performance 4 steps to effectively prioritize · 2017-02-16 · 4 steps to effectively prioritize...

PerformanceImprovement

NotesSpring2016

HowtoIdentifytheMostImportantPerformanceImprovementOFIsFromYourFeedbackReport

ByJohnVanGorkom

Likemanybusinessorganizations,yourorganizationhasembarkedonaperformanceimprovementjourney.Yourorganizationdesirestoimproveandenhanceitsoperationstobemoresuccessfulinyourindustrytherefore,youhaveadoptedtheMalcolmBaldrigeNationalQualityAwardFrameworkanditsassociatedCriteriaforPerformanceExcellence(“Criteria”)asaguide.

Inordertoobtainfeedbackonhowyourorganizationcouldimprove,yourorganizationsubmittedanapplicationtoanational,international,orregional/statequalityawardprogram.Afterathoroughassessmentofyourapplicationbytrainedexaminers,yourorganizationreceivedaFeedbackReportdetailingyourstrengthsandopportunitiesforimprovement(OFIs)relativetotheCriteriaforPerformanceExcellence.

Step1.IdentifyandReviewYourCoreBusinessProcessesandStrategicDirectionStep2.ListAllOFIsandSegmentIntoTwoCategoriesStep3.Prioritize“Real”andApplication-WritingOFIsStep4.Develop,Implement,andMonitorActionPlanstoRemedythePrioritizedOFIs

4StepstoEffectivelyPrioritizeFeedbackReportOFIs

Jump-startyourperformanceimprovementjourneybyeffectivelyidentifyingandaddressingthemostimportantOFIsfromyourFeedbackReport.

AswithmostFeedbackReports,yourorganization’sFeedbackReportcontainsabout50-65OFIs!Unlessyouaredifferentfrommostorganizations,youdonothavethecapacitytoresolvealltheseOFIs.Inaddition,notalltheOFIsareequallyimportant.Someareextremelyimportanttoremedyandsomearelessso.HowdoyoudecidewhichOFIswillhavethebiggestimpactonimprovingyourorganization?HowdoyoudecidewhichOFIsarethemostimportanttoresolve?

ThefollowingfourStepOFIPrioritizationSystemmakesiteasytoidentify,evaluate,andprioritizethemostimportantOFIstoremedy.FixingthesespecificOFIswillhelpyourorganizationachieveahigherlevelofperformance.

4StepstoEffectivelyPrioritizeFeedbackReportOFIs

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Step1.IdentifyandReviewCoreBusinessProcessesandStrategicDirection

ThefirststepintheOFIPrioritizationSystemistoidentifyyourorganization’skeycorebusinessprocesses,andalsoreviewyourorganization’sstrategicdirection.

CoreBusinessProcessesNotallorganizationprocessesareequallyimportant.Aprocessthatcreatesvalueforyourcustomersandprovidesrevenuetotheorganizationisanextremelyimportantprocesses.Processesthataregeneratingvalueforthecustomerwhilegeneratingrevenuefortheorganizationshouldbeconsideredcorebusinessprocesses.OFIsthatfocusontheimplementationofyourcorebusinessprocessesareveryimportanttoaddressandremedy.

Forexample,banksorcreditunionstypicallyreceive80-85%oftheirrevenuefromlending(e.g.carloans,houseloans,creditcards,etc.).Lending,therefore,isakeycorebusinessprocess.Approximately10–15%ofbankorcreditunionrevenueisgeneratedfromcheckingactivities,includingfees.Therefore,checkingisalsoacorebusinessprocess.

Itiscriticaltoidentifyyourorganization’smostimportantcorebusinessprocesses.Thenyoushoulddrawaquickprocessmapwithkeystepsforeachofyouridentifiedcorebusinessprocesses.Mappingacorebusinessprocesshelpsidentifythekeyprocesssteps,aswellasvariousinputsandoutputsoftheprocess,thatarecriticaltosuccessfuloperationofthecorebusinessprocess.Inourbankexampleabove,asimplifiedlendingcorebusinessprocessmapmightlooklikethatshowninFigure1.

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ThekeystepsoftheoverallLendingCoreBusinessProcess:

• CustomerLoanPreferences–theinputtothisstepstemsfromoutputofloanproductdevelopment;

• CustomerServiceExpectations–theinputtothisstepstemsfromtheoutputoftheCustomersRelationshipManagement(CRM)process,whichisuseddeterminethecustomerdesiredrelationships(howthecustomerpreferstobetreatedwhilereceivingtheloanandaswellasongoingloanprocessing);

• CustomerAcquisition-theinputtothisstepstemsfromoutputofthemarketingprocessforacquiringloan-seekingcustomers;

EliminatingOFIsrelatedtoyourcorebusinessprocessshouldbeanextremelyhighpriorityforyourorganization.RemedyingOFIsrelatedtoachievingthedesiredstrategicdirection

andstrategicoutcomesshouldalsobeahighpriorityformostorganizations.

