Bridge Knowle Workshop - Developing Effective KPIs (Companion Workbook)

http://totallyunrelatedrandomanddebatable
.blogspot.com/
Developing Effective
Key Performance
Indicators
Main Slides Compilation
Kenny Ong
-WORKBOOK-
http://totallyunrelatedrandomanddebatable.blogspot.com

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Role of facilitator Role of
participants
Conduct of subgroup
sessions
1. Ensure participation and
discussion
2. Stimulate and focus idea
exchange
3. Provide structure and set
pace
4. Define objectives and
clarify expectation
5. Not to provide answer to
questions
6. Not to provide vision or
goals
1. Set personal objectives
2. Provide organisational
perspective
3. Actively participate in
discussion
4. Constructively
challenge ideas
5. Encourage others’
participation
6. Accept disagreement
1. Select chairperson /
spokesperson
2. Select issues. Budget time
3. Record undecided issues and
go on
4. Encourage views but be
concise (keep to time)
5. Prepare presentation materials
for group discussion

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Management principles

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Sources of problems in performance appraisal and their
consequences

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Performance Management

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Review performance &
results
- provide feedback
Provide coaching & counselling
Discuss and agree on objectives &
key measures
Prioritise the accountabilities agreed upon and discuss on competencies
required for the job.
Discuss &
agree on standards for performance
Discuss and agree on role accountabilities
 Grievance level
 Absenteeism
 Discipline issue
 Poor workethics
Unclear
ResultsDriven
Low Level of trust & commitment (between team leader and team member)
Procedure
driven
High
Degreeandclarityofjobresults
 High level of employee empowerment
 High employee performance
 High employee satisfaction
 High employee involvement
 Challenging working environment
 Optimum HRM cost structure
High
Visionled
Step 5
Step 4
Step 3
Step 2
Step 1
Performance Contracting Model

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What is Performance Management ?

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What is performance management ?
Performance management is a communication process.
 That helps managers provide a motivating climate that assists their employees develop and
achieve performance expectations.
Its focus is on management process and behaviours rather than record keeping or formal
procedures.
The challenge to Performance Management
Emerging solutions
 Focus on management processes that build a motivating climate
 Reduce reliance on forms and procedures
 Emphasise management skills and continuous process
 Promote self management to achieve excellence
 Use flexible, frequent planning and regular feedback
 Recognise and provide rewards that count

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Performance management approach and methodology
Key factors
Climate Internal culture that nurtures individual performance
Competencies Behaviours and characteristics for superior performance
Managerial styles Manager-employee interaction that fosters efficient and effective perform
Reward and recognition Recognising employee's developmental needs and career progression
Performance management process
3-phase process :-
1. Planning performance
 Identifying expected performance in critical areas (key results)
 Identifying expected competencies required to achieve key results
2. Coaching performance (reinforcement / feedback)
 Tracking and observing performance
 Providing feedback
 Coaching for improvement
 Reinforcing performance that is not on target
3. Reviewing performance
 Assessing actual performance against expectations to
- Identify strengths to build on
- Barriers to overcome
- Assess gaps between actual and expected performance

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Performance management key focus
 Translate company objectives into individual key results / goals for employees
 Focus employee behaviour on key actions that will affect organisational results
 Managers and employees agree on goals and behaviours
 Provide continuous communication and coaching focused on achievement of goals
 Guide employees towards behaviours that drive effective performance
 Discuss opportunities for development and advancement
 Provide a 'climate' that supports superior performance

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The difference between
Performance Management Performance Appraisal
 Performance linked to business
objective
 Performance is planned, motivated and
coached
 Process is emphasised
 Results and competencies are critical
 Process conducted by line management
 Evaluation factors subjectively
identified
 Performance is judged after the fact
 Form is emphasised
 Results or traits are emphasised
 Procedure housed in the Personnel
Department

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Performance Management Model

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Performance Planning

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Job title : District Engineer
Duties and responsibilities of the traditional
job description
If stated as key results then the job must
produce
Control, operate and maintain the District
Distribution system
Ensure uninterrupted supply to consumers in the
district by operating the District Distribution
System
Plan and design the High Voltage System Ensure availability of adequate supply for future
needs of industries in the district by planning and
designing the High Voltage system
Manage major supply projects to customer in the
district
Ensure satisfaction of the major customers in the
district by managing supply and distribution
Supervise all technical staff in the district Ensure high performance and productivity of
technical staff by adopting proper human
resource management methods on selection,
training, coaching, counseling and motivation

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Principal accountabilities
Job title : General Manager, Manufacturing
Key Results Major Supporting Actions Performance
Indicators
1. Achieve
targeted
production
volume
 By monitoring production performance and taking
corrective actions
 By analysing production downtime and introducing
improvements
 By thorough preparation for introduction and
implementation of new models and variants
1. Timely production
targets
2. Productivity ratios
3. Downtime
4. Implementation
schedule
2. Achieve
product
quality
targets
 By reviewing quality performance results and
identifying non conformance and undertaking
corrective actions
 By analysing customer feedback and taking
corrective actions
 By undertaking on-line and off-line continuous
quality improvement programs and activities
 By undertaking education and re-education
programs
1. Quality index
2. Defect occurrence
3. Non-conformance
to established
standards
4. Demerit points
3. Ensure safe
and healthy
operating
environment
 By incorporating safety and health features into
infrastructure design and development
 By creating awareness of safety and health among
employees through programs and campaigns
 By constant monitoring of safety and health
standards through working committees
 By developing and implementing occupational
health programs
1. Accident rate
2. Health standards
3. Operation audit
findings

