The Five Key Principles of Corporate Performance Management

Bob Paladino & Associates, LLC

Five Key Principles of Corporate Performance Management (CPM) – A Best Seller

Award Winning Executive Shares Leading Edge Research and Case Study

Bob Paladino, CPA, MBA

Bob Paladino, Managing PartnerBob Paladino & Associates, LLC2543 Washington Road – Suite 910Pittsburgh, PA 15241978-857-6766 Fax 412-220-2454Email: [email protected] our website www.paladinoassociates.com

2 Bob Paladino & Associates, LLC© Copyright 2007 Bob Paladino & Associates, LLC

Introductions, About the SpeakerLed Kaplan & Norton CPM /Balanced Scorecard Consulting

Practice

Directed Crown Castle International’s CPM program as SVP

Global Performance in the CEO Office; Crown

Won Kaplan & Norton’s Balanced Scorecard Hall of Fame Award

Earned APQC’s Best Practice Partner Award

WSJ Ranked Crown Top 20 Most Improved Company on

Shareholder Score Board

Launched CPM Implementation Consulting & Training Firm

Author – Five Key Principles of CPM


Bob Paladino & Associates, LLCThe Firm - Services and Service Partners

Consulting and Training Services

Strategic Planning

Planning & Budgeting

Balanced Scorecard

Benchmarking

Process Improvement

Six Sigma Green Belt

Knowledge Management

Service PartnersAmerican Productivity & Quality Center (APQC)

American Strategic Management Institute (ASMI)

Balanced Scorecard Collaborative (BSCol)

Better Management Inc.

Business Budget Roundtable (BBRT)

Center for Advanced Manufacturing -International (CAM-I)

Conference Board

Harvard Business School (HBS) Press

Institute of Management Accountants (IMA)

Motorola University - Six Sigma


Starting a New Executive Role….

In 2002, CEO Crown Castle International invited me to establish a Global

Performance Office to direct global CPM efforts…. I had many questions:

What are best practices for this new function?

How did winning companies organize themselves?

What are their core competencies?

How did they achieve frame-breaking results?

Many more questions……. so it was time to study the winners

“Only the fool learns from his own mistakes, the wise man learns from the mistakes of others.” - Otto von Bismarck


...Against a Challenging Landscape….The Telecom meltdown had begun, Crown customers were starting to consolidate and capital markets were contracting.

Booz Allen Hamilton - reported “European and North American CEOs topped the list of involuntary exits.”

Fortune - “If making the Fortune 100 best lists is an enormous accomplishment, consider how tough it is to repeat the feat every single year. Just 22 companies have appeared on our list every year since its 1998 inception.” The turnover is staggering.

Kaplan & Norton – “9 out of 10 Companies Fail to Implement Their Business Strategies”

HR Magazine – “Executives are expected to demonstrate results faster than ever before; CEO, CFO, COO, and CIO turnover has accelerated rapidly in the past few years”


“What do Malcolm Baldrige Quality Award, Global

Balanced Scorecard Hall of Fame Award, Sterling Award,

Deming Award, Fortune 100 Best Company Award and

APQC Award winning enterprises all have in common?”

“Man’s mind, stretched to a new idea, never goes back to its original dimensions”

– Oliver Wendell Holmes

…Posed the Question…..


...Commenced Research on Winning Organizations….

Participated with executives and leaders from dozens of leading organizations that included Balanced Scorecard Hall of Fame, Baldrige, Sterling, Fortune, and APQC Best Practice Partner Award winners; research projects and clients included:

Commercial Performance Management Consortia Best Practice Project

Government Performance Management Consortia Best Practice Study Project

Kaplan and Norton’s Office of Strategic Management Study (OSM) Group

Customer Relationship Management (CRM) Consortia Best Practice Study Project

Knowledge Management (KM) Consortia Best Practice Study Project

Best Practice Sharing Consortia Study Project

Numerous high performing companies and divisions


…. Gained Exposure to Top Leadership Thinking…

National Malcolm Baldrige Quality Award winners who have out performed their peers in many performance categories including Medrad, Boeing, Bronson Methodist, Motorola, and City of Coral Springs Florida (Sterling State Award).

