Transcript 50 ways - David Parmenter

Finding your organization's critical
success factors
Presented by David Parmenter
waymark solutions limited
November 2009
Website: www.davidparmenter.com
Email: [email protected]
CSF Stories
 freight forwarding company
 airline
The hierarchy of success factors
Timely
Critical
arrival
success
and
factors
departure
of planes
Success
factors
The hierarchy of success factors
trucks
Critical
leaving
success
on time
factors
as close
to 100%
capacity
Success
as can be
factors
This workshop is an
extract from my white
paper that can be
acquired from
www.davidparmenter.com
This presentation is part of a series of
webcasts on ‘winning KPIs’
www.bettermanagement.com
1.
2.
3.
4.
5.
6.
7.
Introduction to winning KPIs (Aug 09)
Implementing KPIs - A 12-Step Process
Implementing KPIs in Smaller Orgs (<200 Staff)
Finding your organization’s critical success factors
Balanced scorecard in 16 weeks not 16 months
Getting started or restarted with winning KPIs
Revitalizing a floundering balanced scorecard with winning
KPIs
8. ‘Winning KPIs’ - a question and answer session
9. ‘Winning KPIs’ - a question and answer session
10. “Sorting the wheat from the chaff” – finding your wining KPIs
Why does performance measurement
fail in so many companies?
 do not apply enough rigor in our measures –
hospital example
 lack of a process – invented in a spare afternoon
 little or no tie in to the organization’s critical
success factors
 observed well after the ‘horse has bolted’
 lack of clarity about who should see what
 too many and all treated the same
 lack of attention by the senior management team
Linkage of Mission / Vision / Values
Linkage of strategy to KPIs and BSC
strategy to
Strategies (issues & Initiatives)
measurement
Financial
Results
Customer
satisfaction
Learning
& Growth
Internal
Processes
Staff
satisfaction
Community
& environment
Critical Success Factors
Key Result Indicators (max 10)
Performance Indicators & Result Indicators (80 or so)
Key Performance Indicators (max 10)
Financial
Results
Customer
satisfaction
Learning
& Growth
Internal
Processes
Staff
satisfaction
Community
& environment
KPIs & PIs in a balanced scorecard and KRIs in a dashboard
Changing this
Team
direction
Strategic
direction
To this
Teams in alignment with strategy
4 types of performance measures
KRIs
peel the skin to
find the PIs
PIs&RIs
peel to the core
to find the KPIs
KPIs
The 10/80/10 rule
Key result indicators
Performance indicators
Result indicators
Key performance indicators
10
)
) 80
)
10
Tells you how you
have done in a
perspective
Tells you what to do
Tells you what you
have done
Tells you what to do
to increase
performance
dramatically
Critical success factors
 “a list of issues or aspects of organizational
performance that determine ongoing health,
vitality and well-being” source AusIndustry
 out of the 30-40 success factors only 5 to 8
will be the critical ones
 the missing link to making your performance
measures work
How well known are the critical success
factors in your organization?
24% - there is a list which I have as do other staff
25% - there may be a list but I am not aware of it
51% - no formal list but management refer to
them in papers and discussions
Source: survey March 08 www.bettermanagement.com
over 450 attendees
Has an exercise been undertaken to
ascertain your organizations critical
success factors within the last 5 years?
32% - yes
48% - not to my knowledge
20% - do not know
Source: survey March 08 www.bettermanagement.com
over 450 attendees
With 40 or so success factors there is
confusion and a lack of focus
 too many measures
 strategic plans with too many diverse and
contradictory initiatives
 lack of communication and direction to
operational and support staff
Most organizations know their success
