sessions 1. Ensure participation and discussion 2. Stimulate and focus idea exchange 3. Provide structure and set pace 4. Define objectives and clarify expectation 5. Not to provide answer to questions 6. Not to provide vision or goals 1. Set personal objectives 2. Provide organisational perspective 3. Actively participate in discussion 4. Constructively challenge ideas 5. Encourage others’ participation 6. Accept disagreement 1. Select chairperson / spokesperson 2. Select issues. Budget time 3. Record undecided issues and go on 4. Encourage views but be concise (keep to time) 5. Prepare presentation materials for group discussion
  3. 3. Page 3 of 76 Management principles
  4. 4. Page 4 of 76 Sources of problems in performance appraisal and their consequences
  5. 5. Page 5 of 76 Performance Management
  6. 6. Page 6 of 76 Review performance & results - provide feedback Provide coaching & counselling Discuss and agree on objectives & key measures Prioritise the accountabilities agreed upon and discuss on competencies required for the job. Discuss & agree on standards for performance Discuss and agree on role accountabilities  Grievance level  Absenteeism  Discipline issue  Poor workethics Unclear ResultsDriven Low Level of trust & commitment (between team leader and team member) Procedure driven High Degreeandclarityofjobresults  High level of employee empowerment  High employee performance  High employee satisfaction  High employee involvement  Challenging working environment  Optimum HRM cost structure High Visionled Step 5 Step 4 Step 3 Step 2 Step 1 Performance Contracting Model
  7. 7. Page 7 of 76 What is Performance Management ?
  8. 8. Page 8 of 76 What is performance management ? Performance management is a communication process.  That helps managers provide a motivating climate that assists their employees develop and achieve performance expectations. Its focus is on management process and behaviours rather than record keeping or formal procedures. The challenge to Performance Management Emerging solutions  Focus on management processes that build a motivating climate  Reduce reliance on forms and procedures  Emphasise management skills and continuous process  Promote self management to achieve excellence  Use flexible, frequent planning and regular feedback  Recognise and provide rewards that count
  9. 9. Page 9 of 76 Performance management approach and methodology Key factors Climate Internal culture that nurtures individual performance Competencies Behaviours and characteristics for superior performance Managerial styles Manager-employee interaction that fosters efficient and effective perform Reward and recognition Recognising employee's developmental needs and career progression Performance management process 3-phase process :- 1. Planning performance  Identifying expected performance in critical areas (key results)  Identifying expected competencies required to achieve key results 2. Coaching performance (reinforcement / feedback)  Tracking and observing performance  Providing feedback  Coaching for improvement  Reinforcing performance that is not on target 3. Reviewing performance  Assessing actual performance against expectations to - Identify strengths to build on - Barriers to overcome - Assess gaps between actual and expected performance
  10. 10. Page 10 of 76 Performance management key focus  Translate company objectives into individual key results / goals for employees  Focus employee behaviour on key actions that will affect organisational results  Managers and employees agree on goals and behaviours  Provide continuous communication and coaching focused on achievement of goals  Guide employees towards behaviours that drive effective performance  Discuss opportunities for development and advancement  Provide a 'climate' that supports superior performance
  11. 11. Page 11 of 76 The difference between Performance Management Performance Appraisal  Performance linked to business objective  Performance is planned, motivated and coached  Process is emphasised  Results and competencies are critical  Process conducted by line management  Evaluation factors subjectively identified  Performance is judged after the fact  Form is emphasised  Results or traits are emphasised  Procedure housed in the Personnel Department
  12. 12. Page 12 of 76 Performance Management Model
  13. 13. Page 13 of 76 Performance Planning
  14. 14. Page 14 of 76 Job title : District Engineer Duties and responsibilities of the traditional job description If stated as key results then the job must produce Control, operate and maintain the District Distribution system Ensure uninterrupted supply to consumers in the district by operating the District Distribution System Plan and design the High Voltage System Ensure availability of adequate supply for future needs of industries in the district by planning and designing the High Voltage system Manage major supply projects to customer in the district Ensure satisfaction of the major customers in the district by managing supply and distribution Supervise all technical staff in the district Ensure high performance and productivity of technical staff by adopting proper human resource management methods on selection, training, coaching, counseling and motivation
  15. 15. Page 15 of 76 Principal accountabilities Job title : General Manager, Manufacturing Key Results Major Supporting Actions Performance Indicators 1. Achieve targeted production volume  By monitoring production performance and taking corrective actions  By analysing production downtime and introducing improvements  By thorough preparation for introduction and implementation of new models and variants 1. Timely production targets 2. Productivity ratios 3. Downtime 4. Implementation schedule 2. Achieve product quality targets  By reviewing quality performance results and identifying non conformance and undertaking corrective actions  By analysing customer feedback and taking corrective actions  By undertaking on-line and off-line continuous quality improvement programs and activities  By undertaking education and re-education programs 1. Quality index 2. Defect occurrence 3. Non-conformance to established standards 4. Demerit points 3. Ensure safe and healthy operating environment  By incorporating safety and health features into infrastructure design and development  By creating awareness of safety and health among employees through programs and campaigns  By constant monitoring of safety and health standards through working committees  By developing and implementing occupational health programs 1. Accident rate 2. Health standards 3. Operation audit findings
  16. 16. Page 16 of 76 Job title : General Manager, Manufacturing Key Results Major Supporting Actions Performance Indicators 4. Ensure competent, motivated and productive manufacturin g workforce  By developing and implementing on-the-job training  By developing and promoting effective communication with employees and union  By ensuring continuous development and upgrading of skills  By providing appropriate recognition and rewards for high performance  By promoting teamwork through QCC and 5s activities 1. Productivity ratios 2. Turnover rate 3. Employee morale 4. Team activities 5. Strikes / disciplinary actions 5. Enhance operating efficiency and productivity  By ensuring effective and efficient maintenance of plant, machinery and resources  By reducing wastage and eliminating pilferage  By reducing and managing indirect overtime  By managing utilisation of consumables and indirecting materials 1. Operating efficiency standards 2. Cost per unit 3. Wastages and losses 6. Timely execution of projects  By undertaking effective planning and provision of resources  By monitoring implementation and progress of projects  By managing project costs  By developing effective project teams 1. Timely completion of projects within cost allocation
  17. 17. Page 17 of 76 Personal Accountability Description (Job Description) Job Title : Key Results Major Supporting Actions Key Performance Indicators 1. 2. 3.