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Job title : General Manager, Manufacturing
Key Results Major Supporting Actions Performance
Indicators
4. Ensure
competent,
motivated
and
productive
manufacturin
g workforce
 By developing and implementing on-the-job
training
 By developing and promoting effective
communication with employees and union
 By ensuring continuous development and upgrading
of skills
 By providing appropriate recognition and rewards
for high performance
 By promoting teamwork through QCC and 5s
activities
1. Productivity ratios
2. Turnover rate
3. Employee morale
4. Team activities
5. Strikes /
disciplinary
actions
5. Enhance
operating
efficiency
and
productivity
 By ensuring effective and efficient maintenance of
plant, machinery and resources
 By reducing wastage and eliminating pilferage
 By reducing and managing indirect overtime
 By managing utilisation of consumables and
indirecting materials
1. Operating
efficiency
standards
2. Cost per unit
3. Wastages and
losses
6. Timely
execution of
projects
 By undertaking effective planning and provision
of resources
 By monitoring implementation and progress of
projects
 By managing project costs
 By developing effective project teams
1. Timely completion
of projects within
cost allocation

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Personal Accountability Description (Job Description)
Job Title :
Key Results Major Supporting Actions Key
Performance
Indicators
1.
2.
3.

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Personal Accountability Description (Job Description)
Job Title :
Key Results Major Supporting Actions Key
Performance
Indicators
4.
5.
6.

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Sources of critical goals
2 key sources :-
1. The operating plan
Company operating plans Departmental plans Individual
goals
2. Customer expectations
All jobs produce results (either a product or a service) for a 'customer'. Therefore, customer
expectations are important.
Customers may be 'internal' or 'external' and includes clients, vendors, suppliers,
management, other departments, etc.
Why is performance planning ?
 In performance planning, the manager and the employee jointly plan performance objectives
for the coming year
 It addresses both what the employee is to achieve and how it is to be achieved
i.e. the results and the competencies or (behavioural skills) to be demonstrated in
accomplishing those results
Results and competencies are qualitatively different
But
equally important aspects of performance

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Results and competencies
Planning
Review
(Expected)
(Actual)
a. What should be done ?
b. How should it be done ?
Key results (Critical goals)
Jobs typically have 4 - 6 critical goals, which have the greatest impact on the organisation.
Some examples include :-
 Quality
 Customer service
 Revenue
 Productivity

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Why are critical goals important ?
Critical goals are important because they identify clearly what the employee must do to accomplish
the organisation's business objectives this year.
 Critical goals also provide managers and employees with the criteria needed to discuss
performance results objectively
 Clear critical goals prevent surprises during the coaching and performance review phases of the
process. They :-
 Provide in advance an objective, mutually understood and accepted basis for
reviewing and discussing performance results
 Reduce misunderstanding between managers and employees about results they expect
 Specify each employee's role in accomplishing what is important to department goals
and business strategy
 Provide clear performance targets that help employees monitor their progress
Critical for critical goals
 Specific (definite objective and purpose to be achieved)
 Measurable (by definite observation and a certain time one should be able to tell whether
or not it is attained)
 Achievable (conduct 4 training programmes)
 Realistic (Must be within reach of the employees, e.g. to meet stated deadlines, neither
too high nor too low)
 Time phase (per quarter, per year. By end of fiscal year, by 15th
of November)

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Measurable critical goal statements
Clearly written critical goals statements avoid vague phrases like "as soon as possible". "kept to a
minimum", "most of the time", etc. Some examples of specific measurable outcomes are :-
 Conduct 4 training programmes
 Schedule 6 on-site visits
 At 95% accuracy
 To meet written specifications
 Within +/- 10% of budget
 Within 3 days receipt
 To meet stated deadlines
Four types of measures can be considered when writing a critical goal statement :-
Quality  How well the result is produced / performed
Quantity  How much / many of the results are produced or performed
Cost  At what expense the result is produced / performed
Timeliness  When is the result to be produced / performed
The choice of which measure to use is based on what is most relevant to the result. Frequently, more
than one measure is used, but rarely all four.

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Examples of critical goal statements
Some examples of critical goal statements include :-
 Roll out new promotion and have 75% participation within 90 days
 Co-ordinate the location of (business X) to (location Y) in accordance with agreed upon
standards and action plans
 Maintain zero accident rate at the plant for the quarter ending 3 / 31
 Develop a systematic method for calculating proposed salary adjustments by June 1
 Reduce grievances 5% by year end
 Find a new application for (product X) by 12 / 31

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Performance planning worksheet

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Phase I : Performance Planning

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Business Model and Strategy: Setting the Framework for future strategic planning
Market Discipline
Operational Excellence
(low cost producer)
Product Leadership
(best product)
Customer Intimacy
(best total solution)
Market Discipline Analysis
Refer to the three major Customer groups below and how they
usually think about the product/service they ‘buy’:
Customers' Perceptions Of Value
"They are the most innovative"
"Constantly renewing and creative"
"Always on the leading edge"
"A great deal!"
Excellent/attractive price
Minimal acquisition cost and
hassle
Lowest overall cost of
ownership
"A no-hassles firm"
Convenience and speed
Reliable product and
service
"Exactly what I need"
Customized products
Personalized
communications
"They're very responsive"
Preferential service and
flexibility
Recommends what I need
"I'm very loyal to them"
Helps us to be a success
Product Leadership
Operational
Excellence
Customer
Intimacy
1. Rate, on a scale of 1 (lowest) to 10 (highest), the selection priorities
of your main customers and potential customers?
Operational
Excellence
Product
Leadership
Customer
Intimacy
Scale (1 to 10)

