Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)

http://totallyunrelatedrandomanddebatable

.blogspot.com/

Developing Effective

Key Performance IndicatorsMain Slides Compilation

Kenny Ong

-WORKBOOK-

http://totallyunrelatedrandomanddebatable.blogspot.com

http://totallyunrelatedrandomanddebatable.blogspot.com/

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Role of facilitator

Role of

participants

Conduct of subgroup

sessions

1. Ensure participation and

discussion

2. Stimulate and focus idea

exchange

3. Provide structure and set

pace

4. Define objectives and

clarify expectation

5. Not to provide answer to

questions

6. Not to provide vision or

goals

1. Set personal objectives

2. Provide organisational

perspective

3. Actively participate in

discussion

4. Constructively

challenge ideas

5. Encourage others’

participation

6. Accept disagreement

1. Select chairperson /

spokesperson

2. Select issues. Budget time

3. Record undecided issues and

go on

4. Encourage views but be

concise (keep to time)

5. Prepare presentation materials

for group discussion

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Management principles

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Sources of problems in performance appraisal and their

consequences

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Performance Management

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Review performance & results

- provide feedback

Provide coaching & counselling

Discuss and agree on objectives & key measures

Prioritise the accountabilities agreed upon and discuss on competencies

required for the job.

Discuss & agree on standards for performance

Discuss and agree on role accountabilities

Grievance level

Absenteeism

Discipline issue

Poor workethics

Unclear

ResultsDriven

Low Level of trust & commitment (between team leader and team member)

Procedure

driven

High

Deg

ree

an

d c

lari

ty o

f jo

b r

esu

lts

High level of employee empowerment

High employee performance

High employee satisfaction

High employee involvement

Challenging working environment

Optimum HRM cost structure

High

Vis

ion

led

Step 5

Step 4

Step 3

Step 2

Step 1

Performance Contracting Model

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What is Performance Management ?

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What is performance management ?

Performance management is a communication process.

That helps managers provide a motivating climate that assists their employees develop and

achieve performance expectations.

Its focus is on management process and behaviours rather than record keeping or formal

procedures.

The challenge to Performance Management

Emerging solutions

Focus on management processes that build a motivating climate

Reduce reliance on forms and procedures

Emphasise management skills and continuous process

Promote self management to achieve excellence

Use flexible, frequent planning and regular feedback

Recognise and provide rewards that count

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Performance management approach and methodology

Key factors

Climate

Internal culture that nurtures individual performance

Competencies

Behaviours and characteristics for superior performance

Managerial styles

Manager-employee interaction that fosters efficient and effective performance

Reward and recognition

Recognising employee's developmental needs and career progression

Performance management process

3-phase process :-

1. Planning performance

Identifying expected performance in critical areas (key results)

Identifying expected competencies required to achieve key results

2. Coaching performance (reinforcement / feedback)

Tracking and observing performance

Providing feedback

Coaching for improvement

Reinforcing performance that is not on target

3. Reviewing performance

Assessing actual performance against expectations to

- Identify strengths to build on

- Barriers to overcome

- Assess gaps between actual and expected performance

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Performance management key focus

Translate company objectives into individual key results / goals for employees

Focus employee behaviour on key actions that will affect organisational results

Managers and employees agree on goals and behaviours

Provide continuous communication and coaching focused on achievement of goals

Guide employees towards behaviours that drive effective performance

Discuss opportunities for development and advancement

Provide a 'climate' that supports superior performance

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The difference between

Performance Management

Performance Appraisal

Performance linked to business

objective

Performance is planned, motivated and

coached

Process is emphasised

Results and competencies are critical

Process conducted by line management

Evaluation factors subjectively

identified

Performance is judged after the fact

Form is emphasised

Results or traits are emphasised

Procedure housed in the Personnel

Department

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Performance Management Model

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Performance Planning

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Job title : District Engineer

Duties and responsibilities of the traditional

job description

If stated as key results then the job must

produce

Control, operate and maintain the District

Distribution system

Ensure uninterrupted supply to consumers in the

district by operating the District Distribution

System

Plan and design the High Voltage System

Ensure availability of adequate supply for future

needs of industries in the district by planning and

designing the High Voltage system

Manage major supply projects to customer in the

district

Ensure satisfaction of the major customers in the

district by managing supply and distribution

Supervise all technical staff in the district

Ensure high performance and productivity of

technical staff by adopting proper human

resource management methods on selection,

training, coaching, counseling and motivation

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Principal accountabilities

Job title : General Manager, Manufacturing

Key Results

Major Supporting Actions Performance

Indicators

1. Achieve

targeted

production

volume

By monitoring production performance and taking

corrective actions

By analysing production downtime and introducing

improvements

By thorough preparation for introduction and

implementation of new models and variants

1. Timely production

targets

2. Productivity ratios

3. Downtime

4. Implementation

schedule

2. Achieve

product

quality

targets

By reviewing quality performance results and

identifying non conformance and undertaking

corrective actions

By analysing customer feedback and taking

corrective actions

By undertaking on-line and off-line continuous

quality improvement programs and activities

By undertaking education and re-education

programs

1. Quality index

2. Defect occurrence

3. Non-conformance

to established

standards

4. Demerit points

3. Ensure safe

and healthy

operating

environment

By incorporating safety and health features into

infrastructure design and development

By creating awareness of safety and health among

employees through programs and campaigns

By constant monitoring of safety and health

standards through working committees

By developing and implementing occupational

health programs

1. Accident rate

2. Health standards

3. Operation audit

findings

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Job title : General Manager, Manufacturing

