Measuring Performance Systems and Structures to drive improvement

Transcription

1 Measuring Performance Systems and Structures to drive improvement

2 2 Workshop Objectives Understand the principles of performance management Learn how to develop performance measures Understand the tools and techniques to use for measurement Understand how to use and interpret data

3 3 Activity What does performance mean to you? How would you define performance? What is performance management? Discuss with your nearest neighbour

4 4 What is Performance? Performance is the achievement of results. It is the delivery of desirable outcomes to stakeholders Actual and perceived value it creates and sustains for its customers, shareholders, suppliers, partners, employees and other stakeholders

5 5 What is Performance Management? Performance Management refers to the tools and processes used by organisations to monitor the achievement of sustainable results. An excellent organisation will implement effective performance management to achieve sustainable results. An effective framework includes: Strategic Objectives A defined system Performance measurement Cascading objectives Performance framework Rewards & Recognition

6 6 What is Performance Measurement? Performance Measurement is the assignment of numbers to observations, characteristics of objects, persons, states or events, according to rules An excellent organisation will implement performance measures that are: Specific Measurable Achievable Realistic Timelined

7 The better business people 7 The Balanced Scorecard

8 8 The Balanced Scorecard - Summary Concept introduced by Robert Kaplan and David Norton Supplemented traditional financial based measurement with 3 additional perspectives: Customers Internal business processes Learning and growth Achieving a balance of the four perspectives are a key to deriving sustainable results Not a replacement of financial measures, rather a complement to them

9 9 Translating the Vision Managers build consensus around the organisation s Vision and Strategy Motherhood statements do not readily translate into SMART objectives The Mission and Vision of an organisation must be expressed as an integrated set of objectives and measures that are SMART The organisation s Values need to be expressed into clear behaviours that enable the achievement of the Vision

10 10 Communicating and Linking The organisational objectives need to be clearly communicated to all stakeholders, both internal and external The objectives need to be linked throughout the cascading structure of the organisation: Divisions Business Units Teams Individuals The scorecard drives focus on long-term goals

11 11 Business Planning Enables companies to integrate their business and financial plans Challenge to manage diverse improvement initiatives and allocate resources accordingly Use the diverse measures in the scorecard to allocate scarce resources and develop operational priorities Undertake and co-ordinate only those initiatives that move them towards their long-term strategic objectives

12 12 Feedback and Learning Gives the company capacity for strategic learning Short term results are monitored from a balanced perspective that aims to deliver on long-term sustainability of the organisation Evaluate strategic objectives based on past and current performance Modify strategies and organisational behaviour to reflect real time learning

13 Questions? 13

14 The better business people 14 Business Excellence Principles - What do you measure?

15 15 Principles A principle is a governing law used as a basis for prediction and reasoning... Principles are deep fundamental truths that have universal application and natural consequences attached to them... The more we know of correct principles, the greater our personal freedom to act wisely... Stephen Covey

16 16 The Principles of Business Excellence constitute our best understanding of the foundation upon which good enterprises are built. They provide the basis of understanding how well your organisation is performing, how your organisation compares to others. The principles allow you to understand how you need to improve.

17 17 Principle 1 - Leadership Organisations that don t know where they are going usually end up there! Fundamental to the creation of strong values and ethics, a responsible governance structure and a culture of excellence Identify and clarify the values, mission and vision Model behaviour flowing from shared organisational values Develop an environment in which the diversity of people is valued

18 18 Principle 1 - Leadership Leadership and planning provide a sound basis for aligning the efforts of the organisation in a clear direction Alignment occurs when the systems, processes, structures, behaviours and rewards all work together towards a shared aim or purpose A workable plan to move from the current position to a desired position A widely supported business plan linked to personal performance development plans

19 19 Principle 2 - Customers Customers are people, who have needs and form perceptions of relative value Different customers have different needs; therefore, different clients value different offerings Users of your products, services & processes best able to judge the usefulness, suitability and worth of your offerings the value you provide Make it easy for the customer to provide feedback or put sustainable success at high risk Strive to understand & anticipate their customers needs & provide them with outstanding product & service quality

20 20 Principle 2 - Customers People select offerings that provide them with the highest relative perceived value, where relative perceived value is a trade-off between their perception of quality and the cost Organisations need to clearly identify the different customer segments The pursuit of positive customer perception must not be undertaken in isolation of the need to ensure the long-term viability of the organisation Relationships are central to an Australian's perceptions of quality

21 21 Principle 3 Systems Thinking An excellent organisation will view itself as a system. It has an aim, inputs, outputs, customers, suppliers, etc. Find the opportunities for improvement in the processes and systems rather than simply finding a person who may have been responsible for that specific problem Forming a systems view of an organisation can assist in optimising all parts of the organisation to achieve its goals and prevent future problems Understand how well the system is supported by core business activities