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Market Discipline
2. Rate, on a scale of 1 (lowest) to 10 (highest), what scores would best describe
your company and its BUs?
Operational
Excellence
Product
Leadership
Customer
Intimacy
Scale (1 to 10)
(low cost producer)
Product Leadership
(best product)
Customer Intimacy
Operational
Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent
information for all
• Transactional
• 'Once and Done'
Operational
Excellence
• Competitive price
• Error free, reliable
• Fast (on demand)
• Simple
• Responsive
• Consistent
information for all
• Transactional
• 'Once and Done'
Customer Intimacy
• Management by
Fact
• Easy to do
business with
• Have it your way
(customization)
• Market segments
of one
• Proactive, flexible
• Relationship and
consultative
selling
• Cross selling
Customer Intimacy
• Management by
Fact
• Easy to do
business with
• Have it your way
(customization)
• Market segments
of one
• Proactive, flexible
• Relationship and
consultative
selling
• Cross selling
Product Leadership
• New, state of the
art products or
services
• Risk takers
• Meet volatile
customer needs
• Fast concept-to-
counter
• Never satisfied -
obsolete own and
competitors'
products
• Learning
organization
Product Leadership
• New, state of the
art products or
services
• Risk takers
• Meet volatile
customer needs
• Fast concept-to-
counter
• Never satisfied -
obsolete own and
competitors'
products
• Learning
organization

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Market Discipline
Operational
Excellence
1
10
Product
Leadership
1
10
Customer
Intimacy
1
10
3. Combined Ratings
a. Mark down the ratings for customer preference () and ratings for
your company () on the charts.
b. Determine where the biggest gaps are
c. Decide which market discipline you want to focus on for the next five
years
d. Discuss what you need to do to focus and improve on your ratings
(low cost producer)
Product Leadership
(best product)
Customer Intimacy

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Market Discipline
4. Where and how should we focus our internal strategy? How does that impact our
R&D and Product/Service delivery?
•Central authority, low level of empowerment
•High skills at the core of the organization
•Disciplined Teamwork
•Process, product- driven
•Conformance, 'one size fits all' mindset
•Integrated, low cost transaction systems
•The system is the process
•Command and control
•Quality management
Organization,
jobs, skills
Management
systems
Information and
systems
Culture, values,
norms
Product Leadership
•Ad hoc, organic and cellular
•High skills abound in loose-knit structures
•Concept, future-driven
•Experimentation and 'out of the box' mindset
•Person-to-person communications systems
•Technologies enabling cooperation
•Rewarding individuals' innovative capacity
•Risk and exposure management
•Product Life Cycle profitability
Product Leadership
•Ad hoc, organic and cellular
•High skills abound in loose-knit structures
•Concept, future-driven
•Experimentation and 'out of the box' mindset
•Person-to-person communications systems
•Technologies enabling cooperation
•Rewarding individuals' innovative capacity
•Risk and exposure management
•Product Life Cycle profitability
Customer Intimacy
•Empowerment close to point of customer contact
•High skills in the field and front-line
•Customer-driven
•Variation and 'have it your way' mindset
•Strong customer databases, linking internal and
external information
•Strong analytical tools
•Customer equity measures like life time value
•Satisfaction and share management
•Focus on ‘Share of Wallet’
Customer Intimacy
•Empowerment close to point of customer contact
•High skills in the field and front-line
•Customer-driven
•Variation and 'have it your way' mindset
•Strong customer databases, linking internal and
external information
•Strong analytical tools
•Customer equity measures like life time value
•Satisfaction and share management
•Focus on ‘Share of Wallet’
Organization,
jobs, skills
Management
systems
Information and
systems
Culture, values,
norms
Organization,
jobs, skills
Management
systems
Information and
systems
Culture, values,
norms
Organization,
jobs, skills
Management
systems
Information and
systems
Culture, values,
norms

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Market Discipline
• Operational Excellence
• Move know-how from top performing
units to others
• Benchmark against best in class
• Ensure operations training for all
employees
• Use disciplines like TQM for continuous
learning to reduce costs and improve
quality
• Customer Intimacy
• Capture knowledge about customers
• Understand customer needs
• Empower front line employees
• Ensure that everyone knows the
customer
• Make company knowledge available to
customers
• Product Leadership
• Reduce time to market
• Commercialize new products fast
• Ensure that ideas flow
• Reuse what other parts of the company
have already learned
• Ensure there are multiple sources of
funding
5. Based on all the Market Discipline analysis above, discuss some possible
strategies for your company and its Business Units.
(Transfer your answers to a ‘Strategic Options’ list)

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Defining Financial Goals "If we succeed, how will we look to our shareholders?”
Listed below are three common Financial Goals of any organization.
A. Revenue
Growth
This refers to expanding product and service, reaching new customers and
markets, changing product and service mix, and repricing products and
services.
B. Profitability
Growth
This refers to efforts to lower the direct costs of product and services, reduce
indirect costs, and share common resources with other business units.
C. Asset
Utilization
This refers to asset utilization theme, reduce working capital levels, and
better utilization of fixed asset base to increase return on physical assets
D. Stakeholder
Expectations
This refers to managing Stakeholder Expectations across different types of
organizations be it Public Listed, Private, Non-Profit or Government.
Examples include Share Price, ROE, Dividends etc.
1. Define, as many as possible, Factors that impact each financial goal in YOUR organization.
Factors that Impact…
A. Revenue
Growth
B. Profitability
Growth

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C. Asset
Utilization
D. Stakeholder
Expectations

