Session B
Monitoring and
improving performance
In this session we are going to see how you could actually set up a performance management system for your own department, and what you might do with it once it was in place.
Here's an outline of a series of steps to follow in establishing and operating your own system.
Set performance standards
Decide what you need to measure the performance of, then define what is meant by ‘performance’, and what is ‘acceptable performance’.
Monitor performance
Devise ways of measuring performance that show you whether or not you are performing to the standard expected. Create a system to collect the information you'll need to calculate the measures, and then put it into practice: collect the information and calculate the measures on a regular basis. Finally, report them to the people who need to know.
Improve performance
Following performance reports, take appropriate action so that you maintain, and hopefully improve, performance in the future.
A performance ‘standard’ is a performance measure that says a particular level of performance should be achieved.
If you heard something described simply as ‘standard’ you would expect it to be no better or worse than another, acceptable example of the same thing. If you heard about ‘high standards’, you would expect something better than what is usually expected.
Setting performance standards is a three-part process.
Define what it is you are measuring.
Find out what is acceptable.
Establish a level of performance as the standard.
2.1 What are you measuring?
So what ‘performance’ is it that you will be measuring? To answer this question you first need to consider the purpose of your part of the organization – that is, what it actually performs.
Activity 26
What is the purpose of your part of your organization? Avoid the temptation to go into detail: define it as simply as you can.
A short and simple phrase or sentence will do as an answer. Here are some examples I've thought of.
We assemble the engines that form part of products X, Y and Z.
We answer general correspondence and deal with telephone calls from customers.
We create artwork and computer graphics for company publications.
We process claims on household contents insurance policies.
2.2 What is ‘acceptable’ performance?
We saw earlier that performance means different things to different people.
Activity 27
Who are your work team's particular stakeholders?
What aspects of your work team's performance matter to them?
Here are some possible stakeholders for an individual work team that I have thought of. Perhaps you came up with the same ones?
Customers
Even if you do not deal directly with the people who buy your organization's products and services, you still have customers in the sense that someone (an internal customer) uses the output of your department in the next stage of the process.
Whether they are internal or external, customers are concerned that your output should be delivered when they need it, and be free of faults. That is their standard for you.
Senior managers
They expect to see your department comply with the organization's rules and policies, such as hours of work (‘all staff will work from 9 to 5 and take one hour for lunch between 12 am and 2 pm’).
External stakeholders
They may be involved, for instance if your work requires you to follow certain rules and procedures prescribed by the government. A payroll department is a good example: they have to follow rules and meet deadlines set by the Inland Revenue, to the letter.
Your colleagues and you yourself
You are all internal stakeholders, of course, and you will be concerned about matters such as levels of pay, how enjoyable and absorbing the work is, opportunities for career progression, and so on.
Individuals have different standards for these things.
2.3 Setting standards
Armed with as much information as you can glean from stakeholders, you can now begin to set standards.
Wherever you can, quantify the information. For instance, if customers expect ‘fast’ delivery but don't specify what they mean by ‘fast’, you can find out how quickly your department delivers on average.
You then have a choice of whether to use that average, based on current working conditions, as the initial standard, or whether to be more ambitious.
Attainable (or ‘expected’) standards are based on the premise that work will be carried out efficiently, equipment will be properly operated and materials will be properly used. An allowance can be made for inefficiencies if there is no way of avoiding them, given current working conditions.
Ideal standards are based on perfect operating conditions: no inefficiencies, no lost or wasted time, no machine breakdowns or computer crashes, no wasted or spoiled materials.
We'll come back to this choice later. For now, assume that we have decided to be realistic and set standards that we know are attainable.
A call centre has the following information about how long 10 examples of a particular type of customer query took to be resolved during a period of one week.
| Call | Minutes |
| 1 | 1 |
| 2 | 5 |
| 3 | 6 |
| 4 | 7 |
| 5 | 9 |
| 6 | 6 |
| 7 | 8 |
| 8 | 5 |
| 9 | 6 |
| 10 | 7 |
The call centre has set a performance standard that says that 95% of all such queries should be resolved within the standard time set, which is six minutes.