  18. 18. Page 18 of 76 Personal Accountability Description (Job Description) Job Title : Key Results Major Supporting Actions Key Performance Indicators 4. 5. 6.
  19. 19. Page 19 of 76 Sources of critical goals 2 key sources :- 1. The operating plan Company operating plans Departmental plans Individual goals 2. Customer expectations All jobs produce results (either a product or a service) for a 'customer'. Therefore, customer expectations are important. Customers may be 'internal' or 'external' and includes clients, vendors, suppliers, management, other departments, etc. Why is performance planning ?  In performance planning, the manager and the employee jointly plan performance objectives for the coming year  It addresses both what the employee is to achieve and how it is to be achieved i.e. the results and the competencies or (behavioural skills) to be demonstrated in accomplishing those results Results and competencies are qualitatively different But equally important aspects of performance
  20. 20. Page 20 of 76 Results and competencies Planning Review (Expected) (Actual) a. What should be done ? b. How should it be done ? Key results (Critical goals) Jobs typically have 4 - 6 critical goals, which have the greatest impact on the organisation. Some examples include :-  Quality  Customer service  Revenue  Productivity
  21. 21. Page 21 of 76 Why are critical goals important ? Critical goals are important because they identify clearly what the employee must do to accomplish the organisation's business objectives this year.  Critical goals also provide managers and employees with the criteria needed to discuss performance results objectively  Clear critical goals prevent surprises during the coaching and performance review phases of the process. They :-  Provide in advance an objective, mutually understood and accepted basis for reviewing and discussing performance results  Reduce misunderstanding between managers and employees about results they expect  Specify each employee's role in accomplishing what is important to department goals and business strategy  Provide clear performance targets that help employees monitor their progress Critical for critical goals  Specific (definite objective and purpose to be achieved)  Measurable (by definite observation and a certain time one should be able to tell whether or not it is attained)  Achievable (conduct 4 training programmes)  Realistic (Must be within reach of the employees, e.g. to meet stated deadlines, neither too high nor too low)  Time phase (per quarter, per year. By end of fiscal year, by 15th of November)
  22. 22. Page 22 of 76 Measurable critical goal statements Clearly written critical goals statements avoid vague phrases like "as soon as possible". "kept to a minimum", "most of the time", etc. Some examples of specific measurable outcomes are :-  Conduct 4 training programmes  Schedule 6 on-site visits  At 95% accuracy  To meet written specifications  Within +/- 10% of budget  Within 3 days receipt  To meet stated deadlines Four types of measures can be considered when writing a critical goal statement :- Quality  How well the result is produced / performed Quantity  How much / many of the results are produced or performed Cost  At what expense the result is produced / performed Timeliness  When is the result to be produced / performed The choice of which measure to use is based on what is most relevant to the result. Frequently, more than one measure is used, but rarely all four.
  23. 23. Page 23 of 76 Examples of critical goal statements Some examples of critical goal statements include :-  Roll out new promotion and have 75% participation within 90 days  Co-ordinate the location of (business X) to (location Y) in accordance with agreed upon standards and action plans  Maintain zero accident rate at the plant for the quarter ending 3 / 31  Develop a systematic method for calculating proposed salary adjustments by June 1  Reduce grievances 5% by year end  Find a new application for (product X) by 12 / 31
  24. 24. Page 24 of 76 Performance planning worksheet
  25. 25. Page 25 of 76 Performance planning worksheet
  26. 26. Page 26 of 76 Performance management process Phase I : Performance Planning
  27. 27. Page 27 of 76 Business Model and Strategy: Setting the Framework for future strategic planning Market Discipline Operational Excellence (low cost producer) Product Leadership (best product) Customer Intimacy (best total solution) Market Discipline Analysis Refer to the three major Customer groups below and how they usually think about the product/service they ‘buy’: Customers' Perceptions Of Value "They are the most innovative" "Constantly renewing and creative" "Always on the leading edge" "A great deal!" Excellent/attractive price Minimal acquisition cost and hassle Lowest overall cost of ownership "A no-hassles firm" Convenience and speed Reliable product and service "Exactly what I need" Customized products Personalized communications "They're very responsive" Preferential service and flexibility Recommends what I need "I'm very loyal to them" Helps us to be a success Product Leadership Operational Excellence Customer Intimacy 1. Rate, on a scale of 1 (lowest) to 10 (highest), the selection priorities of your main customers and potential customers? Operational Excellence Product Leadership Customer Intimacy Scale (1 to 10)
  28. 28. Page 28 of 76 Business Model and Strategy: Setting the Framework for future strategic planning Market Discipline 2. Rate, on a scale of 1 (lowest) to 10 (highest), what scores would best describe your company and its BUs? Operational Excellence Product Leadership Customer Intimacy Scale (1 to 10) Operational Excellence (low cost producer) Product Leadership (best product) Customer Intimacy (best total solution) Operational Excellence • Competitive price • Error free, reliable • Fast (on demand) • Simple • Responsive • Consistent information for all • Transactional • 'Once and Done' Operational Excellence • Competitive price • Error free, reliable • Fast (on demand) • Simple • Responsive • Consistent information for all • Transactional • 'Once and Done' Customer Intimacy • Management by Fact • Easy to do business with • Have it your way (customization) • Market segments of one • Proactive, flexible • Relationship and consultative selling • Cross selling Customer Intimacy • Management by Fact • Easy to do business with • Have it your way (customization) • Market segments of one • Proactive, flexible • Relationship and consultative selling • Cross selling Product Leadership • New, state of the art products or services • Risk takers • Meet volatile customer needs • Fast concept-to- counter • Never satisfied - obsolete own and competitors' products • Learning organization Product Leadership • New, state of the art products or services • Risk takers • Meet volatile customer needs • Fast concept-to- counter • Never satisfied - obsolete own and competitors' products • Learning organization
