Performance Management Guidelines and Considerations

(1)

Written by

Illinois

Soybean

Association/Illinois

Soybean

Program

Operating

Board

Performance

Management

Guidelines

and

Considerations

(2)

Illinois Soybean Association/Illinois Soybean Program Operating Board Performance Management Guidelines and Considerations

Background Information:

The Illinois Soybean Association (ISA) and the Illinois Soybean Program Operating Board (ISPOB) are the statewide organizations for all Illinois

soybean producers. The farmers who sit on the boards administer the soybean advocacy and membership programs as well as the soybean

Checkoff funds to support market development, soybean production/profitability research, promotion, issue management, analysis,

communications and educational programs. ISA/ISPOB programs are designed to ensure Illinois soy is the highest quality, most dependable,

sustainable and competitive in the global market place.

ISA/ISPOB spent the past two years reviewing and revising the strategic direction, strategic plan and, most recently, the strategic objectives and

annual operating plan for the organizations. ISA/ISPOB has developed a set of Key Performance Indictors (KPIs) to evaluate progress in achieving

the stated objectives in their combined strategic plan. During the same time period ISA/ISPOB has been at work refining and updating its bylaws

and organizational structure to better match the organizations’ going forward strategy. A primary intention of the board and management team

is to align behind the organizations’ combined strategic direction and plan. (See Figure 1 and 2)

Figure

1:

ISA/ISPOB

Strategic

Direction

Vision – (Destination)

The Illinois Soybean Association and the Illinois Soybean Program

Operating Board strives to enable Illinois soybean producers to be the

most knowledgeable and profitable soybean producers around the world.

Mission – (Purpose)

To ensure Illinois soy is the highest quality, most dependable, sustainable and

competitive in the global marketplace.

Values – (Core Beliefs)

Provide leadership to the Illinois soybean industry through Commitment,

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Target Area Objective / Description Indicators

Overall

Utilization

Increase global consumption of Illinois soybeans # bushels of Illinois soybeans utilized

% increase in global market share of Illinois soybeans

Animal

Agriculture

Increase worldwide livestock consumption of IL

soybeans and soybean products. (IL, regional,

national & North America)

% increase in Midwest use permits

% increase in the annual soybean harvest crushed in Illinois % increase in the in‐state soybean utilization rate per species

% increase in the bushels of soybean and soybean meal out‐shipped from Illinois

Transportation Ensure soybeans and soybean products reach

their intended destination efficiently

% change in soybeans and soybean meal transported by container, barge, rail and

truck

% differential in basis between the Gulf and Peoria

Yield Increase yield and return on investment % increase in the soy/corn acres

% increase in yield by soybean growing district

Domestic production ranking by acres planted

Domestic production ranking by total bushels produced

% change in the total cost of production per acre by soybean district % increase in profit margins of Illinois soybean producers by district

High Quality Develop the highest quality soybean, soybean oil

and soybean meal products

% change in amino acid profile of Illinois soybeans

% increase in quality (protein versus oil) ratings of Illinois soybeans by district, by

state, by major competitor (Brazil versus Argentina)

% of overall production dedicated to IP soybeans.

Sustainability Illinois soybean producers accept and employ

sustainable production practices

% of Illinois soybean producers who are ISA/ISPOB 'accredited’ environmental

stewards

% increase in soybean production efficiency gains for 5 key environmental

resource indicators (“Keystone Alliance” metrics for Land use, Energy use,

Irrigation Water Use, Soil Loss, Climate Impact “Net Carbon Emissions”)

Market Access /

Advocacy

Maintain current markets, open new markets

and advocate for equitable public policies and

freedom to operate

% increase in the number of “ag favorable” state policies implemented

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Target Area Objective / Description Indicators

% increase in “ag favorable” state legislative priorities coming out of committee.

Aquaculture Increase worldwide aquaculture consumption of

IL soybeans and soybean products

% increase in overall tonnage of soy in aquaculture feeds used in the Greater Gulf

Region

Industrial Increase domestic industrial consumption of IL

soybeans and soybean products

% increase in gallons of soy biodiesel produced in Illinois

% increase in total dollar value of Soy bio‐products purchased in Illinois

Image Building Improve our image and build coalitions with key

stakeholders

% of consumers with a positive perception of animal and crop agriculture.