Key Results

Major Supporting Actions Performance

Indicators

4. Ensure

competent,

motivated

and

productive

manufacturin

g workforce

By developing and implementing on-the-job

training

By developing and promoting effective

communication with employees and union

By ensuring continuous development and upgrading

of skills

By providing appropriate recognition and rewards

for high performance

By promoting teamwork through QCC and 5s

activities

1. Productivity ratios

2. Turnover rate

3. Employee morale

4. Team activities

5. Strikes /

disciplinary

actions

5. Enhance

operating

efficiency

and

productivity

By ensuring effective and efficient maintenance of

plant, machinery and resources

By reducing wastage and eliminating pilferage

By reducing and managing indirect overtime

By managing utilisation of consumables and

indirecting materials

1. Operating

efficiency

standards

2. Cost per unit

3. Wastages and

losses

6. Timely

execution of

projects

By undertaking effective planning and provision

of resources

By monitoring implementation and progress of

projects

By managing project costs

By developing effective project teams

1. Timely completion

of projects within

cost allocation

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Personal Accountability Description (Job Description) Job Title :

Key Results

Major Supporting Actions Key

Performance Indicators

1.

2.

3.

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Personal Accountability Description (Job Description) Job Title :

Key Results

Major Supporting Actions Key

Performance Indicators

4.

5.

6.

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Sources of critical goals 2 key sources :-

1. The operating plan

Company operating plans Departmental plans Individual

goals

2. Customer expectations

All jobs produce results (either a product or a service) for a 'customer'. Therefore, customer

expectations are important.

Customers may be 'internal' or 'external' and includes clients, vendors, suppliers,

management, other departments, etc.

Why is performance planning ?

In performance planning, the manager and the employee jointly plan performance objectives

for the coming year

It addresses both what the employee is to achieve and how it is to be achieved

i.e. the results and the competencies or (behavioural skills) to be demonstrated in

accomplishing those results

Results and competencies are qualitatively different

But

equally important aspects of performance

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Results and competencies

Planning

Review

(Expected)

(Actual)

a. What should be done ?

b. How should it be done ?

Key results (Critical goals)

Jobs typically have 4 - 6 critical goals, which have the greatest impact on the organisation.

Some examples include :-

Quality

Customer service

Revenue

Productivity

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Why are critical goals important ?

Critical goals are important because they identify clearly what the employee must do to accomplish

the organisation's business objectives this year.

Critical goals also provide managers and employees with the criteria needed to discuss

performance results objectively

Clear critical goals prevent surprises during the coaching and performance review phases of the

process. They :-

Provide in advance an objective, mutually understood and accepted basis for

reviewing and discussing performance results

Reduce misunderstanding between managers and employees about results they expect

Specify each employee's role in accomplishing what is important to department goals

and business strategy

Provide clear performance targets that help employees monitor their progress

Critical for critical goals

Specific (definite objective and purpose to be achieved)

Measurable (by definite observation and a certain time one should be able to tell whether

or not it is attained)

Achievable (conduct 4 training programmes)

Realistic (Must be within reach of the employees, e.g. to meet stated deadlines, neither

too high nor too low)

Time phase (per quarter, per year. By end of fiscal year, by 15th

of November)

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Measurable critical goal statements

Clearly written critical goals statements avoid vague phrases like "as soon as possible". "kept to a

minimum", "most of the time", etc. Some examples of specific measurable outcomes are :-

Conduct 4 training programmes

Schedule 6 on-site visits

At 95% accuracy

To meet written specifications

Within +/- 10% of budget

Within 3 days receipt

To meet stated deadlines

Four types of measures can be considered when writing a critical goal statement :-

Quality

How well the result is produced / performed

Quantity

How much / many of the results are produced or performed

Cost

At what expense the result is produced / performed

Timeliness

When is the result to be produced / performed

The choice of which measure to use is based on what is most relevant to the result. Frequently, more

than one measure is used, but rarely all four.

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Examples of critical goal statements

Some examples of critical goal statements include :-

Roll out new promotion and have 75% participation within 90 days

Co-ordinate the location of (business X) to (location Y) in accordance with agreed upon

standards and action plans

Maintain zero accident rate at the plant for the quarter ending 3 / 31

Develop a systematic method for calculating proposed salary adjustments by June 1

Reduce grievances 5% by year end

Find a new application for (product X) by 12 / 31

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Performance planning worksheet

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Phase I : Performance Planning

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Business Model and Strategy: Setting the Framework for future strategic planning

Market Discipline

Operational Excellence

(low cost producer)

Product Leadership

(best product)

Customer Intimacy

(best total solution)

Market Discipline Analysis Refer to the three major Customer groups below and how they

usually think about the product/service they ‘buy’:

Customers' Perceptions Of Value

"They are the most innovative"

"Constantly renewing and creative"

"Always on the leading edge"

"A great deal!"