  29. 29. Page 29 of 76 Business Model and Strategy: Setting the Framework for future strategic planning Market Discipline Operational Excellence 1 10 Product Leadership 1 10 Customer Intimacy 1 10 3. Combined Ratings a. Mark down the ratings for customer preference () and ratings for your company () on the charts. b. Determine where the biggest gaps are c. Decide which market discipline you want to focus on for the next five years d. Discuss what you need to do to focus and improve on your ratings Operational Excellence (low cost producer) Product Leadership (best product) Customer Intimacy (best total solution)
  30. 30. Page 30 of 76 Business Model and Strategy: Setting the Framework for future strategic planning Market Discipline 4. Where and how should we focus our internal strategy? How does that impact our R&D and Product/Service delivery? Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Organization, jobs, skills Management systems Information and systems Culture, values, norms Product Leadership •Ad hoc, organic and cellular •High skills abound in loose-knit structures •Concept, future-driven •Experimentation and 'out of the box' mindset •Person-to-person communications systems •Technologies enabling cooperation •Rewarding individuals' innovative capacity •Risk and exposure management •Product Life Cycle profitability Product Leadership •Ad hoc, organic and cellular •High skills abound in loose-knit structures •Concept, future-driven •Experimentation and 'out of the box' mindset •Person-to-person communications systems •Technologies enabling cooperation •Rewarding individuals' innovative capacity •Risk and exposure management •Product Life Cycle profitability Customer Intimacy •Empowerment close to point of customer contact •High skills in the field and front-line •Customer-driven •Variation and 'have it your way' mindset •Strong customer databases, linking internal and external information •Strong analytical tools •Customer equity measures like life time value •Satisfaction and share management •Focus on ‘Share of Wallet’ Customer Intimacy •Empowerment close to point of customer contact •High skills in the field and front-line •Customer-driven •Variation and 'have it your way' mindset •Strong customer databases, linking internal and external information •Strong analytical tools •Customer equity measures like life time value •Satisfaction and share management •Focus on ‘Share of Wallet’ Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Organization, jobs, skills Management systems Information and systems Culture, values, norms Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Organization, jobs, skills Management systems Information and systems Culture, values, norms Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Operational Excellence •Central authority, low level of empowerment •High skills at the core of the organization •Disciplined Teamwork •Process, product- driven •Conformance, 'one size fits all' mindset •Integrated, low cost transaction systems •The system is the process •Command and control •Quality management Organization, jobs, skills Management systems Information and systems Culture, values, norms
  31. 31. Page 31 of 76 Business Model and Strategy: Setting the Framework for future strategic planning Market Discipline • Operational Excellence • Move know-how from top performing units to others • Benchmark against best in class • Ensure operations training for all employees • Use disciplines like TQM for continuous learning to reduce costs and improve quality • Customer Intimacy • Capture knowledge about customers • Understand customer needs • Empower front line employees • Ensure that everyone knows the customer • Make company knowledge available to customers • Product Leadership • Reduce time to market • Commercialize new products fast • Ensure that ideas flow • Reuse what other parts of the company have already learned • Ensure there are multiple sources of funding 5. Based on all the Market Discipline analysis above, discuss some possible strategies for your company and its Business Units. (Transfer your answers to a ‘Strategic Options’ list)
  32. 32. Page 32 of 76 Defining Financial Goals "If we succeed, how will we look to our shareholders?” Listed below are three common Financial Goals of any organization. A. Revenue Growth This refers to expanding product and service, reaching new customers and markets, changing product and service mix, and repricing products and services. B. Profitability Growth This refers to efforts to lower the direct costs of product and services, reduce indirect costs, and share common resources with other business units. C. Asset Utilization This refers to asset utilization theme, reduce working capital levels, and better utilization of fixed asset base to increase return on physical assets D. Stakeholder Expectations This refers to managing Stakeholder Expectations across different types of organizations be it Public Listed, Private, Non-Profit or Government. Examples include Share Price, ROE, Dividends etc. 1. Define, as many as possible, Factors that impact each financial goal in YOUR organization. Factors that Impact… A. Revenue Growth B. Profitability Growth
  33. 33. Page 33 of 76 C. Asset Utilization D. Stakeholder Expectations
