Performance Measures

1. Marc Lester Jose
Laureana Veronika S. Vicedo

2. Performance Measures (PM)
• The sixth and final concept of Total Quality
Management
• It plays an important part in the overall
success or failure of a business
organization.
• Performance measures quantitatively tell
us something important about our
products, services, and the processes that
produce them.
• They are a tool to help us understand,
manage, and improve what our

3. Performance measures let us know:
how well we are doing
if we are meeting our goals
if our customers are satisfied
if our processes are in statistical
control
if and where improvements are
necessary.
1
2
3
4
5

4. As a process, performance measurement is
not simply concerned with collecting data
associated with a predefined performance goal or
standard. Performance measurement is better
thought of as an overall management system
involving prevention and detection aimed at
achieving conformance of the work product or
service to your customer's requirements.
Additionally, it is concerned with process
optimization through increased efficiency and
effectiveness of the process or product. These
actions occur in a continuous cycle, allowing
options for expansion and improvement of the
work process or product as better techniques are

5. • Production activities uses measures such
as defects per million, inventory turns, and
on time delivery.
• Service activities uses measures such as
billing errors, sales per square feet,
engineering changes, and activity time.
Numbe
r
• gives a
magnitude
(how much)
Unit
• gives the
number a
meaning
(what)

6. “Managing a business organization
without performance measures is like a
captain of a ship navigating in the middle
of the ocean without any instrumentation.
The captain of would most likely end up
travelling circle without a port of
destination, as would a business
organization.”

7. Essential Elements of Performance
Measures (by Ray F. Boedecker)
1. Objectives
2. Typical measurement
3. Criteria
4. Characteristics

8. 1. Objectives
- Performance measurements as used to
achieve one or more of the following six
objectives:
a. Establish baseline measures and reveal
trends
b. Determine which processes need to be
improved
c. Indicate process gains and losses
d. Compare goals with actual performance
e. provide information for individual and team
evaluation
f. Manage by fact rather than gut felling

9. 2. Typical Measurement
- What should be measured is frequently
asked by managers and teams.
a. Human resources
b. Customers
c. Production
d. Research development
e. Suppliers
f. Marketing/Sales
g. Administration

10. 3. Criteria
- All business organizations have
some measurements in place that
can be adopted for TQM. In order to
evaluate the existing measures or
add new ones, there are seven
criteria to be followed:
a. Simple
b. Few in number

11. c. Developed by users
d. Relevance to customer
e. Improvement
f. Cost
g. Visible

12. 4. Characteristics
- One of the seven basic characteristics is
used to measure the performance of a
particular process or function.
a. Quantity – most common measures;
refers to how many units a production or
business produces
b. Cost – amount of resources required to
produce a given output
c. Time

13. d. Accuracy – number of non-conformances
in the output
e. Function
f. Aesthetics – how the product looks, feels,
sounds, tastes, or smells and is quite
subjective
g. Service – service activity

15. Control:
- Measurements help to reduce variation
Self-Assessment:
- Measurements can be used to assess how well a
process is doing, including improvements that have
been made
Continuous Improvement:
- Measurements can be used to identify defect
sources, process trends, and defect prevention, and
to determine process efficiency and effectiveness,
as well as opportunities for improvement
Management Assessment:
- Without measurements there is no way to be
certain we are meeting value-added objectives or
that we are being effective and efficient
Why do we need to measure?

16. • The basic concept of performance
measurement involves:
(a)planning and meeting established
operating goals/standards;
(b) detecting deviations from planned levels
of performance; and
(c) restoring performance to the planned
levels or achieving new levels of
performance.

17. Benefits of Measurement
• To identify whether the company is
meeting customer requirements. How do
we know that we are providing the
services/products that our customers
require?
• To help us understand the company’s
processes. To confirm what we know or
reveal what we don‘t know. Do we know
where the problems are?

18. • To ensure decisions are based on fact, not
on emotion. Are our decisions based upon
well documented facts and figures or on
intuition and gut feelings?
• To show where improvements need to be
made. Where can we do better? How can
we improve?
• To show if improvements actually
happened. Do we have a clear picture?

19. • To reveal problems that bias, emotion, and
longevity cover up. If we have been doing
our job for a long time without
measurements, we might assume
incorrectly that things are going well.
(They may or may not be, but without
measurements there is no way to tell.)
• To identify whether suppliers are meeting
the company’s requirements. Do our
suppliers know if our requirements are
being met?

20. Malcolm Baldrige National Quality
Award (MBNQA)
• It is an award that recognizes
organizations in business, health care,
education, and non-profit sectors for
excellence in performance.
• The award promotes awareness of
performance excellence as an
increasingly important element in
competitiveness and information sharing
of successful performance strategies and
the benefits derived from using these

21. • The Baldrige National Quality Program
and the associated award were
established after President Reagan
signed into law the Malcolm Baldrige
National Quality Improvement Act of 1987
(Public Law 100-107)
• The program and award were named for
Malcolm Baldrige who served as United
States Secretary of Commerce during the
Reagan Administration from 1981 up to
his death in 1987 in a rodeo accident.

22. • The Award is the only formal recognition for
the performance excellence of U.S.
organizations given by the President of the
United States.
• Another is the Ron Brown Award for
Corporate Leadership that recognize
companies "for the exemplary quality of their
relationships with employees and
communities". It is presented to companies
that "have demonstrated a deep
commitment to innovative initiatives that not
only empower employees and communities
but also advance strategic business

23. 2. Strategic
Planning
3. Customer
Focus
4.
Measurement
, Analysis and
Knowledge
management
5. Work-
force
Focus
6. Process
Manage-
ment
7.
Results
1. Leader-
ship
Baldrige
Criteria

24. 1. Leadership (120pts)
• Examines HOW your organization’s
senior leaders’ personal actions guide
and sustain your organization’s
governance system and HOW your
organization fulfils its legal, ethical, and
societal responsibilities and supports its
KEY communities.

25. 2. Strategic Planning (85 pts)
• Examines HOW your organization
develops strategic objectives and action
plans. Also, it examines HOW your
chosen strategic objectives and action
plans are deployed and changed if
circumstances require, and HOW
progress is measured.

26. 3. Customer Focus (85 pts)
• Examines HOW your organization
engages its customer for long-term
marketplace success. This engagement
strategy includes how your organization
builds a customer-focused culture. Also, it
examines is how your organization listens
to the voice of its customer and uses this
information to improve and identify
opportunities for innovation.

27. 4. Measurement, Analysis and
Knowledge Management (90 pts)
• Examines how your organization selects,
gathers, analyzes, manages, and
improves its data, information, and
knowledge, assets, and how it manages
its information technology. This also
includes the examination of how your
organization reviews and uses reviews to
improve its performance.

28. 5. Workforce Focus (85 pts)
• Examines how your organization
engages, manages, and develops your
workforce to utilize its full potential in
alignment with your organization’s overall
mission, strategy, and action plans. The
category examines your ability to assess
workforce capability and capacity needs
and to build a workforce environment
conducive to high performance.

29. 6. Process Management (85 pts)
• Examines how your organization designs
its work systems and how it designs,
manages, and improves its key
processes fro implementing those work
systems to deliver customer value and
achieve organizational success and
sustainability. Also examine your
readiness for emergencies.

30. 7. Results (450 pts)
• Examines how your organization’s
performance and improvement in all key
areas – product outcomes, customer-
focused outcomes, financial and market
outcomes, workforce-focused outcomes,
process effectiveness outcomes, and
leadership outcomes. Performance levels
are examined relative to those of
competitors and other organizations with
similar product offerings.