John Seddon, Vanguard Consulting, has been using the Toyota Production System and Systems Thinking for almost 3 decades. His work is well known throughout the Quality World and he has made significant improvements in processes for hundreds of organizations and UK government departments. This article is based on his ‘Lean Tactics’ document Measurement.
What to avoid
Believe it or not, it’s possible to damage performance in an organization by badly designed measurements. These kinds of measurements can result in sub-optimal performance that will lead to poor morale. A slippery slope, indeed!
How can this happen? Why would simply taking measurements lead to lower performance. Well, first of all, if a measure of an ‘activity’ that we take puts the focus on the activity and takes our focus off meeting customer needs and expectations, this will inhibit employee performance. Management may see some numbers, but our customers will see activities that aren’t relevant to their interests (WIIFM – what’s in it for me?).
Next, we’ve all heard the phrase, ‘If you can’t measure it, you can’t manage it’. We know that employees pay attention to things that are measured. Hitting targets is usually rewarded some how – an external rather than just internal reward. Seddon points out that poor performance happens when the method of our work shifts to the meet internal measure (hitting the target) rather than the customer.
A third way that measurement can create a negative impact happens when a measure actually creates dissatisfaction for our customers. Think of a help desk person trying to wrap up your phone call to hit an internal time limit target. Now, the customer has to call back, clogging up the incoming line and creating ‘drop-offs’ as well as dissatisfaction. Never a good thing. There is waste created (having to call back) when an internal target leaves our customer hanging.
Finally, morale is damaged when targets are arbitrary, inappropriate or out of the performer’s control. I often use the example of setting targets before we know the capability of any process. We will be wrong 100% of the time – half the time we’ll set the target too high and demoralize employees. The other half of the time we’ll set the target too low and demotivate them. We have to determine process capability before we set a target, then make sure the infrastructure and work environment will support the goal. Competence must be up to the task, too.
What do do
Seddon has identified four areas to develop measures to assess and improve performance – measures that touch the customer. This should include internal customers, of course.
- Customer measures – what matters to our customers? Do we measure ourselves against their expectations?
- Response measures – are we responding to customers efficiently and effectively?
- Process measures – which ones should be permanent and which ones should be temporary? Are we wasting effort measuring stable processes?
- System measures – what measurements can teach us about how well our whole system is working? Do we know enough? Are we using the results to improve the effectiveness of our system?
Reports need to be assessed for payback, too – how long do they take to create? Where do the reports go, and what decisions are made (if any) based on the report?
Getting rid of measurements that aren’t being used well or are not helping us improve is a good first step. Find out how your measures increase organizational knowledge, and make sure each method of measurement is adding value to your organization. This purging will improve morale if the measures have been creating sub-optimal performance. Learning that we’re taking a measurement ‘because that’s the way we’ve always done it’ will bring a breath of fresh air into our improvement activities, too.
We must be sure to include the people who are going to be affected by the measurements. Find out if they think that the current measurements are giving Management useful information about the health of the Management System. Find out when they ‘roll their eyes’ if they have to fill in a form full of useless data that they imagine never gets to the people that matter (customers!).
Evaluate the measurements in place to see if they are truly useful to our organization – can we really tell much about our customers’ perceptions of how well we are meeting their needs and expectations? Can we tell how well we are fulfilling our purpose as an organization?
If you can see some value in new measures, use the ‘Ready-Fire-Aim’ technique, like PDCA to test drive some new ideas. Putting the wrong (or not improved) measurement into place with no escape hatch or no evaluation of its effectiveness won’t make Process Measurement any more valuable. In fact, it will likely make things worse!
With well-designed measurements, Management can start to make decisions based on evidence, not just numbers created to make them happy, or worse, ‘a hunch’ or opinion. Measurements can replace opinion with evidence when they are designed well.
Seddon’s website for Systems Thinking is: http://vanguard-method.net/