Organisation Control KPI’s & an industry Review Dr. Clive Vlieland-Boddy

Cross-sectional analysis Comparison with other companies in the same industry for the same year Differences in company characteristics should always be accounted for in interpretation Comparison with industry averages Multi-product companies Definition and size of industry groupings

Organizational Control Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals Keeping an organization on track, anticipating events, changing the organization to respond to opportunities and threats

Organizational Control Managers must monitor and evaluate: Is the firm efficiently converting inputs into outputs? Are units of inputs and outputs measured accurately? Is product quality improving? Is the firm’s quality competitive with other firms? Are employees responsive to customers? Are customers satisfied with the services offered? Are our managers innovative in outlook? Does the control system encourage risk-taking?

Control Systems Control Systems establish Target-setting Monitoring Evaluation and Feedback systems It provide managers with information about whether the organization’s strategy and structure are working efficiently and effectively.

Control Systems A good control system should: be flexible so managers can respond as needed. provide accurate information about the organization. provide information in a timely manner.

Types of Control Feedforward Controls Used to anticipate problems before they arise so that problems do not occur later during the conversion process Giving stringent product specifications to suppliers in advance IT can be used to keep in contact with suppliers and to monitor their progress

Types of Control Concurrent Controls Give managers immediate feedback on how efficiently inputs are being transformed into outputs Allows managers to correct problems as they arise

Types of Control Feedback Controls Used to provide information at the output stage about customers’ reactions to goods and services so that corrective action can be taken if necessary

The Control Process - Benchmarking Establish standards of performance, goals, or targets against which performance is to be evaluated. Managers at each organizational level need to set their own standards. Goals should be set appropriately so that managers are motivated to accomplish them. They should be achievable will some additional level of effort.

The Control Process Measurement Measure actual performance Managers can measure outputs resulting from worker behavior or they can measure the behavior themselves. The more non-routine the task, the harder it is to measure behavior or outputs

The Control Process - Evaluation Evaluate result and initiate corrective action if the standard is not being achieved If managers decide that the level of performance is unacceptable, they must try to change the way work activities are performed to solve the problem

Information Management If you don’t measure results, you can’t tell success from failure If you can’t see success, you can’t reward it – and if you can’t reward success, you are probably rewarding failure If you can’t recognize failure, you can’t correct it

Benefits of Information Management Understand customers and customer satisfaction Provide feedback to workers Establish a basis for reward/recognition Assess progress and the need for corrective action Reduce costs through better planning

Leading Practices (1 of 2) Develop a set of performance indicators that reflect customer requirements and key business drivers Use comparative information and data to improve overall performance and competitive position Continually refine information sources and their uses within the organization

Leading Practices (2 of 2) Involve everyone in measurement activities and ensure that information is widely visible Ensure that data are accurate, reliable, timely, secure, and confidential Systematically manage organizational knowledge and identify and share best practices

Key objective To make effective decisions companies need good data and information about: Customers and markets Human resource effectiveness Supplier performance Product and service quality

Non Financial Tools The Balanced Score Card

Key Objective A good balanced scorecard contains both leading and lagging measures and indicators. Lagging measures (outcomes) tell what has happened leading measures (performance drivers) predict what will happen.

Learning & Growth 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed.

Business Perspective Allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission)

Customer Perspective If customers are not satisfied, they will eventually find other suppliers that will meet their needs.

Financial Perspective Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it.

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The End