Newsroom

EXAMPLE: A common strategy for existing, known brands within a marketplace is to maximize revenue while minimizing lost business. On the other hand the strategy for a new line of business would be to focus on gaining market share.

When managing the business as a whole, if you applied a straight weighting between each line of business, you would lose the relevance of your strategy towards your new line of business.
Brokers who focus their resources on your new product offering should be recognized as strategic performers. Weighing the measures evenly would not provide you with the data required to recognize and promote this behaviour.

EXAMPLE: It is easy to determine whether a single metric is higher or lower this year than last year. When the business remains constant, it is common to review the performance of the same metrics from month-to-month, or year-to-year. This is a common, manageable task.

When the business changes, or new metrics are deemed important, it is often difficult, or impossible, to obtain the historical data required to evaluate trends.

These examples highlight the difficulties associated with managing performance in an ever changing business environment:

• What was important last year might no longer bear any relevance
• What is important today did not exist in your business, or possibly the marketplace as a whole

In these cases, determining who consistently “best” requires a new way of thinking about the issue.

• How do you manage performance by using a series of individual metrics that change from year-to-year?

Strategic Performance Indexing (SPI) will help you resolve these issues. By taking your strategic objectives and linking them to a basket of Key Performance Indicators (KPI’s), that relates to your lines of business, it is possible to get a clear, objective and relative view of the “best” within your network. The SPI is therefore a composite KPI for each broker that aligns quantitative and qualitative measures with a set of strategic objectives.

(short or long term) against a basket of metrics. This process requires a working knowledge of your organization’s strategic objectives, and more specifically, those that are directly impacted by your broker network. The strategic objectives could be organizational, or at a line of business level, or perhaps, a blend of both. Based on a clear view of the strategy, selecting and weighing the importance of the metrics to include in your basket is a relatively straightforward task.

Computing an SPI for each broker requires data for the entire broker population to be present. Rules will consider the weights assigned to each of the metrics in the basket, as well as the strategic value of each line of business. The end result will provide a clear indication of the relative performance of each broker when compared to their defined peers.

It is not uncommon for organizational strategy to evolve over time, and in some cases to radically change due to new market conditions. In these cases, the basket of metrics being used to define the SPI should change as well. Based on the fact that the SPI is a composite measure of strategic performance, increases in the SPI will reflect improved execution of your strategic objectives by specific brokers, whereas a decrease in the SPI reflects the fact that a broker is not adapting to your changing needs.

The SPI now becomes an objective indicator of performance that is more valuable than individual volume or activity based measures. Furthermore, by segmenting the population into peer groups, we have a clearer view of who is “best” when compared with other “look-alike” brokers.

Strategic Performance Indexing could be confused with Balanced Scorecards because of the alignment with strategic objectives. In fact, they are highly complimentary. The Balanced Scorecard is typically used to manage the strategy at an organizational or departmental level. When looking at the Broker Perspective of a Balanced Scorecard, you may, as an example, find three objectives; Satisfaction, Revenue and Profitability. Each is supported by relevant metrics that can be reviewed and ranked by “best” performers. Developing a Strategic Performance Index at the individual broker level gives you the ability to determine that the most profitable brokers are also the most satisfied.

It is in the opinion of the authors that an SPI will help you identify the brokers that are “best” suited to your strategic objectives, and will provide actionable items to improve the performance of the brokers who are not.

Emphasizing metrics in the SPI that yield higher strategic outcomes will support the most effective use of limited resources and provide the highest possible rate of return to your organization.

The Catalytics Group Inc. specializes in improving strategic execution through measurement and the use of technology as an enabler. Our Team of highly skilled professionals has delivered over 2500 distinctly successful projects and will work with you to create solutions that will transform your strategy into profitable action.