The PuMP Primer Webinar Series Lesson 1: The Top 5 KPI Questions Strategy & Performance Professionals Ask Most And The Critical One to Answer First

Transcription

1 G day everyone! My name is Stacey Barr, and welcome to The PuMP Primer Webinar Series: 12 practical insights for how to find and implement meaningful performance measures. And with me today is my Australian PuMP Partner, Mark Hocknell Hi everyone. The purpose of this webinar series is simple: we want to introduce you to the PuMP Blueprint. PuMP is a deliberate methodology for organisational performance measurement that makes it easier and faster, and meaningful and engaging. And if it resonates with you if you find you have the same struggles that PuMP was designed to solve then you ll also be curious to know when and how you can learn the full PuMP Blueprint in One of the common challenges that we have (and I m no exception) is making time for performance measurement. We know it s important, but rarely is it as urgent as all those other demands that end up filling our schedules. It s made my day to see you stepping out of your whirlwind to make time to expand your knowledge about measuring performance. Thanks for joining me!

2 I realise that not all of you know much about me or my co-host, Mark, so we ll introduce ourselves

3 So I m Stacey Barr. I m a performance measure specialist and have been for almost all of my 26 year career. Straight out of university I was a statistician in research. Twenty years ago I was the corporate performance measurement consultant in QR. In 1999, I started my own practice with performance measurement as my niche. For my whole career, what I ve enjoyed most is making my ideas about measuring what matters easy for others to understand and use. That s where PuMP came from: what I ve learned from all those years focusing ONLY on performance measurement. To me, measuring performance is like gravity. It holds us to the results that matter. By measuring what matters, and measuring it well, we reach our goals sooner and with less effort. I m so glad you re here, because it s likely you believe this too. And my co-host, Mark Hocknell, is someone I ve been working with for about 10 years now, and aside from me, Mark is the most experienced PuMP trainer and consultant on the planet. Thanks Stacey. I started my professional career with a financial services group in Australia called Suncorp, and I was there for 14 years. I ve done all the corporate management training. I was in senior management roles in the customer side of the business. It was a great training ground as a manager and a leader, with plenty of challenges and plenty of 2

4 change. And towards the end of my time with Suncorp, I completed an MBA with QUT. When I left Suncorp, I started working as a management consultant and that was about 11 years ago now, and started teaching part time at the school of business at QUT. And then after all that, I learned about performance measurement, from you Stacey. And that s what I find really amazing today, as a consultant and a coach working with PuMP is that leaders don t really get any insight from their performance reports at all. They tend to manage by intuition. All the time I was at Suncorp, we measured lots of stuff and recorded lots of numbers, but the performance measurement side of things really wasn t done well. And the same with most business schools today: they only teach the bad habits, they don t really teach performance measurement. You re going to get a peak at some of the essentials of the PuMP methodology, through this PuMP Primer Webinar Series. Let me remind you of the program

5 The PuMP Primer Webinar Series is your introduction to PuMP. You re going to learn a sample of tips from each technique in PuMP 12 practical insights in total - over the course of four lessons. Lesson 1: The Top 5 KPI Questions Strategy & Performance Professionals Ask Most And The Critical Lesson 2: The 3 Hottest Tips to Find Meaningful and Measurable KPIs for Your Strategy (or Any Result That Matters) Lesson 3: The 5 Essential Design Inputs For Actionable Performance Reports that WOW Decision-Makers Lesson 4: The 2 Most Powerful Habits to Master To Boost the Size, Speed & Stickiness of Performance Improvement Today we focus on Lesson 1 3

6 Today s lesson is The Top 5 KPI Questions Strategy & Performance Professionals Ask Most And the Critical. It will lay a foundation for the next three lessons, where we ll dig deeper into the steps of the PuMP approach for performance measurement. Let s start with YOUR biggest question about performance measurement right now? What is it? [Think about it and write it down before you continue reading the transcript.] Here s what we ll be exploring together, today 4

7 We ll look at the top 5 most asked questions about performance measurement, asked by over 3000 new Measure Up readers over last 3 years. Measure Up, by the way, is Stacey s weekly newsletter, and you can subscribe over at Then we re going to reveal to you which one of these questions is the CRITICAL one to answer FIRST. After that, we ll dig into the answer to this FIRST question, and we ll give you two frameworks you can use right away to test whether this problem is affecting your organisation, and how you can start fixing it. Let s start by seeing what the 5 most-asked questions are, that you have about measuring performance 5

