604 Measuring what is important by Kingdom Site Ministries

MODULE 604 MEASURING WHAT IS IMPORTANT Dr. Mario Denton Crown Financial Ministries Marketplace Programme Director for Africa Africa Director for FCCI (The Fellowship for Companies for Christ International) CEO STRONG MESSAGE BUSINESS CONSULTANT

Let's keep the good marketplace vibes alive. Let's network. Tel (w) + 27(0) 82 88 29903. E-mail address: mario@crown.org.za Website: www.crown.org.za and click on marketplace E-mail address: marden@mweb.co.za website: www.strongmessage.co.za Skype: mario.denton

Table of Contents 1. Foundation 2. Balanced Kingdom Business Measures 3. Application assignment 4. Appendix

Measuring what is important

he Scriptures teach us to make wise use of the resources God gives us. He

places a sacred trust in the hands of believers who lead businesses to sustain them and grow them appropriately to serve Him and accomplish His purposes. Sustaining and growing the business require that we have the information we need to “know well the condition of our flocks.” (Proverbs 27:23)

1. Foundation Workshop Objectives In this application module you will learn to: • Recognise the foundational Scriptural principles for measurement and fact-based decision making. • Describe the purpose and value of balanced business measures. • Implement a basic Balanced Scorecard and Measurement Review Process. Measuring What’s Important is the sixth application module in the Leadership focus area.

Biblical Foundation The concepts of fact-based decision making and measurement derive from the Kingdom Business foundational principle of Stewardship. The Bible gives practical guidance and instruction about the importance and use of these concepts.

Exercise: Read the following passages and discuss the associated questions with your group. 1. Read Proverbs 27:23-24:

a. How do the phrases “know well the condition of your flocks” and “give attention to your herds” relate to modern business?

b. What is meant by “riches do not last forever” and “does a crown endure to all generations?”

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2. Read Numbers 13 (especially verses 17-26):

a. Why did Moses ask for so much information in verses 18- 20? Why might they have taken forty days to gather the information? b. How would the information requested help Moses and Aaron make decisions? What role did those sent to explore Canaan play in analysing the information gathered? 3. How do the concepts of measurement and fact-based decision making relate to our

stewardship responsibilities? 4. What overall principles regarding measurement and fact-based decision making can

be gained from these Scriptures?

Additional related Scripture readings: 1. Precision and quality: Genesis 26:1-6, Genesis 6:14-16, Exodus 25:8-27:21 2. Accurate measures: Deuteronomy 25:13-16, Proverbs 11:1, 16:11, 20:10 3. Leading for Results: Philippians 1: 9-11

Know well the condition of your flocks, and give attention to your herds, for riches do not last forever; and does a crown endure to all generations? (Proverbs 27:23-24 ESV) NCED

2. Balanced Kingdom Business Measures Just as Moses required a balanced set of information from those he sent to explore Canaan, we also need balanced information to run our business and to “know well the condition of our flocks and herds".

Key Results Areas and Key Results Measures In our Kingdom Business leadership model, we recommend aligning our information needs in the five principle focus areas of:

• Leadership (Financial etc.) • Ministry • Customer • Employee • Operational Excellence

Each of these is a Key Results Area (KRA) where performance is critical to the success of the business. Within each KRA, there are Key Results Measures (KRMs) or specific performance indicators critical to the overall performance of the KRA. Key Result Measures are measures or indicators of quantifiable characteristics of products, services, processes and operations used to track and improve performance. KRMs are frequently represented as calculated percentages, allowing us to see current and longrange performance trends over time. For example, Gross Profit % and Profit Margin % highlight the overall fiscal (Leadership) performance of the business and can be tracked month to month; % Error-free transactions and % On-time Deliveries highlight operational effectiveness and efficiency (in the Operational Excellence focus area).

