Performance Measurement and Management
by Bill Gaw

Without Data, You're Just Another Opinion

Without data, you’re just another opinion. That says it all. To continuously improve our processes, we need to first learn how to capture and then apply statistical data to our situation analysis. This action is a primary requisite to effective problem solving. Slide 2-3 presents an overview of a management by facts system.

Lesson Learned: The more that people use real time data to perform situation analysis and to establish and track corrective actions, the more comfortable and effective they become at interpreting and applying data-on-the-run. It is my contention that exceptional leaders make quick and quality decisions because they have mastered the skill of interpreting data-on-the-run. When a leader says, “That doesn’t sound right to me. What about .. . . .?” He has put to use, what I call, the test of reasonableness and this ability separates the exceptional leaders from the pack. To develop the ability to apply the “test of reasonableness,” a leader must first become an expert at interpreting data-on-the-run.

Measurement - Management - Success

Slide 2-4 identifies why and how performance measurement creates a foundation for successful continuous improvement programs. An important benefit of performance measurement is the value it brings to customer relations. When sales people visit their customers, they are often subjected to customer com-plaints about the poor delivery of spare parts. Many times, because a customer has had a recent and unpleasant experience in obtaining a critical part, his/her perception of the service is not reality.

Lesson Learned: Since the first time a salesman brought me back inaccurate information from a customer about our poor on-time delivery performance,  I have always provided my sales people with a summary of our on-time shipment record for each customer to be visited. This provides the salesperson with the facts about our delivery performance and is the best remedy for  converting customer perception into reality

Performance Recognition and Reward.

Most gurus agree that to increase employee participation and contribution to company success, leaders should set a high priority on employee recognition and reward. In slide 2-5 we have listed five opportunities to recognize and reward individuals and teams.

Lesson Learned: Companies that initiate employee recognition and reward programs and fail have not put in place the performance measurement system required to authenticate and sustain their program.

The Measurement Flow Chart

For a performance measurement system to be successful, it must be focused on the critical processes that determine the efficiency and effectiveness of the company’s total product/service delivery chain. In slide 2-6, we take a systematic tour of the business to determine what measurements are required. This where and what survey is an important step toward establishing a performance scorecard.

Lesson Learned: The performance scorecard is an excellent method for establishing support between key activities. The graphic in slide 2-6 presents an example of a starting point for developing a performance scorecard. Each of the activities are reviewed and evaluated to determine which is crucial to achieving the company’s critical success factors. Performance measurements are then established at all key process interaction points.

The  Organizational Mind Set

Slide 2-10 is self explanatory however, let me emphasize that establishing a performance measurement mindset is the responsibility of management.


Lesson Learned: We hear and read a lot about business culture. Most of the information is far too deep and complicated to serve any true purpose. To me, there is a culture that should be adopted and it’s great in its simplicity—There is no status quo! Everyone in the organization can relate to it and should be able to understand that if you’re not improving - you’re losing.

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