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