CAM-I Performance Management Maturity Framework

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CAM-I Interest Group key members for their time, effort, and expertise in developing and publishing the Performance Management Maturity Framework

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CAM-I Performance Management Maturity Framework

  1. 1. Over Three Decades of Industry- led Collaborative Research The CAM-I Performance Management Maturity Framework CAM-I Confidential Global Leadership in Cost, Process and Performance Management
  2. 2. Performance Management Interest GroupOver Three Decades of Industry- led Collaborative Research CAM-I recognized the need to develop a standardized and integrated view of Performance Management. The interest group has developed a practical framework that will allow any organization to assess its level of performance management maturity. The framework consists of a core group of Enablers and four levels of Maturity. This provides a model relevant to all organizations in optimizing their business results. More importantly, in addition to the maturity framework, the research recommends specific improvement techniques to assist in areas of performance that require enhancement. At the same time, the research cautions attempts to implement new techniques without taking into consideration the organization’s capability of effecting change. CAM-I Confidential
  3. 3. Performance ManagementOver Three Decades of Industry- led Collaborative Research Maturity Framework The full version of this deliverable is for Members only and you can contact Ashok Vadgama, CAM-I President at ashok@cam-i.org or call him at 512-296-6872 for more information CAM-I Confidential
  4. 4. .Figure 1 FRAMEWORK Over Three Decades of Industry- led Collaborative Research CAM-I Confidential
  5. 5. Performance Management vs. PerformanceOver Three Decades of Industry- Measurement led Collaborative Research Two terms often used interchangeably are Performance Management and Performance Measurement. Before performance can be improved, Performance Management concepts need to be in place before measuring performance. For the purpose of this research initiative, PMIG (Performance Management Interest Group) is using the following definitions: Performance Management is the practice of organizing, integrating, automating, and analyzing business methodologies, processes, and systems to drive successful business performance. Performance Measure – The specific representation of a capacity, process, or outcome deemed relevant to the assessment of performance. Performance Measurement – The process of developing measureable indicators that can be systematically tracked to assess progress made in achieving predetermined goals. CAM-I Confidential
  6. 6. Key Components Behind The ConceptOver Three Decades of Industry- led Collaborative Research Performance Enablers: Recognition that every organization is made up of functions and elements of its business that are both unique and common. Performance Management Maturity Levels: Recognition that not all organizations perform Enablers the same way, or with the same efficiency or effectiveness. Those that demonstrate higher levels of effectiveness, contributing to greater business success, represent organizations performing at higher “maturity.” Performance Management Improvement Techniques: Recognition that action is needed to improve Performance Enablers.. Change Capability: Recognition that implementing improvement initiatives to enhance performance has had, in general, a disappointing record of success and sustainability. CAM-I Confidential
  7. 7. Performance Management EnablersOver Three Decades of Industry- led Collaborative Research CAM-I Confidential
  8. 8. Performance Management EnablerOver Three Decades of Industry- Elements led Collaborative Research Performance Management Enablers Enablers of Definition Elements Attributes / Characteristics Performance Management Business / Operational A system of actions, communications and • Establish priorities • Alignment Management controls for developing and executing plans • Set targets • Accountability to achieve strategic goals and objectives.3 • Identify key projects • Transparency • Resource allocation • Ownership • Shared services • Operational planning and budgeting • Capital planning and budgeting • Project management • Monitor/measure Customer Relationship A combination of policies, processes, and • Customer segmentation • Responsiveness Management strategies implemented by an organization to • Customer intelligence • Integration unify its customer interactions, build • Customer database • Continuity customer relationships, and provide a means • Communication to track customer information.4 Financial Management The management of financial resources to • Financial accounting and control • Transparency support accountability and stewardship.5 • Financial analysis (e.g., variance analysis) • Integrity • Managerial accounting (e.g., cost • Timeliness management) • Reliability • Internal controls • Review periodicity • Financial reporting • Advisory CAM-I Confidential
