loading...
loading...
Download the PDF View online for free Order from Amazon Order paper copy View online for free Order from Amazon Order paper copy
     
 

Archive for May, 2010

« Older Entries

Plan-Do-Check-Act (PDCA) / Plan-Do-Study-Act (PDSA), Philosophy and Performance Management

Friday, May 28th, 2010

smartKPIs.com Performance Architect update 21/2010

One of the administrative science domains that feeds Performance Management as a discipline is the quality movement. The Plan-Do-Check-Act (PDCA) cycle is at the core of the link between the two fields. It has been promoted and used in its current form for over 50 years. However, its roots can be traced back to ancient Greece.

Socrates (469-399 BC) formulated the dialectic inquiry process based on the idea of questioning and modifying understanding through the conflict of opposing ideas. This technique was further refined by Aristotle (384-322 BC), who enunciated a method of scientific investigation that employed both dialectics and empirical observations. His deductive reasoning approach combined with inductive elements became the foundation of the western scientific method, influencing philosophy and scientific inquiry for hundreds of years.

The famous arab scholar Ibn Sina, known to the western world as Avicenna (980-1037), proposed two stages of the scientific knowledge discovery process: conceptualizing what is meant and verifying what is being conceptualized, the basis of what evolved into what is being called the “Avicennian logic”.

Francis Bacon (1561-1626), considered one of the fathers of the scientific revolution, employed such an approach in defining a more modern version of the scientific method, with the balance leaning more towards the induction reasoning. The conceptualization becomes hypothesis and verification is separated into two further steps: data gathering and results analysis.

In the 20th century, Dr. Walter Shewhart (1891-1967) brought this process of inquiry traditionally used in research and education in business organizations. His collaborator and mentee, Dr. Edwards Deming (1900-1993) refined and popularized this concept as the Plan – Do – Check – Act (PDCA). Deming called it the “Shewhart cycle” and later replaced Check with Study, however in common use it remained the PDCA process, referred to as the “Deming cycle”.

In the 1990s, with the ascent of new management concepts such as the Six Sigma and the Balanced Scorecard, the PDCA process morphs into the new mutations. In Quality Management, the Six Sigma methodology employed the DMAIC project methodology: Define – Measure – Analyze – Improve – Control and the DMADV project methodology: Define – Measure – Analyze – Design and Verify.

In Performance Management, when the Balanced Scorecard as a concept needed a more robust application framework in mid 1990s, the PDCA came to the rescue again. It provided the elements required for migrating the Balanced Scorecard concept from a Management Accounting stage to the Strategic Management stage.

Today, at the down of a new phase of evolution of Performance Management as a discipline, these stages of scientific inquiry of process execution form the essence of the “management” component in “Performance Management”. They illustrate that Performance Measurement is required but not sufficient. Sound Performance Management practices based on the PDCA cycle give context and make the entire journey of improving performance interesting and relevant.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com


Relevant links

Aristotle: http://galileoandeinstein.physics.virginia.edu/lectures/aristot2.html

Bacon: http://plato.stanford.edu/entries/francis-bacon/

Ibn Sina: http://www.iep.utm.edu/avicenna/

Socrates: http://philosophy.lander.edu/ethics/socrates.html

Tags: , , , , , , , , , , , ,
Posted in Performance Architect update, Performance Management, Performance Measurement, smartKPIs.com | No Comments »

Retail KPIs in practice – Foot Locker 2010

Thursday, May 27th, 2010

Foot Locker, Inc., the New York-based specialty athletic retailer, recently reported first quarter financial results. Some of the Key Performance Indicators (KPIs) used within the report are:

Condensed Consolidated Statements of Operations (Foot Locker, Inc. 2010)

Ken C. Hicks, Chairman of the Board and Chief Executive Officer of Foot Locker, Inc. stated in the news release that “these strong results reflect the hard work of our associates worldwide who drove sales gains by providing diligent customer service at the store level, while managing our inventories and operating expenses effectively. ” (Foot Locker, Inc. 2010)

Foot Locker, Inc. operates 3,500 stores in 21 countries in North America, Europe and Australia.

For further examples of performance reports in the retail industry, explore the Retail KPIs in practice section of smartkpis.com (smartKPIs.com 2010), which include links to the Foot Locker, Inc. performance reports.

