(3) Process problem documentation Score (1):No, process improvements are made when problems occur. (3): Improvements are made in one week workshops involving all staff, to improve performance in their area of the plant (5): Exposing problems in a structured way is integral to individuals’ responsibilities and resolution occurs as a part of normal business processes rather than by extraordinary effort/teams Nick Bloom, Econ 147, 2011Economics of Human Resources Nick Bloom (Stanford Economics) Lecture 2: Monitoring managementPerformance management Today we will run through 5 dimensions on performance management (questions 1 to 6) The concept is around the collection and use of information. While the data we have shown is for manufacturing, these questions have been used in retail, hospitals, schools, healthcare clinics, tax collection agencies, charities, PPPs and law firms Nick Bloom, Econ 147, 2011Setting up your clicker + Press “GO” + Then slowly press “O” and then “5” (channel is “O5”) + Then slowly press “GO” again « Agreen light should appear signaling the clicker workedThe survey scores to question (3), process problem documentation — all countries, manufacturing Average 3.13 2 3 Process Documentation All countries, manufacturing firms (100 to 5000 employees), 9840 observations(3) Process problem documentation (1): No, process (3): Improvements are improvements made in one week are made when — workshops involving all problems occur. _ staff, to improve performance in their area of the plant (5): Exposing problems in a structured way is integral to individuals’ responsibilities and resolution occurs as a part of normal business processes rather than by extraordinary effort/teams 0% Nick 800m, €or 2 0% 2 o% 3 0% 0% a 5The survey scores to question (3), process problem documentation — India, manufacturing o Average 2.64 s 2 3 Process Documentation India, manufacturing firms (100 to 5000 employees), 1137 observationsThe survey scores to question (3), process problem documentation — US, manufacturing Average 3.42 + 1 3 Process Documentation US, manufacturing firms (100 to 5000 employees), 1298 observationsThe survey scores to question (3), process problem documentation — US, Canada and UK, retail 9 Average 3.07 1 2 3 Process Documentation All countries, retail firms (100 to 5000 employees) 661 observationsThe survey scores to question (3), process problem documentation — developed countries, hospitals © Average 3.04 3 Process documentation Hospitals, Canada, France, Germany, Italy, Sweden, UK, US, 1183 observationsThe survey scores to question (3), process problem documentation — developed countries, schools 2 Average 2.93 1 3 Process documentation Schools, Canada, Germany, Sweden, UK, US 780 observations(4) Performance tracking Score (1): Measures (3): Most key tracked do not performance indicate directly if indicators are overall business tracked objectives are being formally. met. Tracking is an Tracking is ad-hoc process overseen by (certain processes _ senior aren't tracked at all) management. (5): Performance is continuously tracked and communicated, both formally and informally, to all staff using a range of visual management tools. Nick Bloom, Econ 147, 2011 ® 7 @Examples of performance metrics - Heathrow | i} nn ii) Hl Nick Bloom, Econ 147, 2011 13Examples of performance metrics — Toyota ™. hy Nick Bloom, Econ 147, 2011 14Examples of performance metrics — Call CentreExamples of performance metrics — Call Centre aExamples of metrics — Retail Bank (2/2) ‘Our ‘RK Foto Responsavel Rede ‘Regional, Ponto.de-venda Categorla SUPER RANKING 1 err recew — MOSIDAS 4 497. uzano one 1398 2 Pyromronnossen REDE! SPCENTRO162-REPUBLICA Potea 6518 2 & Macareorncseun REDEY BAURU—T4-BALRUPonea 888 en REDE! SPCENTRO. 1 1-CENTRAL Potea 49905 6 (B wrcreorosounscscor REDE UNDA) «1 40-JUNDIN Por. 1 Pym cousianerrcens rebe: —seceirmo 1218-rruRca fumes 170 8 Breuiocacnnces REDEH —GUARULHOS aie lSine Pore 4808 © SUPER RANKINGExamples of metrics — Retail Bank (1/2) Data:o9.01/2008, out [Nev bez | 4 jan | Fev Mar | ite ¢ Total Segmentos 61,53 83,64 79,17 73,25 52,27 0,00 0,00 34,87 ¢ Total PF 70,15 76,59 75,13 68,82 42,11 0,00 0,00 26,86 58,09 86,85 86,87 76,92 15,16 9,00 0,00 13,43, Deaton 2108 Ca = rome wea ideal owl 9,00 0,00 25,07 EE ia corn ° 3 5 he SS 999 9,00 0,00 91,89 urs conte | 0 “0 img a ‘Epona cote Bue ° ° ° 'ge ts | |4749 0,c0 0,00 43,04 tucpeono pounscurmr —Arus;s0co 01833 fl 1 108 Comelso or bases Q 8 oa tis, | }26,08 0,00 0,00 23,13 succr Ao 0 5 2 a0 . 