Drivers-based performance management

Service Background

The global economic outlook presents risks of recession, price pressures, and aggressive monetary policies affecting growth. Performance management tools may not be scalable or adequate to manage businesses that constantly change.

Leadership has relied heavily on financial performance to drive performance improvements, and create initiatives as well as visibility from this indicators.

However, senior management believes that existing indicators and processes can be improved, to tilt more towards trend indicators vs. performance indicators, as well as refine performance targets more appropriately against industry benchmarks.

We believe that portfolio of improvement initiatives may not be adequately aligned with the priority indicators and require a new approach.

In this context, our proposal of services support renewing performance and business management process, as well as executing a review of its improvement initiatives and the governance model to manage the overall process.

Service OBJECTIVE

Improve performance management through the optimization of the indicator base and its use for decision making, and a review and prioritization of current initiatives.

• Ensure that performance indicators accurately and specifically reflect the actual performance of critical business processes to achieve business vision

• Ensure that performance reports provide adequate information

• Obtain an advanced concept for the prioritization and management of current initiatives

Service SCOPE

Indicators:

Strategic, operational and external indicators used in

• Strategic and operational planning,

• Budgeting & projections and performance reports.

Performance reporting:

• Internal performance reports

Improvement initiatives:

• Prioritization of initiatives

• Allocation of funds to initiatives

• Management of initiatives

Service APPROACH

Our EPM model enables and facilitates the measurement of performance against strategic and operational objectives

DRIVER FOUNDATION

The Fundamental driver foundation is key to connecting and aligning operations to strategic objectives.

COMMON PROBLEMS

KPI-OPI Dimensions

Dashboards vs. Scorecards

Dashboards are used to measure performance, while Scorecards make it easy to chart progress toward goals.

Dashboards are like car dashboards – they help operational specialists and supervisors act on events that occur.

Scorecards are like school newsletters – designed to support executives and managers in charting progress toward goals, and reviewing performance with subordinates.

STRATEX METHODOLOGY

StratEx is a term used in Kaplan and Norton's contributions to Strategic Maps to represent strategic expenditures, i.e. funds designated to carry out the strategy, and are allocated at the strategy translation stage. Committing funds to StratEx is similar to budgeting for research and development. Both categories represent expenses in short-term stocks that are expected to perform medium to long-term, and are separate from operating expenses, OpEx and CapEx. How is a StratEx made?

With StratEx, initiatives are prioritized and funds are allocated based on strategic and financial valuations.

StratEx describes the process of identification assessment

and prioritization of initiatives, as well as the distribution of the volume of strategic investment as part of strategic planning.

The objective is the execution of the investment strategy, which is consistent with the corporate strategy or the strategies of the units, as well as the distribution of the volume of investment to the initiatives that generate growth, increase the value of the company and generate competitive advantages.

As best practice, uniform criteria are established across the company or methods for the strategic and financial valuation of initiatives as well as a uniform approach to the elaboration of recommendations for action for strategic investments.

SERVICE STAGES

INDICATOR STAGE

Evaluate the current structure of the indicators:

• Number and use of indicators

• Functional areas

• Levels of indicators (KPI – OPI)

Map the current structure of indicators

Prepare and execute a strategic workshop with senior management to review and prioritize current indicators

Run gap analysis, including a comparison of the current map with best practices, to identify opportunities for improvement

Develop a "Quick wins" agenda

Design the objective framework, taking care of the necessary adjustments regarding the life cycle of the national company / the national market

Select relevant KPIs and refine them according to the priority list

Support in the implementation of "Quick wins"

Mapping the objective structure of KPIs

Define a medium- and long-term action plan (including the KPI breakdown plan into OPIs)

REPORTING STAGE

Evaluate the current performance reporting process, focusing on:

• Flow of information (processes, people, systems)

• Reporting format (use of "Scorecards" and/or "Dashboards")

• Frequency of reporting

• Content of the reports

Develop gap analysis, including comparison with best practices, to identify

opportunities for improvement

Develop a "Quick wins" agenda

Support in the implementation of "Quick wins"

Design of a high-level process for performance reporting, focusing on:

• Systems

• Tools and formats (Scorecards, Dashboards)

• Organization (people, frequency, etc.)

Develop a medium- and long-term action plan

INITIATIVE STAGE

Evaluate the current process of prioritizing and managing improvement initiatives

Strategically assess current initiatives using quantitative and qualitative criteria

Financially assess current initiatives using financial KPIs (summarized in groups and weighted)

Assign initiatives to a category with respect to their valuation.

Confirm and present the results of the assessment

Prepare a summary of the financial situation and strategic situation of each of the initiatives,

based on assessments of real qualitative and quantitative criteria

Prioritize initiatives in an executive workshop

Prepare recommendations for the allocation of funds to initiatives

Design an operating model for the management of high-level initiatives / projects, taking care of the requirements of the organization

SERVICE DELIVERABLES

Diagnosis

• Diagnosis of the current situation and a gap analysis to practical improvements focused on the indicators and processes of performance reporting and planning of initiatives

• List of identified "Quick wins" and long-term improvements

"Quick wins"

• Prioritized "Quick wins"

• Short-term action plan for the implementation of "Quick wins"

• Confirmation of implemented "Quick wins"

High-level design

• Target map of indicators (KPI level)

• Map of the high-level performance reporting process

• Prioritized initiatives and recommendations

• Operational model of the management of high-level initiatives / projects

• Medium and long-term improvement plan