Whether you are a CEO, a quality manager or an employee on the production line of a big, medium or small company - you are all responsible. Responsible for contributing to the main objective of the company which is to provide goods and/or services per contracts and specifications, while ensuring profitability. Here are the keys to measuring success and improving performance.
1. It’s the process, not the person
Or: It’s not always the person.
Mistakes are not necessarily proportional to the seniority of the person involved. Many times, it’s a broken process or a lack of information that leads to a mistake. A CEO’s decision that’s based on incorrect or incomplete information may have the same serious implications as ones resulting from a final control operator who releases whole batches of defective parts using an obsolete SOP. Blaming someone doesn’t help here. It’s important that you focus on the process. All processes must be under control across the company. Any risk to the performance of a process is a risk to the overall performance of the company.
Defining the objectives of each process as well as establishing relevant indicators of effectiveness and efficiency in relation to these objectives is essential to improve performance.
2. Effectiveness vs. Efficiency
Effectiveness and efficiency are two separate entities. It is possible to be compliant but lack efficiency.
The processes required to achieve the company’s target must be continually monitored via key performance indicators (KPIs). The indicators are used to demonstrate that processes are in or out of control and can be grouped into those that measure effectiveness and those that measure efficiency. They sound very similar and are often used interchangeably but there’s a subtle difference.
- Effectiveness is the capability to achieve a target.
- For example, if you have two similar production lines that have to deliver together a minimum of 1000 parts per day, and they deliver 2000 parts/per day together, you can say that your production process is effective.
- Efficiency is effectiveness taking into account the resources required to meet the target.
- Looking at the example, if for any reason one of your two production lines is delivering less parts and you have to add a third one to guarantee the same quantity of parts, your process is not efficient as you need more resources to produce the same number of parts.
While effectiveness is a prerequisite to ‘play the game’, efficiency is a major factor in determining who wins. Globalisation brings many opportunities but also increased competition and so the objective is to improve efficiency without incurring additional cost, while adhering to deadlines and using the least possible resources.
3. Beware of Performance Thieves
Lack of performance can involve any of the company's processes.
Performance thieves are everywhere in a company and can impact both effectiveness and efficiency. Major performance thieves are redundant activities with no added value, carried out on a daily basis that owe their existence to incremental complexity over a number of years. The impact, both in terms of human resources and material resources, has not been evaluated by the company.
For example, consider a typical customer complaint process. The customer complaint representative will use an e-messaging system to collect complaints and a spreadsheet to track activities with several exchanges by telephone and email to obtain missing information. As the complaint is evaluated and investigated, the various corrective and preventive actions are recorded in a document and saved on shared drive and shared via email. If suppliers are involved there are additional stakeholders that must be manually alerted. The sequence of activities, the multiplication of stakeholders (internal and external) and the inefficient tools used, induce manual activities that add no value whatsoever. Clearly the performance of the process can be improved.
For many companies, it is tough to leverage those steps. Embracing change and a systematic questioning of working habits, especially if the effectiveness and/or efficiency of your processes do not meet the set expectations, is crucial. Identify and establish your processes and prioritize risks vs. objectives. Continuously and systematically evaluate processes to determine if the measurements of effectiveness and efficiency are being met. And if not, don’t blame the people, but focus on the process. All this will help you to succeed in improving performance and be on the winning side.