Performance

Measurement and
Strategic Information
Management
Chapter 8 Part- 2 THE MANAGEMENT SYSTEM
Measurement
Measurement is the act of quantifying the
performance dimensions of products,
services, processes, and other business
activities.
Measures and indicators refer to the
numerical information that results from
measurement.
Organizations need performance
measures to drive strategies and
organizational change, to manage
resources, and to operate processes
effectively and continuously improve.

Einstein says..

Not everything that can be
counted Counts, and not everything
that counts can be counted.
Osborne & Gaebler
1. If you dont measure results, you
cant tell success from failure.

2. If you cant see success, you cant
reward it- and if you cant reward
success, you are probably
rewarding failure.

3. If you cant recognize failure you
cant correct it.
Balanced Scorecard
Kaplan and Nortons scenario

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Focusing on one thing in an excellent manner ignoring
all others is a disaster for air flight as well as businesses.
Balanced Scorecard
The balanced scorecard consists of four perspectives:
Financial perspective: Ultimate results that the business
provide to its shareholders i.e revenue growth, ROI.
Internal perspective: Key Internal Processes i.e quality
levels, productivity, cycle time.
Customer perspective: Focus on customers needs and
satisfaction i.e Service level, satisfaction ratings, repeat
business.
Innovation and learning perspectives: Focus on
Organizations people and infrastructure i.e. employee
satisfaction, market innovation, skill development


Lagging & Leading Measures
A good balanced scorecard contains both leading and
lagging measures and links them through logical cause-
and-effect relationships.

Lagging Measures .outcomes.tells what has
happened.


Leading Measuresperformance drivers.predict what
will happen.
Process-level measures
Common types of process level measurements include
nonconformities per unit,
defects per unit
errors per opportunity
dpmo--defects per million opportunities.

Many organizations use dashboards, which typically
consist of a small set of measures (five or six) that provide
a quick summary of process performance.


Analyzing and Using
Performance Data

Analysis refers to an examination of facts and data to
provide a basis for effective decisions. Effective analysis
capabilities ensure that managers can understand the
meaning of data, particularly cause and effect linkages
between external lagging results and internal leading
indicators. Simple or sophisticated tools may be used
effectively to analyze data and provide information for
managers.
cost of quality (COQ)
The cost of quality (COQ) is a way to translate quality
problems into the language of upper management--
money. Through the use of quality cost information,
management identifies opportunities for quality
improvement. Quality cost information also aids in
budgeting and cost control and serves as a scoreboard
to evaluate an organizations success.