Performance Measurements by Salih Duffuaa Professor of Industrial Engineering and Operations Research

Performance MeasurementsPerformance Measurementsby by

Performance MeasurementsPerformance Measurementsby by

Salih DuffuaaSalih DuffuaaProfessor of Industrial Engineering and Professor of Industrial Engineering and

Operations ResearchOperations Research

OutlineOutlineOutlineOutline

• Role of Performance MeasuresRole of Performance Measures

• Characteristics of Good MeasuresCharacteristics of Good Measures

• Approaches for developing Approaches for developing measures in strategic planning.measures in strategic planning.

• Implementation of measures.Implementation of measures.

Role of Performance Measures (PM)Role of Performance Measures (PM)Role of Performance Measures (PM)Role of Performance Measures (PM)

• Assess current situationAssess current situation

• Launch Continuous improvement.Launch Continuous improvement.

• Strategic planning implementation.Strategic planning implementation.

Characteristic of PMCharacteristic of PMCharacteristic of PMCharacteristic of PM

• Relevance:Relevance: Include data that are essential to provide Include data that are essential to provide a basis for understanding the accomplishments of a basis for understanding the accomplishments of goals and objectives of the organization.goals and objectives of the organization.

• Interpretability:Interpretability: Interpretability refers to the ease Interpretability refers to the ease with which the intended audience can understand and with which the intended audience can understand and use the information generated by the measure. use the information generated by the measure.

• Timeliness:Timeliness: Report in a timely manner so that it will Report in a timely manner so that it will be available to users before it loses its value in be available to users before it loses its value in making decisions.making decisions.

Characteristic of PMCharacteristic of PMCharacteristic of PMCharacteristic of PM

• Reliability:Reliability:. A measure is reliable if, when repeatedly . A measure is reliable if, when repeatedly

applied to the same population, the same result is applied to the same population, the same result is obtained a high proportion of time. obtained a high proportion of time.

• Validity:Validity:. Validity is the extent to which the measure . Validity is the extent to which the measure accurately represents the quality being assessed. accurately represents the quality being assessed.

Lake Suggested Outcome Based ApproachLake Suggested Outcome Based ApproachLake Suggested Outcome Based ApproachLake Suggested Outcome Based Approach

• It is essential to have a system by which to assess the It is essential to have a system by which to assess the University progress towards achieving its mission University progress towards achieving its mission and vision. The process of developing such a system and vision. The process of developing such a system include:include:

• Identify what outcomes are implied by the Identify what outcomes are implied by the

mission, vision and value statements.mission, vision and value statements.• Identify the key activities that support the Identify the key activities that support the

outcomes?outcomes?• What information is needed to assure that activities What information is needed to assure that activities

and the outcomes are being completed and achievedand the outcomes are being completed and achieved

Balance Scored CardsBalance Scored CardsBalance Scored CardsBalance Scored Cards

• Customer – StakeholdersCustomer – Stakeholders

• Process.Process.

• Financial.Financial.

• People learning and development People learning and development

Objectives Based MeasuresObjectives Based MeasuresObjectives Based MeasuresObjectives Based Measures

• Develop a set of measurable objectives if achieved Develop a set of measurable objectives if achieved will ensure the achievement of the mission and will ensure the achievement of the mission and vision.vision.

• For each objectives develop a set of measures that For each objectives develop a set of measures that assist in checking whether the objectives is achieved.assist in checking whether the objectives is achieved.

• Theses measures can be broken down in BSC Theses measures can be broken down in BSC framework ( Stakeholder- Financial- Process and framework ( Stakeholder- Financial- Process and Learning and growth).Learning and growth).

Strategic Factors ApproachStrategic Factors ApproachStrategic Factors ApproachStrategic Factors Approach

• Strategic factors are those things that your Strategic factors are those things that your organization or business units needs to get right in organization or business units needs to get right in order to succeed with your key stakeholders, that is order to succeed with your key stakeholders, that is your customers, suppliers, employees, owners, and your customers, suppliers, employees, owners, and any other organization, business unit or individual any other organization, business unit or individual that depend on for success. The stakeholders use that depend on for success. The stakeholders use these criteria to evaluate you.these criteria to evaluate you.