KRMs can also be identified to help us track key long-range goals we set for ourselves. For example, if we set a goal to shift our emphasis to new products or service over time we can establish a KRM such as % Sales from New Products. Establish a Balanced Focus & Goals

Balanced Scorecard

As we define and implement KRMs we can employ a tool, known as the Balanced Scorecard, which allows us to assemble in one place a comprehensive set of KRAs and related KRMs for leadership review and analysis. As a whole, the Balanced Scorecard provides a clear basis for aligning all activities consistent with the company’s vision, mission and values. An example of a basic Kingdom Business Balanced Scorecard is shown in Table 1 below.

Key Result

Key Results

Target/

Area

Measures

Standar

Jan

Feb

Mar

Ap r

d Leadership/Finan

Gross Profit %

25%

22%

23%

26%

Profit Margin %

10%

Return on Assets

4.7%

4.8%

4.6%

Ministry

Tithe %

10%

Customer

Retention %

95%

83%

81%

88%

Complaints

<1% sales

3.2%

4.4%

Employee

Retention %

> 5%

92%

91.5%

Operational

Error-free

100%

96%

94%

Excellence

Orders %

98%

On-time

95%

78%

82%

75%

cial

Shipments %

Table 1. Sample Kingdom Business Scorecard

Exercise: Discuss the following questions: 1. What has been your past experience with measurements? What has worked well and

why? What has not worked well and why?

2. How do you foresee a balanced measurement system benefiting your company?

Implementing Balanced Kingdom Business Measures

A Balanced Kingdom Business Measurement System can be implemented by following these steps:

Step 1: Determine what to measure Step 2: Collect Data and Report Step 3: Implement a Regular Review Process

Step 1: Define what to measure Take an inventory of existing measures. The first activity in deciding your key balanced measures is to take an inventory to determine which measures already exist, and then decide whether they are appropriate for any of the Key Result Areas.

Exercise: Review existing measures 1. Discuss what quantitative measurements are already in use in your business.

2. List them below, and identify the Key Result Area in which they best fit. Note: It is not

unusual for companies to have no measures in several KRAs. You may find that you have several financial measures and no customer or employee measures.

Existing Measures

Key Result Area

Identify at Least One Measure for Each Key Result Area At this stage in the Kingdom Business Process for transformation, our goal is to introduce the Balanced Scorecard and establish the beginnings of the measurement system. We will set up the scorecard and identify at least one Key Result Measure in each Key Result Area. As we progress through the transformation process, we will add measures for related applications along the way. For example, we will add a customer satisfaction measurement in the application entitled Customer Focus: Understanding Customer Expectations. For now, however, let’s focus on getting the basics in place.

Exercise: Identify Key Result Measures 1. For each Key Result Area, identify at least one Key Result Measure.

a. Review to see whether an appropriate measure or measures already exists for the KRA. b. If none exists, consider using the following suggested measures: Leadership/Financial: Net Profit % Ministry: Tithe % Customer: Retention % Employee: Retention % Operational: Error Free % c. Ignore the Operational Definition and Data Collection columns at this point. They will be covered in later exercises.

2. List your selected measure on the Balanced Scorecard in the Appendix. Note: You

may have to complete this exercise outside of this training session if you do not complete it in the time allotted here.

Key Result

Operational

Data

Area

Measures

Definitions

Collection Plan

Leadership/ Financial

Ministry

Customer

Employee

Operational Excellence

Define Operational Definitions Operational definitions clarify the understanding and calculation for each measure. An operational definition is a description of how the measurement is taken or how the data are calculated. For example, an operational definition of % error-free might be: Count the total number of orders handled. Count the number of orders shipped with errors of any type. Calculate % orders error-free as: (Total # orders - # orders with errors) ÷ Total # orders. Notice that this calculation does not tell you what types of errors occurred in the orders or the number of errors per orders. That’s fine, as long as you understand what the data actually represent.

Scorekeepers Each Key Result Measure should have a designated person assigned to ensure that the data are accurately collected, suitably formatted and appropriately presented. Scorekeepers may or may not be accountable for measurement results, depending on

the degree to which their responsibilities affect outcomes. However, they should be accountable for seeing that measurements are tracked and reported (see Steps 2 & 3). Assignment of a scorekeeper for each measure is an integral part of the measurement process.

