Tuesday, December 12, 2017

The Monthly “Performance Master’ Book Tuning: The Multiple Aspects of Performance Indicators Dec. 2017

Corporate Performance Management is a management control from strategy till shop floor. "If you can't measure, you can't manage," legendary management guru Peter Drucker once asserted. Managing performance means understanding results, setting metrics, fixing plans, and making decisions to ensure it happens. It takes multifaceted approaches from multidimensional perspectives to unlock digital performance and catalyze change.


The Multiple Aspects of Performance Indicators

Three Challenging Aspects of Performance Indicators You can only manage what you measure, Performance measures and management is not a simple task though, approximately there’re more than ten thousand KPIs around today, a bit overwhelming, let's not forget that there is a "K" in KPI for a reason: Why do you select the certain set of performance measures? What’re the most challenging aspects of working with KPIs? How to leverage the right set of performance indicators in measuring whether the organization is functioning well or dysfunctional? Which management metrics shall you apply to measure organizational overall health and maturity? Who and what tools are being applied to measure if an organization is healthy or sick? Proactive or reactive? Intelligent or dumb? Customer-centric or operational driven? And what are those challenging aspects of performance measurement

How to Set Performance Indicators to Measure Return on Digital Transformation? Change is inevitable, and the speed of change is increasing. The digital transformation is now spreading rapidly to enable organizations of all shapes and sizes to reinvent themselves, but it is the thorny journey with many bumps and curves on the way. How do you measure return on digital transformation in order to make the timely adjustment and improve its success rate? A well-defined set of measurement for digital transformation should contain a good mix of outcome measures or the long-term strategic value along with performance drivers to track the progress in the short term (operational measures).

CIOs as "Chief Improvement Officer": How to Set IT Performance Metrics to Lead Continuous Improvement? IT performance management is about how the IT organization manages performance such as strategic planning, program portfolio, metrics, and day-to-day operation structurally. A measurement system is a necessary foundation for continuous improvement. IT metrics need to evolve into something that matters to the business audience, at the same time that "business sentiment" needs to get put into something more tangible. So, what are guidelines to set IT performance metrics for leading continuous improvement?

Leading Indicator vs. Lagging Indicator? As Drucker well pointed out: “You can only manage what you're measured.” Benchmarking and measuring are both science and art. There are many practical metrics and KPIs, but not every metric is created equal. The concept of leading and lagging indicators, as applied to the Balanced Scorecard, relies on an understanding of the cause-effect relationships between KPIs in the different perspectives. But what’re the differences between leading indicators vs. lagging indicators?

What are the Goals to Choose the Right KPIs Choosing the right KPIs is crucial. The challenge is that people have their own take on KPIs. KPIs must be aligned with the corporate goals and objectives - but should also be directly relevant to the activities that businesses are attempting to manage (process execution). If you only select KPIs based on outcomes without managing the processes that contribute to 'good and bad performance', you will continue to be out of control. However, it is equally dangerous when you focus on 'process execution' without understanding if the process is delivering the desired 'outcomes'. Perhaps the greatest challenges are not about 'data management' - but 'relationship management' within the organizations.

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