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Cost- Effectiveness Birkbeck Managers’ Forum 28 January 2009

Cost- Effectiveness Birkbeck Managers’ Forum 28 January 2009. Best Value. The 4 "C"'s Challenge, Consult, Compare, Compete. Challenge. Why do we do this? Why do we do it this way? What other ways are there of doing it?. Consult. Who are the customers? What do the customers want?

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Cost- Effectiveness Birkbeck Managers’ Forum 28 January 2009

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  1. Cost- EffectivenessBirkbeck Managers’ Forum28 January 2009

  2. Best Value The 4 "C"'s Challenge, Consult, Compare, Compete

  3. Challenge • Why do we do this? • Why do we do it this way? • What other ways are there of doing it?

  4. Consult • Who are the customers? • What do the customers want? • What do the customers think of the service? • What's most important? • What causes problems?

  5. Strategic Imperatives Prime areasfor performance improvement These are the areaswhere the customersassign great importanceto the service, but delivery is poor Key Competencies Maintain performance Customersassign great importanceto the service, and alsoconsider performanceis good Shiftperformance Redeploy resources Importance Irritants Not a problem in themselves, but should be monitored Performance poor, but the customer does not givegreat importance Opportunities Areas of "over servicing" Scope to re-allocate resources? Performance is good, but not considered importantby the customer Performance

  6. Compare:Benchmarking…is "A systematic method of improvement that uses others' good practice to improve your own performance" or"A way to avoid re-inventing the wheel - by making the most of other people's expertise" or "The art of stealing shamelessly"

  7. Making benchmarking work Selection of measurements Measurements should be relevant to the strategic objectives or the organisation Determining the components of output measures is as important as measuring the outputs themselves

  8. Making benchmarking work Definition of measurements Clearly defined and understood measurements are important in gaining consensus on the meaning of the results

  9. Making benchmarking work Validity and comparability It is important to source comparative measures from organisations that: • share a similar business model • are subject to similar pressures

  10. Making benchmarking work for you Understanding The most important element of benchmarking is knowing the management practices, the organisational structures and the systems and processes that support the achievement of the benchmarked output measures.

  11. Compete • Shared services • Outsourcing

  12. The seven deadly sins of cost reduction • not heeding the voice of the customer • salami slicing • compromising on sensitive issues • drifting under budgetary pressure • not seeing things through • losing sight of the outcomes • rewarding the wrong things

  13. Salami slicing • What is it? Shaving a set % from all budgets • Advantages: • simple to do and understand (any fool with a spreadsheet can do it) • perception (illusion?) of fairness • Disadvantages: • can destroy critical services • takes no account of the voice of the customer • takes no account of fairness of previous resource allocations • takes no account of efficiency • takes no account of sustainability

  14. Compromise on the sensitive issues • Not implementing unpopular cost cutting proposals because of the political ramifications • Ensure • Sound evidence and analysis • Courage of convictions

  15. Strategic drift under budgetary pressure • Focusing on the "easy wins" because of budgetary pressure, without considering thestrategic priorities • Ensure • alignment of activity to institutional strategy - the "golden thread"

  16. Not seeing it through • Conflicting pressures; lack of management will, capacity or "bandwidth"; insufficient knowledge; and lack of buy-in result in stalled implementation • Ensure • High level management support • Clear communications • Appropriate resource • Monitoring systems

  17. Losing sight of the outcome • Not achieving the desired result in terms of either cost saving or service delivery becausethe outputs are unspecified • Ensure • Appropriate KPIs and performance management frameworks are in place

  18. Rewarding the wrong things • Managers are rewarded (or status is perceived) on basis of size of responsibility rather than value to the institution, resulting in limiting incentive to make savings. • Ensure: • Align individual's performance targets and KPIs with institutional strategies

  19. Making it work • Management "buy-in" • Ownership • Performance management • Measurement • Continuous improvement • Embedded processes - training, support, documentation, systems

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