Title Details

David Parmenter is an international presenter who is known for his entertaining and thought-provoking sessions, which have led to substantial change in many organizations. He is a leading expert in the development of winning KPIs, replacing the annual planning process with quarterly rolling planning and management practices that will get you to the top. David has delivered workshops to thousands of attendees in many cities around the world, including Sydney, Melbourne, Hong Kong, Kuala Lumpur, Singapore, Tehran, Jeddah, Muscat, Johannesburg, Prague, Rome, Dublin, London, Manchester, Edinburgh, and Toronto. He has worked for Ernst & Young, BP Oil Ltd, and Arthur Andersen, and is a Fellow of the Institute of Chartered Accountants in England and Wales. David is a regular writer for professional and business journals. He is also the author of Winning CFOs: Implementing and Applying Better Practices and The Leading-Edge Manager's Guide to Success (both from Wiley). David can be contacted via [email protected] or +64 4 499 0007. His website, davidparmenter.com, contains many white papers, articles, and freeware that will be useful to readers.

Preface xiii

Acknowledgments xxi

PART I SETTING THE SCENE

CHAPTER 1 Background 3

Are Agencies Really Non Profit Agencies? 3

Measurement in Government and Non Profit Agencies 3

Unintended Behavior: The Dark Side of Measures 4

Balanced Scorecards within Government and Non Profit Agencies 6

Checklist: Where Are You in Your Journey with Performance Measures? 6

Major Benefits of Performance Measures 8

Notes 10

CHAPTER 2 Myths of Performance Measurement 13

Myth 1: Measuring Performance Is Relatively Simple and the Appropriate Measures Are Very Obvious 13

Myth 2: You Can Delegate a Performance Management Project to a Consulting Firm 14

Myth 3: Your In-House Project Team Can Achieve Success while Continuing with Their Other Duties 14

Myth 4: By Tying KPIs to Pay You Will Increase Performance 14

Myth 5: Most Measures Lead to Better Performance 15

Myth 6: Performance Measures Are Mainly Used to Help Manage Implementation of Strategic Initiatives 16

Myth 7: The Balanced Scorecard Was First Off the Blocks 17

Myth 8: Measures Fit Neatly into One Balanced-Scorecard Perspective 18

Myth 9: The Balanced Scorecard Can Report Progress to Both Management and the Board 18

Myth 10: There Are Only Four Balanced-Scorecard Perspectives 18

Myth 11: Strategy Mapping Is a Vital Requirement 20

Myth 12: All Performance Measures Are KPIs 22

Myth 13: Monitoring Monthly Performance Measures Will Improve Performance 23

Myth 14: KPIs Are Financial and Nonfinancial Indicators 23

Myth 15: The More Measures the Better 23

Myth 16: Indicators Are Either Lead (Performance Driver) or Lag (Outcome) Indicators 24

Myth 17: We Know What Good Performance Will Look Like Before the Year Starts and, thus, Can Set Relevant Year-End Targets 24

Notes 25

CHAPTER 3 Revitalizing Performance Management 27

Foundation Stone 1: Understanding Human Behavior 27

Foundation Stone 2: Knowledge of the Paradigm Shifters (Drucker, Collins, Welch, Hamel, Peters, Waterman, and Others) 29

