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As published in the Fall 2001 edition of Competitive Advantage, a publication of the American Society for Quality.

Getting The Most Out Of Your Performance Measures

By Lucy Klausner, Vice President
Polaris Marketing Research Inc.

If innovation is the key to future success, today’s performance standards must be measured so staff can make continual improvements in the way they conduct business. The secret is to let measurement be the team’s idea, to choose the right measurement tool and to carefully tie measurements to performance pay.

Employee Input Creates Success

“Innovation will be the X factor of success for businesses in the next ten to 20 years. Critical here is the ability to leverage creativity so that a staff can come up with new ideas and make those ideas a reality. A lot has to be put in place, however, to create that kind of corporate culture,” Paige Lillard, Director of Business Excellence for Turner Studios in Atlanta, told participants at the American Society for Quality’s 10th Annual Service Quality Conference. 
There must be multiple feedback loops in place to maintain open channels of communication and encourage staff members to continuously improve their performance. 
Turner Studios follows the Baldrige criteria to help focus efforts on creating synergies between employees and the measurement programs used to understand how their performance impacts daily operations. That’s where carefully planned and communicated incentives become critical to encouraging employee ownership of process improvement.

Figure 1: Baldrige criteria framework for performance excellence

As anyone who’s put a measurement program in place can tell you, non-financial performance measures can backfire if they aren’t carefully thought out. Everyone’s encountered the salesman who tries to skew the results by urging his customers to give him all high marks when they are surveyed about his performance.

“It happens all the time and that’s why, sometimes, the measurements that come back are just not helpful to the organization,” Lillard said. 

Sometimes, the staff doesn’t understand the relative importance of the measurement program to the overall success of the organization. Employees must recognize that their job performance in alignment with their organization’s goals is still the most important task. 
“For example,” Lillard said, “there’s the car salesman who asks a customer to fill out a survey with all top marks right then and there, while insisting that if the customer cannot give him the highest marks a discussion must take place right then and there. Not surprisingly the customer left in disgust, crossed the street and bought his car at a competing dealership. In an effort to meet measurement goals without a focus on the big picture, the sales rep ends up hurting himself and the dealership by losing the sale and potentially the customer’s future business altogether.”

In this case, the rep has lost sight of how individual performance is inextricably tied to the overall performance of the organization. Clearly, no program will be a success if performance and customer satisfaction are compromised.

If you take the time up-front in your program planning, you minimize your risk. “We’ve found that the secret to developing a useful performance measurement system is threefold: get staff commitment to ensure the staff understands the purpose of the measurements, choose the right tools, and carefully tie performance pay to the measures,” Lillard said. 

 

Educate, Plan and Then Implement

“To get a jump start on staff commitment, let it be the team’s idea. First educate them on the big picture. Ask them to identify the value that your organization provides to customers and stakeholders. Then, have them think about how they would know if they were doing a good job at providing that value.” she said.

The first step, then, is to ask what criteria determines success. Next, it’s critical to know what information will tell you whether those requirements have been met.

“Once the staff understands the business and knows exactly what they’re aiming for, then they can really take part in planning the program and determining what they deem accurate indications of their performance,” Lillard said. “Staff members hold the key to process improvement as they are the experts in what they do every day. With their input and an honest focus on continuous improvement, the measurements that are developed should help them do a better job.”

Figure 2: Using research to become more customer focused

Choose the Right Measurement Tool

Choosing the right measurement tool can be a challenge. Methodologies include focus groups, in-depth interviews, out-bound telephone interviews, online or Web-based interviewing or interactive voice response surveys. Each method has its advantages and disadvantages depending on the nature of the group being surveyed.

“When developing a survey measurement program – whether it’s customer satisfaction or employee satisfaction – I highly recommend you have an expert to help you navigate the waters,” Lillard told the ASQ conference participants. “There are numerous tools available and the best way to choose the most appropriate one is to work with professional researchers.”
Some of the key elements that drive methodology choices are the length of the survey; the audience; the level of anonymity or confidentiality; the desired timeliness, cost and accuracy of the results; and the need for quotas or forced representation of various customers groups.

Tying Results to Practical Business Practices

Ideally, research is developed as a way to improve some process or outcome. This can be training, employee or customer retention, sales, profitability or performance management. Yet, the information obtained from the research does little good unless it is thoroughly communicated to those who need it. So, for a program to be successful, the people who own the process need to be involved in both planning what gets measured and communicating the results.

Ensuring that your research gets used is also an important part of the development process. Utilizing the results depends, often, on whether individual pay raises are based on the effort. When compensation depends on staff members reaching their individual goals, and those goals are tied to department and overall company goals, then what gets measures actually does get done.

This is particularly true, Lillard said, when “measurements are seen by the staff as a support tool to enhance their jobs rather than a punitive approach to improving performance. Because now you can boost innovation and creativity.”

Good leadership provides the opportunities for creative solutions to surface. To do this, leaders publicly recognize creative solutions as success stories and develop reward programs to encourage staff input. And top management makes all this happen by rewarding the managers that have the most innovations or improvements in their area.

“The future depends on our ability to continuously improve,” Lillard said. “It’s change management. Nobody can simply maintain job performance anymore. If someone thinks they can continue on exactly as they are, doing in ten years exactly what they’re doing today, they are mistaken. The organization as they know it today may not be around anymore. If we can’t do the job at a better price than our competitors with equal or better quality, someone else will be doing it.”

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Reprinted with permission by Competitive Advantage, Fall 2001, a publication of the American Society for Quality.

Lucy Klausner is a former vice president of Polaris Marketing Research Inc. For further information, contact Polaris Marketing Research at 404-816-0353. Polaris is a full service marketing research firm, headquartered in Atlanta, specializing in customer satisfaction and lost customer research.