Process Performance Measures

1. Process Performance Measures Chapter 7

2. Process Performance Measures • Facts are the most important thing in business. Study facts and do more than is expected of you. • Frederick Hudson Ecker • Chairman Metropolitan Life Insurance

3. Process Performance Measures • I’ve always been able to make erroneous decisions very quickly. • Herb Kelleher • Founder, Southwest Airlines

4. Process Performance Measures • Knowledge is what we get by evaluating vast quantities of information…and adding something a little extra-creativity, judgment, experience, and thought. • Dominic Tarantino • Former chairman, Price Waterhouse World Firm

5. Process Performance Measures • Information is only as valuable as its source.

6. Process Performance Measures • You can’t improve what you don’t measure

7. Process Performance Measures • Organizations measure what matters.

8. Process Performance Measures • Our view was, if we could measure it, we could manage it. • Don England • CEO, C.R. England, Inc.

9. Process Performance Measures • Organizations measure what they value • What does our organization value? • What does the organization measure? • What measures does the organization • use to make decisions and take action?

10. Process Performance Measures • Measures create a link between philosophy and action. • What does the organization measure, record, analyses, reports, shares throughout the organization, and takes action on.

11. Process Performance Measures • How do we know what is important? • How do we do what we do? • How will we do what we said we would do? • How do we know we did what we said we would do?

12. Process Performance Measures • What role does information play in creating an effective organization? • How does the analysis of information support customer satisfaction? • How does the analysis of information support a healthy bottom line?

13. Process Performance Measures • Information enables you to make appropriate decisions. • Inter-departmental relationships can be integrated through the use of information.

14. Process Performance Measures • Integrating Customer information, processes and decision-making: • use data collection and analysis to • define the customer requirements • within the identified market segment.

15. Process Performance Measures • Translate requirements into major design parameters to develop, produce, deliver, and service the product that meets the customer requirements. • Complement these primary processes with support activities such as finance, accounting, personnel, etc. • Design the information requirements necessary to manage each process and to integrate all processes.

16. Process Performance Measures • Measures of Performance answer the question: • How do we know?

17. Process Performance Measures • Performance measures enable an organization to answer the following questions: • How well is something performing its intended purpose? • Is the organization able to measure the impact of the changes being made? • How does the organization know that it has allocated its assets correctly?

18. Process Performance Measures • An effective measurement system enables an organization to: • determine if the activities occurring within the company support the achievement of company goals and objectives • determine whether or not those goals and objectives move the organization closer to the stated vision • see where the organization is and where it is going.

19. Process Performance Measures • An effective measurement system links actions and plans to the goals and objectives.

20. Process Performance Measures • Results (Outcome) measures • Results are the objectives the organization wants to achieve. • Results are what customers hope to obtain by doing business with the organization. • Process measures • Process measures monitor operational activities.

21. Process Performance Measures • The Balanced Scorecard • Using measurements from four areas integrates the key business measures into a few manageable indicators of performance so that management is able to quickly access the short and long-term health of the organization from several points of view. • Kaplan and Kaplan

22. Process Performance Measures • The Balanced Scorecard • (Kaplan and Kaplan) • FOUR areas of focus : • Customer Focus • Internal Processes • Learning and Growth • Financial Analysis

23. Process Performance Measures • Barriers to Installing Measurement Systems • Lack of leadership • Individuals are fearful of having specific, measurable objectives to achieve • Lack of focus on what’s important to the organization.

24. Process Performance Measures • Determine • what needs to be measured • and why it needs to be measured • before designing a measure of performance. • PUBLISH definitions for each metric!

25. Process Performance Measures • For Effective Measurement Systems: • Leaders must demonstrate their commitment by holding people accountable for measures • Leaders must show persistence and perseverance to work through data integrity issues. • Real life advice - How about a metric that measures the accuracy of the metrics?

26. Process Performance Measures • When developing measures consider: • What do we need to know? • What are we measuring now? • How does what the organization needs to know compare with what it is currently measuring? • How is this information being captured? • Is the information currently being captured useful and actually being used?

27. Process Performance Measures • When developing measures consider (Con’t) : • 6. Are these measurements being captured over time? • Do the identified, selected, and measured factors reflect what the customers need, require, and expect? • Can these selected factors be acted upon within the organization? • Can the impact of the changes made be measured? • Have the organization’s assets been allocated appropriately?

28. Process Performance Measures • Measurement Systems allow effective organizations to: • Determine that a gap exists between desired and actual performance • Determine the root cause of the gap • Determine the necessary corrective action to eliminate the root cause of the gap • Determine whether the corrective actions eliminated the root cause and closed the gap between the actual and desired performance.

29. Process Performance Measures • HOW MANY METRICS ? • Balanced Scorecard method using METRICS = • about 10 metrics for your Business Unit, 5 for your group and 5 for individuals Any more than that, your focus gets lost!