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Is it ACTUALLY doing what it is supposed to? How do you know? And if it isn't, how do you know whether to adjust things, or by how much? A well designed system produces predictable results with very little variation. People understand clearly what has to be done, and they do it with reliable independence. They relate in predictable ways. They value and respect each other's roles. Almost as if they had practiced a lot. As if they played together often. There is a high level of confidence in a relaxed atmosphere. The system is calibrated. 'Stuff' is always available when it is needed. If you want to change the results, you need only adjust the system by a predetermined amount. Like adjusting diet in an athlete's training training program. Not only that, but the system recognises its own deficiencies, or improvement opportunities, and is self adjusting. Does this sound like a fairy story? It is to people who think that importing the latest technology, implementing a new measurement system or set of techniques will get them there. The 'Instant Pudding' mindset. Unfortunately, there is no short cut to continuous, sustainable improvement. Looking for Solutions Although most of us would like to manage systematically, with detailed planning for long term outcomes, continuous evaluation, and tangible interdependence between people and processes, we are unable to do so for a variety of reasons. The reasons can be collected into two main areas.
The ‘balanced scorecard’, as a derivation from the American Quality Award Criteria, is an excellent vehicle for diversifying business performance measurement from the traditional financial myopia to a more holistic view. Scorecards can be applied very specifically, or used in a more general form (eg Business Excellence Model), and can be used to benchmark performance across enterprises (to the extent that there is similarity), or over time. However, the subjective and summary nature of the method, tends to leave the score isolated from real procedures and the things people do from day to day. There is no indication of the impact of processes or relative importance of various constraints. Assessments are in many cases, applied in isolation from the detailed planning, process attributes and feedback to the people involved. Results may not be compared with expectations at the process level, and may not be presented in a manner which allows a process manager to identify the causes of the performance, and decide whether or not the variation is a result of common or specific causes. Connecting cause and effect, and hence finding tools and techniques to remedy perceived deficiencies, becomes more difficult. In other words, the scorecard does not tell us ‘Why?’ things are as they are. Earned Value Measurement Amongst all the tools for performance measurement, the Earned Value, or Project Performance Measurement discipline is the most mature. It is a specific application of Statistical Process Control. It incorporates rigorous planning and control of cost, schedule and technical performance, and combines the measurement of these parameters into a single metric. The discipline uses widely accepted operational definitions and procedures, and can be implemented using a variety of tools. It can be used in other management applications, such as the application of maintenance effort to achieve plant and equipment performance. An important feature of project performance measurement is that the metrics are derived from, and intrinsically traceable to, the causal factors. However, it could not be called a strategic planning tool for business enterprises. It was not designed for this purpose. Capability Maturity Models Capability Maturity is an expression of an organisation’s ability to deliver expected results consistently and reliably. It could be specified and measured at any level by Capability Index, a comparison of actual results to specified requirements. Because requirements can be specified at any level of production or service, the maturity model can be useful in setting benchmarks and evaluating performance in terms of what is being done. It therefore lends itself to process improvement and corporate learning. A good maturity model is not competitive, and with periodic assessment by the people engaged in the process, focuses on growth in “how well we do our work”. The Goal The goal of performance assessment is to learn from prediction and experience. Your business can grow progressively towards higher levels of Capability Maturity. But you need:
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