At the end of the programme, the participants should be KPIs... · At the end of the programme, the participants should be ... (KRA) What & Why of KRA ... KEY PERFORMANCE INDICATORS

At the end of the programme, the participants should be

able to:-

�Understand the real meaning and importance of KPIs

and KRAs to the organisation

�Link PMS to KPIs and KRAs by having a clear “Line of

PROGRAMME OBJECTIVESPROGRAMME OBJECTIVES

�Link PMS to KPIs and KRAs by having a clear “Line of

Sight”

�Implement the operation process in developing the

KPIs and KRAs

�Set and cascade the KPIs and KRAs to their next level

PROGRAMME CONTENT/OUTLINEPROGRAMME CONTENT/OUTLINE

CONCEPT OF KEY RESULTS AREAS (KRA)

�What & Why of KRA

�Differences between KRA & KPIs

�Organisation or Business KPIs and KRAs:

What & why of organisation or Business KPIs and KRAs?What & why of organisation or Business KPIs and KRAs?

Define your strategic organization or business direction

Specify your strategic organization or Business KRAs & KPIs

Specify your strategic organisation or business target

Turn your organisation or business measurement into

excellent services or profits


CONCEPT OF KEY RESULTS AREAS (KRA)

SETTING OPERATIONS KPIs and KRAs

�What & Why of operations KPIs and KRAs (Down Stream

Concept)

�Specify the operations processes�Specify the operations processes

�Specify the interaction of operations processes

�Measurement Principle : QQCT

�Specify the KPI of the operations processes


CASCADING DOWN THE KPIs and KRAs TO YOUR NEXT

LEVEL

�Concept : Results Focus vs. Task Oriented

�Breakdown of your KPIs and KRAs by section

�Assess the competency of your department�Assess the competency of your department

�Assign & set KPIs and KRAs for your next level

�Assess the feasibility of your assigned KPIs and KRAs

CORPORATE PERFORMANCE MANAGEMENT

PERFORMANCE MANAGEMENT PERFORMANCE MANAGEMENT

FRAMEWORKFRAMEWORK

Key Key Performance Performance

IndicatorsIndicators

Vision

Mission

Strategy

Strategy MapStrategy Map

IdentifyingIdentifying

DefiningDefining

MeasuringMeasuring

Monitoring Monitoring

Reporting Reporting

IndicatorsIndicators

Company Company strategystrategy


COMPONENTCOMPONENT

Three critical components for effective process of performance

management

Performance

Management

Process

Performance management

cycle is continuous and

consistent

Performance

Management

Infrastructure

Performance

Management

Culture

Culture that is based on

performance

accountability

Logistic support and

performance

management

administration


CYCLECYCLE

STRATEGY

Set Measures and TargetSet Measures and Target

Plan and ExecutePlan and Execute

Monitor and EvaluateMonitor and Evaluate

Reward and CoachReward and Coach

MANAGING PERFORMANCE WITH MANAGING PERFORMANCE WITH

BALANCED SCORECARDBALANCED SCORECARD

Balanced Scorecard is a management

tool that provides stakeholders with a

comprehensive measure of how the comprehensive measure of how the

organization is progressing towards the

achievement of its strategic goals.

MANAGING PERFORMANCE WITH MANAGING PERFORMANCE WITH

BALANCED SCORECARDBALANCED SCORECARD

• Balances financial and non-financial measures

• Balances short and long-term measures

• Balances performance drivers (leading indicators)

with outcome measures (lagging indicators)with outcome measures (lagging indicators)

• Leads to strategic focus and organizational alignment.

4 PERSPECTIVES IN BALANCED 4 PERSPECTIVES IN BALANCED

SCORECARDSCORECARD

If we succeed, how will we

look to our shareholders?

Financial Perspective

To achieve our vision, how

must we look to our

customers?

Customer Perspective

The Strategy

customers?

To satisfy our customers, which

processes must we excel at?

Internal Perspective

To achieve our vision, how must

our organization learn and

improve?

