Developing an Airport Performance-Measurement System (2010) / Chapter Skim
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Introduction to PerformanceMeasurement Systems P A R T I 3 Chapter 1 Introduction to the Guidebook 3 Purpose of the Guidebook 4 Applicable Context for this Guidebook 4 Intended Audience for the Guidebook 5 Guidebook Organization 8 Chapter 2 Theory and Practice of Effective Performance-Measurement Processes 8 What Is a Performance-Measurement System? 9 The Airport Performance-Measurement System Framework 11 Relevance of Measuring Performance 12 Benefits of Performance-Measurement Systems 13 Characteristics of an Effective Performance-Measurement System 16 Strategic Plan Elements in Performance Measurement 17 Performance Measures and Areas of Measurement 24 Performance-Measurement System Frameworks 30 Performance-Measurement Systems versus Performance-Management Systems
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KPIs are used as a select subset of a wider group of measures and are usually tracked through corporate scorecards or other business intelligence tools. The term "key performance area," or KPA, is not as widely used as KPI, but is well understood as the grouping or area used to organize performance measures.
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The guidebook and its suggested techniques assume an environment in which airports are independent of national control and are typically owned and operated by local municipalities or regional/state authorities. The guidebook also takes into account the introduction of commercial and private models of airport ownership -- a concept that has changed the scope and significance of performance measurement for airport management, regulators and stakeholders.
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Programs initiated with the use of the guidebook could range from those in which a handful of key performance indicators are tracked by the airport director to those in which a comprehensive, web-based tool is used daily by airport executives to monitor progress toward pre-set strategic goals. Guidebook Organization The guidebook is organized to be a practical and user-friendly reference tool that can assist users with multiple parts of the performance-measurement system process, including research, implementation, and strategy setting.
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Chapter 5 - Manage Performance Measurement (Step 5) Chapter 1 - Airport Case Studies on PM Systems Chapter 6 - Current and Emerging Technology for the PM Process Chapter 2 - Regional, State, and Federal Applications of PM Systems Task 2.
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Introduction to the Guidebook 7 Case studies illustrate hands-on experience with performancemeasurement practices from a representative sample of airports of all sizes scattered throughout the United States and Canada. Relevant excerpts from representative cases have been cited to aid readers as they build an airport performance-measurement system in a step-by-step process.
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Because performance measures should track and measure the key strategies leading to the right goals and objectives, it is important to link these two concepts and two processes throughout the organization. By putting strategic planning and performance measurement together and giving joint authority over both processes to the same group, airports can gain the most benefit from both areas.
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At a minimum, effective performance-measurement programs do the following: • Measure only areas that fall inside the airport's mission area; • Measure activities, products, services, and outcomes that move the airport toward its strategic goals; • Measure areas that have been identified as environmental, business, structural, or other barriers to success; • Measure an inclusive set of short- and long-term, leading and lagging, and operationally diverse indicators; and • Inform management decisions by linking strategic planning to budgeting, resource planning, and other areas of managerial importance. The Airport Performance-Measurement System Framework Over the years, airport privatization and commercialization outside North America has brought a new perception of an airport as an independent private entity, requiring changes in airport management.
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Performance measurement is not just about identifying and tracking some numbers; it is ultimately about managing to achieve results. Performance measurement is a cyclical process that starts with identifying the ultimate outcomes an airport wants to achieve, such as safety, customer service, and financial success.
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Theory and Practice of Effective Performance-Measurement Processes 11 The proper performance measures allow management to understand where to move resources in order to gain the most return on investment. Benchmarking performance against others, while beneficial, needs to be approached cautiously due to the many varying and unique circumstances for individual airports.
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Innovation at all levels of the organization is encouraged through results-based performance frameworks. Benefits of Performance-Measurement Systems The benefits of performance measurement are seen through the use of an organization's performance maturity.
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This soft or undefined process stems from missing leading and lagging measures in a performance-measurement logic model or from making faulty assumptions about a cause-and-effect relationship between measures and activities. The execution phase can force management and teams to translate a less-than-specific understanding of airport strategy into a much more detailed description of how it will all happen: who will take on which tasks in what sequence, how long those tasks will take, how much they will cost, and how they will affect subsequent activities.
