Performance Measurement. Integration of Information for Process Improvement and Innovation Palmira López-Fresno President. Quality Service Committee Spanish Association for Quality 13 th ICIT. Malaysia March, 2008

I. Introduction Process Management as a mechanism for achieving competitive advantage through performance improvement:  As a way to manage the business (holistic perspective).  Being able to tie the deployment from the strategic level to the task level with better effectiveness.

I. Introduction Each process crosses various inter or intra departmental units. PROCESSES FUNCTIONS The overall process performance depends on the performance of each phase of the process. The concept and role of internal customer is crucial for overall effectiveness.

II. Process performance monitoring and evaluation Business Process Management involves the use of a measurement system. One of the first pre-requisites for quality of information is to incorporate information from all the actors (stakeholders) from a global holistic perspective. Regarding employees (internal customers), nobody better than the person who perform the tasks knows how the process is performing and which aspects should be improved.

Profitability Obtained Improvements Cost-effect. analysis Competency Policies Budget Measurem. of impact on customers Communication Customer Service Use/knowledge Measurem. of efficacy Measurem. of customer satisfaction Measurem. of orientation to customers EXPECTED QUALITY OBJECTIVE QUALITY PERCEIVED QUALITY PRODUCED QUALITY ORGANISATION (Internal perspective) (Process based indicators) CUSTOMERS (External perspective) (Customer based indicators) II. Process performance monitoring and evaluation

Profitability Obtained Improvements Cost-effect. analysis Competency Policies Budget Measurem. of impact on customers Communication Customer Service Use/knowledge Measurem. of efficacy Measurem. of customer satisfaction Measurem. of orientation to customers EXPECTED QUALITY OBJECTIVE QUALITY PERCEIVED QUALITY PRODUCED QUALITY ORGANISATION (Internal perspective) (Process based indicators) CUSTOMERS (External perspective) (Customer based indicators) II. Process performance monitoring and evaluation

This cycle can be applied to external or internal customers and also to other stakeholders. For each process the organisation will have indicators related to produced quality (efficiency, cost, time, resources, etc.) and information related to perceived quality (quantitative and qualitative).

Purpose:  To know the perception the persons involved in the execution of the processes (internal supply chain) have about their performance level, in order to identify the processes, sub- processes or phases that need to be improved.  Also it can contribute to communicate and implement Process Management and to increase commitment and participation. The focus is on processes, not in departments and on process performance rather than on internal customer satisfaction. II. Process performance monitoring and evaluation

Purpose:  To know the perception the persons involved in the execution of the processes (internal supply chain) have about their performance level, in order to identify the processes, sub- processes or phases that need to be improved.  Also it can contribute to communicate and implement Process Management and to increase commitment and participation. The focus is on processes, not in departments and on process performance rather than on internal customer satisfaction. II. Process performance monitoring and evaluation

The incorporation of the internal customer voice to the performance measurement system A case experience EXPECTED PERFORMANCE PERCEIVED PERFORMANCE

III. Internal customers perceived quality evaluation Activity: Service organisation. The biggest and most important automobile club in Spain, providing medical, mechanical and personal assistance, travels, insurance, etc. to more than one million members. Set up: In 1897, private capital. Company: RACC Location: Barcelona - Spain Employees: 1650

III. Internal customers perceived quality evaluation Culture:  Traditionally strongly customer oriented (efficacy even more important than efficiency). In 2001 a new “business” perspective was introduced. Process focus gained relevance as a mechanism for increasing competitiveness.  The new perspective challenged accepted ways of thinking and focusing the activity.

III. Internal customers perceived quality evaluation Main element for process effectiveness monitoring DISSENY AND METHODOLOGY IDENTIFICATION AND QUALIFICATION OF PROCESSES Indicators system Inventory Maps Flow charts Process Management Manual PROCESS MONITORING Process Performance Monitoring Scorecards PERIODICAL EVALUATION OF PROCESSES Internal and external customer voice Results from analysis of indicators Benchmarking Continuous improvement and innovation

III. Internal customers perceived quality evaluation The process performance monitoring system was initially mainly integrated by objective indicators (internal perspective). External customer satisfaction was also monthly monitored (data treated separately). An internal customer perceived process performance was implemented, in order to complement the information the organisation had for decision making.

III. Internal customers perceived quality evaluation  To identify areas/ aspects of poor performance.  To identify causes of negative performance results.  To anticipate negative performance results.  To increase employees awareness with regard to process management and its advantages. The final aim was to periodically identify the processes, sub-processes or phases that need to be improved. Objectives:

III. Internal customers perceived quality evaluation  Evaluation performed quarterly, via intranet, by the Corporate Quality Direction. In 2007 data collection was subcontracted.  Addressed yearly to all employees. A sample of 25 % each quarter. Anonymous answering.  Evaluation of 13 main macro processes. Methodology:

III. Internal customers perceived quality evaluation  A questionnaire designed for each process. Includes questions related to friendliness/ courtesy, responsiveness, quality of answer/solution, for each phase of the process, specific questions for some products, and a question related to global performance of the process. Methodology:

III. Internal customers perceived quality evaluation  Numeric scale, with 10 grades, except some questions related to frequency of use. An open question to specify the 3 main improvement aspects in the process according to the perception of the person who evaluates. Methodology:  Each person evaluates the processes in which he/is is mainly involved, from a perspective of internal supplier-customer.

III. Internal customers perceived quality evaluation  By key attributes, at a corporate level (linked to compliance of values): Results: SIG 06  By process (horizontal view):  By unit /department (vertical view):

III. Internal customers perceived quality evaluation  Quantitative  Qualitative  Priorisation of aspects to be improved for each process, using the Importance-Performance Map, and globally, identifying key processes by linking processes to strategic lines. Results:

III. Internal customers perceived quality evaluation Results: PERFORMANCE + - EXCELLENT/ AREA TO BE MANTEINED TO BE IMPROVED AREA CARE-FREE AREA/ TO BE REDUCED SURPLUS AREA/ IRRELEVANT IMPORTANCE + -

III. Internal customers perceived quality evaluation Distribution of results:  Detailed results distributed to top and middle management, and main indicators included in the process performance measurement system.  A summary is distributed to all employees, via intranet.

III. Internal customers perceived quality evaluation Results:  The process performance measurement system was improved, incorporating perceived performance indicators.

III. Internal customers perceived quality evaluation Global results obtained from the methodology:  Increased employees awareness and motivation with regard to process management. They perceive their opinions are valued.  It allows better identification of causes of negative tendencies (ex. Mechanical Assistance) and therefore better identification of improvements and innovation in processes and products.  It allows better allocation of resources.  It can allow to anticipate negative performance results.

IV. Conclusions  Two perspectives should be taken into account when defining a measurement system: internal or process based indicators (produced quality), and external or customer based indicators (perceived quality). Both perspectives should be integrated to provide information for better decision making.  Internal customers provide very useful information on how processes are performing and which areas should be improved or innovated. A methodology to periodically and systematically evaluate process perceived performance should be implemented and results integrated with other internal indicators.  Tools to prioritise improvement should be applied.

Thank you Terima Kasih