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Matching Financial Measures to Goals
The following list consists of common Financial Measures used by different organizations:
1. Match each of the Financial Measures above to the proper Financial Goal:
Goal Financial Measures
A. Revenue
Growth
E.g. Revenue from New Products
B. Profitability
Growth
E.g. Gross Profit
C. Asset
Utilization
E.g. Cash-to-cash cycle
D. Stakeholder
Expectations
E.g. Share Price
Commonly used Financial Measures
 Total Assets
 Total Assets per employee
 Profits as a % of total assets
 Return on net assets
 Return on total assets
 Revenues/total assets
 Gross Margin
 Net Income
 Profit as a % of sales
 Profit per employee
 Revenue
 Revenue from new products
 Revenue per employee
 Return on Equity (ROE)
 Return on Capital Employed (ROCE)
 Return on Investment (ROI)
 % Revenue from different channel (e.g. DC
vs SP)
 % expenses due to quality defect, TNA,
rework etc
 % operating expenditure to revenue
 Reduction in working capital
 Profit per customer
 % revenue to gain market share vs. %
revenue to replace lost customers
 % of sales from new applications
 Compound Growth Rate
 Dividends
 Market Value
 Share Price
 Shareholder Mix
 Shareholder loyalty
 Cash flow
 Total costs
 Credit rating
 Debt
 Debt to equity
 Times interest earned
 Days sales in receivables
 Days in payables
 Days in inventory
 Inventory turnover ratio
 Cash-to-cash cycle
 % resources shared with other business unit
 ROI time cycle
 % Revenue growth of various markets
 Sales growth in targeted markets/ customer/
region
 Operating Cash Flow
 % of customer income (Share of Wallet)
 Net cost per acquired customer

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Defining Customer Goals "To achieve my vision, how must I look to my customers?”
Listed below are five Core Customer Goals of any organization. These are called Customer
Outcome Goals.
A. Market Share Reflects the proportion of business in a given market (in terms of number of
customers, dollars spent, or unit volume sold) that a company sells
B. Customer
Acquisition
Measures the rate at which company attracts or wins new customers or
businesses
C. Customer
Retention
Tracks the rate at which a company retains or maintains ongoing relationships
with its customers
D. Customer
Satisfaction
Assesses the satisfaction level of customers along specific performance criteria
with the value discipline
E. Customer
Profitability
Measures the net profit of a customer, or a segment, after allowing for the
unique expenses required to support that customer
2. Define, as many as possible, Factors that impact each Customer Outcome Goal in YOUR
organization.
A. Market
Share
B. Customer
Acquisition

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BSC CP Exercise 1
Defining Customer Goals - continued
C. Customer
Retention
D. Customer
Satisfaction
E. Customer
Profitability

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Matching Customer Outcome Measures to Customer Outcome
Goals
The following list consists of common Customer Outcome Measures used by different
organizations:
2. Match each of the Customer Outcome Measures above to the proper Customer Outcome Goal:
Goal Customer Outcome Measures
A. Market Share
B. Customer
Acquisition
C. Customer
Retention
D. Customer
Satisfaction
E. Customer
Profitability
Commonly used Customer Outcome
Measures
 Customer satisfaction
 Customer loyalty
 Market share
 Customer complaints
 Complaints resolved on first contact
 Return rates
 Response time per customer request
 Price relative to competition
 Total cost to customer
 Average duration of customer relationship
 Customers lost
 Customer retention
 Customer acquisition rates
 Percentage of revenue form new customers
 Number of customers
 Annual sales per turnover
 Win rate (sales closed/sales contact)
 Customer visits to the company
 Hours spent with customers
 Marketing cost as a percentage of sales
 Number of ads placed
 Number of proposals made
 Brand recognition
 Response rate
 Number of trade shows attended
 Sales volume
 Share of target customer spending
 Sales per channel
 Average customer size
 Customers per employee
 Customer service expense per customer
 Customer profitability
 Frequency (number of sales transactions)

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BSC IP Exercise 1a – Operational Excellence
What do we need to improve?
The table below shows the linkage between the Focus areas of the Value Discipline (column A and B)
with core company processes (column C to E).
A. B. C. D. E.
Value Discipline Focus Areas
Innovation
Process
 Identify
Market
 Create
Product /
Service
Operations
Process
 Build
Product /
Service
 Deliver
Product /
Service
Post-sale
Service
Process
 Service the
Customer
Culture  Disciplined Work Culture
 Process focused
 Conformance, “one size
fits all” mindset
Mgmt System  Command and Control
 Compensation fixed to
cost and quality
 Transaction Profitability
Tracking
Info Tech  Integrated low-cost
transaction systems
 Mobile and remote
technologies
Organization  Centralized functions
 High skills at the core of
the company
Core
Processes
 Product Delivery and
basic service cycle
 Built on standard, no-frills
fixed assets

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BSC IP Exercise 1b – Product Leadership
A. B. C. D. E.
Innovation
Process
 Identify
Market
 Create
Product /
Service
Operations
Process
 Build
Product /
Service
 Deliver
Product /
Service
Post-sale
Service
Process
 Service the
Customer
Culture  Concept, future-driven
 Experimentation and 'out
of the box' mindset
Mgmt System  Rewarding individuals'
innovative capacity
 Risk and exposure
management
 Product Life Cycle
profitability
Info Tech  Person-to-person
communications systems
 Technologies enabling
cooperation
Organization  Ad hoc, organic and
cellular
 High skills abound in
loose-knit structures
Core
Processes
 Invention,
commercialization
 Market exploitation
 Disjoint work procedures

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BSC IP Exercise 1c – Customer Intimacy
A. B. C. D. E.
Innovation
Process
 Identify
Market
 Create
Product /
Service
Operations
Process
 Build
Product /
Service
 Deliver
Product /
Service
Post-sale
Service
Process
 Service the
Customer
Culture  Customer Driven
 Variation: “Have it your
way” mindset
Mgmt System  Share of Wallet Driven
 Rewards linked to
Customer Feedback
 Lifetime Value of
Customer Analysis
Info Tech  Customer Databases
 Knowledge Mgmt
Organization  Entrepreneurial customer
teams
 High skills in the field
Core
Processes
 Client acquisition and
development
 Solution Development
 Flexible and Responsive
work procedures