How many times did the call centre meet the standard (i.e. the query took the standard time or less to be resolved).
Did the company meet its standard during the week in question?
Unfortunately only six out of the ten calls were completed within the standard time. This is 6/10 × 100% = 60% of calls, so the company is failing to achieve its standard of 95% by a long way.
In theory you could monitor performance simply by asking your stakeholders now and then to tell you what they think, but this does not give you much control over what is going on.
A much better approach is to record relevant activities of your department as they happen, and then analyse and review the performance measures on a regular basis.
Computers or computerized machines can collect a mass of data about how much time and other resources are used on any task. But to analyse such data requires your time and effort.
The issue of collecting information and analysing it is covered in depth in other workbooks in this series: Obtaining Information for Effective Management and Solving Problems and Making Decisions.
Indeed, the cost of collecting the information required to produce a performance should be carefully weighed up against the benefits of having that particular measure.
3.1 Measuring performance against standards
Let‘s say your customers expect fast delivery of your department's output, and you have calculated that on average it takes two days for your work team to produce the output. You are thinking about using this as the standard.
It is only an average figure, so sometimes it must take longer than two days, and sometimes it must take less. Really, it would be better if the performance standard was: ‘guaranteed delivery within no more than two days’, but to achieve this, the work of your department probably needs to be analysed in more detail.
You need to identify all the processes and inputs involved in performing tasks, and the relationships between them; you need to find out what is normal; and then you need to use measures to see where failures and errors occur.
This may not be information that you calculate on a regular basis, but information that you could calculate if there has been some variance from expected performance, and you need to interpret the numbers and investigate the cause.
The measures you might calculate to do this for a particular area of performance will often combine and compare measures from the chart shown below.
| Common measures of areas of performance | |
| Area of performance |
Common measures |
| Error or failure | Absenteeism/sickness rates Complaints received Defects detected Incidents of equipment failure Time spent waiting or time late Miscalculations made Misinformation given Returned goods received Incidents of being out of stock Claims under warranties |
| Time taken | Measured per second, minute, hour, day, week, month or year Measured per shift or cycle |
| Quantity produced etc. | Range of products made Number of parts/components held Units produced Units sold Services performed kg/litres/metres of product produced Number of documents produced or processed Deliveries made Enquiries received |
| People's activities | Number of employees Range of employee skills Number of repeat customers Size of competitors Range of suppliers |
You can use this chart in a number of ways to create a very large number of performance measures, simply by inserting the word ‘per’.
Compare items in different columns, for instance ‘Absenteeism per employee’ or ‘Equipment failures per day’.
Compare items in the same column, for instance litres (of some resource) used per unit produced’. ‘Documents produced per service performed‘ might show you that a particular task seemed to generate an unusually large amount of paperwork: something worth investigating by looking at that task and the associated documents themselves.
You can also combine elements in more elaborate ways: for instance you might be interested to know the number of units sold by a particular employee per month compared with the total number of units sold by all employees in that month.
Activity 29
|
This activity may provide the basis of appropriate evidence for your S/NVQ portfolio. If you are intending to take this course of action it might be better to write your answers on separate sheets of paper. |
The common performance measures chart that we have just seen is not all-inclusive of course, so you need to make it more useful to you in your work.
Adapt some of the common performance measures so that they are relevant to your work team: for ‘range of products’, for instance, you could substitute specific products made or services provided by your work team. You will need to delete some items as not being relevant.
Using your personalized chart, devise at least four performance measures that might be useful to help you manage your department.
Explain why they might be useful.
Explain how you would collect the information relevant to your performance measures.
Obviously I don't know which measures would be useful in your situation, but here are some suggestions, showing ways of using the chart.
‘Miscalculations per 1,000 invoices’ would show how accurately someone in the Accounts Department was working.
‘Defects per item returned’ may show that poor-quality goods are being sold or (if there are no defects in returned goods) that customers’ real needs are not being properly identified.
‘Misinformation per 100 customer enquiries’ may show you how knowledgeable and well-trained your customer service staff are.
