Lecture 09: Performance measurement Flashcards
What should a KPI do? (2)
Measure the performance areas
that are most critical to an organization’s success
Capture the essential information
for controlling and managing an organization
Name 5 examples of KPIs
- Inventory Turnover: IT
- Productivity: P
- Product Defects: PD
- Customer Complaints: CC
- Overall Equipment Efficiency: OEE
Name 4 typical challengers for companies regarding KPIs! ⛺️
Employee Engagement and Alignment:
- Creating systems and routines for acting on them.
- Measure them properly.
Data Accuracy and Consistency
Setting Relevant and Measurable KPIs:
- Picking the right performance parameters.
- Prioritizing them according to business objectives.
A KPI should be SMART. What does SMART mean?
S pecific,
M easurable,
A ttainable,
R elevant,
T ime-bound
Describe lead and lag indicator!
Leading indicators are “performance drivers”. → They measure activity.
Laging indicators are “outcome measures”. → They measure results.
Reasons why managers should focus on
Performance-Measurement! (4)
📐
Evaluation
- Continuous Improvement
- Gaining insights about current performance
Decision-making
- Align the organization in achieving the goals
Goal setting
- Employee Engagement and Motivation
- Facilitate corrective actions, improvement, and organizational change
Communication & Transparency
- Strategic Alignment
- Supports to communicate goals
Name 3 benefits of performance measurements for employees!
- Clarification of success criteria in their jobs (Clarity of Expectations)
- Increasing motivation to perform (Recognition and Reward)
- Providing a benchmark for improvement (Professional Development Opportunities)
What 4 perspectives does the balanced scorecard focus on?
- Financial perspective
- Customer perspective
- Internal business perspective
- Innovation and learning perspective
5 Reasons Why Performance Measurement Fails!
Purpose of measurement
Getting what you measure not what you want. What is easy to measure, is usually not what is right to measure.
Lack of empowerment
Missing out customer needs
Lack of trust
Creates extrinsic motivation, but hurts intrinsic motivation.
Lack of accountability
Less cooperation, due to internal competition
Resistance to measurement
Psychological consequences, when measures are not always met.
What is the Hoshin Kanri process? (2)
- A “catchball” process
- Annual policy deployment process that starts with toplevel strategies and breaks them down into goals for different departments
What is lean shop floor management? (3)
Management system, on the shop floor, that facilitates
- daily communication,
- control of performance,
- team building
Name 6 characteristics of shop floor management!
- Short daily meetings
-
Hierarchically layered
_ - Use of visualization
- Fosters the presence of management in the shop floor
_ - Empowers all employees
- Helps to focus on kaizen
Name 4 aspects the shop floor management meetings usually consist of! 👍
- Daily for 15 mins
- A place for communication and collaboration between supervisors and their subordinates
- In front of a shop floor board
- Topics: Status quo on quality
Why measure? (3)
needed for improvement
„If you cannot measure it, you cannot tell if you have improved”
encourage certain behavior
„You get what you measure”
provides status
„You cannot manage what you cannot measure”
Balance Scorecard (4)
Goal → Measure
Hoshin Kanri / Catchball process (5)
Hierarchie of KPI
(Key performance indicator, parameter) (4)
Key Performance Indicator
- few Indicators that are choosen as essential for the company.
- Central for control and management.
Performance Indicator
- Calculated from several parameters.
A parameter / Indicator is a variable which is directly measured.
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