Key Performance Indicators (KPIs)

Key performance indicators (KPIs), while used commonly around the world, have never until now been clearly defined. Management personnel have identified measures as KPIs though these measures have never been KPIs. The lack of understanding of performance measures has led most monitoring and reporting of measures to fail. The casualty has often been the balanced scorecard, a brilliant tool that can only work if the appropriate measures are in it. David Parmenter’s work on Key Performance Indicators represents a significant shift in the way KPIs are developed, implemented and used. His methodology is based around self implementation and has received wide acclaim around the world. His work is a large departure in a number of areas including:

  • dividing performance measures into four types: key result indicators, performance indicators, result indicators and key performance indicators
  • emphasizing the need to know the organisation’s critical success factors (CSFs) defining the characteristics of KPIs focusing on less more targeted  measures
  • a step by step process that can be implemented by a skilled in-house team

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Critical Success Factors (CSFs)

For years organizations with KPIs have not had the focus, adaptability, innovation and profitability that they were seeking. KPIs were ill conceived, mislabelled and misused. This mayhem stemmed from a complete lack of understanding of their critical success factors.  Whilst most organizations know their success factors, few organizations have:

  • worded their success factors appropriately
  • segregated out success factors from their strategic objectives
  • sifted through the success factors to find their critical ones – their critical success factors
  • communicated the critical success factors to staff

Where an organization has not completed a thorough exercise to know its critical success factors (CSFs) performance management cannot possibly function.  Performance measurement, monitoring and reporting will be a random process creating an army of measurers producing numerous numbing reports, full of measures which monitor progress in a direction very remote from the organization’s strategy.  David Parmenter’s work has outlined a process that helps organization’s crystallize and communicate the organization’s CSFs.  This will help staff to align their daily activities closer to the strategic direction of the organisation. The beauty of the method, like all great methods, is that it is a simple methodical process, which can be run by in-house staff.

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Winning CFOs

Chief Financial Officers around the world are seeking ways where they can be a better leader and business partner. They are seeking to learn from their peers better practices—and become more effective, creating a positive footprint in every organization they are part of. All the stalwarts of the finance team are being questioned. Why spend months on an annual planning process you know is flawed? Why spend precious time on an annual report recasting numbers that were available the first week of the new year? Why spend a week on the monthly finance report that won’t be read? Author and performance management leader David Parmenter has determined what makes winning CFO and winning finance teams. His methodology is based around self implementation and has received wide acclaim around the world. His work covers the practices that will help finance teams deliver:

  • Reporting daily, weekly, and monthly in a decision based way
  • Fast month-end reporting within three days or less
  • Signed audited annual accounts within three weeks of year-end
  • Implementing quarterly rolling forecasting
  • Getting your KPIs to work
  • Completing the annual plan in two weeks or less
  • Investing in the right financial systems
  • Developing winning leadership traits
  • Re-engineering processes using “post-it” stickers
  • Selling change to the CEO and Board
  • Making the finance team a great place to work.

Quarterly Rolling Forecasting (QRF)

Companies across the world are recognizing that the existing annual budget process cannot continue. It is now seen by many that the budgetary process is a hindrance to management rather than a help. The answer is to plan on a quarterly rolling process, 6 quarters out, setting targets and allocation resources only three months out, the first quarter.

This quarterly rolling forecasting (QRF) process, typically going out 18 months at a time, can be a quick process. Less than 5 working days if it follows the ‘fast, light touch’ process developed from “winning finance” teams from around the world. David Parmenter’s work on QRF represents a significant shift in the way they are developed, implemented and used. His methodology is based around self implementation and has received wide acclaim around the world. His work is a large departure in a number of areas including:

  • defining the ten foundation stones for a better practice forecasting process
  • outlining all the features of a ‘fast light touch’ quarterly rolling forecast process
  • showing how to implement a forecasting and planning tool and get it right first time
  • a step by step process that can be implemented by a skilled in-house team

Management & Leadership

“What makes a good leader?” “When and how do managers become leaders”. To answer this question David Parmenter went on a long journey analysing the leadership exploits of Sir Ernest Shackleton, Sir Winston Churchill, and some modern-day leaders such as Jack Welch, former CEO of General Electric. Also analysed were the writing of some of the greatest management thinkers such as Peter Drucker, Jim Collins, Ken Blanchard, to name but a few.

To the first question the answer is a person who is a “a Viking with a mother’s heart” a person who sees being a leader as one who served rather than one who was served. By understanding the great attributes of Shackleton, arguably one of the greatest serving leaders, David Parmenter has developed a leadership model that is breathtakingly simple and one that all managers can adopt to become more than a manager, a serving leader.

As a manager, you can bully, order, or coerce staff to undertake tasks in a prescribed manner. However, you are unlikely to succeed unless you have built your foundation stones well enough, and learned the lessons and put into practice the traits of a serving leader.

There are many books on leadership and you can spend your entire life reading them. But they will make you more confused than enlightened. Author and performance management leader David Parmenter has determined the practices that will help you deliver, the personal traits that can limit our potential, the pathway of self-development, the 21st century management better practices you need to master as you climb the management mountain, culminating in what makes a CEO special.