1. Measuring Performance Against the Firm’s Strategic Plan

2. Why Measure Performance?
“If you can’t measure it, you can’t improve it.”

3. Comparing World Class Manufacturing Balanced Scoreboard
Comprehensive Model

4. Circular Process Necessary for the success of any method
Measure
Plan
Update Plan
Feedback

5. Common Ideas in Recent Studies of Measurement Methods
Reliance solely on financial measurements is inadequate
What needs to be measured and how

6. World Class Manufacturing
Measures eight areas of performance
Emphasis on inventory turnover

7. The Balanced Scorecard (BSC)
A departure from traditional measurement based primarily on financial metrics, which limits the analysis to past performance
Uses four perspectives that, together, can be predictive of future performance
A complement, not a replacement, for an organization’s other performance measurement and control systems
Use not limited to just-for-profit enterprises

8. BSC: 4 Measurement Perspectives
Financial – Profit, ROI, ROA, EPS
Customer – Satisfaction, retention, loyalty
Learning & Growth – development of people, systems and organizational procedures
Internal Business Perspective – In what areas must the organization excel?

9. BSC Measures Identified in each of the 4 perspectives:
Performance drivers (leading indicators)
Outcome measures (lagging indicators)
Cross-linking of measures in the various perspectives provides clear picture of cause and effect
Intensively integrates strategy design with performance measures

10. Balanced Scorecard

11. The Comprehensive Model
Simple concept integrates Planning/Management/Measurement process, using same approach at all organizational levels
Found to be effective in many applications: for-profit, non-profit, charities, athletic teams
Both
a process - the development of the plan
a product - the written plan

12. Clearly Defined, Nine-step Process1
PURPOSE OR MISSION 2
ENVIRON-MENTAL ANALYSIS 3
STRENGTHS AND WEAKNESSES 4
ASSUMPTIONS 5
OBJECTIVES 6
STRATEGY 7
OPERATIONAL PLANS 8
EVALUATION AND CONTROL 5A
INDIVIDUAL OBJECTIVES TO LOWEST LEVEL

13. The Ninth Step Process rolled down to every level of the organization
Actually a reiterative process covering multiple steps
Lower levels of organization pick up tasks defined in the operational plan (step 7) as their objectives (step 5), with each unit developing strategies, action plans and measurements of their own

14. Conclusion All models presented have appropriate measures in common
Each model emphasizes different facets of performance measurement
Each organizations should use this information to develop its own system

15. Highlights World Class Manufacturing Balance Scorecard
Continuous, dramatic performance improvement is especially relevant to manufacturing concerns
Balance Scorecard
Understanding this approach could improve skills in recognizing the value of future-oriented strategies & setting innovative measures to monitor them
Elements of presentation can be useful in the effort to communicate measurement results
Comprehensive Model
One integrated process for both strategic planning and performance measurement
Encourages involvement of all levels of the organization
Offers a wide variety of measurements which can be customized to the organization