American Quality & Productivity Center (APQC) Best Practice Partner Award winners including Hilton Hotels, TVA, Bank of America, Jet Blue,Saturn, American Red Cross, Florida Department of Health, and LL Bean.

Global Balanced Scorecard Hall of Fame Award winners including U.S. Army, Crown Castle International, Canon, Ricoh, Royal Canadian Mounted Police (RCMP), Serono, Tennessee Valley Authority (TVA), and KeyCorp.

High Performing Enterprises including Marriott, Raytheon, Siemens, Sprint Nextel, Anheuser Busch, First Energy, Hearst Publications, LB Foster, Bonneville Power Administration (BPA), Federal Reserve Bank, and M7 Aerospace.

Book Royalties Will be Shared to Fund Tower of Voices Flight 93 Memorial


…. Learned “5 Key Principle” Organizations Demonstrate Consistent Winning with Multiple Recognitions.

Enterprise (alphabetical order)

Balanced Scorecard

Global Hall of Fame Award

(Kaplan & Norton)

APQC Best

Practice Award

U.S. President Malcolm Baldrige National

Quality Award

Governor Sterling Quality Award

Deming Award

Fortune 100 Best

Companies to Work

For Award

American Red Cross

Bronson Methodist Hospital 2 times 3 times

City of Coral Springs

Crown Castle International

Florida Dept of Health 2 times Hearst Publications (Houston Chronicle)

KeyCorp

LB Foster Company

Medrad

Raytheon

Ricoh 2 times

Serono International

Sprint Nextel Forbes

Award Tennessee Valley Authority

“I'm against a homogenized society, because I want the cream to rise.” - Robert Frost


The Winners Circle

Book Royalties Will be Shared to Fund Flight 93 Memorial


A Great Deal of Interest in CPM#1 of 1,621 Management & Leadership Titles

Royalties Will be Shared to Fund Flight 93 Memorial


“Five Key Principles” Containing Over 30 Best Practices Provides the Framework to Accelerate Performance


Principle 1: Establish and Deploy CPM Office and Officer–Bronson Book Case Study

“Paladino [Bob] effectively leverages his considerable knowledge and experience as a management consultant and chief performance officer at Crown Castle to produce a compelling case for a Corporate Performance Management office. The CPM office becomes the focal point for translating strategic intent to operational actions. The concept is enriched by the book’s excellent examples from both private and public sector organizations.”

- Dr. Robert S. Kaplan, Harvard Business School; Co-Developer of Balanced Scorecard, Strategy Focused Organization, and Activity-Based Costing


About Bronson Methodist Hospital

Bronson stands out in the Health Care Sector with numerous awards:

Malcolm Baldrige National Quality Award (2005)

Michigan Quality Leadership Award (2001, 2005)

100 Top Hospitals Award (2005).

Governor’s Award of Excellence for Improving Care in Hospital Setting (2004, 2005)

Governor’s Award of Excellence for Improving Preventive Care in the Ambulatory Care Setting (2005)

FORTUNE magazine's "100 Best Companies to Work For" (2004, 2005, 2006)

Working Mother’s “100 Best Companies for Working Mothers” (2003, 2004, 2005)

VHA Leadership Award for Operational Excellence (2005, 2006)

To learn more go to the website www.bronsonhealth.com

Bronson Methodist Hospital is a non-profit medical center:

The hospital is the flagship organization in the Bronson Healthcare Group.

Generates $751 million in gross patient revenues.

Bronson’s 3,200 employees and 780 medical staff manage more than 77,000 emergency visits and 21,000 admitted patients each year.

Providing inpatient and outpatient care from a 28-acre urban campus in downtown Kalamazoo, Michigan.

Established in 1900, Bronson is a 343-bed state-of-the-art, all-private room facility designed as a peaceful, healing environment.

Michele Serbenski, Executive Director, Corporate Effectiveness & Customer Satisfaction is acknowledged for her contributions to the book case.

Adapted from “Five Key Principles of Corporate Performance Management” Bob Paladino , 2007, All Rights ReservedWiley Publishing


About Bronson Methodist Hospital

The Bronson culture is built on a focus and passion for excellence. Its mission to provide excellent healthcare services. This statement reflects what Bronson does and why it exists.

