What is a “first” or “second” generation Performance Management and Measurement framework?
Let’s begin by defining these concepts.
First generation Performance Management and Measurement frameworks derive Key Performance Indicators (KPIs) from strategy. These include well known and established frameworks, such as Balanced Scorecard (BSC) and EFQM Excellence Model.
These first generation frameworks have led organizations to increase the number and range of performance measure, but do not add the value that could be achieved. These frameworks have significant weaknesses in the way that these KPIs are identified, integrated, communicated and acted upon.
On other hand, a second generation Performance Management and Measurement frameworks derives KPIs from stakeholder and organizational needs. This concept was developed by Andrew Jack, when he observed the management and employee dissatisfaction with existing Performance Measurement and Management frameworks. To address these issues, Andrew Jack developed the second generation framework, Value Mapping.
Value Mapping focuses on driving true value for the organization, by deriving measures tied to Value Drivers and Value Outcomes:
- Value Drivers are things that drive Value Creation.
- Value Outcomes are the desired outcomes for the stakeholders.
The Value Mapping framework utilizes a pictorial way of integrating the most useful performance measures, which helps employees to reconnect themselves to their performance. It identifies the most important value required by the stakeholders and then develops a strategy to integrate it. Value Mapping also focuses on effective communication and assets that can create greater value to drive performance.
From the Value Mapping process visual above, we see the components of this model are:
- Value Needs Assessment
- Review of Strategy and Objectives
- Mapping and Integration of Objectives
- Predicted Value Outcome Mapping
- Value Drivers Assessment
- Value Driver Mapping
- Measures Development and Refinement
- Communication, Planning, and Allocation of Energy/Resources
- Value Outcome Assessment and Reporting Value
All organizations should be value-focused. This is the basis to Value Mapping. The Value Mapping model is an approach to value creation that uses the language of value to identify and structure performance measures.
Before we can review and develop our KPIs, we need to understand the Value Outcomes that we are trying to create, which are influenced by the needs of our stakeholders.
Value Mapping, specifically, helps management and employees reconnect with performance measures and performance management. Value Mapping identifies the most important stakeholder needs and uses these to measure value outcomes, as well as to develop an integrated strategy. Value Mapping approach also places great emphasis on the effective communication of the activities and assets that create value, the value drivers, and the measures of their performance. It is an approach that can help to structure the reporting of value for all people concerned in the success of the organization.
Interested in gaining more understanding on how to implement Value Mapping? You can learn more and download an editable PowerPoint about Value Mapping here on the Flevy documents marketplace.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”
– Michael Duff, Managing Director at Change Strategy (UK)
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd
“Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”
– Omar Hernán Montes Parra, CEO at Quantum SFE
