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Risk management and risk premium

In the waning hours of 2009, the risk was still bad news: the Pope jostled by a faithful during the Mass of Christmas, The foiled attack on the flight Amsterdam / Detroit yesterday and the water leak on an American Airlines flight New-York/Paris that led the plane to an emergency landing.

reappear Behold what Nassim Nicholas Taleb, a philosopher of science of chance, a former trader and expert in mathematics, called the Black Swan, these improbable events that mark our lives. The unpredictability is not only the chance and perhaps we should add, in our societies, the mission of "risk-manager" that of "Managing the Unexpected."

Given these recent developments, steps are being taken to control future risk: the papal entourage said goodbye protection procedures, Barack Obama promises enhanced security measures and indignant at the special case failure to take into account the intelligence alert known but untapped could almost say a "leading indicator" unsupervised.

I can not help but make a comparison between the decisions taken following these events and the strike dabistes this month December demanding a reassessment of their risk premium. One side tries to limit the risk and the other accepts it, the more it mints.

Demand for these workers arrested me somewhat, I realized that they require the establishment of procedures to enhance their safety even higher wages to compensate them for increased vigilance in the exercise of their profession. This is not the case since the risk is clearly accepted by those employees.

I could even read, following the revaluation of the risk premium, a committed journalist described the decision as "advancing social ! The risk premium has become a "social progress"! Moreover, one might wonder about the reaction of these same employees if tomorrow, by the establishment of ad hoc procedures, they are guaranteed the "zero risk" in exchange for eliminating the risk premium ... Undoubtedly this would cause conflict with a new claim as a return to an environment of risk!

My intention is nothing but provocative reading a stop July 27, 2009 the State Council for the least surprised me. The Upper House has considered a technician of the environment commissioned under water and forests, assigned to the Directorate of Research and Studies of the National Game and Wildlife, is entitled to payment the risk premium although it is not exposed in his professional practice at any risk!
A risk premium paid to an employee who is no risk!

we trivialize the meaning of risk?

what about the article " negotiate her starting salary in times of crisis " published in the Journal Du Net in September 2009 and issuing the following advice: "Your profile is sought? Know request a risk premium to quit your current job. " In this council, it was perhaps better to express a notion of hiring bonus or why not "golden hello"!

I recently had the opportunity to discuss the topic of risk management with the manager of a large group of industrial equipment. He told me that his organization in the very notion of risk premium was unthinkable because it was not about to risk it was an employee in exchange for a premium. He illustrated his point by telling me that once a warden located abroad had requested permission to pay a risk premium for moving a part in a sensitive country said. His first impulse was then to say that if the proposed assignment posed a risk, it had to cancel it.

*****

I take this end of the year to send my best wishes for success and performance for 2010 but also to thank all those and all those who follow me on this blog that DAF recorded since it went online on 1 October 2009, 4620 visits. Thank you again and hope to see many more in 2010.

What Is The Sharpest Chefs Knife

two cases illustrative of the approach of good operating practices

Following numerous requests, Patrick and Philip Jaulent Mularski propose to illustrate the approach developed in the article good practice performance management by two examples.

One taken in the field of Health Safety at Work, the other taken in the field of Quality.

example in the field of Health Safety

The "Health and Safety at Work" is the obligation of the employer to protect the physical and mental health of its ; employees at work. It is therefore to address the relationship between the state of health of a person and his work.

To set the scene for the demo: a simple definition that encompasses three aspects of health:

- Monitoring the health, well-being, employability,

- Evaluation and prevention of occupational risks, improved working conditions,

- Emergency Organization.

Without being exhaustive, it is important not to ignore the influences of situations and events arising outside the workplace. There are, without doubt, a relationship between job stress factors encountered in the workplace and outside the workplace.

The process of implementation of the approach is consistent with that developed in the article good practice performance management including:

- Identify risks and opportunities prevention,

- Identification of actions to develop improved prevention,

- Defining expected results these actions,

- Monitoring the results of actions,

- Getting no place measures to improve the Health and Safety performance.

Indicators Level 1: Compliance

This level focuses on compliance with legislative and regulatory framework by requiring, for example, minimum compliance with hygiene and security.

Leading indicators of this level could be:

- # Of meetings with the HSC,

- # of shares of health and prevention of risks (collective protection, IPR, ...) developed to meet regulatory requirements,

- # of shares corrective to avoid accidents,

- # of health documents (R) distributed

-% of employees whose jobs require regular medical assessment and specific

-% of employees working for example on platforms at sea, valued for their ability to work through periodic medical examinations,

- # discount brought to the single mandatory risk prevention,

- # controls / protection installed (computer screen equipment, noise detector, HACCP controls for food),

- # of employees trained in health policy.

Level Indicators 2: Improving

This level introduces the "culture of improvement. It is not enough that the Health and Safety Policy is written is published, it must also be understood, applied and produce results.