Exercise: Define Operational Definitions For each Key result measure selected:

1. Write an operational definition that describes the measure and how it is calculated.

2. Transfer the Operational Definition to the Balanced Scorecard Worksheet. Note: You

may have to complete this exercise outside of this training session if you do not complete it in the time allotted here.

Assign a Scorekeeper for each Key Result Measure and record his/her name on the Balanced Scorecard in the Appendix.

Step TWO: Collect Data and Report

Key components of a good measurement system include:

1. Collecting accurate data

2. Establishing a baseline and target

3. Making the data visible

Data Collection Data can be collected in a number of ways:

Computer Systems Many existing computer systems capture all the related data required to track your defined Key Results Measures. Examine your existing systems to see whether the appropriate information is captured and how it can be extracted for reporting purposes.

Paper Records In the absence of computer records, existing manual forms should be examined and modified for data needed. Periodically, individual transactions can be reviewed and transferred to transaction logs and/or spreadsheets. Business Transformation

Data Collection Check Sheet Data Collection Check Sheets and spreadsheets can be created to record data needed to support selected measures and for subsequent production of charts and graphs.

Establish the Baseline and Target

In the previous data collection example, four weeks of data were collected to determine the % of error-free orders. The four-week average of 86.5% represents the existing state of performance known as the baseline. If a sufficient amount of data has been collected, it is accurate.

The baseline can be used to decide a reasonable goal to improve performance, known as a target. Targets are used to create positive tension to improve the baseline performance. It is generally best to begin with a one-year target, and then set longerterm goals after the organisation has experienced the first cycle of success. In deciding a target, the following should be considered:

1. How important is it to make an improvement in the Key Result Area, and how much

improvement must be made?

2. Is the target realistic, i.e. can it be achieved over the next year?

3. What must the leadership do to successfully meet the target?

Note: The approach to answer this question will be covered in the application titled, Early Wins.

Exercise: 1. For each Key Result Measure, define a plan to collect sufficient data to establish a

baseline and target.

2. Record the plan in the Data Collection Plan in the Balanced Scorecard Worksheet.

Collected data must be formatted and visible to be useful. Two key aspects of reporting are Charting and Visibility.

Charting There is an old saying, “a picture is worth a thousand words". Because of the power of observing performance over time, it is important that Key Result Measures be reported on a time-based chart. Charts should be titled and indicate the time frame that they represent.

The accessibility and ease of use of today’s computer tools make charting a relatively easy task. However, the selection of chart types offers a number of options. Among the many options available, the following chart types are most commonly used to report performance data:

Line Graphs Also known as “run charts”, line graphs show performance of a measure over a series of time periods. If targets are known, they should be added to the chart to compare performance to acceptable or desired levels. Arrows are sometimes used to indicate trends. Also, legends are used to identify two or more different sources of performance.

Bar Charts Bar Charts are often used when showing multiple variables within a data point and can provide more information than a line graph.

Each month, data points for each Key Result Measure are entered on an appropriate chart and transferred to the Scorecard. The Key Result Measure Scorekeeper maintains the chart that is used for analysis of trends and causes in performance changes. The scorecard is used by the Leadership Team in the review process, which is covered in the next section.

Examples of a partially completed Balanced Scorecard and associated charts for each Key Result Measure are provided in the Appendix. “No one after lighting a lamp covers it with a jar or puts it under a bed, but puts it on a stand, so that those who enter may see the light.” Luke 8:16

Visibility There is an old saying, “what gets measured gets done”. Perhaps a better saying is “what gets measured, and is made visible, gets done”. Charts and graphs representing performance of Key Results Measures should be made visible for employees to see and use.

Several options exist for displaying charts of Key Results Measures. 1. Post performance charts on bulletin boards in common areas for employees (such as

break rooms or other employee gathering areas) to allow employees to see performance results daily.

2. Distribute printed charts and graphs. Many organisations give employees copies of

reports and graphs at team or company meetings, with a brief analysis of the results.

3. Distribute electronic charts and graphs. Organisations where all employees have

computer access frequently distribute performance reports by e-mail.

