Section 1: Development Processes

1.0 Overview

The use of performance measures in business is hardly new. Companies have been measuring costs, quality, quantity, cycle time, efficiency, productivity, etc., of products, services, and processes as long as ways to measure those things have existed. What is new to some extent is having those who do the work determine some of what should be measured in order that they might better control, understand, and improve what they do.

This section contains information that can help an organization determine what kind of measures it needs, provide some guidance on what should be measured, and show how to set up a measuring system. Approaches used by three different sources are included. The basic fundamentals are the same in each case; however, the specific methods are slightly different. These three approaches address those who actually do the work in determining the appropriate performance measures.

The concepts introduced here apply anywhere in an organization, from the highest levels of a company down to the area where a specific task is accomplished. The elements of continuous improvement are built into the methodologies.

1.1 Performance Measurement Process

Introduction

Performance measures are recognized as an important element of all Total Quality Management programs. Managers and supervisors directing the efforts of an organization or a group have a responsibility to know how, when, and where to institute a wide range of changes. These changes cannot be sensibly implemented without knowledge of the appropriate information upon which they are based. In addition, among many organizations within the Department of Energy (DOE) complex, there is currently no standardized approach to developing and implementing performance measurement systems. As a result, performance measures have not been fully adopted to gauge the success of the various quality management programs practiced by members of the Department of Energy Nevada Operations Office (DOE/NV) Family Quality Forum.

To address these issues, the steering committee members commissioned a work group to study the development, implementation, and operation of performance measurement systems. This guidance document, the product of the work group, provides a comprehensive, step-by-step explanation of how to develop performance measurements at any level within an organization and how to evaluate their effectiveness.

Appendix A contains a glossary of terms that may be used in this guidance document. The accompanying Case Study (Appendix B) illustrates a practical example of how to put the concepts of the guidance document to use. Appendix C contains examples of performance measurements that can be considered.

The implementation of performance measurements for a specific process should involve as many cognizant employees as possible to stimulate ideas and reinforce the notion that this is a team effort requiring buy-in from all involved in order to succeed. Substantial benefits are realized by organizations implementing performance measurement programs. These benefits are realized almost immediately through an improved understanding of processes by all employees. Furthermore, individuals get an opportunity to receive a broadened perspective of the organization's functions, rather than the more limited perspective of their own immediate span of control.

As a process, performance measurement is not simply concerned with collecting data associated with a predefined performance goal or standard. Performance measurement is better thought of as an overall management system involving prevention and detection aimed at achieving conformance of the work product or service to your customer's requirements. Additionally, it is concerned with process optimization through increased efficiency and effectiveness of the process or product. These actions occur in a continuous cycle, allowing options for expansion and improvement of the work process or product as better techniques are discovered and implemented.

Performance measurement is primarily managing outcome, and one of its main purposes is to reduce or eliminate overall variation in the work product or process. The goal is to arrive at sound decisions about actions affecting the product or process and its output.

This section, along with Appendix B, is reprinted by permission of the DOE/NV Family Quality Forum.