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Take control of your
                                  business performance
                                  Navigating b...
Figure 1:   Performance management cycle

     Assess the current performance                                             ...
Designing and implementing these management               After agreeing on the design principles, existing metrics
Figure 4:     Charting the normalized results drives target-setting and best practice initiatives to improve performance

However, depending on the maturity of the organization
Benchmarking internally and externally for realistic             an...
Figure 7:   Stretching goals and targets

Turning the framework into an effective                           individuals’ cascade with clear line of sight to strateg...
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Take Control Of Your Business Performance


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Taking control of business performance by implementing a performance management framework using a set of tools that systematically enable the improvements. Regular performance evaluation using industry benchmarking is unique to the PA offering.

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Take Control Of Your Business Performance

  1. 1. Take control of your business performance Navigating blind is no longer an option Corporate leadership teams often feel their control on their business slipping. For instance, the leader of a major oil and gas company’s IT organization told us he felt he was losing control of the organization. Although the organization believed it was delivering value to its stakeholders, customers were increasingly complaining about poor service. Moreover, dissatisfaction among stakeholders with financial performance was rife. How can managers regain control? The problem stemmed from a range of factors, such as the absence of clear or meaningful performance Following the old adage ‘one can’t manage what indicators, a lack of framework to prioritize actions one can’t measure,’ the first step to regaining control effectively, and misalignment between stakeholders’ of performance is to design the right performance expectations and organizational goals and objectives. management framework. Value-based performance management frameworks can help managers assess The sense of diminishing control is common at any their organization’s health. Once in place, they serve management level. With the ‘r-word’ on everyone’s lips, as catalysts for change, or even as a routemap for the regaining control is paramount. It is especially crucial leadership team’s transformation programs. to show confidence to stakeholders, customers, and employees. Navigating blind is no longer an option. Thought Leadership
  2. 2. Figure 1: Performance management cycle Assess the current performance Design the future scorecard: management framework: Design conceptual dashboard, 1 2 Review KPIs currently in place, identify and select future KPIs to assess organization objectives. include in the dashboard, create Output: Gap analysis value-driver tree. Output: Pilot temporary dashboard, KPIs map Train and educate: Enable the team Benchmark for realistic 6 goal-setting: Identify external and to make informed decisions using the 3 Communicate scorecard. Output: Organization ready internal benchmarks and set realistic to use the dashboard objectives. Output: Benchmark analysis, targets for all KPIs Engage key stakeholders: Implement the scorecard: 5 Communicate continuously over time, Select a more robust and permanent 4 establish performance management roles platform, eg SharePoint and design and responsibilities. Output: Governance reporting mechanisms required. Output: structure, change plan Automated dashboard ready for use Figure 2: KPI review and prioritization matrix Phase II (focus) Phase I (immediate) Customer Budget Customer Cost to satisfaction adherence uptime serve Performance Risk vs service management contracts Process Safety Value to Employee improvement Capacity compliance customers engagement and innovation Training and Talent Vendor Project knowledge management management performance management process Customer Cash Revenue Shareholder value demand management impact Customer value management People and capabilities Operational excellence Phase IV Phase III Lower priority metrics Not ready Ready Figure 3: Sourcing executive dashboard Key messages: Business resilency Financial 1. The Brazil Data Center is now online. Disaster Recovery testing for applications OVERALL SCORE OVERALL SCORE is proceeding as per schedule. Business continuity risk mitigation Savings target adherence 2. The incident volume has increased by Disaster recovery plan adherence Additional savings over 70%, but the response times have Data center hardening Variable cost model remained steady without any increase in Per unit cost of service staffing/costs. 3. Savings targets have exceeded target Overall efficiency by 7% and are on track to meet the annual CBA target for the year. Service 4. The first customer satisfaction survey has had an overall positive score of OVERALL SCORE 75%. Life, P&C and Corp – all companies Service level adherence have rated services at more than 70% Customer satisfaction satisfaction. We are targeting to improve Service provisioning this measure to 80% by next survey. People Flexibility Transformation OVERALL SCORE OVERALL SCORE OVERALL SCORE 2
  3. 3. Designing and implementing these management After agreeing on the design principles, existing metrics frameworks involve the following activities as should be reviewed against criteria based on corporate highlighted in Figure 1: objectives, as illustrated in Figure 2. The assumption here is that the organization already has a performance • Assessing the current performance management management framework and does not want to ‘reinvent framework, if any the wheel.’ Identifying the positive metrics and the • Designing the future scorecard potential gaps will help build the future scorecard, leveraging existing strengths of the framework in place. • Benchmarking internally and externally for realistic goal-setting Designing the future scorecard applies the learning • Implementing the scorecard on temporary and/or from the initial analysis by building it into a structure permanent IT platforms called the value-driver tree. It drives consistency and completeness by mapping all metrics onto their • Educating key stakeholders for buy-in and sustainable respective segments and linking them into one coherent use and improvement of the tool system. This process will drive out metric areas where • Driving sustainable performance improvements using the organization lacks maturity and focus, or reveal the framework. better ways to obtaining needed data not yet available. Assessing the current performance management At the same time there is an opportunity to ensure framework requires a collaborative analysis with alignment with corporate or business goals. Finally, a the business. This will ensure objectives are reviewed system for highlighting levels of performance is added, and metrics assessed against them. At this step, which includes an agreement on visual aspects such as an agreement should be reached on design color-coding and trend depiction, and inclusion in the principles, taking into account corporate and model as a dashboard. Levels of scoring are equated organizational objectives. with colors that will sharpen the organization’s focus on performance improvement. Figure 3 provides an example of a high-level design. 3