No matter which approach you use, it is important that the leadership inform employees of the following: 1. What we are measuring and how the information is gathered and tallied. 2. Why performance is being measured. Employees need to be reassured that

performance measurement data are primarily intended to identify process performance rather than people performance. 3. What the data are telling us. Periodic reviews of the data should be shared with

employees so that they can participate in improvement activities

Step THREE: Implement a Regular Review Process Balanced Scorecard Review Meetings should become a regular process if Key Results Measures are to have any impact on the business. Once your scorecard is in place and data are being collected, you should establish a regular review process to ensure: 1. Key Results Measures do not drop below the baseline or other minimum performance

standards. 2. Early detection of negative performance trends. 3. Initiation of necessary improvement projects.

Follow these guidelines as you establish your review process: 1. Establish a regular monthly review meeting specifically for the purpose of reviewing

the balanced scorecard. Participants should include senior leadership, all focus area team leaders, and KRM scorekeepers as appropriate. 2. Establish a schedule for reviewing each KRM in detail at least once a quarter.

Scorekeepers should be prepared to present detailed analysis of performance levels and trends. Scorekeepers should request “urgent” reviews of their measures when they see significant negative trends or poor performance levels.

3. Scorekeeper analysis should include:

a. Relationship of current KRM performance levels to targets or standards. b. Analysis of positive or negative trends. c. Additional detailed “back-up” data used in calculations other than the operational definitions. d. Root cause identification of problems if known.

4. Leaders should avoid:

a. Overreacting to a single negative or positive data point without sufficient cause. b. Tinkering with KRMs by jumping to conclusions without facts and sufficient understanding of root causes.

5. Teams should be assigned to identify and address root causes of problems as

needed. This approach will be explained further in the application titled, “Early Wins”. A robust measurement review process is essential in determining the health of the organisation and providing a factual basis for Leadership Team decisions that impact the future performance of the organisation. “The heart of the understanding one seeks knowledge, but the mouth of fools feeds on folly.” (Proverbs 15:14 ESV)

Application assignment 1. Complete exercises begun today for Step 1 – Define What to Measure. This step

should be complete by the next meeting.

2. Each Key Result Measure scorekeeper should define a plan for the completion of

activities for Step 2 – Collect Data and Report. The plan should include the establishment of a baseline, target and appropriate charts for each Key Result Measure on the Balanced Scorecard.

3. The senior leader completes activities for Step 3 – Implement a Regular Review

Process. Establish a tentative start date for the first review meeting.

4. Report progress of these steps at the next meeting. Use the Balanced Scorecard in

the Appendix as a template for your reporting.

Note: It may take 3 to 4 months to complete this application assignment.

APP 21

Dig deeper and learn more (Optional) This section includes various support material for further inspiration and encouragement and relates to the material covered in this section -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Nr

Name

604 A 604 B

The business of work Personal scorecard

Date of completion

Progress Report James 1:22-25 “Do not merely listen to the word, and so deceive yourselves. Do what it says. Anyone who listens to the word but does not do what it says is like a man who looks at his face in a mirror and, after looking at himself, goes away and immediately forgets what he looks like. But the man who looks intently into the perfect law that gives freedom, and continues to do this, not forgetting what he has heard, but doing it-- he will be blessed in what he does.” (NIV) Name and Number of Module ________________________________________ Participant’s Name: ________________________________________ 22

The Biblical Truths (Principles) I learned from this module: ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------I intend to apply this Truth (Principle) in my business by: --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------________________________

_______________________

Participant

Date

Inviting Jesus into Your Life The Bible makes it clear that we have to do something to accept the gift that God offers. This is an act of faith. The Disciple John writes, “God so loved the world that he gave his one and only Son, that whoever believes in Him will not perish but have everlasting life.” (John 3:16) Believing involves an act of faith based on all that we know about Jesus. It is not blind faith. It is putting our trust in a Person. In some ways, it is like the step of faith taken by a bride and a bridegroom when they say, “I will,” on their wedding day. The key is three things: Sorry... Thank you... Please...

Sorry

You have to ask God to forgive you for all the things you have done wrong and turn from everything that you know is wrong in your life. That is what the Bible means by “repentance.”