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BSC IP Exercise 2a – Operational Excellence
Determining Internal Process Outcome Measures
The following diagram shows what are the Core IP Outcome Goals for the Operational Excellence value
discipline:
Core IP
Outcome
Goals
1. Refer to Handout A: Commonly Used Internal Process Measures
2. Determine Ten Core IP Outcome Measures. The measures can come from a mix of the four
outcome goals listed above.
3. Bonus: Please add measures relevant to your company if not listed in Handout A.
Core IP Outcome
Goals
Core IP Outcome Measures
1. Product Delivery
2. Asset Utilization
3. Service Cycle
Efficiency
4. Product
Ownership Cost
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Product
Delivery
Asset
Utilization
Service Cycle
Efficiency
Product
Ownership Cost

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BSC IP Exercise 2b – Product Leadership
The following diagram shows what are the Core IP Outcome Goals for the Product Leadership value
discipline:
Product Leadership
Core IP
Outcome
Goals
Core IP Outcome
Goals
1. Innovation &
Design
2. Understanding of
Customer
3. Improve
Product/Service
4. Quality
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Innovation
& Design
Understanding
of Customer
Improve
Product/Service
Quality

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BSC IP Exercise 2c – Customer Intimacy
The following diagram shows what are the Core IP Outcome Goals for the Customer Intimacy value
discipline:
Customer Intimacy
Core IP
Outcome
Goals
Core IP Outcome
Goals
1. Customer
Acquisition
2. Customer
Development
3. Solution
Development
4. Flexibility &
Responsiveness
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Customer
Acquisition
Customer
Development
Solution
Development
Flexibility &
Responsivenes
s

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Example L&G Staff Measures:
 % of staff evaluated on Core
Competency Framework
 % of staff with Career Development
Plans
 # of training hours completed
 % of staff with access to strategic
information
 Employee Satisfaction Survey Index
 % staff evaluated on Culture
alignment
 Strategic Skills Coverage
 Targeted Training Accomplished
 Best Practices Implemented
 %Work Support Implemented
 Employee Climate Survey
 Employee Goal Alignment
Matching Learning & Growth Measures to Goals
The following list consists of common Learning & Growth used by different organizations:
3. Match each of the Measures to the proper Learning & Growth Goal:
Goal Learning & Growth Measures
A.Competencies
B.Motivation,
empowerment,
alignment
C.Information
Systems
Sample Information Systems Measurements
1. Keypunch errors per day
2. Input correction on data
entry
3. Reruns caused by
operator error
4. Percent of reports
delivered on schedule
5. Errors per thousand lines
of code
6. Number of changes after
the program is coded
7. Percent of time required to
debug programs
8. Number of cost estimates
revised
9. Percent error in forecast
10. Percent error in lines of
code required
11. Number of coding errors
found during formal testing
12. Number of test case errors
13. Number of test case runs
before success
14. Number of revisions to
plan
15. Number of documentation
errors
program objectives
17. Number of errors found
after formal test
18. Number of error-free
programs delivered to
customer
19. Number of process step
errors before a correct
package is ready
checkpoint plan
21. Number of changes to
customer requirements
22. Percent of programs not
flow-diagrammed
23. Percent of customer
problems not corrected
per schedule
24. Percent of problems
uncovered before design
release
25. Percent change in
customer satisfaction
survey
26. Percent of defect-free
artwork
27. System availability
28. Terminal response time
29. Mean time between
system repairs
30. Time before help calls are
answered
31. Rework costs resulting
from computer program

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KPI Documentation and Dashboard

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Sample: KPI Data Collection Template Questions
KPI Basics:
1 KPI ID
2 KPI Name
3 KPI Owner
How will the data be collected:
4 Data Collection Method
5 Source of Data
6 Formula/ Scale/ Assessment Method
7 How often, when and for how long do we
collect the data
8 Who collects the data
Target
9 What is the Target or Performance
Threshold(s)?
Good Measure Tests
10 How well is the indicator measuring
performance?
11 What are the costs of collecting data?
Justified?
12 What dysfunctional behaviour could this
KPI trigger?
Reporting:
13 Who is the primary and secondary
audience of this KPI?
14 Reporting Frequency (when and how long
will this KPI be reported?)
15 Reporting Channel (which channel will be
used to report this KPI?)
16 Reporting Formats (in which formats will
this KPI be reported?)

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Sample KPI Dashboard

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Performance Coaching

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What is Coaching?
Coaching : Is the ongoing process in which the Supervisor and the staff informally
- evaluate past performance (discuss progress against critical goals)
- reinforce effective behaviours and
- guide future performance
The Supervisor alerts the staff about
gaps between performance and expectations
It is a continuous and informal activity, woven seamlessly into the ordinary communications
between the supervisor and the staff.

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What is coaching ?
Coaching, as used in this workshop, is defined as managing subordinates :-
 To conduct an accurate assessment of their performance strengths and weaknesses
 To identify their long-term developmental aspirations
 And to develop an action plan in those areas that will achieve those aspirations
Coaching can involve helping others develop competencies in which the coach may or may not
have.
Coaching requires skill in identifying the underlying characteristics that others need to develop over
the long term, as well as the ability to build on that person's unique capabilities.
It is possible to coach marginal performers, as well as good or outstanding performers.