22 22 Principle 3 Systems Thinking The people working in a particular process understand that process best Peoples performance is controlled and limited, to a large extent, by the total system in which they work Work activities are a mixture of daily work and improvement work People involved in the routine activities of the organisation will spend the majority of their time working on daily work Leaders of the organisation however need to spend more time on improvement work

23 23 Principle 4 Involve People Our people are our greatest asset but demonstrate the belief Our people are our greatest cost An organisation s agility depends on the way people accept the need for change & respond rapidly with sustainable improvements Attention to the satisfaction, development and well-being of employees enhances their performance Focus on growing their intellectual capital by developing & supporting people to realise their full potential & prepare them for change

24 24 Principle 4 Involve People People of an organisation put into practice the Principles via their actions, skill and effort Nothing happens in any enterprise other than through its people and their relationships The collective intellectual capability and learning capacity of an organisation is a key driver of success Without the active engagement of the people of an organisation, less will be achieved than is possible

25 25 Principle 5 Continuous Improvement The sustainable advantage of an excellent organisation is the capacity to implement change, learn quickly and respond rapidly with new ways of doing business Maximising both personal and organisational learning leads to improved efficiency and effectiveness, and increase knowledge sharing and innovation The agility is created by fostering a culture of continuous improvement Opportunities for learning include employees ideas, research and development, customer input, best practice and benchmarking

26 26 Principle 5 Continuous Improvement Innovation and organisational learning depend upon the learning of individuals Continuous improvement is the foundation of sustainable results The ability of an organisation to respond to its customers drives continuous improvement and delivers sustained desirable outcomes to its stakeholders Learning and development is the driver of continuous improvement Effective communication and information sharing within, and between the organisation and its stakeholders, is critical to individual and organisational learning

27 27 Principle 6 Information and Knowledge Knowledge can include the tacit understanding that comes from years of experience Combination of facts, data (presented in a non-biased way) and knowledge that can enhance judgement and enable better-informed decisions to be made Willingness to analyse past decisions for unintended consequences (both positive and negative) that contribute to a base of knowledge for enhanced future decision-making Measurement and analysis of performance support evaluation, decision-making, risk management and operational improvement Risk associated with the decision can be assessed and action planned accordingly

28 28 Principle 6 Information and Knowledge Information can be processed through analysis, interpretation and presentation to create information that has meaning Knowledge can be defined as the capacity for effective action and is intrinsically linked with ability to predict The quality of decision-making and the effectiveness of resulting actions are dependant upon the quality of information and knowledge upon which they are based The use of facts and data enhances judgement and enables informed choices to be made The decisions about to be made are based on objective facts and data or speculation and opinion

29 29 Principle 7 Corporate and Social Responsibility Perception by that marketplace that value is being created & sustained for the community Responsible corporate citizen Benefits to a wider range of stakeholders beyond shareholders & paying customers need to be demonstrated Awareness of its potential for constructive or adverse impact on both current and future communities

30 30 Principle 7 Corporate and Social Responsibility Every action that an organisation takes (or does not take) has consequential reactions Plan for the protection of the environment and the needs of the community in which they operate Good governance with corresponding management accountabilities will ensure that the organisation s broader responsibilities are identified and met Enhanced public image, improved risk management and, ultimately, ecological and economic sustainability

31 31 Principle 8 Sustainable Results Organisations operate within larger systems and have a variety of stakeholders An excellent organisation that survives and thrives in the global marketplace is distinguished from others by the actual and perceived value it creates and sustains for its customers, shareholders, suppliers, partners, employees and other stakeholders How do organisations know they are creating & delivering value for all of their stakeholders? Are their perceptions of the organisation being measured? Are these measures linked to organisational plans?

32 32 Principle 8 Sustainable Results Stakeholders perceptions of the organisation will determine its sustainability Balance of outcomes to be achieved across their key stakeholder groups Future sustainability of an organisation often stems from the needs and expectations of these stakeholders and their perceptions of the performance of the organisation Synergy that can be generated between the various stakeholders in the system with regard to their physical and emotional needs

33 33 Activity Identify a performance objective for each of the principles Make the objectives relevant to your role, your business unit or your organisation

34 Questions? 34

35 35 The better business people Key Element Systems Thinking and the Systems View

36 36 What is Systems Thinking? The organisation is a system. The system comprises processes and relationships that are made up of all kinds of activities. The system consists of countless interdependencies and internal interactions. Where these function effectively, the organisation is able to achieve its goals best.