Number of key ag corporations who recognize/acknowledge ISA/ISPOB as a

strong corporate partner

Alignment Align with other soy organizations to advocate for

and advance a proactive agenda

% of Illinois funded projects where we partner with national and state

organizations

Producer

Communications

Build support and recognition with producers for

Illinois soybean association programs

% increase in the number of producers expressing knowledge of ISA/ISPOB

programs

Organization

Excellence

Increase effective, progressive leadership at all

levels of the organization

% of ISA/ISPOB board members expressing strong or very strong overall

satisfaction with ISA's/ISPOB’s overall direction

% of ISA/ISPOB employees expressing strong or very strong overall satisfaction

with ISA's/ISPOB’s overall direction

Other Revenue Increase membership and sponsorship resources % increase in funding coming from sponsorships

% increase in ISA membership

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To capitalize on these gains, ISA/ISPOB is working to implement a professional performance management program to help ensure all Checkoff

and non‐Checkoff resources are invested to maximize profitability and the competitive position of Illinois soybean producers. A growing base of

available Checkoff and non‐Checkoff funds is underscoring the importance of this challenge. It is a challenge resonating within ISA/ISPOB and

across the US soybean industry.

At present there is no unified inter‐organizational strategy to address this challenge. From what we’ve discerned, each soybean organization

(i.e. USB, ASA, USSEC, QSSBs) uses its own process to implement the discipline of performance management. This approach unintentionally

undermines the possibility for better alignment of Checkoff and Non‐Checkoff investments. It is our belief that a greater degree of (targeted)

funding alignment would provide a major impetus for generating new returns to US soybean producers. (See Figure 3)

Figure

3:

Soybean

Organizational

Alignment

1

Where

We

Are

Where

We

Are

:

Where

We

Want

to

Be:

Where

We

Want

to

Be:

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Guideline Objectives:

This paper is written after spending many of the past 20 years working with various national and state level organizations within the soybean

industry. We offer it up aiming to meet four specific objectives.

1. Enable farmer leaders, staff and contractors to gain a clear and shared understanding of what performance management means.

2. Facilitate integration of a practical performance management program into the annual ISA/ISPOB governance cycle and serve as a case

study for fellow soy organizations to consider.

3. Summarize ISA’s/ISPOB’s annual KPI tracking, reporting, learning and evaluation processes.

4. Define key roles and responsibilities the board, committees, staff and contractors must fulfill to execute an annual performance

management program and keep ISA/ISPOB strategically focused. (See Figure 4)

Figure

4:

Roles

and

Responsibilities

Trust Need Credibility Truth Differences

Board

Volunteer Organizations

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What is performance management?

Performance management includes all board, committee, staff and contractor activities aimed at ensuring the organization’s strategic goal and

objectives are met in an effective and efficient manner. (See Figure 5)

Figure

5:

ISA/ISPOB

‐

Strategic

Objectives

2 Personal & Confidential

Goal:

Achieve

maximum

profitability

and

global

competitive

positioning

for

Illinois

soybean

producers

In

te

rn

al

C

u

st

om

e

r

Le

a

rni

ng

& Gr

o

w

th

Fi

na

nc

ia

l

Invest Checkoff for ROI

Raise Other

Revenue

Achieve Organizational Excellence / Leadership Development Improve Image Provide Effective Producer Communications Align Behind Proactive Agenda Animal Ag Yield Market Access Transportation Sustainability Industrial Quality Aquaculture

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Performance management can be thought of as comparing the organization’s “Actual Results” against its “Desired Results.” Any discrepancy,

where “Actual” is less than “Desired”, constitutes (by definition) a performance improvement zone requiring attention. (See Figure 6)

Figure

6:

Performance

Improvement

Zone

Performance Improvement Zone

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A performance improvement zone can appear at each level of an organization performance management program. Level 1 is the overall

strategic goal to be achieved. ISA/ISPOB has a goal of 600 million bushels of Illinois soybeans being utilized annually. (See Figure 1) Level 2 is

also strategic and covers Key Performance Indicators (KPIs) and targeted ranges of performance. Level 3 is operational and covers Projects or

Project Measures and their outcomes of performance. (See Figure 7)

Figure

7:

Two

Levels

of

Performance

Management

Level 1 is the center of the bullseye. Each year the board of the organizations must take a careful look at progress being made toward this

primary strategic intent. This occurs by examining factual information, KPI performance levels, as well as subjective information available to

the board and senior management team.

Level 2 of performance management is an ongoing process where the board periodically reviews and approves a carefully selected set of

specific strategic objectives, prioritized KPIs and desired target ranges of performance for each KPI. Then on a regular basis (at least

annually), KPIs are tracked and actual results reported to gauge whether the desired performance level is being achieved.