  9. 9. Performance ManagementOver Three Decades of Industry- Enabler Elements led Collaborative Research Performance Management Enablers Enablers of Definition Elements Attributes / Performance Characteristics Management Business / A system of actions, • Establish priorities • Alignment Operational communications and controls for • Set targets • Accountability Management developing and executing plans to • Identify key projects • Transparency achieve strategic goals and • Resource allocation • Ownership objectives.3 • Shared services • Operational planning and budgeting • Capital planning and budgeting • Project management • Monitor/measure Customer A combination of policies, • Customer segmentation • Responsiveness Relationship processes, and strategies • Customer intelligence • Integration Management implemented by an organization to • Customer database • Continuity unify its customer interactions, build • Communication customer relationships, and provide a means to track customer information.4 Financial The management of financial • Financial accounting and control • Transparency Management resources to support accountability • Financial analysis (e.g., variance • Integrity and stewardship.5 analysis) • Timeliness • Managerial accounting (e.g., cost • Reliability management) • Review periodicity • Internal controls • Advisory • Financial reporting CAM-I Confidential
  10. 10. Performance Management Interest GroupOver Three Decades of Industry- led Collaborative Research PM Maturity Framework Maturity Levels Level One Level Two Level Three Level Four Rudimentary Established Effective Adaptive PM Enablers 1. Strategic Management 2. Business/Operational Management 3. Financial Management 4. Risk Management 5. Customer Relationship Management Maturity 6. Process Management Growth 7. Information Management 8. Supply Chain Management 9. Innovation Management 10. Human Capital Management 11. Knowledge Management 12. Organizational Management CAM-I Confidential
  11. 11. Performance ManagementOver Three Decades of Industry- Enabler Maturity led Collaborative Research Performance Management Enabler Maturity Enablers of Level One: Level Two: Level Three: Level Four: Performance Rudimentary Established Effective Adaptive Management Non-systematic, Stable and repetitive Internally efficient and Externally efficient and non-periodic, and continuously improving dynamic reactive • Elements are • Planning process is • Operational plans are well • Operational plans are fully performed on an cohesive and closed understood by employees integrated with suppliers, ad hoc and loop with some and where they can customers, and employees tactical basis relationships to the contribute • Planning enables • Business and organiza-tional • Budget formulation process employees to be proactive operational plans strategic plan but is is seen as a key function • Plans & budgets are based are not related to not fully integrated within all areas responsible on rolling forecasts and not organization’s • Reflects consensus for revenue / expenditure limited to an annual event Business / strategic plan view of enterprise generation • Measurement and Operational • Budget objectives • Budget process is accountability of plan Management formulation • Budget formulation complementary to planning performance is in place process is not process is initiatives and planning • Best practices integrated with decentralized to all outcomes are monitored and any formal areas responsible for measured planning revenue/ expenditure processes and generation with seen largely as a oversight by the finance function finance function CAM-I Confidential
  12. 12. Performance ManagementOver Three Decades of Industry- led Collaborative Research Enabler Maturity Performance Management Enabler Maturity Enablers of Level One: Level Two: Level Three: Level Four: Performance Rudimentary Established Effective Adaptive Management Non-systematic, Stable and repetitive Internally efficient and Externally efficient and non-periodic, and continuously improving dynamic reactive • Limited input • Budget process • Efficient resource allocation during budget refers to planning based on the strategic plan preparation initiatives but is not provided by areas fully integrated responsible for • Rudimentary revenue resource allocation generation and based on the Business / expenditure strategic plan Operational commitments Management • No resource (continued) allocation based on the strategic plan • Focused on correcting historical deficiencies CAM-I Confidential
