Metrics: How to Improve Key Business Results Part 23

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The measures for priority setting, is a lot like measuring accuracy. It's a simple set of measures. Are you keeping to the priorities you've established? Or do you allow the latest need to send your priorities spinning? Do you allow the squeakiest wheel to get the attention? Do all of your plans get thrown out as soon as the first crisis occurs?

Of course, if a true emergency hits, you may have to drop everything and solve the crisis. But, do you find that there is always a crisis? Do you find that once you've overcome the emergency that your organization doesn't return to the priority list?

If your organization can't set or keep to defined priorities, then it will have a very difficult time growing. Prioritization not only provides direction, it also includes the identification of tasks, goals, and projects that will not be done. To truly mature, an organization, like an individual, must realize it can't do everything asked of it. You have to make some hard decisions. If you can't, you may find that you accomplished a lot-more than you expected-but little that you truly wanted to do.

The last quadrant we'll visit is the one most managers want to start with-Process Health, which is shown in Figure 11-4.

Process Health.

The last quadrant you should tackle is Process Health, Quadrant 2.

Figure 11-4. Quadrant 2 of the Answer Key.

Concepts.

So you've stuck it out and are finally going to have an opportunity to play with efficiency measures. Or perhaps you've skipped to this portion because you must have them. Process health measures are the most risky because they are the easiest to abuse. It is the equivalent of a coach having statistics on each player's productivity. Like knowing the batting average of your players against each pitcher they will face in the upcoming series of games. You know their performance in night games, day games, even how long it's been since they ate last. Let's make it even more meaningful and say you also have data for how much things cost, how long it takes, how the resources are allocated, and the quality of work, in all situations.

But you might want even more data if you are going to set your lineup based on data. How about how each has performed based on what they ate. What they drank. What time it is. How much sleep they got the night before. The day of the week. And the list can go on forever. And that's a problem.

The point is simple. While data, measures, and information about how well each worker performs in given situations is usable, it's not truth. I've already shared this, so I won't belabor it. But understand that you can't avoid the job of the supervisor, manager, or leader by looking at data. No more than a baseball team's manager can look solely at statistics to set his lineup. You have to know your players. You have to talk to them, work with them, and put each in a position to be successful.

I use sports a.n.a.logies a lot. Not because I like sports (although I do), but because sports provide a great example of how a business can be run, how an organization can function. Table 11-3 shows a comparison of a sports team to a corporate team. You can choose if you identify it better with a professional, college, or high school sports team-just as you can choose to look at the company as either a large, medium, or small (mom and pop) organization.

The a.n.a.logy truly has no bounds. You can take it as far as you like. You can apply it to any aspect of your business. Sports teams-college and professional both-are great examples of how work teams function.

If your work team were a sports team, how successful would they be?

When a sports manager looks at statistics for individuals and the team, she uses these to improve each. Her intent is to find ways to make the team as successful as possible. She can use the data as a starting point for conversations about the player's performance. And if she finds the player not performing up to the needs of the position, she will most likely try to develop the player's talents. The team has already invested money in the player. But in the end, if she can't get the player to perform at the needed levels, she may let him go and have to recruit new players. (I even like that fact that players are recruited and drafted-not "hired.") A good manager will do the same with performance measures. He won't use the measures to manipulate the workers into changing behaviors. He will use the information to work with the employee to improve her abilities, developing her as best he can. If, like the sports manager, he fails, he may have to let her go and hire new workers.

Remember, if the workforce is your organization's greatest a.s.set, then the manager's job is to develop those a.s.sets to their highest potential. Sports teams know the greatest a.s.sets-and they are paid accordingly.

The manager's job is to develop the workforce to their highest potential.

Process Health Measures.

You may want to measure the cost of everything. You may want to know how much each person is paid per hour (even if salaried) so you can determine how much laughter in the halls is costing the company. You may want to be able to show how much it costs the company for the annual picnic. Or the costs of equipment, facilities, and furniture. These measures are not the ones you need.

Process health measures are about the process, not the people. How much does it cost to perform a given process in the way it's done today? It's all about process improvement. If you can find ways to improve a process, one of the measures of success may be less cost to the customer, organization, or society.

So, how much does the process cost? How much does it cost for each of the steps? Feel free to include the hourly rate of the employees but remember why you're measuring it-to improve.

Most process-improvement methods are very good at measuring the right things. Besides cost, you'll find most want you to also measure how long it takes to perform a task or process step. How long does your customer have to wait for the service? How long does it take for you to perform the service?

One example, Lean Six Sigma (a process-improvement methodology) is based on flow and defect removal. Flow is all about how the process moves from point A to Z. Do you incur backlogs, stockpiles of inventory, or lost time? Does it take you days to complete a process that in actual hands-on time takes only hours? How much wait time is there between and within steps? Six Sigma will also want to minimize defects (to a Six Sigma level, 3.4 defects per million opportunities). All methods use measures to determine how well they improve the organization's processes.

