Performance Heirachy Flashcards
what makes up performance MGT systems
CSF - KPI - Reward system
CSF- things you need to be good at to achieve your chosen strategy, are they in line with strategy?
KPI -How do we know CSF is been delivered
R.S - How we incentivise staff to achieve KPI’s
is the PMS consistent with strategy/mission/objectives and is it fit for purpose
what are CSF’S?
They are things a business must do to be successful, what is critical to the success of strategy
You must consider strategy, mission and environment, CSF’s must be aligned to the business and its environment.
where do CSF’s come from? CFIE
A business needs to focus on
Current situation - cost control, cash, margins
Future situation - Innovation, research, new industry development
Internal - Internal departmental analysis, finance, manufacturing - endogenous
External - factors outside our control but needs recognising and a response - exogenous
Exam Tips - check where CSF is out of line with mission strategy
when the CSF is missing any measurement of anything on strategy
What are KPI’S and what makes a good KPI system
The next step in performance hierarchy is to design suitable KPI’s for each CSF
- It needs to be specific - narrow down on area of performance
- it needs to be measurable - put a number on it where possible
- it needs to be achievable
- it should ideally be a driver of performance not merely a measure -
look to the causative factors - A single KPI in one area will rarely be enough and it can be
manipulated - consider if KPI should be absolute or a % measure
- Does the information system exist- can we get the data we need
- it needs to be within control and responsibility of an individual
- It needs to be in line with preceding inputs in performance
hierarchy (strategy and CSF) - They should be SMART
How to evaluate existing KPI’s
KPI problems include
- CSF is missing a KPI to measure
- critical area has only one KPI
- KPI provided is inadequate
what is benchmarking and types
benchmarking aims to consider best practice and compare what we do with others. The hope is we can identify areas of potential improvement
Internal benchmarking - department v department, no external comparison and depts are different e.g. sales v finance
competitor benchmarking - difficult get information on internal performance, only public info always tend to be vague. competitor business may be slightly different
Similar business - accounting firm v solicitor may be good way of benchmarking. benchmarking is about learning from each other not copying.
what is the benchmarking process
OK PMC DI
- Set objectives -
- Identify KPI’s -
- Select partner - someone to benchmark against, this has to be
similar to current operations as there may be variances relating to
benchmarking not actual performance - measure KPI’s
- consider Results
- Decide on actions
- Implement
Ganymede 0612, Morlich 1222, chicory past paper1217
problems with benchmarking
any differences undermine the partners
- strategy - cost leader v differentiator
- Location
- data period coverage
- product ranges and markets
- accounting treatment
what gets measured gets done
The basic idea is be setting KPI’s more people are more likely to focus on a task to achieve KPI as set.
Factors to consider
- Trust in recording system
- incentive available to achieve the target
- is the action in a controllable area
- are staff motivated
- are there consequences of failure - carrot and stick
- are there conflicting measures - one KPI for another
- do staff understand the measure and are they aware of the measure?
Can you create and critique CSF’s and KPI’S