  13. 13. Performance Management Enabler Maturity-Over Three Decades of Industry- led Collaborative Research Financial Management Enablers of Level One: Level Two: Level Three: Level Four: Performance Rudimentary Established Effective Adaptive Management Non-systematic, Stable and repetitive Internally efficient and Externally efficient and non-periodic, and continuously improving dynamic reactive • Financial • Financial • Financial accounting • Financial accounting and accounting is accounting and and control is control is fully integrated governed more by control is used integrated into across all departmental habitual practice jointly by the ongoing operations operations and is aligned with rather than by department • Financial analysis is the enterprise strategy supporting and responsible based on direct • Managerial accounting is being connected • Financial linkage to inputs and owned equally by all areas to enterprise analysis (budget activities within the organization and strategy vs. actual) is • Managerial uses sophisticated methods • Financial control performed accounting methods used for optimizing business is used primarily regularly by the used for monitoring results by the accounting department and improving department as a responsible and business operations tool to determine the finance departmental function compliance • Some simplistic • Financial managerial analysis and accounting review of results methods in place (reporting) are performed largely by accounting staff as opposed to areas that have budget or expenditures CAM-I Confidential
  14. 14. Performance Management ImprovementOver Three Decades of Industry- led Collaborative Research Techniques Purpose and Use Improvement techniques are a list of business tools or solutions designed to improve all processes and systems in the organization in order to achieve higher levels of performance. The concept of using an improvement technique to improve performance is not new. In fact, numerous books and publications have been written over several decades that present and promote uncounted ways organizations can improve performance. CAM-I Confidential
  15. 15. Performance ManagementOver Three Decades of Industry- led Collaborative Research Improvement Technique CAM-I Confidential
  16. 16. Performance Management ImprovementOver Three Decades of Industry- Techniques led Collaborative Research Improvement Definition Specific Techniques Value Provided in Technique Improving Performance Category The radical redesign of a Business Process Modeling Enables the organization to become process, product, or Process Simulation stronger and more successful in the Business service (as opposed to Rightsizing marketplace by greatly simplifying a Process Re the incremental process, product, or service. engineering improvement associated with continuous improvement efforts).19 A process used to Throughput Analysis Optimizes performance efficiency by manage utilization of all Capacity Planning minimizing idle capacity. Assists with assets to ensure that Constraint Analysis operational planning and forecasting current and future Capital Justification / of future capacity requirements in Capacity business requirements Assessment justifying financial investments. Management are met in a cost- Demand/Workload effective manner.20 Forecasting Return On Investment Analysis Business improvement Lean Operations Enables organizations to better methodology that Six Sigma allocate resources to value-added focuses on quality Just in Time activities and improve quality. through speed (Lean) Kanban Focuses on efficiency improvements and eliminating defects Kaizen to streamline and optimize (Six Sigma).21 Total Quality Management operational performance. Lean/Six Sigma ISO 9000 Total Productive Maintenance Continuous Process Improvement Root Cause Analysis CAM-I Confidential
  17. 17. Performance Management Interest GroupOver Three Decades of Industry- led Collaborative Research Identify PM Improvement Techniques For each Enabler, show which Improvement Techniques could help to improve Maturity Level :Example: CAM-I Confidential
  18. 18. Performance Management Enabler LevelsOver Three Decades of Industry- Using Improvement Techniques led Collaborative Research CAM-I Confidential
  19. 19. CAM-I and ChangeOver Three Decades of Industry- led Collaborative Research The integration of this research with the ongoing Performance Management research led to the decision to treat Change Management in a more holistic way. Therefore, we recommend that, before charging off to identify which techniques should be adopted to improve performance, it is essential to review the organization’s capability to adapt to change, depicted in Figure 5 Integration of Performance Maturity and Change Capability. CAM-I Confidential
  20. 20. Integration of Performance Maturity andOver Three Decades of Industry- Change Capability led Collaborative Research Change Capability A structured approach to change in individuals, teams, organizations and societies that enables the transition from a current state to a desired future state. CAM-I Confidential
  21. 21. Recommended Approach on Usinng Performance Maturity as a six stepOver Three Decades of Industry- led Collaborative Research approach CAM-I Confidential
