A quality system is composed of the standards and procedures that are developed to ensure that the level of quality desired is repeated in every unit of a product or service. This portion of the quality system is very concrete and can be measured and managed. Before you start, your organization should establish a core team to carry the performance system design process forward. The eight steps of the design process are:
1. Understand and map all business structures and processes. This forces employees involved in designing a performance measurement system to think through and understand the entire organization, its competitive position, the environment in which it operates, and its business processes. This will also allow for complete understanding of customer touch points and how the different operations in the organization affect the customer’s perception of quality. See Figure 14.1 for an example of a process map.
2. Develop business performance priorities. The performance measurement system should support the stakeholders’ requirements
from the organization’s strategy through to its business processes. This order of priorities must be in place well before the process enters the actual design phase.
3. Understand the current performance measurement system. Every organization has some kind of measurement system in place. For this reason, there are basically two ways to approach the design and implementation of a new performance measurement system. Either you can scrap the old system and introduce a new one as a replacement, or you can redevelop the existing system. Both approaches can work, but the former approach is more likely to lead to trouble. People will cling to the old measurement system and either use both systems simultaneously or use the old one and simply go through the motions of the new one. You can eliminate this outcome by taking the second approach.
4. Develop performance indicators. The most important element of a performance measurement system is the set of performance indicators you will use to measure your organization’s performance and business processes. This is the point in the design process where the top-down approach meets the bottom-up design approach and where the broad masses of the organization become involved. The purpose of this step is to develop the performance measurement system with an appropriate number of relevant and accurate performance indicators.
5. Decide how to collect the required data. Developing perfect performance indicators that will tell you everything you ever wanted to know about what goes on in your organization is one thing, but being able to collect the data required to calculate these performance indicators is a completely different matter. This issue must initially be addressed during the development of the performance indicators so that you avoid selecting those that can never actually be measured. There will be trade-offs of cost and time versus the benefits of collecting data, but a likely middle ground between perfect data/high cost and no data/no cost will be found.
6. Design reporting and performance data representation formats. In this step, you decide how the performance data will be presented to the users; how the users should apply the performance data for management, monitoring, and improvement; and who will have access to performance data. After you finish, you should have a performance measurement system that has a solid place in your organization’s overall measurement based management system.
7. Test and adjust the performance measurement system. Your first attempt at the performance measurement system will probably not be perfect—there are bound to be performance indicators that do not work as intended, conflicting indicators, undesirable behavior, and problems with data availability. This is to be expected. In this step you should extensively test the system and adjust the elements that do not work as planned. 8. Implement the performance measurement system. Now it’s time to put your system to use. This is when the system is officially in place and everyone can start using it. This step involves issues such as managing user access, training, and demonstrating the system.
This is not an absolute process that needs to be followed to the letter in order for it to work. In some cases, one or more steps may be unnecessary; in others, additional steps may be needed. It’s up to you to make the necessary adjustments to the process to maximize the probability of the system’s success.