March 26, 2011

Metrics are all about the effectiveness of your processes. There are four key types of performance that we can focus on in this blog.

  1. Product and service
  2. Customer focused
  3. Financial and market place and
  4. Operational.

This can include focusing on for example just in time delivery, supplier and partner performance, product, service, results, steps, cycles, unit produced, units per employee/sales/invested capital, reduction in resources required, supervisory ratios, response times, levels of satisfaction or time to complete. All of which need to be benchmarked against the best in class, best in region, your competitor or ideally world class organizations so you know how well or badly you are performing! It’s all about FACT BASED MANAGEMENT not what you THINK.


Understanding your processes, measuring them and improving them is the only way you can effectively and efficiently improve the performance of your business. The problem is that so many either don’t gather any data or gather large quantities of data but don’t actually do anything with it!

Processes are used for a reason. The purpose may be for many reasons, safety, consistency, productivity but they should always be updated based on needs and changes and be appropriate. So create procedures where they are appropriate and update them when necessary. Ensure they written to the right level are clear and have diagrams or photos to help be as clear as possible, this is important for example in Scopes of Work. If the procedures are no longer relevant or a better method or process is found then update them.  Finally, don’t create process maps or documents to hang on a wall and go out of date without anyone ever looking at them. If that’s the case then save time and energy and don’t bother!

As the diagram below shows, it’s all about becoming proactive not reactive and creating integrated processes aligned directly to your operational and strategic goals.


Finally, when identifying your core processes to ensure an integrated approach it is KEY that departmental/functional silos are eliminated. If not then you are not integrated and alignment becomes a constant struggle with ongoing disconnects. This would entail marketing, sales, design, estimating, construction and warranty for example to be all involved from the start in a multi-disciplinary project team for the development, design, construction, sale and occupancy of a new home plan. This is also the core cause of conflicting metrics in which the goals of departments become at odds with each other and pitching one against the other. It is also about teamwork,  not handing off the baton at each step, if you watch the relay teams in the Olympics that’s a GREAT chance to drop the baton and LOSE ! But really this issue of integration goes back to having a strong culture and willingness to actively break down the silo walls.

To start off thinking about performance management take a look at the 2010 National Housing winners and see what made them such high performers.


NEXT TIME, the National Housing Quality Award & Self-Assessment

Denis Leonard has a degree in construction engineering an M.B.A. and a Ph.D. in quality management. Denis is a Fellow of the American Society for Quality, a Certified Quality Manager, Auditor, and Six Sigma Black Belt. He has been an Examiner for the Baldrige National Quality Award Board of Examiners a Judge on the International Team Excellence Competition and a Lead Judge on the National Housing Quality Award. A former Professor of Quality at the University of Wisconsin, he has experience as a quality manager in the home building industry as well as construction engineer, site manager, and in training, auditing, and consulting with expertise in strategic and operational quality improvement initiatives. His work has achieved national quality, environmental, and safety management awards for clients. 

Denis is co-author of The Executive Guide to Understanding and Implementing the Baldrige Criteria: Improve Revenue and Create Organizational Excellence.