Learning & Growth Perspective

STRATEGY AND BALANCED STRATEGY AND BALANCED

SCORECARDSCORECARD

Mission – Why

We Exist

Vision – What

We Want to Be

Strategy :

Our Game

Strategy Map

: Translate the

Strategy

Strategic

Outcomes

Satisfied

Shareholders

Delighted We Want to Be

Values – What’s

Important to Us

Our Game

Plan

Balanced

Scorecard :

Measure and

Focus

Delighted

Customers

Excellent

Processes

Motivated

Workforce

STRATEGY MAP FRAMEWORKSTRATEGY MAP FRAMEWORK

• The strategy map framework is presented in

the following slides.

• This framework describes the types of strategic

target that should be presented in each target that should be presented in each

perspective, namely the financial perspective,

customers, internal business process, and

learning & growth perspective.

STRATEGY MAP FRAMEWORKSTRATEGY MAP FRAMEWORK

Cost Efficiency

Long-term Shareholder Value

Revenue Growth

Price Availability BrandServiceQuality

Financial

Customer

Operations

Management

Processes

Human Capital

Customer

Management

Processes

Innovation

Processes

Regulatory

and Social

Processes

Organization Capital Information Capital

Customer

Internal Process

Learning &

Growth

BSC Report as of ___________

Navigation: Click on

ovals to view objective measures

Fin

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Vision Statement

Mission:

Strategic Theme 2 Strategic Theme 4Strategic Theme 1

Strategic Theme 3

F1: Financial Objective 1

F3: Financial Objective 3F2: Financial Objective 2

F0: Top Financial Objective (Tab F0_1,

C1: Customer Objective 1

C3: Customer

Objective 3

P8: Process P7: Process Objective P4: Process

Objective

C2: Customer Objective 2C4: Customer Objective 4.

P3: Process Objective 3

Pe

op

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tern

al

Pro

cess

es

People statement

L1: Learning/People

Objective

L2: Learning /

People ObjectiveL4: Learning / People

Objective

L5: Learning / People

Objective


Objective

P2: Process Objective


P8: Process

Objective



Objective



P11: Process

Objective

FINANCIAL PERSPECTIVE FINANCIAL PERSPECTIVE

• In private companies, the financial perspective is the

main objective (ultimate goal) – without having to

sacrifice the interests of other relevant stakeholders

(community, environment, government, etc.)

• In the financial perspective, the strategic goal is the

longlong--term shareholder valueterm shareholder value. This goal is driven by two

factors, namely : revenue growthrevenue growth and cost efficiency.cost efficiency.

STRATEGIC OBJECTIVES IN STRATEGIC OBJECTIVES IN

FINANCIALFINANCIAL

Long-term

Shareholder Value

Revenue GrowthCost Efficiency

Improve Cost Structure

Increase Asset

Utilization

Expand Revenue

Opportunities

Enhance Customer

Value

CUSTOMER PERSPECTIVECUSTOMER PERSPECTIVE

• This perspective is very instrumental, because

without customers, how can a company survive?

• Customer perspective covers the following elements:

• Customer acquisition

• Customer retention

• Customer profitability

• Market share

• Customer satisfaction

STRATEGIC OBJECTIVES IN STRATEGIC OBJECTIVES IN

CUSTOMERCUSTOMER

Customer Customer AcquisitionAcquisition

Customer Customer SatisfactionSatisfaction

Customer Customer Retention Retention Customer Customer ProfitabilityProfitability

Market Market ShareShare

Price Availability BrandServiceQuality

Customer Customer AcquisitionAcquisition

INTERNAL PROCESS PERSPECTIVEINTERNAL PROCESS PERSPECTIVE

• This perspective reflects the processes in key business that

should be optimized in order to meet the needs of the

customers.

• There are four main themes in this perspective, namely:

• Operations Management Process• Operations Management Process

• Customer Management Process

• Innovation Process

• Regulatory and Social Process

STRATEGIC OBJECTIVES IN INTERNAL STRATEGIC OBJECTIVES IN INTERNAL

PROCESSPROCESS

Operations

Management

Processes

Customer

Management

Processes

Innovation

Processes

Regulatory

and Social

Processes

Processes that

produce and deliver

products and services

Processes that

enhance customer

value

Processes that create

new products and

services

Processes that

improve

communities and the products and services value services communities and the

environment

• Supply

• Production

• Distribution

• Selection

• Acquisition

• Retention

• Growth

• New Ideas

• R&D Portfolio

• Design/ Develop

• Launch

• Environment

• Safety & Health

• Employment

• Community

LEARNING & GROWTH PERSPECTIVELEARNING & GROWTH PERSPECTIVE

• This perspective reflects the capability that a company

should have, namely:

• Human Capital

• Organization Capital

• Information Capital• Information Capital

• This perspective shows us that good human resource

development system, organizational system and

information system forms a solid foundation for

improving company performance.