Excellent/attractive price

Minimal acquisition cost and hassle

Lowest overall cost of ownership

"A no-hassles firm"

Convenience and speed

Reliable product and service

"Exactly what I need"

Customized products

Personalized communications

"They're very responsive"

Preferential service and flexibility

Recommends what I need

"I'm very loyal to them"

Helps us to be a success

Product Leadership

OperationalExcellence

CustomerIntimacy

1. Rate, on a scale of 1 (lowest) to 10 (highest), the selection priorities of your main customers and potential customers?


Product Leadership

Customer Intimacy

Scale (1 to 10)

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Market Discipline

2. Rate, on a scale of 1 (lowest) to 10 (highest), what scores would best describe your company and its BUs?

Operational

Excellence

Product

Leadership

Customer

Intimacy

Scale (1 to 10)


(low cost producer)

Product Leadership

(best product)

Customer Intimacy


Operational

Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent

information for all

• Transactional

• 'Once and Done'

Operational

Excellence

• Competitive price

• Error free, reliable

• Fast (on demand)

• Simple

• Responsive

• Consistent

information for all

• Transactional

• 'Once and Done'

Customer Intimacy

• Management by

Fact

• Easy to do

business with

• Have it your way

(customization)

• Market segments

of one

• Proactive, flexible

• Relationship and

consultative

selling

• Cross selling

Customer Intimacy

• Management by

Fact

• Easy to do

business with

• Have it your way

(customization)

• Market segments

of one

• Proactive, flexible

• Relationship and

consultative

selling

• Cross selling

Product Leadership

• New, state of the

art products or

services

• Risk takers

• Meet volatile

customer needs

• Fast concept-to-

counter

• Never satisfied -

obsolete own and

competitors'

products

• Learning

organization

Product Leadership

• New, state of the

art products or

services

• Risk takers

• Meet volatile

customer needs

• Fast concept-to-

counter

• Never satisfied -

obsolete own and

competitors'

products

• Learning

organization

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Market Discipline

Operational

Excellence

1

10

Product

Leadership

1

10

Customer

Intimacy

1

10

3. Combined Ratings

a. Mark down the ratings for customer preference () and ratings for your company () on the charts.

b. Determine where the biggest gaps are c. Decide which market discipline you want to focus on for the next five

years d. Discuss what you need to do to focus and improve on your ratings


(low cost producer)

Product Leadership

(best product)

Customer Intimacy


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Market Discipline

4. Where and how should we focus our internal strategy? How does that impact our R&D and Product/Service delivery?


•Central authority, low level of empowerment

•High skills at the core of the organization

•Disciplined Teamwork

•Process, product- driven

•Conformance, 'one size fits all' mindset

• Integrated, low cost transaction systems

•The system is the process

•Command and control

•Quality management











Organization, jobs, skills

Management systems

Information and systems

Culture, values,norms

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Product Leadership

•Ad hoc, organic and cellular•High skills abound in loose-knit structures

•Concept, future-driven•Experimentation and 'out of the box' mindset

•Person-to-person communications systems•Technologies enabling cooperation

•Rewarding individuals' innovative capacity•Risk and exposure management•Product Life Cycle profitability

Customer Intimacy

•Empowerment close to point of customer contact

•High skills in the field and front-line

•Customer-driven

•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and

external information

•Strong analytical tools

•Customer equity measures like life time value

•Satisfaction and share management

•Focus on ‘Share of Wallet’

Customer Intimacy

•Empowerment close to point of customer contact

•High skills in the field and front-line

•Customer-driven

•Variation and 'have it your way' mindset

•Strong customer databases, linking internal and

external information

•Strong analytical tools

•Customer equity measures like life time value

•Satisfaction and share management

•Focus on ‘Share of Wallet’






















Management systems
























Management systems
























Management systems



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Market Discipline

• Operational Excellence

• Move know-how from top performing units to others

• Benchmark against best in class

• Ensure operations training for all employees

• Use disciplines like TQM for continuous learning to reduce costs and improve quality

• Customer Intimacy

• Capture knowledge about customers

• Understand customer needs

• Empower front line employees

• Ensure that everyone knows the

customer

• Make company knowledge available to

customers

• Product Leadership

• Reduce time to market

• Commercialize new products fast

• Ensure that ideas flow

• Reuse what other parts of the company

have already learned

• Ensure there are multiple sources of

funding

5. Based on all the Market Discipline analysis above, discuss some possible strategies for your company and its Business Units.

(Transfer your answers to a ‘Strategic Options’ list)

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Defining Financial Goals "If we succeed, how will we look to our shareholders?”

Listed below are three common Financial Goals of any organization.

A. Revenue Growth

This refers to expanding product and service, reaching new customers and markets, changing product and service mix, and repricing products and services.

B. Profitability Growth

This refers to efforts to lower the direct costs of product and services, reduce indirect costs, and share common resources with other business units.

C. Asset Utilization

This refers to asset utilization theme, reduce working capital levels, and better utilization of fixed asset base to increase return on physical assets

D. Stakeholder Expectations

This refers to managing Stakeholder Expectations across different types of organizations be it Public Listed, Private, Non-Profit or Government. Examples include Share Price, ROE, Dividends etc.

