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Introducing the KPIs

               Hj Arriffin Mansor




Arriffin            KPI management   1
Contents of this talk
           1. What is KPI
           2. Key Result Areas or critical success
              factors
           3. How to set performance targets
           4. Bench markings to the best
           5. Performance measuring system.
           6. How could KPI improve performance;
           7. Conduct Gap Analysis
           8. Application of KPI system
           9. Pitfalls in KPI implementation;


Arriffin               KPI management                2
Contents - continue
1.   Performance improvement framework
2.   Programs / initiatives
3.   Performance Framework
4.   Improvement cycle
5.   Business Strategies in metrics
6.   Departmental key performance indicators
7.   Input output performance analysis
8.   Performance management dashboards
9.   Action plan
What is Diagnosis?

•   Diagnosis is the process of understanding how the
    organization is currently functioning, and it provides
    information necessary to design change interventions.



•   It is also a collaborative process between organization
    members and the OD (organization development)
    consultant to collect pertinent information, analyze it, and
    draw conclusions for action planning and intervention.
Before Training

          •   Build transfer of training into supervisory
Manager       performance standards
          •   Collect baseline performance data
          •   Involve supervisors and trainees in needs
              analysis process
          •   Involve trainees in program planning
          •   Brief trainees on the importance of the training
              (course objective, content, process, and
              application on the job)
          •   Review instructional content and materials
          •   Plan to participate in training sessions
          •   Encourage trainees attendance at all sessions
Before Training

          •   Align the training plan with the organization's
Trainer       strategic plan
          •   Systematically design instruction
          •   Provide proactive opportunities
          •   Design a peer coaching component for the
              program and its follow-up activities
Before Training

          •   Provide input into program planning
Trainee   •   Actively explore training options
          •   Participate in advance activities
During Training

          •   Prevent interruptions
Manager   •   Transfer work assignment to others
          •   Monitor attendance and attention to training
          •   Recognize trainee participation
          •   Participate in transfer action planning
          •   Review information on employee in training
          •   Plan assessment of transfer of new skills to the
              job
During Training

          •   Develop application-oriented objectives
Trainer   •   Answer the “WIIFM” question
          •   Manage the unlearning process
          •   Provide realistic work-related tasks
          •   Give individualized feedback
          •   Provide job performance aid
During Training

          •   Maintain an ideas and application notebook
Trainee   •   Participate actively
          •   Form support groups
          •   Plan for applications
          •   Create behavioral contracts
After Training

          •   Plan trainees’ reentry
Manager   •   Provide opportunities to practice new skills
          •   Have trainees participate in transfer-related
              decisions
          •   Reduce job pressures initially
          •   Give positive reinforcement
          •   Schedule trainee briefings for co-workers
          •   Set mutual expectations for improvement
          •   Arrange proactive (refresher) sessions
          •   Provide and support the use of job aids
After Training

          •   Provide follow-up support
Trainer   •   Conduct evaluation surveys and provide
              feedback
          •   Develop and administer recognition system
          •   Provide refresher/problem-solving sessions
After Training

          •   Practice self-management
Trainee   •   Review training content and learned skills
          •   Develop a mentoring relationship
          •   Maintain contact with training ‘buddies’
What is KPI?
             Stands for Key Performance Indicator

            Is a measure of efficiency or effectiveness
           Efficiency is a ratio of output divided by input
               which are generally financial in nature
            However there are also non-financial KPIs



Arriffin                    KPI management                    15
Key Performance Indicators
 • KPI was introduced by Peter Drucker
   when he envisaged “management by
   objectives” a situation where defining a
   clear objective is paramount in effective
   management.



Arriffin             KPI management            16
What is a KPI system?
• A framework consisting of processes,
  measures, and targets that are used to
  communicate, monitor and manage
  performance as well as align resources to
  achieve the objectives of the organisation
  "

Arriffin           KPI management              17
diagnosis                            MONITORING BOARD




                                                           Strategy
Evaluation




                                                         Change
             © Arriffin Mansor 2010       ACTION PLANS
PERFORMANCE FRAMEWORK
                                                    Diagnose
Strategise
                       Goal setting and
                         Objectives




                                          Performance Targets /
                    STRATEGIC MAPPINGS        Standards and
 Key Result Areas
                                             Benchmarkings




                       Key Performance
                          Indicators              Evaluate
Change

19
Arriffin   KPI management   20
Definition of performance
                 management
       An umbrella term used to describe
          the methodologies, metrics,
        processes and systems used to
       monitor and manage the business
        performance of an enterprise.*


Arriffin            KPI management         22
Another definition of PMS
• It is a systematic, integrated management
  approach that links enterprise strategy to
  core processes and activities. By
  providing planning, budgeting, analysis
  and reporting capabilities, PMS allows the
  business to be "run by the numbers" and
  measurement to drive management
  decisions.

Arriffin            KPI management         23
Objective of PMS
• The objectives of an effective performance
  management system are to realize
  improved performance -- increased
  profitability, growth, competitiveness,
  quality and customer satisfaction, to name
  a few.



Arriffin          KPI management           24
Components of PMS
At minimum, the critical components of PMS include the following:
2.   A set of well-defined, measurable, and published corporate
     performance objectives that act as the focal point for developing
     performance measures in functional areas within the company.
3.   A set of standard metrics that are used to define and describe the
     relative contribution or influence that business functions within the
     organization have on the performance objectives.
4.   The first two components provide a common framework for
     measurement, collaboration and cross- functional understanding
     of the effect of each area's performance on the overall company
     objectives, as well as the influence each organization has on the
     performance of other organizations within the enterprise.
5.   The ability to predict outcomes based on the common framework
     for understanding and collectively managing performance -- from
     high-level objectives to operational activities.


Arriffin                      KPI management                            25
The Star

           Tuesday May 17, 2005
           Nor Mohamed wants GLCs to
           start implementing growth
           strategies
           SECOND Finance Minister Tan Sri Nor Mohamed Yakcop wants
           government-linked companies (GLCs) to start implementing growth
           strategies this year, saying that this is “the year of implementation for the
           GLCs”.




Arriffin                               KPI management                                      27
Establishing goals – (1)

           1. Targets have been established for improving current levels of
              performance.
           2. Targets are achievable, but they may require changes to
              existing processes.
           3. Targets are quantifiable so that the target communicates if
              the expected performance was met.
           4. Longterm Targets (3 to 5 years) stretch the organization
              towards its strategic goals.
           5. Longterm Targets are established first before short term
              targets.
           6. Financial related targets are established first before non
              financial targets.




