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DST GROUP STRATEGIC REVIEW & KPI
LABORATORY
Empire Hotel, Bandar Seri Begawan
LEGEND SYSTEMS SDN BHD
• In association with Barker Hoffmann Consulting.
• Regional network of management consultants.
• Offers management and organizational effectiveness training and consulting
Clients- Jabatan Perdana Menteri Malaysia
- Ministry of Entrepreneur Development
- Universiti Kuala Lumpur
- Petronas Management Training Centre
- Perbadanan Urus Air Selangor (PUAS)
- Takaful Nasional Sdn Bhd
- Telekom Malaysia Berhad
CONSULTANTS
• Mohd Shairulnizam Zuall Cobley
Lab Objectives
1. Identify Key Operational Processes (KOP) and Associated Key Result Areas (KRA)
2. Identify Divisional Competitive And Productivity Strategies3. Review/ Redesign Work Process To Correspond With KRA and
Appropriate Strategies4. Identify and Writes Key Performance Indicators For Each KOP
and KRA5. Complete The Divisions Targets Based On The Defined KPI6. Write Operational Action Plan/Initiatives For Each Targets7. Write Works Processes To Complement New KPI Targets As
Specified To The Action Plans
… Lab Process The Meaning of Strategy Cascading Relating to Corporate Vision, Mission Writing Unit’s Mission SWOT Analysis Identify Units Strategic Intention/ Goals Identify Key Result Area
Identify Key Performance Indicators
Develop Operational Targets
Review Key Operational Process Identifying Critical Success Factors
The Lab key principles will be:• Process concept• Business case based on KPI• KPIs for sub processes• New organization design• Quick hits• Working and generic Information System
capable of supporting core business processes
The Role of the Facilitator• Grow ambition of Lab team towards the radical• Protect the Lab from “push back” (by team or visitors) • Help clear roadblocks for radical change• Maintain focus on value rather the turf• Guide, intervene & facilitate team processes to meet
deadlines• Support the Lab members to meet deliverables, exit
criteria, scribing and documentation• Assist in benchmarking
Lab Team Consensus
Consensus Is Achieved When a Disagreeing Member of the Team Can Say:
“I understand what most of you would like to do. I personally would not do that but I feel that you understand what my alternative would be. I have had sufficient opportunity to sway you to my point of view, but clearly have not been able to do so. Therefore, I will gladly go along with what most of you wish to do.”
Cascading Corporate Strategy
Aligning Vision, Mission and Goals with KRA/ KPI
ORGVISION
MISSION
STRATEGICGOALS
STRATEGICGOALS
STRATEGICGOALS
Strategic OpsObjectives
Strategic OpsObjectives
Strategic OpsObjectives
Strategic OpsObjectives
Measuring Operational Objectives Using Key Performance Indicators and Ensuring Alignment with Management Goals
# KPI 1 # KPI 2 # KPI 4# KPI 3 # KPI 5
MANAGEMENT PLANNING PROCESS
Set Strategic Intentions/ GoalsSet Strategic Intentions/ Goals
Define Performance Measurements- KRA and KPI
Define Performance Measurements- KRA and KPI
Set Operational TargetsSet Operational Targets
Set Key Operational ProcessSet Key Operational Process
The Balanced ScorecardA Framework for Managing Organizational Performance
“To satisfy our shareholders and customers, in which internal business processes must we excel?”
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
s
Internal Business Processes
“To achieve our vision, how must our organisation learn and innovate?”
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
sLearning, Growth & Innovation
VISION &
STRATEGY
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
s
“To achieve our financial objectives, what customer needs must we serve?”
Customer
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
s
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
s“To satisfy our shareholders, what financial objectives must we accomplish?”
Obj
ectiv
esM
easu
res
Targ
ets
Initi
ative
s
Financial
Balanced Scorecard Framework - Example of Strategy Map
Financial Goals
Customer Goals
Business Process Goals
Growth and Learning Goals
Improve ICT Support Systems
Improve Managerial and Technical Competencies
PRODUCTIVITY STRATEGY: To optimise cost of operation through innovative technologies, process improvement and enhanced team and individual capabilities.
GROWTH STRATEGY: Increase revenue by increasing product offerings and expanding into downstream activities.
