1. Performance Management
Measure and Improve Organizational Performance
Presentation by: Ahmad Saleem, FCA
Chief Consultant
Performance Management Services

2. Sections Of This Presentation
Section I
What is Performance Management
Section II
Business and its Objectives
Section III
Business Modeling
Section IV
Factor for Performance Management
Section V
Business Performance
Measurement 02

3. Section I Performance In this section we will discuss:
What is Performance?
What is Measurement?
What is Performance Measurement?
What is Performance Management?
Why we need Performance Management?
Business Performance Measurement 03

4. What is Performance?
The accomplishment of given task/activity measured against present known standards of accuracy, completeness, cost and speed etc. 04

5. What is Performance Measurement?
Performance Measurement is the Comparison of Actual Measurement with Expected, Specified or Desired Measurement 05

6. Noting the Quantitative Attributes
What is Measurement?
Noting the Quantitative Attributes
Measurement is a process of obtaining the magnitude of quantity in any unit 06

7. Measurement Accurate and Fixed Judgmental Variable
Length of a nail
Distance
Cost of Machinery
Profit earned
Judgmental
Variable
Taste of Food
Movie
Fuel Consumption
Tyres Consumption

8. We do lot of Measurements in our Daily Life
Dieting
Fuel Consumption
Studies
Games 08

9. Determining Performance
We can determine performance of any Activity, if it is Measureable.
We can only improve those activities, which are measureable
Examples 09

10. Performance Management
Determination - Once we have determined the Performance of any activity then it is decided that whether there is need for improvement or not
Performance Management – When we take steps for the improvement of Performance, that series of actions and steps is called “Performance Management”.
Procedure – Through Performance Management Program we can establish the procedure through which measurement results can be improved.
Identification of Areas – For this, we need to identify the areas where improvement can be made – set the standards for each area for the improvement, note down the present measurement and periodically measure readings to observe the improvement 10

11. Why Performance Management?
We do need Performance Management for the following reasons
Long tern survival and higher return on Investments
Achievement of Objectives in most Efficient, Effective and Economical manners
Less wastage and lower Operational Cost
Better Financial results, Higher Profits and Salaries of Employees
Reducing Top Management Pressure and Tension
Better Motivation and Team work among Employees
A Competitive Advantage and Higher Sales

12. Business Performance – How to determine?
Return on Investment
Sales on Fixed Assets
Contribution Margin on Sales
Positive Financial Position
Expansion 12

13. For the Purpose of this Presentation, we will discuss “Performance Management Program” for Commercial Organizations 13

14. Section II Business In this section we will discuss:
How Business is started?
Objectives of Business?
What is Success?
Roles Required 14

15. Why Doing Business? Having Knowledge and Experience Resources
Opportunity
Some Objectives 15

16. Objectives
Earn Profit
Social Factor
Growth
Success 16

17. What is Success?
Achieving Your Objectives in most Effective, Efficient and Economical manners is Success 17

18. These are Departments of the Company
Roles in the Company
Company
Make Sales of Products
Manufacture Goods
Purchase Materials
Accounting Work
Arranging Funds
Administrative Issues
Your Products
Software and Hardware
These are Departments of the Company 18

19. Section III Business Modeling In this section we will discuss:
With what we will compare?
Potential to Perform?
Identification of Correct Areas
Critical Factor for Performance Management 19

20. Compare to? Determine Potential to Perform
Similar Companies of same Potential
Market Analysis
Expectations 20

21. Resources Opportunities Potential to Perform Potential to Perform
Based on
Resources
Opportunities
Potential to Perform 21

22. Resources Human Resource Time Materials Energy Knowledge Fixed Assets
Funds 22

23. Opportunities
Market
Buying Power
Product 23

24. Resources Opportunities Potential to Perform Potential to Perform
Based on
Resources
Opportunities
Potential to Perform 24

25. Identification of Correct Areas
Sales or Contribution Margin
Determining the Potential - Production
Assets Utilization
Fund Requirement
Planning
Culture 25

26. SCORING Critical Factors in Performance Management
Identification of Correct Areas
Information & Knowledge
SCORING
Documentation
Applying Correct Solutions
Cross Checking of Results
Accurate Measurement 26

27. Factors for Performance Management
Section IV
Factors for Performance Management
In this section we will discuss:
Measurement Methodology – Scoring
Impact of Factors
Factors – detailed discussion 27

28. Measurement – Scoring Scoring is based on three Elements: Knowledge
Documentation
Awareness
Example of Strategic Planning
Strategic Plan? – give marks out of 10
Documentation – available or not
Awareness – related persons aware or not 28

