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Information, Analysis, and Knowledge Management in the Baldrige Criteria

Examines how an organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets.

4.1 Measurement and Analysis of Organizational Performance

a. Performance Measurement

b. Performance Analysis

4.2 Information and knowledge Managementa. Data and Information Availability

b. Organizational Knowledge

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Functions of Information Management

Understand customers needs and customer satisfaction

Provide feedback to workers Establish a basis for reward/recognition Assess progress and the need for corrective

action Reduce costs through better planning and

improvement

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Empirical Survey Results(William Schiemann & Associates)

Measurement-management companies are more likely to:

• be in top third of industry financially

• complete organizational changes successfully

• reach clear agreement on strategy among senior managers

• enjoy favorable cooperation and teamwork

• have more employee empowerment

• have a greater willingness to take risks

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Development of Information

Information is necessary for both control

and improvement

Information derives from analysis of data

Data, in turn, come from measurement

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Process Flow

Measurement

Data

Analysis

Information

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Leading Practices (1 of 2)

Develop a set of key performance indicators (KPI’s) that reflect customer requirements and key business drivers

Use comparative information and data to improve overall performance and competitive position

Involve everyone in measurement activities and ensure that information is widely visible

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Leading Practices (2 of 2)

Ensure that data are reliable and accessible

to all who need them

Use sound analytical methods to conduct

analyses and use the results to support

strategic planning and daily decision making

Continually refine information sources and

their uses within the organization

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Example: Ritz-Carlton

“We only measure what we must. But, we make sure that what we measure is important to our customers.”

50% marketing and financial data; 50% quality-related productivity data.

Cost of quality is top priority. Are improvements important to customers, providing a good return, and done quickly?

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Designing Measurements (Metrics) – APQC (1 of 2)

Plan

• How will you use the data?

• Have you selected and defined your

measures?

Collect

• How will you collect the data?

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Designing Measurements (Metrics) – APQC (2 of 2)

Analyze

• How can you ensure that the data will be relevant and believable?

• What does the data indicate? Adapt

• How will you communicate your findings?

• What kind of action should occur?

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Types of Measurements

Strategic Measurements

• Measure the effectiveness and

appropriateness of strategies

Operational (Performance) Measurements

• Measure the effectiveness and efficiency of

activities

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Linkages to Strategy

Key business drivers (key success factors)

Strategies and action plans

Measures and indicators

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Functions of Strategic Measurements

Clarify and translate vision and strategies

Communicate and link strategic objectives

and measures

Plan, set targets, and align strategic

initiatives

Enhance strategic feedback and learning

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Balanced Scorecard(Kaplan & Norton)

1. Financial perspective

2. Customer perspective

3. Internal perspective

4. Innovation and learning perspective

Leading measures

Lagging measures

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Interlinking

Quantitative modeling of cause and effect relationships between external and internal performance criteria

customersatisfactionrating

time on hold (telephone)

* * * * *

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Use of Comparative Data

Comparative data: industry averages, best

competitor performance, world-class

benchmarks

Helps recognize the need for improvement

Provides motivation to seek improvement

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Process-Level Measurements

Does the measurement support our mission?

Will the measurement be used to manage change; that is, actionable?

Is it important to our customers? Is it effective in measuring performance? Is it effective in forecasting results? Is it easy to understand and simple?

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Creating Effective Process Performance Measures

Identify all customers and their requirements and expectations

Define work processes Define value-adding activities and process

outputs Develop measures for each key process Evaluate measures for their usefulness

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Tools for Data Analysis

Statistical summaries and charts

Trends over time

Comparisons with key benchmarks

Aggregate summaries and indexes

Cause-and-effect linkages and correlations (interlinking)

Data mining

Basic

Advanced

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Managing Data and Information (1 of 2)

Validity – Does the indicator measure what it says it does?

Reliability – How well does an indicator consistently measure the “true value” of the characteristic?

Accessibility – Do the right people have access to the data?

Security – Do the wrong people have access to the data?

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Managing Data and Information (2 of 2)

Timeliness – When will the information be available when needed?

Integration – Is it easy to move the data from one system to another?

Modularity – Is it easy to interchange one subsystem to another?

Scalability – Is it easy to adjust the system in response to change in transaction volume?

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The Cost of Quality (COQ)

COQ – the cost of avoiding poor quality, or

incurred as a result of poor quality

Translates defects, errors, etc. into the

“language of management” – $$$

Provides a basis for identifying improvement

opportunities and successes/failures of

improvement efforts

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Quality Cost Classification

Prevention

Appraisal

Internal failure

External failure

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Return on Quality (ROQ)

ROQ – measure of revenue gains against costs associated with quality efforts

Principles

• Quality is an investment

• Quality efforts must be made financially accountable

• It is possible to spend too much on quality

• Not all quality expenditures are equally valid