AAOM Handbook

ST.02 Define Business Structure Measures

Context

The stakeholders in a business (shareholders, employees, community and government) collectively define the expectations that the business must meet in order for them to continue to support its operation. These expectations typically encompass safety, environmental, social and economic dimensions. At the overall business level, these expectations will be expressed in fairly broad terms that may not be easy to visualize as targets for specific areas within the business. However, in order to provide meaningful guidance for managers and transparent reporting of performance, the business expectations should be translated into specific performance targets for each area of the business. The number of possible measures that can be created for a process is limited only by the imagination of people. The more measures that we create the more difficult it becomes to differentiate between the important and the mundane. The Operating Model definition for the Key Performance Indicators for a process is the smallest set of measures that allow us to recognise that a process is not changing, and is not likely to change. These will be selected from set of Purpose and Theory measures for the process. KPIs may include: • Purpose (outputs) of the process Effectiveness, Efficiency and Sustainability. • Theory behind the process - what makes reliable predictions about the output. These are typically; Output KPIs indicate whether the process is delivering the Performance Targets required to meet the Business Expectations. Consequently, they (or a proxy for them) should be measured consistently. Output KPIs are a lagging measure, that is, we can only recognise that a change has occurred sometime after the event that caused the change. There are two situations where this can cause significant loss. Where there is a; • long time lag between a change in process input or operation and the result becoming evident at the output e.g. the time lag between feed material going into a leach circuit and the gold output from the leach circuit, and • a significant step in output in a very short time, e.g. in the blasting of ore. Obviously we would like to avoid or reduce these potential losses. This can be done by monitoring that the correct inputs, the technical theory of the process and the operating parameters (utilisation, rate, etc.) are being delivered. The Defining the Business Structure (ST.01), is a prerequisite for defining the detailed performance measures. 1. ‘technical’ theory for physical or chemical processes, etc., 2. strategy parameters such as utilisation, rate, quality, etc. and 3. the inputs to the process.

© McAlear Management Consultants 2006

Operational Planning: Set Performance Targets

Updated: August 2018

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