References:

Foot Locker, Inc. 2010, Foot Locker, Inc. reports first quarter financial results , news release, 20 May 2010, New York, viewed 27 May 2010, < http://www.footlocker-inc.com/investors.cfm?page=2010-1q10-earnings-release>.

smartKPIs.com 2010, Retail KPIs in practice, viewed 27 May 2010, <http://www.smartkpis.com/kpi_examples_in_practice/industries/retail/>.

smartKPIs.com 2010, Foot Locker, Inc. KPI in practice, viewed 27 May 2010, <http://www.smartkpis.com/kpi_examples_in_practice/foot-locker-inc–performance-report-retail-industry-979.html>

Tags: , ,
Posted in KPI, KPIs in practice, Performance Measurement, smartKPIs.com | No Comments »

Performance Management – a story told through key survey figures and statistics

Friday, May 21st, 2010

smartKPIs.com Performance Architect update 20/2010

Performance Management is one of the most dynamic business disciplines today. Its evolution accelerated over the last 20 years and due to the large number of concepts it employs and unstructured body of knowledge, having a comprehensive big picture view of the topic is rather challenging. One way of achieving this is by reading a lot and doing a critical review to the various ideas proposed. Another option is by monitoring the pulse of the discipline as reflected in studies and survey reports covering performance management topics.

Listed below is a random list of relevant statistics published in performance management studies over the last few years. It is interesting to put them together as pieces in a puzzle, to create a picture of the state of the discipline. This is the plus. On the other hand, each study used different research tools and varied in rigor, so the results need to be analyzed in the context of the survey as illustrated in the original report.

Overall they form an interesting read and while the degree of accuracy for their findings may vary, they can be useful in understanding the thinking and direction in Performance Management research and practice:

2010

  • ” …the most growth in BI [Business Intelligence] tools to support performance management has been in operations (51%), finance (50%) and customer management (49%) ” (Ventana Research, 2010)
  • ” …more than  half of participants (53%) said that they are only somewhat confident or not confident at all that their BI [Business intelligence] technology meets the needs of the organization”…. with only 9% being “very satisfied with their organization’s BI efforts.” (Ventana Research, 2010)
  • “…lack of resources (60%) and lack of a budget (43%) are the two most common barriers to improving BI and performance management…. The top two people issues are lack of awareness (36%) and lack of executive support (26%)” (Ventana Research, 2010)
  • “…41% of participating organizations evaluate performance data and 29% are assessing metrics or measures to do so.” (Ventana Research, 2010)
  • “…two thirds (66%) of organizations are planning to evaluate new technologies for BI and performance management.” (Ventana Research, 2010)

2009

  • Balanced Scorecard is the sixth most used management tool all over the world. (Bain & Company, 2009)
  • 53% of the surveyed companies use a Balanced Scorecard, with an overall satisfaction score of 3,83 from 5. (Bain & Company, 2009)
  • “ On average, 84% of employees at Best in Class organizations were rated “meets” or “exceeds” performance expectations…” (Aberdeen Group, 2009)
  • “… An [Enterprise Performance Management] EPM system with strong reporting capabilities is a critical enabler for the Best in Class (companies) by enabling leaders and managers to make better decisions…” (Aberdeen Group, 2009)
  • “Most of the companies agree that systemically deriving KPIs from their strategy and effectively communicating that strategy are crucial to ensuring strategic objectives are met” (PricewaterhouseCoopers, 2009)
  • “….only 33% have implemented strategy maps. Nevertheless 67% of the companies use strategy development tools such as value chain analysis.” (PricewaterhouseCoopers, 2009)
  • ” While many companies say they derive KPIs from strategy (61%), a smaller number indicate that they have been through the process of defining strategic value drivers (54%) to break strategy and identify relevant KPIs.” (PricewaterhouseCoopers, 2009)
  • “On a scale of 1 (not integrated) to 6 (fully integrated), 73% of the companies rate their [Performance Management] process integration as a 4 or above.” (PricewaterhouseCoopers, 2009)
  • “…many companies focus on classic financial control measures. 81% stated that they use KPIs concerning profit or loss, liquidity, profitability and operational business.” (PricewaterhouseCoopers, 2009)
  • ” …along financial indicators, 51% of the participating companies explicitly indicated non-financial measures like customer satisfaction or quality of delivered services as KPIs in use” (PricewaterhouseCoopers, 2009)
  • “On average more than 80% of companies think their [Performance Management] PM processes need improvement…the planning, budgeting and forecasting processes seem to be especially problematic” (BARC, 2009)
  • ” ..the number of people involved in performance management processes has increased over the last years with an average of 30% across all [Performance Management] PM processes.” (BARC, 2009)