37 Challenging Traditional Approaches 37

38 Challenging Traditional Approaches 38

39 39 What is Systems Thinking? A system is an interacting whole consisting of interdependent parts The net output of the whole is the result of: The performance of its parts, and The interactions between its parts To improve the whole, you must also improve the interactions between its parts All organisations are systems that are part of a larger system All organisations consist of a number of sub-systems and processes

40 40 Systems Thinking A Summary A systems view of the organisation usually leads to new knowledge being generated, new approaches being developed and new performance indicators being set. The organisational culture moves: From reactive post-mortems and blame to prevention, improvement and innovation; From internal competition and sub-optimisation to organisation-wide teamwork and synergy, and From a focus on short-term outputs to organisational excellence and long-term sustainability.

41 ... Systems View VALUES: 10. SUPPLIERS 6. CUSTOMERS 4. MISSION: 5. VISION: 1. OUR PEOPLE 11. INPUTS 7. OUTPUTS 2. RELATIONSHIPS To Suppliers System 12. PROCESSES 13. PROCESS MEASURES 8. RESULTS MEASURES 14. OTHER STAKEHOLDERS 9. TARGETS FEEDBACK

42 42 Values Values This Means Behaviours to Demonstrate Value

43 43 Processes, Process Measures and Targets Processes Process Measures Targets

44 44 Suppliers and Inputs Suppliers Inputs Input Measures Targets

45 45 Activity What are the most important aspect of Systems Thinking to Your Organisation? What other benefits can you think of? How does it contribute to performance management? What are the risks?

46 Systems Thinking A Discipline for Seeing Wholes 46 Suppliers Inputs Stakeholders Communities Governments Owners Vision - Mission Values Relationships Value-Adding Processes Employees Feedback Customers Outputs All enterprises are part of a larger system. All enterprises consist of a number of sub-systems From Senge

47 Questions? 47

48 48 The better business people Key Element Knowledge

49 49 What is Data? Data is a collection of raw words (qualitative) or numbers (quantitative) Quantitative data is usually categorised in two ways: Attribute Data can be counted and plotted as discrete events that exhibit a defined attribute (eg. the number of correct answers on a test) Variable Data can be measured and plotted on a continuous scale (eg. length, time, volume, weight)

50 50 What is Information? Once the data has been collected, it can be turned into information Information is created when data is processed in a way to give them meaning through analysis or interpretation and presentation

51 51 What is Knowledge? Knowledge is what we develop from information Knowledge is created when relationships demonstrated by information have been tested and refined through experience Knowledge enables prediction

52 The Business Excellence Model 52

53 53 Category 3 Item 3.1 Generating, Collecting and Analysing the right Data to inform Decision-making The systems and processes by which the organisation determines what data should be collected, as well as how data is handled, stored, analysed and interpreted to create information that enhances knowledge of the environment in which the organisation operates (internally and externally). The systems and processes by which the organisation integrates a variety of information from various sources to create knowledge that is used to support decision-making in pursuit of the organisation s objectives.

54 54 Category 3 Item 3.2 Creating Value through applying Knowledge The systems and processes by which knowledge is consolidated and shared across the organisation; and how this is used to ensure its success and sustainability and to stimulate innovative thinking.

55 55 Activity How does your organisation create Knowledge?

56 Questions? 56

57 57 The better business people Key Element Statistical Thinking

58 58 What is Statistical Thinking? Applies a lens to the way we view systems and process data. Statistical thinking will fundamentally change the questions we ask as leaders Provides us with new questions that can help us better understand our organisation Allows us to make more informed decisions based on sound interpretation of valid data.

59 59 Statistical Method Statistical method provides answers to the questions asked by individuals with statistical thinking. Training people in tools of statistics without first stimulating new questions is often wasted, as the relevance of the training is not clearly evident.

60 60 Impact of Statistical Thinking Traditional Decision-making With Statistical Thinking Gut feel decisions Task / activity focus Symptoms addressed Numbers to make me look good Reactive to single points of data Data kills the question Rapid change Data driven decision System / process focus Root causes addressed Numbers to enhance my understanding Responsive to system/process capability Data informs questioning Rapid improvement

61 61 Applying Statistical Thinking... 1 Decide what to measure 2 Collect data 3 Display the data 4 Analyse the data (listen to the voice of the process ) 5 Decide and take action

62 62 Step 1 Decide what to measure We determine what it is that we need to measure. What data we need to inform us as to how the process or relationship we are investigating is performing. We also need to be very clear about the measure we will use, we must have a very clear and shared understanding so those collecting the data are measuring the same thing.

