How Performance-Competitive Are You? By Robert Angel The Gilford Group Limited November 2, 2010

Transcription

1 How Performance-Competitive Are You? By Robert Angel The Gilford Group Limited November 2, 2010

2 Robert Angel Working at the Intersection of Marketing, Performance, Organization, and Finance Understanding customers as individuals Individual-customer strategies, behavioral event methodologies, customer knowledge, and branding Improving enterprise performance Culture change and individual strategic development Enterprise performance management and business cases Soft decisions Schulich School of Business Strategic Market Planning Previously, Marketing Manager for 2 large technology companies and VP Finance for 3 multi-nationals 2

3 Performance Management and CAmagazine 2005 survey of balance scorecard usage: spotty 2007 poll of CAs in industry performance: underwhelming 2010 Performance Management Survey The 2010 survey shows gradual improvement in a number of indicators such as performance sophistication and satisfaction with results. 3

4 Today s Webinar Many finance managers are being pressured to contribute more to improving performance of the entire organization. This webinar presentation is designed for business and professional people who manage the finance function or aspire to as well as professional firm staff for whom the chief financial officer is the client. This fast-paced webinar draws on the article in the October 2010 issue of CAmagazine. Based on extensive research in 2010 of performance practices in Canada, it will tell you what the best performers are doing large, medium or small enterprises. 4

5 Today s Agenda 1. Performance metrics 2. Who is in charge 3. Performance culture 4. The performance maturity curve 5. Performance as a competitive tool 5

6 Why are more metrics are being tracked today than previously? 6

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8 Practitioners Speak... on Metrics We measure everything... from phone calls made to deals done. Patrick Palerme, CEO of GE Capital Canada We tracked 50 metrics, enabling individual teams benchmark their sales and operations metrics against other teams and helping me make sure local actions link to divisional strategy. Pierre Galarneau, entrepreneur/former industrial supply company divisional executive Our multidisciplinary team is expanding our metrics from half a dozen metrics to 100. My contribution is financial risk metrics on foreign exchange, interest rates, credit exposures, and financial productivity. I cover measures like revenue and profit per employee, distribution system throughput, scorecard driven activities, cost per unit shipped, and financial ratios. Bob Hanna, Director of Finance, Keen Canada 8

9 Practitioners Speak... on Metrics We have refined our metrics under 13 key performance indicators covering four business goals: market share, customer satisfaction, employee engagement, and profitability. Metrics range from health and safety incidents to return on sales. One of our most critical metrics is the net promoter score, the likelihood a Hewitt customer will recommend us to a potential customer. - Andre Hudon, COO of Hewitt Equipment Sector-wide standard municipal operating metrics may be useful to compare similar organizations, but are not helpful in managing programs internally, especially in an organization with a very constrained budget spread thinly over a range of somewhat disparate services. Joyce Matthison, public sector manager 9

10 Why Leaders Track Performance Spotting business opportunities rather than just tracking whether doing better or worse Use CRM system dashboard data predictions that help the sales force be more successful (GE Capital) Foster collaboration have functional area second level managers develop integrated metrics organization-wide (Keene Canada) Build business performance set measurable and objective divisional goals that define responsibilities, scope and impact of each manager in each business unit 10

11 Product Customer Chose Qualitative not just Volume Metrics Examples Staff efficiency indicators: Retention rates Absentee rates Diversity statistics Cost/time to fill position Calls/agent, cost /contact, Average hold time, call completion time Call abandonment rates Traditional financial metrics: Revenue growth Cost management Profits Cash flow Incremental/overall ROI Budget accomplishment Share price Volume Customer experience: Customer experience & sat surveys Customer & household V/LTV Channel effectiveness Time to market Pricing power Share of wallet/loyalty Brand value Reducing process cost but not value Performance: Staff experience /engagement surveys Turnover reasons Likelihood to recommend Leadership readiness Personal Growth Manager effectiveness Knowledge sharing Career plan progress Quality The Gilford Group Limited 11

12 Who typically takes charge of enterprise performance management? 12

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14 Performance Culture Starts at the Top According to the 2010 Survey: CEOs, COOs, or other senior line managers are responsible for 72% of performance management programs CFOs are responsible for 27%, compared with only 20% in 2007 Only 36% of Finance respondents are deeply involved in innovation planning, somewhat less than in strategic planning an opportunity for the finance function to become more proactive in boosting the firm s global competitiveness 14