  22. 22. Example - Maturity Assessment ResultsOver Three Decades of Industry- led Collaborative Research CAM-I Confidential
  23. 23. Example - Change Capability vsOver Three Decades of Industry- led Collaborative Research Maturity Results CAM-I Confidential
  24. 24. Another ExampleOver Three Decades of Industry- led Collaborative Research As shown, the Enabler, Process Management, can use six different Technique Categories to improve maturity, and Risk Management can use two.Since Capacity Management was identified as a Technique Category that could improve both Process Management and RiskManagement, the management team decided to investigate this Improvement. CAM-I Confidential
  25. 25. Further Research and PMMF DevelopmentOver Three Decades of Industry- led Collaborative ResearchThe PMMF represents a framework that portrays a collective andcomprehensive view of the factors that affect business results. Beingthe result of collaborative research and debate, it represents anunbiased point of view of performance management, not scripted tosell or “pitch” a new product, yet it’s a conceptual framework that hasgreat potential for continued development in order to provide practicalapplication for businesses. As is, the framework is a useful tool forthinking about improving performance, but success in applying theframework will be enhanced through subsequent efforts. CAM-I Confidential
  26. 26. Further WorkOver Three Decades of Industry- led Collaborative Research Assessment Tool – To effectively apply and utilize the concepts presented in the PMMF, a diagnostic assessment tool or capability could be used to greatly enhance the value of the PMMF to organizations. By developing survey questions that “test” respondents’ answers against the defined maturity levels, the PMMF can be applied to a broad audience. In addition, a survey tool can be crafted in a manner that helps mitigate potential skewing of results where a respondent knowingly or unknowingly answers questions biased towards an intended maturity level. Case Study Assessment – A case study application of the PMMF with organizations on a trial basis would serve the purpose of testing the content of the framework against real business situations to help refine the description and content of the maturity levels. CAM-I Confidential
  27. 27. Further WorkOver Three Decades of Industry- led Collaborative ResearchImprovement Techniques Database – An important distinction in this PMMF isthe differentiation between Enablers and Improvement Techniques. The formerrepresents an inherent capability performed by an organization; the latter representsa means by which an Enabler is improved. The PMIG developed an initial databasethat correlates appropriate improvement techniques within the maturity framework.Further developing and refining this database will serve as a critical tool to helpguide an organization in identifying the most appropriate means of maturingperformance.Performance Measures – Just as the content of the maturity levels can be refinedthrough case study assessment, the framework can be further refined by identifyingtypes of metrics that are in use at different maturity levels. The current contentprovides a descriptive depiction of maturity; adding quantitative or qualitativemetrics will help provide a more concise understanding and measurement ofmaturity levels. CAM-I Confidential
  28. 28. Further WorkOver Three Decades of Industry- led Collaborative Research Benchmarking Capability – If an assessment tool is developed to survey organizations on maturity levels, this could serve as the basis for creating a database of results that could be used for benchmarking purposes. By profiling organizations (by industry, size, market, etc.), the results could be used for comparative analysis of like organizations. Industry-specific performance framework – The PMMF has been developed without emphasis or focus on any specific industry. As such, the language is “generic,” and might not highlight industry-specific issues. The current framework could easily be rewritten for specific industries or uses that would allow the use of industry-relevant information in order to provide more meaningful results for organizations. CAM-I Confidential
  29. 29. Performance Management Maturity Framework - ConclusionOver Three Decades of Industry- led Collaborative Research Every organization, whether privately operated or publicly managed, must be concerned with performance management to be successful. Leading organizations are continually gauging their performance maturity and making adjustments where necessary to stay ahead of their competition. Without question, performance management has many different views, in fact as many as there are organizations. The Performance Management Maturity Framework provides the ability for organizations to holistically assess their performance maturity and understand the most effective means to improve performance, using one consistent approach. CAM-I Confidential

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