STRATEGIC OBJECTIVES IN LEARNING STRATEGIC OBJECTIVES IN LEARNING

& GROWTH& GROWTH

Human Capital Organization

Capital

Information

Capital

• Skills

• Knowledge

• Attitude

• Systems

• Database

• Networks

• Culture

• Leadership

• Organization

Development

STRATEGY MAP TEMPLATESTRATEGY MAP TEMPLATE

• The following slide displays the strategy map

template comprising of four perspectives:

financial, customer, internal business process, financial, customer, internal business process,

and learning & growth.

STRATEGY MAP TEMPLATESTRATEGY MAP TEMPLATE

Improve Cost Efficiency

Enhance Long-term Shareholder Value

Increase Revenue Growth

Enhance

Brand Image

Build High Performance

Products

Financial

Customer

Expand

Market Share

Achieve Operational

Excellence

Develop Strategic

Competencies

Drive Demand through

Customer Relation

Management

Manage Dramatic

Growth through

Innovation

Implement Good

Environmental Policy

Build Learning

Culture

Expand Capabilities with

Technology

Internal Process

Learning & Growth

IDENTIFYING KEY PERFORMANCE INDICATORS (KPI)

KEY PERFORMANCE INDICATORS KEY PERFORMANCE INDICATORS

(KPI)(KPI)

Vision

Mission and

ValuesStrategy

Key Performance Strategic ObjectivesStrategic Objectives

KPI = Measurement or

indicator that provides

information on how far we

have succeeded in achieving

the strategic objectives

Finance

Customer

Internal Business Process

HR Development

Key Performance

Indicators

Key Performance

Indicators

Key Performance

Indicators

KPI GUIDELINESKPI GUIDELINES

The measure of success must show clear, specific and

measurable performance indicators.

The measure of success should be declared explicitly

and in detail so that it is clear what is being measured.and in detail so that it is clear what is being measured.

Costs to identify and monitor the measure of success

should not exceed the value that will be known from

the measurement.

KPI GUIDELINESKPI GUIDELINES

Relevant to the

Strategic Objective Does KPI have a linkage with the strategic objectives?

ControllableAre the KPI achievements still under control?

Actionable Can any action be taken to improve the performance?Actionable Can any action be taken to improve the performance?

Simple Is the KPI easy to explain?

Credible Is the KPI not easy to manipulate?

KPI FAMILY DIMENSIONKPI FAMILY DIMENSION

Productivity

Measures employee output (units/ transactions/

dollars), the uptime levels and how employees use

their time (sales-to-assets ratio, dollar revenue from

new customers, sales pipeline).

Measures the ability to meet and/or exceed the

requirements and expectations of the customer

(customer complaints, percent returns, DPMO --

defects per million opportunities).

Quality


Profitability

Measures the overall effectiveness of the

management organization in generating profits

(profit contribution by segment/customer, margin

spreads).

Measures the point in time (day/week/ month)

when management and employee tasks are

completed (on-time delivery, percent of late orders).

Timeliness


Process

Efficiency

Measures how effectively the management

organization incorporates quality control, Six

Sigma and best practices to streamline operational

processes (yield percentage, process uptime,

capacity utilization).

Measures how effectively the management

organization leverages existing business resources

such as assets, bricks and mortar, investments

(sales per total assets, sales per channel, win rate).

Resource

Utilization


Cost Savings

Measures how successfully the management

organization achieves economies of scale and

scope of work with its people, staff and practices

to control operational and overhead costs (cost

per unit, inventory turns, cost of goods).

Measures the ability of the management

organization to maintain competitive economic

position in the growth of the economy and

industry (market share, customer

acquisition/retention, account penetration).

