Chapter 10: Performance Management
Study Guide
LG 10-1: Definition and Importance of Performance
Management
Definition: Performance Management is the delivery of superior results through the
ongoing measurement, assessment, evaluation, and improvement of the
organization.
Why It's Important: Developing skills in performance management helps leaders to:
o Manage their organizations more effectively and efficiently.
o Improve faster than their rivals.
o Create a distinctive competency that provides a competitive advantage,
leading to superior results.
Performance Management Principles (Approach to embed performance
management into the organization's culture):
o Role of Leadership.
o Customer Focus.
o High-Performance Environment.
o Fact-Based Management.
o Relentless Improvement.
o Innovation and Renewal.
o Use of Experts and Training.
o Use of Proven Methodologies and Tools.
Performance Management Key Elements
The process is built upon three core, inter-related elements:
1. Business Process Management (BPM)
2. Business Measurement, Assessment, and Evaluation
3. Business Improvement Methods & Tools
LG 10-2: Business Process Management (BPM)
Process Definition: A Process is a series of steps or actions taken to convert a set of
inputs into a set of outputs.
Role of Process: The process concept is the underlying framework for understanding
the inter-related activities performed in an organization.
Effective Process: An Effective Process delivers outputs that result in obtaining the
desired behaviors from customers (users) of the process.
Efficient Process: An Efficient Process is an effective process that also generates an
adequate return on the capital employed to operate the process.
Process Maps: Visual depictions of the multiple steps involved in converting inputs
to outputs. Examples include:
o SIPOC (Suppliers, Inputs, Process, Outputs, Customers).
o Swimlane.
o Lean Value.
LG 10-3: Business Measurement, Assessment, and
Evaluation
Role in PM: This element helps organizations understand how effectively and
efficiently specific processes are performing and how well the organization overall
is performing, which helps prioritize opportunities for improvement.
Measurement Levels:
o Process Level: Focuses on specific metrics within a process, such as "%
Increase In Loyal Customers Vs Prior Qtr".
o Organization Level: Focuses on overall business performance, often using an
Integrated Balanced Scorecard.
Business Assessment: A systematic way to evaluate the entire business using
frameworks like the Baldrige Framework. Key categories for assessment in Baldrige
are:
o Leadership
o Strategy
o Customers
o Measurement, Analysis, and Knowledge Management
o Workforce
o Operations
o Results
Business Evaluation: The process of collecting and analyzing external and internal
business data, assessing overall business performance, and identifying and
prioritizing opportunities for improvement.
LG 10-4: Business Improvement Methods & Tools
Role in PM: These are the systematic approaches used for improving the
organization's performance, supported by the Role of Leadership, Use of Experts
and Training, and Use of Proven Methodologies and Tools.
Examples of Improvement Methods & Tools:
o DMAIC / Six Sigma: A structured problem-solving approach involving five
phases:
Define
Measure
Analyze
Improve
Control
o Lean Methodology: A set of principles focused on eliminating the 7 causes of
waste (e.g., overproduction, waiting, unnecessary inventory, etc.).