Quantum Performance Measurement System
The Quantum Performance Measurement System (QPMS) is a performance measurement system with which the implementation of the corporate strategy can be promoted and the degree of target achievement can be controlled. The approach was developed in the late 80s and early 90s by the management consultancy Arthur Andersen & Co. (p. 42 and p. 384).
Structure of the Quantum Performance Measurement System
The QPMS focuses on three categories of performance measures. These are costs , time and quality , which at the same time also form the “magic” triangle of strategic corporate management (see p. 83 ff., P. 384 and the PIMS concept ). According to Hronec, the quality of the performance measures is defined by the respective recipient ( stakeholder ). In terms of quality, these are the company's customers; in terms of time, primarily the management. The costs are determined by various stakeholders including management and shareholders (see p. 18). The three performance measures are related to one another: cost and quality form a value , and quality and time form a service relation. The aim of the company is to continuously improve the performance measures as well as their relationships to one another at the same time in order to achieve the overall goal of "quantum performance" (see Fig. 1).
Quantum Performance Matrix
For the application of the performance measurement system, the performance levels according to Rummler, Brache are used. The levels form the dimensions of people , processes and organization , which, together with the performance measures of cost, time and quality, create a 3x3 matrix, the so-called Quantum Performance Matrix.
The following table shows such a matrix with examples of performance measures (p. 22).
| Quantum Performance | ||||||
| value | service | |||||
| costs | quality | time | ||||
| organization |
|
|
|
|||
| process |
|
|
|
|||
| People |
|
|
|
|||
Quantum Performance Model
Hronec proposes the Quantum Performance Model to define the performance measures in the cells of the matrix. This model represents the basic structure of the performance measurement and shows how far the company is in the implementation process of the implementation and the application of the performance measures. The evaluation model is divided into four elements (see Fig. 2).
- The first element is the drivers . These include the strategy, which is influenced by company management, stakeholders and the best in the company environment (see best practice ). The corporate environment is made up of competitors, legislators, raw material supplies, market entry opportunities, etc.
- The second element are the catalysts (enablers). The catalysts support the implementation of the performance measures through communication, training, rewards and benchmarking .
- The third element is the process itself. The goals are determined by the strategy. Subsequently, the critical processes for achieving the goals must be determined and understood. The next step is to define the output measures for the entire company. Then the key activities of the processes are identified. Once this has been done, the process measures for controlling and monitoring the key activities can be worked out and all performance measures implemented.
- The fourth element is the continuous improvement of the previous steps. For this purpose, feedback is given continuously in order to set new goals and adapt the strategy.
It is important that the performance evaluation itself is a process and not a one-off event. The aim of the model is to drive the company towards quantum performance. Quantum Performance focuses on cost, quality and time, which allows the company to optimize its value and service to stakeholders. The model can be used at every service level in every part of the company. Each part needs its own strategy, goals, output measures, etc.
Case study
The use of the Quantum Performance Measurement System will then be shown in a case study. The example is based on the case study from p. 217, Chapter 11, but has been shortened considerably since only the basic approach is to be shown. For methodological support, reference is made to the list of controlling instruments.
Sample company
The example company is a consumer goods manufacturer with a three-digit million turnover per year. The company is facing increasing competition at home and abroad. Competitors have succeeded in reducing delivery times by relocating production and improving processes. In addition, the products of the example company were rated by customers.
driver
At the driver level, the management is responsible for balancing the requirements of the stakeholders and distributing the scarce company resources. In addition, the management level is also responsible for the implementation of the performance measures.
When it comes to stakeholders, a distinction must be made between customers, shareholders and employees. Customers want new products with new equipment features. On the part of the shareholders, continuously growing profitability, an increasing return on investment and a growing company are expected. The employees hope for a secure job and increased satisfaction in their work.
The company has determined in the area of best practice that many of their processes can be made more effective and efficient. Therefore, the company compares itself with competitors and other industries in order to reduce the experience curve . With this information, the company's management can determine a strategy. One component of the strategy involves retaining existing customers. This is possible on the one hand through a price reduction or through new product developments. Since customer surveys support the new product approach, the management decides in favor of the new development strategy.
Catalysts
In view of the importance of the catalysts, a plan needs to be developed for communication, reward, training and benchmarking.
For example, a company-wide meeting can be held for communication purposes, in which all employees are explained why a new measurement system is being introduced. In addition, the newly introduced performance measures should be a fixed point in all meetings of the top management and the development of the performance measures e.g. B. be documented in the company newspaper, the intranet .
The reward can be monetary or non-monetary. In the example, the management decides to congratulate in writing if the performance measures are fulfilled or exceeded and to publish team photos on the intranet.
Various courses are offered as training courses that aim at a more efficient and effective development process and explain the new performance measurement system and Quantum Performance Measurement.
Finally, the areas that are to be compared internally or externally using benchmarking are identified at this level.
process
aims
First, the company management needs to set goals that drive the strategy of maintaining customer loyalty. The company then develops the following goals:
- Carry out the product development process from the product idea to the market launch 50% faster in the next two years (see time-to-market ).