Growth

KPI CATEGORY DIMENSIONKPI CATEGORY DIMENSION

DirectThe actual raw data value as measured (e.g., sales

volume).

The comparison of the changes in performance of

Percent

The comparison of the changes in performance of

one value relative to the same value at a different

time, geography, etc. (e.g., percentage change in

sales vs. last year).


Simple Ratio

The comparison of one value relative to another to

provide a benchmark for comparison of performance

(e.g., average sales per day).

Index

A combination of several separate measures added

together that result in an overall indicator of

performance (e.g., (company sales

growth)/(industry sales growth) for a specific

geography).


Composite

Average

The addition of the weighted averages of several similar

measures that result in an overall composite indicator of

performance (e.g., customer satisfaction composite is

mixture of results from surveys, focus groups and

product returns).

Statistics

Multiple measures such as mean, variance, standard

deviation and variance that capture the spread and

distribution of the performance measures (e.g., sales

distribution by demographics, geography, channel).

STRATEGY MAP FOR CORPORATE FUNCTIONS

(HR, IT, FINANCE AND MARKETING)(HR, IT, FINANCE AND MARKETING)

INTEGRATION BETWEEN CORPORATE INTEGRATION BETWEEN CORPORATE

AND DIVISION/DEPARTMENTAND DIVISION/DEPARTMENT

Vision

Mission

Strategy

CorporateCorporate

Scorecard

Division

Scorecard

The Division Scorecard is

built by referring to the

corporate scorecard

CORPORATE AND DIVISION CORPORATE AND DIVISION

SCORECARDSCORECARD

Financial

Customer

Corporate

Finance

Corporate

Marketing

Customer

Internal Process

Learning & Growth

Production

Supply Chain

R & D

Corporate HR

Info Technology


SCORECARDSCORECARD

• Division Scorecard is formulated by looking at the four

perspectives in Corporate Scorecard.

• As shown in the previous slides, the learning & growth

perspective provides guidelines for developing

scorecard at the Human Resource and IT divisions, scorecard at the Human Resource and IT divisions,

while the internal process perspective provides

guidelines for developing scorecard at the supply chain

division or R&D.


SCORECARDSCORECARDSample from GE Lighting Business Group

Level of Organization Financial Customer Internal Process Learning & GrowthCorporate Scorecard Increase profit margin Improve customer Increase inventory turns Increase level of

satisfaction level Improve internal process employee competency

Division Scorecard Optimize cost of production Improve customer Increase inventory turns Increase level ofReduce inventory levels satisfaction level Improve internal process employee competency

Plant Scorecard Optimize cost of production Increase percent of Increase inventory turns Number of "on the Increase yields ratio on time delivery Reduce number of defects job training" deliveredIncrease labor productivity Reduce customer per million Number of performanceReduce inventory levels complaints per million Improve quality incoming coaching sessionReduce inventory levels complaints per million Improve quality incoming coaching session

materialsMaintain optimum equipment speed

Frontline Employee Reduce waste Reduce equipment downtime Number of "on the Scorecard Reduce overtime Reduce number of poor job training" attended

Increase production rates solders Number of performanceReduce number of cracked coaching session bulbs attended

The above example shows how the scorecard at corporate level is cascaded to division

level, and further to plant level and employee level.

DIVISION STRATEGY MAP TEMPLATEDIVISION STRATEGY MAP TEMPLATE

•The strategy map for HR Division,

Information Technology Division,

Finance Division, and Marketing Finance Division, and Marketing

Division are presented in the

following slides.

