How to measure Quality and Performance
There is only one way to measure if a company has had success or not. To measure the effectiveness and efficiency of an organization’s operations we use “Performance Metrics.”
For example, if you want 10% of sales to be generated from a particular channel, we have to continually measure revenue from various channels to be able to determine if your goal has been met or not. You can use special software to track visitors to your web site. A strategy is the means to achieve an objective, where Performance Metrics must also be specified in the strategy so they can co-operate together. The strategy is just a framework that provides guidelines so action plans can be developed.
So What?
We try to find defects in a company. A defect is best described as anything outside customer expectations, which we convert into Sigma allowing us to compare the company’s performance with its customers. It is a statistical analysis that eliminates “fluff” found in other quality strategies. It is used for business transformation, strategic improvement and narrowly focused problem solving technique. Performance Metrics must measure effectiveness in two ways. First, understand the vision. Second, it must communicate to your employees what the results are and how valuable they are. This will allow your employees to be motivated to make decisions that lead to desired outcomes. So, involve your employees in the decision making process.
There are several Performance Metric systems. We will explain two of the most common:
Balanced Scorecard and Six Sigma.
1. Balanced Scorecard
The Balanced Scorecard is extremely popular and flexible. It focuses on a firm’s long-term sustainability rather than the short-term. We link strategy to measurement and by asking firms to revise their vision and their critical success factors, we can use performance metrics in four areas:
1. Customers
2. Internal
3. Innovation and Learning
4. Financial (Return on Investment)
Benefits to you of Balanced Scorecard and Six Sigma
- It helps your firm obtain timely information to update its strategy
- We can see how each part of your firm contributes toward accomplishing selected goals
- Helps your firm leverage their relationships with partners and suppliers
- It goes beyond financial metrics
- It creates a long-term perspective for company sustainability
- Forces your company to decide what is important and
- How to translate those decisions into measurable outcomes that your employees can understand
- Enhances your communication within your company
- Supports your employee evaluation
- Allows you to select the most appropriate metric to measure goals, strategies, industry and specific visions
2. Six Sigma
Six Sigma is a data-driven business concept that answers customer’s demand for high quality and near perfect business processes (Source: Strauss, e-Marketing 3rd Edition 2003). We achieve this by analyzing the problem from the customer’s point of view, seeking the cause of the problem. It can be in manufacturing, sales, marketing, service, design etc. |