The mission, values, commitment to patient care excellence, and philosophy of nursing excellence provide the foundation that supports the organizational strategy, which is illustrated in the vision to be a national leader in healthcare quality and the three Cs of corporate strategies (exhibit )

Bronson’s commitment to excellence begins with the visionary leadership provided by President and CEO, Frank J. Sardone. “Continuously raise the bar” is Sardone’s leadership mantra and a concept that has moved Bronson steadily forward in achievement of its vision to be a national leader in healthcare quality.

Adapted from “Five Key Principles of Corporate Performance Management” Bob Paladino , Wiley Publishing 2007, All Rights Reserved

“We make a living by what we get, we make a life by what we give.”- Sir Winston Churchill


Principle 1: Establish and Deploy CPM Office and OfficerBest Practice Highlights

Executive Sponsorship. Bronson sponsored CPM Officer at a high level

Organizational Level and Reporting Relationship. CPM Office Executive reports to a CEO direct report

CPM Office Staff. Small senior team experienced in change programs, full time roles

Leadership, Influence Factors. Able to organize large scale virtual teams to drive results in one of more CPM methods (Plan, Do, Check, Act)

Ownership of CPM Processes and Methods. Established centralized CPM oversight with senior executives. Executive team owns and directs the Strategic Management Model process enterprise wide

Collaborative Maturity. Experienced in working horizontally and vertically through theorganization

(A more complete list and examples of best practices exists in the book)



Principle 2: Refresh & Communicate Strategy

FIVE PRINCIPLES presents guidance for the design, development, and implementation of a strategic planning and control system. Such a system leads

toward better strategic decisions, competitive advantage, and increased profitability. Drawing on his profuse knowledge and extensive practical

experience, Bob Paladino conveys a lively coverage of essential ideas and examples of ways to improve performance.

-Charles T. Horngren, Professor Emeritus, Stanford University, father of Cost Accounting


Principle 2: Refresh & Communicate Strategy-Step by Step

The vision and mission failed promises were it not for the top-level commitment of

Bronson staff, who believe in the values and demonstrate them every day to patients.

Bronson’s success depends on the ability to achieve the three Cs (below)


“It's not enough that we do our best; sometimes we have to do what's required.”- Sir Winston Churchill


Principle 2: Refresh & Communicate Strategy-Strategic Management Model

Strategic planning at Bronson is a continuous process driven by the mission, values,

and vision. Based on Baldrige feedback, the planning process was reevaluated and

enhanced, integrating the strategic, financial, human resource, staffing, and education

plans into a very robust strategic management model (SMM).

The key steps of the SMM and the time frame for executing each step are shown

below.



Principle 2: Refresh & Communicate Strategy-Short and Long Term Goals, Plans, KPIs



Principle 2: Refresh & Communicate Strategy-Best Practices Highlights

Strategic Planning. Bronson personnel conduct strategic planning to understand changing market conditions including competitor, supplier, rivals, potential entrants, and substitutes in the marketplace. SMM includes a comprehensive SWOT analysis.

Strategic Planning. Bronson has effectively linked its philosophy, mission, strategies, and annual plan with its BSC goals and measures, which are cascaded throughout the company. Bronson links strategic, operational, and people plans.

Strategic Plan. Bronson produces a comprehensive strategic plan that is updated continuously throughout the year.

Core and Adjacent Products and Services. Bronson defines and determines core, adjacent, and new services to focus on highest probabilities for success.

Link Strategic Planning and Budgeting Processes. Bronson links strategic planning to the budgeting process to provide for a seamless continuum.

Communications Plan. Bronson communicates strategy throughout the organization using a comprehensive communications plan.




Principle 3: Cascade and Manage Strategy

“Bob Paladino’s observations and principles are firmly rooted in the Kaplan/Norton Strategy Focused Organization (SFO) methodology. Bob is to be

congratulated for his creative extension of these principles and for the illustrative cases provided. He has successfully walked the tightrope of theory and practice

– a good read.”

