2. Performance Measures (PM)
• The sixth and final concept of Total Quality
Management
• It plays an important part in the overall
success or failure of a business organization.
• Performance measures quantitatively tell us
something important about our products,
services, and the processes that produce them.
• They are a tool to help us understand,
manage, and improve what our
organizations do.
3. Performance measures let us know:
how well we are doing
if we are meeting our goals
if our customers are satisfied
if our processes are in statistical
control
if and where improvements are
necessary.
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4. 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.
5. • Production activities uses measures such as
defects per million, inventory turns, and on
time delivery.
• Service activities uses measures such as billing
errors, sales per square feet, engineering
changes, and activity time.
Number
• gives a
magnitude
(how much)
Unit
• gives the
number a
meaning
(what)
6. “Managing a business organization without
performance measures is like a captain of a
ship navigating in the middle of the ocean
without any instrumentation. The captain of
would most likely end up travelling circle
without a port of destination, as would a
business organization.”
7. Essential Elements of Performance
Measures (by Ray F. Boedecker)
1. Objectives
2. Typical measurement
3. Criteria
4. Characteristics
8. 1. Objectives
- Performance measurements as used to achieve
one or more of the following six objectives:
a. Establish baseline measures and reveal trends
b. Determine which processes need to be
improved
c. Indicate process gains and losses
d. Compare goals with actual performance
e. provide information for individual and team
evaluation
f. Manage by fact rather than gut felling
9. 2. Typical Measurement
- What should be measured is frequently
asked by managers and teams.
a. Human resources
b. Customers
c. Production
d. Research development
e. Suppliers
f. Marketing/Sales
g. Administration
10. 3. Criteria
- All business organizations have some
measurements in place that can be
adopted for TQM. In order to evaluate
the existing measures or add new ones,
there are seven criteria to be followed:
a. Simple
b. Few in number
11. c. Developed by users
d. Relevance to customer
e. Improvement
f. Cost
g. Visible
12. 4. Characteristics
- One of the seven basic characteristics is used
to measure the performance of a particular
process or function.
a. Quantity – most common measures; refers
to how many units a production or business
produces
b. Cost – amount of resources required to
produce a given output
c. Time
13. d. Accuracy – number of non-conformances in
the output
e. Function
f. Aesthetics – how the product looks, feels,
sounds, tastes, or smells and is quite
subjective
g. Service – service activity
14.
15. Control:
- Measurements help to reduce variation
Self-Assessment:
- Measurements can be used to assess how well a process
is doing, including improvements that have been made
Continuous Improvement:
- Measurements can be used to identify defect sources,
process trends, and defect prevention, and to determine
process efficiency and effectiveness, as well as
opportunities for improvement
Management Assessment:
- Without measurements there is no way to be certain
we are meeting value-added objectives or that we are
being effective and efficient
Why do we need to measure?
16. • The basic concept of performance
measurement involves:
(a)planning and meeting established operating
goals/standards;
(b) detecting deviations from planned levels of
performance; and
(c) restoring performance to the planned levels
or achieving new levels of performance.
17. Benefits of Measurement
• To identify whether the company is meeting
customer requirements. How do we know
that we are providing the services/products
that our customers require?
• To help us understand the company’s
processes. To confirm what we know or reveal
what we don‘t know. Do we know where the
problems are?
18. • To ensure decisions are based on fact, not on
emotion. Are our decisions based upon well
documented facts and figures or on intuition
and gut feelings?
• To show where improvements need to be
made. Where can we do better? How can we
improve?
• To show if improvements actually happened.
Do we have a clear picture?
19. • To reveal problems that bias, emotion, and
longevity cover up. If we have been doing our
job for a long time without measurements,
we might assume incorrectly that things are
going well. (They may or may not be, but
without measurements there is no way to
tell.)
• To identify whether suppliers are meeting the
company’s requirements. Do our suppliers
know if our requirements are being met?
20. Malcolm Baldrige National Quality
Award (MBNQA)
• It is an award that recognizes organizations
in business, health care, education, and non-
profit sectors for excellence in performance.
• The award promotes awareness of
performance excellence as an increasingly
important element in competitiveness and
information sharing of successful
performance strategies and the benefits
derived from using these strategies.
21. • The Baldrige National Quality Program and
the associated award were established after
President Reagan signed into law the
Malcolm Baldrige National Quality
Improvement Act of 1987 (Public Law 100-
107)
• The program and award were named for
Malcolm Baldrige who served as United
States Secretary of Commerce during the
Reagan Administration from 1981 up to his
death in 1987 in a rodeo accident.
22. • The Award is the only formal recognition for
the performance excellence of U.S.
organizations given by the President of the
United States.
• Another is the Ron Brown Award for Corporate
Leadership that recognize companies "for the
exemplary quality of their relationships with
employees and communities". It is presented to
companies that "have demonstrated a deep
commitment to innovative initiatives that not
only empower employees and communities but
also advance strategic business interests".
24. 1. Leadership (120pts)
• Examines HOW your organization’s senior
leaders’ personal actions guide and sustain
your organization’s governance system and
HOW your organization fulfils its legal,
ethical, and societal responsibilities and
supports its KEY communities.
25. 2. Strategic Planning (85 pts)
• Examines HOW your organization develops
strategic objectives and action plans. Also, it
examines HOW your chosen strategic
objectives and action plans are deployed
and changed if circumstances require, and
HOW progress is measured.
26. 3. Customer Focus (85 pts)
• Examines HOW your organization engages
its customer for long-term marketplace
success. This engagement strategy includes
how your organization builds a customer-
focused culture. Also, it examines is how your
organization listens to the voice of its
customer and uses this information to
improve and identify opportunities for
innovation.
27. 4. Measurement, Analysis and
Knowledge Management (90 pts)
• Examines how your organization selects,
gathers, analyzes, manages, and improves its
data, information, and knowledge, assets,
and how it manages its information
technology. This also includes the
examination of how your organization
reviews and uses reviews to improve its
performance.
28. 5. Workforce Focus (85 pts)
• Examines how your organization engages,
manages, and develops your workforce to
utilize its full potential in alignment with
your organization’s overall mission, strategy,
and action plans. The category examines
your ability to assess workforce capability
and capacity needs and to build a workforce
environment conducive to high
performance.
29. 6. Process Management (85 pts)
• Examines how your organization designs its
work systems and how it designs, manages,
and improves its key processes fro
implementing those work systems to deliver
customer value and achieve organizational
success and sustainability. Also examine your
readiness for emergencies.
30. 7. Results (450 pts)
• Examines how your organization’s
performance and improvement in all key
areas – product outcomes, customer-focused
outcomes, financial and market outcomes,
workforce-focused outcomes, process
effectiveness outcomes, and leadership
outcomes. Performance levels are examined
relative to those of competitors and other
organizations with similar product offerings.