On a parallel track and annual basis Level 3 initiatives and projects are prioritized by committees, approved by the board and executed by

the staff to influence the desired level of KPI performance, i.e. Level 2. In reality it generally takes many projects “pulling together” (often

from across multiple organizations) to achieve a targeted level of performance for one KPI.

For each board approved program or project, a Level 3 “scope specific” performance management program is recommended. It requires

that one or more specific project measures and outcomes of performance be defined, tracked and reported against, as a particular project is

2020 Goal: 600 Million Bushels Illinois Soybeans Utilized Key

Performance Indicators & Targets Grow Animal Agriculture 2012 Projects Project Measures & Outcomes (All relevant)

Level 3 Level 2 Level 1

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executed and ultimately “evaluated.” Project measures evaluate how well ONE particular project is doing while Key Performance Indicators

show how all relevant projects TOGETHER are working to meet a specific strategic objective.

Throughout the life of a particular Level 3 program or project, ISA/ISPOB staff work with contractors to give feedback and exert influence to

achieve the desired level of project performance.

It is important to recognize that performance management is not a precise science. Global disruptive change (e.g. weather, political turmoil,

etc.) often occurs which cannot be controlled. In most situations qualitative factors must be given significant consideration when judging

whether a Level 3 project is working, or when completed successful in driving Level 1 and Level 2 performance. It is Level 1 and Level 2

performance where ISA/ISPOB ultimately seeks to influence. This takes time and requires that ISA/ISPOB take a long‐run view.

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How does Performance Management integrate with the ISA/ISPOB Annual Strategic Management Cycle?

Below is a “working draft” Strategic Management Calendar detailing the planning, evaluation and budgeting processes of the organization

from September, 2011 ‐ September 2013. You will note that performance management has been fully integrated throughout. (See Figure 8)

Figure

8:

ISA/ISPOB

Annual

Strategic

Management

Cycle

–

Updated

12.27.2011

Month Contractor Project Reporting Program Project Evaluation Reporting KPI Results Reporting Objective Progress Determined

Plan, Evaluation & Budget

Development Senior Staff Review Meeting Board / Committee Meetings Sept. 2011

• September 1 start of new fiscal year

• Staff begin assembling evaluation information

for third party review for previous fiscal year

program areas and projects

• Identify / verify / monitor trends and issues

facing the domestic and global soybean

industry

Oct.

• Staff completes assembling of previous fiscal

year evaluation information. Third party

evaluation conducted. • Collection of KPI data

• Identify / verify / monitor trends and issues

facing the domestic and global soybean

industry Nov.

• Present baseline information on all KPIs • Committees review previous fiscal year

project evaluations for immediate projects • Committees analyze KPI data.

• Committees highlight and prioritize trends

and issues the board should consider in the

current planning cycle

• Monitor execution of current year operating

plan by Program Area/Objective

• Review new and amended projects for the

Board’s consideration Executive Committee Production Committee Marketing Committee

• Financial Audit presented to board

• Allocate new available funding to priority KPIs • Update board on committee findings related

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Development Senior Staff Review Meeting Board / Committee Meetings

• Review major program/project evaluation

findings from committees

• Committees recommend any new and

amended projects to the Boards.

Jan.

• Executive Committee lead the next fiscal year

strategic planning process

• Study, discuss, and prioritize issues to plan for

next FY year planning cycle

Executive Committee

Feb.

• Review KPI data and monitor execution of

current FY operating plan by Program Area /

Objective

• Committees review previous fiscal year

project evaluations

• Conduct mid‐year review of current Operating

Plan by major program area and/or objective

Production Committee Marketing Committee March

• Full boards further refine and approve

strategies for next fiscal year

• Approve changes to high level strategic plan

for next fiscal year

• Monitor KPI’s and execution for current year

operating plan by Program Area / Objective • Full board review/confirm the Organizations’

overall Strategic Direction and high level

strategies

Board Meeting and

Training April

• Staff refine next fiscal year strategic operating

plan including a balanced set of objectives,

performance indicators • Staff prepares project proposals

• Work with other stakeholders to identify

areas for collaboration (e.g. Corn, Poultry,

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Development Senior Staff Review Meeting Board / Committee Meetings Beef, etc.)

• Ensure program and project evaluations

requirements are communicated and

synchronized

• Staff coordinates appropriate alignments with

national funding priorities

• Committees support staff in drafting the

proposed FY 13 operating plan and budget

June

• Next FY Project concepts prioritized by

Committees

synchronized

• Executive Committee discusses operational,

program areas, and next FY Evaluations

program.