- David P. Norton, Co-Inventor Balanced Scorecard and Strategy Focused Organization Concepts, Boston, Massachusetts


Principle 3: Cascade & Manage Strategy-Cascading Scorecard Objectives and Measures

The executive team developed an enhanced strategic plan cascade shown below (left) in an effort to strengthen alignment across the organization.

The annual strategic plan, with specific tactics and action plans aligned by the three Cs, is deployed to the organization through this robust cascade Cardiologists cascade below (right) for example.

“When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it

in numbers, your knowledge is of a meager and unsatisfactory kind. - Lord KelvinAdapted from “Five Key Principles of Corporate Performance Management” Bob Paladino , Wiley Publishing 2007, All Rights Reserved


Principle 3: Cascade & Manage Strategy- Staff Performance Management System, Alignment to Strategic Objectives

The Staff Performance Management System

(SPMS) is designed to support organization-

wide expectations of high performance work

by all staff.

It is the primary mechanism for the

achievement of action plans.

Seventy percent of individual leader

performance is based on achievement of the

strategic objectives as measured by the

organizational scorecard.

The remaining 30 percent is based on

individual goals that must also support the

strategic plan.



Principle 3: Cascade and Manage StrategyBest Practice Highlights

Partner with Business Owners. Partner with business owners including line and staff leadership team members to gain support and influence as partners to help them achieve results.

Develop level 1 Balanced Scorecard. Developed an executive level BSC, the highest level in the organization.

Leverage Proven BSC or Comparable Methods. Leveraged proven BSC methods including use of the four perspectives and appropriate number of measures.

Cascade BSC to Lower Levels. Cascaded the BSC to the lowest levels of the organization including to the individual employee level.

Align Support Services. Aligned support services to the corporate BSC objectives and measures.

Align Teams and Individual Employees. Defined personal BSCs for teams and/or individuals that align with higher level and support services BSCs.

Link Compensation. Align rewards, recognition, and compensation programs to the balanced scorecard.

Manage Using Measures. Effectively managed the business using BSC meeting management techniques focused on exception based management. Manage BSC meetings to address the appropriate mix of strategic and operational issues; link these issues with Principle 4 Business Improvement.




Principle 4: Improve Performance

“Lots of organizations are measuring performance, but few succeed in effectively managing performance. This timely book contains time tested insight from

leading companies and provides a ‘how-to’ guide for jumpstarting performance improvement initiatives in your organization.”

-Carl DeMaio, President and Founder The Performance Institute and American Strategic Management Institute (ASMI)


Principle 4: Improve PerformancePlan, Do, Check, Act (PDCA) Performance Improvement System

Through daily use of the PDCA

model, Bronson achieves

improvement, learning and

innovation.

The Focus PDCA model for

improvement creates the

mechanism for improvement of

key processes and continuous

organizational learning.

“Measurement without the opportunity to improve is harassment!”- E. Deming (father of quality)



Principle 4: Improve PerformanceImproving the Customer Experience: Listening and Learning Methods

Understanding customers and their

requirements is essential to achieving

success.

The Customer Research Program (CRP) and

its listening and learning methods are kept

current through the PDCA model.

Bronson utilizes both qualitative and

quantitative listening and learning methods

for annual strategic planning as well as

monthly reviews by the CASE Strategic

oversight teams and the executive team, to

determine customer requirements.

“The measure of success is not whether you have a problem to deal with, but whether it’s the same problem you had last year.”- J. F. Dulles



Principle 4: Improve PerformanceImproving Customer Relationships, Managing and Resolving Complaints

All employees are empowered and expected to resolve patient complaints 24x7.

Employees are oriented, trained, and coached to proactively handle complaints using the service recovery process.

The process includes specific steps to acknowledge, apologize, and amend.

The individual who receives the complaint assumes responsibility for investigation, follow-up and resolution, according to the detailed steps in the patient complaint management process



Principle 4: Improve PerformanceBest Practice Highlights:

Prioritize Improvement Projects. Identify and prioritize strategic and operational initiatives to improve organization’s performance along financial, customer or constituent, process and people dimensions.

Leverage Customer Facing Processes . Develop and exercise customer/patient processes to understand and recalibrate processes around changing customer needs. Gather customer and competitor intelligence through the use of regular customer survey, focus groups, call centers, quality function deployment, and related methods and approaches.