1. Define, as many as possible, Factors that impact each financial goal in YOUR organization.

Factors that Impact…

A. Revenue Growth


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Matching Financial Measures to Goals The following list consists of common Financial Measures used by different organizations: 1. Match each of the Financial Measures above to the proper Financial Goal:

Goal Financial Measures

A. Revenue Growth

E.g. Revenue from New Products


E.g. Gross Profit


E.g. Cash-to-cash cycle


E.g. Share Price

Commonly used Financial Measures Total Assets Total Assets per employee Profits as a % of total assets Return on net assets Return on total assets Revenues/total assets Gross Margin Net Income Profit as a % of sales Profit per employee Revenue Revenue from new products Revenue per employee Return on Equity (ROE) Return on Capital Employed (ROCE) Return on Investment (ROI) % Revenue from different channel (e.g. DC

vs SP) % expenses due to quality defect, TNA,

rework etc % operating expenditure to revenue Reduction in working capital Profit per customer % revenue to gain market share vs. %

revenue to replace lost customers % of sales from new applications

Compound Growth Rate Dividends Market Value Share Price Shareholder Mix Shareholder loyalty Cash flow Total costs Credit rating Debt Debt to equity Times interest earned Days sales in receivables Days in payables Days in inventory Inventory turnover ratio Cash-to-cash cycle % resources shared with other business unit ROI time cycle % Revenue growth of various markets Sales growth in targeted markets/ customer/

region Operating Cash Flow % of customer income (Share of Wallet) Net cost per acquired customer

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Defining Customer Goals "To achieve my vision, how must I look to my customers?”

Listed below are five Core Customer Goals of any organization. These are called Customer Outcome Goals.

A. Market Share Reflects the proportion of business in a given market (in terms of number of customers, dollars spent, or unit volume sold) that a company sells

B. Customer Acquisition

Measures the rate at which company attracts or wins new customers or businesses

C. Customer Retention

Tracks the rate at which a company retains or maintains ongoing relationships with its customers

D. Customer Satisfaction

Assesses the satisfaction level of customers along specific performance criteria with the value discipline

E. Customer Profitability

Measures the net profit of a customer, or a segment, after allowing for the unique expenses required to support that customer

2. Define, as many as possible, Factors that impact each Customer Outcome Goal in YOUR

organization.


A. Market Share


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BSC CP Exercise 1 Defining Customer Goals - continued





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Matching Customer Outcome Measures to Customer Outcome Goals The following list consists of common Customer Outcome Measures used by different organizations: 2. Match each of the Customer Outcome Measures above to the proper Customer Outcome Goal:

Goal Customer Outcome Measures

A. Market Share





Commonly used Customer Outcome Measures Customer satisfaction Customer loyalty Market share Customer complaints Complaints resolved on first contact Return rates Response time per customer request Price relative to competition Total cost to customer Average duration of customer relationship Customers lost Customer retention Customer acquisition rates Percentage of revenue form new customers Number of customers Annual sales per turnover

Win rate (sales closed/sales contact) Customer visits to the company Hours spent with customers Marketing cost as a percentage of sales Number of ads placed Number of proposals made Brand recognition Response rate Number of trade shows attended Sales volume Share of target customer spending Sales per channel Average customer size Customers per employee Customer service expense per customer Customer profitability Frequency (number of sales transactions)

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BSC IP Exercise 1a – Operational Excellence What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E).

A. B. C. D. E.

Value Discipline Focus Areas

Innovation Process

Identify Market

Create Product / Service

Operations Process

Build Product / Service

Deliver Product / Service

Post-sale Service Process

Service the Customer

Culture Disciplined Work Culture

Process focused

Conformance, “one size fits all” mindset

Mgmt System Command and Control

Compensation fixed to cost and quality

Transaction Profitability Tracking

Info Tech Integrated low-cost transaction systems

Mobile and remote technologies

Organization Centralized functions

High skills at the core of the company

Core Processes

Product Delivery and basic service cycle

Built on standard, no-frills fixed assets

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BSC IP Exercise 1b – Product Leadership What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E).

A. B. C. D. E.


Innovation Process

Identify Market


Operations Process





Culture Concept, future-driven

Experimentation and 'out of the box' mindset

Mgmt System Rewarding individuals' innovative capacity

Risk and exposure management

Product Life Cycle profitability

Info Tech Person-to-person communications systems

Technologies enabling cooperation

Organization Ad hoc, organic and cellular

High skills abound in loose-knit structures

Core Processes

Invention, commercialization

Market exploitation

Disjoint work procedures

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BSC IP Exercise 1c – Customer Intimacy What do we need to improve? The table below shows the linkage between the Focus areas of the Value Discipline (column A and B) with core company processes (column C to E).

A. B. C. D. E.


Innovation Process

Identify Market


Operations Process





Culture Customer Driven

Variation: “Have it your way” mindset

Mgmt System Share of Wallet Driven

Rewards linked to Customer Feedback

Lifetime Value of Customer Analysis

Info Tech Customer Databases

Knowledge Mgmt

Organization Entrepreneurial customer teams

High skills in the field

Core Processes

Client acquisition and development

Solution Development

Flexible and Responsive work procedures

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BSC IP Exercise 2a – Operational Excellence Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Operational Excellence value discipline: Operational Excellence

Core IP Outcome Goals

1. Refer to Handout A: Commonly Used Internal Process Measures 2. Determine Ten Core IP Outcome Measures. The measures can come from a mix of the four

outcome goals listed above. 3. Bonus: Please add measures relevant to your company if not listed in Handout A.