8 Over the last 3 years or so, almost 3000 new subscribers to the Measure Up newsletter shared their biggest KPI question when they signed up. I went through every question, and grouped similar ones together. They are summarised in this Pareto chart. #1 in the top 5 most-asked questions is along the lines of Is there a systematic process to design, implement and use measures or KPIs? and it was asked 608 times. Examples of what people asked: What is the best approach to establish corporate performance improvement KPIs? Is there a standard way to approach performance measurement no matter the problem? Is there a framework or instructions for developing, collecting and reporting performance data Is there a common process to make KPI's Is there a systematic process to define/design/implement KPIs? #2 in the top 5 most-asked questions is basically How do I find the right measures or KPIs? and it was asked 572 times. The order of these 2 first questions was reversed a couple of years ago, so now we re seeing more people becoming aware that our approach to measurement is very important. Here are some examples of what people asked: Effective measures for prevention based programs How do you measure success? 6

9 I'm looking for a suite of local government based KPI's What are the leading kpis in the mining industry? Which KPIs to adopt in the manufacturing sector? What are the most commonly used kpis in each industry? #3 in the top 5 most-asked questions was How do you get measures that align to strategy, even when strategy is hard to measure? and it was asked 284 times Examples of what people asked: How to define the best and most appropriate KPIs for your organization within the BSC framework. How do I ensure that the results/ objectives are described in a way that is clear and measureable How to make sure that what we are measuring really indicates progress towards reaching our objectives. How to measure difficult strategic objectives such as artist excellence and community arts leader How to choose KPIS that support our mission, vision and values but are not so subjective that we can't measure them #4 in the top 5 most-asked questions was How do you get people to buy in to performance measurement? and it was asked 206 times Examples of what people asked: We are fighting to get measurements going so that it is seen as a help and aid to use, not something that is used as a punishment. Getting staff to appreciate and buy-in to process. How do you stop people using clever phrases to mask the fact that they aren't measuring anything at all? How to involve the team members in developing smart KPI's How to get buy-in from senior management. #5 in the top 5 most-asked questions was : How do you measure people s performance? and it was asked 173 times Examples of what people asked: How do you measure an academic? Defining measures for staff in a support-type role. How do I put in place proper KPI's for my cold storage warehouse manager What to reward those who show uptrending and great KPIs Some Qualitative jobs are difficult to measure the KPI, how con we make it easier? What is the better way to calculate productivity by technician? How to measure peoples performance Of all these questions, which do YOU think is the most important one to answer first?

10 Which of the 5 biggest questions do you think is the most critical one to answer first? [Think about it and write it down before you continue reading the transcript.] Of all these questions, the most important one to answer first is this one 7

11 The most-asked question turns out to be the most CRITICAL to answer FIRST. This question was: Is there a systematic process to design, implement and use measures or KPIs? It s actually logical that this is the first question to answer. The other questions represent challenges that people simply wouldn t have IF they had a systematic process or approach to design, implement and use performance measures. If you had a systematic performance measurement approach, it would give you the steps to find the right measures. If you had a systematic performance measurement approach, it would give you the steps to make your strategy measurable, and to align measures to that strategy. If you had a systematic performance measurement approach, it would give you the steps to get people involved and engaged in the right way that builds real buy-in. If you had a systematic performance measurement approach, you would have the answers to the remaining questions! When you see performance measurement as a PROCESS, rather than as an EVENT or bureaucratic hoop to jump through, you quickly understand that HOW you do measurement is at the root of your struggles. 8

12 There are some very obvious and common symptoms that you have a performance measurement approach that is ad hoc, and not systematic and deliberate. While ever your approach to measurement is ad hoc, you won t have control over it. That means you won t be able to improve it. And THAT means that you will continue to have the struggles that you re having. Here s a list of the most obvious and common symptoms we see in organisations whose performance measurement process is ad hoc: You don t have measures for intangible goals. You look for measures in KPI libraries or you brainstorm them. Your colleagues don t like measurement and avoid doing it. Performance reports focus more on activities completed rather than results. People spend more time criticising measures than using them. Which of these symptoms have you seen in your organisation? [Think about it and write it down before you continue reading the transcript.] Recognising the causes of your performance measurement struggles is what the first practical insight is about 9

13 It s your approach to performance measurement that causes your struggles with measuring performance. The way you go about choosing, implementing and using performance measures either makes it easy and meaningful, or makes it hard. Now you know that you need to look closely at your approach to performance measurement, as the first step to: Finding the right measures Getting buy-in Aligning measures to strategy And so on So what exactly should you look at, when you look at your performance measurement approach? 10

