Performance Improvement Roadmap V4

PERFORMANCE IMPROVEMENT ROADMAP By Mike Mulcahy Sept 2011 “ Gilberts 6 windows on Human Performance”

This change process is not going to turn a VW into a Porsche 911, but it will turbo charge your engine, make sure all cylinders are firing & give your team advanced driver training and navigation skills !! ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Firstly, define your overall objectives of your change program EXAMPLE

Give your change project an inspirational name ,[object Object],[object Object],[object Object],EXAMPLE

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],THE CHANGE MODEL A visual model of the change process, timeframe and “Building Blocks” for change (Tailored to meet Objectives) Business Performance Review SYNTHESIZE, SIGN OFF. SYNDICATE, IMPLEMENT & MONITOR ACHIEVEMENT OF PLAN Stewardship Review & Control Processes Employee Survey Top 20 Leadership Interviews & Capability Review Behavioral change plan developed Ext. Customer Survey KEY GAP “Deep Dives” TO SUPPORT TARGETS WITH ACTIONS OHS & E Process Manufacturing Excellence Capability Work Cap. Mgt Spend Control Supply Chain Management IT Systems Capability Int. Customer Surveys by Dept Governance Framework, Policy & Process Standards Risk Review Recruitment, Training, Development & Retention effectiveness Customer Service Excellence Understand Strategy & Review Structure Alignment Cash & Debt Mgt Synthesize the critical reasons for change into a Story & Syndicate across/down the organisation to all stakeholders Product & Market Development Process Sales Capability Supplier Transactional Process Efficiency Procure to Pay Customer Transactional Process Efficiency Order to Fulfillment Employee Transactiona l Process Efficiency Payroll & Expense Reimbursement Planning & Performance Management Process Margin / Pricing Management Process Develop Value Driver Model & Theoretical Improvement Potential

Stage 1 - Key Points ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Stage 1 – Building Blocks & Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],Objective: Understand existing strategy (and shareholder perceptions, expectations) and alignment of structure Strategy & Structure 5 Forces Review including trends and scenario’s SWOT Review Competitor Review Vision, Targets Options & Rational Key Actions Key Enablers, Resources & Risks

[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand ideas (SWOT) & leadership capability for each of the senior managers and high potential employee’s – “Are the right people on the bus in the right seats” Top 20 Leadership Review Get all to read “Good to Great” & prepare comments Do 360 degree Performance Reviews List track record and key achievements in last 10 years One on One Interview with CEO Competency Gaps & progression potential Finalised Development Plans completed and implemented started Level 5 Related Skills and Attributes ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Level 5 Related Values and Motivators Learning Leading Results The value of pursuit of knowledge, continuous improvement of self and the organization. The value of personal recognition and control over their own destiny and others. The value of practical achievements, ROI, on time achievement, energy and resources. Level 5 Related Behavioral Styles Consistency Influence Controlling Predictable, steady, composed. Steadiness supports the hedgehog concept. Level 5s are not inherently charismatic. They tend to be compassionate, amiable, objective and logical. Levels 5s are not domineering or highly driven. They are inclined to be purposeful, moderate and conservative.

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand the Employee perceptions of the business performance (& SWOT) & their own performance Employee Survey 20% of employees interviewed by external facilitator All employees do questionnaire compiled by external consultant Present findings Redo every year to measure trend

[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand how each department is perceived by its internal customers for both KRAs and Key Behaviors EXAMPLE EXAMPLE Internal Customer Surveys KRA’s Behavior / Soft Skills

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand current & forecast business performance. Develop initial 80/20 broad range of critical KPIs to quickly instill focus, accountability & sense of urgency Business Performance Review OHS&E Financials Market Operations

[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand the key business risks, their potential impact, the mitigation strategies & probability before & after mitigation Risk Review Brainstorm Key Risks Select Top 10 Risks Agree on Potential impact (develop models) Potential Mitigation Strategies Probability before & after If risk & impact still too high develop more mitigation

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Understand the customer perceptions of our value proposition & business performance (& our SWOT) External Customer Survey 20% of customers interviewed by external facilitator All customers asked do questionnaire compiled by external consultant Present findings Redo every year to measure trend

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Develop a “Theoretical Potential Improvement “ in the business by Developing a Value Driver model and benchmark all its components against best practice and measure gap, Value Driver Model Develop Draft Conceptual Models Populate models with data Benchmark model components to best practice Identify High Level gaps with targeted performance

Objective: Ensure everyone in the business can see the prize or precipice so they understand why we have to change ,[object Object],[object Object],[object Object],Synthesize Story & Syndicate