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Key performance measures can make planning issues more tangible and give employees a better understanding of both what is expected and what challenges they will face. Private and public organizations that utilize measurement effectively have begun to develop outcome measures that better uncover implications and priorities for all of their departments.
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Selected performance measures should be reliable and report not only on end outcomes, but also on intermediate outcomes. Process Theory and Practice of Effective Performance-Measurement Processes 15 Measuring and displaying data without regular discussion, analysis, or dialogue will not lead an airport to improve performance.
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Performance measures should provide sufficient information to adopt budgets and make investment decisions. Strategic Plan Elements in Performance Measurement A well-developed strategic plan should contain the basic information necessary to begin the formulation of an integrated performance-measurement system, as shown in Exhibit I-2.1.
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Performance measures can also be multidimensional, such as ratios of two or more underlying units: costs per passenger, revenue per work load unit, and so forth. Each airport selects performance measures for different reasons, but selection of performance measures usually is based on an airport's strategic objectives, specific environment, and other organizational intricacies.
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Average Fares ACI Survey Rank J.D. Power Rating Customer Complaints Violations Identified by Regulatory Agency De-Icing Material Discharge Frequency and Severity of Spills Emissions per Aircraft Movement Air Quality at the Airport Noise Levels Noise Complaints Total Weight of Recyclable Waste % of Water Recycled and Reused Electrical Power Consumption Water Consumption per Passenger Job Satisfaction Index Employee Turnover Employee Engagement Index Wellness Program Participation Training Hours per Employee % Employees in Career Development Program Men and Women Salary Ratio Minority Representation in Workforce Contracts Awarded to DBE Community Donations Scholarships Service Delivery Baggage Processing System Faults Transaction Check-In Kiosk Usage People Community Relations Cost Performance Debt Management Operating Performance Service Quality Operational Efficiency Customer Value Customer Service IT Noise Reuse and Recycle Environmental Compliance Energy and Water Efficiency Workforce Diversity Learning and Growth Environmental Sustainability Social Responsibility Employee Accidents and Incidents Revenue Management Financial Customer Satisfaction Airfield Violations Safety Security Productivity Employee Engagement Employee Satisfaction Air Quality Source: Infrastructure Management Group *
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The following sections describe leading and lagging measures; input, output, and outcome measures; quantitative and qualitative measures, and timing and progress measures. Leading and Lagging Measures To date, performance measurement has been used mostly to monitor past performance in order to stimulate future action.
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Lagging measures only allow management to take reactive action. Airport operators have increasingly expressed a need for leading measures, which are measures that can predict future performance and which allow management to act in a proactive manner.
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Outcome measures indicate accomplishments or results that occur (at least partially) because of services provided.
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A well-known qualitative measure in airport operations is customer service or satisfaction, which has gained popularity over the years through customer surveys. Qualitative measures can predict the results of quantitative measures: if customer satisfaction is poor, sales and revenue will decrease; if employee engagement is low, employee turnover will most likely increase.
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Actual Employee Compensation Claims Quantitative Qualitative Lagging Leading Input Output Intermediate Outcome Efficiency Measures that evaluate what has happened in the past and allow management to take reactive action. Revenue per Enplaned Passenger, Operating Expenditures, Runway Incursions Measures that may predict future performance and allow management to take a proactive action.
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The performance-measurement system frameworks to be described are the logic model, Balanced Scorecard, The Malcolm Baldrige National Quality Award, and Dashboard. Logic Model A logic model is a top-level depiction of the flow of materials and processes required to produce the results desired by an organization.
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All end-outcome measures would be expected to meet their performance targets within the long-term planning cycle, typically 5 years for most businesses and public organizations. In order to understand the relationship between end outcomes and intermediate outcomes -- output and activity measures that cascade from the vision -- it is useful to graphically illustrate the relationship with a somewhat revised version of the performance logic model (see Exhibit I-2.6)
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Also, strategic performance measures are used to better inform decision-making and show progress towards desired results, so the organization can then focus on the most important aspects necessary to achieve its vision and satisfy customers, stakeholders, and employees. Other benefits include measuring "what matters," identifying more efficient processes focused on customer needs, improving prioritization of initiatives, improving internal and external communications, improving alignment of strategy and day-to-day operations, and linking budgeting to strategy.
