Sandia National Laboratories Approach

Step 1: Describe the Outcomes Wanted

First Law of Performance: If you try to be the best at everything, you'll be the best at nothing.

Why are we doing this work? The answer is to achieve some outcome or objective (the words are used interchangeably in this process). As used here, objectives might not seem very definitive. However, they are very important because they set the direction for all processes in the system. Essentially, objectives (or outcomes) are statements of the wants, needs, and expectations of customers and other stakeholders. Objectives are the warm and somewhat fuzzy expressions that should form the mindset for all who are involved in the system.

Realize that the desired outcome sets the strategic direction of an enterprise. Consequently, tactical decisions about what the business does, how it is done, and what gets measured must relate to this strategic statement. The outcome or objective statement is a driving force for the selection of performance measures. In the end, what is done and measured somehow must connect with the desired outcome.

Step 2: Describe the Major Work Processes Involved

Second Law of Performance: People are more important than the process, but a good process is important to people.

What are we doing and how are we (or should we be) doing it? Processes and their activities are the means to achieve the outcomes---the end results---identified in Step 1. To improve the chances of meeting objectives, be sure to understand the system, that is, the operational structure that underlies the effort. This task is not so obvious. The work we all do usually is part of a larger assignment that is, in turn, part of a larger job, and so on. Quite often, the work contributes to more than one assignment or, as is the case with Environment, Safety, & Health (ES&H) initiatives, it is not always clear which work responds to ES&H requirements and which tasks are unique to building a widget. Further, the interconnections between functions are not clearly defined or understood. Such complexities make it even more important to describe carefully the system you want to measure.

Step 3: Identify the Key Results Needed

Third Law of Performance: If you can't describe it, you can't improve it.

What is produced? The "products" are the outputs or results of each process in the system. That is, the purpose of the activities in each process is to produce some result (a product or service) that is needed by other processes. Products of any given process are inputs to other connected processes in the system. Ultimately, the final products of the system are those that meet the strategic results---the objective---desired by the company.

Step 4: Establish Performance Goals for the Results

Fourth Law of Performance: If you don't have a goal, you can't score.

How will I know when I get there? And an acid test: What will be done if progress isn't satisfactory? There are many questions to ask about this step. Setting goals is very important because you can spend a lot of resources trying to meet them. You're familiar with "no pain, no gain"? The PAIN is worth it if the goals are:

  • Profitable (Is it worthwhile to improve this? Favorable Benefit/Cost?)
  • Achievable (Can it be improved? How? Who will do it?)
  • Important (Does it matter to anyone?)
  • Numerical (Without a number, you won't know when you get there.)

The GAIN is in reaching the goals, because: Goals Are Improvement Numbers.

There are various ways to determine goals. One of the best methods is to ask the customer for each of the product(s) you listed in the previous step. Determine the Customer's Satisfaction Factors (or Critical Success Factors, CSFs) that relate to each product. CSFs are the few key things that must be right for the process to be successful in the customer's view.

Be sure to differentiate among lofty goals, stretch goals, and realistic goals. It is best to establish realistic goals---those you have a decent chance to reach---and, after reaching them, establish new ones.

Step 5: Define Measures for the Goals

Fifth Law of Performance: Measuring the activity usually improves the activity, but not the result.

What can you use to track progress? Measures are descriptions of the items to be monitored. At this stage, measures should be described with relative terms like "percentage of the market" and "average prices."

While there is no specific formula for selecting performance measures, there are some characteristics that are typical of the good ones. They:

  • Reflect results, not the activities used to produce results
  • Contain normalized metrics for benchmarking
  • Are practical and easily understood by all
  • Provide a continual self assessment
  • Relate directly to a performance goal
  • Provide a benefit that exceeds the cost
  • Are based on measurable data
  • Are accepted and have owners

Step 6: Identify the Required Metrics

Sixth Law of Performance: If you know the score, you should be able to predict the outcome.

What specific things do I measure? Metrics---the actual measurements to make---should be fairly obvious from the descriptions of the measures composed in the previous step. Examine the measures statements and the goals to identify the units required for each term.

 

 

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