PERFORMANCE MANAGEMENTffirs.qxd1/21/0410:41AMPageiPERFORMANCE MANAGEMENTTEAM LinG - Live, Informative, Non-cost and Genuine !ffirs.qxd1/21/0410:41AMPageiiTEAM LinG - Live, Informative, Non-cost and Genuine !ffirs.qxd1/21/0410:41AMPageiiiPERFORMANCE MANAGEMENTFINDING THE MISSING PIECES(TO CLOSE THE INTELLIGENCE GAP)GARYCOKINSJohn Wiley & Sons, Inc.TEAM LinG - Live, Informative, Non-cost and Genuine !ffirs.qxd1/21/0410:41AMPageivThis book is printed on acid-free paper.Copyright ?2004 by John Wiley & Sons, Inc. All rights reserved.Published by John Wiley & Sons, Inc., Hoboken, New JerseyPublished simultaneously in CanadaNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise,except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, withouteither the prior written permission of the Publisher, or authorization through payment of theappropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers,MA01923, 978-750-8400, fax 978-646-8600, or on the Web at .copyright4#ff66ff. Requests to thePublisher for permission should be addressed to the Permissions Department, John Wiley & Sons,Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008.Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their bestefforts in preparing this book, they make no representations or warranties with respect to theaccuracy or completeness of the contents of this book and specifically disclaim any impliedwarranties of merchantability or fitness for a particular purpose. No warranty may be created orextended by sales representatives or written sales materials. The advice and strategies containedherein may not be suitable for your situation. You should consult with a professional whereappropriate. Neither the publisher nor author shall be liable for any loss of profit or any othercommercial damages, including but not limited to special, incidental, consequential, or other damages.For general information on our other products and services, or technical support, please contact ourCustomer Care Department within the United States at 800-762-2974, outside the United States at317-572-3993, or fax 317-572-4002.Wiley also publishes its books in a variety of electronic formats. Some content that appears in printmay not be available in electronic books.For more information about Wiley products, visit our web site at .wiley#ff66ff.Library of Congress Cataloging-in-Publication Data:Cokins, Gary.Performance management : finding the missing pieces (to close the intelligence gap) / Gary Cokins.p. cm.Includes bibliographical references and index.ISBN 0-471-57690-51.Organizational effectivenessMeasurement.2.PerformanceMeasurement.3.Industrial productivityMeasurement.I.Title.HD58.9 .C643 2004658.4012dc222003021215Printed in the United States of America10987654321TEAM LinG - Live, Informative, Non-cost and Genuine !ftoc.qxd1/21/0410:43AMPagevCONTENTSAbout the AuthorviiAbout the Web SiteixPrefacexi1Why the Need for Performance Management as a System?1PART ONEPerformance Management Process192Integrating a Suite of Proven Methodologies213Support from Fact-Based Data and Information Technology31PART TWOStrategy Maps and Balanced Scorecards:The Link between Strategy and Successful Execution by Operations394Measurement Problems and Solutions415Strategy Maps and Scorecards as a Solution486Strategic ObjectivesDrive Gears: Cascading Measures537ARecipe for Implementation588The Human Side of Collaboration689 Fact-Based Management Accounting Data7510Scorecards and Strategy Maps: Enablers for Performance Management80vTEAM LinG - Live, Informative, Non-cost and Genuine !ftoc.qxd1/21/0410:43AMPageviviCONTENTSPART THREELeveraging Financial Analytical Facts and Truths8311If Activity-Based Management Is the Answer, What Is the Question?8512Activity-Based Management Model Design and Principles: Key to Success9813Operational (Local) Activity-Based Management for Continuous Improvement11014Strategic Activity-Based Management for Customer and Channel Profitability Analysis11715Predictive Costing, Predictive Accounting, and Budgeting13116Activity-Based Management Supports Performance Management142PART FOURIntegrating Performance Management with Core Solutions14517Customer Intelligence and Customer Relationship Management15118Supplier Intelligence: Managing Economic Profit across the Value Chain17319Process Intelligence with Six Sigma Quality and Lean Thinking19420Shareholder Intelligence: Return on Whose Investment?21421Employee Intelligence: Human Capital Management237PART FIVEPerformance Management, Business Intelligence, and Technology24722Data Management and Mining with Performance Management24923Final Thoughts: Linking Customers to Shareholders262Index273TEAM LinG - Live, Informative