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One of the weakest links in business management is management s review of performance. In a typical review, the
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performance data are presented, most of the attendees wait for their turn to speak and agree about what is presented, and the meeting ends with consensus about the data presented. In visualizing the process before the meeting, the main effort goes into preparing the presentation material for the meeting not necessarily understanding performance. As a result, the focus of the meeting is the presentation instead of the performance. A healthy critical analysis of performance, an understanding of the variation in performance, and actions to improve further are often overlooked. A stronger review process must be established and practiced for a business to benefit from the management review. The purpose of the management review is for leadership collectively to understand a company s performance, look into opportunities for further improvement, identify conflicting priorities among various departments, and assess the strategies being implemented for effectiveness and operational execution for expected results. An effective management review must be planned with a clear agenda. In a multidivision company, the frequency of executive management review must be coordinated with the reviews of various facilities so that the data are aggregated from bottom up to the corporate level. Figure 9-1 shows the corporate review cycle. The cycle includes a monthly review of operations at the process, division, and corporate levels in addition to a conventional quarterly review of the financial measures in detail. The monthly review will drive a better quarterly corporate performance. To prevent these reviews from becoming a trivial exercise, the review guidelines at each level must be clearly established and the goals of the Business Performance Index and Six Sigma Business Scorecard must be communicated. Rather than review performance at a point in time, these meetings must review performance against the sliding goal line on the trend charts. They must assess the improvement from the previous review as well as project performance in the future. The interaction of the various departments must be reviewed for improving synergy and mitigating adversities. To review performance using the Six Sigma Business Scorecard, the agenda must include examining each depart-
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ment for cost, rate of improvement, and timeliness. The status of action items from the previous meeting must also be on the agenda. The main objective of the review is to ensure that performance goals are achieved or exceeded. The suggested agenda items are as follows: 1. Status and effectiveness of action items from the previous meeting 2. Review of measurements by elements 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Leadership and profitability Management and improvement Employee innovation Purchasing and supplier management Operational execution Sales and distribution Service and growth
3. Division or corporate Sigma level 4. Action items for continual dramatic improvement 5. Suitability of the Six Sigma Business Scorecard During the review, attendees present information about their designated category or assigned measurements for level, trend, rate of improvement, and Sigma. They then analyze the data for statistically significant changes by identifying nonrandom patterns. If unacceptable patterns exist, the team at the meeting identifies an action to remedy the systemic problem.
Each stakeholder is accountable to someone in a corporation. The CEO is directed by the board of directors and the board chair. However, a CEO is hardly graded for a process performance; instead, the CEO is graded for results. CEOs tend to be evaluated for their interaction with media instead of their interaction with employees. Leadership Review. Traditionally, leadership s performance has been measured in terms of outcomes that are sometimes difficult to predict. However, decisions about the leadership s performance are made based on the short-term performance of the business or lack of it. For the leadership performance to be evaluated consistently, the leadership must be evaluated as a process by stakeholders, including employees. The leadership evaluation process is shown in Figure 9-2. The inputs into the leadership evaluation process consist of information, executives, policies, and tools. The information portion of the process should include the business scorecard measurements as well as any other information that would help identify opportunities for improvement or provide feedback about leadership s performance. The executives referred to in the process are the CEO and staff members the people who serve as the resources to realize the leadership s vision. The
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