very good start with performance metric management. Essential reading for all scorecard practitioners. A must for all supervisors and managers

1. Building A Metric
Management
An alternative to Balanced Scorecard
ARRIFFIN MANSOR

2. Introduction
 Metric management provide a framework
for management measurements and
targets.
 Strategies are defined in metric terms for
proper communication and execution.
 When asked about strategy, managers
reach for their metric charts and maps.
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3. Agenda
 This slide presentation will outline the
major steps for building a metric
management plans.
 How you execute these steps will depend
upon many factors: Company culture,
tolerance for change, leadership, etc.
 However, please try to follow the same
sequence, focusing on the strategic maps.
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4. Overview
 Metrics are used in management from
planning to controls
 Link these metrics into strategic maps
 Throughout the process, we will refer back
to these maps, making sure everything is
linked. This is very important since we
want to capture a “cause and effect”
relationship in building metrics.
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5. Why metric management?
 Improves how you communicate strategy
 Superimposes a discipline whereby you
capture cause-effect; otherwise you create
pockets of under-performance.
 Also forces you to think about strategic
measurement as opposed to tactical or
operating type measurements
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6. Start with Strategy
 Begin with your strategic plan – what
things are critical to future success?
 Focus on customers – what values will we
add to our customers
 Define the processes – how will we deliver
these services to our customers
 Build the organization – what capabilities
must we put in place
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7. Strategies
 Once we establish our first anchor (goals),
we can develop a set of strategies.
 Strategies define what actions must be
taken to reach the goals.
 Strategies are critical to future success. For
example, in order to grow revenues, we
must introduce new products and expand
our market share.
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8. Goals
 The first components of your strategy are
goals.
 Goals establish direction in concrete terms.
 Goals anchor the rest of the process.
 Goals should fit with the vision and
mission of the organization.
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9. Goal Attributes
 Very short statement
 Directly relates to the mission
 Broad in scope
 Covers long time period (such as 3 years)
 Examples:
- Improve Customer Service
- Leverage Core Competencies
- Develop more innovative products
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10. Strategy Map: Capture a Cause Effect
Relationship from the Bottom Up
Stakeholder
More rapid and
Improved Returns on
accessible services
Investments
Internal Process
Economic Model Reduce Re-Activities Establish Web Based
Process thru ABC/M Self Services
& Growth
Learning
Expand Global Leadership Knowledge
Facility Reach Development Management
Investments
Facilities and Fixed IT Infrastructure
Assets Human Capital

11. Key Benefits of Strategy Maps
 Articulates how the organization creates value for its constituents and
legitimizing authority
 Displays key priorities and relationships between outcomes (the "what") and
performance enablers or drivers (the "how")
 Provides a clear view of "how I fit in" for sub-organizations, teams, and
individuals
 "Cascading the scorecard throughout the organization, and clearly mapping the
various units and functions back to the organization or agency-wide map is
critical to leveraging and ensuring alignment"

12. Strategy Maps –
A Better Way to Communicate Strategy
Executive consensus and Educate and Communicate:
accountability:
Build awareness and
Building the map eliminates understanding of organization
ambiguity and clarifies strategy across the
responsibility. workforce.
Promote Transparency:
Ensure Alignment:
Communicate with and
Each sub-unit and individual educate constituents, partners,
link their objectives oversight bodies, and the
to the map. general public.
Source: "Using Balanced Scorecard Technology to Create Strategy-Focused Public Sector Organizations", Robert S. Kaplan, April 21, 2004,
pg. 20

13. Extend the Map into Measurements,
Targets and Initiatives
Strategy Map
Stakeholder
Detailed statement How success in The level of Key action
Faster Service Access of what is critical to achieving the performance or programs
successfully strategy will be rate of required to
achieving the measured and improvement achieve
strategy tracked needed objectives
Self Service
Applications
Internal Process
Objective
Measure Target Initiative
Lean Processes Description
Eliminate waste, Number of Reworks 2 per setup per Lean / Six Sigma
reworks, and other month each
Process and Value errors in our Outlet Office
Map Analysis processes
L&G
Web Enable
Technologies
Investments
Invest in IT