Example of Strategic FactorsExample of Strategic FactorsExample of Strategic FactorsExample of Strategic Factors

• Product qualityProduct quality• Range of productsRange of products• Price Price • ImageImage• Customer serviceCustomer service• AccessibilityAccessibility

You develop the measures on strategic factors.You develop the measures on strategic factors.

What is a Balanced Scorecard?What is a Balanced Scorecard?

A ProcessA Process For managing and implementing strategyFor managing and implementing strategy A FrameworkA Framework

That uses measurement to describe the strategy of an organization That uses measurement to describe the strategy of an organization across four perspectives (Financial, Customer, Internal Processes, across four perspectives (Financial, Customer, Internal Processes, Infrastructure)Infrastructure)

A Communication SystemA Communication SystemThat links strategic intent in the executive suite to each That links strategic intent in the executive suite to each

part of the organization responsible for implementation part of the organization responsible for implementation

A Measurement SystemA Measurement SystemThat reports on strategic progress and the drivers of That reports on strategic progress and the drivers of

future future performanceperformance

Measurement is the language that gives clarity to vague concepts.

Measurement is used to communicate, not to control.

Strategy can be described as a series of cause and effect relationships

"If we succeed, how will we look to our stakeholders?”

The Strategy

Financial Perspective

"To achieve my vision, how must I look to my

customers/ stakeholders?”

Customer Perspective

"To satisfy my customers, at which processes must

I excel?”

Internal Perspective

"To achieve my vision, how must my organization

learn and improve?”

Organization Learning

TRANSLATE THE STRATEGY TO TRANSLATE THE STRATEGY TO OPERATIONAL TERMSOPERATIONAL TERMS

The Balanced Scorecard AdoptedThe Balanced Scorecard Adopted

for a Government Organizationfor a Government Organization The Balanced Scorecard AdoptedThe Balanced Scorecard Adopted

for a Government Organizationfor a Government Organization

The Mission of the organization is to fulfill Public Policy expectations

“If we succeed, how will we look to our financial donors?”

“To satisfy our customers, financial donors and mission, what business processes must

we excel at?”

“To achieve our mission, how must our people learn, communicate, and work together?”

“To achieve our mission, how must we look to our customers?”

Customer Perspective Budget / Financial Perspective


Learning & Growth Perspective

Stakeholder Perspective

Meeting the Expectations of Customers While Maintaining Financial Viability Constitutes Meeting Mission Objectives

MissionMissionMissionMission

KFUPM is an institution of higher learning committed toKFUPM is an institution of higher learning committed to::

• Preparing competent professionals in the areas of Science, Preparing competent professionals in the areas of Science, Engineering, Environmental Design, and Business, Engineering, Environmental Design, and Business, empowered with knowledge, skills and values, to take empowered with knowledge, skills and values, to take leadership role in the development of the Kingdom. leadership role in the development of the Kingdom.

• Conducting research that contributes to knowledge and Conducting research that contributes to knowledge and sustainable development through innovative solutions to sustainable development through innovative solutions to economic and technological problems. economic and technological problems.

• Providing a stimulating campus life for the welfare of its Providing a stimulating campus life for the welfare of its students, faculty and staff, and offering outstanding students, faculty and staff, and offering outstanding professional services and out-reach programs to the society at professional services and out-reach programs to the society at large. large.

• To be a vibrant multicultural University of To be a vibrant multicultural University of international repute focused on quality education and international repute focused on quality education and

innovative research that prepares professionals and innovative research that prepares professionals and entrepreneurs to lead socio-economic and entrepreneurs to lead socio-economic and technological development in the region. technological development in the region.

VisionVisionVisionVision

These ten core values, within the Islamic principles, form the These ten core values, within the Islamic principles, form the foundation upon which this institution builds its reputation and foundation upon which this institution builds its reputation and continuing success.continuing success.

• CreativityCreativityWe encourage and entertain creative ideas and solutions in teaching and We encourage and entertain creative ideas and solutions in teaching and learning and in research, placing it at the forefront of our focus and learning and in research, placing it at the forefront of our focus and initiatives.initiatives.