Arriffin                             KPI management                           28
Establish Goals and objectives
                   Criteria for
                                                    Define Goals
  Criteria Menu   Defining Goals


Marketplace
Industry Trends
Technology
Competition
Past
Performance
___________
___________
___________
___________
                                     We will increase revenues by 40% over the
                  Past Performance
EXAMPLE ->                           next three years
Arriffin                           KPI management                                29
SMART(ER) Objectives
• Specific: clear, unambiguous, straightfordward,
  understandable
• Measurable: can be related to quantified or qualitative
  performance measures
• Achievable: Objective should be realistic and within
  known              resources
• Relevant: Linked to operational/service plan
• Timebound: Building in target date & review dates
• Extending Capabilities: Stretching team performance
• Recognition: Acknowledgement of team achievement,
  reflection, learning

   Arriffin                KPI management                   30
The Challenge…
                                  Improving Performance
           Turning                  Management (PM)

               Data
                     Into
                             Actionable
                                    Information

Arriffin                KPI management               31
Strategic Focused Management Process

                                       Strategy


                                 Balanced Scorecard
                                       PMS


           Align organization to
                 strategy
                        Translate strategy
                       into operating terms
                                     Mobilize change
                                    starting at the top
                                                 Make strategy a
                                               continuous process
                                                            Make strategy
                                                            everyone's job
Arriffin                           KPI management                            32
Key result areas
• Drucker also introduced the concept of
  key result areas where minimum effort is
  directed and focus which would generate
  maximum impact to the objectives.
• KRA has a strong causal relationship with
  the objectives.
• Other ways of identifying KRA is sensitivity
  analysis, pareto and root cause analysis
Arriffin           KPI management           33
What is a Key Result
              Areas? – (2)
  A key area where satisfactory performance
   is required for the organization to achieve its
   goals
  A means of identifying the tasks and
   requirements needed for success
  At the lowest level, KRAs become concrete
   requirements
  A means to prioritize requirements
Arriffin            KPI management            34
Michael Porter’s
       Business-Level Strategy

              Cost
                                     Differentiation
           Leadership


                        Focus

Arriffin                KPI management                 35
PMS ensures that performance
             is measured at all levels?
      Organizational
       Objectives


           Divisional
           Objectives


              Departmental
               Objectives


                       Individual
                       Objectives

Arriffin                            KPI management   36
More Difficult                    Specific Goals
   Goals Lead                          Lead to
   To Higher                        Better Results
  Performance
              Does PMS
               Work?
  Support from
      Top                           Participation
  Management                           Is Key
   Is Critical
Arriffin           KPI management                   37
Measuring Performance

             Input output ratio analysis




Arriffin              KPI management       38
Performance Analysis
• Take input output data of before and after
  performance.
• Using the ratio O/I calculate targeted KPI
  and compare against actual KPI.
• Eliminate the impact of extra input.
• Calculate the pure performance output as
  a result of efficiency or competency.

Arriffin          KPI management               39
Measures

                               Measuring overall MARKETING DEPARTMENT
  Return on Sales                   Sales Turnover                       Return on assets


                    Standard                              Standard                          Standard
                                                                         Assets
    Sales                            Assets


                      Performed                           Performed                         Performed




                          Profits                                Sales                           Profits




Arriffin                                        KPI management                                             40
Efficiency indicator
                PROFIT MARGIN

                                                                 10%
                                               ORIGINAL KPI
                                               LINE              p
              SALES

                                                                          12%


                                                                 IMPROVED KPI
                                                                 LINE
                      10
                Input
                Change
                       4




                                 12000         14400   16800
                                                                 Profit
                                                                 RM




                                                   Efficiency             Volume
                                                    impact                Impact


                       TOTAL IMPROVEMENT = Efficiency + volume
                       improvement
                                                   4800     =         2400    2400
                                                   4800     =        16800   12000

                       © Arriffin Mansor
Arriffin                          KPI management                                     41
Types of KPIs
• Lead and lag
• Input output process and outcomes
• Drivers and enablers




Arriffin         KPI management       42
Balanced Scorecard
      Chain of Causality of Performance Measures


   Drivers         Moderators              Outcomes
(lead indicators) (lag indicators)

   Cycle Times       Customer                      ROA
                     Satisfaction                  EVA
  • Customer order
     fulfillment                                   EPS
  • Product assembly
     cycle time  Manufacturing
Quality          Unit Costs
• Defect rate
• Scrap rate
Arriffin              KPI management                  43
Internal Business Process Measures
               (Source: Kaplan & Norton, 1996)


Model of Internal Business Process Logistics
Customer      Innovation   Operations Post-Sale           Customer
Need          Process      Process    Service             Need Satisfied
Identified                            Process
 Identify     Create       Build              Deliver    Service to
 Market       Product      Product            Product    the
                                                         Customer



             • Development • Quality        • Delivery   • Service
Relevant       Cycle Time    Defects          Cycle        Satisfaction
Metrics:
                                              Time
                           • MCE
 Arriffin                  KPI management                             44
Corporate Goals & key variables


            •Pricing        5%
            •Costs         Profit              10%            20%
            •Expenses      Margin            Return on       Return on
            •Product Mix                      Assets         Equity
                                                    (leverage)
•Inventory & Receivable     Asset
 Management                Turnover
•Fixed Asset                2.0
 Management

 Arriffin                   KPI management                          45
Performance Network

                             Profit/Capital Employed


           Profit/ Revenue                           Revenue from Sales/
             from Sales               ×               Capital Employed


        Revenue from                Labor Cost/              Labor Cost/
       Sales/ Total Cost      ÷      Total Cost        ×   Capital Employed




Arriffin                            KPI management                            46
What is so special about
                  the PMS?


Arriffin            KPI management    48
What so special about PMS
• It is personal yet organisational
• Performance goal is objective yet
  collective
• Leadership, teamwork and synergy
• Learning and coaching take place at all
  times
• Continous improvement through
  innovation and best practises
Arriffin            KPI management          49
Balanced Scorecard Perspectives

                                  New Focus:
           Balanced measurement of 4 equally important criterias or dimensions


                                     CUSTOMER



EMPLOYEE &                         GROWING
RELATIONSHIP                  BIGGER & STRONGER /                FINANCIAL
                                  ACHIEVE GOP



                                      INTERNAL
                                     PROCESSES



Arriffin                             KPI management                              50
THE benefits of PMS?
• Improve your organisation / structure
• Improve communication (Internal / External)
• Link strategy towards operation and towards
  measured performance
• Focus on results
• Strategies are integrated into total management
• New approach to measure performance
• Diverse / complete measurement with benefits for
  all stake holders
• Use the PMS as a team-building tool
Arriffin             KPI management              51
Reasons for PMS


1. Focus on traditional financial accounting
  measures such as ROA, ROE, EPS gives
  misleading signals to executives with
  regards to quality and innovation. It is
  important to look at the means used to
  achieve outcomes such as ROA, not just
  focus on the outcomes themselves.