29. Measurement – Scoring Your Score Knowledge - 07 Documentation - 01
Awareness - 05
Multiply above three scores
07 x 01 x 05 = 35 = Score 35/10 = 3.50 %
09 x 09 x 09 = 729 =Score 729/10 = 72.9 %
Over 50% is good score 29

30. Factors for High Performance
Costing, Contribution Margin & Breakeven Analysis
Strategic Planning and Management
Potential to Perform
Budgeting
Roles required for Operations
Business Rules
Business Plan
Systems, Policies and SOPs
Departmental Profiles
Risks & Controls
Critical Success Factors
Knowledge Management
Organization’s Culture
Role of IT
Resource Management
Role of Accounts Department
Human Resource
Materials
Fixed Assets
Funds
Time
Energy
Knowledge 30

31. Type of Impacts
The impact of factors can be grouped in four categories:
Planning
Operations
Financial
Controls 31

32. Strategic Planning & Management
For Long Term
Establishes major scope of working
Strategic Planning and Management is defined as the set of decisions and actions that result in formation and implementation of plans to achieve a Company’s objectives
Mid and short term planning based on it
Cannot be changed easily
Based on Size, product, market etc.
Determined by Top Management 32

33. Resources Opportunities Potential to Perform Potential to Perform
Based on
Resources
Opportunities
Potential to Perform 33

34. Business Plan
For shorter time period
Based on the resources
Business Plan is the overall plan for the Organization, which ties all the Organizational functions together
Have Departmental Goals
Can be changed easily
Prepared by Senior and Middle Management
Examples 34

35. Departmental Profile Roles of the Department
Objectives of the Department
Job Description of the Department
Need to establish very clear role of each department as what they are expected to perform, what re their objectives, resources required and their Key Performance Indicators
Key Performance Indicators
Benchmarking
Human resource Requirement
Resources Required
Information and Knowledge to be maintained 35

36. Critical Success Factors
There are always some factors, which play very critical role in the growth and success of the Organizations, we need to determine those factors
Example:
As customer your Critical Factor:
On Time
Safety
Customer Satisfaction
Controls on Material
Assets Utilization
Human Resource
Funds
Knowledge 36

37. Organization’s Culture and Behavior
Authority
Responsibility
This is Character of the Organization, as how it behave in different circumstances. Change of Culture is one of the most important Element.
Empowerment
Trust
No Interference
Result Oriented
Ownership
Respect
Reward
Accountability 37

38. Manages all other Resources
Resource Management – Human Resource
Most Important Resource
Manage all other Resources
The Resource, which…
Manages all other Resources
Competence
Training
Information & Knowledge
With right skills
Should know Expectations 38

39. Materials
How much Material is required?
Wastage and excessive Buying
Materials and Stocks are one of the most important element – Especially for Blocking your Finances
Record keeping
Post Production Analysis – Price and Volume Variances
Carrying Cost 39

40. Watch that Investment…..
Fixed Assets
Complete record of Fixed Assets
Differentiate between Productive and Supportive Assets
In most of the cases, Fixed Assets are the major part of total Investment of the Company.
Watch that Investment…..
Calculate return on Assets with Sales and Contribution Margin
Record of Insurance and Warranties
Repair & Maintenance
Preventive Maintenance
Disposal of Assets
Assets Condition 40

41. Finances One needs a very tight control on Finances..
Keep Financial Burden minimum
Establish accurate Financial Requirement
Look for high Material Cost and Receivables
One needs a very tight control on Finances..
It’s the single major cause of Company’s poor Performance
Avail maximum benefit from Suppliers and Creditors
Never go for Capital Investment from Working Capital Facilities
Accurate projected Fund Flow Statement involving all departments and making them responsible 41

42. One of the MOST Important Resource..
Energy
Energy Audits
Availability of Energy
In present Scenario
One of the MOST Important Resource..
Cost
Management of Energy 42

43. Time 24 hours are available to all…
Utilization of all resource effectively
Time in Production Processes
24 hours are available to all…
Effective utilization makes the difference 43

44. Knowledge Knowledge Is Power What type of Knowledge is required?
How to update?
Who is Responsible?
How to Apply? 44

45. Costing, Contribution Margin and Breakeven
Complete record of cost including direct and indirect cost, fixed cost etc.
Computation of Contribution Margin, linking with Sales and Profit
Cost incurs when resources are utilized…
Keep complete record of Costs, Contribution Margin and Breakeven
Product wise Contribution Margin
Compare return with relation to investment, time consumption etc.
Breakeven analysis, simple and based on cash return 45

