Are your KPIs and metrics actually helping you run and grow your business? If not, you may be missing one of the eight types. Find out what they are and why they matter.
When organizations review their Key Performance Indicators (KPIs), much of the discussion is focused on financial performance. But there’s an ecosystem of performance data that can help you grow your business.
All performance starts with a process. A process is a sequence of activities that take inputs, add value in some way, and produce outputs. If the process goes well (or even sometimes when it doesn’t) – the end result is a product. The product may meet its specifications, or it may not – if it doesn’t, you’ll go back to the process and evaluate it to see if it should be adjusted to produce a better product next time. If the product doesn’t meet its specifications, you may have waste to deal with, or need to do rework.
But assume that your product is perfect. Does that imply that your performance is perfect? Not at all. You may have created the perfect product based on your criteria and understanding of the requirements, but what really matters is what your customer thinks.
As a result, the quality of your product has to be evaluated against two things: whether the customer is satisfied, and whether they’ll continue to interact with you or maybe even participate with you in promotion or brand management (engagement). Maybe you’ve just made a peanut butter and jelly sandwich that meets all specifications for composition and structure and taste -- but a customer with a peanut allergy will neither be satisfied or engaged. Or maybe you’ve added grape jelly when they really prefer strawberry. Performance from the perspective of the customer will make or break you, even if product performance and process performance are great.
Next, workforce results and leadership results come into focus. Instead of one peanut butter and jelly sandwich, imagine that you have to make 10,000 of them, before noon tomorrow. Do you have enough people to make it happen? Are they trained on the process? Can your leaders effectively convey the importance of getting the sandwiches made on time, and making sure they look and taste good? You need alignment:
- Between the workers and the leaders,
- As they collaborate to execute the process
- That produces the products
- That satisfies the customers.
All of these factors are interrelated.
But people’s tastes change, and innovation must occur even in the peanut butter and jelly sandwich market. Your strategy establishes how you want to change and grow and expand into new markets. It’s inevitable that to get to the place your strategy has defined for you, you’ll need to adjust your processes to generate new and improved products that will satisfy new customers and to keep old customers engaged. Being able to measure how well you’re translating that strategy to action, though, is a performance assessment challenge. Are you converting strategic initiatives to action plans? Are you empowering process owners to make adjustments?
Finally, all of this data that reflects performance culminates in financial and market results, driven by your products and processes, but sustained by your strategy. Most companies look at financial and market results all the time, but may not have filled in all the gaps in the other areas – making it really hard to see exactly how functions like EHSQ contribute to the bottom line.
Freeman, G. (2019). Culture of Quality: Achieving Success with Tools, Processes, and People. Intelex Insight Report. Available from https://www.intelex.com/resources/insight-report/culture-quality-achieving-success-tools-processes-and-people
National Institute of Standards and Technology (NIST). (2019). Baldrige Excellence Framework (Business/Nonprofit): Proven leadership and management practices for high performance. Available from https://www.nist.gov/baldrige/publications/baldrige-excellence-framework/businessnonprofit
Radziwill, N. (2019, October 15). EHSQ and 360-degree Organizational Performance. Intelex Webinar.
About the Author: Nicole Radziwill is the Vice President, Global Practice Leader, Quality & Supply Chain at Intelex Technologies. Before Intelex, she was an Associate Professor of Data Science and Production Systems, Assistant Director (VP) End-to-End Operations at the National Radio Astronomy Observatory (NRAO), and manager and consultant for several other organizations since the late 1990's bringing quality management to technologically-oriented operations. She is a Fellow of the American Society for Quality (ASQ) with a Ph.D. in Quality Systems from Indiana State University. Nicole serves as Editor of Software Quality Professional (SQP) journal and is a former Chair of the ASQ Software Division. She is an ASQ Certified Manager of Quality and Organizational Excellence (CMQ/OE) and Certified Six Sigma Black Belt (CSSBB).
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