Taking control of business performance by implementing a performance management framework using a set of tools that systematically enable the improvements. Regular performance evaluation using industry benchmarking is unique to the PA offering.
Six Sigma Improvement Process: Transforming Processes, Elevating Performance
Take Control Of Your Business Performance
1. Take control of your
business performance
Navigating blind is no longer an option
Corporate leadership teams often feel their control on their business slipping. For instance, the
leader of a major oil and gas company’s IT organization told us he felt he was losing control of
the organization. Although the organization believed it was delivering value to its stakeholders,
customers were increasingly complaining about poor service. Moreover, dissatisfaction among
stakeholders with financial performance was rife.
How can managers regain control?
The problem stemmed from a range of factors, such
as the absence of clear or meaningful performance Following the old adage ‘one can’t manage what
indicators, a lack of framework to prioritize actions one can’t measure,’ the first step to regaining control
effectively, and misalignment between stakeholders’ of performance is to design the right performance
expectations and organizational goals and objectives. management framework. Value-based performance
management frameworks can help managers assess
The sense of diminishing control is common at any their organization’s health. Once in place, they serve
management level. With the ‘r-word’ on everyone’s lips, as catalysts for change, or even as a routemap for the
regaining control is paramount. It is especially crucial leadership team’s transformation programs.
to show confidence to stakeholders, customers, and
employees. Navigating blind is no longer an option.
Thought Leadership
2. Figure 1: Performance management cycle
Assess the current performance Design the future scorecard:
management framework: Design conceptual dashboard,
1 2
Review KPIs currently in place, identify and select future KPIs to
assess organization objectives. include in the dashboard, create
Output: Gap analysis value-driver tree. Output: Pilot
temporary dashboard, KPIs map
Train and educate: Enable the team Benchmark for realistic
6 goal-setting: Identify external and
to make informed decisions using the
3
Communicate
scorecard. Output: Organization ready internal benchmarks and set realistic
to use the dashboard objectives. Output: Benchmark analysis,
targets for all KPIs
Engage key stakeholders: Implement the scorecard:
5
Communicate continuously over time, Select a more robust and permanent
4
establish performance management roles platform, eg SharePoint and design
and responsibilities. Output: Governance reporting mechanisms required. Output:
structure, change plan Automated dashboard ready for use
Figure 2: KPI review and prioritization matrix
Phase II (focus) Phase I (immediate)
Customer Budget
Customer Cost to
satisfaction adherence
uptime serve
Performance
Risk
vs service
management
contracts
Process
Safety
Value to Employee
improvement Capacity
compliance
customers engagement
and innovation
Training and
Talent
Vendor Project knowledge
management
management performance management
process
Customer
Cash
Revenue Shareholder value
demand
management
impact Customer value
management
People and capabilities
Operational excellence
Phase IV
Phase III
Lower priority metrics
Not ready Ready
Figure 3: Sourcing executive dashboard
Key messages:
Business resilency Financial 1. The Brazil Data Center is now online.
Disaster Recovery testing for applications
OVERALL SCORE OVERALL SCORE
is proceeding as per schedule.
Business continuity risk mitigation Savings target adherence
2. The incident volume has increased by
Disaster recovery plan adherence Additional savings
over 70%, but the response times have
Data center hardening Variable cost model
remained steady without any increase in
Per unit cost of service
staffing/costs.
3. Savings targets have exceeded target
Overall efficiency
by 7% and are on track to meet the
annual CBA target for the year.
Service
4. The first customer satisfaction survey
has had an overall positive score of
OVERALL SCORE
75%. Life, P&C and Corp – all companies
Service level adherence
have rated services at more than 70%
Customer satisfaction
satisfaction. We are targeting to improve
Service provisioning
this measure to 80% by next survey.
People Flexibility Transformation
OVERALL SCORE OVERALL SCORE OVERALL SCORE
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3. Designing and implementing these management After agreeing on the design principles, existing metrics
frameworks involve the following activities as should be reviewed against criteria based on corporate
highlighted in Figure 1: objectives, as illustrated in Figure 2. The assumption
here is that the organization already has a performance
• Assessing the current performance management
management framework and does not want to ‘reinvent
framework, if any
the wheel.’ Identifying the positive metrics and the
• Designing the future scorecard potential gaps will help build the future scorecard,
leveraging existing strengths of the framework in place.
• Benchmarking internally and externally for realistic
goal-setting
Designing the future scorecard applies the learning
• Implementing the scorecard on temporary and/or
from the initial analysis by building it into a structure
permanent IT platforms
called the value-driver tree. It drives consistency
and completeness by mapping all metrics onto their
• Educating key stakeholders for buy-in and sustainable
respective segments and linking them into one coherent
use and improvement of the tool
system. This process will drive out metric areas where
• Driving sustainable performance improvements using
the organization lacks maturity and focus, or reveal
the framework.
better ways to obtaining needed data not yet available.
Assessing the current performance management
At the same time there is an opportunity to ensure
framework requires a collaborative analysis with
alignment with corporate or business goals. Finally, a
the business. This will ensure objectives are reviewed
system for highlighting levels of performance is added,
and metrics assessed against them. At this step,
which includes an agreement on visual aspects such as
an agreement should be reached on design
color-coding and trend depiction, and inclusion in the
principles, taking into account corporate and
model as a dashboard. Levels of scoring are equated
organizational objectives.
with colors that will sharpen the organization’s focus
on performance improvement. Figure 3 provides an
example of a high-level design.
