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What gets measured gets done If you cant measure it, you can’t manage it

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Page 1: What gets measured gets done If you cant measure it, you can’t manage it
Page 2: What gets measured gets done If you cant measure it, you can’t manage it

What gets measured gets done If you cant measure it, you can’t

manage it

Page 3: What gets measured gets done If you cant measure it, you can’t manage it

Performance It is determined by a combination of

Declarative knowledge Procedural knowledge Motivation

Performance = Declarative knowledge x Procedural knowledge x motivation

Page 4: What gets measured gets done If you cant measure it, you can’t manage it
Page 5: What gets measured gets done If you cant measure it, you can’t manage it

Performance dimensions

Page 6: What gets measured gets done If you cant measure it, you can’t manage it

Approaches to performance Trait based

Emphasize on individual traits that are stable in nature

the presence of these need not engage necessarily in productive behaviours

Results basedEmphasize the outcome and results produced by

the employee Most appropriate when

Workers are skilled in needed behaviours Behaviours and results are related Results show consistent improvement over time There are many ways to do the job right

Page 7: What gets measured gets done If you cant measure it, you can’t manage it

Approaches to performance

Page 8: What gets measured gets done If you cant measure it, you can’t manage it

What to measure ?

Page 9: What gets measured gets done If you cant measure it, you can’t manage it

What to measure ?Some of the pitfalls There are too many measures Measures do not relate to strategyMeasurement is result based and did not tell

mangers how the results were achieved Reward systems are no aligned to

performance measures Measures do not support team based

management structures

Page 10: What gets measured gets done If you cant measure it, you can’t manage it

Appropriate performance measurement must ensure ….Ensure that customer requirements are met Provides a standard for establishing comparisonsProvides visibility to monitor their own

performance Highlights quality problems and determines which

areas require priority attentionGives an indication of the costs of poor quality Justify the use of resources Provides feedback for driving the improvement

effort

Page 11: What gets measured gets done If you cant measure it, you can’t manage it

Criteria for performance measures

Page 12: What gets measured gets done If you cant measure it, you can’t manage it

Measurement issues

Diversity of organizations and professionals If a bank has 10,000 staff, are we going to have

10,000 different performance measurements? It will be a challenge for an organization to keep

track of the huge diversity of skilled professionals and ensure alignment to its mission and values

Page 13: What gets measured gets done If you cant measure it, you can’t manage it

Measurement issuesIntangible and non-financial measurements

When two salesmen achieve the same sales target , how will the manager measure who is more motivated, hardworking, responsible or trustworthy

Also, unlike financial measurements which are governed by accounting standards and principles, non-financial measures will be more susceptible to misuse and manipulation

Change management practices  First of all, nobody likes to be measured. Managers who are

experts in their field may have the freedom to choose and manipulate measures for their own benefit

In large, global organizations, consistency in implementation across departments may be a problem if communication and coordination is not executed well.

Lastly, inexperienced managers may not know what they want to find out and collect data and statistics which may not be that useful. This will cause frustrations and unnecessary effort for staff.

Page 14: What gets measured gets done If you cant measure it, you can’t manage it

Guidelines for Performance MeasurementProcess Improvement

Throughout the implementation of a PMS , there is a need to constantly focus on the critical goals that can bring visible progress and enhancement. Otherwise, there is a tendency for busy employees to lose sight of the ultimate objective of performance measurement, and treat its implementation as a mere data collection exercise for management

Employee Involvement  Truly empowered teams must be able to develop a well

defined PMS which aligns with their individual and organizational goals . But the empowerment should not be limited to the departmental heads alone but should be even at the individual level

Page 15: What gets measured gets done If you cant measure it, you can’t manage it

Guidelines for Performance MeasurementReportable 

Measurements must focus on most the critical items and not sacrifice quality for quantity.

Too much measurement may mean that teams end up spending too much time collecting data, monitoring their activities, and not enough time managing the project outcome.

Forward Looking  Unlike financial measurements that often record past

accounting numbers, a good Performance Measurement system should capture its relevance to the organization vision, validate its strategies and chart new directions.

It should not dwell in the past but focus on measurements that impact future deliverables.