14 An approach to performance measurement is the collection of steps, frameworks, templates and tools that give you the systematic means to choose, create and use performance measures to improve performance. I ll repeat that, because it was a mouthful, and an important mouthful: An approach to performance measurement is the collection of steps, frameworks, templates and tools that give you the systematic means to choose, create and use performance measures to improve performance. There are a few reasons why performance measurement is one of the hardest things to do in business: It does NOT come naturally. It s ignored in most business training. Most people have only bad past experiences. Bad habits have become common practice. Essential steps have been left out because no-one new they were necessary. So an approach to performance measurement should SPELL IT ALL OUT clearly and actionably. Your approach to performance measurement should detail exactly how to: make goals measurable align measures to strategy design meaningful measures engage people to the point of excitement 11

15 build a time and cost efficient data collection and reporting system present measures without distortion interpret measures without reacting to noise use measures to improve business processes Let s look at an example of a Performance Measurement Approach

16 PuMP is a deliberate performance measurement framework. It solves the common struggles we have with measuring performance and KPIs. Let s step through it, and it has 8 steps in total. STEP 1: Understanding Measurement s Purpose Our first struggle with measurement is people believing it s a rod for their back. But we need it to be a tool in their hands. Rather than measuring people, we need to focus measurement on processes and continuous improvement. PuMP begins with using a self-assessment tool called the PuMP Diagnostic, which helps everyone understand what good measurement means and how to do it properly, avoiding the most common struggles and problems. It gets them on the same page about what good measurement practice is. If we don t do that, their ingrained bad KPI habits will continue to sabotage your progress. So before you start any KPI project, make sure your first conversation is about the purpose and process you re going to take. Don t give in to answering the question so what will we measure? STEP 2: Mapping Measurable Results Most goals are really hard to measure. But that s not because they can t be measured. Almost always, they can be. 12

17 It s the bad habit of using weasel words that makes them hard to measure. So that s what we need to change. In Step 2 of PuMP, we use two techniques to make goals measurable. The first is called the Measurability Tests and it makes goals or objectives clear, specific, and easily measurable. The second technique is the Results Map, and it maps the relationships among goals at all levels in the organisation, to get alignment to strategy, and also to give each team a line of sight from their goals to the direction of the organisation. Before you look for measures, you have to make sure your goals are measurable first. STEP 3: Designing Meaningful Measures Too many of our measures are trivial and not very useful. And they don t match our goals all that well. We ve discussed that brainstorming and some other common methods for finding measures is the problem here. It s not a measure design technique. In Step 3 of PuMP, we replace brainstorming with a technique that works every time: we just call it Measure Design. What it does is create measures that evidence their goals and that are meaningful, relevant, cost effective, and will make it easy for people to buy in. Measures are quantifications of evidence, so we need to know the evidence that would convince us our goals were happening, before we can develop the right measures for those goals. STEP 4: Building Buy-in to Measures A struggle we haven t talked about is how hard it is to get people to commit to and own the measures. We see them spend more time debating the relevance or integrity of the measures, than they do using them to improve performance. The bad KPI habit at work here is that we think getting them to sign-off means the same as buy-in. But it doesn t. To avoid the risk of their colleagues and managers not buying in to performance measures they create, Step 4 in PuMP uses what we call the Measure Gallery technique to build buy-in and generate excitement, both for performance measurement in general and for their new measures in particular. It s a way to involve lots of people, hands on, in the measure development. But in a way that doesn t take much effort or time. We can t just send people a list of measures and ask them for their feedback and sign off. They have to be involved, actively, even if only for a few minutes, so they can engage in the choice of the measures. STEP 5: Implementing Measures Another struggle that happens a little later in the measurement process is the huge cost of producing measures, and that really sucks when the measures aren t even used or valued by people. The bad habit here is a lack of discipline in how measures are defined and how data is collected. They are left open to interpretation, and so multiple versions of the same measure, or the wrong version of the right measure, is what gets implemented. In this fifth PuMP step, we use the Measure Definition technique to detail exactly how each of the measures should be implemented, and we begin the documentation of a Corporate Performance Measure Dictionary. These details are things like: the formula, the specific data, actions in response to the measure s signals, owners of the measures.

