Performance measures
can be used to evaluate the efficiency of an individual, a group, or even an entire organization using data collection and
... [Show More] analytics.
Critical Success Factors
The important things an entity must do to be successful, such as quality measures, customer service, or efficiency.
The goals a company must reach in order to consider itself successful
Key Performance Indicator (KPI)
- is a performance measurement that organizations use to quantify their level of success.
- follow "SMART" criteria, which is an acronym for specific, measurable, attainable, relevant, and time-bound
- Organizations will spend considerable management time and attention on monitoring
performance dashboard
DISPLAYs key performance indicators using VISUAL REPRESENTATION such as charts and graphs
- can show trends between KPIs that represent how an organization has performed historically.
- allow managers and decision makers to easily SEE WEATHER the organization is MEETING GOALS or IMPROVING in many different areas.
- are especially useful when it is necessary to display the specific charts, graphs, and data that are integral to making a certain decision.
Advantage of KPIs
- Educate management on company performance
- Can be used as a TOOL ACROSS an ENTIRE ORGANIZATION
-DATA driven results make it easier to QUANTIFY PERFORMANCE
- If used over time, can create an INTERNAL BENCHMARKING system
KPI- DISADVANTAGE
-can be EXPENSIVE and TIME-CONSUMING to set up and use
-REQUIRES FREQUENT, even ON-GOING, MAINTENANCE and MONITORING
-small changes in KPIs may be viewed as meaningful, but may not be statistically significant
- Results are often only rough guide rather than a concrete measurement
-ONCE DESIGNED and SET UP, DIFFICULT to CHANGE
BALANCED SCORECARD
An approach using multiple measures to evaluate performance, including financial measures, and the non-financial measures of customers, internal business processes, and learning and growth.
- purpose is to include in a company's goals some objectives that may not affect the company's current financial performance but do affect the company's long-term performance.
- useful for organizations to determine how successful they are in various categories
- successful balanced scorecard should REFLECT the COMPANY's STRATEGY
ADVANTAGES of balanced scorecard
- Improves ORGANIZATION ALIGNMENT
- IMPROVEs internal and external COMMUNICATION
- LINKS company operations with its STRATEGY
- Emphasizes strategy and organizational results
DISADVANTAGES of balanced scorecard
- Requires time and effort to establish a meaningful scorecard
- Does NOT ILLUSTRATE a FULL PICTURE of the COMPANY PERFORMANCE, particularly financial data
- Sometimes DIFFICULT to MAINTAIN MOMENTUM
- REQUIRES a WIDE CROSS-SECTION of the organization DEPARTMENTS in DEVELOPING the SYSTEM
- May not encourage desired behavior changes
Balanced scorecard - Financial
The financial measures on a balanced scorecard might include such items as OPERATING INCOME, revenue growth, revenue from new products, gross margin percentage, cost reductions, cash, ECONOMIC VALUE ADDED (EVA), and RETURN ON INVESTMENT (ROI)*.
Operating Income
Earnings before Interest and Taxes.
Economic Value Added (EVA)
Net income (after taxes) earned in excess of the amount of net income required to earn the company's cost of capital.
Return on Investment (ROI)
The ratio of income earned on the investment to the investment made to earn that income.
Balanced scorecard - Customer
The customer measures on a balanced scorecard might include such items as market share, customer retention percentage, response time, delivery performance, defects, lead time, CUSTOMER SATISFACTION*, and the number of customer complaints.
Customer satisfaction
A measure of the extent to which customers are satisfied with the products and related services they received from a supplier.
balanced scorecard- internal business process
The BUSINESS PROCESS measures on a balanced scorecard might include such items as manufacturing or technological capability, new products or services, new product development times, number of new patents, defect rate, yield, average time to manufacture orders, setup time, manufacturing downtime, time taken to repair defective products, and CYCLE TIME, which is the amount of time between the receipt of a customer order and the shipment of that order.
Business process
A sequence of logically related and time based work activities to provide a specific output for a customer.
Cycle time
The total elapsed time to move a unit of work from the beginning to the end of a physical process, as defined by the producer and the customer.
Balance scorecard - Innovation & learning
The learning and growth measures on a balanced scorecard might include such items as employee skills, organizational learning, industry leadership, employee satisfaction scores, employee turnover rates, percentage of processes with advanced controls, percentage of employee suggestions implemented, and percentage of employee compensation based on individual and team incentives.
strategy map
a diagram documenting the primary strategic goals being pursued by an organization
VARIANCE
= ACTUAL PERFORMANCE - TARGET PERFORMANCE
- positive - Reflects the extent to which the company exceeded the goals set.
- negative - indicates that the performance fell short of the target measurement.
Net Promoter Score
A management tool designed to collect data indicating the relative loyalty of customers and their WILLINGNESS TO RECOMMEND a company's products or services.
= PROMOTERS - DETRACTORS
Promoter
A category of customer used in the calculation of the Net Promoter Score that indicates a LOYAL and ENTHUSIASTIC CUSTOMER.
- 9-10
Passive
A category of customer used in the calculation of the Net Promoter Score that indicates an UNENTHUSIASTIC and SATISFIED but APATHETIC CUSTOMER.
- SCORE 7-8
Detractor
A category of customer used in the calculation of the Net Promoter Score that indicates an UNHAPPY CUSTOMER.
- SCORE OF 0-6
ADVANTAGES OF NPS
- Creates an easily understood metric for customer perceptions
- Holds employees accountable for their treatment of individual customers
-Allows companies to benchmark against industry leaders
- Relatively low maintenance if deployed electronically
DISADVANTAGES of NPS
- Does not provide in-depth customer perception data
- Requires customers who are willing to respond to the question
- Some argue the 11-point scale is not as predictive as 7-point scale
- Some argue it fails to predict loyalty behaviors
- Can be difficult to capture the precise area of dissatisfaction [Show Less]