Performance Measurement System
PART II.
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Performance Measurement Systems The next step in the process is to develop performance measures to focus attention on and monitor our performance relative to the CSFs. Organizationally, responsibility for determining what is to be measured should reside with representatives of the customer organization being measured, and responsibility for tracking performance should reside with the organization being evaluated using the concepts of self-assessment and quality at the source. The keys to effective performance measurement are well known, but all to often ignored. First, the measurement criteria must be developed in conjunction with the individual, function, or organization being measured. The ultimate goal here is not just to monitor status, it is to improve performance, thus it is important to have the "buy in" of the group responsible for making it happen. That group is in the best position to point out the variables that must be improved in order to optimize performance. It is on those variables that the performance measures should focus, filtering out any extraneous data. That group is also in the best position to identify the variables within their control, relating to a second key to effective performance measurement. If the group is to be held accountable for improving performance of a function or process, that group must have responsibility for the key activities that impact that function. In fact, since CSFs typically cross lines of organizational responsibility, it may be necessary to establish multiple performance measures for a given CSF in order to properly align the measures with functional responsibilities. Other attributes of an effective performance measurement system include ease of data collection, timeliness, frequency, trend identification, and transparency. Timeliness refers to the time lag between data collection and publication of the measurement, naturally the shorter the interval the better. Frequency refers both to how often the data is published as well as the size of the data collection "buckets." The smaller the time bucket (ie, weekly instead of monthly) the more immediate the feedback to the process and the more likely that corrective action can and will be taken. Smaller time buckets also facilitate the analysis process when questions arise (ie, "What happened, why did performance decline last week?"). All measurements should provide the ability to review trends, reinforcing the concept of continuous improvement. It is less important to know exactly where we are today, than to know that we are better today than yesterday, which was better than the day before, which was .... Finally, the concept of transparency is key. Transparency refers to the overall simplicity and ease with which a measurement is understood. Transparent systems are those that the user can "see into" and understand the inner workings of. Systems that are well understood are much more likely to be effectively utilized. Once the required measurements have been defined, the method of presentation must be developed. Given the need for trend analysis, transparency, etc., as discussed above, graphical presentations showing a "percent to plan" are most often the best. The example in Figure 2 may be viewed as a better than average example of an effective performance measurement. In this example, the percentage of work orders released on time and their shortage status is portrayed. The two graphs are shown side by side on the same page since a seesaw effect is possible, one measure may be optimized at the expense of the other. Historical data is lumped into monthly buckets represented by the solid bars, while the most recent month's data is shown in weekly buckets represented by the cross-hatched bars. Thus both long term trend identification as well as short term detailed analysis is possible. The goal or objective for each measure is clearly identified in the graph, and below the graph the quantitative source data is displayed for analysis. Should there be questions, the date the data was prepared and the preparer's signature are both clearly evident. Together, the graphs provide a clear, concise picture of where the process stands relative to the goals that have been established. Figure 3 provides another example of a measurement that portrays process status clearly and effectively. There is no question that the goal has been achieved for the month and the process is well under control. To be Continued 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
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