14. Alignment of Scorecard Components
Make sure the components of your scorecard fit together. We want to create a tight
model for driving execution of your strategy.
Goal Objective Measurement Target Initiative
Achieve Reduce Cost per Outlet 5% - Year 1 Activity
Agency Operational Office, Cost per 10% - Year 2 Based
operational Service Costs by Region, Cost per 15% - Year 3 Costing /
efficiencies 50% over the FTE Management
with best next 5 years
practices in
the private Reduce identified Waste Volume Waste stream Lean / Six
sector re-activities Charts, Rework reductions of Sigma
within primary Tracking, Cycle 5% each year,
processes by Time End to End Reworks cut in
80% over the in S-LX (5 of 7 half for next 3
next 3 years Regions) years, cycle
time cut by 75%

15. Multiple Choice Question –
Create a Tight Model
The Balanced Scorecard process captures a cause and effect
relationship based on having all parts linked together.
Strategic goals link down to objectives, objectives link
down to measurements, and measurements link to:
a. Mission
b. Goals
c. Budgets
d. Targets

16. Multiple Choice Question –
and the answer is . . .
d – Measurements should be linked to
targets. We want a one-to-one relationship
so that measurements are actionable to the
Agency.

17. Key Result Areas
 A concentrated or focused minimum area
of work that would give you the maximum
intended outcome.
 A major component of the outcome
 A pareto activity that gives 20:80 outcome.
 The most sensitive inputs that give
maximum outputs.
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18. Strategy Attributes
 Longer statement than goal statement
 More specific than goal statement
 Indirect relationship to mission
 Covers shorter time period than goal (such
as 6 months or 1 year)
 Example:
- We will expand call center services to
include technical support
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19. Programs (initiatives)
 Based on the goals, three to five programs
should emerge.
 From these programs, we will develop a
strategic map.
 Four common programs are: Operating
Efficiencies, Customer Relations, Product
Innovation, and Growing the Business.
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20. Strategic Model
 Strategic Models can emerge from four
principles:
1. Translate strategies into operating terms.
2. Link strategies throughout the entire
organization.
3. Commit everyone to implementing
strategy.
4. Make strategizing a continuous process of
learning and adjusting to change.
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21. Four Perspectives
Before we build strategic maps, we need to define
four perspectives:
 Financial: Top layer in the map, represents
financial outcomes (profits, revenues, etc.)
 Customer: Next layer down, enables financial
results (service, image, price, quality, etc.)
 Internal Processes: The values added to
customers, such as delivery, production,
distribution, etc.
 Learning & Growth: The people, systems, and
organization that enable processes.
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22. Before we can map your
strategy . . .
 Get down to a set of quantifiable strategic objectives:
Too vague
Improve Customer Service
More precise
Reduce average customer wait times by 30% by
year end
 Make sure your objectives have a direct relationship to
your goals and your goals have a direct relationship to
your mission and values.

23. Strategic Mapping
 Strategic Maps are the foundation of the
Balanced Scorecard.
 You will need one strategic map for each
programs (initiatives)
 Maps are constructed over four
perspectives.
 Strategies are mapped over the four
perspectives, linked together.
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24. Linking
 Strategies need to be placed in the
Strategic Map according to which
perspective fits with the objective.
 Objectives may cross over more than one
perspective.
 We usually start at the top with outcomes
and work our way down, looking at what
enables (drives) the outcome.
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25. Approval
 Once you have completed the strategic
maps, you will need to get approval from
executive management. Does this map
accurately tell the “story” of our strategy?
 If management disagrees with the map, go
back and redo the maps. We need to get
this step right since it represents the
foundation for the entire scorecard.
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26. Measurements
 For each you need one measurement.
(KPI)
 Measurement provides us with feedback
on meeting the strategic objective.
 Most organizations will use many of their
existing measurements.
 Organizations requiring major change
should include driver type measurements.
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27. The Measurement Pyramid
Goal
Strategic/GPRA Goals
End-Outcomes Outcome
Performance
Measures
Longer-Term Intermediate Program
Outcomes
Program Performance Measures
Shorter-Term Program Components
Intermediate
Outcomes Program Component Performance Measures
& Outputs
Activities
Outputs
& Inputs
Activity Performance Measures

