This Week’s Topic:
Performance Measurement: Vital to Operational Excellence
Top management’s performance can usually be measured in terms of sales volume, marketshare, cash flow, profit, ROI, dividends and market value.
For operating management, however, there is often a big disconnect from the strategic plan.
This disconnect is due to the lack of alignment and proper measurement of the business processes and activities that drive financial results. The resulting misalignment of performance measurement between goals, strategy, processes and activities is often poorly understood, and so does not get the emphasis and priority it deserves.
For a quick assessment of how your company is performing, consider these five questions. Simply answer “Yes”, “Sometimes” or “No” to each one and keep track of your responses. Better yet, take an informal poll of your colleagues and see how much consistency there is between functional areas.
- Do your performance measures put pressure in the right directions for improvement?
- Does management understand that some micro performance measurements can decrease overall performance?
- Has management defined success by identifying critical measurements by function, process and activity?
- Does your current performance measurement system help to integrate your company’s people, processes and activities for a better overall performance?
- Does your performance measurement system drive improvement by providing early warning signals that supports a proactive management style?
If you answered "Sometimes" or "No" to any of these questions, you’re in good company. Most organizations could benefit from a more careful look at performance measurement.
From our experience, here are three specific requirements for performance measurements to drive operational excellence:
- Expressed in numbers that enable performance to be tracked and the right action taken
- Fast feedback so action is quick and meaningful
- Understandable to the people who have to use the measurement system or be evaluated by it.
To read more about this critical topic, including other traits for a successful performance measuring system, follow this link to receive a free copy of the Full Article. You are also welcome to browse the list of free white papers and other articles at Free Resources.
If you have a topic that you would like addressed, or an Insight you would like to pass along, e-mail us at: Jack.Rink@rmdonovan.com
Browse our Operational Excellence Insight Archives