9 Steps to Measuring Performance

9 Steps to Measuring Performance

ALIX LARSON Larson Training & Consulting Inc. April 2003

© Larson Training & Consulting Inc. 2003

Agenda w What is a Balanced Scorecard w Types of measures w Where to use a Balanced Scorecard w 9 Steps to Developing a Balanced Scorecard w Putting some of the steps into action


What is a Balanced Scorecard? “TheBalanced BalancedScorecard Scorecardisisaa “The managementsystem systemthat thatenables enablesan an management organizationto toclarify clarifytheir theirvision visionand and organization strategyand andtranslate translateititinto intoaction. action. ItIt strategy providesfeedback feedbackon oninternal internaland and provides externalprocesses processesand andoutcomes outcomesinin external orderto tocontinuously continuouslyimprove improvestrategic strategic order performance.” performance.”


The Balance Scorecard Institute, Rockville, MD

What does this all mean? w It is a measurement system that will help you to: n n n n

Establish your current position Communicate direction Facilitate learning Stimulate action in the most important areas of your business


Why Measure Performance?

You can’t can’timprove improvewhat what You youdon’t don’tmeasure measure you


The 4 Perspectives w There’s more to measurement than financial n n n n

Financial Customer Internal Business Process Learning & Growth


Financial

Greaterfinancial financialreturns returns Greater


Customer

Theneeds needsof ofour ourcustomer customer The andtheir theirsatisfaction satisfaction and


Internal Business Process

Efficiencyand andeffectiveness effectiveness Efficiency


Learning & Growth Perspective

Employeetraining trainingand and Employee corporateculture culture corporate


Where to apply the Balanced Scorecard w Whole organization w Departmental / Team w Individual


The 9 Steps of Implementation w w w w w w w w w

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9

Develop a mission statement Develop performance indicators Establish current performance levels Establish goals Establish small goals Establish lower performance levels Assign weights Develop plan for improvement Lead for improvement


Step 1 Developing the Mission Who

___________________________________________ (name)

What

___________________________________________ (task)

How

__________________________________________ (quality, timeliness, cost, effectiveness, health, & safety)

For

___________________________________________ (the customer)

Where

__________________________________________ (geographical area)

Why

__________________________________________ (benefit of stakeholders)


Mission Statement Canadian Institute of Certified Management Accountants

To provide members with the resources, information and leadership that enable them to provide valuable services in the highest professional manner to benefit clients. © Larson Training & Consulting Inc. 2003

Agenda to Develop a Mission Statement

What

How

Time

Roles

Facilitator, time keeper, recorder

1 min

Agree on objectives

w How long will it take w Agreement to support majority

2 mins

w Time w Process

Read aloud individual mission statements

Round robin for each Mission Statement

Pick one Mission Statement Fine tune

Record Mission Statement add/delete

Wrap up

Read aloud for consensus


15 mins

Step 2 Performance Indexing w What is Performance Indexing? n n n n n n n n

A measurement tool that can be developed by staff Measures the interests of all stakeholders Measures services to the customer Can measure a variety of performance indicators together Is an excellent diagnostic tool Can be used to communicate change Promotes continuous improvement Can measure the future as well as the past


Possible Indicators § Quality § Timeliness § Cost effectiveness § Innovation § Health & Safety § Customer Satisfaction


Possible Performance Indicators for Baggage Handlers

Quality Indicators w w w w

Damage to baggage Complaints Lost baggage Accurate re-routing


Possible performance Indicator for Baggage Handlers Timeliness w Passenger wait time for baggage w Loading baggage w Unloading baggage


Step 3 Establish Current Performance Levels

w Write your estimates on line 3 of the Performance Indicator chart


4

82

5

14

4

32

68

12

35

11

Step 4 Establish Goals for Each Indicator w Good goals are n n n n n

Specific Measurable Agreed upon Realistic Time limited


Step 5 Establish Mini Goals

w Write mini goals in on Scores 4 through to 9 on your Performance Indicator chart


Step 6 Establish Lower Performance Levels

w Write these in on Scores 1 and 2 of your Performance Indicator chart


4

82

5

14

4

8 12 16 20 24 28

80 78 76 74 72 70

6 7 8 9 10 11

17 20 23 26 29 32

5 6 7 8 9 10

32 36 40 44

68 66 64 62

12 13 14 15

35 38 41 44

11 12 13 14

Step 7 Assign Weights w Write these in on the weighting section of your chart. The total should equal 100.


4

82

5

14

4

8 12 16 20 24 28

80 78 76 74 72 70

6 7 8 9 10 11

17 20 23 26 29 32

5 6 7 8 9 10

32 36 40 44

68 66 64 62

12 13 14 15

35 38 41 44

11 12 13 14

7 30 210

8 30 240

4 10 40

5 20 100

2 10 20

610

Step 8 Develop Plan for Improvement

w Using an Action Plan, develop plans for improvement. n n n

What Who When


Step 9 Lead for Improvement w Meet regularly w Recognize & reward improvement w Problem-solve declining performance
