The 7 Deadly Sins of Operational Performance Measurement

1. The 7 Deadly Sins of Operational Performance Measurement Barry Leahy

2. Introduction • Introduction to performance measurement • The 7 Deadly Sins by Michael Hammer - How to avoid them! • How to solve these issues • Methods of measuring operational performance • Conclusion

3. Operational Performance Measurement • Measurement of key operations performed by a business/organisation • Manufacturing, customer service, marketing and procurement • Focus on key operations that are critical to your business • Measures include balanced scorecards, key performance indicators and digital dashboards

4. 7 Deadly Sins • 1 -Vanity • Do not use measures that will inevitably make you or the organisation look good! • E.g. Company measuring delivery promise date success – should measure performance against customer request date – Bar set too low

5. 7 Deadly Sins • 2 - Provincialism • Do not let organisational boundaries and concerns dictate performance metrics • Do not measure too narrowly • Different organisational functions having conflicting metrics

6. 7 Deadly Sins • 3 –Narcissism • Do not Only measuring from own point of view • Include both internal and external factors • E.g. Do not measure how much stock is in a warehouse, measure how much is on the shelf.

7. 7 Deadly Sins • 4 – Laziness • Give adequate thought to choosing the right metrics • Only measure what is strategic and important; not what is easy to measure

8. 7 Deadly Sins • 5 – Pettiness • Focus on what is important to an organisation • Look at the broader picture

9. 7 Deadly Sins • 6 – Inanity • Do not implement metrics without giving thought to the consequences • People seek to improve metrics they are told are important, even if they have counter-productive consequences • Again – Think about what is important to the business!

10. 7 Deadly Sins • 7 – Frivolity • Not being serious about measurement in the first place • Arguing about metrics instead of taking them to heart • Finding excuses for poor performance instead of finding the root of the problem

11. How to solve these issues • Deciding what to measure • Focus on processes that create customer value across the whole organisation • Determine the drivers of enterprise results

12. How to solve these issues • Measuring the right way • Precision • Overhead • Accuracy • Robustness

13. How to solve these issues • Using Metrics Systematically • Metrics implemented must have individuals responsible and accountable for them • The point of measurement is not to measure, but to improve

14. How to solve these issues • Creating a measurement-friendly environment • Embed a good perception of metrics within the culture of your organisation • Personal role modelling • Reward • Commitment

15. Balanced Scorecard • Performance management approach that focuses on various overall performance indicators • Major units throughout an organisation often establishes its own scorecard • Four perspectives • Financial perspective • Customer perspective • Internal process perspective • Innovation and learning perspective

16. Balanced Scorecard

17. Key Performance Indicators • Measures or metrics used to help an organization define and evaluate how successful it is • Mainly involves result area, overall goal, measures and target - Result area - Customers - Goal - Reduce payroll customers complaints - Measure - Customer complaints - Target - 12% of sales

18. Digital Dashboards • Dashboards provide users with one single interface through which they can view information • Used by management to view KPIs that measure the performance of their company using specified metrics • Real time visualisation tools of critical business indicators that help in decision making

19. Digital Dashboards

20. Conclusion • Only measure aspects that are critical to your business • Take performance measurement seriously and use it to improve the overall performance of your organisation • Set realistic goals and reward targets met successfully. This will boost morale and encourage a welcome environment for implementing metrics.