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Coaching is :
 Helping
 Guiding
 Getting people to own their targets
which they set
 Helping people to explore options
 Setting a climate in which improved
performance becomes not only
possible but desirable
Coaching is not :
 Telling someone how to do something
 Giving instruction
 Laying down specific guidelines about
how to accomplish a particular task
 Setting boundaries
 Setting targets for other people

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The importance of coaching to your organisation
 We view the development of people as an area of corporate strength which can drive our strategic
ambition
 Our managers need to be as concerned about individual and team development as they are about
their own task objectives - business growth will be driven by the many not the few
 New recruits, especially young ones, need guidance in order to maximise the benefits of learning
opportunities
 Learning efficiency is maximised if we can more rapidly pass on the benefits of experience
When do you use coaching ?
 Individual development
 Career development
 Succession planning
 Monitoring performance
 Day-to-day problem solving
 Performance management programme
- Objective setting
- Interview review
- Evaluation
- Day-to-day feedback

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What's in it for the manager ?
 More skilled and confident
people
 Less waste and rework
 More clarity about
individual and team
objectives, roles and
expectations
 Errors become learning
opportunities
 I also learn
 Self confidence and self
awareness for me
 Personal satisfaction
 Improved output and
performance
What's in it for the team ?
 We work together more
effectively
 We understand each other
 Improved team
performance
 Confidence in each other
 Team satisfaction
 Consolidating learning
 We coach each other
What's in it for the company ?
 More skilled and motivated
workforce
 More self learning
 More effective and less
expensive form of
development
 Improved efficiency and
effectiveness
 Improved motivation of the
coach
 Improved communication
Improved performance

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Competencies Of An Effective Coach
Competency Behaviours
Sensitivity to others  Understand both strengths and limitations of the staff
 Understand the reasons of the staff behaviour
 Know what motivates the staff as well as what turns them off
 Take the time to listen to staff’s problems
 Give staff assignments and training to develop them
Developing Others  Give encouragement and to staff to improve their motivation
 Give staff timely, specific and detailed feedback
Management of
Subordinates
 Ensure that all staff contribute to departmental objectives
 Give recognition to staff who have contributed to the department’s
success
 Set an example and encourage staff to develop an atmosphere of
teamwork and cooperation
Self-Confidence  Approach staff with a positive, can-do-attitude
 Is receptive to staffs’ ideas
 Provide feedback to staff confidently without arrogance or hostility
Self Control  Remain calm in stressful situations
 Refrain from impulsive reactions or behavior that would interfere with a
motivating relationship with the staff
 Keep calm and constructive in the face of staff’s anger
Use of
Concepts/experience
 Utilise past experience and observations to understand and handle
present situations with staff
 Relate staff’s performance objectives to key values and strategies of the
company
Analytical Thinking  Analyse staff behavior to determine underlying causes
 Accurately anticipate consequences of own behavior toward staff
 Use a systematic approach to handling staff challenges
 Anticipate obstacles in seeking to develop staff

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Phase II : Performance coaching

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Performance evaluation

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What is Performance Evaluation ?
o Formal evaluation of Performance versus Expectations
This is the cumulating of regular tracking during the year
o An ongoing interaction between the manager and the employee to maximise performance
by means of motivation and encouragement
When frequent feedback is the norm, the year-end performance evaluation is less
threatening and contains no surprise
Main Reasons for Performance Evaluation
o to ‘close off’ the activities undertaken in the performance planning period so that a new
planning cycle can begin
o to provide an objective, defensible basis for variable pay decisions
It provides a clear summary statement of performance achieved for the year

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Objectives of Performance Evaluation
o Review employee performance and job progress (i.e. actual versus expectations)
o Identify development needs
o Establish future goals and objectives
o Aids in reward decisions
Problems with appraisal system
 Managers don't like carrying out appraisal interviews
 "HALO" effect
 Central tendency in evaluations
 Excessive leniency or stringency
 Biases of sequence, order or timing of evaluation
 Personality of the appraiser and prejudice
 Lack of clarity of performance standards

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Obstacles to effective appraisal
In discussions with managers under training and in observing them practising interviewing a number of
obstacles to effective interviewing are revealed.
1. Lack of clarity in the mind of the appraiser as to purpose, e.g.,
 reporting up the line
 justifying and rationalising salary actions
 telling the subordinate how well he is doing
 improving performance
2. Lack of clarity in the mind of the subordinate as to purpose, e.g.
 he's come to 'b told'
 he's come to 'justify' his performance
3. The appraiser has made up his mind already about the subordinate's side of the story
 the appraiser describes the subordinate's problems to him or
 seeks information to confirm his beliefs (self fulfilling prophecy) and
 discards evidence presented to the contrary
4. The appraiser reaches conclusions, makes decisions, invites actions on the basis of his opinion or on
what appears to have happened rather than on facts
5. The appraiser sees in depth interviewing as somehow impolite with consequent failure to get to the
root of things
6. The subordinate is put onto the defensive by statements of his failures and mistakes before he is
invited to describe his experiences in the job. This results in the subordinates 'filtering' the
information he gives so as to portray his actions in the best light
Appraisal is thus being used to
 Tell the subordinate he is out of line
 Express disapproval
Appraisal is not being used to
 Find out what happened to the subordinate and why
7. The appraiser lacks skill in creating a willingness in the subordinate to reveal frank information and to
discuss feelings
Feelings are important, they are related to inclination (of capacity), and to motivation

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Performance improvement method (Discussion guide)
1. Develop a careful definition first if there is a problem
 State what it is. View a problem as a deviation from the standard
 How do you know that it's a problem ? What are the signs that indicate a problem ?
 Determine how much the problem is costing the organisation in terms of :-
- Work not being done
- Work not being done on time
- Problems being caused in other parts of the organisation
2. Try to determine the cause of the problem
 Is something preventing the work from being done ?
- Does the employee have the right tools to do the job ?
- Are organisational policies / procedures hindering performance ? (confusion, conflicting
goals, complicated procedures, lack of money, time, etc.)
 Does the employee have enough knowledge to do the work ?
- Does he know why it should be done a certain way ?
- Does he know how his work contributes to the work of the organisation ?
- Does the employee possesses enough knowledge about the work and how it is to be done to
be able to do it ?
- Has he ever been told that his work is not meeting acceptable standards ?
 Try to determine if the job (task) itself has a built-in problem that leads to poor performance
- Is the work too difficult for one person ?
- Is the work so disagreeable that it is avoided ?
- Is there no reward or sense of satisfaction in doing the particular task ?
3. Accurately record the results of the session
 Prepare a rough draft and let the employee review it
 Include all expected changes that should occur