• Staff makes preliminary recommendations for

KPI/project evaluations

• Pro forma budgets and proposed next FY

Operating Plan priorities presented to the

combined committee meeting.

• The full board ‐ serving as a “committee of the

whole” ‐ vets the proposed Operating Plan

priorities for next fiscal year

• Executive Committee discusses program areas

and budget percentages

• Discuss funding allocations by Target Area,;

refine KPI targets as necessary

Combined Committee Meetings Executive Committee July

• Executive Committee discusses program areas

and budget percentages

• Pro forma budget is presented to the board. • Next FY Operating Plan approved by full board • Next fiscal year project RFPs issued

synchronized

New Board Member

Orientation

Training

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Development Senior Staff Review Meeting Board / Committee Meetings August

• Committees meet to review proposals

received in response to RFPs submitted in

July.

• Approve funding allocations by Target Area

for next fiscal year.

• Final projects/budgets approved • Notify contractors of approvals/denials • Ensure program and project evaluations

synchronized

• Staff/Contractors begin compiling data for

project evaluation

Board and Committee

Reorganization

Board / Staff Retreat Sept. 2013

• Begin program, project evaluation for

previous fiscal year.

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How do the ISA/ISPOB KPI Tracking, Reporting, Learning and Evaluation Processes actually work for Level 2 and Level 3?

Level 2: At Level 2 one needs to think of performance management as an ongoing process where the board periodically approves a carefully

selected set of specific strategic objectives, prioritized key performance indicators (KPIs) and desired target ranges of performance for each

KPI. Then actual KPI performance results are tracked and reported, in this case annually, to see if the desired performance levels are being

achieved. For example, is more soybean meal produced in Illinois being consumed by animals in Illinois? (See Figure 9)

Figure

9:

KPI

Tracking,

Reporting,

and

Learning

(Level

2)

Vision, Mission, Values, Goals Strategies 2012‐2013 Operating Plan •Target Areas

•Key Performance Indicators

(Long Term) •Target ranges 2012 Tactical Initiatives Projects •Project Objectives •Project Measures (Short Term) •Outcomes

Impact on KPI / Targets

Q u an ti ta ti ve Re su lt s Q u an ti ta ti ve & Q u al it at iv e Ou tc o m es St ra te gi c Lea rn ing

Board / Committees Committees / Staff

If KPI level progress is noted it is important to understand what is contributing to that progress. We may or may not be able to attribute

progress to our efforts, but we must better understand what is impacting the KPI in order to realign our efforts and make a course correction

where appropriate. If we determine progress is not being made within a reasonable amount of time, we must understand why. Is it because

our efforts were not effective? Did we apply the wrong type of effort? Were factor(s) beyond our control playing a major influence? The key

is to learn from experience and adjust the organizations’ plan as necessary to positively impact performance.

Level 3: At Level 3 the focus is on evaluating programs or projects to determine if execution was effective in achieving the agreed upon

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desired outcomes established when the project was originally approved by the boards. As with Level 2 it is important to understand what is

working and what is not working before final, evaluative judgments are made.

An example: In many soy demand building initiatives, a desired project measure reveals incremental change of target audience behavior

from one level of performance (A) to the next level of performance (B) via a specific message of change. (See Figure 10)

Figure

10:

US

Pork

in

Europe

Project

Measures

A B Stage 1 Awareness Knowledge Stage 4 Purchase Stage 2 Liking Preference Stage 3 Conviction to Try Stage 5 Regular Purchase

# of targeted processors who buy

US Pork; sales to targeted

processors

# of targeted processors who

process primarily US Pork; sales

# of targeted processors who try

US Pork

# of targeted processors aware of

the higher yield and lowering

processing costs of US Pork

# of targeted processors convinced

that US Pork offers higher profit

potential

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To have a full appreciation of Level 3 performance management, one must recognize the essential role program planning and management

plays in the entire process. If projects are approved before complete program descriptions, project objectives, project measures, and

outcomes are established it makes it virtually impossible to do a fair evaluation of performance and conceptually more difficult for the Board

or Committees to approve such projects.

ISA/ISPOB program planners must be diligent in their efforts to understand:

1. the strategic and tactical environment they are targeting,

2. the assumptions they can make about the environment in terms of constraints and opportunities

3. the activities they believe are best suited to achieve the targeted outcomes of performance.

