Metrics: How to Improve Key Business Results Part 12
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Figure 6-2. The Answer Key, Quadrant 4 The following are some questions you can ask yourself or others to determine if your organization is ready for metrics in this area: Do you have a mission statement? Most organizations do these days.
If you ask five workers what the mission of the organization is, will you get the same correct answer?
Do you have a living strategic plan? If yes, how far out is the furthest goal? Most process improvement experts will tell you that a strategic goal should be three to five years out at a minimum. They can stretch out to ten years.
Does your organization have the majority of its goals doc.u.mented?
If you have long-range goals, are they being actively worked? (I won't ask if you know how well they are progressing, since that would require measures which lead to metrics.) Have the organizational concerns been prioritized? If so, are those priorities adhered to or are they routinely ignored?
Do your goals include improving processes over time?
Do you have a strong project management process in place?
Is the process followed willingly by the organization?
If you can't answer these questions in the affirmative, you may not be ready. Normally there is an inner conflict around this area for an organization. The leaders.h.i.+p, which is the main driver of metrics, wants to improve the organization in all aspects, all at one time. This drives the organization to develop strategic plans. It seems to be a requirement for every high-level leader to have a strategic plan with a mission statement and goals.
I won't take you through all the problems this creates for an organization incapable of organizational-wide change. Rather, I offer these questions to help you determine if you are ready. Of course, you could measure this area and determine that your artifacts (strategic plans, goals, and prioritized lists) are not working as intended. That could be useful information by itself, but as I am very fond of saying, most times you don't need metrics to tell you what you already know.
Most times, you don't need a metric to tell you what you already know.
I believe most organizations put together strategic plans and prioritized lists. Most even develop processes for their larger-scale efforts. Mostly because these are "the right things to do." But unfortunately, most of these organizations aren't actually ready for these efforts, so their earnest attempts result in few to no benefits; compounding this lost investment by creating metrics would be wasteful.
Future Health metrics require a readiness most organizations lack.
The Organizational Health quadrant (Figure 6-3) is from the viewpoint of the worker.
Figure 6-3. The Answer Key, Quadrant 3 Again, we can ask some basic questions to get a feel for the readiness of this endeavor.
Do you have a rewards and recognition program?
Do you have a suggestion program for the workforce to provide inputs?
Would you describe your culture as one of mutual trust?
Does each of your workers have a professional development program?
Unlike the Future Health quadrant, Organizational Health doesn't tend to be an early area of interest for leaders.h.i.+p. In many organizations suffering from immaturity, leaders fear metrics based on this area. Leaders.h.i.+p should know if the workforce is treated well and feel valued. They shouldn't "need" metrics to inform them about this. When the "answers" aren't known, it creates doubt and that doubt rightly worries leaders.h.i.+p. Until there is trust within the organization, this area could be troublesome for leaders.h.i.+p.
In most cases, leaders.h.i.+p isn't ready for Organizational Health metrics.
Both Organizational Health and Future Health quadrants speak directly to the "State of the Union" of the organization. In both cases, the metrics should wait until the organization is doing the right things and pleasing the customer on a steady basis. If the organization is in turmoil or suffering from immaturity, a metrics program won't resolve the issues-to the contrary, it will probably make things worse. Starting with either of these two quadrants would be like measuring the average airspeed, alt.i.tude, and lift coefficients of a paper airplane. It is much more important to obtain better transportation before you start measuring how well a paper airplane works.
Return vs. Investment.
Figure 6-4. The Answer Key, Quadrants 1 and 2 The top two quadrants (Figure 6-4) are where most organizations naturally gravitate when they embark on a metrics effort. Most leaders start with wanting to see customer satisfaction survey results. It's the easiest measure to start with. Without fail, every time I bring up finding out how the customer feels about services or products, the first thought is always "survey." I don't mean this is a negative-in fact, I'm happy when this happens because it's a very safe and logical place to start.
The Balanced Scorecard also has four quadrants: Customer, Finance, Employee, and Process-and most leaders jump to the Finance quadrant. The nearest equivalent in the Answer Key is the Process Health (or efficiency) quadrant.
While the right two quadrants in the State of the Union require that the organization be ready, but typically the organization is not, the Return vs. Investment quadrants can be addressed before maturity. Of course, the more mature the organization, the better-especially when developing a metric program.
The Process Health (efficiency) measures (Figure 6-5) can cause a lot of issues, especially in an organization suffering from immaturity. If you don't have great rapport with the workforce, or if there is any lack of trust between the workers, trying to work on metrics for this quadrant can be a killer.
Figure 6-5. The Answer Key, Quadrant 2 The questions I would have you ask to determine readiness for efficiency measures include the following: Does your workforce trust management?
Does your first line of supervision trust upper and/or middle management?
Does management trust the workforce?
