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Performance Measurement Systems
This package has been created as a practical guide to developing performance measurements in any industry. It has been divided into the following 6 sections: 1. Introduction 2. Measurement as a management support system 3. What is a balanced scorecard? 4. Developing a customized balanced scorecard 5. Target setting and quantifying performance for incentive programs 6. New performance management system and the performance improvement process

Performance Measurement Systems: 1.0 Introduction
There are 3 charts in this section Chart 1.1: This is a general introductory chart which has been tailored for measurements to demonstrate that a balanced scorecard is an integral part of business planning and strategy This chart emphasizes that strategy implementation must be top-down and a good measurement system is a powerful tool for achieving this. It also shows how a balanced scorecard decomposes as it permeates downwards from the top - making company objectives actionable at all levels An important chart which demonstrates that the balanced scorecard is a powerful approach for identifying areas of improvement and inadequacies in support processes. A balanced scorecard should be a prelude to a business re-design or a process re-engineering

Chart 1.2:

Chart 1.3:

1.1 The balanced scorecard is an integral part of business planning and strategy

Vision

Mission

Business Planning and Strategy

Goals and Objectives

Balanced Scorecard

Corporate Measurement and Reporting System

1.2 A performance measurement system is a tool for implementing strategic planning and achieving continuous improvement at all levels of an organization

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n S t , Go ra t e g als, y S Obj h a ect r i n ive g s

Balanced Scorecard

Business Units

Measures send signals into the organization as to what is important. To send the right signal measure the right things, i.e., the value drivers In order for a measurement process to serve as a force for improvement, it must be understood and accepted by its users. This is achieved by involving the users in it's development

Me as ur em en tem ys t S

sio

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Vi

Business Operating Systems

Department and Work Centers

1.3 A balanced scorecard identifies performance improvement opportunities/targets and highlights the need for business redesign or enterprise processes Customer Expectations
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Vision
Balanced Scorecard
A L I G N E D O P P O R T U N I T I E S
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This is a balanced set of measures based on your vision and your understanding of what creates 'ideal customer value' Some projects align with the requirements of the customer value drivers, others do not. The latter represent true opportunities for performance improvement and change Inadequacies in the business support systems and the enabling infrastructure are identified

Improvement Projects

Support Processes

Business Processes
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Human Resources Information Technology

Opportunities

Aligned

Performance Measurement Systems: 2.0 Measurement as a management support system This section shows that measures provide the necessary information for management decision making and as such are a natural and inherent part of management process Chart 2.1: Outline the Bindra continuous improvement cycle. This puts the Deming/Shewhart cycle in more contemporary terms

Chart 2.2 - 2.4:

These charts demonstrate that a good performance measurement system is an important information system for management. It is important to measure total business operating systems (BOS) to avoid suboptimization

Chart 2.5:

This is an example of an input/output exercise to determine the customer value drivers. These are labeled "Requirements"

2.1 First, let us consider why measures are important
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NT IN UOU O

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What do measures do for us Tell us where we need improvement Help prioritize where to devote energies and resources Motivate Let us know we...
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