It should always be remembered that progress can only be measured in relation to matters over which ISA/ISPOB and its contractors have

some level of control and influence over. It is absolutely critical to focus on the right project measures. This level of program management

has been nicely summarized by Agralytica Inc. in their work on “Results‐Oriented Management.” (See Figure 11)

Goals Assumptions Constraints / Opportunities Assumptions Activities (Projects) Project measures? Not achieved Why? ….. ….. ….. Achieved Why? ….. ….. ….. Are the Underlying Assumptions sound Yes No Why? ….. ….. ….. Learning Feedback

Figure

11:

Project

Evaluation

Drives

Learning

(Level

3)

Two types of underlying assumptions need to be examined as part of the evaluation process. First is the causal assumption, as in ”Is the

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A primary outcome we seek from any program or project is to “learn” from execution to adapt and modify our planning moving forward to

positively impact KPI performance at Level 2 of the performance management program. Therefore ISA/ISPOB must be innovative and

thoughtful in selection of appropriate Level 3 project measures at the program planning stage. By doing this ISA/ISPOB can periodically

communicate realistic contributions to achieving desired “farmer driven” outcomes, e.g. more local, domestic and international meal

consumption by livestock. To make Level 3 performance management operational it is helpful to think of an evaluation process unfolding

over a one year period of time. (See Figure 12)

Figure

12:

Evaluation

Process

and

Timeline

(Level

2 &

3)

Program

Development

for coming year (Staff,

Contractors,

Committees) StaffCommittee & Exec

Review Evaluation Program for next FY (Level 1, 2 & 3) Staff Recommends Projects & KPIs to be Evaluated (Level 2 & 3) Committees Discuss Projects to be Evaluated with Proposal Evaluation Budget Outside Evaluators Chosen FY Projects / KPIs Evaluated Project/KPI Evaluations Presented to

Committees March‐May

June June June August August August‐September October‐January February

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What are the roles and responsibilities of the board, committees, staff and contractors in the performance management program?

The answer to this question is a two part answer. Answer one relates to the level of responsibility each organizational component has for

the overall strategic management of the organizations. (See Figure 13)

Figure

13:

Strategic

Management

Roles

and

Responsibilities

Organizational

Component

Strategy

Element

Measure

Target

Responsibility

Board of Directors Vision Mission Strategic Goal

High Level Strategies

Overall Soybean Utilization

600 Mil Bushels

Level 1: Approve, allocate

and annually assess

progress toward achieving

this level of utilization

Committees & Staff

Strategic Objectives

Key Performance Indicators

Target Range

established for

each KPI

Level 2: Track, Report and

Learn

Level 3: Evaluate and Learn

Staff & Contractors (some 3rd party)

Tactical Projects

Project Performance Measures

Outcomes established for each program or project Level 3: Execute,

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The second part of the answer relates to specific operational responsibilities each organizational component has at Level 2 and Level 3 of

ISA’s/ISPOB’s performance management program. (See Figure 14)

Figure

14:

Performance

Management

Responsibilities

• Level 2: Key Performance Indicators (Are we achieving our objectives and

ultimately goal?)

– Role of staff– Collect KPI information and report to committees

– Role of committees– Review KPI performance against target ranges, discuss

findings and make recommendations to the board

– Role of board– Adjust, refine or reconfirm target ranges

• Level 3: Program/Project Evaluation

– Role of contractor –Efficiently and effectively execute the project and

provide regular progress reports

– Role of staff– Recommend program/project areas for evaluation and when

appropriate work with Third Party Evaluators to assemble information

– Role of staff/committees‐ Review evaluation reports and make

recommendations for anychanges in target ranges going forward

– Role of board – Adjust, refine or reconfirm target area planning priorities – Role of board and committees‐assure that programs/projects properly align

with the target area objective and that those projects are accomplishing what

they set out to do

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Summary

In summary, ISA/ISPOB is very close to having a fully operational performance management program embedded within the strategic

management processes of the organizations. From both “ROI” and “cost to build” perspectives, significant economies of scale would also be

realized by developing an integrated and practical performance management system with likeminded soybean organizations. A formal

assessment of the situation would likely find a common need for a standard set of goals, objectives, KPI’s and project measures. An

opportunity may exist to build out a base set of indicators and measures all state and national organizations could draw from to manage

their own performance while facilitating resource alignment wherever possible and desirable.

In a “best case” scenario an integrated performance management system would enable state / district level data to be rolled up to the

national level. Alternatively, national and state level organizations would be able to drill down to assess state‐by‐state contributions. This

level of cascading and transparency would likely point out areas for performance improvement and sources of new returns for producers.