  34. 34. Page 34 of 76 Matching Financial Measures to Goals The following list consists of common Financial Measures used by different organizations: 1. Match each of the Financial Measures above to the proper Financial Goal: Goal Financial Measures A. Revenue Growth E.g. Revenue from New Products B. Profitability Growth E.g. Gross Profit C. Asset Utilization E.g. Cash-to-cash cycle D. Stakeholder Expectations E.g. Share Price Commonly used Financial Measures  Total Assets  Total Assets per employee  Profits as a % of total assets  Return on net assets  Return on total assets  Revenues/total assets  Gross Margin  Net Income  Profit as a % of sales  Profit per employee  Revenue  Revenue from new products  Revenue per employee  Return on Equity (ROE)  Return on Capital Employed (ROCE)  Return on Investment (ROI)  % Revenue from different channel (e.g. DC vs SP)  % expenses due to quality defect, TNA, rework etc  % operating expenditure to revenue  Reduction in working capital  Profit per customer  % revenue to gain market share vs. % revenue to replace lost customers  % of sales from new applications  Compound Growth Rate  Dividends  Market Value  Share Price  Shareholder Mix  Shareholder loyalty  Cash flow  Total costs  Credit rating  Debt  Debt to equity  Times interest earned  Days sales in receivables  Days in payables  Days in inventory  Inventory turnover ratio  Cash-to-cash cycle  % resources shared with other business unit  ROI time cycle  % Revenue growth of various markets  Sales growth in targeted markets/ customer/ region  Operating Cash Flow  % of customer income (Share of Wallet)  Net cost per acquired customer
  35. 35. Page 35 of 76 Defining Customer Goals "To achieve my vision, how must I look to my customers?” Listed below are five Core Customer Goals of any organization. These are called Customer Outcome Goals. A. Market Share Reflects the proportion of business in a given market (in terms of number of customers, dollars spent, or unit volume sold) that a company sells B. Customer Acquisition Measures the rate at which company attracts or wins new customers or businesses C. Customer Retention Tracks the rate at which a company retains or maintains ongoing relationships with its customers D. Customer Satisfaction Assesses the satisfaction level of customers along specific performance criteria with the value discipline E. Customer Profitability Measures the net profit of a customer, or a segment, after allowing for the unique expenses required to support that customer 2. Define, as many as possible, Factors that impact each Customer Outcome Goal in YOUR organization. Factors that Impact… A. Market Share B. Customer Acquisition
  36. 36. Page 36 of 76 BSC CP Exercise 1 Defining Customer Goals - continued Factors that Impact… C. Customer Retention D. Customer Satisfaction E. Customer Profitability
  37. 37. Page 37 of 76 Matching Customer Outcome Measures to Customer Outcome Goals The following list consists of common Customer Outcome Measures used by different organizations: 2. Match each of the Customer Outcome Measures above to the proper Customer Outcome Goal: Goal Customer Outcome Measures A. Market Share B. Customer Acquisition C. Customer Retention D. Customer Satisfaction E. Customer Profitability Commonly used Customer Outcome Measures  Customer satisfaction  Customer loyalty  Market share  Customer complaints  Complaints resolved on first contact  Return rates  Response time per customer request  Price relative to competition  Total cost to customer  Average duration of customer relationship  Customers lost  Customer retention  Customer acquisition rates  Percentage of revenue form new customers  Number of customers  Annual sales per turnover  Win rate (sales closed/sales contact)  Customer visits to the company  Hours spent with customers  Marketing cost as a percentage of sales  Number of ads placed  Number of proposals made  Brand recognition  Response rate  Number of trade shows attended  Sales volume  Share of target customer spending  Sales per channel  Average customer size  Customers per employee  Customer service expense per customer  Customer profitability  Frequency (number of sales transactions)
  38. 38. Page 38 of 76 BSC IP Exercise 1a – Operational Excellence What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E). A. B. C. D. E. Value Discipline Focus Areas Innovation Process  Identify Market  Create Product / Service Operations Process  Build Product / Service  Deliver Product / Service Post-sale Service Process  Service the Customer Culture  Disciplined Work Culture  Process focused  Conformance, “one size fits all” mindset Mgmt System  Command and Control  Compensation fixed to cost and quality  Transaction Profitability Tracking Info Tech  Integrated low-cost transaction systems  Mobile and remote technologies Organization  Centralized functions  High skills at the core of the company Core Processes  Product Delivery and basic service cycle  Built on standard, no-frills fixed assets
  39. 39. Page 39 of 76 BSC IP Exercise 1b – Product Leadership What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E). A. B. C. D. E. Value Discipline Focus Areas Innovation Process  Identify Market  Create Product / Service Operations Process  Build Product / Service  Deliver Product / Service Post-sale Service Process  Service the Customer Culture  Concept, future-driven  Experimentation and 'out of the box' mindset Mgmt System  Rewarding individuals' innovative capacity  Risk and exposure management  Product Life Cycle profitability Info Tech  Person-to-person communications systems  Technologies enabling cooperation Organization  Ad hoc, organic and cellular  High skills abound in loose-knit structures Core Processes  Invention, commercialization  Market exploitation  Disjoint work procedures
  40. 40. Page 40 of 76 BSC IP Exercise 1c – Customer Intimacy What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E). A. B. C. D. E. Value Discipline Focus Areas Innovation Process  Identify Market  Create Product / Service Operations Process  Build Product / Service  Deliver Product / Service Post-sale Service Process  Service the Customer Culture  Customer Driven  Variation: “Have it your way” mindset Mgmt System  Share of Wallet Driven  Rewards linked to Customer Feedback  Lifetime Value of Customer Analysis Info Tech  Customer Databases  Knowledge Mgmt Organization  Entrepreneurial customer teams  High skills in the field Core Processes  Client acquisition and development  Solution Development  Flexible and Responsive work procedures