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Performance Evaluation Key Steps
1. Preparation
o Collection of performance Data / Evidence
o Encourage active participation
- Ask appraisee to prepare himself / herself before the appraisal (refer to
Guidelines to
Appraisee for preparation of Appraisal Interview)
- Ask appraisee to prepare self appraisal
- Appraisee completes draft Appraisal form
o Mental preparation
- create climate for honest feedback
2. At the meeting
o The supervisor coaches, not criticizes the appraisee
o Compare actual performance against expected performance (Results and
Competencies)
o Discuss reasons for success and agree on reasons why objectives were not achieved
and why problems developed
o Obstacles to reaching goals and problems are identified
- Plans are made to overcome these obstacles
- Both contribute to the development and carrying out of these plans
o New goals are set
3. End of Meeting
o Summarise trends in Performance and ideas for improvement
o Summarise actions agreed
o Reinforce success
o Where possible or desirable, leave subordinate confident about the future

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Conducting The Evaluation Meeting
(8 Guidelines)
8 Guidelines
1. Attitude
a) A 2-way communication meeting - there must be frank and thorough discussion
b) Not a ‘corrective’ session
All the key aspects must discussed
c) For weak performance, remedial action plans must be discussed
As a manager, it is your accountability to help your subordinate improve
d) Be open
- Be fair and constructive
- Admit if the fault is yourself, the supervisor
2. Seating Arrangements
o Have a neutral setting / seating
- round table
- work side by side
o Avoid a desk in between
3. Begin the Session
o Outline objectives of meeting
o Create climate of trust and confidence
o Breaking the ice

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Conducting The Evaluation Meeting
8 Guidelines (cont’d)
4. Review
o Encourage self review
o Go through each objective and competitiveness as expected versus actual
o Discuss reasons for achievement / non achievement
o Discuss performance rating
5. Evaluator’s Comments
o Appraiser react to Appraisee’s self assessment
o Give personal assessment
o Discuss achievement / non achievement of objectives / competencies
o Discuss performance rating
6. Future Plans
o Discuss plans for the future
o Discuss performance improvement in the future
o Role of the Appraiser / Appraisee
7. Rate Performance not Personality
o Discuss detailed and specific discussion of the person’s progress or lack of it in
achieving the results
o Focus on objective, job-relevant experience (discuss evidences)
o The person’s performance in the job is discussed and not the person himself
o Avoid personal problems
8. Closing the Session
o Reiterate objectives of the session
o Repeat and agree an assessment and action plans
o Complete the appraisal form and agree with the subordinate

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Guidelines to Appraisee for Preparation of Appraisal
Interview
This copy is to be given to the appraisee concerned before the appraisal interview to assist him/her to
prepare for the appraisal interview and is for his/her retention
To The Appraisee
The questions below are designed to stimulate your thinking and to help you prepare for the appraisal
interview and obtain minimum benefit format. Think about your own personal performance,
progress and plans for the future improvement. Appraise yourself as follows :-
1) What are my major accomplishments for the past year ?
2) What are some aspects of my job that I like best ? That I like least ?
3) What do I consider to be the important abilities which my job requires ?
4) Are there any changes I would like to see made in my job which would improve my
effectiveness ?
5) What are the ways in which my superiors can help me to do my job better ?
6) Are all of my capabilities being utilised in my present position ? If not, how can they be
better utilised ?
7) In what aspects of my job do I feel I need more experience and training ?
8) What are specific things I need to do in he next year for my own development ?
9. What have I done for my personal and / or professional development ?
10) In what ways would my present position better prepare me for assuming more responsibility ?

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Goals, Measurements and KPIs
Financial
Commonly used Financial Measures
 Total Assets
 Total Assets per employee
 Profits as a % of total assets
 Return on net assets
 Return on total assets
 Revenues/total assets
 Gross Margin
 Net Income
 Profit as a % of sales
 Profit per employee
 Revenue
 Revenue from new products
 Revenue per employee
 Return on Equity (ROE)
 Return on Capital Employed (ROCE)
 Return on Investment (ROI)
 % Revenue from different channel
(e.g. DC vs SP)
 % expenses due to quality defect,
TNA, rework etc
 % operating expenditure to revenue
 Reduction in working capital
 Profit per customer
 % revenue to gain market share vs.
% revenue to replace lost customers
 % of sales from new applications
 Compound Growth Rate
 Dividends
 Market Value
 Share Price
 Shareholder Mix
 Shareholder loyalty
 Cash flow
 Total costs
 Credit rating
 Debt
 Debt to equity
 Times interest earned
 Days sales in receivables
 Days in payables
 Days in inventory
 Inventory turnover ratio
 Cash-to-cash cycle
 % resources shared with other business
unit
 ROI time cycle
 % Revenue growth of various markets
 Sales growth in targeted markets/ customer/
region
 Operating Cash Flow
 % of customer income (Share of Wallet)
 Net cost per acquired customer