18 We can t assume that people will know how to implement each measure. When we specify the details of each measure, we can save tens of thousands of dollars every month that s otherwise wasted on the wrong data, the wrong measure, and the wrong graphs. STEP 6: Interpreting Signals from Measures There s a struggle that many people don t even recognise they re having. It just seems like that s the way measurement should be: that we disagree on what a measure is telling us, that we can t get a clear picture of how far we are from target. The bad habit is one that has become such a deeply held common practice that it s hard to accept. It s the bad habit of comparing this month to last month. We just don t understand that every measure has natural variability, and the only way to interpret signals when there is variability is to analyse patterns in the data, not compare the points. In Step 7 of PuMP, we use a very powerful graph for al our performance measures, powerful because it shows valid signals of change in our measures and gives us a valid baseline to compare against target. We no longer argue about what a measure is telling us. We no longer can draw different conclusions from a single measure. It all becomes clear and insightful. This chart is called an XmR chart. If you re curious about it, you can find some articles on measureupblog.com just put xmr into the search box. STEP 7: Reporting Performance Measures Reporting in business has become an industry. Reports have evolved for all the wrong reasons: people s favourite graphs; loads of explanations about missed targets and project progress and workload; an analysis that the HR manager asked for 5 years ago (and they left 3 years ago). Reports are bloated, hard to navigate, and just don t give the insights for action. The bad habit we have here is to use performance reports to cover your arse, rather than to focus on continuous improvement action. In Step 6 of PuMP, we challenge those reports that focus on the latest and greatest dashboard dials, gauges, and graphs. We instead focus on the real purpose of performance reports to monitor progress of strategy and adopt 5 principles of report design that serve that purpose. The result is a report or dashboard that can quickly and easily answer the three most important questions that every performance report should answer. These three questions are: what, why and now what? STEP 8: Reaching Performance Targets Sometimes the only way to reach a target is to shift the goal posts. So they align with the results we actually got! Reaching targets without unintended consequences is only seen in highperformance organisations. For the majority, targets are rarely reached and rarely believed in. The bad habit that lurks behind the targets we miss is that our change initiatives usually focus only on symptoms. We say we can only increase output if we have more people. Why don t we realise how much waste there is in our business process design? The role of performance measures is to trigger high-leverage performance improvement. The technique we use at Step 8 in PuMP guides us to use our measures as the lens through which we analyse and improve our business processes, to increase their capability. Not to compensate for their lack of capability. It s about processes, not people. This is where PuMP dovetails with improvement methodologies like Lean Six Sigma. Your process improvement efforts need to be guided by your performance measures. Otherwise we re not improving what matters most to improve.

19 So you might have gathered, PuMP is a VERY deliberate performance measurement process. It s steps and techniques are designed to directly deal with the struggles we have, the world over, in measuring performance and KPIs. Let s do a quick check and see how PuMP contrasts to your current approach to performance measurement

20 Here s a list of the most obvious and common symptoms we see in organisations whose performance measurement process is ad hoc: We have steps missing or incomplete We have frameworks missing or incomplete We have templates missing or incomplete We have tools missing or incomplete None of the above: our approach is the same or similar How does your current approach to performance measurement compare to PuMP? [Think about it and write it down before you continue reading the transcript.] Let s summarise with practical insight #2 13

21 Performance measurement is a process, not an event. There are several essential steps that need to be done well to make it easier, faster, more meaningful and more engaging. PuMP is an example of a real approach to performance measurement that includes the essential steps, and has deliberately designed techniques to make measurement easier, faster, more meaningful and more engaging. We re always on the look-out for a similarly robust approach to performance measurement. If you know of one, please tell us! Something that people often say to me when they first learn PuMP is that it seems to take a lot of time and effort. Are you thinking the same thing? Compared to typical approaches that are missing a lot of essential steps AND wasting time producing useless performance measures, it might look that way. But this actually isn t the case at all. Let s look at why 14

22 You or your colleagues might be like a lot of people and believe that performance measurement is a bureaucratic hoop you have to jump through. Not fun. Not beneficial. Just necessary governance stuff. But that s not what performance measurement is at all. It s not a hoop. It s a LOOP! I ll show you what I mean 15

23 There are a few very important management processes that are essential to an organisation being able to fulfil its mission and achieve its vision. Strategic Planning is the first one. It s a cycle that is ongoing, year after year. It makes sure that the organisation knows what matters and knows what to do to achieve what matters. Data Management is another. It s a cycle of continually fine-tuning the data the organisation needs to capture and organise, so everyone can know rather than guess. Performance Reporting is another important management process. Without it, no-one can know for sure where performance is compared to where it ought to be. Process Improvement or Strategy Execution is another important management process. It s the deliberate way that the gap between current performance and desired performance gets closed. Performance measurement CANNOT be a futile and unnecessary bureaucratic hoop, because it is the only way that these other four management processes can be linked. Performance measurement is a loop, not a hoop. It s a feedback loop, to be more precise. Strategic Planning sets goals that require monitoring, so the performance measurement loop needs a step to design the right measures. Data Management needs to align to the data needs of the organisation, so the performance measurement loop specifies clearly what those data needs are. Performance Reporting needs to highlight where the gaps are in current performance, so the performance measurement loop presents the measures in a way that reliably displays those gaps. 16