‘Customers waiting per minute’ shows you how long the queue in your shop is.
3.2 Being realistic
Of course, one way of dealing with a failure to meet a performance standard is to set a lower standard!
Obviously that is not desirable in the long term, but there may be occasions when there is no other option because of matters that are outside your control.
For example, if your department requires a certain number of highly-trained people to operate effectively and there is a sudden flu epidemic, the chances are that you will fail to meet your normal standards for a time.
The best thing to do is to be totally open about it. At the earliest opportunity, tell everyone who relies on your department's performance that you won't meet your targets. Then they have the chance to make alternative arrangements or, if none can be made, to alert their own customers to the fact that things have been held up.
There are other situations in which standards might be revised. For example, the standard time for doing a task using a certain piece of equipment might change when a new version of the equipment is acquired. It would be meaningless to compare current performance using the new equipment with the old standard.
On the other hand, if you change standards too frequently, people might think you are constantly ‘moving the goal posts’. Your staff will not be motivated to perform well if they can never reach the standard required. This is the problem with so-called ‘ideal standards’, mentioned earlier.
I would say that you should adjust standards when changes of a permanent nature occur, but not in response to temporary ‘blips’.
3.3 Performance reports
Performance reports should be produced and examined as often as they are needed. Your managers might want to see a report once a week or once a month, because they assume you have everything pretty much under control.
You might want to see a report at the end of each day, or perhaps more often, to make sure that you really do have things under control.
There is no prescribed format for a performance report: it will be different for each organization and each part of the organization.
You may be able to call up a detailed list of performance measures on a computer screen and just glance through the latest figures to reassure yourself about specific issues.
Your manager is not likely to want to see a report that goes into a great amount of detail, especially about things that have performed as expected, as most generally do. But he or she will be interested in ‘exceptions’ – the one or two things that went wrong – and you may well be required to add comments explaining why those things went wrong, and what you have done about it.
Activity 30
Here is an extract from the performance information available about the work of a sales order processing department. There are 12 people in the department and they work a seven-hour day, five days a week, mostly dealing with orders submitted on paper, though they also deal with some telephone orders.
| Expected | Actual | |
| Staff-hours available | 420 | 440 |
| Orders processed | 1500 | 1450 |
| Calls received | 120 | 130 |
| Returns processed | 15 | 10 |
As a general rule ‘exceptions’ are only reported to senior managers when the difference from the expected or target figure is more than 5%.
Which of these figures might senior managers be most interested in, and why?
If you calculate the percentages, you'll find that calls received ((130–120)/120 × 100% = 8.3% more) and returns processed ((15–10)/15 × 100% = 75% less) were both outside the limit. On the other hand, there was not an unmanageably large number of extra calls, and it is good news that there were fewer than expected returns (although actually there might have been many, but they did not get processed at all). Also, both are outside the control of the work team being measured, so the manager is unlikely to be greatly interested.
Do you agree that the most unusual thing in this report is that there were about 4% more staff-hours available than there should have been (12 × 7 × 5 = 420). This means that the department worked some overtime or had some extra help. Why should they need to do so, since it was a pretty average week?
The lesson here is to try to think like your manager would think (or whoever you are reporting to). Don't just follow the rules blindly: take an overview and think about whether the figures make sense when considered in relation to each other.
Let's say that you have a complete set of standards which you are monitoring and reporting on. Is this the end of the process?
No, of course we want to improve performance, and some of the processes that we have just gone through will help us to do this.
4.1 Continuous improvement
In modern organizations it is not enough just to perform to the same standard all the time, even if that standard was originally a good one.
In commercial organizations at least, competition is fierce: if you just stand still, your competitors will come out with a better product and take your share of the market.
Technology is changing and advancing faster than ever before, creating new opportunities and making old ways of doing things obsolete.
Customers have learned to expect higher and higher quality.
The emphasis in modern organizations, therefore, is on continuous improvement. This is essentially about reviewing what you do, identifying problems or areas for improvement, planning and implementing the improvements, reviewing the effects of the improvements, identifying further areas for improvement, and so on.
