Performance management

and
KPI

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 Agenda

Performance management

Design of the performance management system

Assignment

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 Definition
Performance Management

Strategic management technique to connect

the organization's goals with daily tasks,
objectives, expectations and rewards through
a well-defined process

• (Sparrow & Hilltrop, 1994)

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 Performance management versus
Performance measurement
Performance measurement
Can be defined as the process where performance/corporate
actions is quantified.

Performance management
A management style that sets the framework for improvement in
individual and company performance with a focus on goals that
support the company's strategy.

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 Performance Measurement versus Performance Management

Performance Measurement Performance management

• Objectives based on key success factors - Training
• Measures to discover and uncover - Team work
deviation - Dialogue
• Measures to form an overview of past - Leadership
performance - Attitudes
• Measure to describe potential - Shared vision
• Measure of input - Employee involvement
• Measure of output - Incentives, rewards
- Behaviour

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 Why performance management?

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 Why Performance Management?

 Communicate goals, mission, values and  Provide visual feedback about ongoing
purpose projects
 Improve and coordinate coolaboration in the  Monitors progress, identifying current state
department
 Departments can recieve relevant support
 Visible leadership
-> clear where the focus area is
 Identify and communicate strengths and
opportunities for improvement

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 How performance management?
 In order to achieve results with PM, you have to
change the behavior of your team and in yourself.

 The point of KPIs is to drive corrective actions.

 Start with changing in the thought pattern and

then change the behavior.

 Obtain and visualize information that can be used

in efforts to reduce waste and be coordinated
factors for management and prioritization of effort

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 Focus in Performance Management

• Convert strategy and goals into specific targets

– Knowing what we can do to achieve the objectives

• Visibility of the department's status in relation to the objectives

– How well are we doing compaired to our goal

• Provide facts and data

– Decisions must be based on facts

• Interpret and understand the different situations

– Standards help to determine whether there is a need for action

• Take ownership - It's our problem

– We can not expect others to solve our problems

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 The ABC of Performance management

A Alignement

B Behaviours
Purpose
C Connection

A Actionable
Performance
management Select matric
B Balanced

C Clean, Clear and Consisten

Leading/ A Accountability
sustaining
B Broadcast

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 Design of the Performance system
• Why work with Performance management?
Recognize • What can PM contribution to?
the need for
PM
• Is the KPI system basis for
improvement?
• Are there a direct correlation
between where we acting and Development • Are they present?
Identifying
and • Are they responsive?
where the problems are greatest? improvments
KPIs
• Can we set a goal?
• Are the KPIs dynamic?
• Can we find reasons?
• Does the measurements create • Is it important?
reaction?

Development
Using KPIs of KPI
• Are all KPIs are actively used everyday including
• Can we quickly get an overview of the situation?
forms
in everyday life? • Does it reflect reality?
• Do all employees understand • Is it simple to update?
the KPIs? • Fast readable?
• Is the system dynamic? • Covering it over ”goal, measurement, causes and
action”?

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 Performance Management

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 Performance Management

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 Assignment
In the following video
clip count all the
passes the white team
makes!

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 If we don’t have Performance Management…
... We do not know
how we're doing
according to our ... We do not
... We do not goal know what is
know what's working and
important what is not

... We lack a
tool to
... We do not have a prioritize our
common direction efforts
and goals

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 Design of the Performance system
• Why work with Performance management?
Recognize • What can PM contribution to?
the need for
PM
• Is the KPI system basis for
improvement?
• Are there a direct correlation
between where we acting and Development • Are they present?
Identifying
and • Are they responsive?
where the problems are greatest? improvments
KPIs
• Can we set a goal?
• Are the KPIs dynamic?
• Can we find reasons?
• Does the measurements create • Is it important?
reaction?

Development
Using KPIs of KPI
• Are all KPIs are actively used everyday including
• Can we quickly get an overview of the situation?
forms
in everyday life? • Does it reflect reality?
• Do all employees understand • Is it simple to update?
the KPIs? • Fast readable?
• Is the system dynamic? • Covering it over ”goal, measurement, causes and
action”?

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 Business goals and KPI’s

Business Key Success Key Performance

Objectives Factors (KSFs) Indicators (KPIs)
Determine. Tracked by.

No Injuries Safety LTI, LTIFR, LTISR.

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 Types of KPI’s

• Score KPI: KPI’s act as a means of measuring process progress

• Track KPI: KPI’s is used a strating point for future goals.
• Detect KPI: KPI’s will act as a proactive warning system.
• Improve KPI: KPI’s can promote a continuous improvement culture

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 Identification of the KPI’s
Several approaches

Top-down perspective The bottom-up perspective

• Strategic decomposition • Task driven
• Decomposition operational goals • Specific improvements

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 Identification of the KPI’s

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 Degree of influence

Organization

Department

Employee

Own

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 Process Boundary

The whole
Value stream

A part of the
value stream

One simple
activity

Across
processes

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 Who do we measure

Example: On time delivery to our end customer

introverted goal outgoing goal

correct creation Transportation time
........ ......

Plan Plan

Act Do Act Do

Check Check

Two different roles

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 Time and quantity!

Is the data Reactive or Proactive

Reactive: we get the data when it is too late
Proactive: We get data before it's too late

How often do we get data?

In some processes, we get frequent data and in

large quantities but in other processes, it is directly
opposite the.

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 The
appropriate
level of the KPI

What affects the group's effectiveness?

