This section is an attempt to demonstrate why organisations should examine their current approach to building and presenting Business Results.
In the first part, we explain the importance of the Business Results and also what are Business Performance Outcomes and Business Performance Indicators. Besides, we underline the importance of a Culture of Measurement and Results. At the bottom of the page, you will find the “Assessment sheet” to help you assessing how your indicators are and what your strengths and areas for improvement are.
BEGIN WITH THE END IN MIND
EVERYTHING AN ORGANISATION DOES PRODUCES AN OUTCOME OR RESULT.
This is an important message for all organisations. In addition to the more traditional types of results associated with volume, cost and quality of products or services, all organisations generate results from the action of transacting information and knowledge between two or more parties everyday (e.g. staff to staff, staff to customers etc). In Excellent organisations, all actions of every employee are designed to add value to the business and therefore to influence performance and the specific results the organisation achieves.
THE SIGNIFICANCE OF RESULTS
The significance of your results extends to your partners and suppliers who will want to trade with you for as long as there is a “win-win”; no one wants to be the creditor of a bankrupt. These Stakeholders will determine if you are achieving “good” results by looking at your solvency, your ability to settle invoices on time and the degree to which you respect their brand integrity when using their products or services to enhance your own. Customers and beneficiaries have a similar interest in knowing that you are a reliable organisation to do business with, that you will honour commitments made and continue to meet present and future needs. Employees rely on sound financial results as some insurance for future employment. They will look to see if the company pension scheme is secure, employee share schemes beneficial and remuneration paid on time and at an appropriate rate in the market place.
DEFINITION OF A BUSINESS PERFORMANCE RESULT
EFQM does not want you to expend time and energy collecting data to produce results that do not contribute a great deal to understanding your performance or your Stakeholders' satisfaction. Instead, we urge you to identify the most significant areas in terms of the impact on the business strategy, plans and customer experience. It is useful the Principle of Pareto, which typical pattern will show that:
The 80/20 Principle challenges us to find the 20% of measurement points that provide 80% of the most valuable information about our processes, our products and our services. We can start to identify what our measures should be and what we should be delivering as our Key Performance Results by applying Pareto Analysis.
There is no doubt that the financial performance of an organisation will be among its most important Key Performance “Outcomes”. Within Kaplan and Norton’s Balanced Scorecard four perspectives, the Financial Perspective has emphasis on measures such as Revenue Growth, Asset Utilisation, Growth and Operating Costs. However, when EFQM refers to Business Outcomes, do not be fooled into thinking that we are only talking about financial results – also Non Financial Outcomes such as “Volume of Products Produced”, “Market Share” and “Frequency of Services Delivered”.
BUSINESS PERFORMANCE INDICATORS
These measures are the operational ones used in order to monitor, understand, predict and improve the organisation’s likely key performance outcomes. Within Kaplan and Norton’s Balanced Scorecard four perspectives, the Internal Perspective and Learning Perspective come closest to the idea of KPIs.
DIFFERENCES BETWEEN COMMERCIAL (LARGE AND SMALL), PUBLIC SECTOR AND NOT-FOR-PROFIT ORGANISATIONS
It is a myth that there are vast differences between the method of measurement, the choice of measures and the quality and excellence of the results obtained between commercial companies and the public sector and not-for-profit organisations.
ACHIEVING “EXCELLENT” BUSINESS RESULTS
We have made several references to achieving “good” results and the need to understand “good” from your Stakeholders’ perspectives. The rigorous scoring framework that accompanies the EFQM Excellence Model (RADAR scoring matrix® - Results, Approach, Deployment, Assessment and Refinement) offers a very clear picture of its expectations in relation to “Results”. The Excellence of the Result is determined by the degree to which an organisation can demonstrate trends, targets and comparisons (numerically) with clear references to causes. The results must also correspond to the range of activities, size and nature of the organisation.
ORGANISATIONS WITHOUT A CULTURE OF MEASUREMENT OR RESULTS-ORIENTATION
In organisations that don’t measure or set targets, results are still produced but the degree to which they meet Stakeholders’ requirements will depend more on good fortune than planning. When organisations start to use the EFQM Excellence Model, a substantial proportion of them score low in the Results criteria, not because their work does not produce results, but because they have never managed their activities with the end in mind. Building a Culture of Measurement and Results Measurement is the main ingredient of Performance Management, and the Excellence of your Business Results depends on the complete deployment in your organisation of a Performance Management culture. This culture will be supported by processes, systems and, above all, the passion of every single person to make a difference through the achievement of pre-determined objectives and targets. A Performance Management System or Process (to use Kaplan and Norton’s preferred term) is designed to help you to determine and deliver the type of results that you want, and keep your Stakeholders satisfied and loyal.
Click here to access the Business Results Assessment Sheet. This Assessment Sheet is in PDF format, you can fill it in as a form, save it or print it.