Leverage Process Improvement Methods. Design and maintain an ongoing process improvement and problem-solving program based on PDCA, root case, and failure modes effects analysis methods and tools to identify and eliminate root causes of issues.

Realize Value from Benchmarking Processes. Leverage benchmarking and comparative methods to identify and regularly improve core and support processes.

Create a Performance Improvement Culture. Create a virtual community of practice of practitioners to coordinate and optimize improvement efforts enterprise-wide..




Principle 5: Manage and Leverage Knowledge

“Read this book if you want a practical guide—based on real experience—to take your organization to higher levels of performance.”

-Carla O’Dell, President American Productivity and Quality Center (APQC)Global Expert on Knowledge Management


Principle 5: Manage and Leverage Knowledge, Knowledge Management – A Holistic View

Bronson makes needed data and information both available and accessible to staff, suppliers, partners, and patients through the state-of-the-art IMS.

Validation of data availability and accessibility are key elements of the processes that support the IMS.

Bronson maintains a computer network of digitally available data for all stakeholders.

Access to the network is obtained through locally attached workstations, wireless-enabled devices, and the public Internet.

Wireless-enabled laptops and other devices are available for checkout to patients, family members, or physicians so they can remain productive and connected while on our campus.

Email is provided to all staff, and is accessible from hospital PCs (including general-purpose “surf stations” for staff that do not use PCs as part of their day-to-day jobs), and is also available via the Bronson wireless network and the Internet.

Interactive kiosks, integrated with the public Bronson website, assist patients and visitors with facility maps, service directories, and other information useful while in our facilities.

“By three methods we may learn wisdom. First, by reflection, which is noblest; second, by imitation, which is easiest; and third, by experience, which is bitterest.”

- Confucious


Principle 5: Manage and Leverage KnowledgeEffective Skill Sharing and Communications

Communication and skill sharing

are recognized as being critical to

organizational success.

A systematic process to facilitate

and ensure effective

communication, skill sharing, and

knowledge transfer has been

developed, incorporating formal

and informal mechanisms



Principle 5: Manage and Leverage KnowledgeBest Practice Highlights:

Develop KM Processes. Establish and leverage best practice identification, gathering, and sharing processes and technology solutions

Leverage Technology . Partner with the IT function to launch and maintain KM systems.

Link KM with Improve Performance Process. Link best practice or knowledge management processes with Principle 4 Improve Performance processes to capture solutions and innovations.

Share Best Practices with Strategic Planning. Share best practices with strategic planning processes to better understand core competencies and possible strategic advantages.

Maintain a Virtual KM Network. Establish and maintain virtual network of KM experts throughout the enterprise to optimize knowledge and to keep processes evergreen.



““Although the last, not least. “ - William Shakespeare


Five Key Principles of CPM Bridge the Divide and Provide for Strategy Execution

Contact us for Training and Consulting Expertise

“Bob Paladino has taken a balanced approach of taking all attributes of high performing businesses and turning them from theory to practical application. His book also discusses a step by step approach by using case studies which, if followed, will help organizations get to the maturity level in a timely manner”.

-Ashok G. Vadgama, President Center for Advanced Management Institute (CAM-I)”


About the Speaker

Firm provides Corporate Performance Management (CPM) consulting services to Fortune 1000 companies.

Hall of Fame winning clients; who have been profiled in recent best-selling books; Harvard Business Review; Forbes; & Fortune magazines.

Served as VP & Global Consulting Practice Leader for Drs. Kaplan & Norton at the Balanced Scorecard Collaborative in affiliation with Harvard Business School; led winning programs for Balanced Scorecard Hall of Fame Award and APQC’s Best Practice Award.

Quoted and published extensively in leading journals; among highest rated speakers at industry and trade events

CPA; dual MBA (Finance & Management) from The Wharton Graduate School of Business at the University of Pennsylvania; member of the AICPA and MSCPA.

Managing Partner, Bob Paladino & Associates, LLC

[email protected] 978-857-6766

Visit our website: www.paladinoassociates.com

The Five Key Principles of Corporate Performance Management

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