If you cannot measure it, you may be in trouble!

June 17, 2015

weights and measures‘If you can’t measure it, you can’t manage it’ is a refrain that managers often hear but do not fully appreciate until confronted with a major challenge such as the complexity of a business transformation programme.  The need to diagnose the problems, stop the rot and prescribe timely and effective treatment, often quickly overwhelms management that is more used to reactive management of day to day events.

Driving through the strategy should be the focus of all management.  Performance management enables managers to maximise and sustain corporate performance by measuring and managing the drivers of future profitability.  Those drivers are what a business should invest in now to sustain and improve performance. The start point must be to quickly establish the necessary disciplines and approaches for the design and implementation of an effective management information system.  Such systems must comprise not only the key performance indicators (KPI’s), but also the execution management skills and processes to use them effectively in achieving operational and strategic objectives.

Silo’d Confusion

An organisation’s efforts to develop effective management information systems are often hampered by confusion caused by factors that include a one-dimensional, simplistic view of the problems.  For example:

  • The finance view‘All we need to do is supplement our financial information with a range of non‑financial          measures.’
  • The IT view – ‘All we need is a data warehouse and interrogation software to exploit the operational data.’
  • The management view‘All we need are better managers and staff.’
  • The staff view‘All we need is a business strategy and effective management.’

All these views may be valid, but the inter-relationships and dependencies between them are not identified and so critical thinking is impossible.  The absence of a universally accepted discipline for management information, similar to that for accounting which underpins the development and integrity of financial information, means there is limitless scope for confusion and paralysis.

A disciplined and structured approach to developing a performance management system must address the execution management processes, training and personnel issues to make effective interventions and encourage appropriate behaviours.

The Performance Measurement Framework

Business managers inhabit a practical world of reacting to day to day operational issues.  They may not haveThe Performance Management Framework the time nor interest in relating the management theories and measurement concepts that underlie the design of a performance management system.

The Performance Measurement Framework model links business objectives to the interventions needed to manage their achievement and gives managers a key to relating the concepts with the practical steps they can immediately take to develop their own performance measures.

The framework model is structured as a sequence of provocations linking business objectives with performance measures.  The performance measures feed the performance management process to actively manage the business on timely actionable intelligence.  Each of the provocations is addressed by practical approaches and quality assured by the pre-determined design principles.

The design principles reflect the values and behaviours that an organisation wishes to embed in all aspects of its structure, processes and relationships.

The Performance Management Process

A performance measurement system is often described as a ‘dashboard’, similar to that of a car.  Taking the analogy further, the performance management process ensures that the driver is sitting in the driving seat, knows how to drive and where he is going!  As with a car, the driver must plan the route and fuel the car, monitor the journey and take control with appropriate actions to ensure a safe and timely arrival.  Managers use just such a cycle to ‘drive’ through the business strategy.PerfManProc

The Performance Management Process is one of the tools Blue-Plate uses to support the KeyneLink Strategy Execution Management approach, and enable managers to visualise and understand the component parts of the process.

This conceptual understanding is a prerequisite to equipping managers to design and implement a performance management process that is appropriate for their organisation.


Negotiating a good deal with the Government!

November 5, 2013

Drive a hard bargainBlue-plate had the recent experience of supporting a client’s bid team in responding to a Cabinet Office Invitation To Negotiate (ITN) in respect of a large scale outsourcing contract.  An ITN response is developed in dialogue with the Cabinet Office to enable them to select a preferred supplier offering the best  win-win sustainable deal for the UK Government. This was a new experience for Blue‑plate and the lessons learned for future ITN’s included:

  • Understanding the Government’s objectives – The need to fully appreciate the Government’s objectives for the contract both commercially and politically.  These objectives will be set-out in the ITN but will need to be fully explored and clarified during the face to face dialogue sessions.  A consensus understanding within the bid team helps to prioritise the requirements and how they can be managed within the context of a commercial response.  The political drivers may be less transparent but will surface during the dialogue sessions and provide a deeper understanding of the context for the ITN.  As well as the financial objectives of reducing costs, accessing private sector capital and expertise, the Government will also be keen to avoid the political risk that may arise from direct accountability for any consequent organisational restructuring and selecting a supplier with a tarnished brand.
  • Obtaining early clarity and agreement to the strategic fit and risk appetite – At an early stage in the response process, the bid team must manage their own internal stakeholders, governance and oversight processes for the bid.  A key element will be to ensure that the risks and potential range of the up-front investment costs are fully appreciated at the outset, in order to avoid the embarrassment of cold feet during the later phases of dialogue.
  • An integrated response – There will be a number of workstreams and subject matter experts engaging with the Cabinet Office concerning the various aspects of the response and contractual terms and conditions.  These workstreams may include legal and commercial operations, technology, human resources, finance.  An overall bid and project manager will be required to co-ordinate activities and  ensure that the right hand knows what the left hand is doing; especially when working at pace to tight drop dead dates.
  • Resources – make sure that the right set of capabilities and resources are available throughout the process, taking account of holidays and other contingencies.
  • Clarity not word count ???????????????????????????????????????????????????make it easy for the Cabinet Office to understand the response in relation to the exam question.  Keep the language simple in good English and well signposted as to the flow and key points.
  • Negotiate – Last but not least is to take advantage of the opportunity to negotiate the best deal.  The Cabinet Office will be keen to understand a bidder’s commercial drivers and to accommodate them where sensible and possible to do so.  The Cabinet Office team in dealing with a number of bidders can quickly spot common concerns that they may address directly with each bidder or in revising the ITN.  The best deal does not mean the cheapest price but will be a mix of price, political risk, supplier brand, quality and confidence that the supplier can deliver over the long term.

