Question 92
of 100
We use a balanced set of
performance indicators.
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Why this is important
Measurement for balance
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Avoid doing these poor practices
Financials KPIs not included in assessment of Business Sustainability.
This would indicate that Business Excellence is an `add on'
and the real business of making money is done elsewhere by the
real people.
KPIs relating only to financials.
Only interested in standard balance sheet assets.
No links between operational and financial measurement.
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Do these good practices
Use of Balanced Scorecard or similar methodology to present
and help balance the needs of the major stakeholder groups (owners,
customers, the company itself, employees, community and alliance
partners).
Indicators developed for the customer specifications for all
major processes, products and services. At a minimum, these
include timeliness, on time delivery, numbers of times any rework
was necessary, anything deliberately specified by the customer,
anything the customer research has identified as important to
the customer and the company controls (or should control).
Extensive measurement of the satisfaction gap between what
the customers value and what the company provides.
Suppliers surveyed (and focus groups) to identify level of
deployment, satisfaction and dissatisfaction with the partnership
relationship. These results have been acted on through several
cycles.
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Principle 10: Value for All Stakeholders (Item 8)
Sustainability is determined by an organization's ability to create
and deliver value for all stakeholders.
You must use a balanced set of performance indicators. You need to
develop indicators to track your progress in
- implementing your strategies and plans
- reaching the balance required between the stakeholders objectives
and the company's objectives
- reaching your own objectives.
Your indicators should
- be `big picture' indicators that provide evidence of success in
achieving, coordinating and integrating the needs of your stakeholder
groups
- measure benefits you have achieved for each of your stakeholder
groups
- allow you to interpret company performance in a broad, holistic
sense — including and beyond financial performance
- allow you to determine how you are achieving success for each of
your stakeholders, and integrate and balance their needs
- allow you to interpret these results in terms of the company's past
and future performance and in terms of the balance between the needs
of the stakeholders
- shows how your initiatives contribute to achieving the company's
purpose, vision and goals
- allow you to ensure that all work contributes to the company's long
term success and adds value to both the company and its stakeholders.
Interpreting these measurements and acting on your findings is essential
to achieve the balance.
Success in the old thinking was measured purely in terms of share price,
return on investment and profit levels. That approach was too one sided
and often led to disregard of the needs of customers and employees,
and the other stakeholders.
The modified balanced scorecard presented in Principle 5 ('Improved
Decisions') emphasizes the balance needed. The use of a balanced composite
of performance measurements
- offers an effective means to show how value is added to both the
company and its stakeholder groups
- provides an opportunity to pull together the strands of the holistic
management system required to meet the needs of each of the stakeholder
groups
You need `real-time' information (measurements of progress) so you
can evaluate success of strategies, improvement of processes, products,
and services, and alignment with overall company strategy.
You need to act to address any problems or opportunities revealed by
the indicators and your interpretation of them. You actually need to
do something. For example, the information on the well being, satisfaction
and motivation of employees should be used to identify dissatisfaction
priorities – and these must be acted on, in the context of overall
performance and the balance between stakeholders needs.
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