• ExcellenceExcellenceWe strive to excel in what we do by maximizing our skills and We strive to excel in what we do by maximizing our skills and continuously improving our business processes to improve quality of our continuously improving our business processes to improve quality of our products and services.products and services.

• IntegrityIntegrityWe attempt to adhere to ethical and professional code of conduct that We attempt to adhere to ethical and professional code of conduct that encapsulates honesty, sincerity and trustworthiness.encapsulates honesty, sincerity and trustworthiness.

ValuesValuesValuesValues

• FairnessFairnessWe deal fairly and humanely in all of our dealings, respecting justice and We deal fairly and humanely in all of our dealings, respecting justice and individual rights and freedom.individual rights and freedom.

• DiversityDiversityWe attract and develop students and employees of different nationalities We attract and develop students and employees of different nationalities seeking to promote cultural diversity through inclusion of a broad range of seeking to promote cultural diversity through inclusion of a broad range of people and perspectives.people and perspectives.

• ResponsivenessResponsivenessWe are responsive to our stakeholders’ requisites and demands with a strong We are responsive to our stakeholders’ requisites and demands with a strong customer focus.customer focus.

ValuesValues ValuesValues

ValuesValuesValuesValues

• TeamworkTeamworkWe aim to create value through teamwork in our business within and outside, We aim to create value through teamwork in our business within and outside, treating one another with respect and to help students to share the spirit of treating one another with respect and to help students to share the spirit of teamwork in their academic progression.teamwork in their academic progression.

• LeadershipLeadershipWe advocate leadership roles that uphold professionalism, responsibility and We advocate leadership roles that uphold professionalism, responsibility and motivation.motivation.

• DisciplineDisciplineWe focus on a disciplined behavior, interaction and approach to our professional We focus on a disciplined behavior, interaction and approach to our professional work.work.

• TransparencyTransparencyWe deal in a transparent manner in matter of education, performance and We deal in a transparent manner in matter of education, performance and progression of faculty, staff and students progression of faculty, staff and students

MeasuresMeasuresMeasuresMeasures

It is essential to have a system by which to assess the It is essential to have a system by which to assess the University progress towards achieving its mission and University progress towards achieving its mission and vision. The process of developing such a system vision. The process of developing such a system include:include:• Identify what outcomes are implied by the Identify what outcomes are implied by the mission, vision and value statements.mission, vision and value statements.• Identify the key activities that support the Identify the key activities that support the outcomes?outcomes?• What information is needed to assure that activities What information is needed to assure that activities and the outcomes are being completed and achieved.and the outcomes are being completed and achieved.

Outcomes Outcomes Implied by MissionImplied by MissionOutcomes Outcomes Implied by MissionImplied by Mission

• Competent professionals Competent professionals • Empowered with knowledge, skills and valuesEmpowered with knowledge, skills and values• leadership role in the development of the Kingdom. leadership role in the development of the Kingdom.

• Research that contributes to knowledge Research that contributes to knowledge • Research contributes to sustainable development Research contributes to sustainable development • Innovative solutions to economic and technological Innovative solutions to economic and technological

problems. problems.

• Stimulating campus life for the welfare of its students, Stimulating campus life for the welfare of its students, faculty and stafffaculty and staff

• Outstanding professional services and Outstanding professional services and • Outstanding out-reach programs to the society at large. Outstanding out-reach programs to the society at large.

Vision Implied outcomesVision Implied outcomesVision Implied outcomesVision Implied outcomes

• A vibrant multicultural University A vibrant multicultural University • International repute International repute • Quality education Quality education • Innovative research Innovative research • Professionals and entrepreneursProfessionals and entrepreneurs• Leadership role of graduatesLeadership role of graduates. .