To be able to use efficiency measures safely requires trust. Honest and accurate data is impossible to achieve in a culture lacking trust. Most pundits think that a culture of trust is predicated on how well the top leaders of an organization walk the talk. Does the workforce trust the top leaders to follow through? To do what they say they would? To keep to their agreements and commitments?
I find the answer to the trust question to be much more direct and simple. Does the workforce believe that their direct supervisors have their best interests at heart? They care much less about the top leader's level of authenticity. They care about their direct manager above all else. As you move further away from the direct manager, the amount of trust required lessens.
So, rather than preach to the CEO of the company that she must gain the workforce's trust, start at the lowest levels and ensure that there is a culture of trust from the bottom up.
When you decide to measure how efficient the organization is, your employees clearly hear that you want to measure how efficient they are. They will not "hear" that you want to improve processes and procedures. At least, they won't unless they trust you. And by "you," I mean their boss.
My CIO usually followed up his admonition to "do the right thing" with an equally important directive to do the right things "the right way." If management is strong, it will seek to improve the way things are done-not improve those who are doing the work. If you rush into working with efficiency measures, you risk not only gathering inaccurate data due to mistrust, but worse, you run the risk of seeding more mistrust.
Process Health metrics require a level of mutual trust rarely found within most organizations.
Remember, Organizational Health metrics speak to the workers' situation, which most leaders are not ready to hear. And even if the leaders.h.i.+p believes it is capable of hearing the feedback, if there is a lack of trust, most workers are not ready to share.
That same lack of trust makes collecting accurate data on how well the business is run (Process Health) hard to accomplish.
So, that leads us to the Product/Service Health quadrant (Figure 6-6). This is not only the safest place to start, it's also the most logical.
Figure 6-6. The Answer Key, Quadrant 1 Let's look at the following questions, which you should ask to determine if you're ready for effectiveness measures: Do you know who your customers are? (This should be a no-brainer, but it's actually worth asking. I am rarely surprised by what is not known.) Do you know what your customers consider important?
Do you know your customers' expectations?
Does this sound a lot easier than the other four quadrants? That is because it is. You need less maturity in the top half of the tier, and there is less risk involved in Product/Service Health than with efficiency measures. At a minimum, you should know who your customers are and be able to determine their wants, expectations, and needs.
You might ask, how could you not know who your customers are?
I'll admit, I found it hard to fathom at first. But, it can actually happen. A story a colleague enjoys relaying centered on a clerk in an admissions office in a college. The clerk had been dealing with freshmen for at least two years too many.
On one of these occasions, a freshman was giving the clerk the common refrain that he was her customer and deserved better than he was getting. He ranted about how she should be doing everything in her power to satisfy his needs since he was the reason the school existed.
"Where is your customer service?" He shouted one last time, enjoying the attention the other students were giving him.
She calmly waited for him to pause. She wanted to make sure he heard her clearly.
"Deary, you're mistaken. You're not the customer, you're the product."
You might be thinking, "nice retort" or "cute comeback." But the bad part is that my colleague was a faculty member. And worse, those listening found it extremely humorous. Of course, I can't blame them-it was a funny line. But, how true was it?
Do we sometimes confuse who our customers are? Another well-known joke is the grocery clerk who argues that "we could get a lot more done if we didn't have to deal with customers."
If it is obvious who your customers are and what they want, then there wouldn't be so many customer service courses and seminars. It may be one of the most basic axioms: the truth is not always obvious.
The truth is not always obvious.
You would think the opposite to be more likely. Falsehoods and lies should be hard to find. The truth shouldn't be hard to find. The truth shouldn't be hidden or obscured by extraneous data. The truth should be obvious.
What should be obvious-like the truth or who your customers are-is not always obvious.
So how do you determine who your customers are? Since it's the prerequisite for developing effectiveness metrics, I think it is worth covering a simple process for determining who your customers are.
One simple view is that your customer is who pays your salary. This allows you to determine your customer on a personal level (as well as an organizational level). Let's start with the obvious (but not necessarily the "truth"). You are paid by your organization. But how is that funding derived? If you are a for-profit, it most likely comes from the sale of a product or service. The buyer of that service or product may likely be a vendor or distributor. The next logical question is, who pays the recipient of your product or service? You should follow this logic until you've identified the end user or purchaser.
Let's look at a car's airbags. The worker who quality-checks the airbag believes his customer is the automobile manufacturer who has the contract with his division. That is accurate, but not the truth. It's neither the car manufacturer nor the dealers.h.i.+p that buys the cars. This is clearer when we look at the buyer who is the rental car agency. The rental car agency then rents the vehicle to a final end user (customer). Is that the true customer? Yes, but there is another customer. The pa.s.senger who sits in the "shot gun" seat who actually benefits from that particular airbag is a truer representation of that customer. That of course can be extrapolated out to include those who love that pa.s.senger. The pa.s.senger's children, parents, and spouse.
