WORKGROUP-LEVEL OVERVIEW. Learning Objectives Upon completion of this session, you will be able to:
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1 WORKGROUP-LEVEL OVERVIEW Performance Scorecards provide an organized, proven method of defining key business outcomes and data, and should be an integral part of your planning process. Included with this Participant Workbook are the following books, available from Richard Chang Associates, Inc. Performance Scorecards Measuring The Right Things In The Real World (hardback book) Measuring Organizational Improvement Impact (Practical Guidebook) Every Performance Scorecard is made up of three basic components: Scorecard Summary, Scorecard Glossary, and Scorecard Report. Together, these three components provide a clear line of sight through your organization by displaying the linkage and alignment between individual and workgroup efforts and seeing that customers needs and expectations are met. Understanding the Performance Scorecard deployment process, associated timeline, and primary roles and responsibilities is necessary to successful integration of measures, performance objectives, and improvement plans into your current system. Learning Objectives Upon completion of this session, you will be able to: 1. Discuss the need to collect strategic inputs to guide your workgroup in developing your Performance Scorecard 2. Begin to identify core processes related to key business outcomes within your workgroup, your workgroup s customer segments, and those customers key requirements 3. Create your plan to collect the inputs needed for your scorecard development process NOTE: Some of the terms used in this program may differ from organization to organization, so for ease of reading, Richard Chang Associates, Inc. has chosen to use the following terms throughout these materials. Next to each term are some common alternatives. Organization (Company, Corporation) Employee (Associate) Workgroup (Business Unit, Department, Team) Strategic Goals (Strategic Priorities, Strategic Imperatives, Overarching Goals) Key Results Areas (Critical Success Areas, Workgroup Outcomes) Key Indicators (Measures) 1
2 Introduction To Performance Scorecards (cont.) Agenda Scorecards: The Foundation Of Your Business Performance Management System Measuring Organizational Performance What Is A Performance Scorecard? Scorecard Linkage The Performance Scorecard Management Cycle Performance Scorecard Deployment Process Introduction To SolvNET (Case Study) Performance Scorecard Tiers Phase 1: Collect Scorecard Inputs Creating Vertical Alignment Creating Horizontal Alignment Defining Core Process Chains Identifying Customers Key Requirements Wrap-Up 2
3 MEASURING ORGANIZATIONAL PERFORMANCE Organizations that effectively manage performance through an integrated and aligned Business Performance Management System achieve superior business results. A Business Performance Management System uses scorecards and good measures as a foundation for effective deployment and alignment of plans. The system begins with the organization s strategic vision, mission, core values, and core passions that in turn feed the Strategic Planning Process. These strategic plans measured by a Performance Scorecard then become the foundation to manage the organization s overall performance. By effectively applying the concepts and methods in the Line Of Sight With Performance Scorecards training and application process, you will contribute to the achievement of the right business results. Business Performance Management System Refinements Review, Evaluate, And Improve Business Performance Management System Rewards And Recognition Vision, Mission, Core Values, And Core Passions Organization-Wide Strategic Planning Process Annual Deployment Cycle Workgroup And Individual Performance Management Process Develop Organization-Wide Performance Scorecard Management Cascade Operating Plans, Budget, And Scorecard Cascading Process Foundations For Achieving Business Performance Results Teaming Process Improvement Project Management System And Skills System And Skills System And Skills Leadership Development System And Skills NOTE: Developed by Richard Chang Associates, Inc., the Business Performance Management System helps organizations achieve superior business results. 5
4 WHAT IS A PERFORMANCE SCORECARD? A scorecard is a comprehensive set of balanced business measures linked to business strategies and goals. A single scorecard is used at a specific level of an organization an executive team, a vice president, a manager, or a department to monitor, manage, and improve a specific area of the business. In general, a Performance Scorecard consists of three components: Scorecard Summary lists the measures on a Performance Scorecard for the specific performance category measured. Scorecard Glossary defines the measures listed on the Scorecard Summary. Scorecard Report provides the charts and graphs that reveal historical, projected, and comparative information about the scorecard measures. The three components of scorecards provide consistent information throughout an organization to review, evaluate, and compare performance to targets, competitor s performance levels, and world-class levels. Key Result Areas (KRAs) are critical, must achieve, make-orbreak performance categories for an organization or workgroup. Key Indicators (KIs) are specific measures that help determine how well you are performing in a given KRA. Scorecards are used to monitor trends, predict future business results, identify strengths and weaknesses, and provide feedback on management actions. Scorecard measures, called Key Indicators (KIs), are grouped into categories called Key Result Areas (KRAs). The KRAs define high-level make or break business outcomes that are critical to the stakeholders of the organization. KRAs are based on business objectives, strategies, desired outcomes, and business direction. (KRAs are also known as Critical Success Areas.) KIs provide feedback on collective progress toward the KRAs. (KIs are also known as measures.) 9