Stage 2 – Key Points ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Stage 2 – Building Blocks & Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Stage 2 – Building Blocks & Objectives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Objective: Ensure a governance framework is in place that meets best practice & exceeds all listing requirements ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Governance Framework Mission & Values Delegation of Authorities Compliance & Audit Code of Conduct Planning & Control Syndicate

[object Object],[object Object],[object Object],EXAMPLE Objective: From feedback, develop detailed behavioral change plan needed to meet all stakeholder objectives (mission, values, targets, etc) Behavioral Change Plan Review Stage 1 feedback from stakeholders Identify behavioral barriers to achieve objectives Identify solutions to remove barriers Develop action plan to implement Communicate to stakeholders

[object Object],[object Object],[object Object],[object Object],Objective: Understand if performance shortfalls are due to any systemic factor that can be corrected Recruitment, Training, Develop. & Retention Effectiveness Is there clear Directional Info. (PD,KRAs,Targets) ? Does the person have sufficient Resources or Tools to do the job ? Are rewards competitive, performance reviews effective & sufficient recognition given ? Are there training and development plans ? Do the employees have the capacity to do their role ? Are they motivated… a good fit or enjoyable workplace environment ?

[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Verify Balance sheet values , identify any major write-offs and/or control weakness with actionable plan Stewardship Review & Control Processes Prepare templates Undertake Stewardship Review Management signoff of findings & action plan Management process in place to ensure gaps are closed Implement Actions

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Review adequacy of capital structure & funding facilities. Implement a process ensuring CFO has day to day control of funding and all material cash outflows Cash Management & Funding Process Appoint Regional Cash Management Bank Design & Implement online payment process Review Capital structure, facilities Develop & implement centralized funding arrangements, align DOA

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Put process in place to ensure all CAPEX & Discretionary Spend (Marcom, R&M, etc) is properly justified, approved, prioritised, controlled in timely manner with post implementation review. CAPEX & Discretionary Spend Control Process Justification Templates & Models Approval Review Ranking Process Implementation Control Post Implementation Review Communicate across organisation Review DOA spend limits

Objective: Put process in place to control & optimize WC % to “Best Practise” ,[object Object],[object Object],[object Object],Working Capital Management Set targets after understanding Value Proposition WC terms & benchmark its competitiveness Minimize payment runs to one per month Make Sales Dept responsible for collection & set weekly collection targets Clear Credit Limit, stop credit and legal proceeding rules enforced by Finance Implement Weekly Cash & WC Forecast / Control process Cost VP WC Terms into CPP margin numbers Monthly Sales & Operation Planning meeting to optimize DOI

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Ensure Margin Management Performance & Processes are “Best Practise”. Identify margin improvement potential & process changes. Margin Management Review Margin Calculation Definition & Costing Methodology Pricing Process & DOA Compliance Cost Plus v Market Based Discount & Rebate Structure CPP Matrix Analysis (Variation) Reporting

Objective: Reengineer Process to be “Best Practice” ,[object Object],[object Object],[object Object],Supplier Procure to Pay Identify Best Practice Map “AS IS” process Document Gaps to “Best Practice” Understand Risk/cost/resources to close gap Develop longer term plan for delivering last 20% Develop 80 / 20 strategy for quick implementation

Objective: Reengineer Process to be “Best Practice” ,[object Object],[object Object],[object Object],Customer Order to Fullfillment Identify Best Practice Map “AS IS” process Document Gaps to “Best Practice” Understand Risk/cost/resources to close gap Develop longer term plan for delivering last 20% Develop 80 / 20 strategy for quick implementation

Objective: Reengineer Process to be “Best Practice” ,[object Object],[object Object],[object Object],Employee Payroll & Exp. Reimbursement Identify Best Practice Map “AS IS” process Document Gaps to “Best Practice” Understand Risk/cost/resources to close gap Develop longer term plan for delivering last 20% Develop 80 / 20 strategy for quick implementation

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Review Capability, Performance & Processes. Identify improvement opportunities Sales Capability Value Proposition Competitiveness Project Pipeline & Market Intelligence Data Systems 4P Effectiveness (Marcom) & Sales Incentives Customer & Channel Relationship & Selling Skills CPP Matrix Analysis (Variation) & Reporting Bid Quality & Turnaround Times

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Do we have an effective process & Have we identified & invested in a sufficient pipeline of growth opportunities to meet our growth targets ? Product & Market Development Process New Channels New Products / Services Expand Up / Down Value Chain New Segments M & A opportunities Geographic Footprint Expansion / Coverage

