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Your Way Through Performance Measurement
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Finding Your Way Through Performance Measurement
Tom Slay had a problem. A million-dollar donor to his nonprofit
company, Franciscan Healthcare Systems, Cincinnati, Ohio, went to receive
care at an outpatient testing center and left without service. The donor
felt the wait of 15 minutes was too long for health care assistance. Slays
boss was on the phone with a very simple question: How long do patients
have to wait, on average, to get service at our clinics? In a follow-up
call, Slay was ready with an answer, albeit the wrong one: We dont
We dont know? the CEO repeated. Maybe he wasnt
hearing right. We dont know, Slay confirmed. Tom,
I have a million-dollar donor on the other line. Isnt there any way
you can find out? What Slay needed and what the CEO soon asked him
to find, was a measurement system in which he could access that kind of
performance data: detailed and from the front line employee, accessible
and up to date and now. It was a tough bill to fill, but Franciscan was
under ever increasing pressure to fill it; the donors demand was only
indicative of the many external forces pushing for performance health care
in the 1990s.
As regional director of TQM for Franciscan, Slay needed a system that could
work with a multi-site company (Franciscan has 29 locations), and involve
all of its 7,000 employees, from the highest level of management to front
line employees. He found assistance from Tony Fink, vice president in charge
of QMAPS at Advanced Production Systems, Inc. (APS), Louisville, Ky. Fink
had been working on perfecting the type of system that could meet the demands
of a large, multi-site enterprise like Franciscans with Don Korfhage,
Trial and Error with Performance Measurement
Collecting and analyzing data is essential for making the right decisions
and taking action; finding the right way to get that data was the first
challenge for Fink and Slay. The problem with a lot of performance
measurement systems, says Fink, is that they measure the wrong
things at the wrong times. I think anyone whos been involved with
establishing proactive business systems based on current data collection
programs will tell you this. Youve got to have a finely tuned, up-to-the-minute
system based on the right indicators to make performance measurement work.
Slay likes this analogy: Imagine you are driving a car, navigating only
through your rearview mirror. The challenge is that you are moving forward,
not backward, and must determine the impending curves based on what you
see behind you. Fink calls this rear-view mirror measurement, and like other
existing performance measurement systems, its based on information
thats not useful. Other systems include ownership and isolationist
measurement. Ownership measurement is embodied by the question, What
difference does my job make anyway? Measuring only the processes you
own, without considering how they fit into the larger picture,
can ultimately inhibit high productivity.
The single-minded pursuit of one performance requirement (financial, customer
satisfaction, human resource utilization, etc.) is indicative of isolationist
measurement. Measuring only the part, and not the sum of the parts in respect
to an overall company vision, results in a distorted view of how the company
is performing. Its easy to fall into such a pattern of isolationist
measurement when team improvement goals do not clearly relate to the strategic
goals and vision of a company.
Creating an Ideal Performance Measurement System
Lets dream for a moment. Imagine that in your day-to-day operations
you know the exact cause of a failure. When something goes well, theres
a reason, and you can prove ityou have data. As a matter of fact,
the maze of factors that contribute to a desired result all fall into place
and form a comprehensible order that everyone can understand. No more what
ifs, no maybes, no guessing. You just know.
In order to achieve that kind of scenario a company needs lead indicators,
data that serves as a dashboard rather than a rearview mirror for management.
Fink and Korfhage developed such a system and were ready to try it out on
Franciscan Healthcare. The proposed system had two steps. First, translate
the company vision into success factors, focused strategies and performance
indicators. Next, apply these factors, strategies and indicators, to a technology
system that provides information on a multi-level accessible basis (think
of Franciscans 7,000 employees at 29 locations).
Franciscans Performance Measurement System
Managements objective with a performance measurement system should
� To engage each employee and communicate the companys vision.
� To access performance data in order to know whether the company
is attaining that vision.
The first step in the performance measurement framework is to translate
the company vision. The vision can be broken down into critical success
factors used to measure achievement or success. For example, a success factor
for Franciscan could be, are patients being assisted within 10 minutes of
entering our clinics?
The next step is alignment, in which focused strategies are created and
used to align the company vision with employee performance. Indicators are
translated down from the executive level to the front-line employee so that
all are focused on some form of the same goal. An example of an indicator
is response time: How long does it actually take for a patient to be assisted
in a Franciscan clinic? Does the response time correlate to the company
vision? If not, what changes can be made for improvement and alignment?
The objective is to identify a measurement system to see if the companys
vision is being attained.
Feedback and information is the third step of the performance measurement
system. This means establishing the ability to capture data in a timely
manner and communicate it. Who reports the amount of time it takes for a
patient to be assisted in the clinic? How can office procedures integrate
new technology to record this information, and can a network be created
to communicate the resulting data to other areas in the company?
Finally, a follow-up step emphasizing improvement is necessary. Why did
it take so long to assist this person? Was it staffing? Scheduling? A busy
time of day? Can customers be better accommodated based on what we now know?
Deciding What to Measure
Slay faced the possibility of analyzing thousands of indicators, so it was
difficult to decide which issues to address in his performance measurement
system. Franciscan, like other health care providers, suffers from what
pediatrician, Donald Berwick, calls Health cares excessive redundancy,
asking the same set of questions in several stages of patient assessment.
Health care also suffers from problems of oversupply of beds and physicians,
unnecessary complexity, fragmented processes, unwillingness to move forward
and expensive habits, like implanting a $5,000 pacemaker when a $2,000 one
would do the job just fine.
With all these problems to consider, how did Slay decide what to measure?
Fink recommended a balanced approach between hard and soft numbers. Soft
numbers come from measuring areas like training and employee satisfaction
(such as unnecessary complexity), while hard numbers include low cost, efficiency
and profit margin (such as an oversupply of beds). Other things to consider
when measuring performance can include: innovation, community responsibility,
corporate assets, growth and learning and quality. Slay and Fink based their
framework on the Malcolm Baldrige Excellence Criteria for 1997, which included
some of these other factors.
The Technology of a Performance Measurement System
The technology aspect of Finks measurement system truly allows it
to overcome traditional problems like rearview mirror measurement. According
to Fink, however, technology is not a solution, it is an enabler and must
be facilitated. The best thing you can do when you employ performance
management technology is to seek a balance between the technology and the
indicators you intend to measure. Are they appropriately defined? Are you
measuring the right thing? Performance measurement only really works with
a holistic approach.
The Benefits of Performance Measurement
There is a myriad of benefits to Finks balanced system of technology
and corporate vision. Compare it to other systems of measurement, including
manual accounting of performance, which is time consuming; spreadsheets,
which become disjointed when made to accommodate large, multi-level data
and individual formatting reports, which offer good reports on data, but
no alignment with company vision.
In Fink and Slays system, embarking on the process of performance
measurement requires the company to effectively translate their vision and
to define what strategies are being promoted at what levels. Integrated,
balanced indicators are essential for effective measurement, as are success
factors and focused strategies. Otherwise, each area has their own perspective
and isolationist management can result.
A performance measurement system communicates success factors and performance
indicators to all departments, workgroups and individuals. It also encourages
all employees to consider how their jobs work with others for the good of
the whole company; it allows employees to track their own data and be in
charge of their own improvement. And it helps people like Tom Slay, when
the CEO calls with a question, respond with something other than I