Relating this to the measurement of performance against standards, we can think of it as a cycle with the following six steps.
1 Set standards and formulate performance measures.
2 Monitor against standards and performance measures (by asking for feedback from stakeholders such as customers and employees, and collecting information relating to performance measures).
3 Identify areas of non-conformance to standards and poor performance, and collect further data.
4 Plan improvements (by identifying possible causes of non-conformance and poor performance and discussing solutions).
5 Implement improvements (in inputs, processes or outputs).
6 Set higher standards and updated performance measures and monitor these (in other words, go back to step 2 again).
Here we will concentrate on step 5 and suggest lots of things that you can either do yourself in your department, or recommend to more senior managers, to make a contribution to the continuous improvement of your organization.
We'll think mainly about improving the performance of a small part of an organization that takes inputs from one department and passes its outputs to another part of the organization.
An example would be a department that takes engine parts and components, assembles the engine, and then passes it to a department that connects the engine up to the car body. Another example would be a department that takes applications for credit from a customer services department, checks the credit status of the applicant, and then passes the application on for final approval by a team in head office.
To help us look at different aspects of performance we'll think in terms of a system.
A system is something that takes inputs and performs processes on those inputs to produce outputs. For example, a bread-making system takes flour, yeast and water (inputs), mixes them up, kneads the mixture, makes it rise and bakes it (processes), and produces loaves of bread (outputs).
Any aspect of work can be seen in this way. In fact an organization as a whole can be seen as a system.
4.2 Improving inputs
The inputs of a department are the resources it uses to make outputs. They include materials, machines and office equipment, information, and above all the people you manage.
We'll save the especially complex issue of people for a separate section and confine our comments here to ways you can improve the performance you get out of other inputs.
Find better suppliers for inputs, who can deliver better-quality items, or deliver faster, or more consistently on time, or in more convenient quantities, or who offer a better after-sales support service. Price is always an issue, too, of course: it is good to save money, but remember cheaper supplies may be inferior.
Don't regard suppliers as ‘the enemy’: develop closer partnerships with suppliers so that they understand your needs better.
If external information is a key input (for example, information about stock markets, or other companies’ activities, or the economic climate in another country) you need that information to be the most up-to-date and accurate available, but you don't need to be overwhelmed. You could subscribe to a specialist information service such as Reuters, who will tailor the information they have available to your precise needs.
If inputs to your department are outputs from another department, then you are that department's customer, and you are entitled to express your views about the quality of their work. Again, it is better to view the relationship as a partnership, not as a fight. Perhaps there are ways of improving the layout of the forms on which they supply information to you, or perhaps you could share a database with them to make it easier to exchange information. Perhaps they could give you early warning about any delays in delivery.
You are the manager in charge of the team who operate the checkouts of a medium-sized branch of a supermarket. (It will help if you think about the supermarket you and your family use personally.)
Identify the resources that are the inputs to the checkout process, and recommend at least one way of improving those inputs. (Concentrate on inputs – we'll think about processes and outputs in the next two activities).
These are the checkout inputs in my local supermarket.
The people who operate the checkouts, and their time, skill and knowledge.
Equipment and ‘stationery’, including computerized tills and paper till rolls, a conveyor belt, a barcode scanner, a number pad for keying in barcodes that cannot be scanned, a set of electronic scales, a credit card scanner, and a tool for removing security tags from items such as clothing.
Information from a system that links up barcodes to product descriptions and prices.
The notes and coins in the tills.
The supermarket goods chosen by customers (food, toiletries etc.) and plastic bags for them to be carried home.
I think the most obvious ways of improving checkout inputs at my supermarket would be to:
have more checkout desks open, which means employing more people;
have scanners that work more of the time;
have a machine that automates the packing of bags, which I hate, and which holds everyone up.
You might have thought of other improvements to inputs: better training for staff, more barcoded items, a machine that would allow customers to scan in their purchases themselves, or better maintenance and regular cleaning of the conveyor belts – and possibly a host of others, depending what most annoys you about your supermarket!