46. Contribution Margin – How to improve?
By increasing Selling Price
Cost incurs when resources are utilized…
Keep complete record of Costs, Contribution Margin and Breakeven
By reducing material cost – change in Design
By reducing Overheads and other expenses
Create awareness in all departments 46

47. Budgeting
Budgets should be prepared for every activity
Involve all the departments and introduce the culture of Budgeting
Budgeting is a process of making best estimate regarding a future activity and then following the initial estimate.
People are reluctant in making budgets. Why?
Periodic Comparison of Actual data and Budgeted data
Check for reasons for variations 47

48. Budgeting Cost incurs when resources are utilized…
Production Budgets
Time Budgets
Cost incurs when resources are utilized…
Keep complete record of Costs, Contribution Margin and Breakeven
Wastage Budgets
Breakdown Budgets
Energy Budgets
Financial Budgets 48

49. Systems, Policies and Procedures
Ensure system for every activity
Policies should be available for all scenarios
Performing any activity in a similar way all the time and all users have same
understanding is called system. This also include processes, policies & procedure.
Standard Operating Procedures – SOPs
Should be Documented 49

50. Risks & Controls – Risks
Nature of Risk
Impact
With every activity there are risks – Inherent, intentional, un-intentional etc.
Frequency
Responsible 50

51. Risks & Controls – Risks
Production Risks
Planning Risks
Marketing Risks
With every activity there are risks – Inherent, intentional, un-intentional etc.
Sales Risks
Human Resource Risks
Fixed Assets Risks
Stocks Risks
Expenses Risks
Purchasing Risks
Quality Risks 51

52. For prevention of Risks, you need to implement certain Controls
Risks & Controls – Controls
Controls
Preventive
Detective
For prevention of Risks, you need to implement certain Controls
Authorization
Documentation
Physical Checking
Access Controls
Reporting
Budgets 52

53. Knowledge Management
Data
Organizations need to have full information and knowledge regarding all related activities.
Documents and Forms
Reports
Information
Knowledge 53

54. Knowledge Management Data Documents and Forms
Data is the raw facts, attributes of any transaction or activities, normally relates to one single transaction and maintained and recorded on certain documents and forms
Documents and Forms
Documents and different forms are used to record the data related to activities and transactions. There can be multiple types of documents used to record the basic data 54

55. Knowledge Management Reports Information Knowledge
A report normally represents the compiled and consolidated data taken for a particular time period.
Information
Information is anything that someone is capable of perceiving. This can be written communication, spoken communication, art, music, signals
Knowledge
Conversion of information in to actionable process is called knowledge. 55

56. Knowledge Management – Discussion
Production
Marketing
Sales
Fixed Assets
Operations
Purchasing 56

57. Role of Software What can be controlled? Through Software / Automation
Software can play vital role in Organizational Success – this may include every possibility of Automation
Basic system is a MUST requirement
Objectives and Benefits
Implementation 57

58. Software – Usage and Benefits
Processing through Software
Magnetic Cards, Bar Codes etc.
Software can play vital role in Organizational Success – this may include every possibility of Automation
Sensors, timers etc.
Programmable Logic Controllers
Benefits
Accuracy
Consistency
Speed
Control 58

59. Role of Accounts Department
Business
Cockpit 59

60. Role of Accounts Department
MOST Important and Critical Role
Responsible to keep Company on track
The role of Accounts Department to keep Organization on track and provide full control on activities
Custodian of Systems, Policies and SOPs
Responsible for Analysis
Responsible for detailed Checking 60

61. Section IV Business Measurement In this section we will discuss:
What to Measurement?
How to Measure?
Who will Measure? 61

62. One must know as what to measure
Decide – what to measure?
Trend – What is Easy to measure?
One must know as what to measure
Required – what is important?
Relevance
Sales vs Contribution Margin
Employees Performance 62

63. It is better to be Approximately right than precisely wrong
How to Measure?
One of the Most Complex part
Make best Estimate / Judgment
It is better to be Approximately right than precisely wrong
Expensive tools not required
Through feedback
Take a small sample 63

64. Who will be responsible to provide measurement
Who will Measure?
Decide – who will measure?
Directly involved ?
Who will be responsible to provide measurement
Who can make judgment
Know what to measure
Know how to measure 64

65. Auto System of Measurement?
Establish an Auto System
Auto recording of relevant activities
Cross Checking of information
Reconciliation
Checking and monitor each other 65

66. SCORING Critical Factors in Performance Management
Identification of Correct Areas
Information & Knowledge
SCORING
Documentation
Applying Correct Solutions
Cross Checking of Results
Accurate Measurement 66

67. Thanks for your participation Is there any need of page #