1guro Residencial o 8 “8 mo 1 Spin At a ‘ 187 ® eauovide Weer o : > 0 Cater 4 10 nome innecraones © CPs fl Bs ont Capaaaeso a eI Sia a hota cobrngae a 0 ‘ > ha ‘ ‘es iausaace a sae! as a n 1 contagion 0 tan on ma 2 Freda Foc PE a ny ae 4 | TOTAL SEGHEWTOS 5227 CansesoDerls o te ee bo) |e) Qe 1 DAU Float o 100 708 e090 @ a Ha co SUPER ‘W086 Jome27% gy Empnbetiog Av PF ° 5a 2 ay O56] RANKING Gua & : ( GER ®)(4) Performance tracking (1): Measures tracked do (3): Most key (5): Performance is not indicate directly if overall performance continuously tracked and business objectives are indicators are communicated, both being met. Tracking is an tracked formally. formally and informally, to ad-hoc process (certain Tracking is overseen _ all staff using a range of processes aren't tracked at by senior visual management tools. all) management. 0% O% 0% 0% 0% Nick ioc, co: A 2 2 3 4 sPerformance tracking (4): all countries, manufacturing Average 3.36 1 5 3 Performance Tracking All countries, manufacturing firms (100 to 5000 employees), 9838 observations(5) Performance review (1): Performance (3): Performance is (5): Performance is continually is reviewed reviewed periodically with reviewed, based on indicators infrequently or in successes and failures tracked. All aspects are anun-meaningful identified. Results are followed up ensure continuous way e.g. only communicated to senior improvement. Results are success or failure management. No clear communicated to all staff is noted. follow-up plan is adopted. 0% 0% 0% 0% 0% Nick Bloom, £01 a i 1 2 3 a 5(5) Performance review Score (1): Performance is reviewed infrequently or in an un- meaningful way e.g. only success or failure is noted. (3): Performance is reviewed periodically with successes and failures identified. Results are communicated to senior management. No clear follow-up plan is adopted. (5): Performance is continually reviewed, based on indicators tracked. All aspects are followed up ensure continuous improvement. Results are communicated to all staff Nick Bloom, Econ 147, 2011 @) "Performance review (5): all countries, manufacturing re Average 3.33 1 2 3 4 5 Review of Performance All countries, manufacturing firms (100 to 5000 employees), 9827 observations(6) Performance dialogue Score (1): The right data or information for a constructive discussion is often not present or conversations overly focus on data that is not meaningful. Clear agenda is not known and purpose is not stated explicitly (3): Review conversations are held with the appropriate data and information present. Objectives of meetings are clear to all participating and a clear agenda is present. Conversations do not, as a matter of course, drive to the root causes of the problems. (5): Regular review/performan ce conversations focus on problem solving and addressing root causes. Purpose, agenda and follow-up steps are clear to all. Meetings are an opportunity for constructive feedback and coaching. Nick Bloom, Econ 147, 2011 ~@Performance dialogue (6): all countries, manufacturing Average 3.19 3 Performance Dialogue All countries, manufacturing firms (100 to 5000 employees), 9794 observationsMarking out a factory floor a eT Nick Bloom, Econ 147, 2011(6) Performance dialogue (1): The right data or information for a constructive discussion is often not present or conversations overly focus on data that is not meaningful. Clear agenda is not known and purpose is not stated explicitly (3): Review conversations are held with the appropriate data and information present. Objectives of meetings are clear to all participating and a clear agenda is present. Conversations do not, as a matter of course, drive to the root causes of the problems. (5): Regular review/performance conversations focus on problem solving and addressing root causes. Purpose, agenda and