4.3 Improving processes
There are lots of ways to improve processes. Here are some suggestions.
Stop doing unnecessary things just because ‘that's the way we've always done it’, or ‘that's what it says in the procedures manual’.
Although it can be quite a time-consuming exercise, it is worth describing on paper each operation that people in your department perform, and then critically analysing each one. Can you eliminate any activity altogether? Can you combine activities in some way that avoids double-handling? Do you collect information that you never use (I know I do)?
Look at your competitors’ processes if you can (in other words, benchmark) and simply make sure you start doing things their way if it is better than what you do now. Even if you can't get sufficient competitor information, there may be other departments in your own organization that are worth looking at, especially if your organization has other regional offices or offices overseas.
Consider contracting out to external suppliers any processes that don't absolutely have to be done in-house (outsourcing). This allows you to concentrate on what you do best.
Change the layout of the work area and storage space to ensure that people who frequently need to work together on a process are physically close to each other and to the things they need to do their jobs.
Use computer technology to its full potential, especially to automate routine tasks. If a task is repetitive and boring it is almost certainly possible to program a computer to do it, or at least most of it.
Integrate processes with other departments. Look at the department handling the stages of the work prior to your department's involvement. It may be more efficient for your department to take over the last part of their processing, or for the other department to take on the first part of yours. The same could apply to the next department's operations.
Look for ways to smooth out operations so that staff members aren't idle at some times and impossibly busy at others. For instance, can you do some of the work in advance of when it would normally be done?
As the manager of the checkout team in a medium-sized branch of a supermarket, identify the processes that occur when customers pass through the checkout and recommend at least one way of improving the existing processes.
These are the main processes that I would identify.
Calculate the amount owed by the customer
Mostly this means picking up an item, finding the barcode, passing it over the scanner and then giving it back to the customer. The computer does the actual calculation. However, there will be a variety of sub-processes to deal with things that don't have a barcode, things whose barcodes can't be read, items that are reduced because they are close to their sell-by date, items that have some damage that is only discovered at the checkout and so on.
Take payment from the customer
There will be separate sub-processes to deal with payment by cash, cheque, or credit/debit card, processing customer loyalty cards, handling money-off coupons and so on.
Give cash back to the customer, if required
This process requires the additional input of a signature or initials from the customer and the checkout operator if a credit or debit card is involved.
Liaison with colleagues and managers
There will be processes for alerting the manager when queues are getting too long, helping out other checkout operators if they run out of change, getting replacements from the shelves for damaged items etc.
Update accounting systems and warehousing systems
This process is done at the checkout, but in most supermarkets it is entirely automated.
I would say this scenario is one that offers excellent opportunities for benchmarking: just go and shop in another supermarket, and note anything that they do particularly well. Other possible ideas include changing the location or layout of the checkouts, or changing the queuing system so that there is only one queue and the next person in the queue goes to the next available checkout.
4.4 Improving outputs
Your outputs are the products you produce or the services you provide for your internal and/or external customers.
Lots of general things can be done to improve outputs.
Keep checking that you know who your customers are and what they want. Maybe your work is received later in the process by a department that has no direct contact with yours, and perhaps does not even know that you are responsible for it. Find out what happens to your work after it leaves you, and if there are extra things you could do, or things you could do differently.
Be more flexible: be willing to tailor your product or service to meet special customer demands.
See if you can remove any unnecessary parts of the product (for instance decorative features) or pieces of information that are rarely used, so that the product is easier and quicker to create.
If you produce several different outputs do they, or could they have, any parts or features in common, or use very similar information? If so, you may be able to save time by using the same component for both products. A simple example would be using the same document template for all the reports you produce.
Think about how your product is delivered. If it is information, you can probably deliver it by internal or external email, or perhaps not deliver it physically at all, just make it available on an intranet. If it is a physical product, you may be able to find a faster or more reliable carrier (rail rather than road, for instance). You may find that customers would prefer to come and collect the product. You may even be able to move your department so that it is nearer your customers.