Thank you You believe that Jesus died for you on the cross. You need to thank Him for dying for you and for the offer of His free gifts of forgiveness, freedom and His Spirit.

Please God never forces His way into our lives. You need to accept His gift and invite Him to come and live within you by His Spirit. If you would like to have a relationship with God and you are ready to say these three things, then here is a very simple prayer you can pray that will be the start of that relationship:

Dear God - I am sorry for the things I have done wrong in my life. Please forgive me. I now turn from everything that I know is wrong. Thank you that Jesus died on the cross for me so that I could be forgiven and set free. Please come into my life by Your Holy Spirit to be with me forever. Thank you, Jesus. Amen.

Now what? If you have prayed this prayer, it is important to tell someone! This may be your Group Director, a fellow member of the group, perhaps a boss or co-worker who accepted this great gift of life at an earlier time. Then find a way to get connected in a local church that loves Jesus and has a heart for the new believer.

SPECIAL ACKNOWLEDGEMENT: Kurt Mentzel has been instrumental in helping organisations establish a system for performance management that enables them to reach benchmark performance. His passion for people, processes and service are key in his delivery of training and consulting for organisations that pursue or have received the coveted Malcolm Baldrige National Quality Award and the Texas Award for Performance Excellence. His work includes deployment of the ISO 9000 series, Lean Enterprise, Six Sigma and studies with Dr. Edwards Deming, Philip Crosby and Dr. Joseph M. Juran. Kurt’s experience includes 15+ years of service with the Baldrige Criteria, including service as a Senior Examiner and Member of the Board of Overseers for the Texas Award for Performance Excellence. He has served as Section Chairman for the American Society for Quality and is an ASQ Certified Quality Engineer and Quality Auditor.

Material adapted by Dr. Mario Denton Mario is the International Field Continental Programme Director – Market-place for Crown Africa, the Africa Director for FCCI (The Fellowship for Companies for Christ International) and the CEO of Strong Message Business Consultancy. He is an international teacher and industrial psychologist and uses his strong academic and corporate background and his uniquely effective coaching to help people tap into their inner being; to utilise their strengths and expand their skills to make a difference in the workplace. He and his wife, Mariene, are based in Cape Town, South Africa, and are blessed with three grown sons.

photocopying, recording, or by an information storage and retrieval system without permission. Regarding permission to reprint material from this material, please write to Dr Mario Denton: Unless otherwise noted, Scripture quotations are from The Holy Bible, English Standard Version, copyright © 2001 by Crossway Bibles, a division of Good News Publishers. Used by permission. All rights reserved.

Crown Companies Legacy Leaders Providing mature business leaders an opportunity to continue to use their skills productively for the Glory of God. Do you desire to pass on the baton to business leaders to transform their business? Legacy leaders are business leaders who have a desire to continue to use their skills productively to mentor, coach and train the other business leaders, as well as train the next generation of business leaders for the glory of God. Crown Companies exists to equip and encourage business leaders to operate their business and conduct their personal lives in accordance with Biblical principles. Legacy leaders •

Are experienced in business 26

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Understand and are committed to the vision of CROWN Companies

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Have implemented biblical principles in their own personal life and business

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Are mature in the Christian faith and are of proven character

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Have a passion to see other business leaders succeed as determined by God’s standards

Legacy leaders may possess: •

The capability to be an encourager, coach, mentor and disciple.

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The ability to provide wise business counsel to other business leaders

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The time and or resources to come alongside other business leaders

"Teach us to number our days that we may present to you a heart of wisdom.” Psalm 90:1. Legacy leaders serve in a wide variety of capacities, including: •

Mentoring individual business leaders

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Working with groups of business leaders

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Serving as an ambassador for CROWN Companies in your church and community

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Travelling abroad to assist business leaders in other countries

Do you want to make a difference in the lives of others for eternity? How can you serve the Lord as a legacy leader and begin sharing all that the Lord has entrusted to you? 1. Pray now where the Lord will use you in the lives of other business leaders to impact the Kingdom of God for His glory. 2. Contact Crown Companies at mario@crown.org.za or the Crown companies office at 021 975 0226

3. Visit our website at www.crown.org.za for more information, tools and resources and become a member to enjoy the support, counsel and fellowship of other members and the extensive material available.

