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Developing Performance Indicators Measures And Methods

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  • 1. Developing Performance Measures Teik Oh Director OTS Management Pty Ltd
  • 2. Purpose of Workshop To assist you in developing •Performance measures •Measurement methods
  • 3. Your Vision, Mission, Goals, and Objectives Why? Wh ? Unit Vision, Mission Goal 1 Goal 2 Goal 3 Objective 1 Objective 2 Objective 1 Objective 2 Objective 1 Objective 2 How? Necessary and Sufficient Objectives to achieve Vision
  • 4. Performance Measure Statements A means of objectively assessing businesses, divisions, projects, products, or services Should be related to your vision and mission Should specifically state how you will measure your objective or goals Should state frequency and when your objective or goals will be measured Should i di t Sh ld indicate who will do th measuring h ill d the i
  • 5. Structure of a Performance Measure Statement •The (description of the measure) based on (approach used to develop the measure) •The (number of rejects on a specific manufacturing line) based on (daily production) •The (satisfaction level of customers for a specific product/service) based on (a quarterly survey of 1,000 customers) •The (time taken to do a specific process) based on (our timesheet system)
  • 6. Two Methods to arrive at Objectives and Performance j i f Measures Objectives set “Ideal” Measures set Measures Objectives •Describe vision • Describe vision •Define mission • Define mission • List goals arising g g •List goals arising List • Brainstorm •List objectives performance •Determine at least Determine measures one performance • Select “preferred” measure for each performance objective measures • Set targets which become the objectives December 13, 2000 OEAS--IE Training Workshop 6
  • 7. First Approach: Objectives set pp j Performance Measures Example: (Customer Service) Goal: To provide timely response to customers’ support calls Objective: To reduce the time it takes for a customer to resolve their difficulties to less than 15 minutes for 95% of support calls Performance measure: The processing time from call to resolution based on the time from receipt of a call to the time the customer says he is satisfied as recorded in our call system satisfied, call-system
  • 8. Second Approach: “Ideal” Ideal Performance Measures set Objectives Example: (Customer Service) Goal: To provide timely response to customers’ support calls Related performance measures (brainstormed) •Support call processing time based on…. •Satisfaction recorded at X% based on annual survey…. •The number of repeat support calls reduced based on call logs…. g Then, select preferred from above, set “ideal” statistics – these become targets
  • 9. Which Approach iis better? i •Horses for courses! •Best Practice industry? y •Competitors’ information available? •Does your vision, mission set targets? •Industry measures?
  • 10. Evaluating the Quality of Your g Q y Performance Measures •Does each measure overtly and specifically relate to y your vision, mission, goals, and objectives? g j •Is each measure important to the business? •Is it possible to collect accurate and reliable data for each measure in a timely manner? •Is there more than one measure for each goal or objective and if so, do the entire set of measures reflect the key results of the business product or service? business,
  • 11. Two Ways of Measuring Performance Direct measures of performance, usually •Time •Error rates •Compliance •Cost •Number of outputs per input Number •Standardized tests Indirect measures of performance usually performance, •Perceived time •Perceived efficiency •Perceived quality Perceived
  • 12. Example: To reduce the time it takes for a customer to resolve their difficulties to less than 15 minutes for 95% of support calls Direct measure: The processing time of call to resolution based on the time from receipt of a call to the time the customer says he is satisfied as recorded in our call-system – can be directly measured by a clock but may not accurately measure “satisfaction” y Indirect measure: The perceived time based on satisfaction survey of a random y sample of 500 callers – can measure an overall “feeling” but cannot accurately define what is “right” time
  • 13. Five Categories of g Performance Measures 1. Input measures (e.g., staff time, materials, equipment, resources) are useful in showing resources or effort used g to t provide products and services; id d t d i however does not show effectiveness You may be a spending resources doing the wrong things well 2. Output measures (e.g., number of products produced or services provided) are useful in defining product or service; however, does not reveal quality or efficiency You may be producing a lot of the right things inefficiently badly
