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.
- 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, ..)
- 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.
- 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.
- 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?
- 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.
- 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
Patrick Jaulent
President Club Europe Balanced Scorecard
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