Sustainable Growth:

Performance Management

Performance Measurement System

Improving Efficiency, Effectiveness, and Adaptability of Your Business Unit

Why Measure Performance?

The basic purpose of any measurement system is to provide feedback, relative to your goals, that increases your chances of achieving these goals efficiently and effectively. Measurement gains true value when used as the basis for timely decisions.

Measurement Is Not an Essence, but Improvement

The purpose of measuring is not to know how your business is performing but to enable it to perform better. The ultimate aim of implementing a performance measurement system is to improve the performance of your organization. If you can get your performance measurement right, the data you generate will tell you where you are, how you are doing, and where you are going.

Modern Systems Approach

You must master your systems thinking skills as measurement today must be neither and end nor an activity in itself but a part of an integrated system for enhancing business performance. "A contemporary approach to measurement recognizes that modern business are complex systems, for which intuition no longer suffices. Today any action that a manager takes can have myriad and unpredictable consequences throughout the organization. Therefore measurement must be based on a careful through-through analysis of the business, one that links the objectives of the business to the things over which managers and front-line personnel have control. Only then can the recognition of a problematic measure lead to the right actions that will correct it and to improved performance of the business a whole," writes Michael Hammer.

Transforming the Traditional Functional Mindset

Traditional functional way of thinking "stands in the way of executives understanding and improving the flow of cross-functional activities which create enduring value for customers and shareholders. It encourages a distorted view of performance measurement and executive rewards, shifting focus away from meaningful measures such as the timeliness and quality of services provided to customers, and towards less significant measures around functional departmental performance."... More

Balanced Scorecard

The Balanced Scorecard is a framework for designing a set of measures for activities chosen by you as being the key drivers of your business. By having four distinct perspectives (financial, customer, internal process and innovation and learning) it promotes a more holistic view of the business... More

 Case in Point  Using the Best Practice at GE: The Trotter Scorecard

Many GE business units employ a tool called the Trotter Matrix to check on their use of best practices. The scorecard was developed by Lloyd Trotter, who ran the Electrical Distribution and Controls side at GE. He listed six desirable attributes for each of his plants and then scored each attribute... More

Economic Value Added (EVA)

Economic Value Added (EVA), or economic rent, is a widely recognized tool that is used to measure the efficiency with which a company has used its resources. In other words, EVA  is the difference between return achieved on resources invested and the cost of resources. Higher the EVA, better the level of resource unitization... More

360-Degree Assessment

The 360-degree assessments are commonly used in corporations in management and leadership development programs. In 360-degree assessment, the participant completes a self-assessment and also collects feedback from supervisors, peers, subordinates and customers (or sometimes vendors)... More

Measuring Cleaner Production

Measuring cleaner production (CP) is of critical importance. You must use appropriate indicators, which are generally applicable, yet specifically measurable, and address both the productivity and environmental aspects of your system in an integrated fashion. The indicators should enable not only estimation of the CP of a product or process and its comparison with other equivalents, but also improvement of the existing process or product and the development of new products.

Life Cycle Assessment (LCA) and Total Cost Assessment (TCA) are two types of CP indicators that help managers understand the practical implications of GP and make right decisions... More

References:

1. Balanced Scorecard In a Week, Mike Bourne and Pippa Bourne

2. Managing Complexity, Robin Wood

3. Six Sigma, Mikel Harry and Richard Schroeder

4. Business Process Management: The Third Wave, Howard Smith and Peter Fingarr

5. BPM - Approaches & Best Practices, by Andrew Spanyi

6. Agenda, Michael Hammer

7. Direct from Dell, Michael Dell with Catherine Fredman

8. Blur: The Speed of Change in the Connected Economy, Davis, S. and Meyer, C.

9. Productivity Improvement in the Service Sector, Mah Lok Abdullah, APO Newsletter,

10. Measuring Performance : Using the new metrics to deploy strategy and improve performance, Bob Frost

11. "More For Less," Andrew Spanyi