2008

  • “ Corporate performance management (CPM) is the highest priority in business intelligence (BI)…” (Gartner, 2008)
  • ‘’….through 2011, at least 50% of companies implementing CPM will simply automate existing finance oriented processes and fail to improve performance management processes across the organization.” (Gartner, 2008)
  • “……organizations that allowed their finance function to lead a CPM implementation were on average 25% less mature in their use of CPM than organizations that had an equal partnership between finance, IT and Key business users in their CPM project.” (Gartner, 2008)
  • [Global Market]  “….financial measures still dominate. In every country, financial measures are the most frequently measured and over half of those surveyed report that over 50% of their measures are financial” (Neely et al. 2008)
  • [Chinese Market] “… 89% reported that they had adopted a formal structure for their enterprise  performance management system.” (Neely et al. 2008)
  • [Japanese Market] “According to data over 60% of Japanese companies have now adopted performance management frameworks such as the balanced scorecard.” (Neely et al. 2008)
  • [U.K. Market] ” … only 17.3% believe they have the right number of measures, while 38.6% have concerns about the quality of their data.” (Neely et al. 2008)
  • [U.S. Market] ” Despite the abundant literature on mapping strategies, the majority of the respondents, 62%, do not visualize their strategies.” (Neely et al. 2008)
  • [Australian Market] “…65.5% of the respondents claim to have a balanced scorecard….. no other framework for enterprise performance management design being prominent in Australia, with 39.3% of respondents preferring to use their own basis for designing their enterprise performance management system.” (Neely et al. 2008)

2007

  • Measuring performance against goals and tracking KPIs occur in 80% of companies. (SAS, 2007)
  • “8 in 10 organizations in this research are engaged in measuring performance against goals, ahead of summarizing and consolidating information. Three-quarters are tracking key performance indicators (KPIs)”:

• Performance measures against goals – 81%

• Summarized reporting of financial performance information on department level – 78%

• Key performance indicators tracked – 76%

• Decision making based on understanding of which measures drive the business – 64% (SAS, 2007)

  • Benefits achieved based on performance management activities

• Competitive advantage: up to 63%

• Agility: up to 56%

• Compliance/Governance: up to 50%

• Budget/plan aligned with strategy: up to 47%

• Revenue growth: up to 47%

• Innovation: up to 44%

• Strategic alignment: up to 44%

• Response to market threats/risks: up to 41%

• Resource alignment/optimization: up to 38%

• Financial transparency: up to 38% (SAS, 2007)

2006

  • “In an evaluation of their budgeting, forecasting, and reporting processes, an astonishing 60% of companies surveyed exhibited limited adoption of [Business Performance Management] BPM best practices, 36% showed ‘some adoption’ while less than 4% showed strong adoption.” (Active Planning, 2006)
  • “Across all companies, 78% of respondents are still using spreadsheets as their primary budgeting and forecasting tool…..only 41% are using graphical dashboards or scorecards in their reporting processes…..and fully 76% have not rebuilt their planning model in over a year” (Active Planning, 2006)

2004

  • “Average companies include nearly nine times too many metrics, focus heavily on historical finance data and not enough on forward-looking indicators.” (Hackett Group (2004) as cited by PMA, 2005)
  • “Less than 20% of all typical companies have mature balanced scorecard implementations in place that are generating business value.” (Hackett Group (2004) as cited by PMA, 2005)
  • “…..world class companies are 159% more likely….. than typical companies to have mature balanced scorecards” (Hackett Group (2004) as cited by PMA, 2005)
  • “…companies report an average of 132 measures to senior management each month (83 financial and 49 operational). This is nearly nine times the number of measures suggested as appropriate when the concept of the balanced scorecard was introduced in 1992″ (Hackett Group (2004) as cited by PMA, 2005)

Same as in Performance Management, “seeing beyond figures” makes the interpretation and use of such results more balanced and relevant.

