Performance Measurement. Integration of Information for Process Improvement and Innovation

1. 13 th ICIT. Malaysia 24-26 March, 2008 Performance Measurement.Integration of Information for Process Improvement and Innovation Palmira López-Fresno President. Quality Service Committee Spanish Association for Quality correo@palmiralopezfresno.com

2. I. Introduction Process Management as a mechanism for achieving competitive advantage through performance improvement: • As a way to manage the business (holistic perspective). • Being able to tie the deployment from the strategic level to the task level with better effectiveness.

3. I. Introduction Each process crosses various inter or intra departmental units. FUNCTIONS PROCESSES The overall process performance depends on the performance of each phase of the process. The concept and role of internal customer is crucial for overall effectiveness.

4. II. Process performance monitoring and evaluation Business Process Management involves the use of a measurement system. One of the first pre-requisites for quality of information is to incorporate information from all the actors (stakeholders) from a global holistic perspective. Regarding employees (internal customers), nobody better than the person who perform the tasks knows how the process is performing and which aspects should be improved.

5. Budget Policies Competency Cost-effect. analysis Improvements Use/knowledge Communication Customer Service II. Process performance monitoring and evaluation CUSTOMERS (External perspective) (Customer based indicators) ORGANISATION (Internal perspective) (Process based indicators) Measurem. of orientation to customers EXPECTED QUALITY OBJECTIVE QUALITY Measurem. of customer satisfaction Measurem. of efficacy Profitability Obtained PERCEIVED QUALITY PRODUCED QUALITY Measurem. of impact on customers

6. Budget Policies Competency Cost-effect. analysis Improvements Use/knowledge Communication Customer Service II. Process performance monitoring and evaluation CUSTOMERS (External perspective) (Customer based indicators) ORGANISATION (Internal perspective) (Process based indicators) Measurem. of orientation to customers EXPECTED QUALITY OBJECTIVE QUALITY Measurem. of customer satisfaction Measurem. of efficacy Profitability Obtained PERCEIVED QUALITY PRODUCED QUALITY Measurem. of impact on customers

7. II. Process performance monitoring and evaluation This cycle can be applied to external or internal customers and also to other stakeholders. For each process the organisation will have indicators related to produced quality (efficiency, cost, time, resources, etc.) and information related to perceived quality (quantitative and qualitative).

8. II. Process performance monitoring and evaluation • Purpose: • To know the perception the persons involved in the execution of the processes (internal supply chain) have about their performance level, in order to identify the processes, sub-processes or phases that need to be improved. • Also it can contribute to communicate and implement Process Management and to increase commitment and participation. The focus is on processes, not in departments and on process performance rather than on internal customer satisfaction.

9. II. Process performance monitoring and evaluation • Purpose: • To know the perception the persons involved in the execution of the processes (internal supply chain) have about their performance level, in order to identify the processes, sub-processes or phases that need to be improved. • Also it can contribute to communicate and implement Process Management and to increase commitment and participation. The focus is on processes, not in departments and on process performance rather than on internal customer satisfaction.

10. EXPECTED PERFORMANCE The incorporation of the internal customer voice to the performance measurement systemA case experience PERCEIVED PERFORMANCE

11. III. Internal customers perceived quality evaluation Company: RACC Set up: In 1897, private capital. Location: Barcelona - Spain Activity: Service organisation. The biggest and most important automobile club in Spain, providing medical, mechanical and personal assistance, travels, insurance, etc. to more than one million members. Employees: 1650

12. III. Internal customers perceived quality evaluation • Culture: • Traditionally strongly customer oriented (efficacy even more important than efficiency). In 2001 a new “business” perspective was introduced. Process focus gained relevance as a mechanism for increasing competitiveness. • The new perspective challenged accepted ways of thinking and focusing the activity.

13. DISSENY AND METHODOLOGY PERIODICAL EVALUATION OF PROCESSES IDENTIFICATION AND QUALIFICATION OF PROCESSES Inventory Maps Flow charts Internal and external customer voice Process Management Manual Indicators system Results from analysis of indicators Benchmarking PROCESS MONITORING Process Performance Monitoring Scorecards III. Internal customers perceived quality evaluation Continuous improvement and innovation Main element for process effectiveness monitoring

14. III. Internal customers perceived quality evaluation The process performance monitoring system was initially mainly integrated by objective indicators (internal perspective). External customer satisfaction was also monthly monitored (data treated separately). An internal customer perceived process performance was implemented, in order to complement the information the organisation had for decision making.

15. III. Internal customers perceived quality evaluation Objectives: • To identify areas/ aspects of poor performance. • To identify causes of negative performance results. • To anticipate negative performance results. • To increase employees awareness with regard to process management and its advantages. The final aim was to periodically identify the processes, sub-processes or phases that need to be improved.

16. III. Internal customers perceived quality evaluation Methodology: • Evaluation performed quarterly, via intranet, by the Corporate Quality Direction. In 2007 data collection was subcontracted. • Addressed yearly to all employees. A sample of 25 % each quarter. Anonymous answering. • Evaluation of 13 main macro processes.

17. III. Internal customers perceived quality evaluation Methodology: • A questionnaire designed for each process. Includes questions related to friendliness/ courtesy, responsiveness, quality of answer/solution, for each phase of the process, specific questions for some products, and a question related to global performance of the process.

18. III. Internal customers perceived quality evaluation Methodology: • Numeric scale, with 10 grades, except some questions related to frequency of use. An open question to specify the 3 main improvement aspects in the process according to the perception of the person who evaluates. • Each person evaluates the processes in which he/is is mainly involved, from a perspective of internal supplier-customer.

19. 06 SIG SIG SIG SIG SIG SIG III. Internal customers perceived quality evaluation Results: • By key attributes, at a corporate level (linked to compliance of values): • By process (horizontal view): • By unit /department (vertical view):

20. III. Internal customers perceived quality evaluation Results: • Quantitative • Qualitative • Priorisation of aspects to be improved for each process, using the Importance-Performance Map, and globally, identifying key processes by linking processes to strategic lines.

21. EXCELLENT/ AREA TO BE MANTEINED SURPLUS AREA/ IRRELEVANT + PERFORMANCE CARE-FREE AREA/ TO BE REDUCED TO BE IMPROVED AREA - + IMPORTANCE - III. Internal customers perceived quality evaluation Results:

22. III. Internal customers perceived quality evaluation Distribution of results: • Detailed results distributed to top and middle management, and main indicators included in the process performance measurement system. • A summary is distributed to all employees, via intranet.

23. III. Internal customers perceived quality evaluation Results: • The process performance measurement system was improved, incorporating perceived performance indicators.

24. III. Internal customers perceived quality evaluation Global results obtained from the methodology: • Increased employees awareness and motivation with regard to process management. They perceive their opinions are valued. • It allows better identification of causes of negative tendencies (ex. Mechanical Assistance) and therefore better identification of improvements and innovation in processes and products. • It allows better allocation of resources. • It can allow to anticipate negative performance results.

25. IV. Conclusions • Two perspectives should be taken into account when defining a measurement system: internal or process based indicators (produced quality), and external or customer based indicators (perceived quality). Both perspectives should be integrated to provide information for better decision making. • Internal customers provide very useful information on how processes are performing and which areas should be improved or innovated. A methodology to periodically and systematically evaluate process perceived performance should be implemented and results integrated with other internal indicators. • Tools to prioritise improvement should be applied.

26. Thank youTerima Kasih