Performance Measurements
PART III.
|
What Should Be Measured Few of the measures used by World Class Manufacturers are new. What is new is the separating of the traditional financial reporting system, still used for external reporting purposes, from the information system used by managers for decision making and to run the business. In addition, the methods used to convey information are much more varied, using charts, graphs, pictures and signals in addition to the traditional numerical report formats. In his excellent book, Performance Measurement for World Class Manufacturing, Brian Maskell indicates the following as some categories considered important by World Class companies. Both quantitative and qualitative measures must be considered, along with trends and velocity of improvement:
The final category of measures for World Class Companies is, in many ways, the most important, but is also the most difficult to quantify. Measuring the effectiveness of the social organization is critical to success at the World Class level. There are some factors, such as safety and environment that lend themselves to quantification, and others, such as education and training levels and team participation that can be measured in quantity if not in quality, but many cannot yet be successfully quantified. To be sure there are questionnaires, survey instruments and performance evaluation formats that claim to measure things like work force morale, teamwork, involvement and leadership ability. However, although these may be valuable indicators, they are no substitute for constant contact, communication and participation by managers, both within and between departments. With all the systems of controls at the disposal of the present day organization, it is still up to managers to ensure that the activities being performed are moving the organization in the direction of its goals, objectives and vision. Evaluation of a Control System Evaluation of a control system is a two stage process. The first step is to list the controls used to measure the organization down the left side of a matrix and list the characteristics (economy, meaningfulness, etc.) across the top. Evaluate which controls do not fulfill the control characteristics. This will give you an indication of how well your control system fulfills its purpose. The second step to determine the information required to evaluate the efficiency and effectiveness of the organization in meeting its goals and objectives. This is not an easy task and requires more of what Peter Senge in The Fifth Discipline calls skills of inquiry rather than skills of advocacy. This means that this is not an exercise of one department defending their position against another. Rather it is an inquiry into what it actually takes to fulfill organizational goals and how best to measure each department's contribution to that effort. An interesting approach to this problem is suggested by Tichy in Control Your Destiny or Someone Else Will. By comparing existing control systems with a goal oriented control system, the typical organization finds that it wastes a great deal of time, energy and money on controls that are meaningless at best and counterproductive at worst. A major reevaluation of the system of controls is often called for since the organization has probably changed in response to global market conditions much more rapidly than the measures used to manage it. In summary, systems of controls are necessary to measure performance in an organization. However, if this system of controls is not constantly evaluated and modified to reflect the changing conditions in which the organization finds itself and the changing information technologies available to it, the organization will find itself falling behind in the World Class race, sabotaged by its lack of understanding of its own purpose. STAY CONNECTED To stay current on bullet-proofed manufacturing solutions, subscribe to our free ezine, "The Business Basics and Best Practices Bulletin." Simply fill in the below form and click on the subscribe button. We'll also send you our free Special Report, "Five Change Initiatives for Personal and Company Success." Your
personal information will never Manufacturing leaders have a responsibility to educate and train their team members. Help for developing a self-directed, World Class Manufacturing training program for your people is just a click away:
You are welcomed to print and share this bulletin with your manufacturing teams, peers, suppliers and upper management ... better yet, have them signup for their own copy at: http://bbasicsllc.com/subscribe.htm With the escalating spam-wars, it's also a good idea to WHITELIST our bulletin mailing domain via your filtering software or control panel:
Manufacturing
Knowledge you’ll not find at offsite
Lean
Six Sigma Consulting World
Class Manufacturing Email: Click here Privacy Policy |