Value Networks

 and the true nature of collaboration

   

Chapter 5: Advanced Analysis

Performance Indicators

 

 

Performance Indicators

It is best to approach Performance Indicators from a perspective 
of seeking business results in both financial and 
non-financial performance terms.
Here you will find suggestions to help you think through performance indicators for roles, participants, transactions, and value flows - and possible measurement areas.
It is always easier to demonstrate results if you have developed baseline measures prior to undertaking any initiative - a step that should be obvious but is often overlooked. There is an old saying that goes, "If you don't know where you are going any road will do." Thinking ahead to measurable results helps to target your interventions more productively and provides a way to tell the story of your results.
Definitions
Performance indicators or measures are either qualitative or quantitative metrics for assessing the quality or efficiency of the execution of an activity, or demonstrating progress toward a gal or desired outcome.
The terms performance indicators and performance measures are often used interchangeably. Indicator is a somewhat broader term in that it includes second-order indicators that point to possible progress even if something cannot be measured directly.
The term KPI (Key Performance Indicator) has become part of the business language in respect to many aspects of organizational, process, and human performance.
By identifying specific value contributing activities, Value Network Analysis (VNA) allows for development of performance indicators right down to the level of a single transaction and deliverable.

In doing a VNA, performance indicators can be developed at any point after completion of the value network map. Some people prefer to work with only the performance indicators and skip the other analysis options. How far people go with the analysis depends on their situation and goals, as well as time constraints.
The biggest mistake in developing performance indicators is that people go after data that is easy to get rather than what is really needed.

For example if you want to know about how people are learning, training hours per person is easy data to collect - but it only tells you how long people sat through training. It does not indicate learning.
Examples of performance indicators
These typical performance indicators can apply to roles, participants, transactions, or value flows.

Output

Units produced

Tons manufactured

Items assembled

Items sold

Forms processed

Tasks completed

Productivity

Work backlog

Shipments

New accounts generated

 

Costs

Unit costs

Fixed costs

Overhead costs

Number of cost reductions

Project cost savings

Rework costs

Program costs

Sales expense

 

Development / Advancement

Number of promotions

Requests for reassignment

Performance appraisal ratings

Increases in job effectiveness

 

Feelings / Attitudes

Favorable reactions

Attitude changes

Perceptions of job responsibilities

Perceived changes in performance

Employee loyalty

Increased confidence

Sharing and team behaviors

Customer satisfaction

 

Initiative and Innovation

Implementation of new ideas

Successful completion of projects

Number of validated ideas submitted

Number of validated ideas implemented

Achieving goals and objectives

Work Climate

Absenteeism

Number communication breakdowns

Conflicts avoided

Grievances resolved

Number of discrimination charges

Employee complaints

Job satisfaction

Employee turnover

Reduced litigation

 

Time

Overtime

On-time shipments

Time to project completion

Processing time

Supervisory time

Learning time for new employees

Training time

Meeting schedules

Lost time days

Cycle time

Response time

 

Quality

Process improvements

Waste

Rejects

Error rates

Rework

Product defects

Deviation from standard

Percent of task completed properly

On-budget project

 

New Skills

Skills and competencies

Problems solved

Frequency use of new skills

Guidelines for good indicators
Clear definition

- Is there shared understanding of exactly what the measure is referring to?

- Is the name of the indicator used consistently in all parts of the organization?

 

Expectations

- Is the indicator target reasonable and attainable?

- Who sets the targets? How?

- Who is affected by the indicator?

- Who are other interested stakeholders?

 

Formulation

- How will the indicator be calculated?

- What is the formula for getting to the indicator?

- What are the units for the formulation? Are they standardized?

 

Action triggers

- What is "stable" and "unstable?"

- What is under control? What is out of control?

- What does a positive trend look like? Negative trend?

 

Data collection and reporting

- Who is accountable for data collection and accuracy?

- When and how is data collected?

- What reliability checks or validation are needed?

- How is the data going to be reported?
Collecting data
The following table is an example of how performance measures could be handled. Different types of indicators can be used. For example, Measure A could be "error rates," Measure B could be "cycle time," and so on.

Measures can be absolute measures or subjective measures as in the sample table.
  

Transactions

Performance

Deliverable:

Nature of Deliverable:

 

(intangible or tangible)

Comes From:

 

(role)

Goes To:

 

(role)

How does the sender evaluate the
performance of the deliverable?

3 = highly satisfactory

2 = satisfactory

1 = acceptable

0 = unacceptable

How does the receiver evaluate the
performance of the deliverable?

3 = highly satisfactory

2 = satisfactory

1 = acceptable

0 = unacceptable

Measure
A

Measure
B

Measure
C

Measure
A

Measure
B

Measure
C

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It is possible to compile indicators for whether the network as a whole is healthy and sustainable. See Value Network Indicators for more on network-level indicators.

 

 

  

TOP OF PAGE

Next chapter: Selected Case Studies