5 THE PERFORMANCE SCORECARD MANAGEMENT CYCLE At this point, you have probably begun to understand that scorecards can help you address your measurement concerns and provide you with the line of sight you need. The Performance Scorecard Management Cycle, illustrated in the figure below, defines a simple six-phase approach to guide you through steps for building, linking, and refining scorecards.! Collect Scorecard Inputs " Create Your Scorecard # Cultivate Your Scorecard $ Cascade Your Scorecard % Connect Your Scorecard & Confirm Your Scorecard From these phases, you can produce and deploy linked scorecards. Such scorecards will provide results-oriented feedback that enables your managers and workgroups to focus time, attention, and resources toward improved results. Performance Scorecards Pages xxi xxviii 16
6 PHASE 1: COLLECT SCORECARD INPUTS In the first phase of the Performance Scorecard Management Cycle, you gather inputs for your scorecard from your organization s strategic goals and senior-level measures/business objectives. Also, you identify your workgroup s outcomes, core work processes, and customers key requirements. As you move through the scorecard development process, this information will become the framework for your scorecard development. This ensures your scorecard measures will match your organization s strategic aims, your customers requirements, and your workgroup s business objectives. Line Of Sight Road Map Phase 6: Confirm 1. Assessment (for validation) 2. Scorecard improvement process (for relevance) Phase 1: Collect 1. Top-level vision, mission, goals (for alignment) 2. Core processes (for linkage) 3. Customers requirements (for targets) Phase 2: Create 1. Scorecard Summary (for improved line of sight) 2. Action items (for start-up) Phase 5: Connect 1. Individual Performance Plans (for focus) 2. Individual Scorecards (for feedback and continuous improvement) Phase 3: Cultivate 1. Scorecard Glossary (for clarification) 2. Scorecard Reports (for understanding and action) Performance Scorecards Page 33 Phase 4: Cascade 1. Cascade plan (for deployment) 2. Cascaded scorecards (for drill-down) 25
7 DEFINING CORE PROCESS CHAINS 2. Core processes By charting your core processes, you will identify your core customers, suppliers, inputs, and outputs. You can chart the customer-supplier chain from external suppliers through internal suppliers, value-added processes, and internal customers to the ultimate external customers. Within your workgroup, there are likely to be many chains that contribute to the outputs you deliver to your customers. A simple illustration of the overall relationship looks like this. Customer-Supplier Chain (Value-Added Process) Requirements Requirements Supplier Inputs Producer Outputs Customer Requirements Feedback Feedback Core process chains convert supplier inputs to useful outputs for customers. Measuring Organizational Improvement Impact Pages Performance Scorecards Page Your scorecard must provide you with indications of how well your core process chains are performing. Identify your four to eight core process chains by answering the following four questions. 1. What are the major outputs (products and/or services) your workgroup produces? 2. What are the major activities of your workgroup? 3. How would you describe your workgroup s primary purpose in three or four words? 4. Who are your key customers? Examples of core process chains at various organizational levels include: Installing new office equipment Designing a new product Managing customers complaints and feedback Processing a customer order Producing a monthly report 28
8 IDENTIFYING CUSTOMERS KEY REQUIREMENTS A key requirement is a characteristic of your delivered output that is most important to your customer. 3. Customers requirements Generally, customer requirements fall into some of these key areas: SAMPLE KEY REQUIREMENTS Timeliness Cost Accuracy Functionality Responsiveness Follow-through Quantity Thoroughness Dimension Yield Price Availability This sample list of key requirements is useful for brainstorming and defining key customer requirements. Use these sample key requirement areas to help jump start your discussions to define specific customer requirements for your workgroup. Over time, as you get more specific requirements based on customer feedback, your measures, targets, and ability to manage with your scorecard will improve. Defining Key Requirements First, determine each of the key requirements for your workgroup s core customers. Consider whether your workgroup received customer feedback recently to answer three key questions. 1. What does your customer need and expect from you? 2. What does your customer do with your work outputs? 3. Do gaps exist between what you provide and what your customer needs and expects? 30
9 WORKGROUP-LEVEL OVERVIEW Personal Action Plan Key learnings: I need to contact and involve the following: Name How When The specific action steps I will carry out on the job include: What When The specific assignments to be completed before the next session are: 34
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