Core IP Outcome Measures

1. Product Delivery 2. Asset Utilization 3. Service Cycle

Efficiency 4. Product

Ownership Cost

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Product Delivery

Asset Utilization

Service Cycle Efficiency

Product Ownership Cost

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BSC IP Exercise 2b – Product Leadership Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Product Leadership value discipline: Product Leadership






1. Innovation & Design

2. Understanding of Customer

3. Improve Product/Service

4. Quality

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Innovation & Design

Understanding of Customer

Improve Product/Service

Quality

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BSC IP Exercise 2c – Customer Intimacy Determining Internal Process Outcome Measures The following diagram shows what are the Core IP Outcome Goals for the Customer Intimacy value discipline: Customer Intimacy






1. Customer Acquisition

2. Customer Development

3. Solution Development

4. Flexibility & Responsiveness

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Customer Acquisition

Customer Development

Solution Development

Flexibility & Responsiveness

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Example L&G Staff Measures:

% of staff evaluated on Core Competency Framework

% of staff with Career Development Plans

# of training hours completed

% of staff with access to strategic information

Employee Satisfaction Survey Index

% staff evaluated on Culture alignment

Strategic Skills Coverage

Targeted Training Accomplished

Best Practices Implemented

%Work Support Implemented

Employee Climate Survey

Employee Goal Alignment

Matching Learning & Growth Measures to Goals The following list consists of common Learning & Growth used by different organizations: 3. Match each of the Measures to the proper Learning & Growth Goal:

Goal Learning & Growth Measures

A. Competencies

B. Motivation, empowerment, alignment

C. Information Systems

Sample Information Systems Measurements 1. Keypunch errors per day 2. Input correction on data

entry 3. Reruns caused by

operator error 4. Percent of reports

delivered on schedule 5. Errors per thousand lines

of code 6. Number of changes after

the program is coded 7. Percent of time required to

debug programs 8. Number of cost estimates

revised 9. Percent error in forecast 10. Percent error in lines of

code required 11. Number of coding errors

found during formal testing 12. Number of test case errors 13. Number of test case runs

before success 14. Number of revisions to

plan 15. Number of documentation

errors 16. Number of revisions to

program objectives

17. Number of errors found after formal test

18. Number of error-free programs delivered to customer

19. Number of process step errors before a correct package is ready

20. Number of revisions to checkpoint plan

21. Number of changes to customer requirements

22. Percent of programs not flow-diagrammed

23. Percent of customer problems not corrected per schedule

24. Percent of problems uncovered before design release

25. Percent change in customer satisfaction survey

26. Percent of defect-free artwork

27. System availability 28. Terminal response time 29. Mean time between

system repairs 30. Time before help calls are

answered 31. Rework costs resulting

from computer program

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KPI Documentation and Dashboard

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Sample: KPI Data Collection Template Questions KPI Basics:

1 KPI ID

2 KPI Name

3 KPI Owner

How will the data be collected:

4 Data Collection Method

5 Source of Data

6 Formula/ Scale/ Assessment Method

7 How often, when and for how long do we collect the data

8 Who collects the data

Target

9 What is the Target or Performance Threshold(s)?

Good Measure Tests

10 How well is the indicator measuring performance?

11 What are the costs of collecting data? Justified?

12 What dysfunctional behaviour could this KPI trigger?

Reporting:

13 Who is the primary and secondary audience of this KPI?

14 Reporting Frequency (when and how long will this KPI be reported?)

15 Reporting Channel (which channel will be used to report this KPI?)

16 Reporting Formats (in which formats will this KPI be reported?)

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Sample KPI Dashboard

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Performance Coaching

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What is Coaching?

Coaching : Is the ongoing process in which the Supervisor and the staff informally

- evaluate past performance (discuss progress against critical goals)

- reinforce effective behaviours and

- guide future performance

The Supervisor alerts the staff about

gaps between performance and expectations

It is a continuous and informal activity, woven seamlessly into the ordinary communications

between the supervisor and the staff.

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What is coaching ?

Coaching, as used in this workshop, is defined as managing subordinates :-

To conduct an accurate assessment of their performance strengths and weaknesses

To identify their long-term developmental aspirations

And to develop an action plan in those areas that will achieve those aspirations

Coaching can involve helping others develop competencies in which the coach may or may not

have.

Coaching requires skill in identifying the underlying characteristics that others need to develop over

the long term, as well as the ability to build on that person's unique capabilities.

It is possible to coach marginal performers, as well as good or outstanding performers.

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Coaching is :

Helping

Guiding

Getting people to own their targets

which they set

Helping people to explore options

Setting a climate in which improved

performance becomes not only

possible but desirable

Coaching is not :

Telling someone how to do something

Giving instruction

Laying down specific guidelines about

how to accomplish a particular task

Setting boundaries

Setting targets for other people

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The importance of coaching to your organisation

We view the development of people as an area of corporate strength which can drive our strategic

ambition

Our managers need to be as concerned about individual and team development as they are about

their own task objectives - business growth will be driven by the many not the few

New recruits, especially young ones, need guidance in order to maximise the benefits of learning

opportunities

Learning efficiency is maximised if we can more rapidly pass on the benefits of experience

When do you use coaching ?

Individual development

Career development

Succession planning

Monitoring performance

Day-to-day problem solving

Performance management programme

- Objective setting

- Interview review

- Evaluation

- Day-to-day feedback

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What's in it for the manager ?