HR STRATEGY MAP TEMPLATEHR STRATEGY MAP TEMPLATE

Optimize HR Efficiency

Drive Long term

Shareholder Value

Enhance People & Organizational

EffectivenessFinancial

Customer

Create Positive Work

Environment

Provide Quality HR

Service

Provide High

Performance People

Achieve HR

Process

Excellence

Develop Strategic & Functional HR

Competencies

Build Strategic

Employee

Competencies

Drive

Organizational

Performance

Enhance Technology

for HR

Create Climate for

HR Action

Customer

HR Internal Process

Learning & Growth

IT STRATEGY MAP TEMPLATEIT STRATEGY MAP TEMPLATE

Optimize IT Efficiency

Drive Long term

Shareholder Value

Enhance IT Impact on

Enterprise OutcomeFinancial

Customer

Deliver Consistent, High

Quality IT Service

Provide Business Units with

Innovative IT Solutions

Maintain a

Reliable IT

Infrastructure

Develop Strategic & Functional IT

Competencies

Develop Effective Decision

Support SystemPropose and Deliver

Transformational Applications

Enhance IT Tools that Enhance the

IT Function

Promote Customer-focused

Culture

IT Internal Process

Learning & Growth

FINANCE STRATEGY MAP TEMPLATEFINANCE STRATEGY MAP TEMPLATE

Optimize Financial Efficiency

Drive Long term

Shareholder Value

Enhance Finance Effectiveness on

Enterprise OutcomeFinancial

Customer

Deliver Responsive & Efficient

Finance Operations

Provide Clear & Reliable Required

Disclosure

Achieve Finance

Process

Excellence

Develop Strategic & Functional

Finance Competencies

Develop Financial

Information to

Improve Decision Making

Ensure Compliance

with Regulatory

Requirements

Use Technology to Improve

Financial Information

Delivery

Finance Internal

Process

Learning & Growth

Promote Customer-focused

Culture

MARKETING STRATEGY MAP MARKETING STRATEGY MAP

TEMPLATETEMPLATE

Optimize Marketing Efficiency

Drive Long term

Shareholder Value

Increase Sales

RevenueFinancial

Customer

Create Satisfied and Loyal

Customers

Enhance Brand

Image

Develop Innovative

Marketing

Communication

Program

Develop Strategic & Functional

Marketing Competencies

Develop

Marketing Business

Intelligence

Accelerate

New Product

Development

Ideas

Enhance Technology

for Marketing

Foster Creative Thinking &

Innovative Solutions

Internal

Process

Learning & Growth

Develop Effective

Customer Relation

Management

REFERENCESREFERENCES

1. Robert Kaplan and David Norton, Strategy

Map : Converting Intangible Assets into

Tangible Outcomes, HBS Press

2. Robert Kaplan and David Norton, Alignment :

Using the Balanced Scorecard to Create

Corporate Synergies, HBS Press

COMPETENCY-BASED PERFORMANCE MANAGEMENT

INDIVIDUAL PERFORMANCE INDIVIDUAL PERFORMANCE

ELEMENTELEMENT

Individual Performance Individual Performance

elementselements

has two main categories:has two main categories:

1. Performance Results: Hard or

quantitative aspects of performance

(result)

2. Competencies: It represents soft or

qualitative aspects of performance

(process)

INDIVIDUAL PERFORMANCE INDIVIDUAL PERFORMANCE

ELEMENTELEMENT

1.1. Performance Performance Results ScoreResults Score

22. . Competencies Competencies ScoreScore

Overall ScoreOverall Score

22. . Competencies Competencies ScoreScore

Will determine the employee’s

career movement, and also the

reward to be earned

ELEMENT # 1 : PERFORMANCE ELEMENT # 1 : PERFORMANCE

RESULTSRESULTSNo. Main Performance Target Target to be

Achieved1 Conduct an assessment of the All employees submit their performance assessment form

employee's performance on time

2 Improve the system for Target : completed 100 % performance assessment in November 2008

3 Conduct training activities Target : to conduct 6 training modules 3 Conduct training activities Target : to conduct 6 training modules in one year

4 Carry out on the job training Target : 90 % of the total employees activities who attend the training

experience an increase in skill and knowledge

Target should be measurable and specific

ELEMENT # ELEMENT # 2 : COMPETENCIES2 : COMPETENCIES

Basic Intermediate Advanced Expert

Actively listens, and clarifies

understanding where required, in order

to learn from others.







Actively listens, and clarifies understanding where

required, in order to learn from others.

Empathise with audience and

formulates messages accordingly.





Empathise with audience and formulates messages

accordingly.

Shares resources and information. Shares resources and information. Shares resources and information. Shares resources and information.

Responds promptly to other team

members’ needs.

Balances complementary strengths in

teams and seeks diverse contributions

and perspectives.

Actively builds internal and external

networks.