Arriffin           KPI management              52
Reasons for PMS

2. Executive performance needs to be
  judged on success at meeting a mix of
  both financial and non-financial measures
  to effectively operate a business.

3. Some non-financial measures are drivers of
financial outcome measures which give managers
more control to take corrective actions quickly.
      (Example: controls in jet cockpit for pilot)

Arriffin              KPI management                 53
Reasons for PMS

4. Too many measures, such as hundreds
  of possible cost accounting index
  measures, can confuse and distract an
  executive from focusing on important
  strategic priorities. The balanced
  scorecard disciplines an executive to
  focus on several important measures that
  drive the strategy.

Arriffin         KPI management              54
Key Result Areas
           1. There are no more than five strategic themes.

           2. Strategic themes are realistic and achievable within the
              organization
           3. Themes support and connect with strategic goals.

           4. Themes convey a positive impact upon the organization.

           5. Themes place focus and direction on what is important.

           6. Each theme is distinct and different.

           8. Themes are strategic in scope and not tactical day to day.

           9. Themes are consistent with the mission and vision of the
               organization.
           10. Themes have an impact on the financial objectives of the
               organization.

Arriffin                              KPI management                       56
Key Result Areas Guidelines
    s      Those 4 to 6 major areas wherein performance is
           essential during the coming year.
    s      Include both financial and non-financial areas.
    s      Will not cover the entire organization—will
           identify the critical few areas where priority
           efforts should be directed.
    s      Most will require cross-functional effort.
    s      Each will be limited, generally, to 2 or 3 words
           and will not be measurable as stated, but will
           contain factors that could be measurable.
Arriffin                        KPI management                57
4 key result areas
     Financial               Customer ->
•    ROI                    • Quality
•    EVA
•    Revenue
                            • Service
•    Earnings               • Pricing
•    Capital                • Time
•    Cash Flow              • Image
                            • Relations



Arriffin               KPI management      58
Key Result Areas
•    Internal Processes ->
•    Production              Learning ->
•    Delivery
                             Employee
•    Marketing
•    Operations              HR Capital
•                            Knowledge        LEARNING
     Quality Control
•    Service Dept            Technology
•    R&D
                             Best Practices
•
                             Intangibles
•


Arriffin                KPI management               59
The Benefits of KPIs
 •         More clearly defined objectives
 •         Better quality of services rendered
 •         Objective evaluation of performance.
 •         Strategies clearly communicated to
           all levels within the organisation.
 •         Performance improvement strategies
           identified.
Arriffin               KPI management       61
Some example of KPIs

            Under the heading of the 4
                  perspectives



Arriffin             KPI management      62
KPIs in a typical private firms
    Customer Perspective: KPI or measures include:

             1.   % of revenue from new customers
             2.   Customer retention rate
             3.   Market share

   Financial Perspective: KPI or measures include:
             •    Profit ÷ revenue
             •    Revenue ÷ total cost
             •    ROI and/or ROA

Arriffin                  KPI management             63
Relating to the Balanced Scorecard (typical private
                           firms)
           Internal Business Perspective: KPI or
           measures include:
                            1.   Inventory turnover
                            2.   On-time delivery
                            3.   Production yield

            Learning and Innovation Perspective: KPI or
            measures include:
       1.     % of staffs who have not been trained for the past 12 months
       2.     % of revenue from new products
       3.     Product mix
Arriffin                            KPI management                           64
Types of Measurements or KPIs

     Measure Type                        Definition                                  Example
                             Intermediate outcomes that predicts or
            Leading                                                            Employee turnover rate
                              drive bottom-line performance results

                           Bottom-line performance results resulting
            Lagging                                                          Employee satisfaction rating
                                      from actions taken

                          Amount of Investments, assets, equipment,
              Input                                                               Number of cashiers
                             labor hours, or budget dollars used
                           Units of a product or service rendered - a
             Output                                                      Number of Value Meal orders fulfilled
                                        measure of yield

                            Resulting effect (benefit) of the use or
            Outcome                                                          Customer satisfaction rating
                                   application of an output

       Objective /           Empirical indicators of performance                      Wait time
       Quantitative
           Subjective /      Perceptions and evaluations of major       Customer complaints received as a % of
           Qualitative           customers and stakeholders                    total customers served
Arriffin                                       KPI management                                                    65
Define the elements of the program or project in a table.
                                                                        WHAT and WHY
                        - HOW -                WHO                                    Outcomes
 Resources/
 Inputs           Activities    Outputs      Customers     Short-term                Intermediate           Long-term
                                              Reached      (Changes in Attitude)   (Changes in Behavior)   (Changes in Condition)




                                                                                          Program
                                                                                          outcomes
                                                                                          related to
                                                                                          factor(s)




Arriffin External Influences:             KPI management                                                                 66
Comprehensive Model for Diagnosing Organization
 A. ORGANIZATIONAL LEVEL
       Inputs                   Design Components                    Outputs
                                          Strategy
   - General
                             Structure                 Culture      Organization
   Environment
                                                                    Effectiveness
   - Industry
   Structure                    Human                 Technology
                                Resources


  B. GROUP LEVEL
       Inputs                   Design Components                    Outputs
                                      Goal Clarity
                                                                    Team
                              Task                    Group
   - Organization                                                   Effectiveness
                          Structure                   Functioning
   Design                                                           e.g., quality of
                             Group                Group             work life,
                         Composition              Norms             performance


  C. INDIVIDUAL LEVEL
        Inputs                  Design Components                    Outputs
                                      Skill Variety                 Individual
 - Organization                                                     Effectiveness
 Design                 Task Identity             Autonomy
                                                                    e.g., job
 - Group Design
 - Personal                                                         satisfaction,
 Characteristics                 Task             Feedback          personal
                         Significance             about Results     development
Types of Intervention

                        Human Process
                         Intervention

                          Structural
                         Intervention
   Types of
 Intervention         Human Resource
                   Management Intervention

                           Strategic
                         Intervention
Intervention
Characteristics:


                   This involves the extent to which intervention
  Goal Specifity   goals are specific rather than broad.




                   This involves the degree to which the
Programmability
                   changes can be programmed or the extent to
                   which the different intervention characteristics
                   can be specified early in advance to enable
                   socialization, commitment, and reward
                   allocation.
Intervention
Characteristics:


                   This concerns the extent to which the change
   Level of
                   target is the total organization, rather than a
 Change Target
                   department or small work group.



