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Sustainable Growth:

Performance Management

Performance Measurement System

Improving Efficiency, Effectiveness, and Adaptability of Your Business Unit

By: Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

 

"You measure what you value.

You get what you measure." 

 

SYNERGISTIC ORGANIZATION (Ten3 Mini-course) - How To Build a Modern Winning Organization

 

8 Best Practices of Successful Companies

  1. Measure performance by customer satisfaction... More

3 Strategies of Market Leaders

Five Benefits of a Good Measurement System

A good performance measurement system will help you achieve success in five ways1:

  1. establish your current position

  2. communicate direction

  3. stimulate action in the most important areas for your business

  4. facilitate learning

  5. influence behavior

Business Process Thinking Check List

13 Questions

  • By what measure does your company judge the performance of your process?... More

Canon Production System (CPS) includes:

Two Elements of a Contemporary Measurement System

By Michael Hammer

  1. Formal, structured and quantified model of enterprise. It recognizes that modern business are complex systems, connects a company overarching objectives with its controllable dimensions and enables managers to mobilize a company's resources and capabilities to ensure that it achieves its paramount goals. It shows managers both what they ought to measure and what they ought to do with the measures.

  2. Process to improve enterprise performance. It contains a deliberate process for using measurement data to improve enterprise performance, a structured and focused program that uses measurement information to identify the causes of inadequate performance and then does something about them.

 

Improvement-focused Measurement System

  • has improvement-oriented measures

  • provides no data without a rationale and purpose

  • ensures that people know why things are being measured

  • ensures that people know what to do about the measures

Measures Used to Manage the Performance of a Business2

  1. Strategic Measures:

    • market attractiveness (industry structure, growth, concentration, innovation, customer power, logistical complexity), and

    • competitive strength (relative market share, relative quality, intellectual property, customer coverage)

  2. Organizational Measures:

  3. Operational Measures:

Successful Measurement System Provides:

  1. Feedback that tells you whether you are or aren't doing the right things, and doing them well

  2. Motivation that will spur you on to improve your performance

  3. Incentive for you and your team to 'do it better'

But for all this to happen you must make sure that you measure:

  1. the right things

  2. at the right time, and

  3. in the right place

SYNERGISTIC ORGANIZATION (Ten3 Mini-course) - How To Build a Modern Winning Organization

The GE Leadership Effectiveness Survey (LES)

Ranking Scale: Significant Development Needed  1  2  3  4  5  Outstanding Strength

25 Lessons from Jack Welch

Enterprise Process Management (EPM) Gives Your the Power To:

  • Monitor and measure performance against goals across sales, marketing, operations, finance, supply chain, customer and product management... More

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.

18 Leadership Lessons from Colin Powell

  • The most important question in performance evaluation becomes not "How well did you perform your job since the last time we met?" but "How much did you change it?".... More

17 Indisputable Laws of Teamwork

  • The Law of the Scoreboard: The Team Can Make Adjustments When It Knows Where It Stands... More

29 Obstacles To Innovation

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.

Balanced Business System

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

Results-based Leadership

 Case in Point  GE: 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

13 Tips for Transitioning Your Company To a Lean Enterprise

  • Realign metrics with value streams perspective... More

 

 Discover much more in the

FULL VERSION of e-Coach

Performance Management...

Effective Performance Measurement System: Key Features...

Manager's Diagnostic Toolkit...

Measure-Management Companies...

Evaluating Corporate Performance: New Metrics...

Two Questions You Should Ask Yourself...

Measuring Productivity...

Six Sigma Tells You...

Measuring Coach's Effectiveness...

Benchmarking...

360 Evaluation and Feedback...

Enterprise Performance Management (EPM)...

Process Thinking...

Systems Thinking...

 Case in Point  Intel Corp...

 Case in Point  Quality Measures at General Electric (GE)...

 Case in Point  Dell Computer Corporation...

 Case in Point  Silicon Valley Firms...

 Case in Point  IDEO...

 Jokes  Robert Burn's Hog-Weighing Method...

 

 

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

  12. Synergistic Organization, Vadim Kotelnikov

Suggestion Systems

Fun4Biz Suggestion System

Winning Organization

Balanced Organization: 5 Basic Elements

Team Assessment and Improvement

Smart Corporate Leader

Smart Business Architect

Using Best Practice: The Trotter Scorecard

Sustainable Growth Strategies

Balanced Approach to Business Systems

6Ws of Corporate Growth

Balanced Scorecard (BSC)