Using Metrics that Drive Bottom-Line Value. APQC s Process Conference Oct , 2012

Transcription

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2 Using Metrics that Drive Bottom-Line Value APQC s Process Conference Oct , 2012

3 Study Highlights 1. Align measures with strategic objectives. 2. Use voice of customer feedback from external and internal customers. 3. Assign an owner of the measurement system to maintain consistent collection and reporting approaches across the organization. 4. Create a sense of ownership by involving staff in developing the measurement system. 5. Foster accountability for measurement within the organization by including measures as part of performance appraisals and connecting measures with compensation. 3

4 Your Input Counts! 1. Everyone has a ResponseCard keypad. 2. After we ask a question, please push the button with the number that corresponds with your opinion. 3. If you push the wrong button, that s ok, the last button you push is the response that will register. 4. All polling is being done anonymously. We want your honest input. 5. The ResponseCards will only work in this presentation 6. Things they will NOT do: change the channel on your TV; open your garage door, help you balance your checkbook 7. Please leave on the table when done. 4

5 1. Align Measures with Strategic Objectives 5

6 What is the most important reason to measure your business? 1. Track performance trends 2. Create greater accountability 3. Understand value of processes 4. Other 0% 0% 0% 0%

7 1. Align Measures with Strategic Objectives Use the following techniques to align measures with strategic objectives: Have senior management analyze the business value stream. Include measurement as part of policy and procedures during annual or strategic planning. Link measures to high-impact business processes. Align individual measures with those of departments. 7

8 Best-Practice Examples At Cargill Corn Milling, performance measurement begins with the strategic planning process. 8

9 Best-Practice Examples PSE&G uses a balanced scorecard approach to identify, select, and cascade performance measures throughout the enterprise. 9

10 Create a Business Value Path Start at the strategic level Cascade downward throughout the organization: Enterprise-level strategies Operating unit objectives Processes and programs Staff activities Have accompanying measures for each component of the value chain 10

11 Measurement Alignment: Product Innovation Example Organizational Outcomes (Strategies/Goals) Efficient Product Innovation Operational Outputs (Objectives/CSFs) Cost, Schedule & Technical Performance (Metric: Product Development Costs) Business Processes and Initiatives Process: Define Requirements Metric: Total Cost of Requirements Gathering Phase Process: Develop Preliminary Design Metric: Total Cost of Preliminary Design Phase Process: Design Details Metric: Total Cost of Detailed Design Phase Process: Integrate Design Metric: Total Cost of Design Integration Phase 11

12 What is the most important consideration to ensure you have selected the right measures? 1. Measures align with strategic goals 2. Measures have support of senior management 3. Measures are linked to operational processes 4. All of the above N = % 0% 0% 0%

13 2. Use Voice of Customer Feedback from External and Internal Customers 13

14 2. Use Voice of Customer Feedback from External & Internal Customers Voice of customer feedback is an important because it informs the selection of measures. It enables the measurement team to: identify and validate measures and define customer-centric metrics. 14

15 Best-Practice Examples Capturing the voice of their customers is critical to business plans and metrics because it helps the leadership team determine whether they are measuring things that are important to their customers. Delta Dental of Kansas also uses surveys and specific meetings with customers (known as Process Improvement Councils) to capture VoC. PSE&G seeks input from internal stakeholders (e.g., key executives) as well as external stakeholders (e.g., union leadership). 15

16 What customer feedback provides the greatest value for measurement? 1. Customer satisfaction with products / services 2. Customer s shortterm goals 3. Both are equally valuable 0% 0% 0%

17 3. Assign an Owner of the Measurement System 17

18 3. Assign an Owner To ensure data accuracy and instill one version of the truth around organizational measures, those responsible for performance measurement need to: define measures consistently, ensure employees understand measures and define them in the same way, and use the data in a consistent manner. Assign an owner of the measurement system to maintain consistent collection and reporting approaches across the organization. 18

19 Best-Practice Examples PSE&G s performance measurement team is responsible for the production of balanced scorecards. Their mantra is complete, accurate, and on-time. Delta Dental s leadership team uses a variety of tools and techniques to ensure data accuracy. 19

20 Where should primary ownership for measurement reside? 1. Senior executives 2. Process owners 3. Should reside with both 0% 0% 0%

21 4. Create a Sense of Ownership by Involving Staff 21

22 What is the most important element to ensure long-term buy-in for measurement? 1. Involve staff from the beginning 2. Train staff on measurement process 3. Maintain consistent communication regarding value of measurement 4. All are equally important N = % 0% 0% 0%