                   This refers to the degree to which there is an
   Internal
                   internal support system to guide the change
   Support
                   process.
Intervention
Characteristics:


                   This concerns the presence of a powerful
  Sponsorship
                   sponsor who can initiate, allocate, and
                   legitimize resources for the intervention.
The Strategic Map

           Linking the 4 perspectives




Arriffin            KPI management      73
TRANSLATE THE STRATEGY TO
           OPERATIONAL TERMS

                                    The Strategy


                                        Financial Perspective
 Measurement is the
                                         "If we succeed, how will
  language that gives                         we look to our
                                              shareholders?”
  clarity to vague
  concepts.                                       Customer Perspective
                                                    "To achieve my vision,
                                                    how must I look to my
                                                         customers?”
 Measurement is used to
  communicate, not to                                          Internal Perspective

  control.                                                          "To satisfy my
                                                                 customers, at which
                                                               processes must I excel?”

 Strategy can be                                                       Organization Learning
                                                                         "To achieve my vision,
      described as a series of                                          how must my organization
      cause and effect                                                    learn and improve?”
Arriffin
      relationships              KPI management                                              74
Basic Scorecard Terminology
                     (Southwest Airlines Example)
            Strategy Map


       Strategic Theme:                          Objectives:      Measures:           Targets:       Initiatives:
      Operating Efficiency                         What the      How success         The level of    Key action
                 Profits and                      strategy is      or failure       performance       programs
Financial          RONA
                                                   trying to    (performance)         or rate of     required to
     Grow                                          achieve          against         improvement        achieve
                               Fewer planes
    Revenues                                                     objectives is         needed          targets
                  Attract &                                       monitored
Customer         Retain More
                 Customers

           On-time        Lowest
           Service         prices


Internal                                         Objectives        Measures            Targets        Initiatives
               Fast ground                                       • On Ground Time     • 30 Minutes   • Cycle time
                turnaround
                                              • Fast ground
                                               turnaround        • On-Time            • 90%           optimization
                                                                  Departure
Learning

               Ground crew
                alignment


 Arriffin                                            KPI management                                          75
Strategy Map: Capture a Cause Effect
   Relationship from the Bottom Up
 Stakeholder




                                                                         More rapid and
                                       Improved Returns on
                                                                       accessible services
                                           Investments
 Internal Process




                       Economic             Reduce Re-Activities            Establish Web Based
                     Model Process             thru ABC/M                       Self Services
& Growth
Learning




                          Expand Global                   Leadership                          Knowledge
                          Facility Reach                 Development                         Management
       Investments




                          Facilities and                                        IT Infrastructure
                          Fixed Assets               Human Capital


Arriffin                                              KPI management                                      76
Pitfall in implementing KPIs

                Some of them are ......




Arriffin               KPI management     78
Some pitfalls in installing KPIs
• Goals and Objectives not clearly defined
• Wrong Key Result Areas identified to
  achieve the goals set.
• KPIs used are not suitable for proper
  performance evaluation
• Performance targets are not achieveable
  and not integrated with that of the
  organisation.
Arriffin          KPI management             79
Organizational benefits of
           performance management
   • Common approach to setting goals and
     reviewing performance & development
   • Aligning individual plans with organizational
     goals

   • Ongoing dialogue between employees and
     supervisors on performance & development

   • Links to corporate learning & development,
     career & succession planning, rewards &
     recognition
Arriffin               KPI management                80
Integrated performance management
           framework - elements & linkages
                            Gov’t Strategic Plan,
                          Ministry Plan, Branch Plan



                      Individual           Start of year
                     Performance
                     Management
                                              Plan
 Review                                   • Goal Setting                         Corporate
Outcomes                                                                        Opportunities

•Recognition
                                 Review                                        •Career Plan
mechanisms
 (e.g.informal and             • Results                   Focus               •High Potential
formal rewards and          • Feedback to            • Progress and            •Succession Plan
    recognition,
development, base             develop new               realignment            •Learning Needs
    pay, pay for
                        En        plan                                     g    & Courses
   performance            do                                            oin
                            fy                                       ng
Arriffin                         ea        KPI management          O                      81
                                      r
                                          Competencies
PMS in summary
  •    Define performance objectives
  •    Establish Key Result Areas
  •    Key Performance Indicators
  •    Performance Targets and Standards
  •    Performance Record Keeping
  •    Variance or gap analysis
  •    Strategic Interventions

Arriffin             KPI management        82
400 INTERNAL PROCESS
INPUT       PROCESS           OUTPUT     OUTCOME

Material    variances
Labour
Overhead    Efficiency        Quantity   Average
            ratios            produced   cost per
                                         transaction


Research    Productivity      Value      ROI
dev         ratios            produced
expense


Inventory   Average                      Average
turnover    lead time                    Prodn cost


            Waste Reduction
                                                  84
900 HRM
INPUT        PROCESS           OUTPUT           OUTCOME

Incentives   variances         Turnover ratio


Hours        Efficiency        No               Profit per
             ratios            produced         employee


Training     Productivity      Value            ROI
             ratios            produced


Salary       Average           Turnover         Revenue per
             lead time                          employee


Skill        Waste Reduction   Employee         Value added per
competenc                      productivity     employee
y
                                                              85
500 MARKETING
INPUT               PROCESS             OUTPUT            OUTCOME

Material            Response rate       No of customers
Labour              Marketing costs % Sales volume
Overhead            Efficiency ratios   Customers
                                        Profitability


Research            Productivity        Product           ROA marketing
dev                 ratios              profitability
expense
                    Average cost per    Customer          Return on Sales
                    transaction         acquisition
Inventory turnover Average lead time Customer
                                     retention



Price rel to comp   Waste Reduction     Revenue growth                      86
400 INTERNAL PROCESS
INPUT       PROCESS           OUTPUT     OUTCOME

Material    variances
Labour
Overhead    Efficiency        Quantity   Average
            ratios            produced   cost per
                                         transaction


Research    Productivity      Value      ROI
dev         ratios            produced
expense


Inventory   Average                      Average
turnover    lead time                    Prodn cost


            Waste Reduction
                                                  87
Arriffin   KPI management   88
PERFORMANCE CYCLE

                                          Business
                                          objectives     Critical
                                                         Success
                         Change
                                                         Factors




           Performance                                          Key Result
             Actuals                                              Areas



                          Strategic                     Performance
                         initiatives                     Indicators

                                          Performance
                                           standards
                                                                             89
Arriffin                               KPI management
Training Need Analysis (TNA)




                    TNA is a tool to
Existing            identify the gap         Required
• Skills                                     • Skills
• Knowledge                                  • Knowledge
• Attitudes                                  • Attitudes




