corporate performance management-1_2003

8/8/2019 Corporate Performance Management-1_2003

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CORPORATEPERFORMANCEMANAGEMENT

An Overview


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An OverviewCorporate Performance Management:Corporate Performance Management encompasses:

strategic planning, budgeting,

forecasting,

workflow,

reporting,

modeling,

scenario planning,

profitability analysis,

KPI monitoring, and

consolidation.

CPM addresses both operational and financial

performance to include the process of collecting thedata and performing analysis and reporting in acollaborative fashion for executives, managers, andstaff through all levels of an organization.


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An OverviewCorporate Performance Managementhas three main activities:

selection of goals,

consolidation of measurement information

relevant to an organizations progressagainst these goals, and

interventions made by managers in light ofthis information with a view to improving

future performance against these goals.


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An OverviewCorporate Performance Management

Corporate performance management consists of: a set of management and analytic processes,

supported by technology,

that enable businesses to define strategic goals.

measure and manage performance against those goals.

Core business performance management processesinclude financial planning, operational planning,consolidation and reporting, business modeling, analysis,and monitoring of key performance indicators linked tostrategy.


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An OverviewCorporate Performance

Management

Strategy

FinancialPlanni

ng

Operational

Planning

Consolidation &

Reporting

Business

Modeling

Analysis

Monitoringof key

PerformanceIndicators


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An OverviewCorporate Performance Management

Alignment Management :A performance management system that tiesevery aspect of the organization from the boardroom to the factory floor to the strategy is

known as alignment management.Alignment management can help achieve thatbalance using three distinct levels ofperformance measures that are:

Organization level

Process level

Jon level


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An Overview

Levels of Performance Management:Level

Outcomes Objectives Design

Measurement

Perspective

Organization

The overarchingstrategy

The value

migration Organizationalignment

The business plan

Strategy drivenfunctions

EVA or CVA value of

function Permeability ofboundaries

ABC/ABM driven

Financialperspective

Customer

perspectiveOrganizationperspective

Growth &Innovation

Process Conformance tocustomer standards

Process owner Inputs Outputs Service levelagreements

Boundary crossing

Cost Cycle time Quantity Quality Conformance tostandards

Job Report cards Easy access Process maps Function charts Activities Outcomes


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An OverviewCorporate Performance ManagementVarious methodologies for implementing corporate

performance management exist. The discipline givescompanies a top-down framework by which to alignplanning and execution, strategy and tactics, and business-unit and enterprise objectives. Reactions may include theSix Sigma strategy, balanced scorecard, activity-basedcosting (ABC), Total Quality Management, economic value-

add, integrated strategic measurement and Theory ofConstraints.

The balanced scorecard is the most widely adoptedperformance management methodology.

Methodologies on their own cannot deliver a full solution toan enterprise's CPM needs. Many pure-methodologyimplementations fail to deliver the anticipated benefits dueto lack of integration with fundamental CPM processes


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An Overview

The need for a different framework forperformance management

Characteristics of an ideal framework

Balanced Scorecard framework Corporate Performance Management

framework

Core components of a performance

management system


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The Need for a DifferentThe Need for a Different

Framework for PerformanceFramework for PerformanceManagementManagement


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Performance management is the practiceof actively using performance data toimprove desired outcomes.

Performance ManagementDefined


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The Need for a Different FrameworkThe Need for a Different Framework

The common measures focus on bottomline results, not the drivers

The need for timely results

There is a need for measures that align withthe mission and strategy (i.e., a focus on

program business operations and outputs)

Common Measures and PerformanceCommon Measures and Performance

Management are not the SameManagement are not the Same


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The Need for a Different FrameworkThe Need for a Different Framework

Participant impact measures provide alimited picture of organizational health

Participant impact measures alone areinsufficient to assess continuousimprovement

Common Measures and PerformanceCommon Measures and Performance

Management are not the SameManagement are not the Same (Continued)(Continued)


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Deploys the agencys strategic plan

Focuses and aligns agency activities andefforts

Tests cause-and-effect relationships amongthe programs activities

Family of measurement types reduces riskof not meeting bottom line measures

Links performance measures to decisionmaking

Characteristics of an Ideal FrameworkCharacteristics of an Ideal Framework


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Balanced ScorecardBalanced Scorecard

FrameworkFramework


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Balanced Scorecard Framework

The Balanced ScorecardBalanced Scorecardis a performance

management approach that focuses on variousoverall key performance indicators, includingcustomer perspective, internal - businessprocesses, learning and growth and financials,

to monitor progress toward organization'sstrategic goals.

Each major unit throughout the organizationoften establishes its own scorecard which, in

turn, is integrated with the scorecards of otherunits to achieve the scorecard of the overallorganization.


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MISSIONMISSION

CUSTOMERCUSTOMERPERSPECTIVEPERSPECTIVE

To achieve ourTo achieve our

mission, how must wemission, how must wesatisfy our customers?satisfy our customers?