  • 14. Five Categories of g Performance Measures 3. Outcome measures ( 3 O t (e.g., scores on a standard test, number of units produced) are useful in showing the impact or benefit of the employee, employee product or service 4. Efficiency measures (e.g., cost per unit of output, outputs per unit of iinput, outputs per i f unit time) are useful in showing productivity and cost effectiveness 5. Quality measures (e.g., reliability, accuracy, competence, responsiveness) are y p p ) useful in measuring the effectiveness in meeting customer expectations - Lack of quality can be measured (e.g., error rates) 14
  • 15. Example Goal: To provide timely response to customers’ support calls What are possible measures using different categories of Performance Measures? 1. Input measure: The number of call-support staff 2. Output measure: The average number of calls processed per day 3. Outcome measure: The call processing time for calls based on the time from receipt of call to satisfaction 4. Efficiency measure: The average number of calls processed per call-support staff per day call support 5. Quality measure: The satisfaction of applicants with the call processing time as measured by a survey
  • 16. Performance Measurement Matrix Quantity Quality How much/how many? H h/h ? How well? H ll? Performance What input/what output? What input/what output? How much/how many? How well? Outcome O What result? What result? December 13, 2000 OEAS--IE Training Workshop 16
  • 17. Workshop: Developing Performance Measures for the Ratatouille Foundation The vision of the Foundation is “a healthy society free of disease” The i i Th mission of the R t t ill f th Ratatouille Foundation is to promote the health & welfare of persons resident or located in the Kuala Lumpur Metropolitan Region i i by all appropriate means, including support of p p healthcare and pp proper elimination of causes of disease.
  • 18. One of Ratatouille’s Goals Goal: To minimize the number of rats in Kuala Lumpur Achievement of th G l was d fi d by th A hi t f the Goal defined b the Objective: “To reduce the number of rats to ten per city block in the next year” Brainstormed a Statement of Performance measure: “The number of rats per city block p y as measured by an extensive search of a random sample of 10 city blocks”
  • 19. PMs Relate to Goal: To minimize the number of rats in Kuala Lumpur •The dollars spent per rat killed based on budget and exterminator records •Percent increase in the n mber of traps set this year based Percent number ear on city records •The satisfaction of the residents with the extermination program based on survey of a random sample of residents •The dollars spent on extermination based on the financial records •The number of rats remaining per city block obtained by conducting an extensive search of a random sample of the city blocks in Kuala Lumpur. •The approximate number of rats killed during the year per city block based on the exterminator reports
  • 20. Evaluating the Quality of Your g Q y Performance Measures •Does each measure clearly relate to the associated Does mission, goal, and/or objective? •Is each measure important to management? •Is it possible to collect accurate and reliable data for each performance measure? •Taken together, do the measures accurately reflect the key results of the program, activity or service? •Is there more than one measure for each goal and/or objective? •For this example - (Are your measures primarily outcome, outcome efficiency or quality measures?)
  • 21. Evaluate: Related to Mission, Important to business, Measurable, Comprehensive business Measurable Comprehensive, and Preferred Type? MINIMIZE THE NUMBER OF RATS IN KUALA LUMPUR – POSSIBLE ALTERNATE PM’S:- •The dollars spent per rat killed based on budget and exterminator records d •Percent increase in the number of traps set this year based on city records •The satisfaction of the residents with the extermination program based on survey of a random sample of residents •The dollars spent on extermination based on the financial records •The number of rats remaining per city block obtained by conducting an extensive search of a random sample of the city blocks in Kuala Lumpur. • •The approximate number of rats killed during the year per city block based on the exterminator reports December 13, 2000 21
  • 22. Some Resulting Objectives g j Supporting the Goal MINIMIZE THE NUMBER OF RATS IN KUALA LUMPUR •To improve the cost effectiveness by 10% by end of the year •To obtain high to very high satisfaction rating of 90% of city residents •To reduce the number of rats to 100 per p city block in the next year December 13, 2000 22
  • 23. Summary: Develop Performance Measures for each Goal Try to develop an input, output, outcome, efficiency, and quality t ffi i d lit performance measure for each goal Identify whether each is a direct or indirect measure •Can you identify a direct measure for the ones that are currently indirect? •Can you identify an indirect measure for the ones that are currently direct? December 13, 2000 23
  • 24. Summary: Develop y p Objectives Evaluate quality of performance measure:- Related •Related •Important •Measurable •Comprehensive •Preferred Type (outcome, efficiency, quality) ffi i lit ) Develop objectives December 13, 2000 24