Bloomington, Luxembourg and No Change in 800 years

May 17, 2013

May 2013 Newsletter

All change at the FSA

From April 1st the Financial Services Authority was no more, having been split between the Prudential Regulation Authority and the Financial Conduct Authority.  Read more about what has changed and will it work to prevent more PPI scandals at The New Regulators are No Joke

Foreign travel

Bloomington Indiana

I had the pleasure of attending a KeyneInsight (www.keyneinsight.com)  Strategy Execution Management workshop in Bloomington Indiana.  After negotiating trains, planes and automobiles in getting to Bloomington from the UK, much was learned from the experience of other Keynelink distributors including, the benefits to Keynelink clients of:

  • a complete audit trail and details of performance progress meetings held between a manager and their subordinates. Such information has been successfully used in defence of legal actions taken by disgruntled employees.
  • leadership and management development, for example.

–  the power of having visibility of whether and how the key strategic initiatives are being supported and progressed throughout the organisation.

–  promoting regular conversations between managers and their subordinates.

  • turnarounds – where Keynelink is a key enabler in supporting a successful turnaround

Luxembourg

Luxembourg is a less complex trip than Bloomington and resulted in an enthusiastic response from a Life Assurer for Keynelink to support their current performance management system in providing:

  • Transparent structure and process

– clear alignment with strategic objectives and values

– consistent process discipline

– comprehensive metrics to maintain alignment

  • System support and data repository

– dynamic, fully-operationalised role definitions

– audit trail of issues

  • support for development of excellent management practice
  • evidence for contentious actions

High School

A similarly enthusiastic local high school wants a speedy implementation of Keynelink to support the management of support staff in performance appraisal system, culture change and provide the Head and Senior Management Team with transparency on progress with the strategic initiatives and individual performance.

Every organisation has a Strategy Execution Management “system”

…most don’t work and look something like this…

SEM Process

 

What does yours look like?

Target Operating Models

A recent project generated some new thinking in applying private sector target operating model concepts to a consumer protection focused public sector regulator subject to major change.  The top 5 lessons learned included:

  1. The customer value proposition through which a commercial strategy is operationalised must be considered in terms of the regulatory lifecycle; being the types of interactions that the regulator will have with the regulated community and the consumer.
  2. Strategy encompasses not only the governing regulations but also more importantly the way in which the regulations are to be applied.  It is this regulatory approach which is operationalised through the design of the target operating model and the regulator’s risk appetite and available resources.
  3. Think process not silo’d functions.  This is no different from a commercial TOM but the challenge is in how any new powers and the regulatory approach will be supported in a seamless way across the organisation and its boundaries.
  4. The relationships with other members of the regulatory family must also be considered and coordinated.
  5. Complete focus on protecting the interests of the consumer while fairly balancing the costs and impact on the regulated community.

Rules for the Conduct of Life

In a ceremony dating back to the 13th century, new Freeman of the City of London are presented with a Freedom certificate and a small red book of Rules for the Conduct of Life. The rules are for the use of “such Freemen of London as take apprentices”. Rule XXVI states that

“Where you are not able to finish a business without the help of others, call in speedily such persons to your assistance as are fit to be employed in it. The more hands are employed, the more work is done; provided they are managed in such good order as not to be a hindrance to one another.”

Regards

Jeff Herman


The New Regulators are No Joke

April 12, 2013

April 1st was not only April fools’day but also saw the split of the tarnished Financial Services Authority into the  Prudential Regulation Authority (PRA), now  part of the Bank of England, and the Financial Conduct Authority (FCA) an independent regulatory body.  Will the new regime prove any more effective than the old?

Having played a small part in the design of the FCA I hope to help answer the question – so what’s different?

Same regulations

Both new regulators will continue to operate under the same statutory remit, FSMA 2000, as amended by the Financial Services Act 2012.  There are some new powers, but the real change is clarity of focus and a far more proactive and risk based regulatory approach.