What is the connection between quality and

effectiveness

Hvad kan årsagerne til dårlig

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 SMARTE
• S - Specific, so that everyone is aware of what is referred to, and what the KPI
concerns
• M - Measurable. The goal must be formulated in measurable terms, so that can be
easily followed up on whether the goal is achieved can also continuously measure the
intervention's results and hold it up against the objective?
• A - Attractive. KPI must be important, interesting and relevant to all?
• R - Realistic. KPI must be realistic, ie the target must be within reach
• T - Time-bound. It must be clear how long one wants to work to achieve this goal
• E - evaluable. It must be clear when and how you want to follow up on the goals.

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 Design of the Performance system
• Why work with Performance management?
Recognize • What can PM contribution to?
the need for
PM
• Is the KPI system basis for
improvement?
• Are there a direct correlation
between where we acting and Development • Are they present?
Identifying
and • Are they responsive?
where the problems are greatest? improvments
KPIs
• Can we set a goal?
• Are the KPIs dynamic?
• Can we find reasons?
• Does the measurements create • Is it important?
reaction?

Development
Using KPIs of KPI
• Are all KPIs are actively used everyday including
• Can we quickly get an overview of the situation?
forms
in everyday life? • Does it reflect reality?
• Do all employees understand • Is it simple to update?
the KPIs? • Fast readable?
• Is the system dynamic? • Covering it over ”goal, measurement, causes and
action”?

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 KPI development
• KPIs should be developed in cooperation with the employees
2-way communication
• What is the reason for the KPI?
• How is the KPI measured?
• Set up action plans with the employees for how the KPI can be achieved

Examples of KPIs;
Customer satisfaction
Employee satisfaction
internal serviceachieved

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 Where it typically goes wrong

• Complexity - too many • Employees who collect data• Lack of use and follow-up
details becomes frustrated around based on the collected data
the lacking usage and the
level of detail

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 KPI overview

There must be a structured design

Easy to form an overview of the areas that
should be focused on

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 Examples of performance management

Focus area

Goal

Measures

Cause

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 01/02/2017 36
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 Fejlårsager i processen
Uge: 5 Team: A

Fejlårsager

Manglende dok. fra rådgiver x x x x

Manglende dok. fra ekstern x
Mgl./forkerte oplysninger i ordren x x x x x x x x x x x x x x x x x x x 32
Mgl./forkert vurdering x x
Sagen er ikke fulgt til døren x x x x
Uoverskuelig sag x x
Kontaktet, hvor vi har lavet fejl x x x
Unødvendige forstyrrelser x x x x x
Manglende kompetence x x x x x x x x x x 36

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 PS nr.

Antal gange årsagen forekommer

Esklaringspunkt Opdateres løbende

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 Design elements

Graphical Methods Aims Grouping / Pareto

 Bar charts  Goals for each event  most times
 spiderweb  Accumulated over the year  Maximum cost
 Line Chart  a final goal  percentage breakdown
 Bubble  A step goal  strategic importance

Timeframe
Data collection and Escalation
 Daily
processing  When do we escalate
 Weekly
 Where the data comes from  Can we escalate
 Monthly
 Are they trustworthy  Reactive / proactive
 Quarterly
 trends  Who should escalate

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 Testing the the KPI

 A good strategy to investigate whether the KPI works by make a hypothesis test
 Apply fictional data and ask the question: what action do we need to do!

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 Design of the Performance system
• Why work with Performance management?
Recognize • What can PM contribution to?
the need for
PM
• Is the KPI system basis for
improvement?
• Are there a direct correlation
between where we acting and Development • Are they present?
Identifying
and • Are they responsive?
where the problems are greatest? improvments
KPIs
• Can we set a goal?
• Are the KPIs dynamic?
• Can we find reasons?
• Does the measurements create • Is it important?
reaction?

Development
Using KPIs of KPI
• Are all KPIs are actively used everyday including
• Can we quickly get an overview of the situation?
forms
in everyday life? • Does it reflect reality?
• Do all employees understand • Is it simple to update?
the KPIs? • Fast readable?
• Is the system dynamic? • Covering it over ”goal, measurement, causes and
action”?

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 "A pig is not fatter by weighing the" ... ..
Measurements provides an overview, but it
is the actions that provide improvements.

Performance management must be closely

linked to actions and therefore we do not
register just for sake of the registrations
but because it will help us to initiate
actions to reduce waste.

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 Design of the Performance system
• Why work with Performance management?
Recognize • What can PM contribution to?
the need for
PM
• Is the KPI system basis for
improvement?
• Are there a direct correlation
between where we acting and Development • Are they present?
Identifying
and • Are they responsive?
where the problems are greatest? improvments
KPIs
• Can we set a goal?
• Are the KPIs dynamic?
• Can we find reasons?
• Does the measurements create • Is it important?
reaction?

Development
Using KPIs of KPI
• Are all KPIs are actively used everyday including
• Can we quickly get an overview of the situation?
forms
in everyday life? • Does it reflect reality?
• Do all employees understand • Is it simple to update?
the KPIs? • Fast readable?
• Is the system dynamic? • Covering it over ”goal, measurement, causes and
action”?

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 The dynamic performance management system

 There should be an ongoing development

 The current focus should be contributing to action
 The goals must constantly be challenging
 The board must show the current focus
 Work on data collection must be reduced

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 Benefits of Performance Management

Better understanding of:

 Goals and progress in achieving these
 Causes of problems experienced in everyday life
 Ongoing actions and why they are launched The greater visibility
faster reaction
Wider and better involvement:
 Finding the causes of waste and work with problem solving

Faster response:
 It will be apparent which problems that arise in daily life
 There will be focus on the issues and to find solutions

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 Performance Management
Kaizen

Cause

Waste analyses, VSM, creativity

And common sense

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 Go intro small group and make a KPI board based on the production lab

Minimum 2 KPI´s

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