More skilled and confident

people

Less waste and rework

More clarity about

individual and team

objectives, roles and

expectations

Errors become learning

opportunities

I also learn

Self confidence and self

awareness for me

Personal satisfaction

Improved output and

performance

What's in it for the team ?

We work together more

effectively

We understand each other

Improved team

performance

Confidence in each other

Team satisfaction

Consolidating learning

We coach each other

What's in it for the company ?

More skilled and motivated

workforce

More self learning

More effective and less

expensive form of

development

Improved efficiency and

effectiveness

Improved motivation of the

coach

Improved communication

Improved performance

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Competencies Of An Effective Coach

Competency Behaviours

Sensitivity to others Understand both strengths and limitations of the staff

Understand the reasons of the staff behaviour

Know what motivates the staff as well as what turns them off

Take the time to listen to staff’s problems

Give staff assignments and training to develop them

Developing Others Give encouragement and to staff to improve their motivation

Give staff timely, specific and detailed feedback

Management of

Subordinates Ensure that all staff contribute to departmental objectives

Give recognition to staff who have contributed to the department’s

success

Set an example and encourage staff to develop an atmosphere of

teamwork and cooperation

Self-Confidence Approach staff with a positive, can-do-attitude

Is receptive to staffs’ ideas

Provide feedback to staff confidently without arrogance or hostility

Self Control Remain calm in stressful situations

Refrain from impulsive reactions or behavior that would interfere with a

motivating relationship with the staff

Keep calm and constructive in the face of staff’s anger

Use of

Concepts/experience Utilise past experience and observations to understand and handle

present situations with staff

Relate staff’s performance objectives to key values and strategies of the

company

Analytical Thinking Analyse staff behavior to determine underlying causes

Accurately anticipate consequences of own behavior toward staff

Use a systematic approach to handling staff challenges

Anticipate obstacles in seeking to develop staff

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Phase II : Performance coaching

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Performance evaluation

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What is Performance Evaluation ?

o Formal evaluation of Performance versus Expectations

This is the cumulating of regular tracking during the year

o An ongoing interaction between the manager and the employee to maximise performance

by means of motivation and encouragement

When frequent feedback is the norm, the year-end performance evaluation is less

threatening and contains no surprise

Main Reasons for Performance Evaluation o to ‘close off’ the activities undertaken in the performance planning period so that a new

planning cycle can begin

o to provide an objective, defensible basis for variable pay decisions

It provides a clear summary statement of performance achieved for the year

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Objectives of Performance Evaluation

o Review employee performance and job progress (i.e. actual versus expectations)

o Identify development needs

o Establish future goals and objectives

o Aids in reward decisions

Problems with appraisal system

Managers don't like carrying out appraisal interviews

"HALO" effect

Central tendency in evaluations

Excessive leniency or stringency

Biases of sequence, order or timing of evaluation

Personality of the appraiser and prejudice

Lack of clarity of performance standards

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Obstacles to effective appraisal

In discussions with managers under training and in observing them practising interviewing a number of

obstacles to effective interviewing are revealed.

1. Lack of clarity in the mind of the appraiser as to purpose, e.g.,

reporting up the line

justifying and rationalising salary actions

telling the subordinate how well he is doing

improving performance

2. Lack of clarity in the mind of the subordinate as to purpose, e.g.

he's come to 'b told'

he's come to 'justify' his performance

3. The appraiser has made up his mind already about the subordinate's side of the story

the appraiser describes the subordinate's problems to him or

seeks information to confirm his beliefs (self fulfilling prophecy) and

discards evidence presented to the contrary

4. The appraiser reaches conclusions, makes decisions, invites actions on the basis of his opinion or on

what appears to have happened rather than on facts

5. The appraiser sees in depth interviewing as somehow impolite with consequent failure to get to the

root of things

6. The subordinate is put onto the defensive by statements of his failures and mistakes before he is

invited to describe his experiences in the job. This results in the subordinates 'filtering' the

information he gives so as to portray his actions in the best light

Appraisal is thus being used to

Tell the subordinate he is out of line

Express disapproval

Appraisal is not being used to

Find out what happened to the subordinate and why

7. The appraiser lacks skill in creating a willingness in the subordinate to reveal frank information and to

discuss feelings

Feelings are important, they are related to inclination (of capacity), and to motivation

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Performance improvement method (Discussion guide)

1. Develop a careful definition first if there is a problem

State what it is. View a problem as a deviation from the standard

How do you know that it's a problem ? What are the signs that indicate a problem ?

Determine how much the problem is costing the organisation in terms of :-

- Work not being done

- Work not being done on time

- Problems being caused in other parts of the organisation

2. Try to determine the cause of the problem

Is something preventing the work from being done ?

- Does the employee have the right tools to do the job ?

- Are organisational policies / procedures hindering performance ? (confusion, conflicting

goals, complicated procedures, lack of money, time, etc.)

Does the employee have enough knowledge to do the work ?

- Does he know why it should be done a certain way ?

- Does he know how his work contributes to the work of the organisation ?

- Does the employee possesses enough knowledge about the work and how it is to be done to

be able to do it ?

- Has he ever been told that his work is not meeting acceptable standards ?

Try to determine if the job (task) itself has a built-in problem that leads to poor performance

- Is the work too difficult for one person ?