Outcomes Implied by ValuesOutcomes Implied by ValuesOutcomes Implied by ValuesOutcomes Implied by Values

• Creativity: Creativity: InnovationInnovation

• Excellence: Excellence: HighHigh quality in teaching, quality in teaching, research and service research and service

• Integrity: Integrity: high ethical standardhigh ethical standard • Fairness: Fairness: High motivationHigh motivation

• Diversity: Diversity: High performance, fairnessHigh performance, fairness

Outcomes Implied by ValuesOutcomes Implied by ValuesOutcomes Implied by ValuesOutcomes Implied by Values

• Responsiveness: Responsiveness: Low cycle time in key processesLow cycle time in key processes

• Teamwork: Teamwork: Collaboration, better qualityCollaboration, better quality

• LeadershipLeadership: : Quality,Quality, new ideasnew ideas..• Discipline: Discipline: Quality, high performanceQuality, high performance

• Transparency: Transparency: Motivation, Achievement Motivation, Achievement

Balanced Scorecard ApproachBalanced Scorecard ApproachBalanced Scorecard ApproachBalanced Scorecard Approach

• Customer – StakeholdersCustomer – Stakeholders

• Process.Process.

• Financial.Financial.

• People learning and development People learning and development

What is a Balanced Scorecard?What is a Balanced Scorecard?

A ProcessA Process For managing and implementing strategyFor managing and implementing strategy A FrameworkA Framework

That uses measurement to describe the strategy of an organization That uses measurement to describe the strategy of an organization across four perspectives (Financial, Customer, Internal Processes, across four perspectives (Financial, Customer, Internal Processes, Infrastructure)Infrastructure)

A Communication SystemA Communication SystemThat links strategic intent in the executive suite to each That links strategic intent in the executive suite to each

part of the organization responsible for implementation part of the organization responsible for implementation

A Measurement SystemA Measurement SystemThat reports on strategic progress and the drivers of That reports on strategic progress and the drivers of

future future performanceperformance

Measurement is the language that gives clarity to vague concepts.

Measurement is used to communicate, not to control.

Strategy can be described as a series of cause and effect relationships

"If we succeed, how will we look to our stakeholders?”

The Strategy

Financial Perspective

"To achieve my vision, how must I look to my

customers/ stakeholders?”

Customer Perspective

"To satisfy my customers, at which processes must

I excel?”


"To achieve my vision, how must my organization

learn and improve?”

Organization Learning

TRANSLATE THE STRATEGY TO TRANSLATE THE STRATEGY TO OPERATIONAL TERMSOPERATIONAL TERMS

The Balanced Scorecard AdoptedThe Balanced Scorecard Adopted

for a Government Organizationfor a Government Organization The Balanced Scorecard AdoptedThe Balanced Scorecard Adopted

for a Government Organizationfor a Government Organization

The Mission of the organization is to fulfill Public Policy expectations

“If we succeed, how will we look to our financial donors?”

“To satisfy our customers, financial donors and mission, what business processes must

we excel at?”

“To achieve our mission, how must our people learn, communicate, and work together?”

“To achieve our mission, how must we look to our customers?”

Customer Perspective Budget / Financial Perspective


Learning & Growth Perspective

Stakeholder Perspective

Meeting the Expectations of Customers While Maintaining Financial Viability Constitutes Meeting Mission Objectives

Measures DevelopedMeasures DevelopedMeasures DevelopedMeasures Developed

• Customer/ StakeholderCustomer/ Stakeholder• Quality of GraduateQuality of Graduate• Teaching expenditureTeaching expenditure• Image and reputationImage and reputation• Leadership roleLeadership role• EntrepreneurshipEntrepreneurship• Innovation Innovation • Project addressing National needs Project addressing National needs • Client satisfaction ratesClient satisfaction rates

Measures DevelopedMeasures DevelopedMeasures DevelopedMeasures Developed

• Financial measures.Financial measures.

• YearlyYearly external projects funds in SR.external projects funds in SR. • Research expenditure per faculty.Research expenditure per faculty.• cost per graduate.cost per graduate.

Measures Measures Measures Measures

• Process measuresProcess measures• Research projects approval cycle time.Research projects approval cycle time.• Quality o students measured by median RAM1 Quality o students measured by median RAM1

score for the batch.score for the batch.• Students success rate.Students success rate.• Employment rates of graduate. Employment rates of graduate. • Master student average graduation period.Master student average graduation period.• Stakeholders satisfaction with services at Stakeholders satisfaction with services at

KFUPM.KFUPM.