- Percentage of employees with knowledge of the health policy or to link with a level indicator "# of health documents distributed with outlets on an appropriate initiative,

- Rate of targets set by the Health and Safety Policy,

- Effectiveness of training courses on health policy, for example utilization of personal protective equipment (PPE),

- Number of employees trained at the OHS (Labour Lifeguard First Aid trained in first aid ).

Indicators Level 3: Lifelong Learning

With this level of maturity, the indicators are defined locally where employees work. Employees are empowered to determine where and how improvements can be implemented .. The employees are both perpetrators and beneficiaries of the policy of Health Safety performance indicators can be developed eg

- Percentage of employees with responsibilities related to health,

- Number of health training conducted,

-% of jobs for which assessments of health risks are realized,

-% reduction in the duration of exposure to hazardous activities (eg reducing exposure to noise, vibration, or chemicals),

- # of people arrested for smoking after anti-tobacco campaign (ditto on alcohol),

- Rate of employees involved in assessments of non-compulsory health.

Philippe Mularski

Example in the field of Quality

- The quality assurance manager (QAM) of the company WWW decides to place suggestion boxes points to "strategic" business (Near the coffee machine at the entrance of the canteen ..). The objective is to strengthen the participation of as many quality employees.

The QAR fixed a target of 10 ideas per month. Naturally, these 10 ideas will fall months do not all alone without a plan of action. The IAS uses the internal newsletter, the intranet to give momentum to his initiative.

indicator showing the maturity level 1 could be:

# of new ideas per month.

After several months of running, the target of 10 new ideas per month is reached.

The QAR determines that the organization is mature enough to move to level 2

The QAR decides to change the initial indicator. It considers that it is indeed nice to have new ideas but it is better to implement some. It changes the basic indicator (without too much change) in:

# of new ideas implemented.

As before the QAR fixed performance targets and identify action plans to achieve them.

It sets and 10 new ideas per month with 3 ideas implemented. After several months of running and using proper action plan (the name ideas are implemented in the newsletter) system developed by the QAR to motivate employees on quality is satisfactory (but begins to s' of breath).

The QAR determines that the company is mature WWW to move to Level 3

The QAR decides to change the previous indicator. He finds that to implement ideas is good, but it's better if they achieve tangible results for the company.

He decided to change the indicator in # of new ideas implemented that allowed (for example) to reduce the processing time of a customer complaint (Class A) 2, or specialists SMED , # of new ideas implemented that allowed a change of tools within X minutes.

Naturally, all this will not happen without a plan of action. The QAR decides (in consultation with DG) to grant a bonus whose value depends on the gain.

Finally, all this is not very complicated. Again, common sense might say farmer.

What should we learn?

- Use indicators that reflect the maturity level of the organization.

- Do not try to copy what is always in the books, the Internet, or what the organization does well over there.

Patrick Jaulent
President of Balanced Scorecard Europe

Why Is My Oovoo And Skype Not Working

Good Practices performance management by Patrick JAULENT

Patrick Jaulent us the honor of the premiere we deliver text of his next paper on good practices in performance management.

The purpose is interesting and could be summarized as "show me your dashboard and tell you the maturity level of your business."

Finding

bodies are different, then why try to format their control system using the same model dashboard with the same indicators. The tools, techniques, indicators can be effective for the organization X and not suitable for the organization Y.

For example, the indicator "# Of meetings held between the finance and business management / # scheduled meetings" may be acceptable to Company A when these two functions have a hard time understanding, so that it will not fit the organization B preferred that the indicator "Rate of meetings held between the finance and sales management having uncorked a joint initiative."

Similarly, the organization C, the latter indicator may deem as not sufficiently evolved. This organization prefers the indicator "# of meetings held between the finance and sales management having uncorked on joint initiatives with the aim to reduce DSO (turnaround time customer)."

For the organization D, the choice will be the indicator "# of meetings between management and financial management leading to business improvement of VAS (Value-added indicator)" acting on such terms and conditions (revised allocation policy discounts, etc.)..

Thus we see that there is a link to the choice of indicators with the level of maturity of the organization. Why then try to build the same dashboard as its neighbor, apart from a willingness to look (at maturity level equivalent). For the general direction of the organization A, the initiative for these meetings, it is not to generate "réunionnite acute" but to put a table around the finance function and marketing function to that 'they work collaboratively on common goals.

Although various models offer 5 levels to assess the maturity level of organizations (Prosci's Change Management Maturity Model, NASCIO Enterprise Architecture Maturity Model, CMMI, Risk Maturity Model, ...) the solution that we recommend, following my return to experience, based on 3 levels:

Level 1 - Compliance: performance indicators that make up this advanced level will be associated with compliance, in other words, the Does organization has implemented a management system to ensure compliance requirements as stipulated by a plethora of external guidelines (IFRS, SOX, LSF, ..) and internal (quality plan ,..). This level introduces the "culture of compliance". It is equivalent to levels 1 to 2 of maturity models cited. Level 1 shows the tactical level of the organization.