Increase Profit
Increase Revenue
Improve Branding
Expand Suppliers Network
Improve Knowledge Management
Improve Customer Relationship
Improve Support Processes Efficiency & Effectiveness
Optimise Cost of Operations
Improve Risk Management
Improve Supply Chain Management
Enter Downstream Activities
Increase Product Offerings
CREDIT CONTROL DIVISION
PERFORMANCE STATEMENT 2010LOAN RECOVERY DEPARTMENT
STRATEGIC KEY RESULT AREAS (KRA)
1. Loan Recovery 2. Litigation Process Management
3. Loan Restructuring Program
DIVISIONAL KEY PERFORMANCE INDICATORS (KPI)
• % of bad debts against Loan
• % bad debt recovered/ FY
• No of litigation cases won• % loan collected from
litigation cases won• No out of court
settlement
• % of total bad loan restructured
• No of Loan Restructured and Approved
FY KPI TARGET (2010) • Bad debt at 3 % of total loan
• 25 % write back of total bad debts/FY
• 100 % of litigation cases in court won/ FY
• 70 % of outstanding amount collected / cases won
• 3 major bad debts (> RM 5 M -corporate) out of court settlement
• 25 % of corporate bad loan successfully restructured
KEY OPERATIONAL PROCESSES (KOP)(That relates to achievement division KRA and KPI)
• Bad debt recovery process & improvement process
• Loan monitoring system (ICU)
• Litigation process monitoring system
• Panel lawyers appointment procedures
• Loan restructuring and approval process
LEAD OPERATIONAL PROCESS KPI(That relates to KOP)
• Process timeliness and lead time• Level of authority
compliance •Lead time of case
transferred to litigation unit
• Litigation cost/ RM recovered•Panel lawyers response
lead time
• Loan restructuring negotiation lead time• Level of authority
compliance
Exit Crite
ria
DEPARTMENT KRA/ KPI
FY 2010 TargetsKey Operational Process (KOP)
KEY WORK PROCESS LEADING KPI PROCESSTARGET
1. LOAN RECOVERY
• % of bad debts against Loan
• % bad debt recovered/ FY
• Bad debt at 3 % of total loan
• 25 % write back of total bad debts/FY
1. Cases transferred from loan operations and loan re-classification process
•Lead time•Comprehensives
• 2 days• Completed
2. Assignment by team leader to recovery officer
•Lead time • 1 day
3. Scheduling of phone calls follow up
•Lead time/ frequency
• 3 days/ 1 calls
4. Case review by team leader •Lead time/ frequency
• 7 days/ 1 review
5. Case transfer to litigation unit for legal process escalation
•Lead time • 90 days after case
transfer to LRU
LOAN RECOVERY DEPARTMENT – KEY OPERATION PROCESS TARGETs
Exit Crite
ria
DST Group Vision
To be the leading service organization that provides innovative, state-of-the-art technology and services to our customers with a highly motivated workforce
dedicated to benefiting stakeholders in Brunei Darussalam and beyond.
DST Group Mission
To be the country’s leading service provider in the field of Communications, Information Technology and Broadcasting.
To Offer high quality products and services.
To develop a multi-skilled, knowledgeable and productive workforce through effective human resource management and development. To be responsible corporate citizens by adopting good industrial practices and nurturing our society and environment.
To broaden our market and acquire access to state of the art technology, contents and applications from anywhere by establishing mutual beneficial alliances with strategic local and foreign partners.
Mission Statements
Relationship Between Vision & Mission
MISSION AYR 1 – 3
VISION
THE STEPS THAT MUST BE GONE
THROUGH IN OUR ORGANISATIONAL
EVOLUTIONMISSION B
YR 4 – 6
MISSION CYR 7 – 9
VISIONWhere we see ourselves in 10
years time
MISSIONThe business we are in and will be in
for the next 3 years
The Unit Mission Statement
• States who you are and what you will be doing for the 3 to 5 years
• The statement is short and sweet
WHAT IS YOUR UNIT MISSION
• Must be supportive of the DST Group corporate vision and mission
• Please state the mid term and long term mission of your unit
SWOT Analysis
• Internal and External scanning
STRATEGIC INTENTIONS / GOALS
What is Strategic Goals? Goals are broad statements of intent meant to give an indication as to where an organization, or an individual, is heading with a focus some
time in the future.
