Presentation on theme: "Performance Measurement and Strategic Information Management"— Presentation transcript:
1 Performance Measurement and Strategic Information Management Chapter 8Performance Measurement and Strategic Information Management
2 Information Management If you don’t measure results, you can’t tell success from failureIf you can’t see success, you can’t reward it – and if you can’t reward success, you are probably rewarding failureIf you can’t recognize failure,you can’t correct it
4 Use of Information and Analysis CustomerRequirementsMeasurementsProcessesResultsDesignControlPredictionValidationMeasurement supports executive performance review and daily operations and decision making.
5 Benefits of Information Management Understand customers and customer satisfactionProvide feedback to workersEstablish a basis for reward/recognitionAssess progress and the need for corrective actionReduce costs through better planning
6 Empirical Survey Results Measurement-management companies are more likely to:be in top third of industry financiallycomplete organizational changes successfullyreach clear agreement on strategyenjoy favorable cooperation and teamworkhave more employee empowermenthave a greater willingness to take risks
7 Example: Federal Express “We measure everything. Then…we prioritize what processes are key to the company.”Most data collection systems are automated, making it fast and easy.Seeks internal measures that are predictors for external measures.
8 Example: Ritz-Carlton “We only measure what we must. But, we make sure that what we measure is important to our customers.”50% marketing and financial data; 50% quality-related productivity data.Cost of quality is top priority. Are improvements important to customers, providing a good return, and done quickly?
9 Leading Practices (1 of 2) Develop a set of performance indicators that reflect customer requirements and key business driversUse comparative information and data to improve overall performance and competitive positionInvolve everyone in measurement activities and ensure that information is widely visible
10 Leading Practices (2 of 2) Ensure that data are reliable and accessible to all who need themUse sound analytical methods to conduct analyses and use the results to support strategic planning and daily decision makingContinually refine information sources and their uses within the organization
14 Common Quality Measures Nonconformities (defects) per unitErrors per opportunityDefects per million opportunities (dpmo)
15 Importance of Comparative Data Comparative data: industry averages, best competitor performance, world-class benchmarksHelps recognize the need for improvementProvides motivation to seek improvement
16 Linkages to Strategy Measures and indicators Key business drivers (key success factors)Strategies and action plansMeasures and indicators
17 Process-Level Measurements Does the measurement support our mission?Will the measurement be used to manage change; that is, actionable?Is it important to our customers?Is it effective in measuring performance?Is it effective in forecasting results?Is it easy to understand and simple?
18 Creating Effective Performance Measures Identify all customers and their requirements and expectationsDefine work processesDefine value-adding activities and process outputsDevelop measures for each key processEvaluate measures for their usefulness
19 The Cost of Quality (COQ) COQ – the cost of avoiding poor quality, or incurred as a result of poor qualityTranslates defects, errors, etc. into the “language of management” – $$$Provides a basis for identifying improvement opportunities and success of improvement programs
21 Quality Cost Management Tools Cost indexesPareto analysisSampling and work measurementActivity-based costing
22 Return on Quality (ROQ) ROQ – measure of revenue gains against costs associated with quality effortsPrinciplesQuality is an investmentQuality efforts must be made financially accountableIt is possible to spend too much on qualityNot all quality expenditures are equally valid
23 Managing Data and Information Validity – Does the indicator measure what it says it does?Reliability – How well does an indicator consistently measure the “true value” of the characteristic?Accessibility – Do the right people have access to the data?
24 Analysis Statistical summaries and charts Trends over time Basic Comparisons with key benchmarksAggregate summaries and indexesCause-and-effect linkages and correlations (interlinking)Data miningBasicAdvanced
25 InterlinkingQuantitative modeling of cause and effect relationships between external and internal performance criteriacustomersatisfactionratingtime on hold (telephone)* **
26 Information and Analysis in the Baldrige Award Criteria The Information and Analysis Category examines an organization’s information management and performance measurement systems and how the organization analyzes performance data and information.4.1 Measurement and Analysis of Organizational Performancea. Performance Measurementb. Performance Analysis4.2 Information Managementa. Data Availabilityb. Hardware and Software Quality