factors - however few organisations
have:
 worded their success factors appropriately
 segregated out success factors from their
strategic objectives
 sifted through them to find their critical ones
– their CSFs
 communicated the CSFs to staff
Importance of getting the SFs right
 wording of the SFs is critical
• retention of staff becomes retention of key staff
• increase repeat business becomes increase repeat
business from core customers
 measures become more specific
• daily sales becomes daily sales made to key
customers
• planned calls becomes planned calls to key
customers
• deliveries made on time becomes deliveries to key
customers made on time
Finding your critical success factors
(step 6) is a three phase process
1. finding out the SFs that have been mentioned
over the last ten years or so
2. holding a two day workshop
3. presentation to the SMT and Board to obtain
agreement on the CSFs
The Goal: to find your 5 to 8
organization-wide CSFs
 5 to 8 regardless of size
 CSFs will largely be industry specific e.g.
the CSFs for an airline are different to a
retail record chain store
 a conglomerate organization would have 5 to
8 CSFs for each different industry
 a very subjective exercise - highly dependent
on the analytical skill of those involved
Please talk to the person next to you about
what I have said
 does it make sense?
 is it relevant to you?
 any areas of confusion
Phase 1: Researching the existing SFs
 finding out the SFs that have been mentioned
over the last ten years or so
 developing a list of these and grouping similar
ones together
 consult stakeholders (board members, key
customers, key suppliers, unions etc.) and
employees
 interview some of the SMT and Board
members (especially those who have known
the organization for a long time)
The SF matrix
Success factor
Finance
Resources
SF environment & community
Positive public perception of organization
Y
Y
Be seen in the community as an employer of ‘first choice’
Y
Y
Supporting minorities through employment
Minimizing pollution and waste
Y
Supporting educational institutions (share knowledge via organization’s website)
Encouraging voluntary assistance by staff to the local community
Y
A CSF case study
(NZ Maori Arts & Crafts Institute, Rotorua)
Background
 Rotorua geysers, mud pools and Maori arts
& crafts
 56 staff
 600,000 tourists
• foreign independent travellers
• tours (many from Asia)
• domestic
 revenue generated from entrance fees, retail
shop, evening concerts
 geyser is the main draw card
Financial SFs
 balance of experiences, products and
services
 increased in overall spend by FIT
 increased repeat domestic business
 optimal utilisation of assets and resources
 optimisation of working capital
 understanding of the geothermal valley
 continued fiscal responsible management
 maximise off-season potential
Customer satisfaction SFs
 seamless service to inbound operators
 modern, well maintained assets for visitors
 introduction of new services to enhance
experience (one to one, information
stations, interactive computer displays)
 quality guided tours, intimacy with Maori
culture
Internal Process SFs
 increased linkages with key suppliers
(millennium hotel etc)
 timely maintenance of assets
 effective relationships with key players in
tourism, and other stakeholders
 optimising technology (extranet for
inbound information, intranet etc)
 successful completion of projects
 increased innovation
Learning & growth SFs
 increase in adaptability and flexibility
 increase in productivity through increase in
skills, motivation, etc
 increase in empowerment (delegated
decision making)
 foreign language capability (Korean etc)
 increase in technology savvy
 develop knowledge database
 increase guide skills, cultural sensitivity &
storytelling
Employee satisfaction SFs