Crown Companies: Reclaim the workplace for Christ Is the vision of your church also to bring the people of your community into a lifetransforming encounter with the Kingdom of God? The workplace is a key battle ground for achieving the above vision. Mature and equipped believers should live their faith in the workplace. But many need help in understanding what that means, as well as support in carrying it out. If you want to live your faith in the workplace, helping to make it more effective of God’s Kingdom on earth, then we at Crown Companies want to come alongside you to support and equip you. Our mission and intention are to develop flexible training programmes and processes to assist you in this regard. Imagine a workplace where ….. •

There were biblically based, explicitly defined values

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Ethics and integrity are paramount

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Love and servant leadership governed relationships

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Pursuit of excellence was the norm

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Collaboration was sought but obedience and commitment to final decisions were followed

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Selfish ambition was non-existent 28

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Accountability was enforced – in a supportive manner

START WITH A WORKPLACE MINISTRY IN YOUR CHURCH Equip your workplace leaders to become ministers. Help them to become sensitive to the lost. Help the workplace leaders of your church get a vision for joining God in the workplace ministry.

Crown Companies: Become the business leaders God intended you to be Sometimes it is a matter of survival, but you have to become the business leaders God intended you to be. The purpose of Crown Companies is to help business leaders: •

Draw closer to God

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Establish a committed and vibrant relationship with the Lord

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Develop deep, meaningful relationships with like-minded peers

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Learn what it means to run a company for Christ

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Help other workplace leaders to do the same

This is accomplished through •

Monthly leadership groups

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Workplace conferences

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Materials, resources and training on our website

"Love the Lord your God with all your heart and with all your soul and with all your mind and with all your strength. The second is this: Love your neighbour as yourself. There is no commandment greater than these." Mark 12:30-31. Search the untold riches of the Bible to find scriptural perspective for operating a company as a steward of Christ with like-minded peers and colleagues. Join a small group and facilitate discussions relevant to: •

Sales and marketing strategies

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Effective time management

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Cash flow and profit

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Planning goals and implementation

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Motivating people

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Problems solving

"For my thought are not your thoughts, neither are your ways my ways, declares the LORD. As the heavens are higher than the earth, so are my ways higher than your ways and my thoughts than your thoughts." Isaiah 55: 8-9. START WITH A SMALL GROUP DISCUSSION IN YOU AREA Do you need someone to pray with you – someone who understands the pressures of running a company, someone who cares? Do you desire to integrate your Christian faith into the daily operations of the business God has entrusted to you? For more information on a small group in you area contact Dr Mario Denton at mario@crown.org.za. "And I say unto you, Ask, and it shall be given to you; seek and ye shall find; knock, and it shall be opened unto you. For every one that asketh receiveth; and

he that seeketh findeth; and to him that knocketh it shall be opened.". Luke 11: 910.

Crown Companies: Every believer a minister in the workplace Common dilemmas in the workplace •

Isolation: Feeling the pressure of being responsible for many people

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Need encouragement but rarely receive it

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Need people with whom they can communicate honestly

Equipping the workplace You have an opportunity to make a difference in the workplace to which God has called you. Meet monthly with other business leaders to receive instruction and training from other top business speakers on how to integrate your Christian life into your business. Form a small group of leaders who serve one another in a well-informed, support group where burning issues like the following can be discussed: •

Develop a strategic plan tailored for each member’s business

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Developing an action plan for ministry

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Developing your company’s mission and vision

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Product and service excellence

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Giving back to the Lord

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Long-term financial planning

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Building a high-performance team

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Hiring smart

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Sharing your faith in the workplace

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Problem solving

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Customer service

START WITH A LIFE-CHANGING SMALL GROUP DISCUSSION IN YOU AREA. Do you desire to integrate your Christian faith into the daily operations of the business God has entrusted to you? For more information on a small group in you area contact Dr Mario Denton at mario@crown.org.za.