If you manage an airline, you will know that your aircraft have to leave and arrive on time, you need efficient check-ins, you want to ensure your planes are full and you want to optimise the income (yield) from each flight. These are each “points of performance”.
If you run a meals on wheels service you want to know that the meals are arriving on time, in good condition, that your customers are safe and well and that they are eating the food, getting the nutrition they need.
If you are a retailer, you want to know your takings at the point of sale, you want to know footfall and conversion in your outlets, you want to ensure your supply chain works so your is in the right place, you want to be buying at the right price so you can make a margin. These are each “points of Performance”.
Points of performance are where the activity of your business reaches a critical touch point with either your customers or finances. Monitor these are you have a very good idea of the health of your business. Ignore them and your business will run away with you.
Points of performance are ideal locations for a KPI (Key Performance Indicator). That is a key, critical or informative indicator of performance (How you are doing) and result indicators (how it affects your customers and finances). Indicators that tell your staff how they are doing and tell management how the business is doing as a whole.
They are also useful rallying points for improvements. 20 years ago, British Airways focused on their point of performance with a Key Performance Indicator (KPI) that measured whether their planes were leaving on time. If they were more that two hours late the Chief Executive rang for an explanation. Today their KPI is to have the plane ready to leave two minutes before the plans has its take-off slot. Their level of performance for this important, industry wide measure, has improved dramatically.
These points of performance are really useful in balanced scorecard design. They usually sit in the process perspective. They provide points where operationally imperative data should be reported and monitored. The information passes that important test of being useful to the people who are on the ground producing it. It is also extremely helpful to their managers.
Operationally it is keeping on top of the day to day performance of the business. Strategically you can ask, how could we improve this to get ahead of our competition?
So where are the “Points of Performance” in your business? Work out where these are and you can determine where your KPIs should be and where key performance targets should be.
Of course choosing the right Key Performance Indicator to use at that point of performance is another technique, because choosing the wrong one can still lead to dysfunctional behaviour and gaming the system to achieve the targets. A topic of another post.