• People learning and developmentPeople learning and development• Number of conferences per faculty member per Number of conferences per faculty member per

year.year.• Number of workshops or short course per staff.Number of workshops or short course per staff.• % of faculty involved in externally funded % of faculty involved in externally funded

projectsprojects• % of graduate students involved in research % of graduate students involved in research

projects.projects.• % of faculty on sabbatical leave.% of faculty on sabbatical leave.• % of faculty who goes on an international % of faculty who goes on an international

exchange yearly.exchange yearly.

Strategic Plan Measures and Monitoring SystemStrategic Plan Measures and Monitoring SystemStrategic Plan Measures and Monitoring SystemStrategic Plan Measures and Monitoring System

• Develop an automated performance measurement Develop an automated performance measurement system.system.

• Collect data and compute measures.Collect data and compute measures.• Establish target and benchmarks.Establish target and benchmarks.• Conduct periodic management reviewConduct periodic management review• If target met update targets If target met update targets • If target not met modify action plans to meet targetsIf target not met modify action plans to meet targets

Develop Flow chartDevelop Flow chart

Automated Data

Collection & Analysis Sys.

Data Collection &

Measures Calculation

Update Target

Action Plans

Management Review

Are You Meeting Target?

Yes

NoBench Mark

Establish Target

Strategic Plan Measures & Monitoring System

Strategic ObjectivesStrategic ObjectivesStrategic ObjectivesStrategic Objectives

In order to achieve its vision and mission the University In order to achieve its vision and mission the University will pursue the following strategic objectives:will pursue the following strategic objectives:

• Provide up to date current academic programs that Provide up to date current academic programs that meet international standards embed meet international standards embed entrepreneurship and satisfy market needs.entrepreneurship and satisfy market needs.

• Provide a student focused integrated educational Provide a student focused integrated educational experience that emphasize knowledge, skills and experience that emphasize knowledge, skills and values.values.


• Build a strong, motivated and highly committed Build a strong, motivated and highly committed

faculty community.faculty community.• Attract, maintain and develop a qualified pool of Attract, maintain and develop a qualified pool of

undergraduate and graduate students.undergraduate and graduate students.• Provide a conducive research environment that will Provide a conducive research environment that will

enable our faculty and graduate students to conduct enable our faculty and graduate students to conduct research at the frontier of knowledge with emphasis research at the frontier of knowledge with emphasis on areas that serve and sustain the Kingdom on areas that serve and sustain the Kingdom economic development.economic development.


• Continuously build and modernize university Continuously build and modernize university infrastructure including computing facilities, library infrastructure including computing facilities, library resources, laboratories. resources, laboratories.

• Create and encourage strategic and value oriented Create and encourage strategic and value oriented partnership with industry, government, local/ partnership with industry, government, local/ international institutions and alumni.international institutions and alumni.

• Sustain a less –bureaucratic and transparent Sustain a less –bureaucratic and transparent productive work culture that foster professionalism.productive work culture that foster professionalism.

• Continuously improve our internal and external Continuously improve our internal and external community services community services


• Establish stronger and continuous relationships with Establish stronger and continuous relationships with the University Alumni and capitalize on their the University Alumni and capitalize on their potentials.potentials.

• Continuously improve the quality of campus life Continuously improve the quality of campus life both in facilities and activities.both in facilities and activities.

• Establish a wider socio-cultural involvement with the Establish a wider socio-cultural involvement with the external community and the public. external community and the public.


• Define for each objective a set of measures using the Define for each objective a set of measures using the context of BSC.context of BSC.

• As an example for the following objective we will As an example for the following objective we will have:have:

• Objective: Objective: Provide a student focused integrated Provide a student focused integrated educational experience that emphasize educational experience that emphasize

knowledge, skills and valuesknowledge, skills and values• Customer:Customer: Quality of Graduates, Employment ratesQuality of Graduates, Employment rates

of graduateof graduate• Process : Class size, Student faculty ratio, Process : Class size, Student faculty ratio,

Teaching workshops attended by Teaching workshops attended by faculty.faculty.


• FinancialFinancial: : Cost per graduateCost per graduate• People learning and Development:People learning and Development:..

% of faculty on sabbatical leave% of faculty on sabbatical leave

% of faculty who go on an international exchange % of faculty who go on an international exchange yearlyyearly

Documents

Performance Measurements by Salih Duffuaa Professor of Industrial Engineering and Operations Research