63 63 What is Measurement? The assignment of numbers to observations, characteristics of objects, persons, states or events, according to rules Source: Minimum, King and Bear Statistical Reasoning in Psychology and Education 3rd Edition, Wiley and Son, 1993, p18. Source: Tull and Hawkins Marketing Research. Measurement and Method Fifth Edition, Macmillan, 1990, p258

64 64 Results Measures Collected at the end of the process Cover key stakeholder groups Represent data that is reliable, consistent, valid and timely Predominantly lag indicators

65 65 Process Measures Collected within the process Mix of lead and lag indicators Monitor those critical things you must get right

66 ... Systems View VALUES: 10. SUPPLIERS 6. CUSTOMERS 4. MISSION: 5. VISION: 1. OUR PEOPLE 11. INPUTS 7. OUTPUTS 2. RELATIONSHIPS To Suppliers System 12. PROCESSES 13. PROCESS MEASURES 8. RESULTS MEASURES 14. OTHER STAKEHOLDERS 9. TARGETS FEEDBACK

67 67 Results Measure Customer Satisfaction Employee Satisfaction Process Measure Planning approval completion rate No. of waste management complaints received No. of days sick leave No. of OH&S incidents

68 68 Step 2 Collect the data Check Sheets are a tool used for counting and accumulating data. Surveys are usually used to collect data from various numbers of people. They are most frequently used to measure the perception of stakeholders. Sampling is the process of collecting data from a representative group rather than the whole population. Sampling is used when it would be too costly or time consuming to survey the whole population.

69 69 Step 3 Display the data Once the data has been collected it may be presented in various ways to facilitate interpretation. Accurate analysis is not achieved through trying to read series of numbers.

70 70 Box Plots: Seeing Variation Within and Between Groups 5 I like coming to school to learn + I enjoy school-work + I enjoy learning + Job Satisfaction y J o A B 4.5 C 5.0 D 5.5E 6.0F 7.0 G 8.0 H 8.5I 9 J. 0 1 K L M N Year-level Councils in Network

71 Run Charts: Seeing Variation Over Time Staff Attending Staff Meetings /Oct/99 1/Dec/99 1/Feb/00 1/Apr/00 1/Jun/00 1/Aug/00 1/Oct/00 1/Dec/00 1/Feb/01 1/Apr/01 Number of Staff Date Females Males

72 72 Step 4 Analyse the data and hear the voice of the system Statistical Thinking is about changing the way that we look at data, and Listening to the Voice of the System or Process. This ability to Listen to the Voice of the System or Process comes with an understanding of variation.

73 73 Variation Variation is present in all aspects of our lives. Our weight, stress level, sleeping pattern, emotions, bank balance, expenses, car fuel consumption, and time to travel to work all vary over time. On a daily basis we make decisions that require us to interpret variation we are observing. How do I respond to this individual s complaint? Should I be leaving home earlier to get to work on time? Variation impedes the ability of people in the system to satisfy customers

74 74 Common Cause Variation The natural variation that is inherent in the process or system and affects everyone working in the process or system. This variation stems from the myriad of possible causes as they come together in each observation.

75 75 Special Cause Variation Sometimes called assignable cause variation that is not part of the normal process or system and arises because of specific circumstances.

76 76 Over Reaction Reacting to points of data that represent Common Cause Variation as if they were Special Causes. For example: engaging a large proportion of staff in a specialist program intended only for staff in need of extra help. Making changes to the fundamental structure of a system or process in response to Special Cause Variation. For example: making changes to organisational policies or processes in response to isolated complaints or in response to the vocal minority.

77 77 Under Reaction Failing to detect and respond to changes or trends in process or system performance. For example: not noticing a downward trend in resident s opinion of the agency. Failing to take any action to points of data that suggest Special Cause Variation. For example: not providing support to a staff member who is clearly in need of assistance well beyond that required by others, or not investigating a complaint to see what could be learned and to determine if the complaint was representative of the system (common cause variation) or a special cause.

78 78 Step 5 Decide and take action A key skill to develop in measuring performance is to shift from asking is the last data point okay or not, to asking how it better informs about system or process performance.

79 79 Why Measure? There are three key steps in the decision to take action for the Statistical Thinker: Listen to the Voice of the System or Process What are the plotted data points telling us about the performance of the process or system? Are there special causes present? Is the system or process stable? Is the system or process capable? Fix or explain the Special Causes where they exist Take improvement action to improve the performance of the process or system using the PDSA Improvement Process.

80 80 The Voice of the Process Provided you do not change me, I will continue to give results between the upper and lower natural limits of variation... (no matter how much you like or dislike it or how often repeated). I will give results outside these limits only when a special (as opposed to common ) cause exists.

81 Ravi Fernando State Manager NSW & ACT 81