Level 2 - Improved: performance indicators that make up the advanced level are related to the effectiveness of management systems of the organization. This level is intended to inform management on areas of weakness in the organization and determine where efforts should be conducted. This level introduces the "culture of improvement." It is equivalent to 2 to 3 levels of maturity models cited. Level 2 shows the functional level of the organization.

Level 3 - Lifelong learning: At this level, learning and continuous improvement are the goals for all parts of the organization. With this level of maturity, the teams set their own performance indicators developed to facilitate the learning process and continuous improvement. This level therefore requires "accountability" of actors to determine where and how improvements can be made. This level also introduces the "culture of lifelong learning." It is equivalent to levels 4-5 maturity models cited. Level 3 shows the strategic level of the organization.

But whatever the level (1, 2 or 3) the performance indicators developed will be chosen and will evolve based on the greatest potential threats to the organization .

Why use performance indicators developed on 3 levels of maturity?

We have repeatedly stated, outcome indicators (lagging indicator) are needed to communicate on past performance: that of the past month, quarter past, half past the previous year. But they can not control, anticipate performance as can be leading indicators (leading indicator).

Indeed, leading indicators:
- Allow you to identify what is important to improve performance.
- Provide rapid feedback on what is true: they improve the visibility of efforts to improve performance.
- Allow a connection with incentive programs by identifying efforts (and not just the result).
- are early warnings of the vitality of a process, thus promoting preventive action corrective action (see proactive control).
- Provide a framework for analysis under certain conditions: equivalent level of maturity, the same performance indicators advanced.

Characteristics of a good performance indicator.

To be effective, it is important that a performance indicator is:
- Linked to the objectives of the organization on which actors are involved and are eventually evaluated
- Easy to use (collection ,..), therefore understood and adopted by the actors who influence
- Reliable on the level of performance
- A controlled costs (Costs of equipment, technology, personnel, collection time, ..)

In addition to these general characteristics, other characteristics must be demonstrated, such as:
- The understanding of the indicator hierarchy
- The ability to provide information that can guide future action or a warning about the potential drift of certain processes.

Characteristics of a good performance indicator advanced

In addition to the above features, an advanced performance indicator should:
- relate to activities considered important for future performance
- may be subject to an intervention or influence by the group work whose performance is measured,
- refer to something that can be improved,
- provide a clear indication on how to improve the performance of the indicator.

When using performance indicators developed, it is important to analyze Periodically relations or indicator (s) Advanced (s) and delayed the outcome indicator. Statistical analysis can be a way to verify the correlation between these indicators.

To help you select the best performance indicators developed in view of the characteristics presented, we invite you to ask the following questions on all performance indicators developed:
- Covers- t they the biggest threats to the organization's performance?
- Do they cover the elements (Systems / processes / activities ..) of the organization offering opportunities for improvement (availability of resources to achieve improvement)?
- Do they provide information to guide action to improve performance?
- Are they under the control of a working group that influences the performance?
- Are these goals?

How many performance indicators developed to have a reasonable coverage of the 3 levels of maturity?

My experience shows a selection of approximately 10 performance indicators developed (to be linked to outcome indicators, about 20 indicators in total) should provide coverage of the 3 levels of maturity but still manageable. The segmentation of the 10 leading indicators is of course depending on the level of maturity of the organization.

example:
- With a low level of maturity, the organization may decide to place the 10 indicators only on level 1 to ensure the minimum "culture of compliance"
- With a level of maturity higher, the organization may decide to position 5 indicators on the level 1 and 5 indicators on level 2.,
- At maturity level even higher, the organization may select two indicators for level 1, 3 indicators for level 2, and 5 indicators for Level 3.

The process of selecting performance indicators developed is not one-off exercise. Even if progress is achieved through selective and appropriate use of indicators, it is necessary to review periodically to maintain their effectiveness and adapt to the changing environment.

This principle is the same for a reasonable coverage of corporate risk: assessing the level of maturity in risk management through, for example, the Risk Maturity Model model, then selection of the 10 leading indicators risk position on all 3 levels, depending on the level of the organization on this subject.

The incentive and recognition

Many public and private incentives to use the principles (Bonuses, gifts, changes ..) to encourage better performance.

To improve motivation towards these incentives are advised to encourage the performance indicators developed and not only indicators. The use of these early may also help to improve the perceived fairness of the incentive mechanism and increase the transparency of relations between different actors (relationships between those who set the incentive and those who perceive it).

Patrick Jaulent
President Club Europe Balanced Scorecard

Does Tricare Cover Pain And Suffering

Social: why do it simple when you can make it complicated?

When I drove my company, I always wondered why the calculation and payment of payroll taxes for self-employed (self-employed, managers majority of SARL) resulted from rules too complex to understand so that it could be simple.

Judge for yourself:

If employees pay social contributions in real time on a monthly, self-employed pay them in two parts:

• a first time on the basis of income of the penultimate year of operation,

• a second time on the basis of real income for the year under review, the latter calculation being made at During the fourth quarter of next year.