Foundation Stone 3: Using an Appropriate Strategy 44

Foundation Stone 4: Critical Success Factors Known by All Staff 45

Foundation Stone 5: Abandon Processes That Do Not Work 45

Rejuvenating Human Resources 46

Performance-Related Pay: Correcting the Errors 47

Reviewing an Individual’s Performance 48

Getting the Right People on the Bus 48

Jack Welch’s 20/70/10 Differentiation Rule 49

Secrets from High-Performing Teams 49

Toyota’s 14 Principles 50

Role of Performance Measures: Implementing Winning KPIs 51

Quarterly Rolling Planning: The Setting of Targets 51

Reporting Performance 52

Outside-In View 53

Adopting Kaizen 53

Working Smarter Not Harder 54

Getting Technology to Deliver 54

Moving from Management to Leadership 55

Notes 55

CHAPTER 4 Measurement Leadership Has to Come from the Chief Executive Officer 57

Barriers to Measurement Leadership 57

The Way Forward for the Chief Executive Officer 58

Appoint a Chief Measurement Officer 60

Notes 60

CHAPTER 5 Strategy and Its Relevance to Performance Measures 61

Define Your Organization’s Mission, Vision, Values 61

Create a Strategy That Is Understood by Staff 63

Ensure That Your Strategy Is Balanced 64

Monitor Implementation of Your Strategy 66

Creating the Future 66

Replace the Annual Planning Process with Rolling Planning 67

Notes 67

PART II WINNING KPIs METHODOLOGY

CHAPTER 6 The Great KPI Misunderstanding 71

Key Result Indicators 71

Performance and Result Indicators 73

Key Performance Indicators 74

Seven Characteristics of KPIs 76

Difference between Key Results Indicators and KPIs 78

Lead and Lag Confusion 79

10/80/10 Rule 81

Importance of Timely Measurement 82

Note 83

CHAPTER 7 Finding Your Organization’s Critical Success Factors 85

The Missing Link 85

Importance of Knowing Your Organization’s Critical Success Factors 86

Four Tasks For Identifying Organization-Wide Critical Success Factors 91

Strategy Mapping 100

Notes 103

CHAPTER 8 Foundation Stones for Implementing Key Performance Indicators 105

“Partnership with the Staff, Unions, and Third Parties” Foundation Stone 105

“Transfer of Power to the Front Line” Foundation Stone 107

“Measure and Report Only What Matters” Foundation Stone 108

“Source KPIs from the Critical Success Factors” Foundation Stone 110

“Abandon Processes That Do Not Deliver” Foundation Stone 111

“Understand Human Behavior” Foundation Stone 112

“Organization-Wide Understanding of Winning KPIs Definition” Foundation Stone 113

Notes 113

CHAPTER 9 Implementing the 12-Step Process 115

How the 12-Step Model and the Seven Foundation Stones Fit Together 115

Step One: Senior Management Team Commitment 115

Step Two: Establish a Winning KPI Team Working Full Time on the Project 120

Step Three: Establish a Just-Do-It Culture and Process 124

Step Four: Set Up a Holistic KPI Development Strategy 127

Step Five: Market the KPI System to All Employees 131

Step Six: Identify Organization-Wide Critical Success Factors 134

Step Seven: Record Performance Measures in a Database 134

Step Eight: Select Team-Level Performance Measures 137

Step Nine: Select Organizational Winning KPIs 143

Step Ten: Develop the Reporting Framework at All Levels 145

Step Eleven: Facilitate the Use of Winning KPIs 148

Step Twelve: Refine KPIs to Maintain Their Relevance 151

Notes 152

CHAPTER 10 Determining the Measures 155

How to Derive Measures 156

Brainstorming Measures 156

Stacey Barr’s PuMP 157

Checking KPIs for Behavioral Alignment 159

CHAPTER 11 Case Studies 161

Golf Club (Non Profit Membership Organization) 161

Surf Life Saving (Non Profit Membership Organization) 166

Government Department 169

Professional Accounting Body 170

CHAPTER 12 Selling Change 173

Selling by Emotional Drivers 173

Selling the Move to Winning KPIs 174

CHAPTER 13 Common Critical Success Factors and Their Likely Measures for Government and Non Profit Agencies 177

CHAPTER 14 Reporting Performance Measures 185

The Work of Stephen Few in Data Visualization 185

Reporting the KPIs to Management and Staff 186

Reporting Performance Measures to Management 191

Reporting Performance Measures to Staff 195

Reporting Performance Measures to the Board 195

Reporting Team Performance Measures 201

How the Reporting of Performance Measures Fits Together 204

Notes 204

Epilogue: Resources 205

Appendix A: Foundation Stones of Performance-Related Pay Schemes 211

Appendix B: Effective Recruiting—Getting the Right People on the Bus 223

Appendix C: The Public Sector Can Abandon the Flawed Budget Process 229

Appendix D: Jack Welch’s Strategy Slides 241

Appendix E: Suggested Success Factors for Government and Non Profit Agencies 243

Appendix F: List of Performance Measures Suitable for Government and Non Profit Agencies 273

Appendix G: Presenting the Critical Success Factors to the Board/Government Official 293

Appendix H: Main Differences between the Balanced-Scorecard and Winning-KPIs Methodologies 301

Index 305