KPP202. Lecture 10. Mohammed Salloum

Transcription

1 KPP202 Lecture 10 04/10/2011 Mohammed Salloum

2 Synopsis What is performance measurement (PM)? A historical perspective The Balanced Scorecard (BSC) Keeping it real Hoshin Kanri 2

3 Beehive Group up (2-4 individuals per group). Discuss the question below for a couple of minutes. Wit Write down the answers and prioritize iti among them. What is performance? 3

4 What is PM? Performance: The potential for future successful implementation of actions in order to reach the objectives and targets. Lebas (1995) 4

5 Why should we measure? 242 cm? cm 5

6 What is PM? Performance measure - a metric used to quantify the efficiency and/or effectiveness of an action. 6

7 What is PM? Performance Measurement System Performance measurement system (PMS) - the set of metrics used to quantify both the efficiency and effectiveness of actions. 7

8 What is PM? Performance Measurement System Performance measurement - the process of quantifying the efficiency and/or effectiveness of action. 8

9 What is PM? Performance management - the process in which performance is managed in line with its corporate and functional strategies and objectives. 9

10 Beehive Group up (2-4 individuals per group). Discuss the question below for a couple of minutes. Wit Write down the answers and prioritize iti among them. What are the benefits for companies to measure? 10

11 What is PM? The most frequent mentioned reasons for implementing measurement systems are: Monitoring i of performance Identification of areas in need of attention Enhancing motivation Improving communication Strengthening accountability Alignment between actions and strategy Strategy implementation Challenge the validity of the strategy 11

12 A historical perspective p Phase I Frederick Taylor & Scientific Management The DuPont Model Detachment ownership & management Introduction of the tableau de bord 12

13 A historical perspective p Frederick Taylor and Scientific Management - Management was responsible of devising the most efficient method of performing work - Increase efficiency i and output t per individual id worker - Methods of working via analysis of existing work - Methods monitored through closely monitored metrics 13

14 A historical perspective p The DuPont Model 14

15 A historical perspective p Phase II Human Relations Movement Hawthorne Studies Hierarchy of needs 15

16 A historical perspective p Hawthorne Studies The famous experiments at Western Electric's Hawthorne plant became acknowledged as groundbreaking and provided new scientific foundations for management (Smith, 1998) - Conducted between the years Examined productivity it correlated to work conditions - Financial incentives not the only performance driver, work conditions and performance closely correlated - Benevolent supervision, i affection for employees and group dynamics 16

17 A historical perspective p Hierarchy of needs - Needs trigger motivation - Motivation triggers performance 17

18 A historical perspective p Phase III Globalisation li Delta between book value and market value Western management practices under fire 18

19 A historical perspective p Toyota - The unquestioned position of the American management style became challenged - Japanese goods were superior in both quality, variety and competitively priced - Effectiveness became equally important to efficiency 19

20 A historical perspective p Unconventional measures - Financial i metrics derived d from accounting systems for mills and railroads etc. - New measures focus on operational aspects that are useful for everyday decision making 20

21 Beehive Group up (2-4 individuals per group). Discuss the question below for a couple of minutes. Wit Write down the answers and prioritize iti among them. What should companies measure? 21

22 The Balanced Scorecard (BSC) How do we look to our shareholders? (financial perspective) What must we excel at? (internal business perspective) How do our customers see us? (the customer perspective) How can we continue to improve and create value? (innovation and learning perspective) The BSC is the most cited and implemented performance measurement system 22

23 The Balanced Scorecard (BSC) Type I BSC: a specific multidimensional framework for strategic performance measurement that combines financial and non-financial strategic measures. Type II BSC: Additionally describes strategy by using causeand-effect relationships. Type III BSC: Additionally implements strategy by defining objectives, action plans, results and connecting incentives with BSC. 23

24 The Balanced Scorecard (BSC) 24

25 Keeping it real Companies tend to develop their own PMS These are integrated to more extensive systems Breakthrough ideas are accounted for Academic gaps reflected in practice Utilization rather than design is the current challenge 25

26 An example: AB Volvo 26

27 An example: Mac Trucks Manager KPI KPI KPI Productivity Direct Runner Delivery Precision Supervisor KPI KPI KPI Labour Efficiency Online Quality Daily throughput V Plan KPI KPI KPI KPI FAC Incidents Absenteeism Training Participation Rework Time Section Leader KPI KPI KPI KPI Labour Efficiency SV s Online Quality Daily throughput V Plan KPI KPI Overtime Rejected Parts 27

28 Principle 10 The Toyota Way Principle 10: Develop exceptional people and teams who follow your company s philosophy 28

29 Principle 10 part of the VPS foundation Goal G l oriented teams Cross functional work Organizational design Visualization Goal oriented teams are the foundation on working with operational as well as development goals The teams goals are visualized and followed up on a regular basis. To secure team performance, development elopment plans including goals are also set and followed up on individual level Within the teams actions and improvements are decided on how to reach the goals 29

30 Hoshin Kanri Hoshin means direction. Kanri means management. Together they create the compass. Hoshin kanri is a method devised to capture and cement strategic goals as well as flashes of insight about the future and develop the means to bring these into reality. 30

31 Main steps in the Hoshin Kanri Process Strategic planning Organization s present situation Desired Future State Select Vision Element for Breakthrough Tactical planning and deployment of plan (Catchball) Create plans to improve the vision element Deploy/Cascade the plan Implementation of plan and regular review Execute the plan - create activities and actions Check progress and take action on deviations Annual review Improve planning Process and create next year s plan 31

32 Catchball In Hoshin Kanri, each management level s strategy becomes the objectives of the next level down Catchball ensures alignment across process and functional lines. Catchball is a vigorous give-and-take that gets people involved in the strategic focus that motivates them to achieve the targets In Catchball, ideas generated at each level of the company are passed up or down to people at other levels for their review and input Those receiving an idea catch it, modify it (if necessary) to make it relevant to the work done at their level, l and pass it along to the other levels l This give-and-take dialogue continues until everyone understands and agrees on the objectives, strategies, and action plans of the other levels 32

33 Focusing forces Before lack of shared view Hoshin Kanri After Shared view Shared view about common direction and alignment of goals and measurements is necessary to deliver on Business Objectives 33

34 Hoshin Kanri is a system of nested PDCA cycles Strategic planning Tactic planning and deployment of plan (Catchball) Implementation of plan and regular review Act Strategic level (Annual) Plan Act Tactic level (Weekly/Monthly) Do Plan Operative level (Daily) Do Annual review Check Check 34

35 Summary PM is the process of quantifying efficiency and effectiveness. Evolution of PM divided into three phases. BSC is the best known PMS. In reality companies develop PMS after they own needs. Hoshin Kanri is a powerful strategic planning tool that enables the involvement of the organisation in the PM process. 35

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