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?”

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Internal Business Processes

“To achieve our vision, how must our organisation learn and innovate?”

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Initi

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sLearning, Growth & Innovation

VISION &

STRATEGY

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“To achieve our financial objectives, what customer needs must we serve?”

Customer

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s“To satisfy our shareholders, what financial objectives must we accomplish?”

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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

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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

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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

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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?

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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.”

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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

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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