                                                           90
Strategy Map Framework
                                               Long-term Shareholder
                                                       Value


                             Cost Efficiency                            Revenue Growth
Financial



                   Price           Quality       Service               Availability              Brand


Customer


                                                                                           Regulatory
                    Operations           Customer              Innovation
                                                                                           and Social
                   Management           Management              Processes
                                                                                           Processes
                    Processes            Processes

Internal Process

Learning & Growth

                   Human Capital                Organization Capital                  Information Capital
Strategic Objectives in Financial

                        Long-term
                     Shareholder Value



   Cost Efficiency                       Revenue Growth

 Improve Cost Structure                  Expand Revenue
                                          Opportunities
Increase Asset Utilization         Enhance Customer Value
Strategic Objectives in Customer

 Customer Retention          Customer Profitability


 Customer Satisfaction           Market Share


              Customer Acquisition




 Price   Quality   Service     Availability   Brand
Strategic Objectives in Internal Process

  Operations          Customer                            Regulatory
                                         Innovation
 Management          Management                           and Social
                                         Processes
  Processes           Processes                           Processes


  Processes that     Processes that     Processes that    Processes that
   produce and      enhance customer      create new         improve
 deliver products        value           products and    communities and
   and services                            services      the environment


• Supply            • Selection        • New Ideas       • Environment
• Production        • Acquisition      • R&D Portfolio   • Safety &
• Distribution      • Retention        • Design/         Health
                    • Growth           Develop           • Employment
                                       • Launch          • Community
Strategic Objectives in
                Learning & Growth
                   Organization     Information
Human Capital
                     Capital           Capital



• Skills         • Culture        • Systems
• Knowledge      • Leadership     • Database
• Attitude       • Organization   • Networks
                 Development
Strategy Map Template
                                                  Enhance Long-term
                                                  Shareholder Value


                                  Improve
                                                                      Increase Revenue Growth
                                Cost Efficiency
Financial


                     Build High                      Expand                      Enhance
               Performance Products                Market Share                 Brand Image

Customer



                      Achieve             Drive Demand                            Implement Good
                                                              Manage Dramatic
                     Operational        through Customer                           Environmental
                                                              Growth through
                     Excellence              Relation                                  Policy
                                                                Innovation
                                           Management
Internal Process

Learning & Growth
                   Develop Strategic                Build Learning          Expand Capabilities with
                    Competencies                        Culture                  Technology
Action Plan Format
Objective:
Action                                                            Feedback
             Accountability       Schedule         Resources      Mechanism
Steps
             Primary   Others   Start   Complete   Money   Time
THANK YOU FOR YOUR
               ATTENTION
              Questions please



Arriffin          KPI management   100

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kpi for the malaysian government