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Customer
Commonly used Customer
Outcome Measures
 Customer satisfaction
 Customer loyalty
 Market share
 Customer complaints
 Complaints resolved on first
contact
 Return rates
 Response time per customer
request
 Price relative to competition
 Total cost to customer
 Average duration of customer
relationship
 Customers lost
 Customer retention
 Customer acquisition rates
 Percentage of revenue form new
customers
 Number of customers
 Annual sales per turnover
 Win rate (sales closed/sales
contact)
 Customer visits to the company
 Hours spent with customers
 Marketing cost as a percentage of
sales
 Number of ads placed
 Number of proposals made
 Brand recognition
 Response rate
 Number of trade shows attended
 Sales volume
 Share of target customer spending
 Sales per channel
 Average customer size
 Customers per employee
 Customer service expense per
customer
 Customer profitability
 Frequency (number of sales
transactions)

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Internal Process
General Internal Process Measures
 Average cost per transaction
 On-time delivery
 Average lead time
 Inventory turnover
 Environmental emissions
 R&D expense
 Community involvement
 Patents pending
 Average age of patents
 Ratio of new products to total offerings
 Stockouts
 Labor utilization rates
 Response time to customer requests
 Defect percentage
 Rework
 Customer database availability
 Breakeven time
 Cycle time improvement
 Continuous improvement
 Warranty claims
 Lead user identification
 Products and services in the pipeline
 Internal rate of return on new projects
 Waste reduction
 Space utilization
 Frequency of returned purchases
 Downtime
 Planning accuracy
 Time to market of new
products/services
 New products introduced
 Number of positive media stories
Common Supply Chain Measures
Time
 On-time delivery receipt
 Order cycle time
 Order cycle time variability
 Response time
 Forecasting/planning cycle time
 Planning cycle time variability
Quality
 Overall customer satisfaction
 Processing accuracy
 Perfect order fulfillment
o On-time delivery
o Complete order
o Accurate product selection
o Damage-free
o Accurate invoice
 Forecast accuracy
 Planning accuracy
 Schedule adherence
Cost
 Finished goods inventory turns
 Days sales outstanding
 Cost to serve
 Cash to cash cycle time
 Total delivered cost
o Cost of goods
o Transportation costs
o Inventory carrying costs
o Material handling costs
o All other costs
 Information systems
 Administrative
 Cost of excess capacity
 Cost of capacity shortfall

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Example Measures:
 % of staff evaluated on Core Competency Framework
 % of staff with Career Development Plans
 # of training hours completed
 % of staff with access to strategic information
 Employee Satisfaction Survey Index
 % staff evaluated on Culture alignment
 Strategic Skills Coverage
 Targeted Training Accomplished
 Best Practices Implemented
 %Work Support Implemented
 Employee Climate Survey
 Employee Goal Alignment
HR, ICT , Culture

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Common Human Resource Management
Measures
7.1 Manage deployment of personnel
a. Percentage employee absenteeism
b. Cost per external hire
c. Cost per internal I Lire
d. Cost to supervise
e. Current employee/supervisor ratio
f. External accession rate
g. External replacement rate
h. Internal accession rate
i. Internal replacement rate
j. Job posting effectiveness
k. Job posting response rate
l. Number of days to fill an employment request
m. Number of days to respond to applicant
n. Number of job descriptions written
o. Number of jobs leveled
p. Orientation and training costs per hire
q. Percentage of employment requests filled on
schedule
r. Percentage of offers accepted
s. Personnel turnover rate
t. Relocation expenses
u. Requisitions filled per month/quarter/year
v. Requisitions per recruiter
w. Time to evaluate jobs
x. Time to process an applicant
y. Time to start
7.2 Develop succession and career plans
a. Distribution of performance appraisal ratings
b. Distribution of merit pay increase
recommendations
c. Ratio of promotions to total employees
d. Ratio of openings filled internally vs. externally
e. Average number of years or months between
promotions
7.3 Recruit, select, and hire employees
a. Average days to fill open positions
b. Average days between opening and fill
c. Ratio of acceptances to hires
d. Ratio of acceptances to offers
e. Ratio of qualified applicants to total applicants
7.5 Ensure employee involvement
a. Current employee/ supervisor ratio
b. Employees involved in job rotation
c. Number of days to answer suggestions
d. Number of suggestions per employee
e. Number of suggestions per team
f. Percentage of employees participating in
company sponsored activities
g. Percentage of suggestions accepted
h. Percentage of total workforce now participating in
self directed work teams
7.6 Develop and train employees
a. Average pre- and post-training test score
change/performance review change
b. Cost per trainee
c. Hours of employee training
d. Number of days to develop a training course or
modules
e. Number of hours per year of career and skill
development training per employee
f. Percentage of employees trained
g. Percentage of employees with development
plans
h. Percentage of training classes evaluated as
excellent
i. Percentage of employees receiving tuition
refunds
j. Total expenditure for tuition reimbursement or
executive development
k. Total external training expenditures
l. Total internal training days
m. Total internal training expenditures
n. Trainee or unit work performance changes
o. Training costs as a percentage of payroll
p. Training costs as a percentage of sales/revenue
q. Training days per employee per year
r. Training department employees to total
employees
7.7 Develop and manage base and variable
compensation
a. Average salary cost per employee
b. Compensation costs
c. Compensation costs/revenue
d. Overtime pay costs
e. Percentage of performance appraisals submitted
on time
f. Salary range exceptions
g. Supervisory compensation costs/total
compensation costs
7.8 Ensure employee well being and satisfaction
a. Department morale index
7.9 Manage and administer employee benefits
a. Benefits cost per employee
b. Benefits cost
c. Benefits costs/revenue
d. Benefits costs/total compensation costs
e. Benefits to payroll ratio
f. Error rates in processing benefits claims
g. Retiree benefits costs/expense
7.12 Manage labor-management relationships
a. Average employee tenure
b. Average length if time to settle grievances
c. Costs associated with work
stoppages/slowdowns
d. Frequency/duration of work
stoppages/slowdowns
e. Percent of grievances settles out-of-court and
associated savings
f. Ratio of grievances/complaints to total
employees

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