Performance Measurement System in Integrated Enterprise Excellence

A performance measurement system that creates and manages key performance indicators (KPIs) needs to be management’s eyes to the process. It needs to stimulate the most appropriate behavior. Successful performance measures contain a naturally balanced organizational set of measurements which provides an unbiased process performance assessment that leads to the 3 Rs of business; i.e., everyone does the Right things while doing them Right at the Right time.

Performance Measurement Characteristics

When process output performance measures are not accurately seen and reported relative to a desired result, there is not much hope for making long-lasting improvements. Generic measures for a process that should be an integral part of a performance measurement system are:

  •  Quality
  • Cost
  • Time

Most processes need a balanced measurement set of these generic measurement characteristics to prevent optimizing one metric at the expense of overall process health; e.g., sacrificing quality to meet on-time delivery targets.

Performance metrics as part of an organizational performance measurement system can also drive undesirable (from an enterprise point of view) behaviors if conducted in isolation from the overall enterprise needs; hence, organizations benefit from the incorporation of an effective performance measurement system that:

  • Stops any game playing with the numbers
  • Replaces firefighting with fire prevention

Performance Measurement that Stops Game Playing with the Numbers and Story Telling

Organizations establish goals and often track how well organizational functions perform relative to achieving those objectives using a table of numbers. However, a table of numbers can lead to storytelling and minimal productive effort that has long-lasting benefit to the enterprise as a whole.

To illustrate this story-telling point, for the following table one might state for this city’s scorecard (a story) as part of their performance reporting system: in 2002 our cost per call was up because annexations did not occur as quickly as expected; however, in 2003, annexations increased, which resulted in a decrease in costs per call. This may be a true statement; however, this form of reporting does not provide a clear direction on acrobat pro price how all the associated processes are performing and what, if any, adjustments should be made to those processes.

Organizations establish goals and often track how well organizational functions perform relative to achieving those objectives using a table of numbers. However, a table of numbers can lead to storytelling and minimal productive effort that has long-lasting benefit to the enterprise as a whole.

To illustrate this story-telling point, for the following table one might state for this city’s scorecard (a story) as part of their performance reporting system: in 2002 our cost per call was up because annexations did not occur as quickly as expected; however, in 2003, annexations increased, which resulted in a decrease in costs per call. This may be a true statement; however, this form of reporting does not provide a clear direction on how all the associated processes are performing and what, if any, adjustments should be made to those processes.

Performance Measurement Systems Need, Table of Numbers

Non-insightful Metric Reporting does not Provide Insight to Process Performance

Organizations benefit when they use the Integrated Enterprise Excellence (IEE) performance measurement system which provides predictive metrics that can offer guidance to what should be done differently to improve the process. The IEE predictive performance measurement system is described below, which can be used as part of an operational excellence and business process management system. The IEE system and its benefits are described in a free e-book, The Integrated Enterprise Excellence System: An Enhanced, Unified Approach to Balanced Scorecards, Strategic Planning, and Business Improvement.

Performance Measurement System that Replaces Firefighting with Fire Prevention

Organizations should avoid creating and using a performance measurement system that encourages firefighting the problems of the day or week in lieu of orchestrating process improvement efforts which reduce the likelihood of issues reoccurring in the future.

Red-yellow-green scorecards or stoplight scorecards that track the output of a process can lead to firefighting activities. With this form of reporting, when a metric color is red, action needs to be taken because the measurement is not meeting its goal. A green color indicates that a metric objective is being met and no action is needed.
With stoplight scorecards when a transition from red to green occurs, one typically assumes that a long-lasting process resolution has been implemented; however, this is often not the case when the performance-metric goal is within the natural output variability of the process.

Performance Measurement System Needs, Red-yellow-green scorecards

Non-insightful Process Metric Reporting can lead to Much Firefighting

Unlike stoplight scorecards, an IEE performance measurement system provides predictive metrics, which offer insight to what efforts need to be undertaken to improve a process.

Creation of Predictive Scorecards

A 1-minute video describes issues and resolution to traditional scorecards.

A 13-minute video: Converting to IEE predictive performance reporting and avoidance of red-yellow-green scorecarding issues

Articles that describe the creation and application of predictive scorecards:

  1. 30,000-foot-level predictive performance metric reporting
  2. Diabetes measurement chart – 30,000-foot-level reporting

A Minitab add-in for the easy creation of 30,000-foot-level reporting is available through Smarter Solutions’ on-line resource center.

Eight Examples: Dashboard Reporting Issues with Predictive-performance Reporting Resolution

Many commonly used dashboards do not lead to the most appropriate behaviors. For how eight rear-view-window dashboards (real company examples used with permission) were converted to predictive performance reporting see “Predictive Key Performance Indicators Examples.” This link illustrates how organizations can benefit from examining performance reporting from a different point of view. This alternative view provides additional insight to what is the most appropriate behavior for a given situation.

Performance Measurement System IEE Predictive Metrics Implementation

The following aspects need to be addressed when creating an IEE predictive performance measurement system:

  1. Developing performance metrics
  2. Performance management system
  3. Performance dashboard
  4. Enterprise performance management software

For integrating performance measurements into a business process management system, see:

  1. Enterprise Process Management Implementation: IEE Documents, Videos, Books
  2. Integrated Enterprise Excellence Operational Excellence system

Performance Measurement System Application Assessment to Your Situation

If you would like to determine whether your measurement reporting methodology is leading to the most appropriate behaviors or not, contact us to discuss. We could create, at no charge, an IEE predictive performance measurement system report-out for one of your KPIs. A comparison of this report-out to your current reporting methodology is typically very revealing! Our phone number and e-mail contact information is: +1 512.918.0280 or info@smartersolutions.com.

To learn more on Predictive Key Performance Indicators and to see examples, click here.

If you are looking for software to communicate enterprise performance scorecards throughout your company, click here.

If you are looking to learn about the tools used to understand scorecards and business performance, click here.

If you are looking for specific training on the IEE Scorecard reporting methods, click here.