What to Measure
|1. Why Measure
2. How To Measure
3. What To Measure
4. Where To Focus
5. Now What
Part 3 of a five-part series on performance measurement.
by Glenn Felix
As noted last month, every company measures lots of things, generating loads of data — some of it helpful to certain individuals . . . much of it quite useful to a wider audience — if it can be well communicated.
So the challenge is to simply share the very best information that can help the greatest number of people accomplish the most good.
Criteria for Sharing
To help narrow focus, some criteria are worth considering.
The best measures:
- Regularly inform a wide audience of individuals (and teams) that can influence those measures for the better.
- Can very favorably impact organizational success if improved.
- Have meaningful potential for improvement.
- Are easily understood.
Some quick examples include:
- Output per labor hour
- Product quality
- Material waste
- Energy efficiency
- And so forth . . .
Improvements in the above will very likely have a direct and positive impact on profitability.
There are other important measures worth sharing that might not impact revenues or costs directly, but that have an important indirect influence — or that are critical for other reasons.
- Unscheduled equipment downtime
- Changeover time
- Frequency of changeover
- Employee turnover
- Employee safety
- And the like . . .
Reducing equipment downtime by itself won’t boost productivity, but it likely would favorably impact output per hour, hence the indirect-ness. Changeover and turnover similarly have indirect affect.
Also, certain levels and departments in an organization have unique informational needs and possibilities for impacting performance, so deciding what to measure needs to take that into account as well.
Finally, some measures that inform people of other worthwhile organizational goals outside the profitability playing field might be worth considering: Volunteer hours, 401K participation, United Way participation, employee suggestions submitted . . .
The metrics opposite are only suggestions, but they likely capture most of the measures that the above discussion points toward. Some points of note:
- There are no financial or dollarized measures, which helps tighten the focus toward those factors that the widest audience can best understand and impact.
- Output is mentioned lots: Output can be cases, pounds, gallons, units, totes . . . whatever best represents what people “accomplish.”
- All the metrics can benefit from definition. Labor hours, for instance, are typically worked hours and include temporary-employee hours, part-time hours and overtime hours (counted as one hour worked). A vacation or holiday hour is not a “worked” hour. But also, if re-defining things to this constraint upends current data tracking methods, the wheel doesn’t have to have new spokes. Relevancy, consistency, and understanding are the most important factors.
- Similarly what constitutes a defect, how energy is monitored, the time frames that safety numbers are reflecting? Good definitions (a topic for a later part of this series) leave no confusion about what is important to monitor and improve.
Drop me a line if you have questions about other metrics or want to explore possibilities.
Next month we’ll explore ideas for where to focus attention ... which measures warrant the most visibility.