A survey of businesses posted on LinkedIn found that 52% never or rarely developed and used performance measurement or key performance indicators (KPIs) to evaluate the success or failure of business processes. This is a critical gap because KPIs provide the feedback loop for business to drive business strategy and a profitable bottom line. It is key for effective business performance and project management because it provides quantifiable performance data as feedback for decision-making and driving performance improvement.
In large complex organizations, converting business strategy into effective short-term tactical execution can be difficult. An effective Performance Management System, with a few key performance indicators reduces execution ambiguity and drives accountability. Used broadly and consistently across the company, Performance Measurement helps create alignment and drive improved organizational performance across functional areas so business strategy and departmental goals do not conflict. For companies that struggle with organizational alignment issues, implementing Performance Measurement in conjunction with organizational structure change management is highly effective.
At Supply Velocity, Performance Measurement is one of our fundamental consulting services, and is included with most continuous improvement (CI), business strategy and change management projects. We also apply it to our own consulting firm and to all consulting service lines. When we begin a consulting project, we benchmark our client’s business performance prior to initiating our consulting services. Post implementation we assess the effectiveness of our consulting services by reviewing performance data with benchmarks. We use Key Performance Indicator feedback to inform decision-making and help our clients attain the desired level of operational performance improvement and customer satisfaction.
Helping our clients implement Performance Measurement in conjunction with other consulting projects is our preferred business model. The goal of our consulting service is to make the Performance Measurement Process simple and easy to implement. Our philosophy is that “few measures in the hands of the many is more powerful than many measures in the hands of the few.”
Implementing Performance Measurement will help companies that are profitable as a foundation to achieve the next level of performance improvement. Having clear balanced performance scorecards is the way to implement continuous improvement in your business strategy. For companies that are struggling, the transformation is simple, rapid and dramatic. Performance Management is effective across all industries including manufacturing, professional services, distribution, retail, non-profit and government, and many different types of supply chains.
Performance Measurement Assessment
Do you feel like your workforce is not aligned, focused or effective? Is business performance suffering? Is decision-making slow? In the 20+ years we have been proving performance improvement consulting services, we have seen executives blame their people, but not provide quantitative feedback on performance. Without this feedback your people are working in the dark. They get through the day, week or month, but don’t know if they are performing great or poorly, except for verbal “good job” when profits are strong, or “you’ve got to do better” if financial results are suffering.
Symptoms of vague Performance Measurement Systems are:
- You created a business strategy, but it remains a plan that is never implemented
- Performance improvement is ad hoc
- Sales and operations are working at cross-purposes
- Employee problems, including high absenteeism and turnover
- New products don’t meet sales expectations
- Customer are not loyal and complaints are high
- Project management practices are based on gut-feel not data
Our consulting firm’s Performance Management Assessment provides a targeted assessment of the businesses’ performance versus strategic and tactical goals. The Assessment contrasts perceived performance throughout the organization with available performance data and reports. The Assessment also includes change management, alignment, internal communications, standardization and consistency. The Performance Measurement Assessment determines if key performance indicators (KPIs) are in place and effective. We then provide a road map for developing and executing this system using hierarchical Performance Scorecards.
Over the years, we have honed one of the most effective, swift and cost-effective Assessments available. The recommendations are supported by performance data and observations and provide a general framework for the implementation steps, timing, requirements and finances.
Typically, an Assessment is a two-day process involving 1) interviews with key personnel (executives, managers and individual contributors), 2) analyzing financial and operational performance data, and 3) facility tours and direct observation. The onsite portion of the Assessment is very hands-on. We work directly with personnel to ensure they are involved and made comfortable with the overall process.
Things we look for during the Assessment:
- How are key performance indicators used in the organization?
- How well are measures understood and how accessible are the data?
- What meetings and venues are used for communications, alignment and accountability?
- Does poor performance lead to action items to close the gap
- How consistently understood are high level companywide Performance Measures across the organization?
- How well is the company performing versus its Performance Measures?
- Do measures align and complement across departments?
- Are measures leading or lagging?
- Do key Performance Measures include both internal (voice of the business) and external (voice of the customer) critical requirements?
Even companies that invest effort to develop performance data and balanced scorecards are sometimes surprised their system is not as effective as it could be. Supply Velocity works closely and collaboratively with your organization to get an accurate Performance Measurement Assessment and then we show you the path to making it effective.