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• LendingStep-theinputtothisstepstemsfromlendingprocesswhichincludesactuallyprovidingtheloan,loanqualification,loaninterestrates,loanterms,loanpaperwork,customertreatment,etc.Anotherinputtothelendingstepisworkforcetraininganddevelopment.

• LoanProvidedtoCustomer-anoutputofthelendingcorebusinessprocess.Loanrevenue(thereceiptofloanpaymentsandfees),alsoanoutputofthisstepthenbecomesaninputtotheorganization’sfinanceprocess;

Mappingcorebusinessprocessesquicklydemonstratestheinterrelatednessofyourbusiness’sdepartmentsandkeyprocesses.Ifthelendingcorebusinessprocessandtheorganizationaretosucceed,theeffectiveintegrationamongthesedepartmentsandprocessesiscritical.

Agreatexampleisthisintegrationisthestaffdevelopmentandeducationprocessesdesignedtoteachstafftoprovideloans,botheffectivelyandefficiently,andalsoprovideexceptionalcustomerserviceduringtheloanprocess.Ifstaffaretrainedonlytoprovideloans,butnottoprovideexceptionalcustomerservice,orviceversa,thenthewholelendingcorebusinessprocesswilllikelyfail.Also,aninputintothestaffeducationanddevelopmentprocesstoteachexceptionalcustomerservice,iskeyinformationonhowcustomerswishtobetreatedwhileobtainingtheloan,whichisdeterminedbytheCRMprocess.EliminatingOFIsrelatedtoyourcorebusinessprocesses,includingassociatedkeyinputs,shouldbeanextremelyhighpriorityforyourorganization.OrganizationStrategicDirectionInaddition,itisalsowisetoreviewyourorganization’sstrategicdirection.Todoso,startbyaskingyourselfthefollowingkeyquestions:“Whatbusinessareweinandwhy?Wheredoesourrevenuecomefrom?Whatisourorganizationoverallpurpose?Ourmission?Ourvision?Ourdesiredfuture?Ourdesiredoutcomesmetrics?Ourkeystrategies?andfinally,Whatarethechallenges,andadvantagesofthosestrategies?”.

RemedyingOFIsrelatedtoachievingthedesiredstrategicdirectionanddesiredstrategicoutcomesshouldalsobeaveryhighpriorityformostbusinesses.

Step2.ListAllOFIsandSegmentintoTwoKeyCategories

MakeaListallOFIs–Team/SeniorLeaderDeterminedOFIsandFeedbackReportOFIsWhiledevelopingyourapplicationtoyourqualityawardprogram,youandseniorleadersprobablyidentifiedmanyOFIsthattheorganizationneedstoaddress.ListtheseOFIs.NowaddalltheOFIsfromtheFeedbackReporttothatlist.WhenlistingtheOFIs,itishelpfultoincludetheBaldrigeCriteriareferenceandthemainthemeofeachOFI,e.g.“1.1a(1)–LackofSeniorleaderdeploymentofvisionandvaluestoworkforceandkeypartners”or“7.1a(1)Comparisonsofapplicantpatientoutcomescomparedtootherhealthcareorganizations’patientoutcomesisnotprovided.”Youmayhave70-80OFIsonthelist!SegmentallOFIsIntoTwoMainCategories:“ApplicationWriting”OFIs,and“Real”OFIsTomaketheprioritizationprocessmoremanageableitisveryhelpfultodistinguishbetweenRealOFIsandApplicationWritingOFIs,andcategorizeeachOFIintothesetwocategories.

Application-writingOFIsarethoseOFIsresultingfrominadequatedraftinganapplicationandgenerallyarenotarealdefectinanorganizationalprocess.Forexample,yourapplicationmayhaveadequatelydescribedthecar-loanprocess,butdidnotindicatethatthecar-loanprocesswasfullydeployed/utilizedinthevariousbranches.HenceyoureceivedanOFIaboutlackofdeploymentofthecar-loanprocess.

Anothertypicalapplication-writingOFIexamplemightbebasedonthefactthatyourorganizationdidnotprovidecustomersatisfactioncomparisoninformationinresultsitems,eventhoughyouindicatedthatyouactuallycollectandmonitorcustomersatisfactioninformationofcomparableorganizationsintheOrganizationalProfileandCategory4.

Anotherexampleofacommonapplication-writingOFIislistingofsomeveryimportantstrategicchallengesintheOrganizationalProfile,butthenfailingtodiscusshowtheorganizationisaddressingtheseimportantstrategicchallengesinotherCategoriesoftheapplicationsuchastheStrategicPlanningCategory.

4StepstoEffectivelyPrioritizeFeedbackReportOFIs

Ifyourorganizationisactuallyaddressingthesekeystrategicchallengesbutfailstodescribethisintheapplication,youhaveanapplication-writingOFI.Note:Ifyourorganizationisreallynotaddressingtheseveryimportantstrategicchallenges,thenyouhavearealOFI.RealOFIsarethoseOFIsthatidentifyarealissueincurrentoperationofyourorganizationthatshouldbeaddressediftheorganizationistosucceedinitsperformance-improvementjourney.

