Selecting the correct Key Performance Indicators (KPI’s) are essential to any business but putting them in place can be easier said than done. For example, often a lot of money is spent on management information systems (MIS) to support the production process; however, it is often the case that capturing the correct information to enable accurate analysis is often a lot harder than is expected.
The phrase “rubbish in – rubbish out” is quoted on numerous occasions, so how do you ensure that the data generated is useful and relevant? What can you do to make sure that the generation of KPI’s will have the desired effect? How can they be produced effectively with the minimum of effort and how will you get your employees to buy into the whole idea?
What to measure
There are myriad measurement possibilities, from sales targets, pipeline management of proposals to sales, leads generated and customers qualified to the amount of waste and overall equipment productivity. The aim is to understand what you are measuring and why. A lot of time can be spent generating reports, both financial and operational; but at the end of the day it’s the relevance of the data that counts. Critically analyse the reports that are being generated and ask if they’re having a direct effect on the business, whether they are used to promote best practice, or if they should be forgotten entirely.
How to measure
If you are measuring quality, or work completed in time, for example, be clear. Remember, the report is not an end in itself. With quality, if there is a problem with the job, develop a feedback system that will enable you to highlight where the problem arose. If this is a regular occurrence, then find out where it first started. Then focus on how you are going to rectify it so that it will not happen in the future. A tool that can be used is the ‘5 whys’ - keep asking why the problem occurs. It might not be the obvious. Spending time working through the incident will lead you to the actual source of the problem.
Process not the person
After you have decided what to measure, why and how you are going to measure it, the next step is implementation. The temptation is to measure the person - how fast are they working, how successful are they in meeting deadlines etc. However, in order to get staff involved and gaining accurate data, focus must be on the process of the job. By looking at the processes within your business and focussing efforts to improve these, the blame culture and often the secrecy of measurements, can be removed. The staff involved can be encouraged to suggest improvements to the process, not their performance.
This has to be very clear and specific, not only what data is needed, but where the data is collected. If you are measuring the turnaround time of a job, break this down and measure each process that it will pass through. This will enable you to spot bottlenecks. Try to create a critical path analysis, i.e. how long each process in a job takes, then compare this to the time it actually takes for a job to go through, what is the disparity, why does this exist.
Communicating the results
Effective communication is the key to improvement. Talking through the results in a monthly meeting will not enable effective management. If it is important enough to measure, then there needs to be a clear visualisation of the results. If it is looking at the sales pipeline, then this needs to be updated and owned by the sales staff. If it is the performance of a press, then get a display chart clearly showing the numbers and have regular short meetings to discuss this.
Encourage feedback at each stage. Your staff should be empowered to speak up about what improvements can be made. The staff working on the job will have ideas and suggestions. Don’t just do a suggestion box, but actively encourage improvements.
Think about how you are going to reward team efforts. This is again not about rewarding individuals but rewarding process improvements that will make a difference to how well the business as a whole performs.