  41. 41. Page 41 of 76 BSC IP Exercise 2a – Operational Excellence Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Operational Excellence value discipline: Operational Excellence Core IP Outcome Goals 1. Refer to Handout A: Commonly Used Internal Process Measures 2. Determine Ten Core IP Outcome Measures. The measures can come from a mix of the four outcome goals listed above. 3. Bonus: Please add measures relevant to your company if not listed in Handout A. Core IP Outcome Goals Core IP Outcome Measures 1. Product Delivery 2. Asset Utilization 3. Service Cycle Efficiency 4. Product Ownership Cost 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Product Delivery Asset Utilization Service Cycle Efficiency Product Ownership Cost
  42. 42. Page 42 of 76 BSC IP Exercise 2b – Product Leadership Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Product Leadership value discipline: Product Leadership Core IP Outcome Goals 1. Refer to Handout A: Commonly Used Internal Process Measures 2. Determine Ten Core IP Outcome Measures. The measures can come from a mix of the four outcome goals listed above. 3. Bonus: Please add measures relevant to your company if not listed in Handout A. Core IP Outcome Goals Core IP Outcome Measures 1. Innovation & Design 2. Understanding of Customer 3. Improve Product/Service 4. Quality 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Innovation & Design Understanding of Customer Improve Product/Service Quality
  43. 43. Page 43 of 76 BSC IP Exercise 2c – Customer Intimacy Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Customer Intimacy value discipline: Customer Intimacy Core IP Outcome Goals 1. Refer to Handout A: Commonly Used Internal Process Measures 2. Determine Ten Core IP Outcome Measures. The measures can come from a mix of the four outcome goals listed above. 3. Bonus: Please add measures relevant to your company if not listed in Handout A. Core IP Outcome Goals Core IP Outcome Measures 1. Customer Acquisition 2. Customer Development 3. Solution Development 4. Flexibility & Responsiveness 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Customer Acquisition Customer Development Solution Development Flexibility & Responsivenes s
  44. 44. Page 44 of 76 Example L&G Staff Measures:  % of staff evaluated on Core Competency Framework  % of staff with Career Development Plans  # of training hours completed  % of staff with access to strategic information  Employee Satisfaction Survey Index  % staff evaluated on Culture alignment  Strategic Skills Coverage  Targeted Training Accomplished  Best Practices Implemented  %Work Support Implemented  Employee Climate Survey  Employee Goal Alignment Matching Learning & Growth Measures to Goals The following list consists of common Learning & Growth used by different organizations: 3. Match each of the Measures to the proper Learning & Growth Goal: Goal Learning & Growth Measures A.Competencies B.Motivation, empowerment, alignment C.Information Systems Sample Information Systems Measurements 1. Keypunch errors per day 2. Input correction on data entry 3. Reruns caused by operator error 4. Percent of reports delivered on schedule 5. Errors per thousand lines of code 6. Number of changes after the program is coded 7. Percent of time required to debug programs 8. Number of cost estimates revised 9. Percent error in forecast 10. Percent error in lines of code required 11. Number of coding errors found during formal testing 12. Number of test case errors 13. Number of test case runs before success 14. Number of revisions to plan 15. Number of documentation errors 16. Number of revisions to program objectives 17. Number of errors found after formal test 18. Number of error-free programs delivered to customer 19. Number of process step errors before a correct package is ready 20. Number of revisions to checkpoint plan 21. Number of changes to customer requirements 22. Percent of programs not flow-diagrammed 23. Percent of customer problems not corrected per schedule 24. Percent of problems uncovered before design release 25. Percent change in customer satisfaction survey 26. Percent of defect-free artwork 27. System availability 28. Terminal response time 29. Mean time between system repairs 30. Time before help calls are answered 31. Rework costs resulting from computer program
  45. 45. Page 45 of 76 KPI Documentation and Dashboard
  46. 46. Page 46 of 76 Sample: KPI Data Collection Template Questions KPI Basics: 1 KPI ID 2 KPI Name 3 KPI Owner How will the data be collected: 4 Data Collection Method 5 Source of Data 6 Formula/ Scale/ Assessment Method 7 How often, when and for how long do we collect the data 8 Who collects the data Target 9 What is the Target or Performance Threshold(s)? Good Measure Tests 10 How well is the indicator measuring performance? 11 What are the costs of collecting data? Justified? 12 What dysfunctional behaviour could this KPI trigger? Reporting: 13 Who is the primary and secondary audience of this KPI? 14 Reporting Frequency (when and how long will this KPI be reported?) 15 Reporting Channel (which channel will be used to report this KPI?) 16 Reporting Formats (in which formats will this KPI be reported?)
  47. 47. Page 47 of 76 Sample KPI Dashboard
  48. 48. Page 48 of 76 Sample KPI Dashboard
  49. 49. Page 49 of 76 Sample KPI Dashboard
  50. 50. Page 50 of 76 Sample KPI Dashboard
  51. 51. Page 51 of 76 Sample KPI Dashboard
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  53. 53. Page 53 of 76 Sample KPI Dashboard
  54. 54. Page 54 of 76 Performance Coaching
  55. 55. Page 55 of 76 What is Coaching? Coaching : Is the ongoing process in which the Supervisor and the staff informally - evaluate past performance (discuss progress against critical goals) - reinforce effective behaviours and - guide future performance The Supervisor alerts the staff about gaps between performance and expectations It is a continuous and informal activity, woven seamlessly into the ordinary communications between the supervisor and the staff.
  56. 56. Page 56 of 76 What is coaching ? Coaching, as used in this workshop, is defined as managing subordinates :-  To conduct an accurate assessment of their performance strengths and weaknesses  To identify their long-term developmental aspirations  And to develop an action plan in those areas that will achieve those aspirations Coaching can involve helping others develop competencies in which the coach may or may not have. Coaching requires skill in identifying the underlying characteristics that others need to develop over the long term, as well as the ability to build on that person's unique capabilities. It is possible to coach marginal performers, as well as good or outstanding performers.