Usingthissegmentationofapplication-writingOFIsandrealOFIs,helpsidentifyOFIsthatareflawsintheorganization,andthereforeveryimportanttoremedy,versustheOFIsthatcansimplybeeliminatedbyutilizingmoreexperiencedhelpindraftingoftheapplication.

Step3.PrioritizeTheRealandApplication-WritingOFIstoRemedy

Prioritize“Real”OFIs.SincemostorganizationsmaynotbeabletoaddressalltherealOFIs,you’llneedprioritizewhichtherealOFIstoremedy.ThefollowingprocesshelpsyouprioritizetheOFIstoaddress.

EachOFIcanbequantitativelyevaluatedbythefollowingfactorsusingatableformat:▪ Typeofprocess:

o IsOFIaboutacorebusinessprocess?–10points

o IstheOFIaboutaninputtocorebusinessprocess?–7points

o IstheOFIaboutotherprocesses?–5points

▪ TheOFI’sImpacton:o AchievingStrategicdirection(MVV,

strategies,strategicoutcomes).Rateimpactfromhighimpact(10points)tolowimpact(1point)

o Achievingrevenuetotheorganization.Rateimpactfromhighimpact(10points)tolowimpact(1point)

o Achievingcustomersatisfactionandengagement.Rateimpactfromhighimpact(10points)tolowimpact(1point)

▪ RemedyingtheOFI:o TheamountoftimetoremedytheOFI.

Ratethetimefromminimaltime(5points)toextensivetime(1point)

o ThecosttoremedytheOFI.Lowcost(5points)tohighcost(1point)

o TheeaseofremedyingtheOFI.Easytoremedy(5points)todifficultremedy(1point).

▪ Totalscore–addalltheevaluationfactorscoresforeachOFI.

TheOFIswiththehighestscoreareprobablythemostimportanttotackle,whilethoseOFIswiththelowestscoremightnotbeasimportant.ItisalwayswisetoreviewandverifythequantitativescoresforeachOFIandmakequalitativemodifications,asnecessary.NowyoucanselectwhichoftheRealOFIstoresolve.

TwoKeyTypesofOFIs.

Application-WritingOFIsandReal

OFIs.ApplicationWritingOFIsresult

frominadequatedraftingofan

applicationtoaquality/performance

excellenceawardprogram,and

generallyarenotarealdefectinyour

organization.RealOFIsontheother

handidentifyarealissueincurrent

operationofyourorganizationthat

shouldbeaddressedifyour

organizationistosucceedinits

performanceimprovementjourney.

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PrioritizeApplicationWritingOFIsUsethesameprocessasabovetoprioritizeapplication-writingOFIs.Thenselectwhichapplication-writingOFIstocorrect.

Step4.Develop,Implement,andMonitorActionPlanstoRemedytheSelectedOFIs

DevelopActionPlanstoRemedySelectedOFIsForeachselectedrealOFItoremedyandeachselectedapplication-writingOFIthatyouwanttoremedy,developactionplanstoresolvetheOFI.Actionplansusuallyaddresswhoisresponsible,whatwilltheydo,thedeadlinesfortheiractions,andwhatresourceswillbeneededtocorrecteachselectedOFI.

ImplementtheActionPlansFromtheOFIActionPlans,itishelpfultodevelopamasterOFIremedytimetablelistingtheOFItoberemedied,whoisresponsibleforrectifyingtheOFI,andthetime-frameforcompletion.

MonitorProgress–“Whatgetsmonitored,getsdone”ToassureOFIcorrectionactionplansareontrackandontime,itishelpfulifseniorleadersreviewprogressmonthly,andmakeanyadjustmentsasnecessary.

SummaryMostbusinessorganizationsdonothavethecapacitytoalleviateallOFIspresentedinaFeedbackReport.The4StepOFIPrioritizationProcessprovidesasystematicmeansfordeterminingwhichOFIsaremostimportanttoremedy,thosethatwillhavethebiggestimpactonachievingyourorganization’sandperformanceexcellencegoals.

AbouttheAuthor:JohnVanGorkomistheManagingDirectorofVGStrategiesLLCManagementConsultingfirm.Johnspecializesinassistingorganizationsimprovetheirprofitabilityandprocesses,andindevelopingeffectivestrategicplansthroughtheimplementationoftheBaldrigeCriteriaforPerformanceExcellence.ThisisJohn’s14thasaBaldrigeexaminer,whereheiscurrentlyservingasanAlumniexaminer.Johnhashelpedmanyorganizationsdevelopapplicationstotheirrespectivequalityawardprograms.Johnalsohasco-authoredthreeoftheBaldrigeCaseStudiesusedtotrainBaldrigeexaminersandotherinternational,national,andstate/regionalqualityawardprograms.Ifyouhavequestionsaboutthe4StepOFIPrioritizationProcess,pleasefeelfreetocontactJohn.HecanbereachedthroughtheVGStrategieswebsiteatwww.VGStrategies.orgorbye-mailatJohn@VGStrategies.org