  4. 4. Figure 4: Charting the normalized results drives target-setting and best practice initiatives to improve performance Average time to answer – seconds Longest time to answer – seconds Average time to answer – seconds Q1 Q1 Q1 Q2 Q2 Q2 Q3 Q3 COA Q4 Q4 Q3 COA COA Q4 Customer satisfaction survey by customer type Abandonment rate Inbound agent call wrap-up time – minutes (regular, key, new customers) Q1 Q1 Q1 Q2 Q2 Q2 Q3 Q3 Q3 COA Q4 Q4 COA Q4 Normalized data is compared to the target company and is used to define stretched, market-based target and objectives to aim for to improve overall performance. Best practices of the better performing companies are identified for implementation by the target company and initiatives created to enable those stretched targets to be achieved and to move from second to first quartile performance. Figure 5: Example performance management framework Above expectations Meets expectations Below expectations Value to customers Value to shareholders 2.2 1.5 Time spent on IT issues 2.0 Actual costs vs budgets/targets 2.0 Field force satisfaction 2.0 Cost reduction over time 1.0 Managing field force demand 2.7 Account payable performance 1.5 Sourcing effectiveness 2.1 Team capability Vendors and service performance 3.0 1.6 Performance against SLAs 2.0 Team performance 3.0 Internal vendor performance survey 1.5 Team satisfaction 3.0 Performance against contract 1.5 Team capacity 3.0 Projects performance 1.5 Figure 6: The change framework includes both driving and releasing Making it essential Making it ready Making it happen Making it stick Build case Communicate case Review case Ensure relevance Build and communicate a compelling case for change Model benefits Plan realization Track benefits Drive realization Design and drive Design program Develop plans Mobilize Capture knowledge the program Implement and Define future organization Detailed organization design Fine tune organization test organization Design and structure Implement and Define future processes Detailed process design Fine tune processes the business test processes Define system requirements Design systems Implement and test systems Fine tune systems Enable change leadership Build purpose Develop capability Coach leaders Develop leaders Engage and manage Engage and enable people Identify stakeholders Build knowledge and skills Use knowledge and skills stakeholders Align with the Gather views and Assess readiness Define change required Release energy organizational culture refresh approach Driving Releasing 4
  5. 5. However, depending on the maturity of the organization Benchmarking internally and externally for realistic and the state of system and data availability, more goal-setting helps to determine current performance robust and sophisticated platforms can be investigated levels against a panel of peers and to establish such as SharePoint or Business Objects. The scorecard targets against which scores are measured to should be implemented quickly and pragmatically, improve performance. with automated linkages to data preferred to manually gathering and populating spreadsheets. Extensive Benchmarking data is available from companies that testing and refinement must occur prior to launch. specialize in such studies and appropriate data that aligns with the scorecard being developed needs to Educating key stakeholders in the objectives, purpose be sourced. The benchmarking process should and function of the scorecard is vital to a successful include a comprehensive set of normalization factors implementation. A well structured change framework will to ensure that comparisons are fair, that the appropriate ensure that the required business change is successfully level of attainable stretch is built into the targets, and implemented. Key scorecard management roles need that the process is repeatable as the scorecard matures to be defined to ensure smooth operation and reporting. over time. An example is provided in Figure 4. All staff will have to be trained and the team will need to develop training materials and a suitable course. Implementing the scorecard on temporary and permanent IT platforms is the next logical step once Since business performance is being managed the model and its data sources have been confirmed through this process, the effectiveness of training and finalized. Typically the initial model is built in readily will also need to be tracked throughout. A well informed available tools such as MS Excel or MS Access. stakeholder group is a critical success factor of such an implementation, especially since the logical outcome of such an initiative is that compensation and rewards will eventually be linked to performance measures the scorecard reports. 5
  6. 6. Figure 7: Stretching goals and targets Final performance targets Performance Intermediate performance targets Intermediate performance targets Time Figure 8: Scorecard management process Focus metrics Update scorecard list (monthly) Review weightings List all consistent with latest and targets upward trends metric data List metrics below Revised 50% List recurring Identify top YES targets and greens 5-10 metrics for weights list Suggestions/guidelines: (three months) discussion? List metrics red • Focus on top 5-10 metrics and down at each SLT meeting • Revise metrics quarterly Review targets Add or to see if they need • Revise targets whenever necessary remove List metrics red to be revised to remove recurring green metrics and flat list (quarterly) • Revise weighting annually. 6
  7. 7. Turning the framework into an effective individuals’ cascade with clear line of sight to strategic communication tool will help spur organizational and objectives. The linking of business performance to behavioral change, the area where such programs most incentives with periods and parameters of performance frequently fail. In developing and communicating a clear is the desired outcome, but this is a sensitive area case for change, leaders must be engaged at every which requires clear communication. It is important stage of the process. to define and communicate the management process exhaustively of how the scorecard will be managed A comprehensive stakeholder management and and how rewards will be calculated and awarded, communication plan aligned to the change framework who qualifies and what the schedule for payouts will must be actively used to familiarize stakeholders with be. The scorecard itself should be sufficiently stable the scorecard. Implementation of the scorecard is most so that it delivers consistent results before any linkage effective when it is cascaded into the organization and to rewards or incentives is considered. driven with the support of key stakeholders. Take back control of your business performance Driving improved performance using the framework now and establish a well-designed performance must be the ultimate aim of any performance scorecard management framework to align with and achieve implementation. As stressed in the communication excellent performance. To do so, adopt a structured process, the objectives, purpose, and operation need approach. You will immediately begin to reap the to be communicated and understood at the lowest levels rewards that improved performance brings. of the organization. A reliable process to confirm that understanding needs to be in place before proceeding fully. It is vital that clear, single accountability for information that links metrics to 7
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