TOPIC：PERFORMANCE-MANAGEMENT

1Topic:PerformanceManagementKongkitiPhusavat,Ph.D.AssociateProfessorInternationalGraduatePrograminIndustrialEngineeringKasetsartUniversityBangkok,Thailand2OverviewManagementFunctions:planning,coordinating,andcontrollingProcesses:measurement,analysis/evaluation,andimprovementEmphasisontheorganizationalandfunctionallevel3OverviewMeasurement:understandingofthetermKPIorperformancemeasures,identificationoftheKPI,applicationofMFPMM,audittoimproveKPIbylinkingwithpolicies,objectives,database,etc.,rationetworking,andtargetsettingAnalysis:trend/variationunderstandingwithMCPMT,benchmarkingprocess,andscorecardandroot-causeanalysisImprovement:outsourcing,developmentofmanufacturingstrategies,integrationofknowledgelearnedonlogisticsandsupplierpartnership4OverviewWhatreflectsorrepresentsthetermperformance?KaplanandNorton(1992):Financial,customer,internalbusiness,andinnovation/learningSinkandTuttle(1989):Profitability,productivity,quality,qualityofworklife,innovation,effectiveness,andefficiencyHarper(1984):Productivity,unitcost,price,factorproportion,costproportion,productmix,andinputallocation5IntroductionMulti-national,national,andindustriallevelsOrganizational,functional,program,andprojectlevelsTeamandindividuallevelsIndividuallevelManagementWorkforcesKnowledgeandwhite-collarBlue-collar6Introduction(1)Measuringproductivity/performancerequiresasystemviewofanorganizationoraunitofanalysis.(2)Measuringproductivity/performanceiscommon.(3)Understandingofimpactsfromlowproductivityiscriticalformanagement(competitiveness).(4)Understandingofunitdimensionsanddefinitionsareessentialformeasurement.7IntroductionOngoingIssuesfor“Productivity”Management(1)Total-,multi-,andsingle-factorproductivityconsideration(2)Combinationofvariousinputfactors(considerationintoweightofeachinput,datacollectedsuchasintangibleassets,unitdimensions,reportingandinformationformatontabularand/orgraphicalforms,etc.)aswellasoutputfactors8IntroductionSystemViewofanOrganizationProcessesOutputsInputsDownstreamUpstream9Purposesofperformancemeasurement:ToidentifywhetherwearemeetingcustomerrequirementsTohelpuseunderstandourprocessesToensuredecisionsarebasedonfacts,notonemotionToshowwhereimprovementsneedtobemadeToshowifimprovementsactuallyhappenedToidentifywhetherourcontractorsorsuppliersaremeetingourrequirements(DepartmentofEnergy,USA)Introduction10Performancemeasurementshouldbeusedandintegratedintoamanagementsystemandprocess,basedonthefollowingreasons.Control:Performancemeasurementhelpsreduceprocessvariation.Continuousimprovement:Performancemeasurementhelpsidentifydefectresources,processtrends,anddefectpreventionaswellasopportunitiesforimprovement.Needtohavefeedbackbymanagement:Performancemeasurementhelpsmangersandadministratorsrealizewhatistobedone,whatisbeingdone,whentotakecorrectiveandpreventiveactions,andwhentochangetheexpectation.(DepartmentofEnergy,USA)Introduction11IntroductionDownstreamoroutcomes:customers,users,consumers,buyers,andstakeholders(impacts,reaction,satisfaction,financialgrowth,sales,return,replacement,recall,survival,etc.)Upstream:providers,suppliers,contractors,andvendors(relationships,partnerships,contractualagreements,etc.)12IntroductionOutputsIntangibleTangibleOutcomes[Satisfaction,Expectation,DesirableImpacts,etc.]13BasicsonMeasurementDeming“Youcannotmanagewhatyoucannotmeasure.”“Youcannotmeasurewhatyoucannotdefine.”“Youcannotdefinewhatyoudonotunderstand.”14BasicsonMeasurement•MandatedbytheGovernmentPerformanceandResultsAct(GPRA)of1993•Federalagenciesmustbeaccountableandfocusonimprovingservicequalityandcustomersatisfaction.•CoupledwiththeGovernmentManagementReformActof1994whichemphasizesperformanceimprovementandopennessforannualfinancialaudit(i.e.,PART,activity-basedmanagement,performance-basedcontract,adaptiveprocessforplanningandbudgeting,ownershipcost,etc.)15BasicsonMeasurementThe1993GovernmentPerformanceandResultsAct(GPRA)requiresthefollowing:(1)Establishingtop-levelagency’spoliciesandobjectivesaswellasannualprogramgoals(2)Defininghowtheagencyintendstoachievetheseobjectivesandgoals(3)Demonstratehowtheagencywillmeasureitsownperformance,includingtheprograms16BasicsonMeasurementBushAdministration(2001):“Performancemeasurementisnotanannualevent;ratheritisacontinuousprocessrequiringclearperformanceexpectations,periodicfeedbackforreview,andanalysisforimprovement.”BushAdministration(2001):“Performancemeasurementisnotanoption;theonlyquestionishowwellitisdone.”17BasicsonMeasurementMeasurement:understandingonstatic/dynamicmeasure,andtotal-/partial-/single-factormeasure,andsurrogatemeasureStaticRatio:RevenueCostDynamicRatio:[Revenue46Revenue45][Cost46Cost45]18BasicsonMeasurementSingle-factormeasure:OutputlaborPartial-ormulti-factormeasure:Output(labor+material)Total-factormeasure:Output(labor+material+capital+machine+facility+utility+information)19BasicsonMeasurementCasestudyforsingle-factormeasure(laboronly):5employeesproducing500outputunitsinonemonthbyworking22dayspermonthand8hoursperday.Forthesecondmonth,600unitsweremadewith5employeesbutwo