Monday, December 13, 2010

Measuring System Performance

With the end of the year approaching organizations are working on coming up with next years plan.  Hopefully Lean organizations are using Hoshin Kanri or policy deployment to shape their future.  Nonetheless, next years objectives will certainly include performance measures.  I am going to highlight some thoughts on good measurement systems in this weeks Daily Tips on A Lean Journey's Facebook Page.  In the mean time I will start the week with a look at how to define performance measures.

It is useful to start with question "what is a performance measure?" 

Andy Neely of London Business School proposed these definitions of performance measurement, a performance measure and a performance measurement system:

Performance measurement can be defined as the process of quantifying the efficiency and effectiveness of action.”

“A performance measure can be defined as a metric used to quantify the efficiency and/or effectiveness of action.”

“A performance measurement system can be defined as the set of metrics used to quantify both the efficiency and effectiveness of actions.”

An effective measurement system is one of the most powerful tools for change.  The measurement should:

- Provide short-term indicators of problems - and no problems.
- Be part of a feedback or capability of the process or people.
- Focus on improving performance.
- Be capable of being acted upon.

Having identified what is meant by performance measurement, the next post will cover how to check out your performance measures for effectiveness.

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