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Part - II

Benchmarking Performance

Key performance indicators (KPIs) are the metrics deemed essential to understanding operational health. Measuring performance allows an organization to objectively determine what is working and what is not. In addition, by identifying successes, managers can reward and learn from best practices.

"Measurement has the power to focus attention on desired behavior and results," said Gardner. "People will pay attention when they know their job is being measured, especially if the measurement is linked to compensation." When targets are set using validated, normalized data, measurement will support a means to determine operational improvement. Of course, it is critical to tie process improvement to measures that matter to an organization. In doing so, measures can provide:

• Feedback to guide change,
• Assessment and baseline information,
• A compelling business case,
• A diagnostic tool to identify areas for improvement and set priorities, and
• A basis for communication (using a consistent definition).

Most measurement occurs at the process level, where the transformation from input (resources applied) to output (goods and services) takes place. The four main categories of metrics to assess performance at the process level are:

• Cost effectiveness (e.g., $ 6.22 per invoice),
• Staff productivity (e.g., 93 invoices processed per FTE),
• Process efficiency (e.g., 11.2 percent error rate), and
• Cycle time (e.g., processing time of 3.8 days).

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* Contributed by -
Emma Skogstad,
Courtesy: APQC (American Productivity & Quality Center)