Embed Size (px)
Citation preview
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 11
I. Non Financial Measures/indicators – I. Non Financial Measures/indicators – II. Performance Measurement System – II. Performance Measurement System – III. Interactive Control System – III. Interactive Control System –
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 22
I. Non Financial Measures of I. Non Financial Measures of Performance Evaluation – Why?Performance Evaluation – Why?
Mere use of Financial Measures
Encourages Short term actions –supply low quality products to achieve sales and profit
target.De-motivation to take long term actions –
ignore strategic views, take up new projects Communication distortion between corporate mgt and BU mgt.-
setting low targets, non-communication of failure to achieve the target till the end of the year.May motivate the manipulation.-
Low provision for bad debts, warranty claims.
Hence one has to concentrate on other critical factors of performance too such as …………………………….
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 33
Non Financial Measures of Non Financial Measures of Performance Evaluation -Performance Evaluation -
A. Customer related measures/indicators.
• Order bookings• Back orders (imbalance between production and sales) • Market Share• Key Account orders• Customer satisfaction – (through customer surveys, complaints)• Customer retention (length of customer relationship)• Customer Loyalty (Repeat purchase orders, referrals,
% off take of total requirement.)
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 44
Non Financial Measures of Non Financial Measures of Performance Evaluation -Performance Evaluation -
B. Business related measures/indicators. -
B. Business related measures/indicators. -
• Capacity utilization.• On time delivery.• Inventory turnover.• Quality.• Cycle time
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 55
Non Financial Measures of Non Financial Measures of Performance Evaluation -Performance Evaluation -
C. Employee related measures/indicators. -
• Attitude about Job and Company,• Turnover/Retention• Loyalty• Skill Development
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 66
How Non Financial Indicators How Non Financial Indicators Financial Performance Financial Performance Case Study at SEARS Co.Case Study at SEARS Co.
5 Times increase in Employee Attitude
1.3 Times increase in Customer Impression
0.5% Growth in RevenueDrives Drives
Better Attitude about the job
Enhanced Customer Retention
Employee Retention
Better Goods & Values
Enhanced Employee Behavior
Better Attitude about the company
Better Service & Helpfulness
Better Customer Impression
Better Return on Assets, Operating Margin,Revenue Growth
More Customer Recommendations
Compelling Place to BuyCompelling Place to Work
Actual Evaluation Results
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 77
II. Performance Measurement System II. Performance Measurement System – –
Design and Implementation of MCSDesign and Implementation of MCS
Selects those measure which best represent & count the company’s strategic achievement.
Strategy defines the critical success factors; if these factors are measured and rewarded, people are motivated to achieve them.
PMS improves success rate of Company to implement its strategy.
• Define Strategy
• Define Measures
• Integrate Measures in to Management System. Fit measurement system in to management system.
• Review System.
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 88
Performance Measurement System -Performance Measurement System -
STRATEGY
What counts, gets
measured
What gets measured, gets done.
What gets done, gets rewarded
What gets rewarded,
really counts
IDEAL PMS
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 99
III. Interactive Control System –III. Interactive Control System –
1. MCS functions & strategic uncertainties go hand in hand. Hence MCS plays vital role.
2. Mangers at all levels focus their attention to information given out by MCS.
3. Seniors discuss and interpret the implication of the information about the future strategic initiatives.
4. This leads to debate which challenges the underlying information, assumptions and ultimately initiates appropriate strategic corrective actions.
What makes MCS Interactive???: -
04/11/2304/11/23 [email protected]; VIM [email protected]; VIM Pune 1010
Interactive Control System –Interactive Control System –
Corporate StrategyWith inherent Uncertainties
Implementation of Strategy through
MCS
Use of MCS information for improvements
New Corporate Strategy evolves
40% Market Share-Competitors strategy, New
technological developments, Lifestyles
Implementation Strategy through MCS
Competitor’s aggressive promotion policy
Counter promotional strategy
How it works Example