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com

References:

Tags: ,
Posted in Business Intelligence, Performance Architect update, Performance Management, Performance Measurement, smartKPIs.com | No Comments »

A visual representation of the Balanced Scorecard concept

Wednesday, May 19th, 2010

There are many popular figures representing the Balanced Scorecard concept. Perhaps the most famous one is the one illustrating the four traditional perspectives, with corresponding questions and related objectives, measures, targets and initiatives:

Tags: ,
Posted in Balanced Scorecard, Data visualization | No Comments »

What is wrong with Performance Measurement?

Friday, May 14th, 2010

smartKPIs.com Performance Architect update 19/2010

A simple answer is over-reliance on measurement and its merits.

Since ancient times, humans had a fascination with measurement. In discovering the natural universe, measurement has its merits and one might say it is indispensable. Evaluating the physical properties of the world around us, we have gradually developed a rather objective and accurate way to determine distance, weight, density among others.

In administrative science things are different, tough. Measurement is done by humans and results are used by humans in a much more subjective environment, conducive of errors. It is not something new, and it will not be easily addressed, if ever.

Protagoras of Abdera, who lived between 480-410 B.C. famously said: “Man is the measure of all things”. His words have deep philosophical meanings that reverberate deeply in a performance measurement context. The implications are on one hand at a practical level, as ancient Greek measurement systems used in construction and architecture were based on the dimensions of the human body. On the other hand, at conceptual level, it underpins some of the human evaluation dilemmas that has been in place for centuries.

A relevant example of this dilemma is the practice of conducting individual performance evaluation. The precise origin of performance appraisals is not known but the practice dates back to the third century when the emperors of the Wei Dynasty (221-265AD) rated the performance of the official family members (Banner & Cooke (1984); Coens and Jenkins (2000)). Fairness of raters was questioned since the third century by the Chinese philosopher Sin Yu who reportedly criticized a rater employed by the Wei Dynasty with the following words: “The Imperial Rater of Nine Grade seldom rates men according to their merits, but always according to his likes and dislikes” (Patten (1977) as cited in Banner & Cooke (1984)).

Fast forward a few hundred years and at the turn of the 20th century a performance measurement revolution is announced and driven by Harvard Business School researchers. Eccles published his famous manifesto on 1991 and Kaplan and Norton seized the opportunity to give the world the tool to drive change, fueling it with an equally famous article in 1992 that promoted the Balanced Scorecard as a performance measurement tool. They have quickly realized that measurement is not the key and shifted their efforts towards strategy and performance measurement overall. However, as a result of the growing popularity of the Balanced Scorecard as a strategic performance management system, the efforts of many researchers and practitioners focused on the measurement side of things, trusting that performance management is taken care of. Thousands of articles and books on performance measurement were written in the 90s, many addressing questions such as:

  • Why to measure?
  • What to measure?
  • When to measure?
  • Who should measure?
  • Where to measure?
  • How to measure?

By the beginning of the 21st century, the attitude towards Performance Measurement as a discipline was similar to the one towards Physics a century ago, when Lord Kelvin said: “There is nothing new to be discovered in physics now. All that remains is more and more precise measurement.”

Fueled by advanced in technology, accelerated rate of change in the environment in which many organizations operate and the enthusiastic momentum of the 90s, performance measurement continued dominate the Performance Management research and practice agenda. The fascination of the measurement promise is similar to the one in Physics. There seems to be an attitude that there is nothing new to be discovered in Performance Management now. All that remains is more and more precise performance measurement. As in Physics this view is far from being accurate. There are two major flows with is:

  1. It is not the data that matters, but what you do with it and the impact. Having a very accurate set of data that is used incorrectly and leads to the wrong decisions is worse than having a less accurate set of data, but used smartly in leading to the correct decisions.
  2. We should not discount the possibility that data accuracy in human administration is an elusive desideratum. Coming back to Physics, Nield Bohr’s statement gives food for thought: “Accuracy and clarity of statement are mutually exclusive”.