increase in employee satisfaction
retention of key staff
provide opportunities to grow
establish good life and work balance
appropriate reward and recognition for all
increased recognition (celebrating success)
a pleasant physical work environment for all
active and well supported social club
Environment, community SFs
 good working relationships with key
community organisations (IWI, whaka
village, all neighbours)
 demonstrate leadership in the community
 adoption of green globe 21
 linking sponsorship with staff community
work
 supporting local businesses
 favourable reputation in the community
Workshop #1 revisiting the success factors of
organizations in your sector (see hardcopy)
 Please read and follow instructions
Phase 2: Holding a two day workshop
1. planning the workshop



inviting the right people
appropriate location
making sure all attend (invite from the CEO)
2. use the agenda in the manual


run the 6 workshops
check that proposed CSFs address all the six BSC
perspectives
3. day and half for all, 2 days for the KPI team
4. utilize material I have put on
www.bettermanagement.com
Suggested attendees
 20 to 40 people experienced and knowledgeable staff
from all around the organization (operators,
administrators, sales staff, production)
 selection of management from head office including
one or two from the SMT
 all KPI project staff
 external project facilitator, if you have one
 if a couple of pilots are to be run, invite a team from
the relevant business units
Short listing the CSFs – by relationship
mapping
Increase repeat
business
Retention
of key staff
Increased
recognition
4 OUT
Example of
relationship
mapping
 All teams work
with same SF list
 Arrows draw in the
direction of the
relationship
 A subjective area,
so you cannot be
wrong
 Compare results
Another example of relationship mapping
Workshop 2: Airline success factors
Feedback of ranking from teams
Team 1
Team 2
Team 3
Positive public perception of organization
Be seen in the community as an employer
of ‘first choice’
Supporting minorities through
employment
Environmentally friendly culture and
reputation ( use of environmentally
friendly materials)
Delivery in full on time, all the time to our
key customers
Finding better ways to do the things we
do everyday
Optimizing technology that matters
5
1
4
3
1
5
2
Table for short-listing CSFs
Critical success factor
1. e.g. timely arrival and
departure of planes
2. e.g. delivery in full and
on time
3. xxxxxxxxxxxxxxxx
4. xxxxxxxxxxxxxxxxxxx
Financial

Customer
satisfaction

Staff
satisfaction

learning &
growth

Internal
process



possible





Environment
& community
possible

Testing that your top 5-8 CSFs link to
your strategic objectives
Strategic Objectives
Critical success factor
SO#1
e.g. timely arrival and
departure of planes


e.g. delivery in full
and on time to key
customers

possible
1. xxxxx
2. xxx
SO#2
SO#5
SO#6
possible







5. xxxxx

6. xxxx

7. xxxx
SO#4

3. xxxxx
4. xxx
SO#3


No linkage to strategic objective #4


Phase 3: Presentation to the SMT and
Board to obtain agreement on the CSFs






prepare with PR help – using emotional drivers
present the top 5 to 8 CSFs
explain the ramifications on measurement
list the 24/7, daily, weekly measures, if any,
that are currently being collected in this area
discuss requirement to communicate to
employee representatives and staff
ask for permission to proceed to next stage, (
team and organizational measures)
Please talk to the person next to you about
what I have said
 does it make sense?
 is it relevant to you?
 any areas of confusion
Brainstorming performance measures using
one of the CSFs
_______________
_______________
______________
_______________
_______________
_______________
_______________
_______________
CSF:
______________
_______________
_______________
_______________
______________
_______________
_______________
_______________
_______________
_______________
_______________
_______________
______________
______________
_______________
_______________
_______________
_______________
Implementing KPIs - a 12 step
process
Project week pre 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 post
1
2
3
4
5
6
7
8
9
10
11
12
SMT commitment
Establishing a "winning KPI" project team
Establishing a "just do it" culture and process
Setting-up a holistic KPI development strategy
Marketing KPI system to all employees
Identifying organisation-wide critical success factors
Recording of performance measures in a database
Selecting team performance measures
Selecting organisational winning KPIs
Developing the reporting frameworks at all levels
Facilitating the use of winning KPIs
Refining KPIs to maintain their relevance
What we have learnt
 gain an in-depth understanding of the
characteristics of KPIs
 understand the significance of critical
success factors
 understand how KRIs,PIs,RIs & KPIs fit
together
 how to brainstorm measures from a critical
success factor
CSFs help reporting measures in






the board dashboard – the KRIs
daily / weekly KPI reporting
team scorecard reporting
organizational scorecards
reporting progress to staff
the staffs’ own performance agreements
see other ‘better management’ presentations I
have delivered for examples of these
Suggested next steps
 read my paper on www.bettermanagement.com – it is
free to access
 acquire the book “Key Performance Indicators –
developing, implementing and using winning KPIs”
 ban further development of measures until the CSFs
have been agreed
 hold the two day CSFs workshop (may need a
facilitator)
 listen to my other web casts
 attend my KPI master class if you are to be in the
KPI project team (see www.davidparmenter.com)
These books came out in 07
www.waymark.co.nz to order, see link to www.amazon.com
Thank you for investing the
time
John Wiley & Sons have published
Amazon link on www.davidparmenter.com