FINANCIALFINANCIALPERSPECTIVEPERSPECTIVE

If we succeed, how willIf we succeed, how will

we look to Congresswe look to Congressand the public?and the public?

INTERNAL PROCESSESINTERNAL PROCESSESPERSPECTIVEPERSPECTIVE

To satisfy our customers, Congress,To satisfy our customers, Congress,

the public, and mission, whatthe public, and mission, whatbusinesses processes must we excelbusinesses processes must we excelat?at?LEARNING AND GROWTHLEARNING AND GROWTH

To achieve our mission, how must ourTo achieve our mission, how must ourpeople learn, communicate, and workpeople learn, communicate, and worktogether?together?

Value

,

Value

,

Benefit

Benef

it

V

alue,

V

alue,

B

enefit

B

enef

it

Balanced Scorecard FrameworkBalanced Scorecard Framework


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Perspectives are key organizational strategies

Aid to system and operations management

Help in diagnosing and troubleshooting Prioritizing

An aid to planning

Understand improvement Tracking performance

External accountability

To be successful, theTo be successful, thedrivers of performancedrivers of performance

must be identifiedmust be identified

PerspectivesPerspectives ObjectivesObjectives MeasuresMeasures

Why Use Different Perspectives?Why Use Different Perspectives?


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Identify strategic themes and group them underthe appropriate perspective

Create a strategy map to visualize the interaction

of individual activities in the larger system For each identified strategic theme, identify what

you are trying to achieve and the obstacles youface

Develop measurable objectives that specifynumeric target levels, where appropriate

Limit objectives to major program elements

PerspectivesPerspectives ObjectivesObjectives MeasuresMeasures

Use a Strategy Map to Develop ObjectivesUse a Strategy Map to Develop Objectives


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How well did we succeed at providingcustomer value?

How well do we do the things whichsupport creating customer value?

Each measure should answer one of the followingquestions:

PerspectivesPerspectives ObjectivesObjectives MeasurMeasur

eses

Develop Measures for the ObjectivesDevelop Measures for the Objectives


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Compare

Learn

Motivate

Reward and celebrate

Promote and explain

PerspectivesPerspectives ObjectivesObjectives MeasurMeasur

eses

Uses of Performance MeasuresUses of Performance Measures


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PerspectivesPerspectives

AgencyAgency

DepartmentDepartment

Team/IndividualTeam/Individual

MeasuresMeasuresObjectivesObjectives

Strategies Should be Aligned atStrategies Should be Aligned atDifferent Organizational LevelsDifferent Organizational Levels

The Importance ofAlignment


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Wherever the product of a public organization hasWherever the product of a public organization has

not been monitored in a way that ties performancenot been monitored in a way that ties performance

to reward, the introduction of an effectiveto reward, the introduction of an effective

monitoring system will yield amonitoring system will yield a fifty percentfifty percent

improvement in the product in the short run.improvement in the product in the short run.

In other wordsIn other words

What gets measured gets doneWhat gets measured gets done

Chases Law on MeasurementChases Law on Measurement


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Customer Perspective ExampleCustomer Perspective Example

Initiative:Initiative: Implement an expanded supportive servicesImplement an expanded supportive servicesstrategy to increase the percent of program completersstrategy to increase the percent of program completersfrom the current rate of 83%from the current rate of 83%

Rationale:Rationale: Successful completions highly correlated withSuccessful completions highly correlated with

increased employment and earningsincreased employment and earnings

Linking Strategy to MeasurementLinking Strategy to Measurement


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Illustration Using the BSCIllustration Using the BSC

ApproachApproach

Increasing the Efficiency and ProfitabilityIncreasing the Efficiency and Profitability

of a Commercial Airlineof a Commercial Airline


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Corporate PerformanceCorporate Performance

ManagementManagementAn Extension of the BSC ApproachAn Extension of the BSC Approach


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Corporate Performance ManagementCorporate Performance Management isisdefined as the processes, methodologies, metricsdefined as the processes, methodologies, metricsand systems needed to measure and manageand systems needed to measure and managebusiness performance. In the five years since CPMbusiness performance. In the five years since CPMwas introduced, this approach to management haswas introduced, this approach to management hasbeen credited with many success stories andbeen credited with many success stories andturnarounds. CPM builds on the core features of theturnarounds. CPM builds on the core features of theBSC.BSC.

CPM Framework

CPMCPM

MissionMission

RefineRefine

Review/Review/

AnalyzeAnalyze

Measure/Measure/

MonitorMonitor

Align/Align/

ExecuteExecute

Define/Define/

PlanPlan

CPM includesCPM includes

the whole setthe whole set

of managementof management

processes thatprocesses thatstarts with thestarts with the

mission of themission of the

organization.organization.


