TABLE OF CONTENTS Traditional performance measures based on cost accounting information provide little to support organizational excellence, because they do not map process performance and improvements seen by the customer. This chapter shows how performance measurement is important in identifying opportunities, and comparing performance internally and externally. A performance measurement framework will be recommended at the organizational, process, and individual levels, plus a review system.
The Deming cycle of plan, do, check, act (PDCA) is a useful design aid for measurement systems. It will be stressed that for per formance measurement, the strategic objectives must be converted into critical success factors (CSFs), and appropriate key performance indicators (KPIs) developed.
It is often better to start with the simple measures and improve them, and the value of any measure must be compared with the cost of producing it.
The separation of process management and process performance is important and all critical parts of the process should be measured. Process owners should be involved in defining the performance measures which must reflect customer requirements.
The chapter also explains that performance review techniques, such as quality costing and self-assessment, are useful to identify improvement opportunities and motivate performance improvement. There is some discussion of the nature of the feedback to the benchmarking and strategic planning processes and how these may determine the course towards measured total organizational excellence.
Traditionally, performance measures and indicators have been derived only from cost-accounting information, often based on outdated and arbitrary principles. These...