follow-up steps are clear to all. Meetings are an opportunity for constructive feedback and coaching. EN 0% 0% 0% 0% 0%Modern manufacturing (1): all countries, manufacturing * Average 2.77 2 3 Modern manufacturing All countries, manufacturing firms (100 to 5000 employees), 9830 observations(1) Modern manufacturing, introduction Score (1): Other than JIT delivery from suppliers few modern manufacturing techniques have been introduced, (or have been introduced in an ad-hoc manner) (3): Some aspects of modern manufacturing techniques have been introduced, through informal/isolated change programs (5): All major aspects of modern manufacturing have been introduced (Just-in-time, autonomation, flexible manpower, support systems, attitudes and behaviour) ina formal way Nick Bloom, Econ 147, 2011 - “@(2) Modern manufacturing, rationale Score (1): Modern manufacturing techniques were introduced because others were using them. (3): Modern manufacturing techniques were introduced to reduce costs (5): Modern manufacturing techniques were introduced to enable us to meet our business objectives (including costs) Nick Bloom, Econ 147, 2011Why Lean is not always good.... The £7 million guide to a tidy desk, London Times, January 5, Red tape has given way to black marker tape for thousands of bemused civil servants as part of a £7 million paperclip revolution aimed at ensuring that they keep the tools of their trade in the right place. Office workers have been iven the tape to mark out where | they should put their pens and pencils, their computer keyboards and to indicate where to place their phones. National Insurance staff have been chosen as guinea-pigs for the latest phase of the “Lean” rogramme brought in by the logistics consultants Unipart. The programme prohibits workers from aeeping personal items on their desks. @) Nick Bloom, Econ 147, 2011 (BYModern manufacturing, rationale (1): all countries, manufacturing Average 2.89 2 3 Modern manufacturing, rationale All countries, manufacturing firms (100 to 5000 employees), 9595 observationsWe also got managers to self score themselves at the end of the interview We asked: “Excluding yourself, how well managed would you say your firm is on a scale of 1 to 10, where 1 is worst practice, 5 is average and 10 is best practice” We also asked them to give themselves scores on operations and people management separately Nick Bloom, Econ 147, 2011Managers generally over-scored their firms “Best Practice” | “Average” 2 4 6 8 10 Their self-score: 1 (worst practice), 5 (average) to 10 (best practice)Self-scores were also not linked to firm performance Labor Productivity 0 2 4 6 8 10 Self scored management * In comparison the management score has a 0.295 correlation with labor productivityMy favourite quotes The bizarre Interviewer: “[long silence] there....hello” Production Manager: “....... I'm sorry, | just got distracted by a submarine surfacing in front of my window” The unbelievable ma is [Male manager speaking to a female interviewer] Production Manager: “| would like you to call me “Daddy” when we talk” [End of interview. ..]Some firms seemed to be too truthful Who rules the home in Ireland _———~ Interviewer: “Would you mind if | asked how much your bonus is as a manager?” Manager. “| don't even tell my wife how much my bonus is!” Interviewer. “Frankly, that’s probably the right decision...” Staff retention the American way Manager: “| spend most of my time walking around cuddling and encouraging people - my staff tell me that | give great hugs” The trusted Secretary . —_—_— French secretary: “You want to talk to the plant manager? There are legal proceedings against him, so hurry up!!” —Wrap up 1) Large variation in monitoring practices — best organizations monitor everything and feed into continuous improvement systems 2) Variation common across all industries we have looked at — manufacturing, retail, schools, hospitals, clinics and charities 3) So potential for improvement is extensive, especially in smaller organizations, in less competitive areas in developing countries Next lecture we will focus on targets — what you do with your monitoring data Nick Bloom, Econ 147, 2011