And this complexity is increasing for the creator of activity, failing to meet the requirements of a self-contractor, must pay membership dues during the first two years of activity on a Flat rate dummy then give rise to a recalculation based on actual earnings from work in the 2nd year in respect of the first year of operation and in 3rd year as regards the second year of operation.

You follow? No?

I assure you, even accountants do not respond to this complexity with the help of software dedicated to this issue.

The issues are however not least

- The difficulty of assessing the "fair value" of payroll taxes makes difficult

• assessment of its cost and therefore the possibility of passing those costs in selling prices,

• assessment of payroll the past year and therefore the valuation of provisions to include in its income statement for the year .

- The complex mode of payment results in negative changes in cash, forcing the management of cash.

- The new contractor will be paying payroll taxes even though he has not yet received its first revenues.

- In case of cessation of activity, the Contractor will pay in addition to his last contribution, the adjustments to the past period.

It seems so much simpler and fairer to introduce a system of returns monthly or quarterly, as the VAT, which would bring the calculation and payment of payroll taxes for the majority manager of limited liability company, a percentage of the monies and for the self-employed, a percentage of gross margin or the value added.

The Economic Modernisation Act in December 2008 came in that simplify the procedures for the provision on self-entrepreneurs, it is desirable that these simplifications have to all employed persons.

What do you think?

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The gross margin performance: feedback

The gross margin is a key indicator in all businesses, but it is a financial indicator, result and therefore an indicator of the past that, reading Anglo-Saxon , is called a "lagging indicator" . Action on the gross margin required to identify operational indicators influencing the performance of gross margin that is still called the action indicators or leading indicators or "leading indicators" having a causal hard with the objective (translated by indicator delayed). The leading indicator allows the anticipation of a trend that is confirmed by the lagging indicator of outcome.

Outcome indicator or indicators of actions, must still ensure the validity and reliability of measurement of indicators used. The validity expresses the fact that a measure of success to realize what it is supposed to represent and express the reliability that this measure should not be flawed.

Finally, and foremost, it is necessary to ensure and test the causal links leading indicators the outcome indicator and output indicator to the strategic goal. The results indicator assesses he pertinently the objective? Remembering that A goal is associated A and A only lagging indicator.

The determination of gross margin is the ratio of consumption to turnover. Cost accounting allows an even thinner margin by identifying the family of items. Choice of indicators, validity, reliability, causality, it must therefore first analyze the flows other than those from buying and selling and influencing the gross margin to identify famous leading indicators.

This analysis amounts to rationalize the gap between consumption as shown in the accounts and the sum of weighted average costs (CMP) of items sold. This is still to identify and value all logistics flows entering the consumer and compare this recovery in consumption in accounting.

This control is essential to perform regular or it is clear that it is not systematically put in place because if the problem seems simple to state, its resolution will quickly become complex.

Yet, issues of control are of great importance:

- Identify the flow involved in consumption (the samples, the provision for commercial the scrapping, replacement SAV levies Various known unknown shrink, etc ....)

- Allow the choice of performance indicators to be used on these flows, and then intervene on sources internal logistics performance loss at the Gross margin, ie to identify the leading indicators related to the lagging indicator gross margin.

- To be assured of the validity and reliability of selected indicators and their causal link with outcome indicator,

- Understand the internal causes of fluctuation in gross margin (leading indicators). It is easier to act on them than on marketing actions, or revisions of sale or on purchase price negotiations with suppliers.

gap approximation

But when one tries to be comprehensive in the operations to be taken into account to make this comparison, it is clear that there is always a gap reconciliation and that it may, depending on the complexity of the organization or the number of items managed represent a significant value nonetheless. And besides, even when the overall gap leads to an acceptable value, it can actually hide important variations in the analysis section, the negative differences generated by some sections being offset by positive variances in other articles.

I have several times been brought to practice this type of approximation in the companies using different ERP distribution. This analysis was very time consuming to reach an acceptable gap in absolute terms but each time the findings identifying particular failures impacting performance margin.

I thought I was just there on specific cases, the comment left by Michael Heck, manager of a software firm, in response to my post on performance evaluation Business indicated that this issue was in fact a recurring theme in many societies and that application had been developed within the IT services company to respond.

causes trouble this approximation are of 3 types:

One factor computer

Every logistical operation must be matched by computer operation which will affect the case or not, the calculation of CMP section. Now all logistical situations can be envisaged during the initial setup of the ERP. It is then observed over time inflation in the creation of computer operations involved in the movement of an article and / or its recovery and thereby face of such a choice, it creates a risk of error in their use by those involved.

Conversely, for computer processing of certain logistics flows uncommon and not considered during the implementation of ERP is a great temptation for users to use existing IT operations but not for originally for the treatment of such flows.

