Performance Measurement: The Good Bad and Ugly

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Organizations gain much when tracking a performance measurement using a 30,000-foot-level format, which can often provide a prediction statement.

Traditional performance measurement reporting is not unlike driving an automobile by only looking at the rear view mirror of a car. This automobile navigating approach can lead to many types of unintended consequences.

 

Potential unintended consequence from traditional KPI reporting that reports rear-view mirror historical metrics

It is much better to have performance measurement reporting approach that provides a “look out of the windshield” perspective for making decisions.

 

Predictive key performance indicators examples, making decisions by looking out the windshield of an automobile

A 30,000-foot-level performance measurement approach provides this forward-looking measurement perspective when making action or non-action decisions.

According to Wikipedia, performance measurement is the process of collecting, analyzing, and/or reporting information regarding the performance of an individual, group, organization, system, or component.

In an organization, performance measurement reports can take various formats.  Performance measurement can be a daily report-out, a table of numbers, or a red-yellow-green scorecard report-out at the business level. Performance measurement within an organization can appear as a statistical process control chart, a process capability index (e.g., Cp, Cpk, Pp, Ppk) report, or an Acceptable Quality Level (AQL) test result.

Business Level Performance Measurement

A regular daily team meeting might assess recent production problems and assign people to resolve identified issues.  If something happens in production requiring immediate attention, action needs to occur; however, organizations should also consider what they might do to improve a process that prevents the reoccurrence of the identified problem or a similar problem.

Often a business performance measurement is not reacted to as though the current response is the output from a process (Y). Management to Ys in an organization (e.g., meet next month’s arbitrarily set goals) can lead to very unhealthy organizational behaviors (e.g., playing games with the numbers). A better approach for performance measurement goal setting is discussed later in this article.

The output of a process (Y) is a function of its inputs (Xs). The Xs of a process consists of the procedures and steps taken when executing an associated process. Long-lasting positive change to a process output Y response occurs by making beneficial enhancements to its Xs.

Business level performance measurement monthly or quarterly report-outs have a similar problem. For this situation, leadership may make a decision based on an individual point response, possibly with a comparison to a previous reporting period (e.g., last month or a similar month from a year prior). This regular monthly or quarterly reporting can evaluate current measurements in various formats.

Traditional monthly or quarterly reporting using a table of numbers, red-yellow-green, or a similar format is an ″elephant in the room″ that has a fundamental Y=f(X) perspective problem relative to leading to the best organizational actions or non-actions.

Improving scorecards for performance measurement

Eight performance measurement reporting real-company-data examples illustrate the problems with traditional performance measurements reporting and the benefits of transitioning to 30,000-foot-level reporting at the business level.

 

Operations Level Performance Measurement

Performance measurements within an organization can appear in various formats, which often have technical problems that can cause significant waste and firefighting. These performance measurements can occur as a statistical process control chart, a process capability index (e.g., Cp, Cpk, Pp, Ppk) report, or an Acceptable Quality Level (AQL) test result.

Problems with this reporting from a high-level process-output point of view are resolved with 30,000-foot-level reporting as described in the following articles:

 

Application Examples of Organizational 30,000-foot-level Performance Measurement Reporting

The novel-written 2020 published books Management 2.0: Discovery of Integrated Enterprise Excellence & Leadership System 2.0: Implementing Integrated Enterprise Excellence provide 20 applications and benefits of 30,000-foot-level reporting.

 

 

performance measurement book 1performance measurement book 2

 

 KPI Metrics Example Applications: IEE Volume II and III

Integrated Enterprise Excellence (IEE) is a 9-step business management system. The implementing of IEE is described in detail in a 4-book series.

There are descriptions of applying 30,000-foot-level process-output failure rate reporting for both Lean Six Sigma project metrics AND business KPI reporting in this 4-book IEE Series.

The Integrated Enterprise Excellence (IEE) Volume II in the 4-book set provides details for applying Key Performance Indicator (KPI) reporting techniques at the business level.

The IEE Volume III describes using the above process-output-metric-reporting techniques (i.e., 30,000-foot-level reporting) at the Lean Six Sigma improvement project execution level. A project’s 30,000-foot-level metric baseline would occur in the measure phase of the Define-Measure-Analyze-Improve-Control (DMAIC) roadmap.

 

business systems thinking book

 

 

How to Use a FREE App to Create a 30,000-foot-level Report for YOUR Data

A free 30,000-foot-level reporting app is described with a provided link to the software in “Free Business Process Management Software.”

