Article 5.5

MEASUREMENT SYSTEMS THAT SPARK PRODUCTIVITY

Accounting and financial numbers are designed for paying taxes and managing cash-flow, but they are weak at helping individuals or workteams measure their accuracy, timeliness, or their customer/next-department satisfaction rates. Because of personal computers (PCs) and spreadsheet software every employee and workteam could have 4 to 10 measurements which they could track and graph on a trend basis. These "database scorecards" could make any job more interesting, challenging and innovative assuming a few things.

SOME ASSUMPTIONS ABOUT NUMBERS

1. Where we don't measure, we tend to practice wishful thinking and not notice problems until they have grown quite large.

2. If we do measure some new performance variable(s) for the first time, our selective perception can become tuned to that opportunity. We then start to learn more about the area and see new possibilities with which to experiment, so, new measurements can eventually lead to change and improvement.

3. Often what management chooses to measure, employees can improve by trading-off resources from other things that aren't measured which creates new problems; e.g., unmeasured quality can deteriorate while quantity or costs are consistently measured. To avoid tradeoff optimization, we can measure a job with a family of measurements that surrounds the performance and, if necessary, prioritize which factors to sacrifice first to last. Try to measure every job for at least the dimensions of - quantity throughput, quality of accuracy and timeliness and satisfaction ratings from whomever is to be served next.

4. The more ways we can score and follow a game or a job, the more involved and excited we can potentially become. Numbers also provide steady feedback, recognition and pressure. If performance numbers at a firm are ranked and published, those who are on top are proud and work hard to stay there. Those on the bottom can have a healthy achievement response which is to aspire to be like the best; or, they can be exposed for being the overpaid, under-performing teammates that they are. The coasters won't like the numbers published; but, any firm that cannot confront and correct the problem of achievers subsidizing the coasters will, today, lose the achievers to progressive firms and collect coasters until they liquidate the firm.

5. Because useful operational measurements for workteam scorecards may be currently buried, uncaptured, and unassembled in one report, it will take extra work to develop the scorecards. This work can be delegated to the teams starting with the most aggressive, can-do, ones on an experimental basis. By succeeding with the most progressive teams, we can become process-smart and have testimonials to draw upon as we proceed to the less progressive.

6. Tracking daily, weekly, etc. totals of any given measurement on a trend line basis is critical for a number of reasons. Referring to the diagram below, which graphs a performance variable over time, we can appreciate that:

a. The baseline average for any variable is apt to remain flat unless successful productivity experiments permanently improve matters or a rising economic tide makes everyone look better.

    1. As measurements bounce around within a "standard deviation zone" false heroes and goats of the month are often created. On upticks we often cheer and take credit for the good news, while we tend to ignore, excuse, and not discuss the downticks. Listening to the background noise at most firms, we would think that things are improving when they are remaining at a status quo. In the absence of some conscious change in how things are done, there can be no sustained improvement in the numbers unless external forces do them for us. Trying harder programs can lift numbers for a few weeks.

 

7. If a job-area has problem-solving, decision-making and customer interaction content which are all non-routine, then simple input/output measures have less significance and customer satisfaction ratings become more critical.

DEVELOPMENT GUIDELINES FOR DATABASE SCORECARDS

PC literacy among the troops is not necessary. One person can set the format for the scorecard on a spreadsheet program. With some coaching, each team member can take a turn at gathering, entering, crunching, graphing, and interpreting data. The average person gets quite excited about mastering a little PC fluency.

In choosing which things to measure, let the team involved brainstorm about measurements for quantity, quality, timeliness, and customer satisfaction. Encourage teams to keep measurements initially to about 4-6 and add more later. For quantity measurements, for example, one end-point number can do for many upstream statistics which feed into the final result number.

Test the measurement choices against the questions of: how would this improve decisions?; and how would this data lead us to new insights and action instead of just being interesting?

Emphasize team measurements over individuals' results whenever possible; otherwise, there might not be much teamwork. Team results can initially be published while individual rankings might be eased into semi-public display.

Plan on logging in data points for at least 18 months, so that average trend lines for six months can be compared to the same six months the year prior. In spite of economic news practices, comparing a monthly average versus the same month a year earlier is foolish, because reliable averages don't happen within one month or even one quarter.

OVERALL CONSIDERATIONS

Good scorecards for workteams can be a spark for growing productivity only if other prerequisites exist. A firm must: share all the general financial numbers with the employees: make them all responsible for growing productivity to finance their collective compensation expectations; give the employees some discretion in trying productivity experiments which will lead to "good mistakes" and eventual successes; and not punish good mistake failures. Employees will, otherwise, be: initially intrigued with the numbers; have their own theories on how to improve things, but take no initiative; and eventually be bored with and resentful about flat trend lines which reflect their "lack of initiative" in management's eyes.

Many scorecard and financial numbers can be lifted with significant improvements in leadership as well as better focused and disciplined corporate strategy. Assuming no changes in those two factors, the biggest improvement in workteam numbers are apt to come from re-thinking the systems that govern the group. Smaller, but psychologically important, improvements will come from: improving the aptitude and horsepower of new hires; the education of team members; and improving their tools for doing the job.

CONCLUSION

"Feedback is the breakfast of champions" and it can make any game or job more interesting. Most jobs need to be surrounded by different dimensions of measurements and tracked on an average trend basis to have something to experiment against to see if sustained improvements from successful innovations do result.

Database scorecards are powerful tools, and they imply that everyone must be responsible for growing productivity which is the case today. This type of tool, however, is like a match to light a bonfire. If management does not build a perfect bonfire by addressing the prerequisites, then the match will burn out uneventfully.

Merrifield Consulting Group, Inc., Article 5.5