One of today’s tragedies provides the scene to put things into context. We might never know exactly the amount of oil that leaked in the Gulf of Mexico as a result of the The Deepwater Horizon incident. What matters more is not the exact quantities and linking them to bonuses for cleaning or penalties for the accident taking place. Learning the right lessons from such an incident, changing attitudes and behaviors and making a positive impact on both recovery efforts and the future operations of the company, response teams, the industry, local community and the regulators is what matters.

Performance measurement puts too much value on measurement. And as Benjamin Franklin once said “I conceive that the great part of the miseries of mankind are brought upon them by false estimates they have made of the value of things.”

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com

References

Banner, D.K., & Cooke, R.A. (1984). Ethical dilemmas in performance appraisal. Journal of Business Ethics, No. 3, pp. 327-333.

Coens,T., & Jenkins, M. (2000). Abolishing performance appraisals: why they backfire and what to do instead. San Francisco: Berrett-Koehler Publishers

Eccles, R.G. 1991, “The performance measurement manifesto”, Harvard Business Review, Vol 69, No.1 January-February, pp. 131-137.

Kaplan, R. S. and Norton D. P. (1992, Jan-Feb) ‘The Balanced Scorecard – Measures That Drive Performance’, Harvard Business Review, Vol.70, No.1, pp.71-79

Patten, T.H., Jr (1977), Pay: Employee Compensation and Incentive Plans, pp. 352 Free Press, London.

Tags:
Posted in Performance Architect update, Performance Management, Performance Measurement, smartKPIs.com | No Comments »

Over 600 Key Performance Indicators (KPI) in practice reports on smartkpis.com

Tuesday, May 11th, 2010

www.smartKPIs.com registered users can now learn about how companies use Key Performance Indicators (KPIs) to monitor their performance by reviewing over 600 KPIs in practice reports documented and published in the online repository. The smartKPIs.com team focused in the last month on publishing reports from the manufacturing , and retail industries. KPIs in practice reports specific to the publishing and hospitality industries were also added to the database.

The KPIs in practice repository now contains reports from almost all industries in the smartKPIs.com business taxonomy, from over 60 countries, as diverse as Jordan, Japan, New Zealand, Romania, Singapore or Bermuda. The countries with the highest number of KPIs in practice reports are:

The industries with the highest number of documented performance measures are:

Example of a documented KPIs in practice report: Google

KPIs in Practice user experience on http://www.smartKPIs.com

Tags: , , , , , ,
Posted in KPI, KPIs in practice, Performance Management, Performance Measurement, smartKPIs.com | No Comments »

Healthcare performance measures at national level

Monday, May 10th, 2010

The Agency for Healthcare Research and Quality (AHRQ) has issued the seventh annual report on the state of health care quality nationally, the National Healthcare Quality Report (NHQR) and the National Healthcare Disparities Report (NHDR).

Both reports present the latest available findings on quality and access to healthcare.

  • The National Healthcare Quality Report presents performance management in healthcare system through quality measures, focused both on process and outcome.
  • The National Healthcare Disparities Report offers a broader perspective upon healthcare quality and access among various racial, ethnic, and income groups and other priority populations, such as children and older adults.

The main conclusions of the reports are:

  • Agency for Healthcare Research and Quality (2010) reported that improvements in patient safety continue to lag. Quality is improving at a slow pace. Of the 33 core measures, two-thirds improved, the median rate of change being 2% per year.
  • Process and outcome measures are improving. Of the 68 process measures, 23 (34%) improved at a rate greater than 5% per year. Overall, the median rate of change was 2.2% per year. Improvement is somewhat slower for outcomes. Of the 92 outcome measures, 23 (25%) improved at a rate greater than 5% per year. Overall, the median rate of change was 2.3% per year.

Change in quality over time

Change in quality over time, (Agency for Healthcare Research and Quality 2010, p.9)

  • Although rates are improving incrementally, Agency for Healthcare Research and Quality (2010) considered that minirities are less likely to receive preventive antibiotics before surgery in a timely manner.
  • The reports indicate that the lack of health insurance slows improvement in healthcare quality and reduction of disparities, being the strongest predictor of poor quality care.

smartkpis.com provides its users with a comprehensive library of Healthcare KPIs in practice (smartKPIs.com 2010), which shows how other healthcare organizations  from around the world monitor performance.

