Assess Performance: IMPACT Primer

Transcription

1 Assess Performance: IMPACT Primer Enabling Enterprise

2 What is IMPACT Primer? Published by SPRING Singapore 1 Fusionopolis Walk, #01-02 South Tower, Solaris Singapore Tel: Fax: SPRING Singapore 2013 All rights reserved. No part of this publication should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying or otherwise, without prior permission of the copyright holders. The IMPACT (Integrated Management of Productivity Activities) Primer is a tool to assess productivity performance. It is important to assess productivity performance because it allows me to understand: Where I am now current performance Where I would like to be targeted performance What I should do to reach my target identify areas for improvement and track progress Whilst every effort has been made to ensure that the information contained herein is comprehensive and accurate, SPRING Singapore will not accept any liability for omissions and errors. 1

3 Profit: Traditional short-term focus of business Traditionally, profit is the key indicator of performance. Value added: Sustainable long-term focus of business It is more sustainable for a company to focus on value added, instead of just profit. Sales - Wages - Other Operating costs = Profit Value added is the value created by the company and its employees. To increase profit, a company can increase sales or reduce wages and other operating costs. Value adding process However, if wages are reduced, it will be hard to attract and retain good employees. $ to suppliers $ from customers The company will suffer in the long term. It is the difference between what a customer pays to the company (sales) and what the company pays to its external suppliers (other operating costs). Sales - Other Operating Costs = Profit + Wages To increase value added, a company can increase sales or reduce other operating costs. When value added increases, both profit and wages can increase over time. Employees will be motivated to work to achieve the company s goals. = + Increase Increase Profit Increase Wages 2 3

4 Key Productivity Indicators People are an important resource to any company, and their potential should be maximised. To find out how efficient and effective employees are in generating value, the company can measure value added per employee. WhY should I use IMPACT Primer? At the same time, the company can measure profit per employee and wages per employee. Benefits = + Increase Value added per Employee Indicator Value added per employee (Labour productivity) Increase Profit per Employee Increase Wages per Employee What it measures Effectiveness and efficiency of employees in creating value for customers and the company Measure effectiveness of the company s productivity management effort Improve key productivity levers Recommend areas for improvement Track and monitor improvement Profit per employee Effectiveness and efficiency of employees in generating net returns for the company How productive is my company and what are the areas I can improve? Wages per employee Attractiveness of average salary to the employee 4 5

5 HOW do I use IMPACT Primer? There are 2 parts to the IMPACT Primer. Part 1: Qualitative Assessment Assess productivity management effort and productivity levers Rate each of the following statements on a scale of 0 to 3, based on the company s operations. Tabulate the score at the end of each section. 0 = not at all 1 = to a small extent 2 = to some extent 3 = to a great extent Managing Productivity Improvement 1. There is someone in charge of productivity improvement. 2. Productivity targets are set. 3. Productivity targets are communicated to employees. 4. There is a plan to improve productivity 5. There is a system to measure productivity performance. 6. Employees are rewarded for achieving productivity targets. Part 1 Qualitative assessment Shows how well the company is doing in managing productivity improvement and the key productivity levers Part 2 Quantitative assessment Shows the company s productivity performance based on 3 key indicators 7. Sales targets are set. Complete both parts of the IMPACT Primer to perform a basic assessment of productivity performance. A Microsoft Excel version of the IMPACT Primer is available online for download at It allows comparison of the company s performance against the average performance of the industry. Sales 8. There is a marketing strategy to achieve sales targets. 9. New market segments are constantly identified. 10. Product mix or service offering is reviewed regularly. 11. Product and service quality are emphasised. 6 7

6 Evaluation of scores Processes 12. Suppliers are reviewed to source for best price, quality and delivery. 13. Action is taken to reduce costs. 14. Business processes are reviewed for continuous improvement. Fill in the table below with the scores obtained from the assessment. My score (A) Highest possible score (B) % (A B) Example % 15. Manpower is deployed according to sales fluctuation (eg. flexi work arrangement, use of part-timers). Managing Productivity Improvement 18 Manpower 16. Employees are trained to carry out their jobs effectively. 17. A productivity mindset is instilled in employees. Sales 15 Processes Technology is used to improve work processes. Fixed Assets 19. There are adequate machines and equipment in place. 20. Space is used effectively. Manpower 9 Fixed Assets 9 Less than 30%: Weak. Take immediate corrective action. Between 30% and 70%: Average. Continue to improve. More than 70%: Strong. Sustain achievement and seek continuous improvement. 8 9

7 Part 2: Quantitative Assessment Assess productivity performance using the 3 indicators Calculate value added per employee to measure the productivity of the company. Fill in the blanks with the information required. per Employee = = No. of Employees $ = - Sales Other Operating Costs = $ = $ - $ = $ I can calculate value added per employee for the past 3 years, and analyse how my company has performed over time. Calculate profit per employee and wages per employee to provide a more comprehensive view of the company s performance. /Employee Profit = + /Employee Wages /Employee 10 11

8 Overall Assessment and Recommendations Analyse the findings from Part 1 and Part 2. With the results, consider taking further actions to: Improve areas that the company has scored less than 30% in Part 1. Seek consultation if there is decreasing value added per employee over the years when compared against other companies. WHERE can I get HELP? I can approach the advisors at any of the SME Centres for more detailed analysis and consultation. I can also go to for information on productivity tools and how other companies have improved their productivity. You can access the IMPACT Primer tool online at or approach advisors for assistance at any of the SME Centres. SME Centre@ASME Association of Small and Medium Enterprises T: E: enquiries@smecentre-asme.sg W: SME Centre@SCCCI Singapore Chinese Chamber of Commerce and Industry T: E: enquiry@smecentre-sccci.sg W: SME Centre@SICCI Singapore Indian Chamber of Commerce and Industry T: E: sme@smecentre-sicci.sg W: SME Centre@SMCCI Singapore Malay Chamber of Commerce and Industry T: E: gadvisory@smecentre-smcci.sg W: SME Centre@SMF Singapore Manufacturing Federation T: E: query@smecentre-smf.sg W: 12

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