Transcript 50 ways - David Parmenter

A ‘top ten’
performance
management book on
www.amazon.com for
over one year
www.waymark.co.nz to order, see link to www.amazon.com
Getting started or restarted with
winning KPIs
Presented by David Parmenter
waymark solutions limited
June 2008
Website: www.waymark.co.nz
Blog: www.davidparmenter.com
Email: [email protected]
What stage are you with your performance
measures?
1. performance measures are not working and
want to get started using winning KPIs
2. have got a balanced scorecard but it needs a
revamp
3. our performance measures are working well
and am only interested to compare them
against winning KPIs
This webcast is 6th in a series on
winning KPIs
1. introduction to winning KPIs
2. implementing KPIs - A 12-Step Process
3. implementing KPIs in Smaller Organizations
(<200 Staff)
4. finding your organization’s critical success
factors
5. balanced scorecard in 16 weeks not 16 months –
the implementation lessons
6. getting started or restarted with winning KPIs
How familiar are you with the “winning
KPIs” methodology?
1. this is my first web seminar I have attended on
winning KPIs
2. I have attended at least one other web cast done by
David Parmenter
3. am very familiar with the work but have not used it
yet
4. not only familiar but have started the process to use
winning KPIs in our organization
Contents of this web seminar
 how to get started or restarted depending on
the variety of issues you face
 the main barriers to success
 your next steps
How to get started when little has been
done
 performance measures (PMs) have been a
random development
 the balanced scorecard, if mentioned, would
be confused with a weight watchers’ tool
 most PMs are reported monthly
 nearly all PMs are financial
Selling the change
1. collect data on impact of the current performance
measures (slide)
2. read Kaplan & Norton’s Harvard Business Review
papers January-February 1992
3. read papers on www.bettermanagement.com
4. prepare the sales pitch for change (slide)
5. pre-sell the sales pitch to the influencers
6. make the sales pitch
7. plan and execute a workshop on the critical success
factors – see web seminar
8. seek green light for the implementation of ‘winning
Data on impact of the current
performance measures
 estimate the cost of gathering measures
 find the ‘war stories’ in your organization by
visiting the oracles both past and present e.g.
the green book
 interview the workforce in the field to see
what they think
 run a survey on the staff, using a statistical
sample
We have these problems
(The sales pitch )
 a lack of timely decision making at the work place
leading to rising operational costs
 a lack of alignment of day to day activities to
strategy e.g. staff are performing the same TQM on
all shipments
 too many performance measures e.g. over xx are
gathered each month at an estimated cost of $yy
 a lack of clarity on which of our success factors are
critical e.g. timely arrival and departure of planes
A winning KPIs project will fix all these
How to get started when the balanced
scorecard (BSC) is failing
 BSC put in at great cost by external consultants
 the reporting of PMs is seen as an end in itself nothing seems to happen
 interest in the BSC and PMs is waning
 BSC is now thought of as a failed management
fad
 the BSC is no longer on the CEO’s radar screen
Revitalization #1
1. ascertain reasons for failure (slide)
2. compare and contrast the way you have dealt with
performance measures against how winning KPIs
are to be implemented and used, see my papers on
www.bettermanagement.com
3. prepare the sales pitch for change (slide)
4. pre-sell the sales pitch
Revitalization #2
5. make the sales pitch
6. plan and execute a series of workshops to revisit;
the critical success factors, the team and
organization measures and associated scorecards see CSF workshop paper for content
7. ascertain what ‘winning KPI steps’ have to be
done and what can ticked off as already
accomplished
8. commence implementation (see book)
Why did the BSC fail?
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lack of involvement of in-house team
little involvement with the workforce
no PMs tracking important activities that happen
24/7 or daily
the CSFs where not ascertained
CSFs were not communicated to the work force
all PMs were called KPIs
too many KPIs
Prepare the sales pitch for change
(hard as the SMT do not want to listen)
 explain the magic of knowing the CSFs
 if staff know the CSFs they will start aligning
their daily activities to the organization’s strategy
 emphasize the learning that has already occurred
through the BSC process
 explain why this approach is different
 emphasize the tasks and how the implementation
will avoid the pitfalls of the existing BSC project
 ask ‘can we afford not to undertake this task’
How to get started when management have
already given the go ahead for ‘winning KPIs’
 some of the senior management team (SMT) have
listened to the winning KPIs presentations on
www.bettermanagement.com
 the CEO is aware that PMs will change and their
monitoring involvement will be daily / weekly
 a half day workshop has been held for the SMT and
they are aware of the characteristics of winning
KPIs
 the project steps and the need for a full time KPI
team have been agreed
Getting started
1. set up the KPI team with support facilitator
2. hold the two day critical success factor
workshop
3. design the implementation from either the 12
steps or the 8 phase approach, or some
combination
4. KPI team implement the plan with regular
feedback to CEO and guidance from the
external facilitator
The main barriers for success
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the wandering attention of the CEO (slide)
not freeing up the right people for the KPI team
not making the KPI team full time
lack of selling through the emotional drivers of the
SMT, management, and staff
 lack of follow through
 completing priorities – we need to finish what we start
 see the presentation BSC in 16 weeks not 16 months
Keeping the CEO & SMT interested
 always sell the change via the CEO emotional
drivers e.g. the points of pain – ask the EA
 communicate small wins weekly to the CEO,
e.g. something to boast about on the 19th hole
 encourage / actively manage positive feedback
up to the CEO “ I appreciate those kind words,
could you repeat what you have said to the
CEO when you next meet, it would mean a lot
to me and the KPI team”
 celebrate every success – a celebration is a
great communication tool
Appointing the right people for the KPI team
The key characteristics which need to be covered by
the team include:
 excellent persuasive presentation skills
 innovation
 ability to complete large projects
 knowledge of the organization and sector
 advanced communication skills
 ability to bring others onboard
 balanced mix of “oracles” and “young guns”
Which team member for leader?