28. Examples of Measurements by Perspective
Stakeholder / Customer Internal Processes
• Current customer satisfaction level • Number of unscheduled maintenance calls
• Improvement in customer satisfaction • Production time lost because of maintenance
• Customer retention rate problems
• Frequency of customer contact by customer • Percentage of equipment maintained on schedule
service • Average number of monthly unscheduled outages
• Average time to resolve a customer inquiry • Mean time between failures
• Number of customer complaints
Learning and Growth Investments
• Percentage employee absenteeism • % of facility assets fully funded for upgrading
• Hours of absenteeism • % of IT infrastructure investments approved
• Job posting response rate • # of new hire positions authorized for filling
• Personnel turnover rate • % of required contracts awarded and in place
• Ratio of acceptances to offers
• Time to fill vacancy

29. Key Performance Indicators
 The best KPI is a ratio of inputs and
outputs.
 It indicates efficiency at all processes
along the value chain i.e inputs, process,
outputs and outcomes.
 The most important KPI is at the outcome
phase which should supercede those of
earlier KPIs in the value chain.
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30. Measurement Criteria
 Measurements should drive change,
providing teeth to our strategy.
 Measurements define objectives in specific
terms. A good measurement should tell
you what your objective is – this is an
indicator of good linkage.
 Measurements should be repeatable,
quantifiable, and verifiable.
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31. Measurements
 Outcome efficiency
 Customer satisfaction:
- Response time to service customer
- Satisfaction survey scores
 Process Efficiency:
- Cycle time
- Downtime
- Number of Restarts
 Input efficiency
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32. Lead and Lag Measurements
 Leading measurements are drivers behind
performance and provide some
predictability (forward looking)
 Lagging measurements are usually final
outcomes that look back, such as customer
satisfaction or return on investment
 Metrics should include both leading and
lagging type measurements
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33. Targets (KPS)
 Once you establish measurements, you
need to set a target for each measurement.
 Targets push the organization to a required
level of performance.
 Targets put focus on the strategy,
expressing the specifics of the strategy.
 When an organization hits its targets, then
it has successfully implemented its
strategy.
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34. Characteristics of Initiatives
 Leader Sponsored
 Requires Investments – people, funding, technology, etc.
 Has designated owners
 Includes deliverables or milestones
 Usually has time deadlines
 May be difficult to launch – not resourced
 Could encounter obstacles – people are confused, conflicts with
other functions

35. Initiatives should enable strategic execution
Initiatives Goals or Objectives
Value Mapping Project Improve identification and delivery of all
agency services across the full stakeholder
spectrum
Employee Rotation Program Improve the employee turnover and
satisfaction scores
Web Self Service Portal Reduce agency costs and streamline our
services for more direct service delivery
Common Knowledge Center Expand the overall knowledge base so that
inter-functions can learn from one another
Customer Survey and Develop a more systematic process across
Analysis Tool Program the entire agency to better connect to our
customers
Shared Service Center Reduce reworks and overlaps between our
Tracking System seven shared service centers

36. Examples of Targets
Average Turnaround Times 8 days 7.5 days 6.8 days
at Docking Sites FY05 FY06 FY07
Utilization Rate for Self 10% FY05 18% FY06 25% FY07
Serve Web Portal
Rotation Internship 1,800 FY05 2,500 FY06 3,900 FY07
Participation Rates
Glider integration mapping Establish 8 per sets 10 per sets
tool used for geo-sets baseline
% of agency SES Levels 30% FY05 40% FY05 65% FY05
following IRPS from end to
end for the entire year
% funding through SEPCO 30% FY05 35% FY06 45% FY07
for space mapping

37. Examples of Targets
 Total Time to Recruit New Employees:
Less than 40 days by year-end
 Utilization of rental facilities: Increase to
85% during peak summer months
 Growth in top line revenues: 10% increase
over last year
 Improve overall customer satisfaction:
Total scores exceed 90%
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38. Initiatives (programs)
 In order for things to happen in an
organization, you must initiate major
projects or programs. For example,
improving customer service may require a
new customer management system.
 Once you launch appropriate initiatives,
you should be able to meet your
objectives. This closes the loop, everything
is now linked and away we go!
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39. Initiative Attributes
 Sponsored by senior management
 Designated owners manage project(s)
 Includes deliverables or milestones
 Usually has some time deadlines
 Could be difficult to launch – lack of
support, no funding, poorly defined, etc.
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40. Templates
Strategic Map for Strategic Theme #1:
Financial
Throughout this
process, we will use
Customer
templates to capture,
analyze and document
data. Templates are
used for strategic
mapping, defining Internal
measurements, etc.
Learning
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41. Other Important Steps
 Metrics are built around three teams:
Leadership Team (upper level
management), Core Team (middle level
management) and Measurement Team
(lower level functional personnel).
 Metrics are built around at least four group
meetings: Kick Off Meeting followed by at
least one meeting for each of the three
teams.
 Metrics are cascaded to the individual
level at performance planning meeting 41
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42. Some Tools for Determining
What to Measure
Program Logic Model
Process/ Intermediate End
Inputs System Output Outcomes Outcome
Process Flow
Causal Analysis
Prototype
Product
Desired
Outcome Acceptable Not Acceptable
Results
Back to
To Market Of
Laboratory
Testing

