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The Performance management is the process of measurement and management of business processes or KPIs. The measurement assesses the progress of every KPI ( Key Performance Indicator ) versus target. For every under performing KPI it is necessary to understand causes for underperformance, in order to undertake corrective measures.

The Root Cause Analysis  or Fishbone Diagram is the method of KPI result analysis. For every under performing KPI there are usually more than one cause. The Fishbone Diagram can be used in order to identify causes of the event. Fishbone Diagram can be used for analysis of any event, either under performing or over performing. It is important to be aware of every situation and all events in that situation. Fishbone diagram is the tool for understanding all causes of events.

The author of the Fishbone Diagram is professor Kaoru Ishikawa, who invented the Fishbone Diagram in 1960s. The intention of prof. Ishikawa was to continuously improve quality standards, where the Fishbone Diagram has an important role. Ishikawa considered that the results of every business process can always be conducted in more quality way, with every new cycle. Ishikawa used Fishbone Diagram as a tool of improving process quality. 

Fishbone Diagram should be always used as analytical tool for those KPIs that are below Standard ( Target ). As underperformance is always possible, the Fishbone Diagram must be ready for identification of possible causes of underperformance.  

Fishbone Diagram was named based on it's fishlike shape. The head of the fishbone diagram is the problem that is being analyzed. The bones of fishbone diagram represent causes of the problem. Every cause within fishbone diagram can be further developed by it's own causes. 

During the Fishbone Diagram analysis, group causes in two groups:

- External ( economy, weather, legislation ) just list them in Fishbone Diagram, but do not focus too much about them, since it is hard or impossible to influence them.

- Internal ( productivity, discipline, high costs, ... ) are causes that you can influence. Branch further the Fishbone Diagram for every cause.

Based on Route Cause Analysis ( Fishbone Diagram ) owner of the KPI need to prepare Action plan with a purpose of returning the result of process back on track, meaning to be on Target with that specific KPI next time. The action plan is focused on defining a 4 key points that are defines by simple questions:

Who    - The owner of the KPI is responsible for conducting the action plan

What   - Action plan, specifying activities that will lead to achieving target

When  - Time frame, deadline for the activities

How    - Resources required for Action plan

Owner of the Key Performance Indicator - KPI has to prepare action plan whenever he have underperformance of specific KPI. Read more about this topic in the section Review Meeting.  
  
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