23 4. Create a Sense of Ownership by Involving Staff Create a sense of ownership by involving employees (including the leadership team) in developing the measurement system. Making employees part of the decision-making process typically helps an organization more effectively identify and select measures. Involving employees in the decision-making process makes them accountable and helps drive the organization toward corporate goals. 23

24 Best-Practice Examples At Delta Dental of Kansas, the goal is to make sure that employees understand their value within the organization, as well as the important role they play. All 530 employees at DM Petroleum have the opportunity to provide input and feedback on the organization's strategic plan. 24

25 What is the main indicator to tell you that buy-in exists for measurement? 1. Staff proactively use measurement in the flow of work 2. Acceptance of validity of measurement information 3. Measurement system is self-sustaining (i.e., stable despite personnel changes) 4. Other N = % 0% 0% 0%

26 5. Foster Accountability for Measurement 26

27 5. Foster Accountability for Measurement Two techniques used by the best-practice partners to foster accountability within their organizations are to: Include measures as part of performance appraisals. Connect measures with compensation. 27

28 How effective is linking measures to compensation to bring accountability? 1. Highly effective 2. Moderately effective 3. Ineffective 0% 0% 0%

29 Best-Practice Examples When employees see how their contributions directly impact business results and that the organization appreciates their contributions they get more involved and take ownership of their work. Cargill Corn Milling leverages a strategic measurement alignment model that ties personal goals to enterprise goals. At PSE&G, employee performance on scorecard metrics links directly to employee incentive compensation. 29

30 Questions? 30

31 APQC Contact Information Contact Information: Chris Gardner APQC Phone: (713) Darcy Lemons APQC Phone: (713) APQC 123 N. Post Oak Lane, 3rd Floor Houston, Texas

32 Learn More About the Findings Discussed in This Presentation Using Metrics that Drive Bottom-Line Value APQC members can download the full report for free Free study overview Case studies: Cargill Corn Milling Delta Dental of Kansas DM Petroleum Operations Public Service Electric & Gas 32

33 Thank you! 33

34 Research Champion: Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 204,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. 34

35 Alliance Partner: International Society for Performance Improvement (ISPI) Founded in 1962, the International Society for Performance Improvement (ISPI) is the leading international association dedicated to improving productivity and performance in the workplace. ISPI represents Performance Improvement professionals throughout the United States, Canada, and 40 other countries. 35

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37 Additional Study Information

38 Your Project Team APQC Project Team: Darcy Lemons, senior project manager Jonathan Kraft, project coordinator Subject Matter Expertise Chris Gardner, director, performance improvement, APQC Research Champion: Accenture Dr. Mathias Kirchmer, partner and executive director, business process management, Accenture Marketing Alliance Partner: International Society for Performance Improvement (ISPI) Gay E. Bruhn, EdD, CPT, Director of Certification and Industry Relations 38

39 Study Sponsors 39

40 Best-Practice Partners 40

41 Study Overview 41

42 Study Scope 1. Identify Actionable Measures 2. Ensure Staff Buy-in for Measurement 3. Analyze Metrics to Gain Insights for Proactive Decision Making 4. Refine Measurement to Adjust to Changing Business Conditions *For the full details, see the notes section of this slide. 42

43 Study Methodology Identify potential best-practice partners Invite them to participate in the study Hold kickoff mtg. Finalize data collection tools January April 2012 P L A N C O L L E C T Participate in virtual or face-to-face site visits with bestpractice partners Collect information from the bestpractice partners and study sponsors using the data collection tool(s) Write case studies Late May June 2012 Analyze data Identify key findings, critical success factors, and enablers July 2012 A N A LY Z E A DA P T / R E P O RT Conduct knowledge transfer session Discuss key findings, critical success factors, and enablers Attend breakout sessions, roundtable discussions, and more Share sponsor key learnings August 15-16,

44 Best-Practice Findings An Overview Identifying Measures Getting Buy-In Analyzing Measures Refining Measures Use a variety of techniques to align measures with strategic objectives Align individual measures with departmental measures Use voice of customer feedback from external and internal customers Involve senior leaders in the measurement process from the beginning Maintain a healthy performance measurement system with a balance of leading and lagging indicators Have a low number of measures for the average business process Take a holistic view of process measurement by using a diverse blend of measures including cost, efficiency, and quality Leverage fact-based internal (historical data) and external (benchmarking) information to set performance targets Assign an owner of the measurement system Use a variety of change management techniques to secure buy-in for measurement Use a variety of techniques to foster accountability within the organization Use a variety of communication techniques to convey the importance of measurement, the scorecard, and employees roles in measurement Involve multiple staff segments in communicating with employees about measurement Leverage a number of different process improvement techniques that involve analyzing process measures Use a variety of analytical tools and techniques Provide activity and outcome measurement information directly to employees responsible for executing a process Involve a centralized measurement group in adjusting measures to increase stability Update measures annually Insulate measurement system from disruptive changes with shifts in personnel Use a formal change control process to make adjustments to the measurement system 44