References:

Agency for Healthcare Research and Quality, 2010, National Healthcare Disparities Report, U.S. Department of Health and Human Services, U.S.

Agency for Healthcare Research and Quality, 2010, National Healthcare Quality Report,   U.S. Department of Health and Human Services , U.S.

smartKPIs.com 2010, Healthcare KPIs in practice, viewed 15 April 2010, <http://www.smartkpis.com/kpi_examples_in_practice/industries/healthcare/healthcare-support-services/> .

Tags: , , , , ,
Posted in Case Study, Customized KPI library, KPIs in practice, Performance Management, Performance Measurement, smartKPIs.com | No Comments »

Relationship Marketing Performance Management

Saturday, May 8th, 2010

Although not benefiting from a unanimously accepted definition, Relationship Marketing is a sub-discipline of Marketing defined (Gummesson 2004, p. 136) as ”Marketing based on interaction within networks of relationships”. The classic Relationship Marketing refers to the physical distribution network relationships, with main focus on supplier-customer interactions (Gummesson 1997 cited in Harwood & Garry 2006), the premise being the mutual benefit for both parties and also the commitment to ensure relationship longevity (Harwood and Gary, 2006). While the supplier-customer is not the only form of Relationship Marketing existence, it is argued (Ballantine et al. 2000 cited in Harwood & Garry, 2006) that customer relationship marketing is the most representative for achieving improved market and financial performance.

Because developing long-term relationships with customers is not the best approach in all situations, special attention should be given to assessing customer relationships in terms of profitability, satisfaction etc. and this can be done by the means of a performance management process. The premises are that not all customers are willing to engage in relationship with their suppliers, nor do they all add value that makes them all attractive for the organization to invest in. Hence, organizations should invest resources in those relationships that are profitable for them and which they can nurture in the best way possible so as to have satisfied and content customers.

Although the question of accurately assessing the Return on Relationship Investment (ROR) remains unclear (Gummesson 2004 cited in Bonnemaizon et al. 2007), the technological developments, mainly in the shape of CRM (customer relationship management) and other IT tools and databases give an outstanding value and facilitation to the efforts of measuring and managing relationships. It is argued that these tools strive to employ tangible metrics to evaluate intangible dimensions that occur in the context of Relationship Marketing, such as trust and cooperation (Lages et al. 2008).

It is argued that the use of relationship performance metrics serves various purposes, among which: helping organizations to administer resources more efficiently by allocating them differently to different kinds of customers and identifying deviations from objectives, establishing priorities in terms of marketing efforts and even supporting motivational and rewards policies by relying on comprehensive data (Lages et al. 2008). Performance Management can support the constant monitoring and improvement of customer relationship processes.

Nigel Piercy (1998) describes the systems employed to monitor outcome performance of Relationship Marketing as part of the implementation stage of the Relationship Marketing strategy. He suggests an extended approach to measuring not only the outcomes, but investigating also the drivers of these outcomes, which rely on the behavior of the people within the organization that impacts on what the customer receives in terms of service and quality. The author suggests a three stage customer satisfaction measurement process that covers the interaction between the customer and the internal environment:

  • The first stage describes the managerial use of customer satisfaction measurement in areas such as quality and operations management, staff training and evaluation and strategic management control;
  • This further on helps diminishing the internal processes barriers to Relationship Marketing (perceived market drivers, logistics, corporate culture etc.);
  • Which in turn enhance the third stage, the marketing strategies (service and quality, competitive differentiation etc.).

This describes a strategic and decisional three-stage process that relies on the measurement, but with a fourth element – the measurement that closes a strategic cycle of measure – use – improve.

References

Bonnemaizon et al. 2007, ‘Relationship Marketing in 2015: A Delphi Approach,’ European Management Journal, vol. 25, no. 1, pp. 50-59.

Gummesson, E 2004, ‘Return on relationships (ROR): the value of relationship marketing and CRM in business-to-business contexts,’ Journal of Business & Industrial Marketing, vol. 19, no. 2, pp. 136-148.

