Begin with the End in Mind
Everything an Organisation does produces an outcome or result
This is an important message for all organisations. In addition to the more traditional types of results associated with volume, cost and quality of products or services, all organisations generate results from the action of transacting information and knowledge between two or more parties everyday (e.g. staff to staff, staff to customers etc).
In Good Practice organisations, all actions of every employee are designed to add value to the business and therefore to influence performance and the specific results the organisation achieves.
1.2. The Significance of Results
The significance of your results extends to your partners and suppliers who will want to trade with you for as long as there is a “win-win”, no one wants to be the creditor of a bankrupt. These Stakeholders will determine if you are achieving “good” results by looking at your solvency, your ability to settle invoices on time and the degree to which you respect their brand integrity when using their products or services to enhance your own. Customers and beneficiaries have a similar interest in knowing that you are a reliable organisation to do business with, that you will honour commitments made and continue to meet present and future needs. Employees rely on sound financial results as some insurance for future employment. They will look to see if the company pension scheme is secure, employee share schemes beneficial and remuneration paid on time and at an appropriate rate in the market place.
1.3. Definition of a Business Performance Result
EFQM does not want you to expend time and energy collecting data to produce results that do not contribute a great deal to understanding your performance or your Stakeholders' satisfaction. Instead, we urge you to identify the most significant areas in terms of the impact on the business strategy, plans and customer experience. It is useful the Principle of Pareto, which typical pattern will show that:
The 80/20 Principle challenges us to find the 20% of measurement points that provide 80% of the most valuable information about our processes, our products and our services. We can start to identify what our measures should be and what we should be delivering as our Key Performance Results by applying Pareto Analysis.
Business Performance Outcomes: There is no doubt that the financial performance of an organisation will be among its most important Key Performance “Outcomes”. Within Kaplan and Norton’s Balanced Scorecard four perspectives, the Financial Perspective with its emphasis on measures such as Revenue Growth, Asset Utilisation, Growth and Operating Costs. However, when EFQM refers to Key Performance Outcomes, do not be fooled into thinking that we are only talking about financial results – also Non Financial Outcomes such as “Volume of Products Produced”, “Market Share” and “Frequency of Services Delivered”.
Business Performance Indicators: These measures are the operational ones used in order to monitor, understand, predict and improve the organisation’s likely key performance outcomes. Within Kaplan and Norton’s Balanced Scorecard four perspectives, the Internal Perspective and Learning Perspective come closest to the idea of KPIs.
1.4. Differences between Commercial (large and small), Public Sector and Not-for-Profit Organisations
It is a myth that there are vast differences between the method of measurement, the choice of measures and the quality and excellence of the results obtained between commercial companies and the public sector and not-for-profit organisations.
1.5. Achieving “Excellent” Key Performance Results
We have made several references to achieving “good” results and the need to understand “good” from your Stakeholders’ perspectives. The rigorous scoring framework that accompanies the EFQM Excellence Model (RADAR scoring matrix® - Results, Approach, Deployment, Assessment and Refinement) offers a very clear picture of its expectations in relation to “Results”. The Excellence of the Result is determined by the degree to which an organisation can demonstrate trends, targets and comparisons (numerically) with clear references to causes. The results must also correspond to the range of activities, size and nature of the organisation.
- Trends: The EFQM Excellence Model encourages organisations to plan and manage for repeated, durable good performance rather than be satisfied with “one-off” success. Sustainability is assessed by the degree to which the organisation’s Key Performance Results show positive trends over a period of 3 years.
- Setting Targets: An organisation’s performance in relation to Key Performance Results cannot be assessed fully unless the results are matched against the targets set by the organisation. Even then, we might not be fully satisfied unless we know if the targets set are relevant in terms of the organisation’s declared aspirations.
- Range of Results (Scope and Segmentation): Although you may be measuring a range of activities and processes, both in terms of “Outcomes” and “Indicators,” there are a number of interesting questions: “How selective are you in what you are choosing to measure and what you are choosing to report? Does your set of results align with your strategy, your business plan and your core and key processes? Are you producing a pertinent, comprehensive set of Results for your organisation?”
1.6. Organisations without a Culture of Measurement or Results-Orientation
In organisations that don’t measure or set targets, results are still produced but the degree to which they meet Stakeholders’ requirements will depend more on good fortune than planning. When organisations start to use the EFQM Excellence Model, a substantial proportion of them score low in the Results criteria, not because their work does not produce results, but because they have never managed their activities with the end in mind.
Building a Culture of Measurement and Results
Measurement is the main ingredient of Performance Management, and the Excellence of your Key Performance Results depends upon the complete deployment in your organisation of a Performance Management culture. This culture will be supported by processes, systems and, above all, the passion of every single person to make a difference through the achievement of pre-determined objectives and targets. A Performance Management System or Process (to use Kaplan and Norton’s preferred term) is designed to help you to determine and deliver the type of results that you want, and keep your Stakeholders satisfied and loyal.
- Data Collecting, Reporting and Communicating: The core components of data collection are linked with clearly defined processes for collection, with more and more organisations using software and often Intranet collection and display solutions. The results need to be segmented to understand the performance levels and strategic outcomes achieved within specific areas of the organisation. A good set of results can have an immediate impact on Stakeholders’ confidence and it is important to convey the right message to the right people.
- Employee Involvement and Empowerment: Performance Management Systems cannot work if the staff do not play a full role.
- Training for Measurement, Results and Improvement: Good Practice organisations use intensive training to enable employees to understand their measurement frameworks.
- The Improvement Process: Underlying all aspects of this Booklet is the belief that whatever our level of performance today, we want to do even better tomorrow. However, the secret to effective improvement is knowing what to improve and how to improve it. Results will provide us with valuable data but the full story cannot emerge until we first determine our results with reference to our plans and our priorities, execute, measure the results or outputs of our efforts and take remedial action.
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