1. A ‘top ten’ performance management book on www.amazon.com for over one year www.waymark.co.nz to order, see link to www.amazon.comwww.amazon.com

2. Getting started or restarted with winning KPIs Presented by David Parmenter waymark solutions limited June 2008 Website: www.waymark.co.nzwww.waymark.co.nz Blog: www.davidparmenter.com Email: Parmenter@waymark.co.nz

3. What stage are you with your performance measures? 1.performance measures are not working and want to get started using winning KPIs 2.have got a balanced scorecard but it needs a revamp 3.our performance measures are working well and am only interested to compare them against winning KPIs

4. This webcast is 6 th in a series on winning KPIs 1.introduction to winning KPIs 2.implementing KPIs - A 12-Step Process 3.implementing KPIs in Smaller Organizations (<200 Staff) 4.finding your organization’s critical success factors 5.balanced scorecard in 16 weeks not 16 months – the implementation lessons 6.getting started or restarted with winning KPIs

5. How familiar are you with the “winning KPIs” methodology? 1.this is my first web seminar I have attended on winning KPIs 2.I have attended at least one other web cast done by David Parmenter 3.am very familiar with the work but have not used it yet 4.not only familiar but have started the process to use winning KPIs in our organization

6. Contents of this web seminar  how to get started or restarted depending on the variety of issues you face  the main barriers to success  your next steps

7. How to get started when little has been done  performance measures (PMs) have been a random development  the balanced scorecard, if mentioned, would be confused with a weight watchers’ tool  most PMs are reported monthly  nearly all PMs are financial

8. Selling the change 1.collect data on impact of the current performance measures (slide) 2.read Kaplan & Norton’s Harvard Business Review papers January-February 1992 3.read papers on www.bettermanagement.com 4.prepare the sales pitch for change (slide) 5.pre-sell the sales pitch to the influencers 6.make the sales pitch 7.plan and execute a workshop on the critical success factors – see web seminar 8.seek green light for the implementation of ‘winning KPIs’

9. Data on impact of the current performance measures  estimate the cost of gathering measures  find the ‘war stories’ in your organization by visiting the oracles both past and present e.g. the green book  interview the workforce in the field to see what they think  run a survey on the staff, using a statistical sample

10. We have these problems (The sales pitch )  a lack of timely decision making at the work place leading to rising operational costs  a lack of alignment of day to day activities to strategy e.g. staff are performing the same TQM on all shipments  too many performance measures e.g. over xx are gathered each month at an estimated cost of $yy  a lack of clarity on which of our success factors are critical e.g. timely arrival and departure of planes A winning KPIs project will fix all these

11. How to get started when the balanced scorecard (BSC) is failing  BSC put in at great cost by external consultants  the reporting of PMs is seen as an end in itself - nothing seems to happen  interest in the BSC and PMs is waning  BSC is now thought of as a failed management fad  the BSC is no longer on the CEO’s radar screen

12. Revitalization #1 1.ascertain reasons for failure (slide) 2.compare and contrast the way you have dealt with performance measures against how winning KPIs are to be implemented and used, see my papers on www.bettermanagement.com 3.prepare the sales pitch for change (slide) 4.pre-sell the sales pitch

13. Revitalization #2 5.make the sales pitch 6.plan and execute a series of workshops to revisit; the critical success factors, the team and organization measures and associated scorecards - see CSF workshop paper for content 7.ascertain what ‘winning KPI steps’ have to be done and what can ticked off as already accomplished 8.commence implementation (see book)

14. Why did the BSC fail?  lack of involvement of in-house team  little involvement with the workforce  no PMs tracking important activities that happen 24/7 or daily  the CSFs where not ascertained  CSFs were not communicated to the work force  all PMs were called KPIs  too many KPIs

15. Prepare the sales pitch for change ( hard as the SMT do not want to listen)  explain the magic of knowing the CSFs  if staff know the CSFs they will start aligning their daily activities to the organization’s strategy  emphasize the learning that has already occurred through the BSC process  explain why this approach is different  emphasize the tasks and how the implementation will avoid the pitfalls of the existing BSC project  ask ‘can we afford not to undertake this task’

16. How to get started when management have already given the go ahead for ‘winning KPIs’  some of the senior management team (SMT) have listened to the winning KPIs presentations on www.bettermanagement.com www.bettermanagement.com  the CEO is aware that PMs will change and their monitoring involvement will be daily / weekly  a half day workshop has been held for the SMT and they are aware of the characteristics of winning KPIs  the project steps and the need for a full time KPI team have been agreed

17. Getting started 1.set up the KPI team with support facilitator 2.hold the two day critical success factor workshop 3.design the implementation from either the 12 steps or the 8 phase approach, or some combination 4.KPI team implement the plan with regular feedback to CEO and guidance from the external facilitator

18. The main barriers for success  the wandering attention of the CEO (slide)  not freeing up the right people for the KPI team  not making the KPI team full time  lack of selling through the emotional drivers of the SMT, management, and staff  lack of follow through  completing priorities – we need to finish what we start  see the presentation BSC in 16 weeks not 16 months

19. Keeping the CEO & SMT interested  always sell the change via the CEO emotional drivers e.g. the points of pain – ask the EA  communicate small wins weekly to the CEO, e.g. something to boast about on the 19 th hole  encourage / actively manage positive feedback up to the CEO “ I appreciate those kind words, could you repeat what you have said to the CEO when you next meet, it would mean a lot to me and the KPI team”  celebrate every success – a celebration is a great communication tool

20. Appointing the right people for the KPI team The key characteristics which need to be covered by the team include:  excellent persuasive presentation skills  innovation  ability to complete large projects  knowledge of the organization and sector  advanced communication skills  ability to bring others onboard  balanced mix of “oracles” and “young guns”