These are measures of quality. Errors, rework, defects, issues, and problems are all words that fit under process quality. Your job is to use the quality measures to find improvements to the process to reduce (and hopefully eliminate) them. This may include training or retraining your workers. It doesn't include "pus.h.i.+ng" your workers to be more diligent. To be fair, you may need them to pay more attention to detail, to be more focused, and to be more diligent. The difference will be in how you do that. You shouldn't "demand, cajole, force, or manipulate" them. You should develop them.

Resource allocation is another measure you can use in Process Health. Besides the process steps, you may have the wrong mix of resources doing the wrong steps at the wrong times. Beware though. Throwing more resources (money, manpower, or equipment) at a problem rarely fixes it over the long term. You'll need to dissect the problem and find solutions that will stand the test of time.

A simplified set of measures includes the following:.

The number of process steps.

The number of handoffs between departments Wait times The time to complete (by steps/overall) Touch time (how much time is active vs. the wait time) The costs in the process Materials s.h.i.+pping Storage Production Resources allocated (by steps/overall) The number of defects per opportunity The types of defects Process repeatability Is it doc.u.mented?

Is it done the same way each time?

Is it tweakable?

Is the process under control?

The Process Health quadrant, like the others, can be a powerful and meaningful tool for organizational improvement. The risk is that management will use the metrics to improve the worker (rather than develop him) or to influence behavior (rather than improve processes). If you are confident that these measures will be used properly, they can reap great benefits. Process improvement (and therefore Process Health) is at the core of most organizational development efforts.

Recap.

Quadrants 2, 3, and 4 of the Answer Key provide important insights into the organization's overall health. Each has its own viewpoint-business, worker, and leaders.h.i.+p-and each has benefits and risks. There are other measures you can collect, a.n.a.lyze and use to build metrics. The Answer Key provides a foundation and framework for a comprehensive metrics program.

Besides providing meaningful insights to the organization's health, these advanced metrics also help the organization mature into becoming a data-driven organization. The metamorphosis required to become a metric based organization is not an easy one. It requires patience and unwavering integ-rity on the part of leaders.h.i.+p, management, and service providers.

After Product/Service Health, I recommend moving to Organization Health (Quadrant 3) in which you use measures like Employee Satisfaction, Training, Work Environment, and Reward & Recognition. This is the metric with the lowest risk factor and great potential to build a loyal, dedicated, and happy workforce.

I suggest tackling Future Health (Quadrant 4) next. The only problem may be that your organization isn't ready to look to the future. It may be struggling to maintain its status quo. I fully believe that organizations (and people) can't afford to "strive to survive." To succeed you have to shoot for more than keeping your head above the water. You have to swim to sh.o.r.e. But, not everyone agrees. If your organization isn't concerned with the future, you may have to skip this quadrant. But if you have strategic plans, long-term goals, or have projects in the works-tackle Future Health metrics next.

Finally, I suggest you fully delve into Process Health. It's important to note that if you or your organization is implementing a process improvement effort, you will likely be doing some Process Health measures for those efforts. I'm not in any way trying to deter you from doing so. Any of these metrics and their measures can be used to answer specific root questions. I am suggesting that you don't create a stand-alone metrics program to provide organizational health monitoring in this quadrant until you've built up enough equity in your organization that your workforce trusts your intentions and use of these measures.

Conclusion.

Advanced metrics are very useful and can help an organization grow in many ways. They also introduce risks to the organization. To mitigate these risks and get the most benefits from the metrics, I highly recommend you work from root questions for any metrics you want to create. The metrics should only "live" as long as they answer the root question and as long as the question is still in need of answering.

If you must create a metrics program that lives on its own account, without a specific root question, I highly recommend you start with Product/Service Health (effectiveness). Once that is fully implemented and you've built up a level of trust and understanding of the ways to use (and not use) metrics, look into incorporating the other three quadrants. Incorporate them in the following order: Quadrant 3: Organization Health.

Quadrant 4: Future Health.

Quadrant 2: Process Health (efficiency).

Creating the Service Catalog.

How to Enhance the Report Card.

One of my biggest challenges when I created the Report Card for my organization was getting the leaders.h.i.+p to agree to a list of core or key services. Since I successfully won the battle of using effectiveness measures over efficiency ones, I would need a list of the services (or products) to be evaluated in the Service/Product Health Metrics.

Many organizations are function-centered. You can see this in the organization chart and the way the parts of the organization work with each other. There are sections for marketing, customer relations, project design, and development, test, and implementation. There are areas whose focus is customer support like help desks and second-tier support functions. These units are not focused on a given service or even the concept of services. They are focused on the functions they provide. They are focused on the "task at hand" and the "job."