Inflation in the creation of computer operations, lack of control of authorizations for their use, not provided logistic flows to the origin and use of alternative procedures, if these events are not checked and corrected inevitably lead to errors in the computation of the CMP section and thus in the calculation of gross margin.

Finally, special attention should be focused on ensuring the proper management of computer dates of operation in all processing of the information system. This point seems to be obvious, yet it is still too often a source of dysfunction.

A human factor

The human factor is also creator of deviations by the error (mistake, error reference, packaging error, wrong date, etc.. ...) or by the disregard or ignorance of certain procedures for processing transactions to follow.

One factor management

Finally management methods are used generating errors or deviations if business rules were not properly defined and integrated Information System.
Thus, differences in values between the order price and the prices charged are, bookkeeping, be turned into stock, and thus participate in the calculation of the CMP, but only for the share of items remaining in inventory at receipt of the invoice. Conversely, in the rapprochement of the valuation of logistics flows in accounting should be added to the enhancement of logistics flow differences of values for items consumed.

The achievement of such control appears a little complex but it allows the Director of Finance, besides having perfect knowledge of all logistics flows, offering the possibility of steering the margin indicators valid, reliable and demonstrating their causal links to the gross margin.

What do you think?

White Discharge After Ovulation

In search of language performance

After a series of posts a bit technical, I had the urge to write one, lighter and tinged with humor.

I was in my car and the CEO of a company's CAC 40 was invited on the chain BFM radio Asked about the business of his company, he had this response: "we are recording negative growth less than our competitors' !!!!!

This answer was not without recalling a remark that I read recently in the 2009 annual report of another listed company: "if the first half ended with negative organic growth, the second half showed a nice turn of events ". Turnaround from a negative growth! Should understand that the second half showed a positive internal decay?

managerial rhetoric would seek it at all costs a language of performance? That is to say that language in which every event must be presented positively.

We've all read or heard this: "approximation we have just concluded with Company X is the result of an ambitious strategy that will allow us, leaning on our brands to become a major player market. This alliance creates value, was an opportunity to take our business to changing .... ".

You will notice a Décroissance becomes a "negative growth" a "strategy" is still "ambitious" the "brands" are inevitably "prestigious" a "actor" is necessarily 'inevitable' , the "opportunities" are obviously "to seize" and "business" undoubtedly "changing" .

was added systematically to the words and what Roland Barthes called adjectives of reinvigoration.

This sanitized language, composed of boilerplate phrases, is growing again when the need arises to soften the brutality of some life events of the company.

Thus, "takeover" is a "rapprochement" , we no longer speak of "creation of profit" but "value creation" a "restructuring" becomes a "focus on the heart of business" that we also anglicized as "refocusing on the core business" . a "plan termination" fades in "reenginering social" or "backup plan for employment" to and not more than "employees looking for work ' but of "talent search for new challenges" .

The language is still evolving when functions or professions need to change their image, we no longer speak of bosses but "entrepreneurs create jobs" the "management" becomes the "management" , the "shareholders" become "investors" the "advisor" is called "coach" and "advocate" is presented as "Board" .

The speeches of Presidents in the introduction to corporate annual reports differ little in their language and are often very conformist.

- The results are still poor, most of the time, justified by the environment and very rarely by an error of assessment or a lack of anticipation. Well be implicated "the difficult economic environment" , "increased raw material prices" , "environment Monetary unstable ", etc.. ...

- Positive results, however, are always assigned to the proper management of the group and its successful strategy. And it is still alluded to the environment it is only to put a little more dynamic values and the performance achieved by the organization.

Excerpts from annual reports of listed companies: (I will not mention names)

- "Another year of growth rapidly despite an unfavorable "X Company's 2003 Annual Report,

- " While growth in sales slowed in 2008, it remained a good (...) despite currency headwinds and commodity prices. (...) This performance reflects both the resilience of the group and management quality "X Company 2008 Annual Report.

Some companies still evolving towards greater creativity

- look at the 2008 Annual Report CEGID (and here I quote his name): "Crisis? A return to the entrepreneurial agility ", the term is found,

- go to the blog of Michel Edouard Leclerc " What I MEL ", the pun is very nice.

In this regard, Jeanne Bordeau, founder of the Institute for Quality of Expression, recommends that managers "find the world of color and words that characterize Business ».

The IBM was perfectly understood by practicing self-mockery. In its advertisement entitled bingo bla-bla " it rightly pins the many technical terms and other anglicisms too regularly used in business, and let's face it, by us first.

What do you think?

IBM bingo blah Bars TV

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The operation of the customer base as leverage performance

satisfaction Who says loyalty is often thought, but the correlation between these two concepts is far from established. Many companies see a customer satisfaction rate of over 90% but registers a retention rate of only just over 50%.

A customer can be satisfied, this does not mean it will become true. The customer is in fact quite normal to be satisfied, because if the satisfaction is the result of a perception, faithfulness, it is the result of a behavior.

