Performance Management

Organizational Diagnosis

There are numerous improvement techniques designed to improve operational performance. Score carding, survey assessment, quality improvement, process design/reengineering, etc., each can benefit from an organizational diagnostic to ensure maximum value and performance. However, more often than not, target projects for performance improvement are often based on intuition rather than an objective diagnosis of operational performance — a major reason for failure or sub-optimized results.

CASE STUDY   A financial services company had invested heavily in Six-Sigma training. However, bottom-line results were not forthcoming. MRT was engaged to conduct a diagnosis of the operations to identify areas of improvement that can be addressed through the Six-Sigma initiative. Well over $25 million in annualized financial improvements were identified then implemented through a number of Six-Sigma teams.

Business Process Management (BPM)

Business Process Management, or BPM, refers to the alignment of business processes to better enhance the delivery of products and services aligned with the needs and wants of customers. BPM promotes creativity to enhance efficiency and effectiveness of business processes by engaging innovation and technology to focus outcomes that better address client expectations.

BPM treats business processes as strategic assets similar to other assets such as employees, facilities, equipment, etc., that must be managed and improved in response to changing market needs. Similar to Total Quality Management (TQM), Continuous Process Improvement, or Process Re-Engineering, BPM offers a more rigorous response to changing needs in the marketplace and/or competitive challenges. Rather than relying principally on technology, BPM incorporates the personnel component necessary to produce added value delivered to customers. BPM has been defined as performance improvement through management of processes to achieve harmony with marketplace expectations that includes flexibility to meet ever-changing demands.

MRT has developed proprietary tools that garner customer needs and wants as they either match, or are at odds with, competitive capabilities while identifying the processes that will return the greatest ROI for the investment in BPM.

CASE STUDY   A banking products outsourcing company used AVM® to identify the processes and supporting activities that required corrective action.  The process for integrating their products into banks was experiencing difficulties and costing the company millions in lost revenues.  Although the product was widely accepted by their customers, the implementation process was a struggle and existing customers could not even be used as references for potential customers.  Sales sold the product by promising a 12-week installation process, but normally it took over 20 weeks.  Process maps were developed and an implementation team designed a new process that immediately reduced the implementation time from 20 to 10 weeks by identifying the activities that can be performed in parallel rather than sequentially as in the past.  Over several additional months, the implementation process was further refined, reducing the average installation time to only 8 weeks.  It was estimated that the change in process produced over $1 million in additional annual profit during the first year by realizing revenues sooner, those revenues were added to their investment portfolio.  Since this project was completed a number of years ago, this service offering has grown ten-fold and the savings have compounded over subsequent years.

Survey Assessment

Customer or employee surveys form the basis for understanding the level of customer or employee loyalty. Such surveys measure the pulse of the stakeholders and often offer management insights regarding stakeholders that they would otherwise not have.

There exists a strong correlation between employee loyalty, customer loyalty and profitability.

“It is impossible to build a loyal customer base without a base of loyal employees... and the best employees prefer to work for companies that provide the kind of superior value that builds customer loyalty“

- Frederick F. Reichheld, The Loyalty Effect

Understanding the drivers of customer or employee loyalty is critical for success. Loyalty is different from satisfaction — satisfied customers or employees can leave at any time. However, loyal stakeholders will not defect as easily and become the foundation for long-term success. There are specific measures designed to identify the attributes that drive loyalty and it is to these attributes that improvement initiatives can be focused.

Value Engineering

Value Engineering (VE) is a disciplined approach for reviewing the designs of products and service offerings removing unneeded and costly features while enhancing the benefits most valued by the customer. VE can produce dramatic improvements in both cost and customer acceptance. VE is performed by identifying the functions associated with a product or service, analyzing the cost to provide those functions, then developing functional alternatives to improve cost, quality and customer acceptance. Improvements in product design and/or service delivery can be dramatic.

Case Study   A Midwestern manufacturer used an MRT consultant to perform a Value Engineering review of one of its best-selling electrical controls. In addition to analyzing the functions of its product offering, a similar evaluation was performed on competitive products. Their customers, as well as customers of their competition, were interviewed to determine the best and least important features of all the products analyzed. The result was a new product offering that had the best features of all the products reviewed with the non-important features eliminated. In other words, customers received more of what they wanted and less of what they did not want. However, the story doesn’t end there. The costs were reduced by 35% and because the features and functionality were significantly enhanced, the price was increased and yet, they garnered a larger market share. Profitability was significantly enhanced through increased revenues coupled with lower costs.

Building on this experience under their belt, the next project was also as outstanding. However in this case, there was more downward pressure on prices for an industrial control. The result was a product that had four times the expected life with a 55% reduction in cost. These results permitted the company to lower prices to meet competitive pressures while improving the profit margin.

Employee Performance Improvement

Based upon a thorough diagnosis, both mission-related and non-mission-related activities are identified and measured, identifying ways to obtain significant improvements in personnel performance. Performance is improved by eliminating or reducing non-mission-related work in favor of intensifying the focus on mission-critical activities. In addition to a thorough diagnosis of organizational processes and activities, the costs and effort related to those activities, experiential information is captured from group members as well as internal and external (if applicable) customers.

CASE STUDY   A large cable TV billing company discovered that although the market was experiencing double-digit growth, they were only achieving single-digit growth in revenues from year to year. A study conducted by MRT consultants found that the Sales function only spent 35% of their effort in the mission-related activities associated with revenue generation. Examining the information, they discovered that a major roadblock for the sales force was that they had to do most of their own marketing and qualifying leads. The information also indicated that the Marketing group was spending only 39% of their time doing the marketing work necessary to adequately support the Sales function. The data made the solution clear and changes in Marketing were made to eliminate their non-mission-related work, allowing Sales to focus on revenue generation. The result achieved double-digit revenue growth consistent with market growth.

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