Managing performance is much more than just measurement

Long ago, a wise and profound person coined the phrase you can't manage what you don't measure. Although I suspect I heard that phrase even before I studied work measurement at Georgia Tech, I think about this simple principle now more than ever.

For many operations managers, pre-2001 challenges often involved balancing the competing forces of growth against a lean supply of labor. As economic conditions took a dive during the past four years, however, the challenge quickly turned to one of managing costs downward against shrinking volumes. Too many companies paid a painful price for not being prepared with the capability to meet this challenge.

My partner, Bruce Strahan contends that as we begin looking closely at why an operation is being run with too many people, or too much inventory, or too many trucks, we will almost always find two common causes:

1. Supervisors and middle managers lack proper training in the basic techniques of quantitative management
2. The right operational performance data, at the right levels of detail, are not readily accessible

If this describes any part of your organization, where should you begin?

Developing Managers of People

Without properly trained mangers, having good data is irrelevant … great data in the hands of someone who doesn’t understand or appreciate it is either dangerous or a waste of effort. Conversely, a manager enlightened in the basics of quantitative management will begin working to overcome gaps in data availability.

Training your front line supervisors and managers on the basics of quantitative techniques doesn’t have to be huge undertaking. But it should include basic and ongoing exposure to topics on how to measure, how to interpret results, how to report, and importantly, how to “coach” improvement.

Bottom line - unless you have a plan to address this deficiency, then you probably shouldn’t spend any more money and time gathering data. At best, that investment will have a short-lived benefit. At its worst, it will frustrate higher-level managers who see the data, but no signs of improvement.

Defining the Right Performance Data

This is one of the toughest parts of the problem, and of course is unique for each environment. Bruce offers these broad guidelines as starters:

• Defining the right level of performance measurement detail requires getting to a level where the process attributes are reasonably common, e.g. a “lines picked per hour” measurement will be more useful if separated by pallet, case and each picking.
• In any time-based measurement, make sure the time denominator is accurate. Operations frequently move people from their assigned job without moving the hours, biasing the output ¸ time statistic.
• Create the ability to isolate output measures over short periods of time. We often observe short periods of time when the performance is considerably higher than the daily average. A great opportunity may exist if you can determine how to replicate the perfect conditions more often.
• Low performance is more often related to process design flaws and uneven workflow than to issues of inadequate effort and pace.
• Don’t let a lack of systems support keep you from measuring. Manually collected data entered on spreadsheets can work just fine.

It’s true that you can't manage what you don't measure. But it goes deeper than that … an effective Performance Management program involves the systematic means for measurement, setting targets and reporting results. But, it will only be effective over the long term if you have developed the measurements around your process and with your people – associates, supervisors, managers.

ABOUT THE AUTHOR

James M. Apple, Jr. is a Director in The Progress Group. Prior to co-founding The Progress Group in 1991, he was a Partner with Coopers & Lybrand's SysteCon division. During 1992-1995 he served as a Senior Systems Advisor with Vanderlande Industries, a major conveyor and systems provider in Europe.

Jim is an internationally recognized thought leader in the area of facility design and integrated distribution systems. His contributions to the improvement of distribution practices have been recognized by his receipt of the prestigious Reed-Apple Award, which is given for lifetime contributions to the advancement of the material handling profession. Jim has also received the Institute of Industrial Engineers' Facilities Planning and Design Award. He has written numerous articles and handbook chapters on warehousing and logistics operations and is a popular speaker on logistics seminar and conference programs.

Prior to SysteCon, Jim worked as an Industrial Engineer with IBM, was Supervisor of Facilities Planning for the Oldsmobile Division of General Motors and was Executive Vice President for an automotive aftermarket parts supplier. He holds B.S. and M.S. degrees in Industrial and Systems Engineering from the Georgia Institute of Technology.