  57. 57. Page 57 of 76 Coaching is :  Helping  Guiding  Getting people to own their targets which they set  Helping people to explore options  Setting a climate in which improved performance becomes not only possible but desirable Coaching is not :  Telling someone how to do something  Giving instruction  Laying down specific guidelines about how to accomplish a particular task  Setting boundaries  Setting targets for other people
  58. 58. Page 58 of 76 The importance of coaching to your organisation  We view the development of people as an area of corporate strength which can drive our strategic ambition  Our managers need to be as concerned about individual and team development as they are about their own task objectives - business growth will be driven by the many not the few  New recruits, especially young ones, need guidance in order to maximise the benefits of learning opportunities  Learning efficiency is maximised if we can more rapidly pass on the benefits of experience When do you use coaching ?  Individual development  Career development  Succession planning  Monitoring performance  Day-to-day problem solving  Performance management programme - Objective setting - Interview review - Evaluation - Day-to-day feedback
  59. 59. Page 59 of 76 What's in it for the manager ?  More skilled and confident people  Less waste and rework  More clarity about individual and team objectives, roles and expectations  Errors become learning opportunities  I also learn  Self confidence and self awareness for me  Personal satisfaction  Improved output and performance What's in it for the team ?  We work together more effectively  We understand each other  Improved team performance  Confidence in each other  Team satisfaction  Consolidating learning  We coach each other What's in it for the company ?  More skilled and motivated workforce  More self learning  More effective and less expensive form of development  Improved efficiency and effectiveness  Improved motivation of the coach  Improved communication Improved performance
  60. 60. Page 60 of 76 Competencies Of An Effective Coach Competency Behaviours Sensitivity to others  Understand both strengths and limitations of the staff  Understand the reasons of the staff behaviour  Know what motivates the staff as well as what turns them off  Take the time to listen to staff’s problems  Give staff assignments and training to develop them Developing Others  Give encouragement and to staff to improve their motivation  Give staff timely, specific and detailed feedback Management of Subordinates  Ensure that all staff contribute to departmental objectives  Give recognition to staff who have contributed to the department’s success  Set an example and encourage staff to develop an atmosphere of teamwork and cooperation Self-Confidence  Approach staff with a positive, can-do-attitude  Is receptive to staffs’ ideas  Provide feedback to staff confidently without arrogance or hostility Self Control  Remain calm in stressful situations  Refrain from impulsive reactions or behavior that would interfere with a motivating relationship with the staff  Keep calm and constructive in the face of staff’s anger Use of Concepts/experience  Utilise past experience and observations to understand and handle present situations with staff  Relate staff’s performance objectives to key values and strategies of the company Analytical Thinking  Analyse staff behavior to determine underlying causes  Accurately anticipate consequences of own behavior toward staff  Use a systematic approach to handling staff challenges  Anticipate obstacles in seeking to develop staff
  61. 61. Page 61 of 76 Performance management process Phase II : Performance coaching
  62. 62. Page 62 of 76 Performance evaluation
  63. 63. Page 63 of 76 What is Performance Evaluation ? o Formal evaluation of Performance versus Expectations This is the cumulating of regular tracking during the year o An ongoing interaction between the manager and the employee to maximise performance by means of motivation and encouragement When frequent feedback is the norm, the year-end performance evaluation is less threatening and contains no surprise Main Reasons for Performance Evaluation o to ‘close off’ the activities undertaken in the performance planning period so that a new planning cycle can begin o to provide an objective, defensible basis for variable pay decisions It provides a clear summary statement of performance achieved for the year
  64. 64. Page 64 of 76 Objectives of Performance Evaluation o Review employee performance and job progress (i.e. actual versus expectations) o Identify development needs o Establish future goals and objectives o Aids in reward decisions Problems with appraisal system  Managers don't like carrying out appraisal interviews  "HALO" effect  Central tendency in evaluations  Excessive leniency or stringency  Biases of sequence, order or timing of evaluation  Personality of the appraiser and prejudice  Lack of clarity of performance standards
  65. 65. Page 65 of 76 Obstacles to effective appraisal In discussions with managers under training and in observing them practising interviewing a number of obstacles to effective interviewing are revealed. 1. Lack of clarity in the mind of the appraiser as to purpose, e.g.,  reporting up the line  justifying and rationalising salary actions  telling the subordinate how well he is doing  improving performance 2. Lack of clarity in the mind of the subordinate as to purpose, e.g.  he's come to 'b told'  he's come to 'justify' his performance 3. The appraiser has made up his mind already about the subordinate's side of the story  the appraiser describes the subordinate's problems to him or  seeks information to confirm his beliefs (self fulfilling prophecy) and  discards evidence presented to the contrary 4. The appraiser reaches conclusions, makes decisions, invites actions on the basis of his opinion or on what appears to have happened rather than on facts 5. The appraiser sees in depth interviewing as somehow impolite with consequent failure to get to the root of things 6. The subordinate is put onto the defensive by statements of his failures and mistakes before he is invited to describe his experiences in the job. This results in the subordinates 'filtering' the information he gives so as to portray his actions in the best light Appraisal is thus being used to  Tell the subordinate he is out of line  Express disapproval Appraisal is not being used to  Find out what happened to the subordinate and why 7. The appraiser lacks skill in creating a willingness in the subordinate to reveal frank information and to discuss feelings Feelings are important, they are related to inclination (of capacity), and to motivation
