| I. Introduction | | | | • Owned and managed by teams or individuals |
| Historically, organizations have always measured | | | | within the business |
| performance in some way through the financial | | | | • Based on a high level of data integrity |
| performance, be this success by profit or failure by | | | | • Done in a way so that data collection is |
| liquidation. However, traditional performance measures | | | | embedded within the normal procedures or processes |
| based on financial information do not provide the help | | | | • Able to drive improvement |
| towards a business’s quality journey, because they | | | | • Linked to the Strategic Business Plan |
| do not give process performance and improvements | | | | IV. Steps in the Framework |
| which the customer sees. In a successful total quality | | | | There are four, which are continuously implemented |
| business, performance will be measured by | | | | and reviewed: |
| improvements across the whole business, as seen by | | | | • The strategic objectives of the business are |
| all stakeholders. | | | | converted into desired standards of performance |
| | | | • Measures are developed to compare the desired |
| “You cannot manage what you cannot | | | | performance with the actual performance |
| measure” | | | | • Gaps or variations are identified |
| “When you can measure what you are speaking | | | | • Improvement action is initiated |
| about and express it in numbers, you know something | | | | A business needs to evolve its own set of measures, |
| about it” | | | | using any existing ones as a starting point in |
| In the cycle of continuous improvement, performance | | | | understanding current performance. Consider the use |
| measurement plays an important role in – Identifying | | | | of the Balanced Scorecard, as discussed in another |
| and tracking progress against business goals; | | | | article. To ensure that the measures kickstart the |
| identifying opportunities for improvement; comparing | | | | improvement cycle, they should be in the following |
| performance against both internal and external | | | | main areas: |
| standards. Reviewing the performance of a business | | | | • Effectiveness, or Actual output divided by |
| is also an important step when formulating the | | | | Expected output |
| Strategic Business Plan. Measurement plays a key role | | | | • Efficiency, or Resources actually used divided by |
| in quality and productivity improvement activities, the | | | | resources planned to be used |
| main reasons being: | | | | • Productivity, or outputs divided by inputs |
| • To ensure Customer requirements have been | | | | V. A data collection/reporting system |
| met | | | | Key elements are: |
| • To be able to set sensible objectives | | | | • Set up a data collection system |
| • To provide standards for establishing comparisons | | | | • Agree method for establishing current |
| • To provide visibility and a scorecard for people to | | | | performance |
| monitor their own performance | | | | • Identify possible sources of benchmark data |
| • To highlight quality problems and determine areas | | | | • Decide how often measure is reported |
| for priority attention | | | | • Establish measure owner |
| • To provide feedback for driving the improvement | | | | VI Implementation |
| effort | | | | The measures, targets, improvement initiatives and a |
| III. A simple Performance Measurement framework | | | | plan with timescales and designated owners should be |
| A good framework will focus on the “customer” | | | | represented as part of the Strategic Business Plan, |
| whether internal or external and measure the right | | | | and cascaded down through the business so that |
| things. Performance measures must be: | | | | everyone is aware of the requirements. |
| • Meaningful, unambiguous and widely understood | | | | |