- Is the work so disagreeable that it is avoided ?

- Is there no reward or sense of satisfaction in doing the particular task ?

3. Accurately record the results of the session

Prepare a rough draft and let the employee review it

Include all expected changes that should occur

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Performance Evaluation Key Steps

1. Preparation

o Collection of performance Data / Evidence

o Encourage active participation

- Ask appraisee to prepare himself / herself before the appraisal (refer to

Guidelines to

Appraisee for preparation of Appraisal Interview)

- Ask appraisee to prepare self appraisal

- Appraisee completes draft Appraisal form

o Mental preparation

- create climate for honest feedback

2. At the meeting

o The supervisor coaches, not criticizes the appraisee

o Compare actual performance against expected performance (Results and

Competencies)

o Discuss reasons for success and agree on reasons why objectives were not achieved

and why problems developed

o Obstacles to reaching goals and problems are identified

- Plans are made to overcome these obstacles

- Both contribute to the development and carrying out of these plans

o New goals are set

3. End of Meeting

o Summarise trends in Performance and ideas for improvement

o Summarise actions agreed

o Reinforce success

o Where possible or desirable, leave subordinate confident about the future

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Conducting The Evaluation Meeting

(8 Guidelines)

8 Guidelines

1. Attitude

a) A 2-way communication meeting - there must be frank and thorough discussion

b) Not a ‘corrective’ session

All the key aspects must discussed

c) For weak performance, remedial action plans must be discussed

As a manager, it is your accountability to help your subordinate improve

d) Be open

- Be fair and constructive

- Admit if the fault is yourself, the supervisor

2. Seating Arrangements

o Have a neutral setting / seating

- round table

- work side by side

o Avoid a desk in between

3. Begin the Session

o Outline objectives of meeting

o Create climate of trust and confidence

o Breaking the ice

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Conducting The Evaluation Meeting

8 Guidelines (cont’d)

4. Review

o Encourage self review

o Go through each objective and competitiveness as expected versus actual

o Discuss reasons for achievement / non achievement

o Discuss performance rating

5. Evaluator’s Comments

o Appraiser react to Appraisee’s self assessment

o Give personal assessment

o Discuss achievement / non achievement of objectives / competencies

o Discuss performance rating

6. Future Plans

o Discuss plans for the future

o Discuss performance improvement in the future

o Role of the Appraiser / Appraisee

7. Rate Performance not Personality

o Discuss detailed and specific discussion of the person’s progress or lack of it in

achieving the results

o Focus on objective, job-relevant experience (discuss evidences)

o The person’s performance in the job is discussed and not the person himself

o Avoid personal problems

8. Closing the Session

o Reiterate objectives of the session

o Repeat and agree an assessment and action plans

o Complete the appraisal form and agree with the subordinate

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Guidelines to Appraisee for Preparation of Appraisal

Interview

This copy is to be given to the appraisee concerned before the appraisal interview to assist him/her to

prepare for the appraisal interview and is for his/her retention

To The Appraisee

The questions below are designed to stimulate your thinking and to help you prepare for the appraisal

interview and obtain minimum benefit format. Think about your own personal performance,

progress and plans for the future improvement. Appraise yourself as follows :-

1) What are my major accomplishments for the past year ?

2) What are some aspects of my job that I like best ? That I like least ?

3) What do I consider to be the important abilities which my job requires ?

4) Are there any changes I would like to see made in my job which would improve my

effectiveness ?

5) What are the ways in which my superiors can help me to do my job better ?

6) Are all of my capabilities being utilised in my present position ? If not, how can they be

better utilised ?

7) In what aspects of my job do I feel I need more experience and training ?

8) What are specific things I need to do in he next year for my own development ?

9. What have I done for my personal and / or professional development ?

10) In what ways would my present position better prepare me for assuming more responsibility ?

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Attachments

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Goals, Measurements and KPIs

Financial

Commonly used Financial Measures Total Assets Total Assets per employee Profits as a % of total assets Return on net assets Return on total assets Revenues/total assets Gross Margin Net Income Profit as a % of sales Profit per employee Revenue Revenue from new products Revenue per employee Return on Equity (ROE) Return on Capital Employed (ROCE) Return on Investment (ROI) % Revenue from different channel

(e.g. DC vs SP) % expenses due to quality defect,

TNA, rework etc % operating expenditure to revenue Reduction in working capital Profit per customer % revenue to gain market share vs.

% revenue to replace lost customers % of sales from new applications

Compound Growth Rate Dividends Market Value Share Price Shareholder Mix Shareholder loyalty Cash flow Total costs Credit rating Debt Debt to equity Times interest earned Days sales in receivables Days in payables Days in inventory Inventory turnover ratio Cash-to-cash cycle % resources shared with other business

unit ROI time cycle % Revenue growth of various markets Sales growth in targeted markets/ customer/

region Operating Cash Flow % of customer income (Share of Wallet) Net cost per acquired customer

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Customer

Commonly used Customer Outcome Measures Customer satisfaction Customer loyalty Market share Customer complaints Complaints resolved on first

contact Return rates Response time per customer

request Price relative to competition Total cost to customer Average duration of customer

relationship Customers lost Customer retention Customer acquisition rates Percentage of revenue form new

customers Number of customers Annual sales per turnover

Win rate (sales closed/sales

contact) Customer visits to the company Hours spent with customers Marketing cost as a percentage of

sales Number of ads placed Number of proposals made Brand recognition Response rate Number of trade shows attended Sales volume Share of target customer spending Sales per channel Average customer size Customers per employee Customer service expense per

customer Customer profitability Frequency (number of sales

transactions)