  66. 66. Page 66 of 76 Performance improvement method (Discussion guide) 1. Develop a careful definition first if there is a problem  State what it is. View a problem as a deviation from the standard  How do you know that it's a problem ? What are the signs that indicate a problem ?  Determine how much the problem is costing the organisation in terms of :- - Work not being done - Work not being done on time - Problems being caused in other parts of the organisation 2. Try to determine the cause of the problem  Is something preventing the work from being done ? - Does the employee have the right tools to do the job ? - Are organisational policies / procedures hindering performance ? (confusion, conflicting goals, complicated procedures, lack of money, time, etc.)  Does the employee have enough knowledge to do the work ? - Does he know why it should be done a certain way ? - Does he know how his work contributes to the work of the organisation ? - Does the employee possesses enough knowledge about the work and how it is to be done to be able to do it ? - Has he ever been told that his work is not meeting acceptable standards ?  Try to determine if the job (task) itself has a built-in problem that leads to poor performance - Is the work too difficult for one person ? - Is the work so disagreeable that it is avoided ? - Is there no reward or sense of satisfaction in doing the particular task ? 3. Accurately record the results of the session  Prepare a rough draft and let the employee review it  Include all expected changes that should occur
  67. 67. Page 67 of 76 Performance Evaluation Key Steps 1. Preparation o Collection of performance Data / Evidence o Encourage active participation - Ask appraisee to prepare himself / herself before the appraisal (refer to Guidelines to Appraisee for preparation of Appraisal Interview) - Ask appraisee to prepare self appraisal - Appraisee completes draft Appraisal form o Mental preparation - create climate for honest feedback 2. At the meeting o The supervisor coaches, not criticizes the appraisee o Compare actual performance against expected performance (Results and Competencies) o Discuss reasons for success and agree on reasons why objectives were not achieved and why problems developed o Obstacles to reaching goals and problems are identified - Plans are made to overcome these obstacles - Both contribute to the development and carrying out of these plans o New goals are set 3. End of Meeting o Summarise trends in Performance and ideas for improvement o Summarise actions agreed o Reinforce success o Where possible or desirable, leave subordinate confident about the future
  68. 68. Page 68 of 76 Conducting The Evaluation Meeting (8 Guidelines) 8 Guidelines 1. Attitude a) A 2-way communication meeting - there must be frank and thorough discussion b) Not a ‘corrective’ session All the key aspects must discussed c) For weak performance, remedial action plans must be discussed As a manager, it is your accountability to help your subordinate improve d) Be open - Be fair and constructive - Admit if the fault is yourself, the supervisor 2. Seating Arrangements o Have a neutral setting / seating - round table - work side by side o Avoid a desk in between 3. Begin the Session o Outline objectives of meeting o Create climate of trust and confidence o Breaking the ice
  69. 69. Page 69 of 76 Conducting The Evaluation Meeting 8 Guidelines (cont’d) 4. Review o Encourage self review o Go through each objective and competitiveness as expected versus actual o Discuss reasons for achievement / non achievement o Discuss performance rating 5. Evaluator’s Comments o Appraiser react to Appraisee’s self assessment o Give personal assessment o Discuss achievement / non achievement of objectives / competencies o Discuss performance rating 6. Future Plans o Discuss plans for the future o Discuss performance improvement in the future o Role of the Appraiser / Appraisee 7. Rate Performance not Personality o Discuss detailed and specific discussion of the person’s progress or lack of it in achieving the results o Focus on objective, job-relevant experience (discuss evidences) o The person’s performance in the job is discussed and not the person himself o Avoid personal problems 8. Closing the Session o Reiterate objectives of the session o Repeat and agree an assessment and action plans o Complete the appraisal form and agree with the subordinate
  70. 70. Page 70 of 76 Guidelines to Appraisee for Preparation of Appraisal Interview This copy is to be given to the appraisee concerned before the appraisal interview to assist him/her to prepare for the appraisal interview and is for his/her retention To The Appraisee The questions below are designed to stimulate your thinking and to help you prepare for the appraisal interview and obtain minimum benefit format. Think about your own personal performance, progress and plans for the future improvement. Appraise yourself as follows :- 1) What are my major accomplishments for the past year ? 2) What are some aspects of my job that I like best ? That I like least ? 3) What do I consider to be the important abilities which my job requires ? 4) Are there any changes I would like to see made in my job which would improve my effectiveness ? 5) What are the ways in which my superiors can help me to do my job better ? 6) Are all of my capabilities being utilised in my present position ? If not, how can they be better utilised ? 7) In what aspects of my job do I feel I need more experience and training ? 8) What are specific things I need to do in he next year for my own development ? 9. What have I done for my personal and / or professional development ? 10) In what ways would my present position better prepare me for assuming more responsibility ?