The PRA under Andrew Bailey (he used to sign bank notes for a living), is focused on two key areas:

  • the financial integrity of systemically important financial services firms, (estimated to number around 1,700) and
  • the overall stability of the UK financial services market.

These firms are effectively dual-regulated by both the PRA and FCA, each acting independently, but co-ordinating their activities where appropriate.  The balance of firms that are not dual‑regulated, estimated to number around 23,000, are now solo-regulated by the FCA alone in respect of both financial stability and conduct.

The FCA, under its CEO Martin Wheatley, has a clear focus on consumer protection with the key aim “to ensure financial markets work well so consumers get a fair deal”. To do this, the FCA must

  • protect consumers
  • enhance the integrity of the UK financial system and
  • help maintain competitive markets and promote effective competition in the interests of consumers

A different approach

The change is intended to get away from what was perceived as a box-ticking regulatory approach to one that is more proactive with the consumer and integrity of the financial services market at its heart.  It should be borne in mind that the definition of consumers is very broad, encompassing not only the likes of you and me who have bank accounts and insurance policies,  but also the likes of Goldman Sachs and J.P. Morgan

Let’s not forget that the “C” in the FCA is about “conduct”. The FCA has the clear intent to change the “customer is there to be ripped-off” culture.  This culture is not just about what happens at the point of sale,  but about  behaviours that extend from the boardroom to the point of sale and beyond.  Being proactive means taking action at an early stage to stop potential problems such as PPI, before they cause material consumer loss.  For example, the new product intervention powers may be very rarely used if the views of the FCA are taken on-board at an early stage in the product design or marketing.

Will it work?

To a large extent it is up to individual firms to change their conduct as a matter of good business and reputational sense, rather than because of the policing activities of the regulators.   If they do not fully develop and engage with their conduct strategies to change behaviours, the risk of further PPIs cannot be discounted.   However, it may be some time before cultural change is so pervasive that the right balance is struck between realistic and sustainable shareholder returns, the customer and employees.

All this is likely to take some time, so be prepared for more turbulence before we reach the calmer waters of a trusted and profitable financial services industry that is good for consumers.

 

Jeff Herman


Execution Management vs. Performance Management

February 17, 2013

by Kelly Nelsen, Ph.D.

Performance management generally refers to measuring past performance and making an adjustment or two in order to increase performance next time. In the workplace, you perform to some standard, and your boss measures your performance to see if it met the standard.  Based upon the results of that measurement, you adjust your performance (or the standard) as necessary in order to meet it the next time around.  At its essence, it’s nothing more than an employee appraisal process that the human resources department typically owns.

Execution management is a bit different.  Execution is the act of doing something, and when you manage execution, you’re focused on managing an act rather than a result. That’s not to say that execution management is or should be about micro-management – far from it.  But shouldn’t management be about leading, guiding, and motivating people to greatness rather than simply judging them at the end?

Shouldn’t management be about leading, guiding, and motivating people to greatness rather than simply judging them at the end?

The Way Sports Teams Do It

Organizations usually set goals at the beginning of the year and then look at them again at the end of the year to see if they were met. Based upon this annual review, adjustments are then made for the coming year. But what if a football coach managed its players this way? The coach would set a goal at the beginning of the season to win 15 out of 16 games, let’s say, but only at the end of the season would he look back and discover that they only won six. That would be one sure way of getting fired as a coach, wouldn’t it? Instead, the players are coached throughout the game, and the game itself is reviewed in detail at its conclusion. This way, players can make adjustments as they go. Shouldn’t organizations work that way, too? Shouldn’t they practice execution management the same way that sports teams do?

Driven by Strategy

It’s not enough to manage the execution of individuals in an organization; rather, individuals’ activities need to be driven by the organization’s strategy and goals. Just as the individual football players’ activities are driven by the team’s, management’s, and owner’s goals, so must individual employees’ activities be driven by higher-level goals and strategies.

Unlike performance management, execution management is owned by senior executives. It starts with defining the strategy and continues with the execution of it. While the purpose of performance management is to determine how well employees are performing for succession planning, training, merit raises, and the like, the purpose of execution management is to successfully carry out the strategic plan in order to realize the organization’s vision. Because strategic plans are identified at the highest levels in an organization, execution management is the ultimate responsibility of the executive team. Performance management, on the other hand, is typically the ultimate responsibility of Human Resources.

If you want a system that merely looks at past performance of employees to see if they deserve a raise or a bonus, a simple performance measurement system will do. But if you want to manage the successful execution of your strategic plan, take a look at Keyne Insight’s strategy execution management system at http://www.keyneinsight.com.

Kelly Nelsen, Ph.D., is the CEO of Keyne Insight