Writing Strategic Goals
Short Statements using Directional Verb.Examples are:
• Increase• Improve• Maintain• Reduce• Withdraw• Enter• Develop
Four Perspectives of Goals
• Financial • Customer Satisfaction• Internal Business Process• Internal Learning and
Competency Development
Operational Goals The Unit Goals that are related to the Human
Resources Division can be:
• Improve Competency Gap• Reduce Staff Turnover• Enhance Competency Based Training • Improve efficiency and professionalism
Operational Goals The Unit Goals that are related to the Product
Marketing can be:
• Increase the quality of product mix• Improve customer usage• Achieve quality systems compliance
Your Division Goals ?Your Unit Goals ?
KEY RESULT AREAS
WHY MEASURE PERFORMANCE?
‘What get measured, get done’
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Definition of Key Result Areas (KRAs)
“KRAs are those areas in which a high level of performance is
required in order to be successful during a specified period.
They constitute the key results, outputs or contributions of either
a group or an individual.”
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Purpose of KRAs
KRAs are written to: Help a manager direct limited resources (time, money, people, plant and
equipment) to the most important areas where the return on effort will be greatest.
Prevent managers getting locked into "the activity trap" which involves people "doing things right", rather than "doing the right thing". Doing the right thing is concern for achieving results.
Help focus on areas where managers should invest their time, energy and talent.
Help identify areas for which objectives are set.
Assist in the setting of priorities.
Help define each person's unique contribution.
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The Relationship of KRAs to Goals
Goals are broad statements of intent relating to where resources and effort must be placed in order for the strategy appropriate to the business unit level to be achieved.
Goals tells us where we want to place our efforts and resources in order to achieve the mission of the BU and hence the SBU and organisation.
KRAs tell us what accountability a group or individual has in terms of a result, output or contribution.
A KRA tells us what specific output will be produced and by whom.
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Pareto’s Rule – The Critical Few
THINGS TO DONE
20%
RESULTS ACHIEVED
80%
20%
80%
KRAs are that 20% of a job that produce the greatest payoff. The rest is the 80%, sometimes called “busy work”, which gives little in the way of results.
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Activities vs. Results
ACTIVITIES RESULTS
ActivitiesProcess
InputMeansTools
ProceduresTasksHow
OutcomesResultOutputEnds
AchievementsResults
OutcomesWhat
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Viewing a Job as a System, which Produces Results of Value
The Job
· $· People· Materials· Guidance· Direction
The activities and tasks that are performed
The results and outcomes produced
Processes OutputsInputs
In a nut shell KRA KRA is not an activityKRA is a set of activities
E.g. Attending meeting is not a KRA, it is an activity
KEY TASKS & PROCESS ≠ KEY RESULT AREASKEY TASKS & PROCESS ≠ KEY RESULT AREAS
Example of KRAs• Project Management • Staff Development• Infrastructure Management• Business Loan Monitoring
Manage Project X
Develop Staff X
Manage Infrastructures X
Monitor Loan X
(Verb)
(Noun)
Performance Objectives Vs. Operational Objectives
• Performance Objectives deals with doing things right
• Operational Objectives is doing the right thing
41
Exercises
Identify Your Key Business Processes
Specify Key Performance Indicators (KPIs)
The Need for Measurement
To improve productivity, you must manage.To manage effectively, you must control.To control consistently, you must measure.To measure validly, you must define.To define precisely, you must quantify.
How to determine a KRA’s KPI?
1, List all our Work Process
2, Think why we need to do those activities
3, Can we NOT do it?
4, If No, what would be the output of the activities?
5, Can the output be measured. If Yes, How?
45
Definitions of Performance Indicators (PIs)
“PIs are those quantifiable factors within a KRA, for which it is worthwhile to derive objectives.
They identify only WHAT will be measured not
HOW MUCH or BY WHEN.”
“A unit of measurement for which measurable standards can be established,
to measure the performance of individuals, teams, or the whole organisation.”
46
Relationship between PIs & Measurable Standards
A PI is NOT a standard, but it can be translated into a standard.
2 categories of standards:
Process (Standards for What You Do)
Product (Standards for What You Produce)
• Written for Specific Behaviour• Describes measurable statements
of observable performance• Process oriented• Written for Key Tasks• Derived from the behaviour itself
• Written for Results/Achievements• Describe measurable statements of the
Outcomes/Results of performance• Product oriented• Written for Key Results• Derived from Performance Indicators
Example of PIExamples
NOT This
100 kilos per liter
20% reduction in response
30% reduction in rejects
3 point increase on morale rating scale
This
Kilos per liter
Response time
% reduction in rejects
% increase on morale rating scale
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Criteria for Good PIs
They are written for Key Results. They select potential measurable areas, for which objectives can be
written. They are not designed to be measures of effectiveness in themselves. They can be useful as control measures, but not all control measures
function as performance indicators. One indicator can be used to measure results in more than one Key
Result Area. The cost of identifying or checking them, should not exceed the value of
the information. They can be Lag Indicators (Outcome Measures) or Lead Indicators
(Driver Measures) Indicators are written to indicate 'WHAT" will be measured, not to state
the specific amount.
