PART 3 MEASURING PROGRESS TOWARDS GOALS

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PART 3- MEASURING PROGRESS TOWARDS GOALS

• The measurement of Speed, Accuracy, Volume and
  Investment

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Introduction

• Performance measurement is the most neglected and
  yet critically important element of the
  management cycle.
• Now in section 3, we will do two things, we will
  learn how to measure progress, and we will learn
  how to motivate progress.
• Measuring progress is a scientific model of
  capturing change in performance areas that are
  desirable.

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CHAPTER 10, PERFORMANCE MEASUREMENT AND
PERFORMANCE MANAGEMENT

• Things could be worse, suppose your errors were
  counted and recorded every day like a baseball
  player

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Introduction to Chapter 10

• Figure 10.1, The Management Cycle

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LINKING PERFORMANCE MEASUREMENT TO STRATEGIC PLANS

• WHY IS MEASUREMENT NECESSARY?
• To show progress towards achieving strategic
  goals.
• Show evidence as to the performance gaps in areas
  where strategic outcomes are not being met
• Show evidence to let superior performance be
  recognized and rewarded.
• Show evidence to let poor performance be
  recognized and corrected.

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AN OVERVIEW OF PERFORMANCE MANAGEMENT

• Figure 10.2, levels of performance management

Strategic vision
Directors View
Management View
Core Strategies
FEEDBACK
Operations View
Action Plans
Satisfaction
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Figure 10.3, An Overview Of Performance
Measurement
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Building a Measurement System

• The first effort in performance measurement will
  be to develop measures of results and outcomes
• we can then translate the strategic goal into an
  operating goal,

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Building a Measurement System

• two principal dimensions.
• We need to measure activity
• Hour spent, materials consumed, overhead used.
• We need to measure results and outcomes.
• Things built, customers satisfied, money made

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• Figure 10.4,
• Input and Output Measures

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Figure 10.5, Example Output Measures
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Figure 10.6, Example Input Measures
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Two Kinds of Data

• Measures that come from observations of events
  are called Counting measures,
• Measures of opinion are called Judgement
  measures.

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Developing SAVI measures

• Regardless of whether you are developing input or
  results measures, and regardless of whether you
  are developing high level measures for directors
  or operating level measures..there is one
  framework for the development of the performance
  measures.

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Figure 10.7, Four Dimensions of Measurement
Do what you do at the right speed. Speed means
on time, not fast!
Speed
tm
Do what you do with accuracy. This is the quality
dimension of your work
Accuracy
Do what you do in the right volume. You need to
meet the needs of all of your customers.
Volume
Soundly manage investment in resources, in terms
of efficient and effective allocation of money,
assets and people.
Investment
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Four Dimensions of Measurement

• Speed
• Speed, an output measure, refers to the timing of
  the delivery of the product or service, not
  necessarily how fast..
• Accuracy
• Accuracy, an output measure, is the quality
  dimension of your results.
• Volume
• Volume, an output measure, refers to the quantity
  of goods and services provided.
• Investment
• Investment, an input measure, refers to the
  efficient utilization of total organizational
  resources to get the job done.

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The Bus Ride.

• Riders on a bus will be happy when the bus
  arrives on time S, it is clean and the driver is
  safe A, everyone at the bus stop is picked up V,
  and the fare is fair I. If any one of the
  dimensions is out of line, satisfaction declines.

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The Budget Process.

• Internal customers, senior management, will be
  happy when the deadline is met S, the budgets are
  accurate A, all divisions have prepared the
  budget V, and there was a minimum investment made
  I in preparing the budget because the process was
  simple.

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The Restaurant.

• Customers will be happy when the service is
  prompt S, (fast at the drive through, slow at the
  romantic restaurant), the food is good quality A,
  the portion was the right size V and the price
  was fair I.

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The Grocery Store.

• Customers are happy when the store is open at
  convenient times S, the goods are fresh A, there
  is enough selection of products V and prices are
  low I.

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The Car Dealership.

• Customers are happy when the model they want is
  available immediately S, it is clean on delivery
  A, it is reliable for the first five years V, and
  the price was fair I.

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Chapter Summary

• In order to effectively manage performance we
  need to have good measures of performance. To
  have good measures we need the commitment of the
  organization to make improving performance a high
  priority, and a safe thing to do.

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Good performance measures should be

• Measurable
• The data management system must be able to locate
  and report performance information in an accurate
  and timely fashion.
• Observable
• There is a cause and effect relationship between
  data reported and desired performance such that
  when the data shows improvement, performance has
  actually improved.
• Reliable
• The goal and its measurement system should offer
  consistent and uniform reporting.
• Controllable
• The variables that cause change in a performance
  area must be in the manager's control.
• Active
• The goal must relate to an active business
  process that is in the realm of the manager's
  routine.

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Closing Remarks

• This chapter introduced the concepts of
  measurement, chapter 11 will present performance
  measurement examples in detail (this should make
  us able to do it), and chapter 12 will cover
  the human side of measuring and managing
  performance, (this should make us willing to do
  it).