  • 1. Introducing the KPIs Hj Arriffin Mansor Arriffin KPI management 1
  • 2. Contents of this talk 1. What is KPI 2. Key Result Areas or critical success factors 3. How to set performance targets 4. Bench markings to the best 5. Performance measuring system. 6. How could KPI improve performance; 7. Conduct Gap Analysis 8. Application of KPI system 9. Pitfalls in KPI implementation; Arriffin KPI management 2
  • 3. Contents - continue 1. Performance improvement framework 2. Programs / initiatives 3. Performance Framework 4. Improvement cycle 5. Business Strategies in metrics 6. Departmental key performance indicators 7. Input output performance analysis 8. Performance management dashboards 9. Action plan
  • 4.
  • 5. What is Diagnosis? • Diagnosis is the process of understanding how the organization is currently functioning, and it provides information necessary to design change interventions. • It is also a collaborative process between organization members and the OD (organization development) consultant to collect pertinent information, analyze it, and draw conclusions for action planning and intervention.
  • 6. Before Training • Build transfer of training into supervisory Manager performance standards • Collect baseline performance data • Involve supervisors and trainees in needs analysis process • Involve trainees in program planning • Brief trainees on the importance of the training (course objective, content, process, and application on the job) • Review instructional content and materials • Plan to participate in training sessions • Encourage trainees attendance at all sessions
  • 7. Before Training • Align the training plan with the organization's Trainer strategic plan • Systematically design instruction • Provide proactive opportunities • Design a peer coaching component for the program and its follow-up activities
  • 8. Before Training • Provide input into program planning Trainee • Actively explore training options • Participate in advance activities
  • 9. During Training • Prevent interruptions Manager • Transfer work assignment to others • Monitor attendance and attention to training • Recognize trainee participation • Participate in transfer action planning • Review information on employee in training • Plan assessment of transfer of new skills to the job
  • 10. During Training • Develop application-oriented objectives Trainer • Answer the “WIIFM” question • Manage the unlearning process • Provide realistic work-related tasks • Give individualized feedback • Provide job performance aid
  • 11. During Training • Maintain an ideas and application notebook Trainee • Participate actively • Form support groups • Plan for applications • Create behavioral contracts
  • 12. After Training • Plan trainees’ reentry Manager • Provide opportunities to practice new skills • Have trainees participate in transfer-related decisions • Reduce job pressures initially • Give positive reinforcement • Schedule trainee briefings for co-workers • Set mutual expectations for improvement • Arrange proactive (refresher) sessions • Provide and support the use of job aids
  • 13. After Training • Provide follow-up support Trainer • Conduct evaluation surveys and provide feedback • Develop and administer recognition system • Provide refresher/problem-solving sessions
  • 14. After Training • Practice self-management Trainee • Review training content and learned skills • Develop a mentoring relationship • Maintain contact with training ‘buddies’
  • 15. What is KPI? Stands for Key Performance Indicator Is a measure of efficiency or effectiveness Efficiency is a ratio of output divided by input which are generally financial in nature However there are also non-financial KPIs Arriffin KPI management 15
  • 16. Key Performance Indicators • KPI was introduced by Peter Drucker when he envisaged “management by objectives” a situation where defining a clear objective is paramount in effective management. Arriffin KPI management 16
  • 17. What is a KPI system? • A framework consisting of processes, measures, and targets that are used to communicate, monitor and manage performance as well as align resources to achieve the objectives of the organisation " Arriffin KPI management 17
  • 18. diagnosis MONITORING BOARD Strategy Evaluation Change © Arriffin Mansor 2010 ACTION PLANS
  • 19. PERFORMANCE FRAMEWORK Diagnose Strategise Goal setting and Objectives Performance Targets / STRATEGIC MAPPINGS Standards and Key Result Areas Benchmarkings Key Performance Indicators Evaluate Change 19
  • 20. Arriffin KPI management 20
  • 21.
  • 22. Definition of performance management An umbrella term used to describe the methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.* Arriffin KPI management 22
  • 23. Another definition of PMS • It is a systematic, integrated management approach that links enterprise strategy to core processes and activities. By providing planning, budgeting, analysis and reporting capabilities, PMS allows the business to be "run by the numbers" and measurement to drive management decisions. Arriffin KPI management 23
  • 24. Objective of PMS • The objectives of an effective performance management system are to realize improved performance -- increased profitability, growth, competitiveness, quality and customer satisfaction, to name a few. Arriffin KPI management 24
  • 25. Components of PMS At minimum, the critical components of PMS include the following: 2. A set of well-defined, measurable, and published corporate performance objectives that act as the focal point for developing performance measures in functional areas within the company. 3. A set of standard metrics that are used to define and describe the relative contribution or influence that business functions within the organization have on the performance objectives. 4. The first two components provide a common framework for measurement, collaboration and cross- functional understanding of the effect of each area's performance on the overall company objectives, as well as the influence each organization has on the performance of other organizations within the enterprise. 5. The ability to predict outcomes based on the common framework for understanding and collectively managing performance -- from high-level objectives to operational activities. Arriffin KPI management 25
  • 26.
  • 27. The Star Tuesday May 17, 2005 Nor Mohamed wants GLCs to start implementing growth strategies SECOND Finance Minister Tan Sri Nor Mohamed Yakcop wants government-linked companies (GLCs) to start implementing growth strategies this year, saying that this is “the year of implementation for the GLCs”. Arriffin KPI management 27
  • 28. Establishing goals – (1) 1. Targets have been established for improving current levels of performance. 2. Targets are achievable, but they may require changes to existing processes. 3. Targets are quantifiable so that the target communicates if the expected performance was met. 4. Longterm Targets (3 to 5 years) stretch the organization towards its strategic goals. 5. Longterm Targets are established first before short term targets. 6. Financial related targets are established first before non financial targets. Arriffin KPI management 28
  • 29. Establish Goals and objectives Criteria for Define Goals Criteria Menu Defining Goals Marketplace Industry Trends Technology Competition Past Performance ___________ ___________ ___________ ___________ We will increase revenues by 40% over the Past Performance EXAMPLE -> next three years Arriffin KPI management 29
  • 30. SMART(ER) Objectives • Specific: clear, unambiguous, straightfordward, understandable • Measurable: can be related to quantified or qualitative performance measures • Achievable: Objective should be realistic and within known resources • Relevant: Linked to operational/service plan • Timebound: Building in target date & review dates • Extending Capabilities: Stretching team performance • Recognition: Acknowledgement of team achievement, reflection, learning Arriffin KPI management 30
  • 31. The Challenge… Improving Performance Turning Management (PM) Data Into Actionable Information Arriffin KPI management 31
  • 32. Strategic Focused Management Process Strategy Balanced Scorecard PMS Align organization to strategy Translate strategy into operating terms Mobilize change starting at the top Make strategy a continuous process Make strategy everyone's job Arriffin KPI management 32
  • 33. Key result areas • Drucker also introduced the concept of key result areas where minimum effort is directed and focus which would generate maximum impact to the objectives. • KRA has a strong causal relationship with the objectives. • Other ways of identifying KRA is sensitivity analysis, pareto and root cause analysis Arriffin KPI management 33
  • 34. What is a Key Result Areas? – (2)  A key area where satisfactory performance is required for the organization to achieve its goals  A means of identifying the tasks and requirements needed for success  At the lowest level, KRAs become concrete requirements  A means to prioritize requirements Arriffin KPI management 34