Page 16: What gets measured gets done If you cant measure it, you can’t manage it

Guidelines for Performance MeasurementOptimization 

Whether improvement in one area of the organization be achieved at the expense of another?

If it does, how much sacrifice or risk should the organization take?

For example, should a manufacturer delay production dateline because a new supplier is coming with cheaper alternatives to save cost?

Page 17: What gets measured gets done If you cant measure it, you can’t manage it

Guidelines for Performance MeasurementRealistic 

The measures agreed by the employer and employee have to be ambitious and challenging, and at the same time, be realistic and attainable.

Too little means employees fall into complacency; too much and they start to rebel or leave

Management Commitment  The focus should be on strategy and vision, and not day-to-day

operational controls. Managers should dictate strategic goals, ensure that each

team understands how its job fits into the strategy, and provide training so that the team can devise its own measures.

Managers should allow the teams to decide which measures will best help them perform their jobs.

Managers should not make the mistake of thinking that they know what is best for the team.

Page 18: What gets measured gets done If you cant measure it, you can’t manage it

Three types of measures :organizational

Page 19: What gets measured gets done If you cant measure it, you can’t manage it

Types of measuresFinancial : income ,shareholder value, added value,

rates of return, costs etcOutput: units produced or processed, new accountsetcImpact: attainment of standards, changes in behaviour,

completion of work/project, level of take up of service ,innovation

Reaction: judgment by others ,colleagues, internal and external customers

Time : speed of response or turnaround, achievements compared to timetables ,amount of backlog,delivery times

Page 20: What gets measured gets done If you cant measure it, you can’t manage it

Measurement indicesPQCDMS IndexProduction –PQuality – QCost – CDelivery – DMorale – MSafety -S

Page 21: What gets measured gets done If you cant measure it, you can’t manage it

Different approaches to measurement Balanced score cardEuropean foundation for quality management

(EFQM) ModelEconomic Value AddedOther traditional financial measures

Page 22: What gets measured gets done If you cant measure it, you can’t manage it

Applications 1. As a framework which organisations can use to help them

develop their vision and goals for the future in a tangible, measurable way.

2. As a framework which organisations can use to help them identify and understand the systemic nature of their business, the key linkages and cause and effect relationships.

3. As the basis for the EFQM Excellence Award, a process which allows Companies to recognise its most successful customer experience (internal and external) and promote them to achieve the organizational target guided by their mission statements

4. As a diagnostic tool for assessing the current health of the organisation. Through this process an organisation is better able to balance its priorities, allocate resources and generate realistic business plans.

1. This fourth, diagnostic use, is also known as self-assessment

Page 23: What gets measured gets done If you cant measure it, you can’t manage it

Balanced score card

Page 24: What gets measured gets done If you cant measure it, you can’t manage it

EFQM ModelIt is a TQM based framework criteriaFive of them are enablers –what the

organization does People Partnerships Resources Processes leadership

Four are results which are cause by enablers and this is what organization achieves

Performnace Customers People Society

Page 25: What gets measured gets done If you cant measure it, you can’t manage it

CONCEPTS OF EFQM ModelResults orientation: achieve results that

delight all the stakeholdersCustomer focus: Create sustainable value Leadership and constancy of purpose Management by processes and facts People development and involvementContinuous learning, innovation and

improvementPartnership developmentCorporate social responsibility

Page 26: What gets measured gets done If you cant measure it, you can’t manage it

EVA modelThis measure represents the difference b/w

the company’s post tax profits and cost of the capital invested in the business

The theory is if the company makes profit it does not mean that the company is doing good ,but has to justify the cost of capital

Page 27: What gets measured gets done If you cant measure it, you can’t manage it

Other economic measure Added value Market value addedTotal shareholder returnTraditional

Earning per share Return on equity Return on capital employed Price earnings ratioAsset turnoverReturn on sales Profit or sales Output per employee

Page 28: What gets measured gets done If you cant measure it, you can’t manage it

5 s philosophy

Page 29: What gets measured gets done If you cant measure it, you can’t manage it

Performance @BHELThey created a culture of performance and excellence

through award schemes They devised a PMS which rewards direct or indirect

contribution towards parameters of profitability and growth

This includes Excellence in quality Timeliness Speed and response rateOutstanding technical paperResearch and development Customer service Contribution to environment and society

