Performance Measurement Is Essential To Productivity
The Performance Measurement Rule – If You Can’t Measure It, You Can’t Change It!
A Performance Measurement Question:
Would any one have broken the 4-minute mile if no one ever timed the runner?? How would they know?
Achieving higher levels of productivity requires 4 fundamental steps
#1 – Understanding what performance as it is today.
#2 – Identifying what performance needs to be within what time frame.
#3 – Creating a plan of action to get from Step 1 to Step 2.
#4 – Assigning and managing resources to accomplish the goal.
Today’s ever changing world of business demands organizations continually improve performance or parish. Disruption to historically sound business models is rampant. Embracing change and using it to drive productivity is part of the modern business environment. It may also lead to a new and innovative business model.
Essential To Improving Productivity Is Information
Information, is data presented in a way that is easy to understand and meaningful to the users.
As a wise CEO once told me; “a person without data is just another person with an opinion!” Decisions should not be based on opinions.
Information in the form of performance measures and metrics, not opinions, is the compass by which productivity initiatives navigate.
Performance measurement will focus attention on:
- Where you are
- Where you need to be
- Where you are in the process
- When you are likely to get where you need to be.
To be effective, performance measurements must include the element of time.
To illustrate, answer this question;
Is a 20 % increase in gross margin better than a 4 % increase??
Would your answer change if you knew the 20 % increase took 5 years to achieve and the 4 % improvement was accomplished in 6 months??
Time is the framework for decisions.
Everyone Needs To Understand
Another critical element for performance measurement setting is clearly understanding the answer to the question – What are we trying to do?
Performance measurement values or metrics will be different for each answer.
- Reduce operating costs?
- Shorten production through put time?
- Reduce WIP inventory levels?
- Improve customer service levels?
and then ask BY WHEN ??
The answers will identify the business processes that will need to be reviewed, understood, re-engineered and executed.
Improving performance is a FOUR step process
#1 – Understanding what your performance is today! THE AS IS CONDITION
Identifying “what needs to be measured” and “what drives the value the metric” is the key to understanding what current performance is.
#2 – Establishing what your performance needs to be! THE TO BE CONDITION
Once present performance, the “As Is” condition, the next task is to adjust the desired performance measurement value to be attained in the future – the “To Be”.
#3 – Identifying the methods, tasks and resources to achieve the desired performance measurement value. THE HOW TO PLAN
The selection among alternative improvement methods, should be based on getting “biggest gain with the least investment”.
Each improvement initiative should pay for itself and provide resources to implement the next opportunity.
#4 – Monitor Progress and Results.
Set a regular schedule to monitor and report results on each performance improvement effort. A formalized reporting schedule will FOCUS ATTENTION AND ESTABLISH IMPORTANCE for the efforts.
Performance measurement is an essential element to a successful productivity improvement strategy. Lack of valid and understood performance metrics is at the top of the list of why these effort fail.
Interested in improving the productivity of your organization? Or, just getting your change management program back in high gear? We can help.
Give us a call 520 940 6152 OR submit our Contact form and we will get right back