But it is the loyalty that determines the performance of the company: the customer is a loyal costumer is also a potential prescriber is still a customer less sensitive to price changes and will tend to buy more. The customer is at the heart of corporate strategy should therefore identify its fidelity, it fit a differentiated communication. And this is even more true in difficult economic circumstances in which a defensive marketing is still cheaper than a marketing offensive.

ID? Differentiated communication? It is therefore more necessary than ever to learn to segment its customer base to identify different customer behaviors and thereby enable the establishment of policies tailored to specific marketing and strategic business objectives.

Business Strategy share declined in differentiated marketing, segmentation and identification of indicators, we're back on the ground of the method BSC (Balanced Scorecard).

Suppose that the objective Business is "increase sales by x%" , objective news to the various entities of the company to identify how they will contribute to its realization.

marketing decides to "revise the segmentation of the customer base" approach that can be either a goal or a marketing plan. One can easily imagine a causal relationship between the two objectives: "review the segmentation of the customer base" contributes to "increase sales by x%" .

Indeed, analysis of segmenting the customer base can help guide actions to be taken as the number of new customers acquired, the turnover per segment to reach existing customers, the increase retention rates, regaining lost customers ...

It should also prioritize these actions, and perhaps to give some order to define the proper allocation of resources ( human, logistic, financial) tailored to each client and the action potential of each customer segment.

Thus marketing considers that the review of customer segmentation is fully on the strategic objective of the company. For this CFO will review it in budget period, to define the probability of occurrence of potential sales by customer class.

Segmentation (RFM identify - Frequency - Amount) is the most effective to normalize a database client. This is a method of analyzing the customer portfolio based on three criteria : A review (when the last customer's purchase), frequency (number of purchases during the period) and amount (amount of purchases made by the customer over the period analyzed).

In this method the client portfolio is segmented in 4 periods (quarter, semester, year) called P-1, P-2 P-3, P-4 and which is assigned a response binary 1 or 0 depending on whether the customer has placed an order for the period (1) or remained inactive (0) over the period. Thus, a customer who placed the order only on the periods P-1 and P-3 will be assigned binary code: 1010, the having ordered the four periods will be assigned code: 1111.

thus determined 16 customer segments that can be grouped in 5 macro-segments to simplify and synthesize the communication of analysis results:

1111 = Very good customer

1110 = Very good customer

1101 = Good customer

1100 = Good customer

1101 = Good customer

1010 = Customer cyclic

1001 = Customer cyclic

1000 = New customer

0111 = Good customer

0110 = Customer cyclic

0101 = Customer cyclic

0100 = lost Customer

0011 = lost Customer

0010 = Client lost

0001 = lost Customer

0000 = Customer inactive

These 16 segments and identify customers with similar behavior and which can be associated, in a column in a spreadsheet, indicators such as the number of customers, sales, the average shopping basket, the frequency purchase, etc.. ...

And dragging this history with each new period, we can recalculate a new segmentation thereby determining a new indicator: the rate of conversion of each customer segment that is to say "new clients" that have become "good" clients the "good customers" who have become "very good" clients the "very good" clients lost and so on.

This shows the power of information we can draw from its customer base from the intersection of different customer segments with the selected indicators:

- in hindsight: knowledge of customer behavior based on their segment,

- a vision of the future: anticipation of future customer behavior by adding a probability of behavior.

And from these two visions, it becomes possible to adapt the commercial offers to each customer segment based on strategic choices defined by the head of the company.

Such an analysis presupposes a certain integrity of customer data base, from experience, this is not always realized, it should nevertheless not be an obstacle to its implementation and use of this wonderful performance lever.

In a BSC methodology for assessing the achievement of the objective, then it is best to define the two types of key performance indicators, outcome indicator (lagging indicator) we choose among those cited above and action indicators (Leading indicators) that will strategic choices of the customer defined policy.

On this last point I invite you to read the article by Patrick Jaulent "How to link long-term strategic objectives and daily operational activities? "
What do you think?

Make A Home Made Coin

How do you assess the performance of your business?

What do you use to evaluate the performance of your business?

- The results?

- The PER of the action?

- Customer satisfaction?

- The quality of products?

- Employee satisfaction?

The correct answer? There is not is a matter of choice. Must still make them, share them and stick!

I recently attended a seminar for chief financial officers and controllers on the theme of the implementation process of a Balanced Scorecard (BSC). If all participants were aware and convinced of the necessity of implementing such an approach, hence their presence, there was consensus to share a difficulty in some branches of membership in this process.

[The Balanced Scorecard can be defined as a tool to decline the strategic objectives into a set of operational actions and performance indicators. It plays a key role in operational management.]

This difficulty stems from membership in certain practices:

- A strategy deliberately not spread to the company

- a strategy often referred to in times of budgeting only

- A lack of alignment in the goals

- A focus on the past and the short-term

strategy deliberately not spread to the company

Fear of loss of confidentiality of the strategy was mentioned by some branches to restrict its communication to a few insiders.

