Performance

Management
Course Instructor
Anubha Dadhich, PhD-IIT/D
Performance measurement
• Process of gathering data to see whether an organization’s business results are
meeting operational and strategic goals.

• Organizations measure their performance using different methods and criteria.

• They use performance metrics, or measures, to carry out this process.

• There are numerous possible metrics for each business activity.

15-Jun-20
Performance
Metrics

15-Jun-20
Continue……..

15-Jun-20
Encourage Managers to measure Performance

• https://myhbp.org/hmm12/content/performance_measurement/wh
at_is_performance_measurement.html#!/learn

15-Jun-20
Balanced PMS

• Many organizations use a performance measurement (PM) system to measure business

performance across their functions.

• The best systems demonstrate balance in terms of the kinds of performance they
evaluate, the data they use, the indicators they track, and other aspects of performance.

• By using a balanced PM system, a company builds a more complete picture of how it's
doing.

• This picture helps managers make informed decisions, learn from mistakes, and
constantly improve.

15-Jun-20
Balanced PMS

15-Jun-20
Balanced PMS

15-Jun-20
How can vision improve customer services ?
Balance PMS

• https://myhbp.org/hmm12/content/performance_measurement/wh
at_is_performance_measurement.html#!/learn

15-Jun-20
Effective Performance Measurement

• Effective performance measurement and the operation of an airplane.

• Airspeed indicator, fuel gauge, altitude indicator, and so forth.

• One piece of information NOT ENOUGH

• Range of "instruments" to evaluate how they're doing.

• Measurement systems are often referred to or named “cockpit,” “navigator,” or

“dashboard.”

15-Jun-20
Who uses performance data?
• Executives use the data to review how well corporate strategy is being implemented and
whether major corrective actions are needed.

• Unit managers and group leaders use performance data to monitor productivity and
motivate and evaluate employee performance.

• Shareholders, industry analysts, and customers use data to make choices such as
whether to invest in or buy from a company.

• The media and government regulators use data to determine whether an organization is
operating with efficiency and integrity and complying with regulations and standards.

• Employees use data to learn whether they and their teams are contributing to company
goals.

15-Jun-20
Your Role is ………….
• Assessing your group's results—and understanding the value of performance measurement in
general—enables you to:

• Determine whether you and your direct reports are helping your organization achieve its goals

• Correct any missteps to improve your group's performance

• Understand how your behavior and choices affect your employees' performance

• Identify new opportunities for your group to improve its effectiveness or to strengthen its
contribution to the organization’s success

• Build your business knowledge and professional credibility—and thereby advance your career

15-Jun-20
Performance measurement system :
• A set of strategic objectives and performance metrics applied throughout the entire enterprise.

• A PM system helps executives see how business results, generated in the organization’s many
different units, combine to influence the enterprise's overall results.

• It gives executives and managers a comprehensive, high-level view of their organization's

performance.

• It also helps them see how the different parts of an organization work together to produce
business results.

• For example, if managers discover that if the logistics group accelerates order-delivery time, the
customer service group can more easily increase customer satisfaction.

15-Jun-20
Continue………..
• By seeing such interrelationships between groups, managers can make more informed
decisions—such as increasing a budget, adding new hires, or streamlining a business process.

• Senior managers are generally the ones who put the PM system in place and manage its
implementation.

• But once the system has been set up, managers and designated employees may contribute to it
and use it by defining individual and unit goals that support company-level goals.

• They will also generate performance data that their supervisors' input into the system.

• In some organizations, managers have access to only some levels of performance data, such as
data related to their unit or function. Generally, employees have limited access, if any.

15-Jun-20
Common performance measurement systems

• Dashboards

• Quality improvement systems

• The Balanced Scorecard

15-Jun-20
Dashboards
• A dashboard or cockpit combines the organization’s numerous metrics, targets, and performance
data into one online or printed document, such as a spreadsheet.

• The document is prepared at regular intervals.

• A dashboard is probably the simplest type of PM system. It enables executives and managers to
easily digest the company's aggregated performance data.

• Many dashboards use a "traffic light" coding system to evaluate performance on each metric:

• Red—performance that's significantly below target

• Yellow—performance that’s slightly below target
• Green—performance that’s at or above target.

• This “traffic light” coding enables leaders to spot and address problems promptly.

15-Jun-20
Dashboard

15-Jun-20
Dashboard

15-Jun-20
Quality improvement systems

• Quality improvement systems come in many different forms, including:

• Plan-Do-Check-Act. The Plan-Do-Check-Act framework helps managers establish a four-step cycle of

continuous improvement:
• Plan: Identify a performance problem and the processes affecting it.
• Do: Explore potential solutions and implement one.
• Check: Assess how well your solution worked.
• Act: If your solution worked well, institutionalize it and look for another improvement opportunity.
If it didn't, return to step 1.

• Six Sigma. Six Sigma is a data- and measurement-driven approach that helps managers continually
improve business processes through reduction of errors. Many companies that use Six Sigma apply it to
all their business processes—manufacturing, product development, order fulfillment, customer
service, and so forth.

15-Jun-20
Quality improvement systems

• Baldrige National Quality Program. The Baldrige program defines criteria for
high-quality business performance in numerous areas—such as leadership,
strategic planning, and knowledge management.

• European Foundation for Quality Management (EFQM). EFQM identifies eight

fundamental concepts for achieving sustainable excellence in any organization:
sustaining outstanding results; succeeding through the talent of people;
managing with agility; leading with vision, inspiration, and integrity; adding value
for customers; creating a sustainable future; developing organizational capability;
and harnessing creativity and innovation

15-Jun-20
Continue……

• Total quality management (TQM). TQM is an integrative management philosophy

for continuously improving the quality of products and processes. Key principles
include defining quality in terms of customers and their requirements;
emphasizing prevention rather than detection of defects; stressing objectives
rather than subjective measurement and analysis; focusing on process rather
than output; and making continuous improvement a way of life for everyone in
the organization.

• Lean enterprise (“Lean”). Lean emphasizes using fewer resources and minimizing
waste. This approach changes management’s focus from optimizing separate
technologies, resources, and departments to optimizing the flow of products and
services throughout the entire value chain.
15-Jun-20
Balance Scorecard
• It allows managers to look at the business from four important perspectives.

• How do customers see us? (customer perspective)

• What must we excel at? (internal business perspective)

• Can we continue to improve and create value? (innovation and learning

perspective)

• How do we look to shareholders? (financial perspective)

15-Jun-20
How to create
Balance
Scorecard ?
Example

• Established general goals for customer performance:

• Get standard products to market sooner,
• improve customers’ time to market,
• become customers’ supplier of choice through partnerships with
them, and
• develop innovative products tailored to customer needs.

• Translate this into specific measures

15-Jun-20
Continue………..

15-Jun-20
Continue….

15-Jun-20
Balance Scorecard

• https://myhbp.org/hmm12/content/performance_measurement/wh
at_is_performance_measurement.html#!/learn

15-Jun-20