Page 30: What gets measured gets done If you cant measure it, you can’t manage it

EVA model @TCS TCS worked out a EVA (ECONOMY VALUE

ADDED) framework to align corporate value with the performance of the constituent business units and the individuals who comprised these

The objective was to align its people to the corporate mission, creating an entrepreneurial culture through an empowered work force

The performance was linked to the compensation of the employee – variable pay component

Page 31: What gets measured gets done If you cant measure it, you can’t manage it

EVA model @TCSThe individual works towards the improvement of

the benefit package, which essentially has three components - the Corporate EVA, the Business Unit EVA, and the Individual Performance Factor. Out of the total EVA payment a certain percentage

goes to each employee on the basis of corporate EVA improvement.

Secondly, if your business unit did better than another business unit, then automatically you got more than the other business unit. Again it is a team reward concept.

The third one depends on the evaluation of individual performance

Page 32: What gets measured gets done If you cant measure it, you can’t manage it

Performance objectives Objectives are statements of an important and

measurable outcome that when accomplished will help ensure success for the accountability

Establishing objectives will help to identify the the highly important results that needs to be achieved

Help the employees to guide their efforts to wards these objectives

Once objectives for employees are set ,they should be getting feedback on their progress towards attaining the objective

Rewards should be allocated to those employees who have reached their objectives

Page 33: What gets measured gets done If you cant measure it, you can’t manage it

Accountability

A job description will have a number of tasks Tasks included in the job can be clustered

together based on their degree of relatedness. Each of these clusters is known as accountability for which the employee is responsible for producing results

Page 34: What gets measured gets done If you cant measure it, you can’t manage it

Characteristics of Objectives Specific & clearChallengingAgreed upon b/w the manger and employee Significant enoughShould be prioritized Bound by time Achievable Fully communicated Flexible Limited number of objectives

Page 35: What gets measured gets done If you cant measure it, you can’t manage it

Performance standards What kind of approach towards measurement ?

BEHAVIOUR BASED

RESULT BASED

Page 36: What gets measured gets done If you cant measure it, you can’t manage it

Performance standards These are yardsticks designed to help people

understand to what extent the objective has been achieved

These standards provide raters with information as to what extent an objective has been achieved

Quality Quantity Time

Page 37: What gets measured gets done If you cant measure it, you can’t manage it

Results based approach QUALITY

How well the objectives has been achieved Usefulness to the

strategy ,responsiveness,effect obtained,acceptance rate

QUANTITYHow much has been produced ,how many ,how

often and at what cost TIME

Due dates ,adherence to schedule ,cycle times,deadlines (how quickly)

Page 38: What gets measured gets done If you cant measure it, you can’t manage it

Performance standards should include an action ,the desired result ,a due date and some type of quality or quantity indicator For eg; reduce overtime from 150 hours

/month by Dec 1 2009 to 50 hours /month ,at a cost not exceeding 12000/-

Once the standard has been fixed stds for minimum and excellent performance should also be fixed

Page 39: What gets measured gets done If you cant measure it, you can’t manage it

Behaviour based approach Identify the competencies based on the job

descriptionDescribe the behavioural indicators ,to what

etent one should possess List suggestions to improve on those

competency (training,mentoring,coaching,etc )

Choose an appropriate measurement system Comparative Absolute

Page 40: What gets measured gets done If you cant measure it, you can’t manage it

Behavioral Measurement systems Comparative stds Simple ranking orderAlternation ranking

orderPaired comparisons Forced distribution

Absolute Essays Behaviour checklists Critical incidents Graphic rating

scales

Page 41: What gets measured gets done If you cant measure it, you can’t manage it

Determinants to Performance stds Related to the positionConcrete ,specific and measurable Practical to measure Meaningful Realistic and achievable Reviewed regularly

Page 42: What gets measured gets done If you cant measure it, you can’t manage it

References Performance Management, Herman Aguinis,

second edn, Pearson Publications .Performance Management , Varsha Dixit, Ist

edn, Vrinda publications Performance measurement and management :

GK Suri,CS Venkataraman,NK Gupta ssssssHRM Review,icfai university press,july

2008,ocober 2008