CHAPTER 12 OUTLINE – MEASUREMENT AND KNOWLEDGE MANAGEMENT FOR PERFORMANCE

EXCELLENCE

I. First

Value and scope of performance measurement

-If you dont measure results,you can't tell success from failures

Organizations need good measures for 3 reasons:

1. To lead the organization in a particular direction
2.to manage the resources needed to travel in this direction by evaluating the
effectiveness of the action plan
3.to operate the process that make the organization work and continously improve.

*measurements should derive from business needs and strategy

*effective information systems provide the right information to the right people at the
right time.

Balanced Scorecard = the purpose is to translate strategy into measures that uniquely
communicate your vision to the organization

4 perspective of scorecards:
*financial perspective
*internal perspective
*customer perspective
*innovation and learning perspective

Lagging Measures(outcomes)= tell what has happened

Leading Measures(performance drivers)=predict what will happen

II. Second

PERFORMANCE MEASURMENT IN THE

BALDRIGE CRITERIA

PRODUCT MEASURES
- Measures and indicators of product and service performance that have strong
correlation with customer satisfaction and decisions relative to future purchases.

PROCESS MEASURES
-Measures and indicators of process effectiveness and efficiency

CUSTOMER-FOCUSED MEASURES
-Relevant measures and indicators of an organization's performance as viewed by
customers
 WORKFORCE-FOCUSED MEASURES
- How well the organization has created and maintained a productive, engaging, and
caring work environment.

LEADERSHIP AND GOVERNANCE MEASURES

-Practice and demonstrate high standards of overall can conduct.

FINANCIAL AND MARKET MEASURES

-Financial measures are generally tracked by senior leadership to gauge overall
organizational performance
-Market performance indicators could include market share, measures of business
growth and alike

ANALYTICS AND BIG DATA

-Analytics is the use of data, to help managers gain improved insight about their
business operations and make better, fact-based decisions.
-Analytics professionals have coined the term "big data" to refer to massive amounts
of business data from wide variety of sources.

III. Third

DESIGNING EFFECTIVE PERFORMANCE MEASUREMENT SYSTEMS

Purposes of a performance measurement system:
 Providing a perspective of the past, present and future
 Identifying trends and progress
 Facilitating understanding of cause and effect relationship
 Providing direction and support for continuous improvement
 Allowing performance comparison to benchmarks

Selecting Performance Measures

Two fundamental mistakes:
1. Not measuring key characteristics critical to organizational performance or
customer behavior
2. Taking irrelevant or inappropriate measurements

Linking Measures to Strategy

IV. Fourth

Aligning Strategic and Process-Level Measurements

- is vital to a high performing organization, and can be viewed as an approach for
strategy deployment.
Enterprise Resource Planning (ERP)
- systems are software packages that integrate organizational information systems
and provide an infrastracture for managing information across the interprise.

3 Most Prominent Vendors for ERP are: SAP, Oracle and People-Soft.

Auditing the Measurement System

An audit should examine whether the measures are aligned with the organization's
goals whether the right balance between leading and lagging measures and between
operational ajd strategic measures has been struck, and whether any gaps, blind
spots, or potential conflicts exist in the measurement system.