 leader is well respected in the organization
 gets on well with the CEO
 well liked as they have an inclusive
leadership style
 has completed projects in the organization
 had a string of successes
 relaxed style, seems to make time rather than
be constantly fighting time – stories
Selling through the emotional drivers
 car sales person analogy
 emotional drivers differ:
• SMT - looking a fool in front of the Board, impact
on their bonus, short term focus
• management - not invented by me, will behave
based on their perception, sceptical for good
reason
• staff – job security, impact on existing workload,
perception of what management will do with the
information
A sales presentation
We have these problems
 a lack of timely decision making at the work place
leading to rising operational costs
 a lack of alignment of day to day activities to
strategy
 too many performance measures
 lack of clarity of what of our success factors are
critical
 we are missing goals through taking our eye off our
critical success factors
A winning KPIs project will fix all these – let
me explain
KPI Stories
 Freight forwarding company KPI
 Airline KPI
 What characteristics are common with these
stories?
The characteristics of winning KPIs
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non financial (not expressed in Pds, $s, Euros etc)
measured frequently e.g. daily or 24 by 7
acted upon by CEO and senior management team
all staff understand the measure and what
corrective action is required
 responsibility can be tied down to the individual
or team
 significant impact e.g. it impacts most of the
CSFs and more than one BSC perspective
 has a positive impact e.g. affects all other
performance measures in a positive way
Definition of KPIs
they focus on the aspects or areas of our
organisation’s performance that are critical
or vital for our ongoing and future success
they measure our success in key areas and
processes that affect our customers, our
employees, our shareholders or other
stakeholders
Source: AusIndustry
Clearly few of our measures are KPIs
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xxxxxxxxxxxxxx is not a KPI because
xxxxxxxxxxxxxx is not a KPI because
xxxxxxxxxxxxxx is not a KPI because
xxxxxxxxxxxxxx is not a KPI because
xxxxxxxxxxxxxx is not a KPI because
xxxxxxxxxxxxxx is not a KPI because
There are four types of performance
measures
KRIs
peel the skin to
find the PIs
PIs&RIs
peel to the core
to find the KPIs
KPIs
Our top five measures are thus
xxxxxxxxxx
Reviewed
monthly
KRI
xxxxxxxxxx
Reviewed
weekly
RI
xxxxxxxxxx
Reviewed daily
PI
xxxxxxxxxx
Reviewed daily
KPI
xxxxxxxxxx
Reviewed
quarterly
KRI
David Parmenter’s 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
Key result indicators
Examples
 profitability of customers
 net movement of earnings before interest and
tax
 customer satisfaction
 employee satisfaction
 return on capital employed
 speedometer analogy (gear, rpm)
Performance indicators
Examples
 % increase in sales to the top 10% of customers
 # of employees’ suggestions implemented in last
30 days
 key customers’ complaints
 sales calls organized for the next week, next
fortnight
 late deliveries to key customers
 no. of products rejected by quality assurance
Result indicators
Examples
 sales made yesterday
 weeks sales to key customers
 net profit on key product lines
 debtor collections in week
 xxxxxxxxxxxxxxxxxxxxxxxxxxx
Measuring in the three timeframes
 past measures: e.g. number of late planes last
week/ last month
 current measures : e.g. planes over 2 hours late
(updated continuously)
 future measure: e.g. number of initiatives to be
commenced in the next month / two months to
target areas which are causing late planes.
 KRIs and RIs by definition are past measures
 KPIs and PIs can be past, current, or future
measures
Too many of our measures are in the
past (looking back)
xxxxxxxxxx
Reviewed monthly
Past
xxxxxxxxxx
Reviewed weekly
Past
xxxxxxxxxx
Reviewed daily
Past
xxxxxxxxxx
Reviewed daily
Past
xxxxxxxxxx
Reviewed quarterly
Past
Mission / Vision / Values
Linkage
of
Relationship between strategy / CSFs and
PMs
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 and 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
Definition of a critical success factor
“a list of issues or aspects of
organizational performance that
determine ongoing health, vitality and
well-being”
source AusIndustry
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
xxxxxxxxxx
SF
xxxxxxxxxx
SF/CSF?
We know our
success factors xxxxxxxxxx
- however do xxxxxxxxxx
we know our
xxxxxxxxxx
CSFs?
SF
SF
SF
xxxxxxxxxx
SF/CSF?
xxxxxxxxxx
SF
xxxxxxxxxx
SF/CSF?
Importance of getting the CSFs right
 wording of the CSFs is critical
• retention of staff becomes retention of key staff
• increase repeat business becomes increase repeat
business from core customers
 this makes measures 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
Only KPIs will give us the alignment –
the annual plan will not!
Strategic Objectives
out to 5-10 years
Development plan
out to 3-5 years
KPIs
AP
Silos
AP
Silos
Daily activities
AP
Silos
Next steps
 access the draft PowerPoint and prepare your
sales pitch
 I would be happy to review your sales pitch – and
offer some pointers
 get some public relations assistance (the
emotional driver experts)
 keep up to date by referring to my website
www.davidparmenter.com, my web seminars,
KPI book e.g. templates are available etc
 make sure you celebrate success and let me know
so I can celebrate with you!
Changing this
To this
These books came out in 07
www.waymark.co.nz to order, see link to www.amazon.com
Thank you for participating
in this web seminar
Hope to see you at a workshop
see www.davidparmenter.com
for venues
John Wiley & Sons have published
Amazon link on www.davidparmenter.com