Example 3: Eastman Kodak Safety Performance Index

The Eastman Kodak company uses an interesting and effective methodology for creating performance indexes. Basically, the method used by Kodak involves mapping the range of performance for several metrics onto a fixed scale, applying a multiplier to the value extracted from the scale, and adding the results together. An example of how this index is computed follows (this example has been adopted from Kodak' handbook for Safety Performance Indexing and modified slightly for the purposes of this example).

Developing a Performance Matrix

The first step in the Kodak process involves developing a performance matrix that shows goals and ranges of performance for several metrics. Figure 1.8 is an example of a performance matrix.

At Kodak, developing this matrix is a 10-step process:

Step 1: Select indicators that are related to and that measure progress in the area for which you intend to develop an index. Kodak developed a Safety Performance Index. In this example, we will use the Kodak method to develop a Conduct of Operations Index. Remember to ensure that the performance indicators that are chosen are clearly defined. Once the appropriate performance indicators are chosen, list them down the left column of the matrix (see Figure 1.8).

Step 2: For each of the component performance indicators, determine its relative importance and the impact that it should have on the index. The total of the weight for the constituent performance indicators must add up to 100%. Write the value of the weights in the "Wt." column. (See Figure 1.9).

Step 3: Establish the baseline value for each performance indicator. In the matrix, level 7 represents the baseline. A good baseline might be a four-quarter average.

Step 4: Determine a goal for each measure. In the matrix, performance level 3 represents the goal.

Step 5: Determine a "stretch goal" for each performance indicator. This goal should be attainable, but only if your facility performs superbly. In Figure 1.10, the stretch goal is represented by level 1 in the matrix.