 How to Increase Production, Profit and Morale - Part 4Published Date: 2008-05-11 16:04:54 WorkOnInternet.com
The introduction of KPIs in your organisation is not an easy, simple panacea that will solve all your organisational ills. It is not easy to figure out an encompassing statistic for every position in an organisation. It is even more difficult for the creative jobs. For instance in a software development company, such as mine, there are standard metrics for programmers, like number of lines of code, function points or features. Each has its liabilities. Measuring only lines of code can lead to voluminous, inefficient code. The code could easily be one tenth as long and ten times easier to maintain had the developer spent the same amount of time figuring a more concise way to accomplish it. I recall several heated discussions I had with a team who were repetitively churning out screen forms that required a day and a half to create the code to save and retrieve the data from the database. Only one developer saw the desirability of creating a data plumbing framework that reduced the time to ten minutes for simple screen forms created after that. It took quite some time to create that framework and even more to add to it as additional requirements were discovered. Computing her productivity on number of lines of code or features delivered would have made her production look abysmal yet it was a brilliant solution with fantastic long-term benefits. The framework set us up to be able to deliver far more functionality for far les cost than would otherwise have been the case. --------------------------------- Two quotes from Peter Drucker. "Management is doing things right; leadership is doing the right things." "Management by objectives works if you think through your objectives. Ninety percent of the time you haven't." Staticising the wrong things will cause problems. Don't rush into an implementation of business performance measurement without considering the focus that your staff will have as a result of the definitions of your KPIs. If you have a large, well running organisation, consider a staggered implementation so you can closely monitor each area as KPIs are introduced. Have someone keen on the success of the program look for and handle any negativity in the staff affected. Be especially alert to check for actions being dropped because "they don't contribute to the stats". It may be that the staff member does not see the relationship. It may be that the definition of the KPI does not explicitly state or even imply a relationship. In this case the definition may need to be reworded. --------------------------------- There are potential down sides to the introduction of staff KPIs in an organisation. You may get some protest at this from the people who would not want their lack of production to be exposed. I will leave you to wonder how much better off your whole team would be without the non-producers keeping their foot on the brake of organisational productivity! There may be some resistance to the idea of financially rewarding higher production. Some people do not subscribe to the concept that more output should be rewarded. The actions you take to address that viewpoint are outside the scope of this article. --------------------------------- There needs to be some element of checking in the system you establish to detect fudged, padded or downright falsified statistics. One way is to have a comparison of two or more statistics to highlight anomalies. Another is to do spot checks. --------------------------------- Hard results and products (number of widgets made) are easy to see and quantify. A slightly more difficult one is the soft results that are not easily measured without surveys. Client satisfaction is one. In areas that have a short sales cycle, repeat business may be an indicator. Percentage of clients who repurchase may be an appropriate metric. If the sales cycle is a long one, a lot of damage can be done to your company's reputation by the time that shows up in the figures. In this case an after service survey can be worth more than its weight in gold to you. --------------------------------- Remember that Rome wasn't built in a day. Despite your best efforts at cross checking that the measurement accurately reflects genuine and balanced progress towards your current strategic objectives, what seems to be a valid set of metrics at day one may very well need to have their definitions adjusted to suit the situations that crop up. New statistics may need to be added to measure progress towards new strategic directions of an organisation. Be prepared to tweak the wording as experience with them exposes any weakness or omission in their definitions. Always be alert for misdirection in the efforts of those striving purely to attain the numbers without delivering the full product. If you are implementing business performance measurements from scratch, just remember to be humble. Just because we think we've got it right it doesn't mean it is right. Just ask any software programmer or tester! About the Author: Tom Grimshaw is the CEO of Just For You Software. He can be contacted at http://www.just4usoftware.com.au" target="_blank">http://www.just4usoftware.com.au See how your business stacks up, take the tests at http://www.testyourbiz.com" target="_blank">http://www.testyourbiz.com Copyright© 2008 by Tom Grimshaw. ALL RIGHTS RESERVED. Permission is hereby granted to reprint and distribute this article in whatever legal and ethical format and fashion you care to use providing it is used in its entirety, including the copyright notice.
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