1. Cost- Effectiveness Birkbeck Managers’ Forum 28 January 2009

2. Best Value
The 4 "C"'s
Challenge,
Consult,
Compare,
Compete

3. Challenge Why do we do this? Why do we do it this way?
What other ways are there of doing it?

4. Consult Who are the customers? What do the customers want?
What do the customers think of the service?
What's most important?
What causes problems?

5. Strategic Imperatives
Prime areas for performance improvement
These are the areas where the customers assign great importance to the service, but
delivery is poor
Key Competencies
Maintain performance
Customers assign great importance to the service, and also consider performance is good
Shift performance
Redeploy resources
Importance
Irritants
Not a problem in themselves, but should be monitored
Performance poor, but the customer does not give great importance
Opportunities
Areas of "over servicing"
Scope to re-allocate resources?
Performance is good, but not considered important by the customer
Performance

6. Compare: Benchmarking…is
"A systematic method of improvement that uses others' good practice to improve your own performance"
or "A way to avoid re-inventing the wheel - by making the most of other people's expertise" or
"The art of stealing shamelessly"

7. Making benchmarking work
Selection of measurements
Measurements should be relevant to the strategic objectives or the organisation
Determining the components of output measures is as important as measuring the outputs themselves

8. Making benchmarking work
Definition of measurements
Clearly defined and understood measurements are important in gaining consensus on the meaning of the results

9. Making benchmarking work
Validity and comparability
It is important to source comparative measures from organisations that:
share a similar business model
are subject to similar pressures

10. Making benchmarking work for you
Understanding
The most important element of benchmarking is knowing the management practices, the organisational structures and the systems and processes that support the achievement of the benchmarked output measures.

11. Compete
Shared services
Outsourcing

12. The seven deadly sins of cost reduction
not heeding the voice of the customer
salami slicing
compromising on sensitive issues
drifting under budgetary pressure
not seeing things through
losing sight of the outcomes
rewarding the wrong things

13. Salami slicing What is it? Shaving a set % from all budgets
Advantages:
simple to do and understand (any fool with a spreadsheet can do it)
perception (illusion?) of fairness
Disadvantages:
can destroy critical services
takes no account of the voice of the customer
takes no account of fairness of previous resource allocations
takes no account of efficiency
takes no account of sustainability

14. Compromise on the sensitive issues
Not implementing unpopular cost cutting proposals because of the political ramifications
Ensure
Sound evidence and analysis
Courage of convictions

15. Strategic drift under budgetary pressure
Focusing on the "easy wins" because of budgetary pressure, without considering the strategic priorities
Ensure
alignment of activity to institutional strategy - the "golden thread"

16. Not seeing it through
Conflicting pressures; lack of management will, capacity or "bandwidth"; insufficient knowledge; and lack of buy-in result in stalled implementation
Ensure
High level management support
Clear communications
Appropriate resource
Monitoring systems

17. Losing sight of the outcome
Not achieving the desired result in terms of either cost saving or service delivery because the outputs are unspecified
Ensure
Appropriate KPIs and performance management frameworks are in place

18. Rewarding the wrong things
Managers are rewarded (or status is perceived) on basis of size of responsibility rather than value to the institution, resulting in limiting incentive to make savings.
Ensure:
Align individual's performance targets and KPIs with institutional strategies

19. Making it work Management "buy-in" Ownership Performance management
Measurement
Continuous improvement
Embedded processes - training, support, documentation, systems