15 Should you be paying more attention to performance culture? 15

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17 Practitioners Say Performance Culture is Key Operations have taken the lead on developing the productivity index; visibility for the productivity factor brings the organization closer together around a clear, common purpose. Don Evans, CFO at Culliton Brothers Linking compensation to performance keeps people s motivation; second level managers really like it because they now understand clearly what they are evaluated on and are focusing more on what is most important. Bob Hanna, Director of Finance, Keen Canada Over the long term, incentive compensation is critical for the culture and staff acceptance, to be able to link pay with performance and pay sales representatives on profits. Patrick Palerme, CEO of GE Capital 17

18 Experts Emphasize Performance Culture As Well Paying attention to culture yields benefits higher up the organization as well. The CEO wants frequent checks of the company s pulse in areas of deployment because this is where the link is most likely to break. Joy Kosta, Senior Director of Talent Communities at The Human Capital Institute Performance culture requires thinking about managing the risks to performance. People are often inhibited in taking innovative management actions. Dragica Grbavac, Executive Director of The International Centre for Operational Risk Management and Program Director, Centre of Excellence for Business Performance and Risk Management, at the Schulich Executive Learning Centre 18

19 The Performance Culture Continuum Foundation Advanced Breakthrough Hierarchical Command and Control Departmental Self-directed Virtual Teams Management Transactional and Aggregated Integration across the Enterprise Learning & Service Delivery Architecture Information Cost and Risk Reduction Productivity Improvement Collaborative Improvement Operations Service/Product Oriented Segmented View Customers Individual Needs and Value Customers Growth & Maintenance Growth & Performance Innovation Strategy - Bob Angel, Putting an Innovation Culture into Practice, Ivey Business Journal, Jan-Feb

20 Buy-in is Major Factor Limiting Performance Success It is not enough to accept performance goals at the executive level where they are formulated Get performance goals bought into sufficiently down at the department or individual levels Manage performance as a whole understand key contributing factors across the organization 20

21 What is the performance maturity curve and how are best performers climbing it? 21

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23 The Five Enterprise Performance Maturity Levels Basic: Using traditional financial reporting and operating budgets with mainly financial indicators without a formal mechanism to link activities to strategy drivers and their strategic results and to bridge the gap between long-term strategies and day-to-day actions Beginning: Starting to transform business needs into actionable plans by defining key metrics and assigning ownership to them to increase accountability; and ensuring employees are focusing on tasks essential to strategy and aligned with day-to-day tasks Scorecards: Using a using a spreadsheet-based Performance Management framework, e.g. Balanced Scorecard, Malcolm Baldridge, Six Sigma to track performance against key performance metrics; align performance measures with critical organization perspectives; and track cause-and-effect of under-and over-performance IT evolution: Using a commercial application to manage the Scorecards or other framework using IT to help improve scorecard execution e.g. with automated data integration and online drill-down; and systematically communicating results periodically Advanced: Improving accountability enterprise-wide by instating a formal performance culture change program, assigning ownership of individual measures across organizational boundaries and into the extended enterprise, and taking a collaborative approach to bring about a sustained high performance culture The Gilford Group Limited 23

24 Investment Justification Basic organizations pay a price the higher on the maturity scale, the more likely superior business Investment to climb the maturity curve apparently results does not seem to have had an effect on performance for so many organizations The moral: too many organizations are still rooted in a bye-gone age of business-as-usual 24

25 How are organizations using performance management to be more competitive? 25

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28 Put Highest Priority on Tracking Competitive Position We want to be among the best in our industry so we also look for a wealth of up to date industry data to show us how we stack up against competitors on market share, customer satisfaction and profitability. We must strike the right balance between profitability and customer satisfaction. Andre Hudon, COO of Hewitt Equipment ROI often depends on level of maturity. Organizations using spreadsheets might look to improved accuracy and transparency of information; organizations with larger data volumes and more advanced methodologies might realize productivity savings through automation. Tina Schweihofer, Performance Management Solutions Specialist for SAS Canada 28

29 Conclusion: Are We Building Performance Preconditions? Brand Suppliers Customers Staff Partners 1. The CFO with a business perspective 2. Performance culture visible to customers 3. Brand differentiation on performance culture 4. Performance fostering more performance 29

30 How Performance-Competitive are You? Questions & Answers 30

31 Thank You! The Gilford Group Limited (416)