Key Performance Indicators
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 useful 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 inhouse 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 trained 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 serves rather than one who is 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.
David has ascertained 8 behavioural traits that need to be adopted, absorbed and applied in order to be a successful leader of large teams.
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.
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 David’s method, like all great methods, is that it is a simple methodical process, which can be run by in-house staff.
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
Rapid Annual Planning
The annual planning process is part of the trifecta of lost opportunities for a corporate accountant. The other two being the year-end accounts and the monthly accounts processes. All three exercises keep the corporate accountant locked into processing and reporting leaving little time for added value activities. It is interesting to note that we seldom get thanked for preparing the annual accounts, for controlling the annual budget process or for preparing the month-end accounts.
A two week annual planning process sounds impossible yet it is achieved. It takes good organization and recognition that the annual planning process is not adding value. Instead it is undermining an efficient allocation of resources, encouraging dysfunctional budget holder behaviour, negating the value of monthly variance reporting and consuming huge resources from the Board, senior management team, budget holders, their assistants and of course the finance team. At best you have a situation where budget holders have been antagonized, at worst budget holders who now flatly refuse to co-operate!
Finance Team Best Practice
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
- Rapid 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 and leading change
- Making the finance team a great place to work.
I was promised, by my religious education teacher, when I reached fifty I would be working a four-day week. The Americans had just landed on the moon, with less computer capacity than your smartwatch. My teacher was certain that the technological advances would be used so ably and willingly by us that it was inconceivable that we would not have an extra day of recreation. Has this happened?
Certainly not. Many of us today have frustrating long commutes, are constantly sleep deprived, are addicted to responding to Facebook, Twitter, Snapchat, Instagram as well as binging on a box set or two. To make matters worse now, once in the office, we are subjected to far too many meetings, scheduled across the day that go nowhere quickly. Everyday pressures of modern life leads us toward the belief that we cannot cope as there is not enough time in the day.
When I was in my thirties, the king of time management was Stephen Covey. He wrote the book “First thing’s first”[i], and developed an international training programme that hundreds of thousands of people attended, around the world, including myself.
What I have discovered, is that with the passing of Stephen Covey, a whole generation of people have not been exposed to time management principles, which has led to an epidemic of time-poor practices. I discovered this when I wrote an article for ‘Accountants in Business’ on time management. It created far more feedback than all my other articles put together. My webinar on the topic had over 250 registrations and these were the responses to the polls.
I would like to make it clear that I am not a paradigm of time management, far from it. However, through exposure to talented managers, meetings with consultants and reading many works by the great management thinkers I have collected a potpourri of solutions that will revolutionise readers’ time management to varying degrees