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Performance Management Presentation by: Ahmad Saleem, FCA Chief Consultant Performance Management Services +92 300 847 1640 Measure and.

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Presentation on theme: "Performance Management Presentation by: Ahmad Saleem, FCA Chief Consultant Performance Management Services +92 300 847 1640 Measure and."— Presentation transcript:

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

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

3 Section I Performance In this section we will discuss: 1.What is Performance? 2.What is Measurement? 3.What is Performance Measurement? 4.What is Performance Management? 5.Why we need Performance Management? 6.Business Performance Measurement Section I Performance In this section we will discuss: 1.What is Performance? 2.What is Measurement? 3.What is Performance Measurement? 4.What is Performance Management? 5.Why we need Performance Management? 6.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? Measurement is a process of obtaining the magnitude of quantity in any unit 06

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

8 We do lot of Measurements in our Daily Life DietingFuel ConsumptionStudies 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? 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 A Competitive Advantage and Higher Sales Better Motivation and Team work among Employees Reducing Top Management Pressure and Tension We do need Performance Management for the following reasons

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: 1.How Business is started? 2.Objectives of Business? 3.What is Success? 4.Roles Required Section II Business In this section we will discuss: 1.How Business is started? 2.Objectives of Business? 3.What is Success? 4.Roles Required 14

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

16 Objectives Earn ProfitGrowthSuccessSocial Factor 16

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

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

19 Section III Business Modeling In this section we will discuss: 1.With what we will compare? 2.Potential to Perform? 3.Identification of Correct Areas 4.Critical Factor for Performance Management Section III Business Modeling In this section we will discuss: 1.With what we will compare? 2.Potential to Perform? 3.Identification of Correct Areas 4.Critical Factor for Performance Management 19

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

21 Potential to Perform Based on ResourcesOpportunities Potential to Perform 21

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

23 Opportunities Market Buying Power Product 23

24 Potential to Perform Based on ResourcesOpportunities 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 Critical Factors in Performance Management Information & Knowledge Documentation Accurate Measurement Cross Checking of Results Identification of Correct Areas Applying Correct Solutions SCORING 26

27 Section IV Factors for Performance Management In this section we will discuss: 1.Measurement Methodology – Scoring 2.Factors for Performance Management 3.Impact of Factors 4.Factors – detailed discussion Section IV Factors for Performance Management In this section we will discuss: 1.Measurement Methodology – Scoring 2.Factors for Performance Management 3.Impact of Factors 4.Factors – detailed discussion 27

28 Scoring is based on three Elements: Measurement – Scoring 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 Your Score Measurement – Scoring 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 Strategic Planning and Management Potential to Perform Roles required for Operations Business Plan Departmental Profiles Critical Success Factors Organizations Culture Resource Management Human Resource Materials Fixed Assets Funds Time Energy Knowledge Costing, Contribution Margin & Breakeven Analysis Budgeting Business Rules Systems, Policies and SOPs Risks & Controls Knowledge Management Role of IT Role of Accounts Department 30

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

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

33 Potential to Perform Based on ResourcesOpportunities Potential to Perform 33

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

35 Departmental Profile Roles of the Department Objectives of the Department Job Description of the Department Human resource Requirement Resources Required Information and Knowledge to be maintained Benchmarking Key Performance Indicators 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 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 Customer Satisfaction Human Resource Funds Knowledge Assets Utilization Controls on Material Example: As customer your Critical Factor: On Time Safety Example: As customer your Critical Factor: On Time Safety 36

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

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

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

40 Fixed Assets In most of the cases, Fixed Assets are the major part of total Investment of the Company. Watch that Investment….. In most of the cases, Fixed Assets are the major part of total Investment of the Company. Watch that Investment….. Complete record of Fixed Assets Differentiate between Productive and Supportive Assets 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.. Its the single major cause of Companys poor Performance One needs a very tight control on Finances.. Its the single major cause of Companys poor Performance Keep Financial Burden minimum Establish accurate Financial Requirement Look for high Material Cost and Receivables 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 Energy In present Scenario One of the MOST Important Resource.. In present Scenario One of the MOST Important Resource.. Energy Audits Availability of Energy Cost Management of Energy 42

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

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

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

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

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

49 Systems, Policies and Procedures 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. 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. Ensure system for every activity Policies should be available for all scenarios Standard Operating Procedures – SOPs Should be Documented 49

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

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

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

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

54 Knowledge Management 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 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 Data 54

55 Knowledge Management Information A report normally represents the compiled and consolidated data taken for a particular time period. Information is anything that someone is capable of perceiving. This can be written communication, spoken communication, art, music, signals Reports 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 Software can play vital role in Organizational Success – this may include every possibility of Automation What can be controlled? Basic system is a MUST requirement Objectives and Benefits Implementation Through Software / Automation 57

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

59 Role of Accounts Department Business Cockpit Business Cockpit 59

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

61 Section IV Business Measurement In this section we will discuss: 1.What to Measurement? 2.How to Measure? 3.Who will Measure? Section IV Business Measurement In this section we will discuss: 1.What to Measurement? 2.How to Measure? 3.Who will Measure? 61

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

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

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

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

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

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


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