43. Implementation
 The minimum time for developing a
metric management is three months.
 Full deployment of metrics throughout the
entire organization can take more than one
year.
 The best place to start building a metric
managemnt is where all components of the
value chain are in place: Customer,
Innovation, Production, Delivery, Services,
etc.
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44. Summary
 Metrics are the best framework of
management today.
 It communicates strategies.
 A fully integrated approach: Goals,
Objectives, Mapping, Measurements,
Targets, and Initiatives.
 Metrics can be experimental, whereby you
test your strategies, refine, and make
changes as you get feedback and learn
what works.
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45. Components of Metric
Management
 Goals and objectives definition
 Key result areas (Strategies) – cause effect
relationship
 Strategic Programs (initiatives)
 Strategic Mapping
 Key Performance Indicators – lead and lag
indicators
 Key Performance Standards &
Benchmarkings 45
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46. Installing corporate metrics
 Define corporate goals in Du Pont ROE
format.
 Identify critical performance gaps and
strengths
 Identify Critical success factors
 Refine above into strategic maps
 Developing programs and people identified
 Cascading metrics to operating departmental
heads
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47. Performance improvement framework
Performance Gaps Targeted Output
Identify Critical Gaps The right
Current Gap Analysis performance New
Practices Best Practices improvement Practices
Training strategies
Other management changes
Innovation
STANDAR Company Industry Innovation
DS
Evaluate Performance through measurements
Linking metrics through the strategic maps
Adopt participative performance planning and appraisal cycle

48. RETURN ON EQUITY
20% 4 2 160%
PROFIT SALES ASSET PROFIT
X X S =
SALES ASSETS EQUIT EQUITY
Y
PROFIT ASSET EQUITY RETURN
MARGIN TURNOVE MULTIPLI ON
R ER EQUITY
48

49. FINANCIAL KPIs
INPUT PROCESS OUTPUT OUTCOME
Material variances
Labour
Overhead Efficiency ratios No produced Average cost per
transaction
Research Productivity Value produced ROI
dev expense ratios
Inventory Average lead RETURN ON
turnover time EQUITY
Waste Reduction
49

50. MARKETING
INPUT PROCESS OUTPUT OUTCOME
Material Response rate No of customers
Labour Marketing costs % Sales volume
Overhead Efficiency ratios Customers Profitability
Research Productivity Product ROA marketing
dev expense ratios profitability
Average cost per Customer acquisition Return on Sales
transaction
Inventory Average lead time Customer retention
turnover
Price rel to comp Waste Reduction Revenue growth
Delivery Channel
50

51. INTERNAL PROCESS
INPUT PROCESS OUTPUT OUTCOME
Material variances
Labour
Overhead Efficiency No produced Average cost per
ratios transaction
Research Productivity Value ROI
dev expense ratios produced
Inventory Average
turnover lead time
Waste Reduction
51

52. HRM KPIs
INPUT PROCESS OUTPUT OUTCOME
Incentives variances Turnover ratio
Hours Efficiency No produced Profit per employee
ratios
Training Productivity Value ROI
ratios produced
Salary Average Turnover Revenue per
lead time employee
Skill Waste Reduction Employee Value added per
competency productivity employee
52

53. Performance Tools
 Du Pont ROE Analysis
– KPI standards – industry or past
– Variance Analysis
– Critical Performance Gaps
 Input Output Evaluation
– KPI
 BSC perspective to determine learning needs
 Strategic Maps
 Performance improvement matrix
 ROI Training
53

54. Thank you
QUESTION PLEASE
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