AAOM Handbook

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Purpose

To define the performance targets that must be delivered by each Business Structure element, in order to meet the Business Expectations.

Quantity

• One set of performance targets for each element of the Business Structure.

Quality

• The objectives for overall business effectiveness, efficiency and sustainability expectations for any element of the Business Structure are defined by the requirements of the connected Business Structure elements. • The performance targets for each element of the Business Structure, shall be the input specifications for the Business Process Performance Model that produce a forecast outcome that meets the Business Expectations. • Performance targets may include; o Effectiveness (units output per time period), o Efficiency (a ratio between resources used and units of output) o Sustainability (the material and social requirements for ongoing effectiveness). • A performance target may include a; o lower specification limit, o upper specification limit, and o target mean. • Each performance target must include at least a lower or upper specification limit. If any of the other two specification values is significant in evaluating the performance of the process it shall also be defined in the target specification. • The confidence level for each performance target shall be specified based on the area of the actual/forecast performance histogram (for the specified time interval) that is required to overlap with the area of the target specification. The confidence level indicates the probability that performance in a time period will meet specifications, and hence, definition of the confidence level will be guided by the expectations of the process 'customer', for example - if financial markets expect that company forecasts will meet guidance in 4 out 5 quarters, the confidence level required on targets will be 80%.

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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