Builds internal and external networks and uses

them to efficiently to create value.

Competency : CollaborationCompetency : Collaboration

Involves teams in decisions that effect

them.

Uses cross functional teams to draw

upon skills and knowledge throughout

the organization.

Uses cross functional teams to draw upon skills and

knowledge throughout the organization.

Encourages co-operation rather than

competition within the team and with

key stakeholders.

Builds and maintains relationships

across The company.

Drives and leads key relationship groups across The

company.

Manages alliance relationships through complex

issues such as points of competing interest.

Ensures events and systems, eg IT, for

collaboration are in place and used.

Draws upon the full range of relationships

(internal, external, cross The company) at critical

points in marketing and negotiations.

ASSESSING COMPETENCY THROUGH ASSESSING COMPETENCY THROUGH

ASSESSMENT CENTERASSESSMENT CENTER

Assessment Center Characteristics:Assessment Center Characteristics:

• A standardized evaluation of behavior based on multiple inputs.

• Multiple trained observers and techniques are used.

• Judgments about behaviors are made, in major part, from specifically developed assessment simulations.

• These judgments are pooled in a meeting among the assessors or by a statistical integration process

TYPES OF TEST IN ASSESSMENT TYPES OF TEST IN ASSESSMENT

CENTERCENTER

• In-trays or in-baskets involve working from the

contents of a manager’s in-tray, which typically

consists of letters, memos and background

information. You may be asked to deal with

paperwork and make decisions, balancing the

volume of work against a tight schedule.

In-Basket

Exercise

volume of work against a tight schedule.

• In a role play, you are given a particular role to

assume for a certain task. The task will involve

dealing with a role player in a certain way, and

there will be an assessor watching the role play.

Role

Simulation


CENTERCENTER

• You may be required to make a formal presentation

to a number of assessors. In some cases this will

mean preparing a presentation in advance on a

given topic. In other cases, you may be asked to

interpret and analyse given information, and present

a case to support a decision.

Presentation

• In a fact-finding exercise, you may be asked to

reach a decision starting from only partial

knowledge. Your task is to decide what

additional information you need to make the

decision, and sometimes also to question the

assessor to obtain this information.

Fact-Finding

Exercise


CENTERCENTER

• Group exercises are timed discussions, where a

group of participants work together to tackle a

work-related problem. Sometimes you are given a

particular role within a team, for example sales

manager or personnel manager. Other times

Group

Discussion

manager or personnel manager. Other times

there will be no roles allocated. You are observed

by assessors, who are not looking for right or

wrong answers, but for how you interact with

your colleagues in the team.

COMPETENCY ASSESSMENT AND COMPETENCY ASSESSMENT AND

RATING RATING

Competency ScoreResults of

Observation

Through the Through the

Assessment Center

RECOMMENDED FURTHER RECOMMENDED FURTHER

READINGSREADINGS

1. Paul Green, Building Robust Competency, John

Wiley and Sons

2. David Dubois, Competency-based HR 2. David Dubois, Competency-based HR

Management, Black Publishing

MONITORING KPIs and KRAs USING THE BSC STRATEGIC MAP

DASHBOARDDASHBOARD

BSC Report as of ___________

Navigation: Click on

ovals to view objective measures

Fin

an

cia

lC

ust

om

er

Vision Statement

Mission:

Strategic Theme 2 Strategic Theme 4Strategic Theme 1

Strategic Theme 3

F1: Financial Objective 1

F3: Financial Objective 3F2: Financial Objective 2

F0: Top Financial Objective (Tab F0_1,

C1: Customer Objective 1

C3: Customer

Objective 3

P8: Process P7: Process Objective P4: Process

C2: Customer Objective 2C4: Customer Objective 4.

P3: Process Objective 3

Pe

op

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Pro

cess

es

People statement

L1: Learning/People

Objective

L2: Learning /

People ObjectiveL4: Learning / People

Objective


Objective


Objective



P8: Process

Objective



P7: Process Objective P4: Process

Objective



P11: Process

Objective

Documents

At the end of the programme, the participants should be KPIs... · At the end of the programme, the participants should be ... (KRA) What & Why of KRA ... KEY PERFORMANCE INDICATORS