If your organization is growing and
if you find yourself a little bit lost about what matters and what does not matter for the success of your operations, you may want to continue
reading this post. A simple way of knowing if your business is performing well is by
setting up simple-to-follow performance indicators (PI). A set of PIs can
provide you with a brief and relevant summary of the main metrics of your
organization’s performance. We have put together a list of ten simple steps that
you can take today in order for you to start managing your business with a more
systematic approach.
1. Think
about 2 or 3 (no more) metrics that are truly important to your business. They can
be net margin, safety incidents, return on investments (ROI), maintenance
costs, units produced/hour, waiting time, and so on.
2. Ask
yourself if you can truthfully measure these indicators on a certain frequency
(if not, go back to step 1 and do some more thinking, if yes, move onto step
3).
3. List
these metrics on a sheet of paper and add some columns to their right side: UOM
(unit of measurement), frequency (daily, weekly, monthly), accountable (the
person who you are expecting to report these numbers), and goals (it can be the
goal for the year or a yearly goal broken down into 12 months - if so, you
should also have 12 columns for the 12 months of the year.
4. By
now, you should have a pretty good idea of what your “Performance Indicators Dashboard”
looks like. Transfer all of that info to an Excel spreadsheet (or another application
such as Microsoft Word but for calculation purposes and just overall
workability of numbers, Excel is the best option).
5. Create
boundaries - signals that will give you a quick visual summary of the current
statuses (e.g. green for on pace/good results, yellow for getting out of hand, and red
for out of limits/undesirable results). Tip: you can use font TQC to visualize nice “traffic lights” for your dashboard.
6. Play
around with the numbers and make sure that your boundaries have been set
properly. To make your "lights" become green, yellow, or red based on your numbers, please access the following link to learn more about creating conditional formatting in Excel: http://msdn.microsoft.com/en-us/library/office/bb286672(v=office.11).aspx
7. Communicate
the process and expectations to the business leaders who will be in charge of
the reporting task. Expect that they cascade the communication down.
8. Put
the practice in place, starting today, and make sure that you set up a 30-minute
conference call with the involved employees to discuss the results of your performance indicators, especially
the red lights.
9.Follow
up on the undesirable results through a simple 3W questionnaire: what, who, and
when - these should be the corrective actions to undesirable results.
10. Constantly improve
the accuracy of the data utilized for your PIs; here, more than never, it’s garbage in, garbage out.
There is still a lot of work that
can be done on performance indicators. For example, you may want to develop a standard
for each PI in which you specify the source of information, the frequency, the accountable for the data collection, the formula to be used, and all other
pertinent information required to develop a meaningful set of PIs.
We are available to help! For further information on this approach and other programs eZSigma offers, please contact us and we will gladly discuss the right options for your needs.
