Attributes of Good Metrics

The choice of what to measure is crucial to the success of the organization. Improperly chosen metrics lead to suboptimal behavior and can lead people away from the organization s goals instead of towards them. Joiner (1994) suggests three systemwide measures of performance: overall customer satisfaction, total cycle time, and first-pass quality. An effective metric for quantifying first pass quality is total cost of poor quality (later in this chapter). Once chosen, the metrics must be communicated to the members of the organization. To be useful, the employee must be able to influence the metric through his performance, and it must be clear precisely how the employee s performance influences the metric.

Rose (1995) lists the following attributes of good metrics:

• They are either customer centered and focused on indicators that provide value to customers, such as product quality, service dependability, and timeliness of delivery, or they are associated with internal work processes that address system cost reduction, waste reduction, coordination and teamwork, innovation, and customer satisfaction.

• They measure performance across time, which shows trends rather than snapshots.

• They provide direct information at the level at which they are applied. No further processing or analysis is required to determine meaning.

• They are linked with the organization s mission, strategies, and actions. They contribute to organizational direction and control.

• They are collaboratively developed by teams of people who provide, collect, process, and use the data.

Rose also presents a performance measurement model consisting of eight steps:

Step 1: performance category This category is the fundamental division of organizational performance that answers the question:...