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Internal Process

General Internal Process Measures

Average cost per transaction

On-time delivery

Average lead time

Inventory turnover

Environmental emissions

R&D expense

Community involvement

Patents pending

Average age of patents

Ratio of new products to total offerings

Stockouts

Labor utilization rates

Response time to customer requests

Defect percentage

Rework

Customer database availability

Breakeven time

Cycle time improvement

Continuous improvement

Warranty claims

Lead user identification

Products and services in the pipeline

Internal rate of return on new projects

Waste reduction

Space utilization

Frequency of returned purchases

Downtime

Planning accuracy

Time to market of new products/services

New products introduced

Number of positive media stories

Common Supply Chain Measures Time On-time delivery receipt Order cycle time Order cycle time variability Response time Forecasting/planning cycle time Planning cycle time variability Quality Overall customer satisfaction Processing accuracy Perfect order fulfillment

o On-time delivery o Complete order o Accurate product selection o Damage-free o Accurate invoice

Forecast accuracy Planning accuracy Schedule adherence Cost Finished goods inventory turns Days sales outstanding Cost to serve Cash to cash cycle time Total delivered cost

o Cost of goods o Transportation costs o Inventory carrying costs o Material handling costs o All other costs

Information systems Administrative

Cost of excess capacity Cost of capacity shortfall

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Example Measures: % of staff evaluated on Core Competency Framework % of staff with Career Development Plans # of training hours completed % of staff with access to strategic information Employee Satisfaction Survey Index % staff evaluated on Culture alignment Strategic Skills Coverage Targeted Training Accomplished Best Practices Implemented

%Work Support Implemented Employee Climate Survey

Employee Goal Alignment


HR, ICT , Culture

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Common Human Resource Management Measures 7.1 Manage deployment of personnel

a. Percentage employee absenteeism

b. Cost per external hire

c. Cost per internal I Lire

d. Cost to supervise

e. Current employee/supervisor ratio

f. External accession rate

g. External replacement rate

h. Internal accession rate

i. Internal replacement rate

j. Job posting effectiveness

k. Job posting response rate

l. Number of days to fill an employment request

m. Number of days to respond to applicant

n. Number of job descriptions written

o. Number of jobs leveled

p. Orientation and training costs per hire

q. Percentage of employment requests filled on schedule

r. Percentage of offers accepted

s. Personnel turnover rate

t. Relocation expenses

u. Requisitions filled per month/quarter/year

v. Requisitions per recruiter

w. Time to evaluate jobs

x. Time to process an applicant

y. Time to start 7.2 Develop succession and career plans

a. Distribution of performance appraisal ratings

b. Distribution of merit pay increase recommendations

c. Ratio of promotions to total employees

d. Ratio of openings filled internally vs. externally

e. Average number of years or months between promotions

7.3 Recruit, select, and hire employees

a. Average days to fill open positions

b. Average days between opening and fill

c. Ratio of acceptances to hires

d. Ratio of acceptances to offers

e. Ratio of qualified applicants to total applicants 7.5 Ensure employee involvement

a. Current employee/ supervisor ratio

b. Employees involved in job rotation

c. Number of days to answer suggestions

d. Number of suggestions per employee

e. Number of suggestions per team

f. Percentage of employees participating in company sponsored activities

g. Percentage of suggestions accepted

h. Percentage of total workforce now participating in self directed work teams

7.6 Develop and train employees

a. Average pre- and post-training test score change/performance review change

b. Cost per trainee

c. Hours of employee training

d. Number of days to develop a training course or modules

e. Number of hours per year of career and skill development training per employee

f. Percentage of employees trained

g. Percentage of employees with development plans

h. Percentage of training classes evaluated as excellent

i. Percentage of employees receiving tuition refunds

j. Total expenditure for tuition reimbursement or executive development

k. Total external training expenditures

l. Total internal training days

m. Total internal training expenditures

n. Trainee or unit work performance changes

o. Training costs as a percentage of payroll

p. Training costs as a percentage of sales/revenue

q. Training days per employee per year

r. Training department employees to total employees

7.7 Develop and manage base and variable compensation

a. Average salary cost per employee

b. Compensation costs

c. Compensation costs/revenue

d. Overtime pay costs

e. Percentage of performance appraisals submitted on time

f. Salary range exceptions

g. Supervisory compensation costs/total compensation costs

7.8 Ensure employee well being and satisfaction

a. Department morale index 7.9 Manage and administer employee benefits

a. Benefits cost per employee

b. Benefits cost

c. Benefits costs/revenue

d. Benefits costs/total compensation costs

e. Benefits to payroll ratio

f. Error rates in processing benefits claims

g. Retiree benefits costs/expense 7.12 Manage labor-management relationships

a. Average employee tenure

b. Average length if time to settle grievances

c. Costs associated with work stoppages/slowdowns

d. Frequency/duration of work stoppages/slowdowns

e. Percent of grievances settles out-of-court and associated savings

f. Ratio of grievances/complaints to total employees

Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)

Business

Transcript of Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)