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Types of Indicators: Qualitative and Quantitative Measures
Type of Indicator Method of Measurement
1. Quantitative • Volume• Rate• Timeliness
• Responsiveness• Value
2. Qualitative • Accuracy• Functionality• Initiative
3. Combined Quantitative & Qualitative
• Volume• Rate• Timeliness• Accuracy
• Functionality• Initiative • Cost
50
Quantitative Indicators
Volume Rate Timeliness
% Objectives Achieved
Tray Clearance per Day Processing Time
Number of Legal Suits Filed Turnover per Month
Written Minutes Produced by Time
% Increase TonnageStaff Turnover per
QuarterReports Completed
on Time
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Qualitative Indicators
Method Examples
Accuracy:How well?Meet standard?
% Typing errors.Management Performance:% Increase on a rating scale.
Functionality:Does it work? Degree of acceptance by users –
acceptance scale.
Innovativeness:Is it new? (Initiative) Degree of innovation – innovation scale.
Operational Targets
MANAGEMENT PLANNING PROCESS
Set Strategic Intentions/ GoalsSet Strategic Intentions/ Goals
Define Performance Measurements- KRA and KPI
Define Performance Measurements- KRA and KPI
Set Operational TargetsSet Operational Targets
Set Key Operational ProcessSet Key Operational Process
“Cheshire – Puss – would you tell me please, which way I ought to go from here?
“That depend a good deal on where you want to get to,” said the cat.
“I don’t much care where,” said Alice.
“Then it doesn’t matter which way you go.” said the cat
Alice in Wonderland
What is Operational Targets
“ … the specific descriptions of end results to be achieved that are directly related to the Goals of the organization and the Key Result Areas that have been set. They are measurable statements of outputs.”
OPERATIONAL TARGETS• A specific description of an end result to be achieved• Specify in a clear measurable detail the end product we want
to produce• Should constitute about 70% of your effort over the next
reporting period (6-18 months)• May be written for:
6 common + technical areasPersonal DevelopmentProblems you want solved
Without objectives, people tend to be evaluated on the basis of their personality instead of the results they produce.
CHARACTERISTICS OF A GOOD OPERATIONAL TAEGETS
• Specific. Answers the questions WHAT?• Measurable. Answer the questions
How Much (Quantity)How Many (Quantity)How Well (Quality)
• Achievable (Realistic)• Result-oriented• Time-bounded. Completion date: 6-18 months
GOOD OPERATIONAL TARGETS
Should also be…
• Challenging (Extends you)• Supportive of the goals and purpose of the
organisation
OPERATIONAL TARGET FORMAT
Action verb + Quality/Quantity Performance Measure
WHAT BY HOW MUCH
Completion Date
BY WHEN
GENERATING OPS TARGETS
SWOT ANALYSIS(Internal/External demands impacting on SRAs)
MAJOR PROBLEMS/BARRIERS(What major problems/barriers can affect SRAs/Goals)
PERFORMANCE INDICATORS
STRATEGIC GOALS(To what goals can we make a potential contribution over the next 3-5 years)
POOL OF POTENTIAL TARGETS
INTUITION(Per our intuition, what innovations can we introduce)
SELECT(Those which will cover SRAs)
WRITE FINAL FORM
KEY OPERATIONAL PROCESSES
• Must support the Unit Mission, KRA/ KPI and targets
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How will success look
like?
What are the deliverables?
KRA Champion:
What should change?
What is the Initiative?
Why is it Important?
Operational Action PlansKEY OPERATIONAL PROCESS
KEY RESULT AREA SUPPORTED STRATEGY THEMES SUPPORTED/ STRATEGIC GOALS
OPERATIONAL TARGET
Tasks/ Initiatives Lead KPI/ Measure of success
Who When Review
Operational Action PlansNo Tasks/ Initiatives KPI/
Measure of success
Who When Review
KEY SUCCESS FACTORS REQUIRED CAPABILITIES