We highly suggest setting up a Zoom meeting with us, where YOU will see the power of this free app for YOUR dataset situation.

You can set up this Zoom meeting time by e-mailing or calling us. Or, you can set up a Zoom meeting time directly.

 

Automatic Updating of 30,000-foot-level Performance Measurements in an Organization

An organization can create 30,000-foot-level performance measurements throughout its enterprise using an Integrated Enterprise Excellence (IEE) system. This IEE system can automatically update 30,000-foot-level performance measures using Enterprise Performance Reporting System (EPRS) software behind an organization’s firewall.

 

Performance Management: Organizational Goal Setting that Encourages Process Improvement

Organizations often create goals but do not include what (and the tracking of) process improvement efforts that will be used to achieve these goals.  This commonplace management approach is management to the Ys of an organization, which typically has many problems.

The PDF article at the bottom of the web page, “Business Goal Setting And Corporate Policy,” shows how to set goals using the IEE system, which encourages process improvement efforts to benefit the entire enterprise in the long term.

 

Good Performance Metrics Characteristics and the Benefits of 30,000-foot-level Performance Measurement Reporting in an Organization

The enhanced performance measurement reporting methodology of 30,000-foot-level provides a means to address the following eight attributes of good performance measurement and how to achieve these characteristics in an organization.

  • Business alignment: Performance measurements consume resources for both data collection and analyses. Performance measurements need to provide insight into business performance, its issues, and its needs. An organization’s IEE value chain can provide the structure for addressing this requirement.
  • Honest assessment: Creating measurements so that the performance of someone or an organization will appear good has no value and can be detrimental to the organization. Performance measurements need to provide an honest assessment, whether good, bad, or ugly.
  • Consistency: Identified components in any performance measurement need to be defined at the outset and remain constant. Criteria and calculations need to be consistent concerning time.
  • Repeatability and reproducibility: Performance measurements should have little or no subjectivity. A recorded performance measurement response should have little or no dependence on who and when someone recorded the response.
  • Actionability: Often, performance measurement creation is for measuring without considering what to do if the measurement were lower or higher. Focus on those performance measurements to react to, which provide insightful information, e.g., either remove a degradation problem or hold the gain. When the performance measurement response is unsatisfactory, organizations must be prepared to conduct root-cause analysis and corrective or preventive actions (e.g., process improvement efforts and error-proofing).
  • High-level time-series tracking: Performance measurements should be captured in a high-level time-series format, not as a snapshot of a point-in-time activity. High-level time-series tracking can describe trends and separate special-cause from common-cause variation (from a high-level perspective), often providing a predictive statement.
  • Predictability: A predictability statement is included in the performance measurement report-out when its high-level time-series tracking indicates process stability.
  • Peer comparability: In addition to internal performance measurements, there are benefits when comparisons are made between peer groups in another business or company. A good peer comparison provides additional analysis opportunities, which can identify improvement possibilities.

 

 Summary

The described 30,000-foot-level performance measurement reporting methodology and the IEE system addresses:

  • How to track performance measurements from a high-level process-output reporting point of view, which provides much more process insight than traditional process control charting and process capability indices (e.g., Cp, Cpk, Pp, and Ppk) reporting
  • How to track, report, and improve business Key Performance Indicators (KPIs) metrics so the whole enterprise benefits
  • How to reduce firefighting and use data to make process improvements so the entire organization benefits
  • How practitioners and managers can work together to establish organizational goals that lead to the best behaviors that have timely execution so that the business financials and customers benefit

Performance measurement utilization requires commitment and resource allotments; hence, it is crucial to do it right. When organizations strive to become more performance-measurement-driven, it is vital to avoid performance measurement design and usage errors. Common mistakes include creating measurements for the sake of measures, formulating too many performance measurements, resulting in no actions, lacking measurement follow-up.

The IEE system, with its 30,000-foot-level reporting of performance metrics, addresses these commonplace performance measurement reporting issues and more.

 

 

business management system meeting

 

Contact Us through an e-mail or telephone call to set up a time for a discussion on how your organization might gain much from an Integrated Enterprise Excellence Business Process Management system. Or, a Zoom meeting can be schedule directly:

E-mail ([email protected]) or call us (+1.512.918.0280), if you encounter difficulties setting up a Zoom session directly or want to schedule another time that is not available in the Zoom-meeting calendar.

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