If the person quality-checking the airbags sees the underlying truth about the real customer for their work, how would it change that worker's behavior patterns? How would it change that worker's self-esteem?
In a not-for-profit organization, this process still works. Consider Habitat for Humanity. When you volunteer your time to Habitat for Humanity, is the site supervisor the customer? Or is it the Habitat for Humanity organization? Or is it the person who will eventually take possession of the home? Or is it the children who will have a "real" home to live in for the first time in their lives? You could go even further and ask if the real customer is society. Without becoming too philosophical, I suggest that we go as far as the direct end user. In this case, it's the family who ultimately lives in the house.
When we look into this reality far enough, we resolve to accept that our customers are much more than the first purchaser of our products or services. When we look this deeply we find the truth of who our customers are.
Of course, when we look at the effectiveness measures of delivery, usage, and customer satisfaction, it is usually good enough to determine the immediate customer. You'll need to know who they are so you can ascertain what the customer considers important. You will also need to determine what their expectations are and how to meet those requirements.
The Customers' Viewpoint.
Starting with the customers' viewpoint makes total sense. It's the right place to start collecting, a.n.a.lyzing, and reporting data, measures, and information. Let me tell you a story about a restaurant owned by Tom. He was a hardworking man who loved good food.
Tom's restaurant was doing all right, but he wanted to do better. He wanted his restaurant to be the best in the town, perhaps even a prototype for a chain of restaurants. His menu was made up of old family recipes-home cooking that appealed to everyone. He thought an even better restaurant would provide a good future for his family.
He wanted to know how well the business was actually doing and how to improve. He decided to collect metrics; not only to determine how well he was doing, but to also better predict if his vision had a chance of coming true.
Tom knew very little about organizational development or process improve-ment. He knew even less about metrics. He was a great manager/owner and his pa.s.sion for the business, the product, and customer service made him a natural. His compa.s.sion for his staff was born from a history working low-end jobs, saving and scrimping, and then taking the biggest risk of his life-putting all of his savings into his own restaurant. He knew what it was like to be underpaid and underappreciated. What he didn't know was how to take his dream to the next level.
When he thought about gathering information about his restaurant, he immediately thought of customer satisfaction surveys. He created a comment card, which he had each waitperson give to the customers along with the menu. He wanted to give customers a chance to critique their restaurant experience from the beginning to the end.
Tom knew there were many good and bad points to the survey. It was good in that it would provide quick feedback from his most important critics-his customers. The feedback would help the staff and remind them to keep the customers' happiness at the forefront.
On the other hand, he knew customers might not always provide the information needed to help him improve because many people don't like to complain-unless they are extremely dissatisfied.
Besides the qualitative information a survey provides, Tom needed objective input regarding the quality of his services and products. This information was readily available.
Tom had empirical data on his customer base-since most customers used credit cards, he could determine the number of repeat customers and how often these customers frequented his restaurant. He also could determine the menu items they ordered. He knew when his busy times were and when the restaurant was slow. He actually already had a wealth of usage information. This information in conjunction with the customer satisfaction survey results should give a good picture of how well his business was doing.
Tom was happy with all this information, but felt he was missing an objective measure of how well his restaurant was satisfying the customer without asking the customer for input. He thought the comment cards were enough of an intrusion.
Tom reviewed the quality of the food by bringing in local food critics. He reviewed the service of his staff by personally observing them and getting their opinions on the restaurant. He reviewed the speed of the food preparation and delivery, as well as the check out speed for the customers. He compared this information to that of other top restaurants in the area.
With these inputs Tom felt confident that he had good indicators of the quality of his restaurant from the customers' point of view.
And for the most part he was right. There are other measures he could use, like availability (restaurant hours), reliability (consistency in taste, quality, and time to table), and accuracy (getting the food orders right). These would help round out his metric and give him a more comprehensive picture. But his customer satisfaction and usage data were a good start.
By looking at the customers' viewpoint, Tom removed the basis of fear, which plagues efficiency metrics, while focusing on Return vs. Investment-the area most managers desire deeper understanding of. Fear is born of the unknown. The unknown factor in most early metrics programs (especially in an organization suffering from immaturity) is how the information will (and won't) be used. That is why I push for all metrics efforts to clearly communicate how the metrics will and won't be used.
Even if you promise that the measures you collect and report won't be used improperly, unless you have a strong culture of trust in your organization, the workforce won't believe, and fear will rule. At least if you use efficiency measures. If instead you start with effectiveness measures, it is easy to convince others that the information won't be used against them. This is because all of the measures will reflect the customers' point of view.
A real life example follows.
Metrics: How to Improve Key Business Results Part 12
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