Harwood, TG & Garry, T 2006, ‘Relationship marketing: why bother?,’ Handbook of Business Strategy, pp. 107-11.

Lages et al. 2008, ‘The B2B-RELPERF scale and scorecard: Bringing relationship marketing theory into business-to-business practice,’ Industrial Marketing Management, vol. 37, pp. 696-697.

Piercy, NF 1998, ‘Barriers to implementing relationship marketing: analyzing the internal market-place,’ Journal of Strategic Marketing, vol. 6, pp. 209-22.

Tags: , , , , ,
Posted in Performance Management, Performance Measurement, Uncategorized | No Comments »

Performance Management case study: Balancing on-time service and pay-for-performance in urban public transport

Friday, May 7th, 2010

smartKPIs.com Performance Architect update 18/2010

Delivering urban public transportation services today is a challenge due to the slow process of upgrading infrastructure and the general trend of population increase in large cities. Finding a balance between service delivery and punctuality requires careful planning and active monitoring of results. The case study illustrated below highlights some of the challenges and trade-offs that have to be explored by each operator.

Company

Urban public transportation operator.

Setting

While in many cities the local public transport is operated by the government, a trend that gained momentum over the last 15 years is the outsourcing of the operations of the infrastructure. This way the government becomes a customer of a separate entity responsible for the service delivery to the wider public. The arrangement as benefits for both sides. The government shifts some of the pressure from citizens regarding the quality of the public transport services towards the operator, limiting a sensitive issue at election time. The operator manages a monopoly or in some instances is part of an oligopoly of service providers.

Mandate

Operate a safe and reliable public transportation system, delivering quality services for the public.

Instruments

To stimulate the improvement of services, Service Level Agreements clarify responsibilities of both parties and outline performance standards that the service operator needs to meet. A common element in such agreements is a pay-for-performance arrangement that rewards or penalizes the operator based on the achievement of set targets.

Performance indicators

Some of the commonly used KPIs in such agreements are:

% Planned services delivered (monitoring if services are operated)

% Punctuality (monitoring if the set schedule for each stop is followed)

These two KPIs are key to evaluating the customer experience. The first outlines if the routes planned to be serviced each day were delivered at all, while the second monitors how well were these routes serviced in terms of punctuality.

Scenario

One afternoon, a passenger on the way home from work gets on a bus, validates the ticket and takes a seat, waiting for the bus to arrive at the desired stop, the second last of the line.

At the fourth stop before the end of the line, the bus driver announces all passengers that he has been requested to finish the route early at that stop. Everyone is invited to get off the bus and once the bus is empty, it skips the last three stops of the route, continuing with the return service.

Our passenger has paid the travel fare, expecting in return the arrival to destination, as planned. The early termination of the route by the public transport operator resulted in diminished utility of the amount spent and in an incomplete journey.

Questions

  • What is the relationship between the KPIs used to track service performance and the decision to change the route of the bus?
  • How is the estimated impact on customer satisfaction of such actions?
  • Why aren’t customer satisfaction KPIs used as widely as service delivery KPIs in transport operator SLAs?

Stay smart! Enjoy smartKPIs.com!

Aurel Brudan

Performance Architect,
www.smartKPIs.com


Discuss the case in the smartKPIs.com Forum

This Performance Management Case Study is now available in the smartKPIs.com Forum, where members of the smartKPIs.com community are invited to contribute to the discussion (after logging in by using their registration details). New members are invited to join (for free) the smartKPIs.com community.

Tags: , ,
Posted in Case Study, Performance Architect update, Performance Management, smartKPIs.com | No Comments »

Performance Management history file – Global Performance Management for Small and Medium-Sized Enterprises

Tuesday, May 4th, 2010

The specific needs of small and medium-sized enterprises (SMEs) have been addressed by various initiatives in diverse areas of organizational management and development, including the context of performance management and measurement.

Such an initiative represents the project entitled Global Performance Management for Small and Medium-Sized Enterprises (GPM-SME), financed by the 6th Framework Program (FP 6) of the European Commission, the Co-operative research (CRAFT) scheme between 2002-2006.

