Performance Management Systems

Question 1

Performance Measurement

Answer 1

Quantification of:
- input such as staff hrs
- O/P such as cost
- Level of activity of an event or process such as the number of calls answered per operator

Question 2

Why measure performance

Answer 2

Focus people’s attention on what is important to the company by linking key objectives to employees actions

Get business improvement: by setting the right achievable targets in key areas

Improve customer satisfaction: notice the difference in service delivery

Increase Productivity

Align operational performance with strategic objectives:

Question 3

More Reasons

Answer 3

Communication
By measuring something, the organisation is saying it is important- for communicating and implementing organisation strategy
By measuring everything, you are saying nothing is important
Measures inform employees of what they may be accountable for

Motivation
Creating a mindset that influences employee behaviour
It is important to have the right balance of measures

Control
Provide feedback so that action can be taken to keep processes in control
Ensure consistent performance across the entire ecosystem

Improvement
Powerful at driving improvement
Learn how to manage processes better
Linking measures with rewards or penalties

Question 4

What to measure

Answer 4

External Data:
Financial - Sales Turnover, total cost, value of stock, value of raw material
Non-financial: Training, staff satisfaction, turnover

Development/forward focus
Financial: market share, customer satisfaction, customer loyalty, retention rates
Non-financial: Equipment/staff availability, number of customers, delivery

Question 5

Supporting Infrastructure to Measure

Answer 5

Data acquisition: how the raw data is gathered
Data Collation: How is the data collated into a single dataset
Data Manipulation: How are the raw data assigned to meaningful categories
Data Analysis: How are patterns which exist in the sorted data set found
Data Interpretation: How are the implications of any identified patterns explained
Data Dissemination: How are the implications of any identified patterns visualised and disseminated

Question 6

Operations Performance Measures

Answer 6

Quality (being right):
Performance, conformance, serviceability, features, reliability, technical durability, technical durability. Aesthetics, perceived quality
Measuring quality: prevention cost, appraisal costs, failure costs (internal vs external failure)

Speed:
Quote generation, delivery speed, delivery frequency, production speed, new product development speed

Dependability (on time): how dependable the company is when it comes to the timely delivery of products to customers in accordance with planned prices and costs.
Schedule adherence, delivery performance, ability tp keep promises

Flexibility: ability to change
Material quality, output quality, new product, mix, changeover, modification, rerouting, volume

Cost (being productive)
Manufacturing, value-added, running cost, service, profit

Question 7

Success Maps

Answer 7

Key Objective:
Stakeholder WAN:
Organisation WAN: what do you want and need from the stakeholders

Strategies: what strategies are we going to pursue to satisfy these WAN?

Process: What processes do we need to put in place to enable us to achieve these strategies?

Capabilities: What capabilities do we require if we are to operate these processes?

Start objectives with a verb
Build down by asking how to achieve it
Verify up by asking why we need this

Question 8

Pitfalls of Performance Measurement Systems

Answer 8

Focus on what is important to measure what is important

Reduce bureaucracy

Don’t overcomplicate

Instead of immediately reacting to a red measure, reflect on the priority and importance of the measure