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Measurement Systems

Measurement Systems. Development of Information. Information is necessary for both control and improvement Information derives from analysis of data Data, in turn, come from measurement. Process Flow. Measurement. Data. Analysis. Information.

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Measurement Systems

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  1. Measurement Systems

  2. Development of Information • Information is necessary for both control and improvement • Information derives from analysis of data • Data, in turn, come from measurement

  3. Process Flow Measurement Data Analysis Information

  4. What Could Be Measurements for Personal Health?

  5. Measurements for Personal Health • Blood pressure • Weight • Heart rate • Respiration • Body fat percentage • Blood chemistry • Strength • Flexibility

  6. How Do People React to Measurements?

  7. Questions Concerning Measurements • Why do we need them? • How will the measures be used? • Will they be used for punishments? If so, how? • Why is my performance measured? • What is in this for me? • Will we see the results?

  8. How to Alleviate Fear of Measurements?

  9. Effective Use of Measurements • Assign clear accountability/responsibility • Establish performance goals • Conduct regular review and analysis • Use information for better decision-making and improvement • Communicate performance information • Provide reward and recognition

  10. Potential Problems with Measurement Systems • Too many measures • Short-term focused • Lack of detail for action or decision-making • Drives wrong performance • Measures courtesy versus competence • Measures behavior versus accomplishments

  11. Characteristics of Effective Measures • Are meaningful • Respond to multiple organizational priorities • Encourage operational improvements • Provide a complete, accurate, and believable picture of performance • Blend leading and lagging indicators

  12. Design of An Effective Measure • Purpose – is worth collecting to support decision making • Validity – measures what it claims to measure • Precision – returns consistent value with each measurement • Accurate – matches the true value • Cost effective – is not too costly to track and report

  13. How to Design An Effective Measure?

  14. Designing Measures (Metrics) – APQC (1 of 2) • Plan • How will you use the data? • Have you selected and defined your measure? • Collect • How will you collect the data?

  15. Designing Measures (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?

  16. Types of Measures • Strategic Measures • Measure the effectiveness and appropriateness of strategies • Operational (Process-Level) Measures • Measure the effectiveness and efficiency of activities

  17. Purpose of Strategic Measures - Balanced Scorecard • Clarify and translate vision and strategies • Communicate and link strategic goals and measures • Plan, set targets, and align strategic initiatives • Evaluate and improve effectiveness of strategic initiatives

  18. Balanced Scorecard(Kaplan & Norton) • Financial perspective • Customer perspective • Internal perspective • Innovation and learning perspective Leading measures Lagging measures Interlinking

  19. Examples of Balanced Scorecard Measures • Customers – satisfaction, retention, acquisition, profitability • Financial – net income, return on equity, return on investment, growth, cash flow • Internal – productivity, quality • Innovation & Learning – employee development, retention, satisfaction

  20. Balanced Scorecard for A Fast-Food Restaurant?

  21. Balanced Scorecard for A Fast-Food Restaurant • Customers • Satisfaction, frequency, retention, referral • Financial • Net profit, sales growth • Internal • Quality, timeliness,service experience • Innovation & Learning • Experience, training, empowerment, accountability, employee satisfaction

  22. Process-Level Measures • Does the measure support our mission? • Will the measure 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?

  23. Creating Effective Process–Level Measures • Identify all customers and their requirements and expectations (key performance factors) • Define work processes • Define value-adding activities and process outputs • Develop measures for each key process • Evaluate measures for their usefulness

  24. Measures for Payroll Processes

  25. Measures for Payroll Processes • Staff productivity (# of payroll forms processed each week) • Cycle time (time to complete an inquiry) • Operating costs (labor cost /payroll FTE) • Process efficiency (% of resources for payment processing vs. inquiries)

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