3 Measures of Organizational Success Facts are the most important thing in business. Study facts and do more than is expected of you.Frederick Hudson EckerChairman Metropolitan Life Insurance
4 Measures of Organizational Success I’ve always been able to make erroneous decisions very quickly.Herb KelleherFounder, Southwest Airlines
5 Measures of Organizational Success Knowledge is what we get by evaluating vast quantities of information…and adding something a little extra-creativity, judgment, experience, and thought.Dominic TarantinoFormer chairman, Price Waterhouse World Firm
6 Measures of Organizational Success 1 Leadership2 Strategic Planning ‘leadership triad’3 Customer and Market Focus4 Measurement, Analysis, and Knowledge Management5 Workforce Focus6 Process Management ‘results triad’7 Results
7 Measures of Organizational Success 4.0 Measurement, Analysis, and Knowledge Management4.1 Measurement, Analysis, and Improvement of Organizational PerformanceDescribe how your organizationmeasures, analyzes, aligns, reviewsand improves its performance dataand information at all levels and inall parts of your organization.
8 Measures of Organizational Success 4.0 Measurement, Analysis, and Knowledge Management4.2 Management of Information, Information Technology, and KnowledgeDescribe how your organization ensures the quality and availability of needed data and information for employees, suppliers, partners, collaborators, and customers.Describe how your organization builds and manages its knowledge assets.
9 Measures of Organizational Success Information is only as valuable as its source.
10 Measures of Organizational Success Can’t improve what you don’t measure
12 Measures of Organizational Success Organizations measure what matters.
13 Measures of Organizational Success Our view was, if we could measure it, we could manage it.Don EnglandCEO, C.R. England, Inc.
14 Measures of Organizational Success Organizations measure what they valueWhat does our organization value?What does the organization measure?What measures does the organizationuse to make decisions and take action?
15 Organizational Results Performance Measures Focused on Strategic Intent
16 Measures of Organizational Success Measures create a link between philosophy and action.What does the organization measure, record, analyses, reports, shares throughout the organization, and takes action on.
24 Cost of Quality versus Profit When an organization is able to reduce quality costs – particularly prevention costs and internal failures and external failures – the gains will show up in the profit line.
25 Measures of Organizational Success What role does information play in creating an effective organization?How does the analysis of information support customer satisfaction?How does the analysis of information support a healthy bottom line?
26 Measures of Organizational Success Information enables you to make appropriate decisions.Inter-departmental relationships can be integrated through the use of information.
27 Measures of Organizational Success Integrating Customer information, processes and decision-making:use data collection and analysis todefine the customer requirementswithin the identified market segment.
28 Measures of Organizational Success Translate requirements into major design parameters to develop, produce, deliver, and service the product that meets the customer requirements.Complement these primary processes with support activities such as finance, accounting, personnel, etc.Design the information requirements necessary to manage each process and to integrate all processes.
29 Measures of Organizational Success Measures of Performance answer the question:How do we know?
30 Measures and Their Relationship to Strategic Planning
32 Measures of Organizational Success Performance measures enable an organization to answer the following questions:How well is something performing its intended purpose?Is the organization able to measure the impact of the changes being made?How does the organization know that it has allocated its assets correctly?
33 Measures of Organizational Success An effective measurement system enables an organization to:determine if the activities occurring within the company support the achievement of company goals and objectivesdetermine whether or not those goals and objectives move the organization closer to the stated visionsee where the organization is and where it is going.
34 Measures of Organizational Success An effective measurement system links actions and plans to the goals and objectives.
35 Measures of Organizational Success Results (Outcome) measuresResults are the objectives the organization wants to achieve.Results are what customers hope to obtain by doing business with the organization.Process measuresProcess measures monitor operational activities.
36 Measures of Organizational Success The Balanced ScorecardUsing measurements from four areas integrates the key business measures into a few manageable indicators of performance so that management is able to quickly access the short and long-term health of the organization from several points of view.Kaplan and Kaplan
37 Measures of Organizational Success The Balanced Scorecard(Kaplan and Kaplan)FOUR areas of focus :Customer FocusInternal ProcessesLearning and GrowthFinancial Analysis
38 Measures of Organizational Success Barriers to Installing Measurement SystemsLack of leadershipIndividuals are fearful of having specific, measurable objectives to achieveLack of focus on what’s important to the organization.
39 Measures of Organizational Success Determinewhat needs to be measuredand why it needs to be measuredbefore designing a measure of performance.PUBLISH definitionsfor each metric!
40 Measures of Organizational Success For Effective Measurement Systems:Leaders must demonstrate their commitment by holding people accountable for measuresLeaders must show persistence and perseverance to work through data integrity issues.Real life advice - How about ametric that measures the accuracyof the metrics?
41 Measures of Organizational Success When developing measures consider:What do we need to know?What are we measuring now?How does what the organization needs to know compare with what it is currently measuring?How is this information being captured?Is the information currently being captured useful and actually being used?
42 Measures of Organizational Success When developing measures consider (Con’t) :6. Are these measurements being captured over time?Do the identified, selected, and measured factors reflect what the customers need, require, and expect?Can these selected factors be acted upon within the organization?Can the impact of the changes made be measured?Have the organization’s assets been allocated appropriately?
43 Measures of Organizational Success Measurement Systems allow effective organizations to:Determine that a gap exists between desired and actual performanceDetermine the root cause of the gapDetermine the necessary corrective action to eliminate the root cause of the gapDetermine whether the corrective actions eliminated the root cause and closed the gap between the actual and desired performance.
44 Measures of Organizational Success HOW MANY METRICS ?Balanced Scorecard method using METRICS =about 10 metrics for your Business Unit, for your group and 5 for individualsAny more than that, your focus gets lost!
45 Measures of Organizational Success How?- LeadershipHow does leadership analyze and use information?Are our leaders converting information into appropriate policies and actions?
46 Measures of Organizational Success How?- Strategic PlanHow does our strategic plan analyze and use information?How does our strategic plan react to new information?
47 Measures of Organizational Success How?- Customer and Market FocusAre we communicating useful customer and market information to our employees in a manner that improves their job performance and enhances customer service?
48 Measures of Organizational Success How?- Measurement, Analysis, and Knowledge ManagementHow are our employees gathering, analyzing, disseminating and using information related to our key processes?Does the organization have communication systems in place that enhance employees ability to obtain analyze and use information?
49 Measures of Organizational Success How?- Measurement, Analysis, and Knowledge Management (con’t).How does your organization ensures the quality and availability of needed data and information for employees, suppliers and partners, and customers?How does your organization builds and manages its knowledge assets?
50 Measures of Organizational Success How?- Workforce FocusDo our employee policies and reward systems support the use and analysis of information related to our key processes during day-to-day activities?Do our employee policies and reward systems support the use and analysis of information during continuous improvement activities?
51 Measures of Organizational Success How?- Process ManagementHave the key processes supporting the analysis and use of information been identified and/or improved?Are we gathering appropriate information concerning our key processes?Is the information gathered being used to support appropriate improvement efforts?
52 Measures of Organizational Success How?- ResultsDo the business results associated with our key processes reflect the judicious analysis and use of information?Is the successful integration of customer and market information into our strategic plan shown by our business results?