Ch 12 Flashcards
Process measures
Work system performance»_space; improve cost savings or high productivity by using internal/external resources
External: reduced emission levels, waste stream reductions, by-product use, recycling
Internal: cycle times, production flexibility, lead times, set up times, time to market
Customer focused measure
Viewed by customers. Include direct measures of cust. Satisfaction and dissatisfaction, customer retentio, gains and losses of customer and accounts, complaints, & warranty claims.
Workforce focused measure
How well the org has created and maintained productively, engaging and caring work environment.
Outcome: increased workforce retention»_space; peer recognition program or # of promotions
Or safety, effective training, engagement
Leadership & governance measures
Regulatory, legal compliance, results of oversight audits, financial and ethics review results
Outcome: measures of social responsibility & community service
Financial and market measures
Tracked by senior leadership to gauge overall org performance, used 2 determine incentive compensation for senior executives
Include revenue, return on equity, return on investment, operating profit, pretax profit margin, earnings per share, other liquidity measures
Market: market shar, business growth, new product and geographical entered, % of new product sales
Analytics
Use of data, information technology, statistical analysis, quantitative methods, and mathematical or computer based models to help managers gain improved insight about their business operations and make better
Descriptive analytics
Use of data to understand past and current performance and make informed decisions
Predictive analytics
Analyzing past performance in an effort to predict the future by examining historical data, detecting patterns
Prescriptive analysis
Using optimization to identify best alternatives
Disciplines underlying analysis
Statistics, business intelligence & operations research/management science
Purpose of performance measurement system
- provide perspective of past, present future
- identify tends & progress
- cause & effect relationships
- provide direction & support 4 cont improvement
- allowing performance comparison to benchmarks
Why do balance scorecards fail most of the time?
Not identifying real drivers of customer satisfaction, not defining measures appropriately to focus attention on areas that have greatest impact on org performance; negotiating goals rather than basing them on customer requirements, limitations and improvements
Most organizations make two fundamental mistakes
1: not measuring key characteristics critical to organizational performance or customer behavior
2: taking irrelevant or inappropriate measurements
Balance scorecard
Identifying right measures by aligning them with org’s vision and strategy.
Org’s have a means of setting targets and allocating resources for short-term planning, communicating strategies, align personal goals to strategies
Key performance measures should be align with
Strategies and action plans