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Are these systems appropriate for our needs and are they efficient and cost effective ? IS / IT Systems Capability Measurement KPIs Competitiveness of IS system Age of Infrastructure Outsourcing Options Skills & Experience Technology as enabler of growth

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Develop detailed plan to ensure the customer service is consistently competitive, value enhancing & meeting our promise to the customer ? Customer Service Excellence Measurement of KPIs (Lead Time, Stock Outs, $DOI, DIFOT%, distribution costs) Benchmark & Pareto Performance Gap Competitiveness of Value Proposition Quality Process On Time Process

[object Object],[object Object],[object Object],[object Object],Objective: Are the OHS & E processes and performance at “Best Practice” levels X OHS & E Process Does the leadership put OHS & E as #1 priority ? Have we implemented mitigating strategies for all High Impact risks / activities ? Do we measure incident pyramid ? Do 100% of employees conduct and questioned in regular audits ? Are all issues raised in Audits closed out in a timely matter Is there regular and sufficient training given ?

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Are the Manufacturing processes and performance at “Best Practice” levels Manufacturing Excellence Capability Measurement Fit for purpose Raw Materials & efficient utilization & batch size Appropriate Equipment (quality and efficiency) Repairs & Maintenance Skills & Experience Production Planning Process & Product Complexity

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Objective: Are these processes and performance at “Best Practice” levels Supply Chain Management Procurement Warehousing & Stock Management Distribution Forecast Accuracy Outsourcing Production Planning Process & Product Complexity

Objective: Ensure there is a process in place that drives ongoing systematic improvement, provides clear accountability, focuses the business on things that are important and creates a sense of urgency ,[object Object],[object Object],[object Object],[object Object],Planning & Performance Management Process Strategy , benchmark & 5 year plans Action Plans to close gap along with 1 year budget Integrate with Individual STI targets Monitor Performance Daily, Weekly, Monthly KPI Reporting Take Corrective Actions to close gaps Undertake Individual Performance Reviews

[object Object],[object Object],[object Object],[object Object],Objective: Turn “Theoretical Gap” into confirmed opportunities with management commitment and detailed hard action plans Performance Gap “ Deep Dives” Identify items that make up at least 90% of Gap Undertake “Deep Dives” for these items with “Best” Understand why, & develop plan for closure of gap Reviewed & Signed off by CFO

APPENDIX 1 EXAMPLE DAILY (Email Template) Good News - Wins MTI, LTI, Enviro Incident, Fraud Incid Resignations - Key Management Bad News Despatches Unit Volume - Yesterday Unit Volume - MTD % of Mth Fcst Margin % - Act & Mth Fcst Orders Received Unit Volume - % of Mth Fcst Margin % - Act & Mth Fcst Cashflow - Act & Mth Fcst Cash Position WEEKLY KPIs. (Email Template) Act Cashflow v 1 week Fcst Fcst Cashflow Next Week Act Sales Rev v 1 week Fcst Fcst Sales Rev Next Week Interco Payables Overdue % Receivables Overdue % Inventory Over 30 days Inventory - % of Mth Fcst DIFOT % - Act & Mth Fcst MONTHLY ELT REVIEW AGENDA Minutes of Last Meeting Traffic Light Summary OHS&E C.S. - DIFOT % & Lead Time Days PEOPLE - Behavioural Change Agenda EBIT - Variance Analysis Volume - Pipeline & Market Margin Spread Selling Price Variable Costs Costs & Efficiencies Manufacturing Logistics S & M Admin & Other REVENUE - Variance Analysis CASHFLOW - Variance Analysis WC Inventories Receivables & Payables Capex & Disposals Project Progress Update Risks & Opportunities Agreed Actions & Checkout ONE HOUR ALERT (Phone Call) LTI Environment Issue Fraud Reporting / KPI pipeline – Daily, Weekly, Monthly

APPENDIX 2 EXAMPLE Value Driver Model

EXAMPLES OF EBIT IMPROVEMENT PROCESS APPENDIX 3 EXAMPLE

MISSION VALUES COC & DOA VISION TARGETS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ELT GOVERNANCE FRAMEWORK ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],ELT MONTHLY ONE DAY REVIEWS SPECIAL AGENDA (DEEP DIVES) APPENDIX 4 EXAMPLE

APPENDIX 5 EXAMPLE MONTHLY KPI REPORT – Situation, Reason, Action

EXAMPLES OF EBIT IMPROVEMENT PROCESS APPENDIX 6 EXAMPLE

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