24 Process Improvement and Strategy Execution need to focus effort where it s needed most and also be confident that those efforts are working, so the performance measurement loop highlights priorities and tests how well efforts are really working. In very advanced organisations, this learning that the performance measurement loop generates is capture in a Knowledge Management system and fed back into the next Strategic Planning cycle. How well does it work this way in your organisation? Let s find out

25 How many people in your organisation see performance measurement as a bureaucratic hoop and NOT as a feedback loop? [Think about it and write it down before you continue reading the transcript.] Our third and for this webinar our final practical insight is this 17

26 When people understand that performance measurement is a feedback loop not a rod for their back they see the true value in doing it. We need to start talking differently about the context of performance measurement. And one of the most important first steps is to STOP talking about measuring people. Instead, talk about measures as tools to help people monitor and diagnose and improve the processes they work in. This will empower them: and the fear will gradually go away and then real performance improvement will start to happen. So we have some hope now Hope that there is a different way of SEEING and DOING performance measurement, so it works properly. 18

27 Back to that important FIRST question From the research we discussed at the start of this webinar, the most important question to answer first is: Is there a systematic process to design, implement and use KPIs? It s near impossible to solve any of the other big challenges about performance measurement until you have a good answer to this one. Of course, my answer to this question is the PuMP Blueprint. And if you have the same struggles with measuring that the research highlights, PuMP is also a good answer for you. It will make measuring easier and faster, and meaningful and engaging. So a decision for you to make before the end of this PuMP Primer webinar series is: will you decide on PuMP, or not? I will help to think of learning PuMP as an investment, not a cost: Steve Silvers from the FAA invested $12K in PuMP and in 7 months had saved nearly half a million dollars from the improvement he created from one measure. That s a 40x ROI. Peter, from an energy company, invested about $20K in PuMP to focus everyone on the right things, and in one year his department saved the company $20M through his procurement strategy. And Martin, in a freight company, found that his reporting was costing him about $400K per year, and he was getting no value at all from the reports. So PuMP helped him streamline his measurement and reporting. 19

28 The people who come to PuMP Blueprint Workshops are mostly strategy and performance professionals, managers, leaders, and also business and reporting analysts. But, there are a few reasons to decided AGAINST PuMP, so If want to build KPIs for employee performance appraisal, then PuMP is NOT for you! If want someone to tell you what to measure, then PuMP is NOT for you! If you want a quick fix you can get done in a brainstorming workshop, then PuMP is NOT for you! PuMP is for you if you know that measurement is a fundamentally important process in every organisation, and you know that it s a skill that is needed internally, just like financial management, leadership and project management. PuMP is for you if you know that measurement must be deliberate before it can work, and when it does work, it can completely change the performance culture of your organisation. Do you believe this too? Raise your hand if you do. You ll learn a bit more about PuMP over our next 3 lessons in The PuMP Primer Series along with the other 9 practical insights but if you have already decided that PuMP is the approach for you, you can visit this link: and register for one of our PuMP Blueprint Workshops in In 2017, we re making PuMP a 3-day program the first 2 days give you the how-to that you ll practice in small group exercises. But the third day is pure implementation, where you start applying PuMP with our coaching, and you leave the workshop with your measures designed. We ve been testing this over the last year with some private clients, and they absolutely love this approach with the implementation day and the success they have, getting better measures back at work, is even higher. Time to wrap up Lesson 1

29 Lesson 2 is about The 3 Hottest Tips to Find Meaningful and Measurable KPIs for Your Strategy (or Any Result That Matters). We ll cover: How to help people understand what performance measurement is REALLY about, and to feel more excited and curious about it. The step that almost everyone unknowingly leaves out that guarantees it will be IMPOSSIBLE to find truly meaningful performance measures. The recipe for writing a quantitative performance measure. We hope you can make it: it s so much better when we re here live together. Thanks everyone for joining Mark and I today. We both hope it was a fruitful use of your time and that you learned a tonne. Was it worth your time and effort to be here with us today? So I m looking forward to joining you again tomorrow, on the second lesson in The PuMP Primer Series. Thank you once more for joining us: this is Stacey Barr and Mark Hocknell signing off!