  71. 71. Page 71 of 76 Attachments
  72. 72. Page 72 of 76 Goals, Measurements and KPIs Financial Commonly used Financial Measures  Total Assets  Total Assets per employee  Profits as a % of total assets  Return on net assets  Return on total assets  Revenues/total assets  Gross Margin  Net Income  Profit as a % of sales  Profit per employee  Revenue  Revenue from new products  Revenue per employee  Return on Equity (ROE)  Return on Capital Employed (ROCE)  Return on Investment (ROI)  % Revenue from different channel (e.g. DC vs SP)  % expenses due to quality defect, TNA, rework etc  % operating expenditure to revenue  Reduction in working capital  Profit per customer  % revenue to gain market share vs. % revenue to replace lost customers  % of sales from new applications  Compound Growth Rate  Dividends  Market Value  Share Price  Shareholder Mix  Shareholder loyalty  Cash flow  Total costs  Credit rating  Debt  Debt to equity  Times interest earned  Days sales in receivables  Days in payables  Days in inventory  Inventory turnover ratio  Cash-to-cash cycle  % resources shared with other business unit  ROI time cycle  % Revenue growth of various markets  Sales growth in targeted markets/ customer/ region  Operating Cash Flow  % of customer income (Share of Wallet)  Net cost per acquired customer
  73. 73. Page 73 of 76 Goals, Measurements and KPIs Customer Commonly used Customer Outcome Measures  Customer satisfaction  Customer loyalty  Market share  Customer complaints  Complaints resolved on first contact  Return rates  Response time per customer request  Price relative to competition  Total cost to customer  Average duration of customer relationship  Customers lost  Customer retention  Customer acquisition rates  Percentage of revenue form new customers  Number of customers  Annual sales per turnover  Win rate (sales closed/sales contact)  Customer visits to the company  Hours spent with customers  Marketing cost as a percentage of sales  Number of ads placed  Number of proposals made  Brand recognition  Response rate  Number of trade shows attended  Sales volume  Share of target customer spending  Sales per channel  Average customer size  Customers per employee  Customer service expense per customer  Customer profitability  Frequency (number of sales transactions)
  74. 74. Page 74 of 76 Goals, Measurements and KPIs Internal Process General Internal Process Measures  Average cost per transaction  On-time delivery  Average lead time  Inventory turnover  Environmental emissions  R&D expense  Community involvement  Patents pending  Average age of patents  Ratio of new products to total offerings  Stockouts  Labor utilization rates  Response time to customer requests  Defect percentage  Rework  Customer database availability  Breakeven time  Cycle time improvement  Continuous improvement  Warranty claims  Lead user identification  Products and services in the pipeline  Internal rate of return on new projects  Waste reduction  Space utilization  Frequency of returned purchases  Downtime  Planning accuracy  Time to market of new products/services  New products introduced  Number of positive media stories Common Supply Chain Measures Time  On-time delivery receipt  Order cycle time  Order cycle time variability  Response time  Forecasting/planning cycle time  Planning cycle time variability Quality  Overall customer satisfaction  Processing accuracy  Perfect order fulfillment o On-time delivery o Complete order o Accurate product selection o Damage-free o Accurate invoice  Forecast accuracy  Planning accuracy  Schedule adherence Cost  Finished goods inventory turns  Days sales outstanding  Cost to serve  Cash to cash cycle time  Total delivered cost o Cost of goods o Transportation costs o Inventory carrying costs o Material handling costs o All other costs  Information systems  Administrative  Cost of excess capacity  Cost of capacity shortfall
  75. 75. Page 75 of 76 Example Measures:  % of staff evaluated on Core Competency Framework  % of staff with Career Development Plans  # of training hours completed  % of staff with access to strategic information  Employee Satisfaction Survey Index  % staff evaluated on Culture alignment  Strategic Skills Coverage  Targeted Training Accomplished  Best Practices Implemented  %Work Support Implemented  Employee Climate Survey  Employee Goal Alignment Goals, Measurements and KPIs HR, ICT , Culture
  76. 76. Page 76 of 76 Common Human Resource Management Measures 7.1 Manage deployment of personnel a. Percentage employee absenteeism b. Cost per external hire c. Cost per internal I Lire d. Cost to supervise e. Current employee/supervisor ratio f. External accession rate g. External replacement rate h. Internal accession rate i. Internal replacement rate j. Job posting effectiveness k. Job posting response rate l. Number of days to fill an employment request m. Number of days to respond to applicant n. Number of job descriptions written o. Number of jobs leveled p. Orientation and training costs per hire q. Percentage of employment requests filled on schedule r. Percentage of offers accepted s. Personnel turnover rate t. Relocation expenses u. Requisitions filled per month/quarter/year v. Requisitions per recruiter w. Time to evaluate jobs x. Time to process an applicant y. Time to start 7.2 Develop succession and career plans a. Distribution of performance appraisal ratings b. Distribution of merit pay increase recommendations c. Ratio of promotions to total employees d. Ratio of openings filled internally vs. externally e. Average number of years or months between promotions 7.3 Recruit, select, and hire employees a. Average days to fill open positions b. Average days between opening and fill c. Ratio of acceptances to hires d. Ratio of acceptances to offers e. Ratio of qualified applicants to total applicants 7.5 Ensure employee involvement a. Current employee/ supervisor ratio b. Employees involved in job rotation c. Number of days to answer suggestions d. Number of suggestions per employee e. Number of suggestions per team f. Percentage of employees participating in company sponsored activities g. Percentage of suggestions accepted h. Percentage of total workforce now participating in self directed work teams 7.6 Develop and train employees a. Average pre- and post-training test score change/performance review change b. Cost per trainee c. Hours of employee training d. Number of days to develop a training course or modules e. Number of hours per year of career and skill development training per employee f. Percentage of employees trained g. Percentage of employees with development plans h. Percentage of training classes evaluated as excellent i. Percentage of employees receiving tuition refunds j. Total expenditure for tuition reimbursement or executive development k. Total external training expenditures l. Total internal training days m. Total internal training expenditures n. Trainee or unit work performance changes o. Training costs as a percentage of payroll p. Training costs as a percentage of sales/revenue q. Training days per employee per year r. Training department employees to total employees 7.7 Develop and manage base and variable compensation a. Average salary cost per employee b. Compensation costs c. Compensation costs/revenue d. Overtime pay costs e. Percentage of performance appraisals submitted on time f. Salary range exceptions g. Supervisory compensation costs/total compensation costs 7.8 Ensure employee well being and satisfaction a. Department morale index 7.9 Manage and administer employee benefits a. Benefits cost per employee b. Benefits cost c. Benefits costs/revenue d. Benefits costs/total compensation costs e. Benefits to payroll ratio f. Error rates in processing benefits claims g. Retiree benefits costs/expense 7.12 Manage labor-management relationships a. Average employee tenure b. Average length if time to settle grievances c. Costs associated with work stoppages/slowdowns d. Frequency/duration of work stoppages/slowdowns e. Percent of grievances settles out-of-court and associated savings f. Ratio of grievances/complaints to total employees

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