It is not yet in the process of performance management to reveal the very sensitive areas of strategy, communication can be sanitized and disseminated in the underlying objectives. In all cases the strategy should be known by those involved in its implementation if it can find to do.

A strategy often mentioned during budget preparation only.

Unfortunately, we all see that the budget has little to do with strategy, it is actually, in most cases a year, very time allocation resources and management of the compromise between what the operational and proposed that ownership imposes.

Jack Welch, former chairman of General Electric sums it up thus: "people work for a month on their tables and their budget submissions for senior management to announce that given the economic environment and competitive situation the best they can do is 2. Branch said while their shareholders expect 4. We scored 3 in the budget and everyone goes home happy. " The purpose is not provocative but so full of reality.

In fact, regardless of the consensual aspect of the budget, the strategy is not always translated into targets on the budget and when it does, it is not often translated into financial and nonfinancial indicators linked by a causal link allowing the rationalization.

A lack of alignment in the goals

indicators exist in the company, each department makes it a point of honor to develop its own and to evaluate its performance according to criteria and priorities that are not necessarily in connection with the strategic objectives.

This brings us to develop a real Encyclopedia of indicators, sometimes jealously guarded by Devers itself and therefore not shared between departments or in checked their reliability until presented in "exclusive" to the next steering committee. Indicators that can be requested again by management to another service to ensure data consistency. And it happens more time to produce and control numbers and to analyze when there is time available, more time in analysis than in anticipation.

It reminds me that I had about read somewhere "the act of measuring does not create more value than the fact of being weighed does not lose weight! "

For the point is there, value creation is the common objective of any business. But the value is created only by the proper execution of policy decisions. Strategy without action is not a strategy. It is therefore introduce into the execution of the strategy measures of value creation and to communicate to the operational objectives in relation to the strategy.

Focusing on the past and the short-term

meetings to present the monthly report are part of the agenda of any CFO. All financial indicators are reviewed. Variances are analyzed and discussed in relation to monthly N-1, the cumulative N-1, NO monthly budget, budget accumulated N, "remains to be done" with respect to N "is to" N-1. From the second half we also introduces deviations from the "re-estimated." And if there's time for this meeting one or two non-financial indicators of the current period will be provided to indicate the trend of the next monthly reporting, and will there be shown to "advance".

Communication rationalization strategy, strategic alignment, consistency and anticipation are so many areas of improvement. Ie moving from a culture of reporting, accounting vision performance to that of the scoreboard oriented toward the future vision for future action.

In this cultural evolution CFO has an opportunity to take to strengthen its role as partner management. What do you think?

To go further on this subject I invite you to browse the blog Jaulent Patrick, President of Balanced Sorecard Europe

German Big Boob Velba

The payroll function is also an issue of performance for the balance of control DAF

We do not say it enough but in French companies 40% of pay slips contain errors.

Result of inflationary evolution of regulation, each year they are averaging almost 150 new texts that are directly impacted the content and calculation of the earnings statement.

result on the complexity of the calculation or application of certain measures: Reduction Fillon Act TEPA, today ... If everyone masters the calculation of the CSG and CRDS, I do not understand yet why do so on the plate as in the calculation rules have been devised to as complex: a plate of 97% of gross salary plus employers' contributions to pension and provident additional complementary taxed at a rate of 8% but not tax-deductible up to 2.4%!

The payroll is often seen in companies with a certain indifference or as an ancillary activity with no real added value. She manages, however, one of the first business expenses, payroll, and is also the conduit for communicating with employees as recurring monthly newsletter delivery. Finally, we must not forget that a pay slip is also a legal document of the employee's rights systematically produced during industrial tribunal litigation.

Financially, the stakes can be very substantial as a result of inspections conducted by URSSAF. The balance control URSSAF 2007 concluded in an adjustment to businesses of nearly 800 million in absolute value, which splits into 550 million in adjustments in favor of URSSAF and corrections to the 250 million profit Employers .

And do not forget that since 2008 URSSAF has become responsible for the control of contributions due for unemployment insurance. The impact unemployment insurance adjustments performed by URSSAF is estimated at more than 100 million euros.

While these figures are justified by the increasing complexity of regulation but also in a lack of appreciation and anticipation of the financial consequences of inaccurate payroll.

The correct evaluation of social avoids the payment of a charge later unfunded in terms of results, not expected in terms of cash but above plus, in addition to penalties, withholding of salary that the company has no employees but also reflected the advisory fee in case of dispute. Note in passing that since the Finance Act 2008, these penalties are not deductible for tax purposes.

The correct evaluation of the charges can also avoid paying too much, which happens more often than one might think of 250 million euros in 2007!

The payroll should be considered one of the levers of business performance , a lever for value creation, issue of HRD as well as finance departments. This is not the case today.

What do you think?

What Did Men Do In The 1800s

URSSAF Contributor 2007

Reading the balance of control URSSAF Contributor 2007 (published June 2008) conducted by Dirr (Department of Regulatory Affairs, Recovery and Service) is particularly instructive to identify the irregularities most frequently in business.

