CIMA Workshop: Business Performance Improvements

Last month, I attended a CIMA skills workshop that focused on business performance improvement and Key Performance Indicators (KPI’s) presented by Robin Tidd. Robin has a huge reputation within CIMA and consulting circles, so it really was a pleasure to meet him and listen to his thought and ideas.

During the seminar, Robin revealed that in the private sector, it is estimated that around 25% of a company’s turnover is lost through “waste” such as inefficiencies, errors, reworking, duplication and downtime etc. This rises to as much as 40% of revenue or budget in the public sector. That’s startling isn’t it? So a typical SME in the private sector with a turnover of £2m per annum, could add as much as £500,000 as year to their “bottom line” through process improvements! Have I got your attention now?

Process improvement is about understanding the operations or procedures within an organisation, and identify where value is being added and more importantly where value isn’t been added. But it’s not just about processes. The culture and behaviour of the organisation, as well as the skills of the leadership team are also critical. From these process reviews, certain key operations critical to the success of the business can be identified and measured using KPI’s.

KPI’s are used to measure quality, quantity and use of resources in critical areas of a business or organisation in order to help it meet its vision and goals. Put another way, performance indicators can help you understand what is happing in your business and evaluate its performances, enabling you to make timely and proactive decisions. But performance is not just about results! The common mistake made in such process reviews is to use KPI’s that are purely performance measures or results indicators. Football managers don’t manage the team by looking at the scores in the Sunday Papers. Targets without a methodology are pointless.

At this point, I would like to give you an analogy based on a car’s dashboard that Craig Povey recounted to me so wonderfully recently. Successful use of KPI’s can be compared to a driver using the dashboard of their car. I suspect that many car drivers don’t understand how a car engine or the other mechanical systems on a car work. The simple fact is you don’t need to. You have the speedometer to tell you how fast you’re are travelling, the rev counter to give you information on the engines performance, the petrol gauge to tell you how much fuel is in the car and the temperature gauge to tell you whether the engine is over heading.

Based on these “performance indicators”, the driver can use the accelerator, brakes, steering wheel and gear stick in order to match the cars performance to that required by the road, in order to meet the target or goal of reaching the destination safely. Ignoring this information or not having it available to you could result in the driver being stopped for speeding, running out of fuel, or over revving the engine or letting it get too hot, resulting in a breakdown. All of which would result in the driver not achieving their goal!

To find out more about how Suttongate Consulting can help your business or organisation find the hidden process improvements in your business and potentially add hundreds of thousands of pounds to your bottom line, contact us today!

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DOMINIC SEARS FCMA CGMA MIoD
MANAGING DIRECTOR