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Elements of CPM

MissionMission

Define/PlanDefine/Plan

Align/ExecuteAlign/Execute

Measure/MonitorMeasure/Monitor

Review/AnalyzeReview/Analyze

RefineRefine

Organizations purposeOrganizations purpose

VisionVision

Value driversValue drivers

Used to align all activitiesUsed to align all activities

in an organizationin an organization

l f


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Elements of CPM

MissionMission





RefineRefine

Feedback fromFeedback from

implementation of currentimplementation of currentstrategystrategy

Refine organizationsRefine organizationscorporate strategy modelcorporate strategy model

Strategic objectivesStrategic objectives

Key performance measuresKey performance measures

TargetsTargets

Strategic initiativesStrategic initiatives

Communicate strategy toCommunicate strategy toall organizational levelsall organizational levels


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El f CPM


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Elements of CPM

MissionMission





RefineRefine

Continuous monitoringContinuous monitoring

Track progress on keyTrack progress on keyperformance measuresperformance measures

Requires the collectionRequires the collectionand reporting of timely,and reporting of timely,accurate, and accessibleaccurate, and accessibledatadata

Create and useCreate and use

performance scorecard toperformance scorecard tosee the entire organizationsee the entire organization

El f CPM


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Elements of CPM

MissionMission





RefineRefine

Analyze performanceAnalyze performance

gaps on key performancegaps on key performancemeasuresmeasures

Use performance dataUse performance dataand create a learningand create a learning

feedback loop to educatefeedback loop to educateall levelsall levels

Business insights onBusiness insights onperformanceperformance

Use these insights toUse these insights tounderstandunderstand

El t f CPM


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Elements of CPM

MissionMission





RefineRefine

Decision makersDecision makers

collaborate, sharingcollaborate, sharingdifferent viewpoints anddifferent viewpoints andideasideas

Generate integratedGenerate integrated

insights frominsights fromReview/Analyze stepReview/Analyze step

Refine corporate strategyRefine corporate strategyand execution planand execution plan


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Key Features of CPM Comprehensive and structuredComprehensive and structured

planningplanning Disciplined execution andDisciplined execution and

reviewreview

Information-based decision makingInformation-based decision making

Integrated management processesIntegrated management processes

Agile management structureAgile management structure


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Core Components of aCore Components of a

Performance ManagementPerformance ManagementSystemSystem

Performance Management System


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Performance Management SystemDefined

AA PerformancePerformance

ManagementManagement

SystemSystem is theis the

continuous use ofcontinuous use of

four practices (four practices (seesee

diagram)diagram) that are fullythat are fully

integrated into anintegrated into an

organizations coreorganizations core

businessbusiness

Source: Turning Point,Source: Turning Point, From Silos to Systems: Using PerformanceFrom Silos to Systems: Using Performance

Management to Improve the Publics HealthManagement to Improve the Publics Health, 2003, 2003


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Important ConceptsPerformance StandardsPerformance Standardsare objectiveare objective

standards or guidelines that are used tostandards or guidelines that are used to

assess an organizations performance (e.g.,assess an organizations performance (e.g.,

80 percent entered employment rate).80 percent entered employment rate).Standards may be set based on national,Standards may be set based on national,

state, or scientific guidelines; by bench-state, or scientific guidelines; by bench-

marking against similar organizations; based on themarking against similar organizations; based on thepublics or leaders expectations; or other methods.publics or leaders expectations; or other methods.Source: Turning Point,Source: Turning Point, From Silos to Systems: Using PerformanceFrom Silos to Systems: Using PerformanceManagement to Improve the Publics HealthManagement to Improve the Publics Health, 2003, 2003


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Important Concepts

Source: Turning Point,Source: Turning Point, From Silos to Systems: Using PerformanceFrom Silos to Systems: Using Performance

Management to Improve the Publics HealthManagement to Improve the Publics Health, 2003, 2003

Performance IndicatorsPerformance Indicatorssummarize the focus (e.g.,summarize the focus (e.g.,

talent development, customer service) of performancetalent development, customer service) of performancegoals and measures, often used for communicationgoals and measures, often used for communicationpurposes and preceding the development of specificpurposes and preceding the development of specificmeasures.measures.

Performance MeasuresPerformance Measuresare quantitative measures ofare quantitative measures ofcapacities, processes, or outcomes relevant to thecapacities, processes, or outcomes relevant to theassessment of a performance indicator.assessment of a performance indicator.


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Important Concepts

Performance TargetsPerformance Targetsset specific and measurableset specific and measurable

goals related to agency or system performance.goals related to agency or system performance.Where a relevant performance standard is available,Where a relevant performance standard is available,the target may be the same as, exceed, or be anthe target may be the same as, exceed, or be anintermediate step toward that standard.intermediate step toward that standard.

R i f C iti l S F t


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Review of Critical Success Factors

BSC and CPM Emphasize theBSC and CPM Emphasize the

PerformancePerformanceManagement System ShouldManagement System Should

Align to the corporate mission and strategyAlign to the corporate mission and strategy

Develop meaningful key performanceDevelop meaningful key performancemeasuresmeasures

Increase data availabilityIncrease data availability

Maximize data qualityMaximize data quality

Enhance performance reportingEnhance performance reporting

Improve analysisImprove analysis

Achieve performance integrationAchieve performance integration

Drive decision makingDrive decision making


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Questions?

corporate performance management-1_2003

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