As shown by the Community Research and Development Information Service (CORDIS), the Framework Program is the largest EU instrument for the funding of research and considering the major importance of SMEs in the Union’s economy (seen as the most innovative, flexible and dynamic enterprises and accounting for a great amount of the existing jobs), it’s no wonder that one of the Program’s schemes – the CRAFT scheme mentioned above – is dedicated exclusively to SMEs (CORDIS, 2010).

The GPM-SME project was launched by a transnational consortium of R&D centres, industrial companies, software developers, consulting firms and standardization organizations (Alba et al., 2005):

Source: Alba et al., 2005

The goal was to develop a new framework called the Global Performance Management (GPM) for SMEs, combining two performance management approaches: Extended Performance Management (ExPM) and Enriched Performance Management. The first approach aims at creating collaborative performance management instruments at all levels (internal, external and network), in the context of what is called an evolution of businesses from single enterprises to Collaborative Networks (CN) and Virtual Organizations (VO). The second approach enriches the traditional Balanced Scorecard approach to measuring performance with additional dimensions, such as Innovation and Agility, Environmental Care and Corporate Social Responsibility (Alba et al., 2005).

The project consisted of a two-stages approach (Alba et al., 2005):

  1. Analysis of the problem and identification of solutions based on user requirements collected;
  2. Development of a set of ready-to-use instruments for the implementation of GPM in SMEs, such as:
  • A methodology and SME-oriented architecture to help SMEs define and operate a real model of the GPM solution;
  • A free of cost IT toolset that bridges the conceptual and practical environment;
  • A tutorial for broad dissemination of results on a cross-sectorial basis.

Out of the toolset helping managers translate their strategy into operational objectives, the GPM Dashboard represents a repository with all the KPIs, allowing visualization of the information and analysis, which correlated to the GPM Strategy Observer, shows deviations and pushes warnings to the managers. Other toolset products are the GPM Simulation of Innovation Scenario, GPM Innovation Potential Scorecard and the GPM Best Practices Monitor.

The project was based on two industries – automotive and consumer goods – which were considered to be the global best practices in terms of upstream value chain optimization, respectively downstream value chain optimization. But the purpose was to expand the lessons learned in these two sectors so as to deliver valuable results with a broad range of applicability.

While the GPM-SME project is now closed, it represents an interesting example of a collaborative approach in developing new approaches and instruments for Performance Management as a discipline.

References:

CORDIS (2010), „Specific projects for SMEs”, available at: http://cordis.europa.eu/fp6/instr_sme.htm (accessed 1 May 2010).

Alba, M., Diez, L., Olmos, E. and Rodrigues, R. (2005), “Global Performance Management for Small and Medium-Sized Enterprises (GPM-SME)”, available at: http://www.everis.es/Images/GPMArt_tcm31-4575.pdf (accessed 1 May 2010).

Tags: , , , , , , , ,
Posted in Case Study, Performance Management | No Comments »

Over 3200 Key Performance Indicator (KPI) examples on www.smartKPIs.com

Monday, May 3rd, 2010

www.smartKPIs.com registered users can now select their Key Performance Indicators (KPIs) from over 3200 Performance Measures documented and published in the online repository. The team focused in the last month on publishing examples from the Healthcare,  Professional Services and Hospitality & Tourism industries.

The functional areas with the highest number of KPI examples are:

The industries with the highest number of documented performance measures are:

Example of a documented performance measure: # Patient consultation time

User experience on http://www.smartKPIs.com

  • Learn: To learn more about performance management and Key Performance Management visit the Resources section.
  • Explore: To explore the library of KPI examples by navigating the functional area and industry directory, visit the Browse KPIs section.
  • Customize: To build your customized KPI library by saving favorite examples for later use, visit the My KPIs section.
  • Contribute: To propose a new example of KPI, visit the Submit KPIs section.
  • Collaborate: To collaborate with other users and to discuss KPI examples, add comments on each KPI description page.

Tags: , , , , , , ,
Posted in Customized KPI library, KPI, Library of KPI examples, Measure, Performance Measurement, smartKPIs.com | No Comments »

« Older Entries

Featured products

[no image]
$999 USD
 
[no image]
$99 USD
 
[no image]
$35 USD
 
[no image]
$99 USD
 
[no image]
$39 USD
 
[no image]
$99 USD
 
[no image]
$289 USD
 
[no image]
$249 USD