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4. Figure 4: Charting the normalized results drives target-setting and best practice initiatives to improve performance
Average time to answer – seconds Longest time to answer – seconds Average time to answer – seconds
Q1 Q1 Q1
Q2 Q2 Q2
Q3 Q3 COA
Q4 Q4 Q3
COA COA Q4
Customer satisfaction survey by customer type Abandonment rate Inbound agent call wrap-up time – minutes
(regular, key, new customers)
Q1 Q1
Q1
Q2 Q2
Q2
Q3 Q3
Q3
COA Q4
Q4 COA
Q4
Normalized data is compared to the target company and is used to define stretched, market-based target and objectives to aim for to improve overall
performance. Best practices of the better performing companies are identified for implementation by the target company and initiatives created to enable
those stretched targets to be achieved and to move from second to first quartile performance.
Figure 5: Example performance management framework
Above expectations Meets expectations Below expectations
Value to customers Value to shareholders
2.2 1.5
Time spent on IT issues 2.0 Actual costs vs budgets/targets 2.0
Field force satisfaction 2.0 Cost reduction over time 1.0
Managing field force demand 2.7 Account payable performance 1.5
Sourcing effectiveness
2.1
Team capability Vendors and service performance
3.0 1.6
Performance against SLAs 2.0
Team performance 3.0
Internal vendor performance survey 1.5
Team satisfaction 3.0
Performance against contract 1.5
Team capacity 3.0
Projects performance 1.5
Figure 6: The change framework includes both driving and releasing
Making it essential Making it ready Making it happen Making it stick
Build case Communicate case Review case Ensure relevance
Build and communicate a
compelling case for change Model benefits Plan realization Track benefits Drive realization
Design and drive
Design program Develop plans Mobilize Capture knowledge
the program
Implement and
Define future organization Detailed organization design Fine tune organization
test organization
Design and structure Implement and
Define future processes Detailed process design Fine tune processes
the business test processes
Define system requirements Design systems Implement and test systems Fine tune systems
Enable change leadership Build purpose Develop capability Coach leaders Develop leaders
Engage and manage
Engage and enable people Identify stakeholders Build knowledge and skills Use knowledge and skills
stakeholders
Align with the Gather views and
Assess readiness Define change required Release energy
organizational culture refresh approach
Driving Releasing
4
5. However, depending on the maturity of the organization
Benchmarking internally and externally for realistic and the state of system and data availability, more
goal-setting helps to determine current performance robust and sophisticated platforms can be investigated
levels against a panel of peers and to establish such as SharePoint or Business Objects. The scorecard
targets against which scores are measured to should be implemented quickly and pragmatically,
improve performance. with automated linkages to data preferred to manually
gathering and populating spreadsheets. Extensive
Benchmarking data is available from companies that testing and refinement must occur prior to launch.
specialize in such studies and appropriate data that
aligns with the scorecard being developed needs to Educating key stakeholders in the objectives, purpose
be sourced. The benchmarking process should and function of the scorecard is vital to a successful
include a comprehensive set of normalization factors implementation. A well structured change framework will
to ensure that comparisons are fair, that the appropriate ensure that the required business change is successfully
level of attainable stretch is built into the targets, and implemented. Key scorecard management roles need
that the process is repeatable as the scorecard matures to be defined to ensure smooth operation and reporting.
over time. An example is provided in Figure 4. All staff will have to be trained and the team will need to
develop training materials and a suitable course.
Implementing the scorecard on temporary and
permanent IT platforms is the next logical step once Since business performance is being managed
the model and its data sources have been confirmed through this process, the effectiveness of training
and finalized. Typically the initial model is built in readily will also need to be tracked throughout. A well informed
available tools such as MS Excel or MS Access. stakeholder group is a critical success factor of such an
implementation, especially since the logical outcome
of such an initiative is that compensation and rewards
will eventually be linked to performance measures the
scorecard reports.
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6. Figure 7: Stretching goals and targets
Final performance
targets
Performance
Intermediate
performance
targets
Intermediate
performance
targets
Time
Figure 8: Scorecard management process
Focus
metrics
Update scorecard list (monthly)
Review weightings List all consistent
with latest
and targets upward trends
metric data
List metrics below
Revised
50%
List recurring
Identify top YES targets and
greens
5-10 metrics for weights list
Suggestions/guidelines: (three months)
discussion?
List metrics red
• Focus on top 5-10 metrics
and down
at each SLT meeting
• Revise metrics quarterly Review targets
Add or
to see if they need
• Revise targets whenever necessary remove
List metrics red to be revised
to remove recurring green metrics
and flat
list (quarterly)
• Revise weighting annually.
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7. Turning the framework into an effective individuals’ cascade with clear line of sight to strategic
communication tool will help spur organizational and objectives. The linking of business performance to
behavioral change, the area where such programs most incentives with periods and parameters of performance
frequently fail. In developing and communicating a clear is the desired outcome, but this is a sensitive area
case for change, leaders must be engaged at every which requires clear communication. It is important
stage of the process. to define and communicate the management process
exhaustively of how the scorecard will be managed
A comprehensive stakeholder management and and how rewards will be calculated and awarded,
communication plan aligned to the change framework who qualifies and what the schedule for payouts will
must be actively used to familiarize stakeholders with be. The scorecard itself should be sufficiently stable
the scorecard. Implementation of the scorecard is most so that it delivers consistent results before any linkage
effective when it is cascaded into the organization and to rewards or incentives is considered.
driven with the support of key stakeholders.
Take back control of your business performance
Driving improved performance using the framework now and establish a well-designed performance
must be the ultimate aim of any performance scorecard management framework to align with and achieve
implementation. As stressed in the communication excellent performance. To do so, adopt a structured
process, the objectives, purpose, and operation need approach. You will immediately begin to reap the
to be communicated and understood at the lowest levels rewards that improved performance brings.
of the organization.
A reliable process to confirm that understanding needs
to be in place before proceeding fully. It is vital that clear,
single accountability for information that links metrics to
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