This is not necessarily a bad thing. But it is in direct contrast to what you get when you structure your organization around services. By focusing on services, your organization can truly embrace continuous improvement and become a more effective team.

Think of it this way: if you are functionally focused, you concentrate on delivering your functions to your customer-internal or external. Once you have completed your part of the process and have finished your tasks, your interest in the process is done. On the other hand, if you are service-centered, there are no "hand offs." Each function understands how their efforts fit into the overall delivery of the service. Being service-oriented encourages teamwork. It encourages a customer-centered viewpoint. It moves an organization away from individualism (including departmental silos) and moves the organization toward maturity.

Besides the benefits to the organization's maturation, being service-oriented helps in the development of meaningful metrics. This is especially true if you are working on the first quadrant of the Answer Key, Product/Service Health. Since the quadrant is focused on the customers' viewpoint and on improving the health of the services and products you provide-having the organization focused on those same services makes the metrics much easier.

Since our organization was primarily service-oriented, the leaders.h.i.+p agreed to start our metric program with an a.s.sessment of the health of the key or core services. The problem was getting the directors of the different areas within the organization to agree on which services were core.

While I innocently (and naively) thought this should be a simple decision, I soon found out that I was wrong. Where I wanted to know which services should be considered "core" simply to determine which ones to build metrics for, the directors saw this list as a determination of what was important and what wasn't.

I didn't even consider that FUD (fear, uncertainty, and doubt) would be a factor for the directors. I forgot that reactions to metrics are not based on position, paycheck, or power. Fear is a human emotion-and our leaders are just as human as the entry-level staff members.

So, my innocent question about which services were key to the organization created an unexpected firestorm of debate. If the CEO didn't include a service that a director thought was integral for his group, that director feared that the service was expendable. Perhaps when financial cuts had to be made in the future, these non-key services would be at risk. This was especially real at the time, due to the economic woes the United States experienced in the early twenty-first century. So, every director fought to have as many of his services included as possible. Any peer recommendations to exclude a service were seen as an attack against that director's security and that director's group.

My good intentions didn't matter a bit. I even made the mistake of trying to convince these directors that their perception was wrong; that no one was looking to use these metrics to determine how to downsize the organization. That was a colossal mistake. Where I was consistently careful to mitigate the workers' FUD, I missed the same opportunity with leaders.h.i.+p.

Good intentions don't outweigh poor execution.

So, I created an uphill battle for myself that culminated, as you may have guessed, in having to move forward without a list of key services. Instead, I selected seven services that had high customer use and which I felt the directors would agree were among the key services-but not, in any way, a complete list. These services included e-mail, calendaring, the service desk, the network, telephones, printing, and electronic storage services.

In an ideal situation (which requires that the organization be on its way toward maturity), the service catalog would be created easily and as an integral part of the organization's natural definition of itself. If the organization is introspective, it will want to know what services (and products) it provides. Along with the "what," the organization will want to know the who, the how, and especially the why.

Who is the customer? Not the next person or unit in the process, but the final consumer.

When I say "how," you don't have to have the process spelled out (although that would be nice). By "how" I mean you have to know what goes into the service/product. In essence, another "who." Who is involved in providing the service/product? Which units or departments?

The "why" relates to the customer. What is the purpose of the service/ product? Why does it have value? Why would your customer "pay" for it?

How to Develop a Service Catalog.

While a service catalog is not a requirement for a Service/Product Health metric program, it can definitely help. So, let's take a moment to look at how to create one and then use it.

To create a service catalog, you will need to take each service and run it through a simple a.n.a.lysis. Before you start, take a pre-step to determine what business you are in. Check your mission statement. Why does your organization exist? What is its purpose? If you have a good feel for that, then determine the "types" of services that you provide. One of the byproducts of our metric effort has been the identification of service types or categories. Being an IT service organization, we ended up with the following: Utilities (including network, telephone, e-mail, and electronic storage).

Support (general support, like the service desk).

Academic services (specific support services for the academy).

These categories can help, but are not necessary. If you provide only a few services, like McDonalds, you may not need to break out the services into categories. McDonalds could categorize by meal (breakfast, lunch/dinner), by type of food (entree, side, desert), or by cost (dollar menu, value meals, individual items). But, the question is, how useful is this? The answer will be in the metrics and what questions you are trying to answer.

Service/Product Health Service Catalog.

You will need to take the following steps in order to create the catalog.

Step 1: Identify the service.

This can be as simple as writing down the name of the service. What is it known as? How does the customer refer to it?

Metrics: How to Improve Key Business Results Part 23

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