45 About APQC

46 Who We Are APQC is a member-based, 501(c)3 nonprofit specializing in benchmarking, knowledge management, measurement, and process improvement. Leveraging benchmarks and best practices obtained from more than 7,000 projects, APQC helps organizations to rapidly define and prioritize improvement efforts. 46

47 APQC s Mission As one of the world s leading proponents of process and performance improvement, we follow our mission to help organizations around the world improve productivity and quality by: discovering effective methods of improvement, broadly disseminating findings, and connecting individuals with one another and with the knowledge they need to improve. 47

48 APQC Membership Using award winning methodologies, APQC works with members to share knowledge and transfer best practices designed to impact business results in the process areas of: Enterprise-Wide Financial Management Human Capital Management Knowledge Management Supply Chain Management Organizations may acquire memberships based on APQC s core process areas Members are provided access to content specific to their core process area, along with APQC s renowned process and performance improvement resources 48

49 APQC s Core Competencies Benchmarking and best practices Frameworks and maturity models Knowledge management Process improvement and measurement Metrics and measures 49

50 APQC Highlights APQC opens its doors as APC Co-founded the Malcolm Baldrige National Quality Award International Benchmarking Clearinghouse made it s debut APQC develops business taxonomy with The Process Classification Framework SM (PCF) Partners with Arthur Anderson to sponsor the 1 st Knowledge Imperative Symposium, now known as the KM Conference Chairman Grayson again set course to improve performance and productivity with a major education initiative Recipients of the 100 Companies That Matter in Knowledge Management, by KMWorld magazine Recipients of the 100 Companies That Matter in Knowledge Management, by KMWorld magazine 50

51 The New Edge in Knowledge Based on APQC s 20 years of experience in KM benchmarking, best practices, and implementation with leading organizations around the world. Understand the new forces driving KM, and build a targeted strategy. Use a proven framework to guide your KM program design. See examples from leading organizations with outstanding KM programs. Propel your KM efforts with tested tools, models, and criteria. 51

52 The Knowledge Base: Content You Can Use The world s largest database of benchmarks and best practices - access to current, validated benchmarks, business drivers, and best practices from more than 8,500 studies. Top Business Excellence downloads of July 2012 included: APQC Process Classification Framework (PCF) - Cross Industry - PDF Version Using Process Frameworks and Reference Models to Get Real Work Done (Best Practices Report) APQC's Seven Tenets of Process Management Best Practices in Measuring Corporate Quality (Best Practices Report) C O N T E N T T Y P E S Articles and White papers Benchmarks and Metrics Best Practices and Business Drivers Case Studies Presentations Reports and Books Tools and Templates 52

53 APQC s Research Opportunities and Custom Solutions 53

54 Best Practice Research Best practice studies Brings together a group of cross-industry professionals focused on a specific topic to learn best practices from leading organizations Learning takes place through a series of virtual and in-person meetings, site visits, and a concluding knowledge transfer session. Cost to participate varies by study 20% discount for members Advanced working groups Focused group of advanced member organizations that work on leading edge and critical topics of importance Cost to participate varies by group 54

55 Best Practice Study Topics for : Business Excellence Business Excellence Building a Process Framework for Enterprise Quality (August November 2012) Effective Project Management Offices (August December 2012) Overcoming Organizational Resistance (September 2012 January 2013) 55

56 Advisory and Custom Solutions Advisory Services We work with you to assess and improve your internal processes by helping you identify the strategies, tactics, and measures appropriate to your organization to drive business results. Services available in business excellence, process improvement, knowledge management, and measurement Custom Benchmarking We will conduct custom research, specific to your organization s business model, to provide objective performance indicators and leading edge practices 20% discount for members 56

57 Training Opportunities APQC offers the following onsite training tailored to focus on your organization s specific issues: Applying Benchmarking Skills BenchStarts Effectively Managing Performance Measurement Systems Process Mapping Process Management Process Frameworks Process Design Some of these are also offered in conjunction with APQC conferences. 57