21. Which team member for leader?  leader is well respected in the organization  gets on well with the CEO  well liked as they have an inclusive leadership style  has completed projects in the organization  had a string of successes  relaxed style, seems to make time rather than be constantly fighting time – stories

22. Selling through the emotional drivers  car sales person analogy  emotional drivers differ: SMT - looking a fool in front of the Board, impact on their bonus, short term focus management - not invented by me, will behave based on their perception, sceptical for good reason staff – job security, impact on existing workload, perception of what management will do with the information

23. A sales presentation

24. We have these problems  a lack of timely decision making at the work place leading to rising operational costs  a lack of alignment of day to day activities to strategy  too many performance measures  lack of clarity of what of our success factors are critical  we are missing goals through taking our eye off our critical success factors A winning KPIs project will fix all these – let me explain

25. KPI Stories  Freight forwarding company KPI  Airline KPI  What characteristics are common with these stories?

26. The characteristics of winning KPIs  non financial (not expressed in Pds, $s, Euros etc)  measured frequently e.g. daily or 24 by 7  acted upon by CEO and senior management team  all staff understand the measure and what corrective action is required  responsibility can be tied down to the individual or team  significant impact e.g. it impacts most of the CSFs and more than one BSC perspective  has a positive impact e.g. affects all other performance measures in a positive way

27. Definition of KPIs they focus on the aspects or areas of our organisation’s performance that are critical or vital for our ongoing and future success they measure our success in key areas and processes that affect our customers, our employees, our shareholders or other stakeholders Source: AusIndustry

28. Clearly few of our measures are KPIs  xxxxxxxxxxxxxx is not a KPI because

29. There are four types of performance measures PIs&RIs KRIs peel to the core to find the KPIs KPIs peel the skin to find the PIs

30. Our top five measures are thus xxxxxxxxxxReviewed monthly KRI xxxxxxxxxxReviewed weekly RI xxxxxxxxxxReviewed dailyPI xxxxxxxxxxReviewed dailyKPI xxxxxxxxxxReviewed quarterly KRI

31. David Parmenter’s 10/80/10 rule

32. Key result indicators Examples  profitability of customers  net movement of earnings before interest and tax  customer satisfaction  employee satisfaction  return on capital employed  speedometer analogy (gear, rpm)

33. Performance indicators Examples  % increase in sales to the top 10% of customers  # of employees’ suggestions implemented in last 30 days  key customers’ complaints  sales calls organized for the next week, next fortnight  late deliveries to key customers  no. of products rejected by quality assurance

34. Result indicators Examples  sales made yesterday  weeks sales to key customers  net profit on key product lines  debtor collections in week  xxxxxxxxxxxxxxxxxxxxxxxxxxx

35. Measuring in the three timeframes  past measures: e.g. number of late planes last week/ last month  current measures : e.g. planes over 2 hours late (updated continuously)  future measure: e.g. number of initiatives to be commenced in the next month / two months to target areas which are causing late planes.  KRIs and RIs by definition are past measures  KPIs and PIs can be past, current, or future measures

36. Too many of our measures are in the past (looking back) xxxxxxxxxxReviewed monthlyPast xxxxxxxxxxReviewed weeklyPast xxxxxxxxxxReviewed dailyPast xxxxxxxxxxReviewed dailyPast xxxxxxxxxxReviewed quarterlyPast

37. Relationship between strategy / CSFs and PMs Linkage of strategy to measurement Learning & Growth Customer satisfaction Financial Results Internal Processes Strategies (issues & Initiatives) Mission / Vision / Values Critical Success Factors Key Result Indicators (max 10) Performance and Result Indicators (80 or so) Key Performance Indicators (max 10) Staff satisfaction Community & environment Learning & Growth Customer satisfaction Financial Results Internal Processes Staff satisfaction Community & environment KPIs & PIs in a balanced scorecard and KRIs in a dashboard

38. Definition of a critical success factor “a list of issues or aspects of organizational performance that determine ongoing health, vitality and well-being” source AusIndustry

39. With 40 or so success factors there is confusion and a lack of focus  too many measures  strategic plans with too many diverse and contradictory initiatives  lack of communication and direction to operational and support staff

40. We know our success factors - however do we know our CSFs? xxxxxxxxxxSF xxxxxxxxxxSF/CSF? xxxxxxxxxxSF xxxxxxxxxxSF xxxxxxxxxxSF xxxxxxxxxxSF/CSF? xxxxxxxxxxSF xxxxxxxxxxSF/CSF?

41. Importance of getting the CSFs right  wording of the CSFs is critical retention of staff becomes retention of key staff increase repeat business becomes increase repeat business from core customers  this makes measures more specific daily sales becomes daily sales made to key customers planned calls becomes planned calls to key customers deliveries made on time becomes deliveries to key customers made on time

42. Only KPIs will give us the alignment – the annual plan will not!

43. Next steps  access the draft PowerPoint and prepare your sales pitch  I would be happy to review your sales pitch – and offer some pointers  get some public relations assistance (the emotional driver experts)  keep up to date by referring to my website www.davidparmenter.com, my web seminars, KPI book e.g. templates are available etc www.davidparmenter.com  make sure you celebrate success and let me know so I can celebrate with you!

44. Changing this

45. To this

46. These books came out in 07 www.waymark.co.nz to order, see link to www.amazon.comwww.amazon.com

47. Thank you for participating in this web seminar Thank you for participating in this web seminar Hope to see you at a workshop see www.davidparmenter.com for venues www.davidparmenter.com

48. Amazon link on www.davidparmenter.com John Wiley & Sons have published