- Development of two products a year that are accepted by the market.
- Achieving 25% of company profits from new products in two years.
These goals take into account the three components of the Quantum Performance Measurement System. The time is taken into account with the speed with which you want to be on the market. Quality is the goal of developing two new products that customers want. The cost target is described by the company profit in two years (25% from new products).
Critical processes
To determine the critical processes, management identifies all of the company's main processes. These are exemplary processes for determining customer wishes and needs, measuring customer satisfaction, controlling the corporate environment, planning, procurement, use of resources in processes, marketing and sales for customers, developing new products, etc. critical processes can be derived. In this case, this is the development of new products, because you want to be on the market 50% faster with new products.
Output measures
For the new product development process, the company must now develop the earnings performance metrics. This is done in five steps.
- Identify the customers: Both internal customers and external customers are relevant. The internal customers of new product development are the production and purchasing departments. External customers are the buyers of the product.
- Identifying and understanding the expectations of the customers: Production does not want any design changes while production is running continuously, as well as a production-oriented design. That means you don't want any new machines / tools and therefore no additional training in operating them. Purchasing wants long-term predictable orders in order to build up long-term supply relationships and negotiate good terms.
- Evaluation of customer expectations: This is done on the basis of the strategy or the goals that have already been set.
- Selecting the result or output measures: After the previous steps have been carried out, the company uses the Quantum Performance Matrix as a reference point for developing the output measures. In coordination with the strategy, the company decides on the output measures summarized in the following table. The dimensions are divided into variable and binary dimensions. The binary measures are usually easier to determine, but the variable measures have the advantage that they can be used to measure or check continuous improvement.
| Quantum Performance | ||||||
| value | service | |||||
| costs | quality | time | ||||
| organization | ||||||
| process |
|
|
||||
| People |
|
|||||
- Set goals: Since new product development is a main activity (see core process ), top standards in competition or in other industries are sought in order to determine goals for the selected outcome measures input (budget), speed, flexibility and attractiveness .
Key activity
In the process of new product development, four key activities / processes are identified. These are:
- the conceptual design,
- the product design ,
- the prototyping and
- the target costing
Process performance metrics
As an example, only the conceptual design of these four key activities is considered further.
The corporate goals are used again to determine the process performance measures. The focus is on the speed of market entry, market acceptance and profit.
In the second step, the Quantum Performance Matrix again serves as an orientation for determining cost, quality and time measures.
Followed by the third step, which is to determine what is being measured and how. The process performance measures found in the example are shown in the table below.
| Quantum Performance | ||||||
| value | service | |||||
| costs | quality | time | ||||
| organization | ||||||
| process |
|
|
|
|||
| People |
|
|
||||
In the fourth step, the employees involved in the process are asked whether it is possible for them to control the process and continuously improve it with the process performance measures found. If this is not the case, it is possible to adjust the performance measures.
Finally, the dimensions are again divided into variable and binary dimensions. This classification has already been made in the table above.
implementation
In the last step, the system must be implemented based on performance measures. This can be broken down into the following working points:
- First a reporting system needs to be developed and assessed. For this purpose, responsibilities, the form of reporting, the frequency and the start of reporting must be clarified.
- In the example, management uses the output measures to evaluate the degree of target achievement. The output measures should be summarized, if possible graphically, the development of the measures should be displayed and compared with benchmarks.
- The process performance measures, on the other hand, are not reported to management; they remain with the process itself. B. Display boards shown. Your task is to enable the employees involved to control the process or to use the dimensions specifically to optimize the process.
- Now the company begins to measure and report and consequently to support process optimization.
Continuous improvement
Once implemented, the performance metric must be given enough time to prove itself. For the continuous improvement of the system of measurement, a suitable period is set after the performance measures are questioned in coordination with the strategy and the goals, or their effectiveness is assessed. If measures turn out to be unsuitable or if the boundary conditions have changed, the process performance measures, the goals or even the strategy itself must be adapted and the cycle is run through again partially or entirely.
Individual evidence
- ↑ a b c d e f g h i Hronec, SM, Arthur Andersen & Co .: Vital signs: using quality, time, and cost performance measurements to chart your company's future., 1993
- ↑ a b c d e Hronec, SM Arthur Andersen: Vital Signs: Indicators for optimizing the performance of your company, Schäfer Poeschel 1996
- ↑ a b Grüning M .: Performance Measurement Systems, Deutscher Universitäts-Verlag GmbH, 1st edition, Wiesbaden 2002
- ↑ a b Baum, H.-G., Coenenberg, AG , Guenther, T .: Strategisches Controlling, 2007
- ^ Rummler, GA, Brache, AP: Improving Performance: How to Manage the White Space on the Organization Chart, Jossey-Bass, San Francisco 1995
- ↑ Rothwell, WJ, Hohne, CK, King, SB: Human performance improvement: building practitioner competence, 2000