It appears that the mechanism very complex calculation of the "reduction Fillon is the source of the majority of adjustments . We can expect the same effect when the checks will focus on law enforcement TEPA.

At the time of writing this post, the balance of 2008 is not yet available on the ACOSS website, it seemed interesting to me however summarize the highlights and findings of inspections made in 2007 by URSSAF.

For those interested by reading all 59 pages of the report, it is available on the following link: Assessment of control URSSAF 2007

In 2007, 112,000 companies have been the subject of a control plate, or over 5% of total enterprises and 16% of contributions liquidated controllable.

Consolidating data over 3 years revealed that over 16% of companies were inspected representing over 58% of employees.

The corresponding adjustments have exceeded 795 million euros, 542 million of positive adjustments and 253 million of negative adjustments

The number of inspections resulting in a recovery from 54 % in 2005 to 58% in 2008, which confirms the authors of the report, the targeting of the contributors to risks.

analysis by employment size confirms that plans to control URSSAF remain focused on larger companies. Thus the rate of corporate control over 200 employees is over 23% while the overall rate of control is 5.20%.

Furthermore, employers with more than 200 employees represent only 2.30% of the number of checks, but over 38% of total adjustments.

analysis by broad business shows that the rate of recovery increases with the size of the company

Thus, firms employing more than 200 employees control rate of over 23% and a recovery nearly 93%.

analysis of the distribution of adjustments reveals that adjustment comes mainly from the reintegration of the contribution base "compensation not subject to contributions (38.54%) and application error "measures derogating for employment" (34%).

Regarding 'salaries are not subject to contribution " four items of legislation are of generating irregularities in 2007. These are:

• of "hidden work with or without verbalization" (25.4%),
• "benefits in kind (23.61%), the a share of" benefits nature "from 39% in 2006 to 24% in 2007. This significant reduction confirms the trend observed since 2004, particularly in large companies, linked to the implementation of regulation orders in December 2002.
• "employees and undeclared wages without intent to defraud" (20.95%),
• of "gratuities, bonuses and allowances" (13%).

Regarding the "exceptional measures for employment" the amount of adjustments in absolute value reached 346 million euros in 2007, up 34% of all adjustments and 27% of the total adjustments made.

measures "related to the reduction of charges on low wages" in producing the highest amount of irregularities (71%). From this type of irregularity is steadily increasing it represented respectively 50% and 67% in 2005 and 2006. The major deficiency concerns in 2007, adjustments related to reductions in contributions called "Fillon. This irregularity is related to both the amounts claimed or redeemed businesses consequence of a high complexity in the implementation of this incentive scheme for recruitment.

analysis indicates that the meaning of adjustments:

• adjustments biggest positive in amount, are on the "compensation not subject to contribution" (52%), the "exceptional measures for employment" (17%), the "business expense deduction or not justified" (12%),
• the negative adjustments, those in favor of the employer, are a good indicator of the degree of complexity of the legislation. As in previous years, "the derogations for the use of" represent the largest share of income adjustments.

All adjustments payable increased by 80%. This increase is mainly due to a significant increase in reimbursements related to reductions in contributions called "Fillon.

Behavioral Reports For Prek

DAF You said 2.0? The performance of

The current crisis situation encourages companies to increase efforts for improvement.

Optimization of cash, cash which ranks more than ever at the heart of business.

optimization process control, it should now to act rather than react .
vocabulary evolves, we talk steering proactive performance indicators it is now appropriate to maximize optimize, control, enhance, stimulate ...

Companies that incorporate a process of Balanced Scorecard (BSC) in their system of performance management are now becoming more numerous. The subject of financial performance is constantly addressed and CFO is at the heart of this approach in its implementation.

His area intervention has changed, financially, it is no longer the guarantor of financial reporting or blameless, or spreadsheet engineering producing all kinds of indicators. He became the agent of change, the actor in the translation of performance to an extent Some have come and identify the " DAF 2.0.

The circumstances of the moment leads me to take a careful look at sites such as cadremploi.fr including offers of senior financial positions!

I am amazed that in 10 years the vocabulary of position descriptions of DAF have not really changed. Very few of them refer to a control monitoring performance or establishment of performance indicators or to the establishment of a process to prospective action . To use a vocabulary BSC the main tasks of the DAF specified in the job descriptions evoke more production lagging indicators that leading indicators, suggests that the role of CFO, or his environment, does have not changed.

What do you think?

common example of job description:

Attached (e) the Director General and Member of Executive Committee, your main responsibilities will include:

• Oversee the production of accounts and ensure compliance with accounting and tax
• Provide monthly reporting (IFRS) to the group,
• Analyze the deviation from the budget,
• Animate the budgetary procedure,
• Monitor cash,
• Ensure compliance with standards and procedures of the group,
• Oversee management control,
• Ensure compliance with tax rules and legal
• Etc ... ..