  • 35. Michael Porter’s Business-Level Strategy Cost Differentiation Leadership Focus Arriffin KPI management 35
  • 36. PMS ensures that performance is measured at all levels? Organizational Objectives Divisional Objectives Departmental Objectives Individual Objectives Arriffin KPI management 36
  • 37. More Difficult Specific Goals Goals Lead Lead to To Higher Better Results Performance Does PMS Work? Support from Top Participation Management Is Key Is Critical Arriffin KPI management 37
  • 38. Measuring Performance Input output ratio analysis Arriffin KPI management 38
  • 39. Performance Analysis • Take input output data of before and after performance. • Using the ratio O/I calculate targeted KPI and compare against actual KPI. • Eliminate the impact of extra input. • Calculate the pure performance output as a result of efficiency or competency. Arriffin KPI management 39
  • 40. Measures Measuring overall MARKETING DEPARTMENT Return on Sales Sales Turnover Return on assets Standard Standard Standard Assets Sales Assets Performed Performed Performed Profits Sales Profits Arriffin KPI management 40
  • 41. Efficiency indicator PROFIT MARGIN 10% ORIGINAL KPI LINE p SALES 12% IMPROVED KPI LINE 10 Input Change 4 12000 14400 16800 Profit RM Efficiency Volume impact Impact TOTAL IMPROVEMENT = Efficiency + volume improvement 4800 = 2400 2400 4800 = 16800 12000 © Arriffin Mansor Arriffin KPI management 41
  • 42. Types of KPIs • Lead and lag • Input output process and outcomes • Drivers and enablers Arriffin KPI management 42
  • 43. Balanced Scorecard Chain of Causality of Performance Measures Drivers Moderators Outcomes (lead indicators) (lag indicators) Cycle Times Customer ROA Satisfaction EVA • Customer order fulfillment EPS • Product assembly cycle time Manufacturing Quality Unit Costs • Defect rate • Scrap rate Arriffin KPI management 43
  • 44. Internal Business Process Measures (Source: Kaplan & Norton, 1996) Model of Internal Business Process Logistics Customer Innovation Operations Post-Sale Customer Need Process Process Service Need Satisfied Identified Process Identify Create Build Deliver Service to Market Product Product Product the Customer • Development • Quality • Delivery • Service Relevant Cycle Time Defects Cycle Satisfaction Metrics: Time • MCE Arriffin KPI management 44
  • 45. Corporate Goals & key variables •Pricing 5% •Costs Profit 10% 20% •Expenses Margin Return on Return on •Product Mix Assets Equity (leverage) •Inventory & Receivable Asset Management Turnover •Fixed Asset 2.0 Management Arriffin KPI management 45
  • 46. Performance Network Profit/Capital Employed Profit/ Revenue Revenue from Sales/ from Sales × Capital Employed Revenue from Labor Cost/ Labor Cost/ Sales/ Total Cost ÷ Total Cost × Capital Employed Arriffin KPI management 46
  • 47.
  • 48. What is so special about the PMS? Arriffin KPI management 48
  • 49. What so special about PMS • It is personal yet organisational • Performance goal is objective yet collective • Leadership, teamwork and synergy • Learning and coaching take place at all times • Continous improvement through innovation and best practises Arriffin KPI management 49
  • 50. Balanced Scorecard Perspectives New Focus: Balanced measurement of 4 equally important criterias or dimensions CUSTOMER EMPLOYEE & GROWING RELATIONSHIP BIGGER & STRONGER / FINANCIAL ACHIEVE GOP INTERNAL PROCESSES Arriffin KPI management 50
  • 51. THE benefits of PMS? • Improve your organisation / structure • Improve communication (Internal / External) • Link strategy towards operation and towards measured performance • Focus on results • Strategies are integrated into total management • New approach to measure performance • Diverse / complete measurement with benefits for all stake holders • Use the PMS as a team-building tool Arriffin KPI management 51
  • 52. Reasons for PMS 1. Focus on traditional financial accounting measures such as ROA, ROE, EPS gives misleading signals to executives with regards to quality and innovation. It is important to look at the means used to achieve outcomes such as ROA, not just focus on the outcomes themselves. Arriffin KPI management 52
  • 53. Reasons for PMS 2. Executive performance needs to be judged on success at meeting a mix of both financial and non-financial measures to effectively operate a business. 3. Some non-financial measures are drivers of financial outcome measures which give managers more control to take corrective actions quickly. (Example: controls in jet cockpit for pilot) Arriffin KPI management 53
  • 54. Reasons for PMS 4. Too many measures, such as hundreds of possible cost accounting index measures, can confuse and distract an executive from focusing on important strategic priorities. The balanced scorecard disciplines an executive to focus on several important measures that drive the strategy. Arriffin KPI management 54
  • 55.
  • 56. Key Result Areas 1. There are no more than five strategic themes. 2. Strategic themes are realistic and achievable within the organization 3. Themes support and connect with strategic goals. 4. Themes convey a positive impact upon the organization. 5. Themes place focus and direction on what is important. 6. Each theme is distinct and different. 8. Themes are strategic in scope and not tactical day to day. 9. Themes are consistent with the mission and vision of the organization. 10. Themes have an impact on the financial objectives of the organization. Arriffin KPI management 56
  • 57. Key Result Areas Guidelines s Those 4 to 6 major areas wherein performance is essential during the coming year. s Include both financial and non-financial areas. s Will not cover the entire organization—will identify the critical few areas where priority efforts should be directed. s Most will require cross-functional effort. s Each will be limited, generally, to 2 or 3 words and will not be measurable as stated, but will contain factors that could be measurable. Arriffin KPI management 57
  • 58. 4 key result areas Financial Customer -> • ROI • Quality • EVA • Revenue • Service • Earnings • Pricing • Capital • Time • Cash Flow • Image • Relations Arriffin KPI management 58
  • 59. Key Result Areas • Internal Processes -> • Production Learning -> • Delivery Employee • Marketing • Operations HR Capital • Knowledge LEARNING Quality Control • Service Dept Technology • R&D Best Practices • Intangibles • Arriffin KPI management 59
  • 60.
  • 61. The Benefits of KPIs • More clearly defined objectives • Better quality of services rendered • Objective evaluation of performance. • Strategies clearly communicated to all levels within the organisation. • Performance improvement strategies identified. Arriffin KPI management 61
  • 62. Some example of KPIs Under the heading of the 4 perspectives Arriffin KPI management 62
  • 63. KPIs in a typical private firms Customer Perspective: KPI or measures include: 1. % of revenue from new customers 2. Customer retention rate 3. Market share Financial Perspective: KPI or measures include: • Profit ÷ revenue • Revenue ÷ total cost • ROI and/or ROA Arriffin KPI management 63
  • 64. Relating to the Balanced Scorecard (typical private firms) Internal Business Perspective: KPI or measures include: 1. Inventory turnover 2. On-time delivery 3. Production yield Learning and Innovation Perspective: KPI or measures include: 1. % of staffs who have not been trained for the past 12 months 2. % of revenue from new products 3. Product mix Arriffin KPI management 64
  • 65. Types of Measurements or KPIs Measure Type Definition Example Intermediate outcomes that predicts or Leading Employee turnover rate drive bottom-line performance results Bottom-line performance results resulting Lagging Employee satisfaction rating from actions taken Amount of Investments, assets, equipment, Input Number of cashiers labor hours, or budget dollars used Units of a product or service rendered - a Output Number of Value Meal orders fulfilled measure of yield Resulting effect (benefit) of the use or Outcome Customer satisfaction rating application of an output Objective / Empirical indicators of performance Wait time Quantitative Subjective / Perceptions and evaluations of major Customer complaints received as a % of Qualitative customers and stakeholders total customers served Arriffin KPI management 65
  • 66. Define the elements of the program or project in a table. WHAT and WHY - HOW - WHO Outcomes Resources/ Inputs Activities Outputs Customers Short-term Intermediate Long-term Reached (Changes in Attitude) (Changes in Behavior) (Changes in Condition) Program outcomes related to factor(s) Arriffin External Influences: KPI management 66
  • 67.
