Transcript

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What Gets Measured Gets Undone

Dr. Jim Mirabella

Director of Institutional Research

Professor of Statistics

Florida Community College - Jacksonville (FCCJ)

J. Michael Adams

Corporate Manager, Quality Services

Florida Power & Light/ FPL Group, Inc.

Florida Sterling Conference

Wednesday, May 31, 2000

Disney World, Orlando, Florida

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What’s getting “undone” ?

• The desired outcome and supporting processes that the measure(s) intended to describe

• Why????– Poor measures drive poor performance!

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Objectives of the workshop• Know good measurements from poor

measurements

• Distinguish the implications of good and poor measures on performance

• Balance an array of measures that favorably tracks a process’s outcome for planning, assessing performance, and analysis

• Assess attendees’ measures

• Any other expectation?

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“Why” Measure at All?

• Measurement is the language of progress and comparison

• Provides a sense of where we are AND where we are going (planning)

• Can guide a steady advancement toward established goals (tracking)

• Can identify goal shortfalls, or over-achievement (analysis)

• Communicates to the work force what is important to the organization (behavioral)

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Good measures are born from SMART goals

• Specific

• Measurable

• Agreed upon

• Realistic

• Time-Bound

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The Challenge of Measuring• Workers might perceive it as a threat• Workers might disregard organizational goals,

customers, products and services• Workers might focus on obtaining favorable

measurements• Measuring items with no influence on organizational

success = waste of time – result is a bean-counting approach that focuses on irrelevant

details

• Expected to do something!

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The Challenges- examples

• “Apples and oranges”

• Impact on comparisons, benchmarking and performance

• turnover

• consistency

• defects vs. defectives

• commutes (measured in time or miles)

• school achievement

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“Where” are these measures

• Organizational

• Process

• Department/work unit

• Individual– Exercise

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Your measures Jot down your various

performance measures for you, your department, unit and organization. Indicate the purpose of the measure ( 1= planning, 2= tracking and analysis; 3: behavioral changes)

• Organization

• Process

• Department/ Unit

• Individual

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“What” Do We Measure?

• Quality• Delivery• Cycle Time• Waste• Cost

• Defects• Satisfaction• Complaints• Financials• Price

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Measurement Examples

Operations-related measures- reliability- timeliness of delivery- order processing time- errors / defects- product lead time- inventory turnover- cost of quality- employee

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Measurement Examples

Customer-related measures- customer satisfaction- customer complaints- customer retention

Financial measures- market share- sales per employee- return on assets- return on sales

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Baldrige/ Sterling: Results CategoryPrivate, Education, Health Care7.1: Customer Focus Results; Student

Performance, Patient and other Customer Focus

7.2: Financial and Market; Student and Stakeholder Focused Results,

7.3: Human Resource Result; Budgetary and Financial Results, Staff and Work

System7.4: Supplier and Partner Results; Faculty

and Staff Results7.5: Organizational Effectiveness

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Determining and Reviewing Measurements for Balance

BaldrigeResults 7.0

•Customer

•Financial

•Human Resources

•Supplier/ Partner

•Organizationalsupplier

dept

process

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Desired Outcomes- Airlinesoverall organization balance scorecard

• “Assumed Quality”- arrive safely

• Loyal Customers– Market differentiation, key value attributes:

• on-time arrival• baggage handling• customer complaints

• Profitability and Market share– Satisfied stakeholders (shareholders, partners)

• Employee growth and retention

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Airline Measurement System

• Individual measures for each flight process• Group measures for overall airline• If problems occur with a flight, who do you

blame -- the flight crew or the airline?• What measures do you affiliate with the

flight crew?• What measures do you affiliate with the

airline?• What is important to you for a satisfactory

flying experience?

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Review your measures

• Are the organization measures reflective of all Baldrige results items?

• Do the measures reward favorable behaviors?

• Is there alignment with the contributing departments and suppliers?

• Are the overall results managed as an outcome of a process?

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What’s the opportunity?• Many organizational measurement systems are

too short, too rigid, or used like a strict teacher’s ruler ... to whack rather than to motivate

• Need to replace these outdated measurement systems with more dynamic measurement system that motivates continuous improvement in customer satisfaction, flexibility, and productivity … SIMULTANEOUSLY

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Mis-measurement Systems

• Unless specifically tuned to flight plan, measurement systems may:– yield irrelevant / misleading information– provoke behavior not conducive to strategy

• Traditional measures ignore requirements & perspectives of customers (internal/external)

• Bottom-line measures (profitability) too late for mid-course correction / remedial action

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Mis-measurement Systems

• Many measurement systems overlook key non-financial performance indicators

• Measures often used for punishment rather than to promote learning

• Many measurement systems are inflexible and limited in what they can do

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What Should a Measurement System Do?

• Measures must link operations to strategic goals– departments should know how they contribute

separately and together toward strategic mission

• System has to integrate financial / non-financial info in a way usable by managers– managers need right info at right time

• Measurement system’s real value lies in its ability to focus all business activities on customer requirements

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What Should a Measurement System Do?

• Measure what is important to the customers

• Motivate operations to continually improve against customer expectations

• Identify and eliminate waste -- of both time and resources

• Help to accelerate organizational learning and build a consensus for change when customer expectations shift

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Measurement Mismanagement

In an effort to increase market share, a computer service bureau strategizes to improve the timeliness of its voicemail service. The goal is to provide new customer with service w/in 24 hours. To help speed the process, a program is developed to accept verbal phone orders. Most new customers were online w/in a day as promised, causing the company to celebrate their success. A later audit revealed 70% error rate in order entry, with 30% of customers disputing their bill and eventually canceling service..

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Measurement Mismanagement A Hi-Tech company sets objective to become highly

profitable by being a product leader. To measure the performance of its marketing and R&D functions, the number of new products developed is the most watched barometer. An internal review reveals that in a sample of 20 new product introductions, 80% were delivered over a month late, and significant waste piles up in production. Management cannot understand why the accountant’s ink is red – after all, their yardstick tells them they are developing new products at a record rate.

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Beware of ……..

Seemingly Simple Measures

• How satisfied are your customers?

• What is your employee turnover?• What is your client retention

rate?• Is the value of our service worth

the price?

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Beware of ……..

Treating customer perceptions as objective measures• Customer satisfaction product quality

• Customer satisfaction is a complex phenomenon

• A well-handled complaint results in higher customer satisfaction than does no complaint

• More reasons for complaint more dissatisfaction

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Beware of ……..

Non-specific measurements• Results are actionable

• Hard to improve what you cannot assess

Failing to measure adequately• Think BALANCED SCORECARD

• Don’t give employees an outlet for gaming success

• Identify all areas important to customers

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Beware of ……..

Using results incorrectly• Don’t tie results to employee pay

unless employees can directly influence results

• Don’t base employee pay on results that cannot be measured

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Recap of Objectives and Expectations

• Know good measurements from poor measurements

• Distinguish the implications of good and poor measures on performance

• Balance an array of measures that favorably tracks a process’s outcome for planning, assessing performance, and analysis

• Assess attendees measures

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Thank you!!!!!!

Jim Mirabella

Mike Adams