Illustrated are the benefits of performance measurements and metrics that are predictive. The described next generation performance management methodology addresses issues with many current business management practices.
In today’s approaches, organizations often set goals that are to be met at a certain point of time. If a goal is met at the designated point in time, an organization often assigns the color green to indicate that the target was met. If the objective was not met, a red color typically would be assigned. However, does this common-place methodology lead to the best behaviors? My response: this management approach can lead to firefighting, playing games with the numbers, and other non-productive, if not destructive, behaviors.
Goals are important; however, a process (whether documented or not) is what leads to a metric’s response. Variability exists within processes. This process changeability affects a reported performance output at any point in time. Traditional scorecards and dashboards such as red-yellow-green, table of numbers and bar chart reporting do not quantify the impact of this variability in a process’ overall output response. Traditional performance management metric reporting does not provide insight to output performance from a process point of view. The published article below provides a methodology to overcome this shortcoming.
To elaborate more on why a next generation performance methodology is needed, consider that someone tracks the number of steps that they take daily when walking/running. This person might initially set a goal of 10,000 steps daily. Their performance would then tracked over time in an attempt to meet this objective. However, consider that this person often does not achieve their 10,000-foot-step goal; i.e., their tracked stoplight daily performance color would be ″red″. The person then might decide that 10,000 is not a realistic target for them; hence, they could change their goal to 7,000 daily steps. If going forward with this new goal their color might now be ″green″ most of the time. Because of this color change, they feel better, even though the number of their daily steps might not be any different from they did with a 10,000-step-goal.
From this illustration, we note:
- With a traditional red-yellow-green performance management tracking approach, the output of a process can be made to appear better by changing a goal.
- With a traditional goal-set tracking approach there often is a binary trigger point relative to meeting an objective or not. To illustrate this point, consider the 10,000-step-goal situation. For this scenario, a green color would appear whenever 10,000 (or more) steps are reached, while a red color would occur when steps are 9,999 or below. With this reporting practice, a green color still occurs whenever a one-day performance was much higher (e.g., 15,000 steps), while a red color is still assigned for the situation when only 1,500 steps occurred in a day.
- For a person to set a goal and track against a number-of-steps-daily objective, we could presume that this person is interested in their health and believe walking is an input that can impact their wellbeing. Goals are important; however, the overall average number of steps daily and associated variability is what would really make a difference to someone’s overall health; i.e., the output of their personal process relative to amount walked. Traditional forms of process output scorecards (e.g., number of daily steps as a process output variable) do not have this form of reporting.
- For the number-of-steps-daily process, an individual has some direct control of the process-output response. Often this direct control of a process output (i.e., I need to push myself to achieve my daily steps goal) does not exist in business organizational situations; however, the tracking of a process output can be very similar; e.g., stoplight scorecard.
Next Generation Predictive Performance Measurements and Metrics: Measurement Reporting
Current business performance measures can lead to playing games with the numbers or unhealthy behaviors that may be even be destructive; e.g., Blue Bell ice cream listeria problem. A one-minute video highlights issues with current performance measurement practices and the need for an alternative system.
The below available published article illustrates a next generation performance management Integrated Enterprise Excellence (IEE) methodology that overcomes the shortcomings of traditional performance tracking reporting and organizational improvement so that the big picture benefits. This methodology assesses Key Performance Indicators (KPIs) from a process predictability point of view.
The article below is an application of this next generation performance management methodology, which provides this desire for high-level output reporting from a process output point of view; i.e., a 30,000-foot-level reporting predictive performance perspective. The process in this illustration does not have a specification; however, the basic methodology also applies if a dimensional criteria exists.
Next Generation Predictive Performance Measurements and Metrics: Integration of Measurements with Processes.
Organizations may be structured so that those working on performance metrics are in the ″north wing of the business″, while those involved in process documentation are in the ″south wing of the business″. Because of an organizational chart these two business functions may not ″speak to each other″. However, these two components should be conversing since the output of a process is a function of what is done and how the response is measured; i.e., Y = f(x).
Within the 9-step IEE methodology, an organizational IEE value chain structurally links process steps/procedures with their 30,000-foot-level reported metrics performance. This IEE value chain can provide automatically updates so that anyone authorized can have access to up-to-date performance metrics and their associated processes through a click of the mouse.
When an IEE 30,000-foot-level reported response is stable, the process is said to be predictable. If this futuristic statement undesirable, the process needs enhancement. For this situation, the performance management Key Performance Indicator (KPI) improvement need (reported in a 30,000-foot-level performance format) ″pulls for a projects creation″.
Organizations benefit when using the described next generation IEE measurement reporting and process integration/improvement system. For organizations that have been undertaking the project-improvement based lean Six Sigma program, some have referenced the described methodology as lean Six Sigma 2.0.
For more information about the application of this next generation performance management methodology, download the published ASQ Quality Progress December 2012 article titled ″No Specification? No Problem: Improving Process Performance when Missing Specifications″ written by Forrest Breyfogle.
Contact Us to set up a time to discuss with Forrest Breyfogle how your organization might gain much from an IEE Business Management System implementation.