  • 68. Comprehensive Model for Diagnosing Organization A. ORGANIZATIONAL LEVEL Inputs Design Components Outputs Strategy - General Structure Culture Organization Environment Effectiveness - Industry Structure Human Technology Resources B. GROUP LEVEL Inputs Design Components Outputs Goal Clarity Team Task Group - Organization Effectiveness Structure Functioning Design e.g., quality of Group Group work life, Composition Norms performance C. INDIVIDUAL LEVEL Inputs Design Components Outputs Skill Variety Individual - Organization Effectiveness Design Task Identity Autonomy e.g., job - Group Design - Personal satisfaction, Characteristics Task Feedback personal Significance about Results development
  • 69. Types of Intervention Human Process Intervention Structural Intervention Types of Intervention Human Resource Management Intervention Strategic Intervention
  • 70. Intervention Characteristics: This involves the extent to which intervention Goal Specifity goals are specific rather than broad. This involves the degree to which the Programmability changes can be programmed or the extent to which the different intervention characteristics can be specified early in advance to enable socialization, commitment, and reward allocation.
  • 71. Intervention Characteristics: This concerns the extent to which the change Level of target is the total organization, rather than a Change Target department or small work group. This refers to the degree to which there is an Internal internal support system to guide the change Support process.
  • 72. Intervention Characteristics: This concerns the presence of a powerful Sponsorship sponsor who can initiate, allocate, and legitimize resources for the intervention.
  • 73. The Strategic Map Linking the 4 perspectives Arriffin KPI management 73
  • 74. TRANSLATE THE STRATEGY TO OPERATIONAL TERMS The Strategy Financial Perspective  Measurement is the "If we succeed, how will language that gives we look to our shareholders?” clarity to vague concepts. Customer Perspective "To achieve my vision, how must I look to my customers?”  Measurement is used to communicate, not to Internal Perspective control. "To satisfy my customers, at which processes must I excel?”  Strategy can be Organization Learning "To achieve my vision, described as a series of how must my organization cause and effect learn and improve?” Arriffin relationships KPI management 74
  • 75. Basic Scorecard Terminology (Southwest Airlines Example) Strategy Map Strategic Theme: Objectives: Measures: Targets: Initiatives: Operating Efficiency What the How success The level of Key action Profits and strategy is or failure performance programs Financial RONA trying to (performance) or rate of required to Grow achieve against improvement achieve Fewer planes Revenues objectives is needed targets Attract & monitored Customer Retain More Customers On-time Lowest Service prices Internal Objectives Measures Targets Initiatives Fast ground • On Ground Time • 30 Minutes • Cycle time turnaround • Fast ground turnaround • On-Time • 90% optimization Departure Learning Ground crew alignment Arriffin KPI management 75
  • 76. Strategy Map: Capture a Cause Effect Relationship from the Bottom Up Stakeholder More rapid and Improved Returns on accessible services Investments Internal Process Economic Reduce Re-Activities Establish Web Based Model Process thru ABC/M Self Services & Growth Learning Expand Global Leadership Knowledge Facility Reach Development Management Investments Facilities and IT Infrastructure Fixed Assets Human Capital Arriffin KPI management 76
  • 77.
  • 78. Pitfall in implementing KPIs Some of them are ...... Arriffin KPI management 78
  • 79. Some pitfalls in installing KPIs • Goals and Objectives not clearly defined • Wrong Key Result Areas identified to achieve the goals set. • KPIs used are not suitable for proper performance evaluation • Performance targets are not achieveable and not integrated with that of the organisation. Arriffin KPI management 79
  • 80. Organizational benefits of performance management • Common approach to setting goals and reviewing performance & development • Aligning individual plans with organizational goals • Ongoing dialogue between employees and supervisors on performance & development • Links to corporate learning & development, career & succession planning, rewards & recognition Arriffin KPI management 80
  • 81. Integrated performance management framework - elements & linkages Gov’t Strategic Plan, Ministry Plan, Branch Plan Individual Start of year Performance Management Plan Review • Goal Setting Corporate Outcomes Opportunities •Recognition Review •Career Plan mechanisms (e.g.informal and • Results Focus •High Potential formal rewards and • Feedback to • Progress and •Succession Plan recognition, development, base develop new realignment •Learning Needs pay, pay for En plan g & Courses performance do oin fy ng Arriffin ea KPI management O 81 r Competencies
  • 82. PMS in summary • Define performance objectives • Establish Key Result Areas • Key Performance Indicators • Performance Targets and Standards • Performance Record Keeping • Variance or gap analysis • Strategic Interventions Arriffin KPI management 82
  • 83.
  • 84. 400 INTERNAL PROCESS INPUT PROCESS OUTPUT OUTCOME Material variances Labour Overhead Efficiency Quantity Average ratios produced cost per transaction Research Productivity Value ROI dev ratios produced expense Inventory Average Average turnover lead time Prodn cost Waste Reduction 84
  • 85. 900 HRM INPUT PROCESS OUTPUT OUTCOME Incentives variances Turnover ratio Hours Efficiency No Profit per ratios produced employee Training Productivity Value ROI ratios produced Salary Average Turnover Revenue per lead time employee Skill Waste Reduction Employee Value added per competenc productivity employee y 85
  • 86. 500 MARKETING INPUT PROCESS OUTPUT OUTCOME Material Response rate No of customers Labour Marketing costs % Sales volume Overhead Efficiency ratios Customers Profitability Research Productivity Product ROA marketing dev ratios profitability expense Average cost per Customer Return on Sales transaction acquisition Inventory turnover Average lead time Customer retention Price rel to comp Waste Reduction Revenue growth 86
  • 87. 400 INTERNAL PROCESS INPUT PROCESS OUTPUT OUTCOME Material variances Labour Overhead Efficiency Quantity Average ratios produced cost per transaction Research Productivity Value ROI dev ratios produced expense Inventory Average Average turnover lead time Prodn cost Waste Reduction 87
  • 88. Arriffin KPI management 88
  • 89. PERFORMANCE CYCLE Business objectives Critical Success Change Factors Performance Key Result Actuals Areas Strategic Performance initiatives Indicators Performance standards 89 Arriffin KPI management
  • 90. Training Need Analysis (TNA) TNA is a tool to Existing identify the gap Required • Skills • Skills • Knowledge • Knowledge • Attitudes • Attitudes 90
  • 91.
  • 92. Strategy Map Framework Long-term Shareholder Value Cost Efficiency Revenue Growth Financial Price Quality Service Availability Brand Customer Regulatory Operations Customer Innovation and Social Management Management Processes Processes Processes Processes Internal Process Learning & Growth Human Capital Organization Capital Information Capital
  • 93. Strategic Objectives in Financial Long-term Shareholder Value Cost Efficiency Revenue Growth Improve Cost Structure Expand Revenue Opportunities Increase Asset Utilization Enhance Customer Value
  • 94. Strategic Objectives in Customer Customer Retention Customer Profitability Customer Satisfaction Market Share Customer Acquisition Price Quality Service Availability Brand
  • 95. Strategic Objectives in Internal Process Operations Customer Regulatory Innovation Management Management and Social Processes Processes Processes Processes Processes that Processes that Processes that Processes that produce and enhance customer create new improve deliver products value products and communities and and services services the environment • Supply • Selection • New Ideas • Environment • Production • Acquisition • R&D Portfolio • Safety & • Distribution • Retention • Design/ Health • Growth Develop • Employment • Launch • Community
  • 96. Strategic Objectives in Learning & Growth Organization Information Human Capital Capital Capital • Skills • Culture • Systems • Knowledge • Leadership • Database • Attitude • Organization • Networks Development
  • 97. Strategy Map Template Enhance Long-term Shareholder Value Improve Increase Revenue Growth Cost Efficiency Financial Build High Expand Enhance Performance Products Market Share Brand Image Customer Achieve Drive Demand Implement Good Manage Dramatic Operational through Customer Environmental Growth through Excellence Relation Policy Innovation Management Internal Process Learning & Growth Develop Strategic Build Learning Expand Capabilities with Competencies Culture Technology
  • 98. Action Plan Format Objective: Action Feedback Accountability Schedule Resources Mechanism Steps Primary Others Start Complete Money Time
  • 99.
  • 100. THANK YOU FOR YOUR ATTENTION Questions please Arriffin KPI management 100

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