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The Malcolm Baldrige National Quality Award The Malcolm Baldrige National Quality Award is given by the United States National Institute of Standards and Technology. It was established by the Malcolm Baldrige National Quality Theory and Practice of Effective Performance-Measurement Processes 27 Financial Sustained Profitability Spread of Income Recurring Income Income from New Products Customer New Customers Won Lost Customers/Prospects Complaints Referrals Learning and Innovation No.
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The criteria are designed to help organizations use an aligned approach to organizational performance management that results in delivery of ever-improving value to customers, contributions to market success, improvement in overall organizational effectiveness and capabilities, and organizational and personal learning.14 The seven categories of the criteria are the following: 28 Part I: Introduction to Performance-Measurement Systems Source: Salt Lake City Department of Airports Responsive Government Capital Investment/ Resource Mgmt. Public Safety Growth/Quality of Life Community Building/ Diversity Revitalization of Downtown/ Neighborhoods Transportation EconomicDevelopment Excel in Municipal Services & Continuously Improve Service Delivery C us to m er Reduce Crime Against Property/ Persons Increase Perception of Safety Provide Safe & Efficient Transportation Facilitate Economic Opportunity Improve the City's Economic Base Strengthen Neighborhoods Protect & Enhance the Environment Fi na nc ia l Budget Responsibly Maintain Financial Stability Protect Bond Ratings Ef fic ie nc y/ Ef fe ct iv en es s Create High Performance Services Promote Professional Customer Interactions Promote CommunityBased Problem Solving Improve Infrastructure Condition W or kf or ce Q ua lit y Attract & Retain Qualified Employees Improve Employee Job Skills & Knowledge Increase Diversity Educate Employees Regarding Diversity Involve Employees in Performance Planning & Goal Setting Measure & Evaluate Employee Performance Provide Tools & Technology Promote the well-being of the public by continuously improving municipal service delivery Conserve resources and proactively manage environmental issues Revenue projections are based on conservative, yet realistic assumptions Ensure each Airport fund is financially secure Analyze debt capacity prior to issuing bonds and maintain modest debt levels to protect and enhance the Airport's overall credit worthiness Provide customers with best-in-class services Provide Airport employees with customer service training to raise customer satisfaction level Balance between new opportunities and maintenance of existing infrastructure Attract and retain qualified employees to ensure effective delivery of Airport services in a cost-effective manner Identify organizational-wide training priorities for the next 2 years to sharply focus training resources on skills and competencies required to excel at providing Airport services Increase diversity of the Airport's workforce to match or exceed the labor force of the Wasatch Front Provide training for all managers, supervisors and employees regarding the value of a diverse workforce Involve employees in performance planning and goal setting to establish clear job related expectations, link employee's goals to corporate goals and improve communication Conduct semi-annual performance evaluations FOCUS AREAS Salt Lake City Department of Airports Provide for the safe and efficient movement of people to the Airport.
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The visual display of information is characteristic of this framework, as can be observed in Exhibit I-2.9. Theory and Practice of Effective Performance-Measurement Processes 29 Source: San Diego International Airport Exhibit I-2.9.
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Performance-Measurement Systems versus Performance-Management Systems While an exponential increase in computer power and connectivity has allowed organizations to store, recall, and process an increasingly large number of performance measures or amount of data in recent years, true accountability, transparency, and actual performance management has remained more challenging across both the private and public sectors. This difference between a performance-measurement system and performance management is critical in understanding why simply collecting organizational data does not necessarily lead to management improvements.
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Spreadsheets capture a slice of this story, but fail to create the linkages between strategy and the vibrant daily measures that are so important for execution at all levels. Effective Performance Management -- Gauging Your Airport's Performance Maturity Do you know how mature the performance-measurement system is at your airport?
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45–60: High Performance Maturity 35–45: Developing Performance Maturity 25–35: Average Performance Maturity 25 and below: Airport still in performance-measurement system or measurement stage 32 Part I: Introduction to Performance-Measurement Systems
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