Yet again you are the manager in charge of the checkout team at a medium-sized branch of a supermarket.
Identify the outputs of the checkout process and recommend at least one way of improving the outputs.
These are my suggestions for outputs.
The service itself, in other words a customer who has been served in a certain length of time.
A till receipt and perhaps some money-off coupons.
Cash back.
Answers to customer queries such as ‘are you open over the Bank Holiday?’
Occasional help with packing and carrying shopping bags.
Assistance to colleagues and managers.
Information for other systems, such as the accounting system, the stock control system and the marketing system.
Most customers will want faster service above all, and there are lots of ways of achieving this, such as ‘six items or less’ queues and bag packers (assuming they do this more quickly, and as well as, the customer would).
I would like my supermarket to have someone in the checkout area to go and fetch items that I have forgotten to pick up, so I don't lose my place in the queue!
As usual, you probably have your own ideas, depending on your particular gripe with your supermarket.
4.5 Improving staff performance
In ‘staff’ we include you, of course, because a large part of getting better performance out of people is improving your own management skills. Good management on your part should give you highly motivated and skilled employees. They will work hard for your organization because they realize that if they contribute to your aims, they can achieve their own goals.
Train your staff. Your organization and its environment are continually changing, so employees constantly need to develop new skills. Training may be needed in a variety of areas: in knowledge about the organization (its mission, objectives, systems, other departments); in personal skills such as time management, decision making, and communication; in specialized knowledge about specific processes in your department or specific tools or software packages that you use; and in general knowledge about matters such as health and safety.
You may like to refer to two other Super Series titles: Developing Yourself and Others and Coaching and Training Your Work Team.
Empower your staff. Empowerment means delegating to the lowest possible level, because those most closely involved with operations (the ones who actually do the tasks) are in the best position to make decisions about them. Empowerment leads to faster decisions, helps personal development, and offers staff more job satisfaction.
Acknowledge each person's contribution publicly: you'd be surprised how much difference a simple ‘thank you’ can make. If you are in a position to do so, see that extra effort is rewarded in some way.
Encourage teamwork and co-operation. More experienced staff will help with training their less experienced colleagues if both depend on each other to get a job done.
Be more open in your communications. Some managers think knowledge is power, but if you keep secrets from people you have no right to be surprised if they don't achieve what you really wanted them to achieve.
Think about how you make decisions and whether you can improve. Decisions should be given the attention they deserve, but it is easy to get bogged down in detail.
You can't always make people ‘happy’, and ‘happy’ workers aren't necessarily more productive workers. But you can try to make sure that your staff members are treated courteously, without favouritism, prejudice, or public criticism. If you slip, as you probably will, be sure to apologize. If you become aware of a conflict between individual members of staff, bring them together and do everything you can to resolve the conflict. There is nothing worse than an ‘atmosphere’.
For more guidance on managing conflict see Managing the Employment Relationship.
How can you find out whether people need training to improve performance? (You don't have to answer this in relation to the supermarket checkout, but do so if you wish.)
Sometimes it will be obvious. If a new law is passed that affects what an organization does, or new equipment or software is brought in, staff will need to know about it.
Sometimes you may only have hints: absenteeism, high staff turnover, disciplinary issues and frequent mistakes are matters that need to be investigated to see what the root causes are. Training may solve the problem.
Some organizations do formal ‘training needs analysis’, where training needs are defined as the gap between the requirements of the job and the actual current performance of the people who do it.
Activity 35
|
This activity may provide the basis of appropriate evidence for your S/NVQ portfolio. If you are intending to take this course of action it might be better to write your answers on separate sheets of paper. |
Most of the organization management initiatives that have become popular in the last decade or so have, at heart, the idea of the organization as a system made up of lots of smaller inter-related systems and processes.
Describe your part of your organization in this way, in other words identify your work team's inputs, processes and outputs.
Can you identify any way in which these inputs, processes and outputs could be changed so that work activities can be improved? Try to identify ways in which resources can be better controlled by making these changes.
4.6 Quality management initiatives
The need to improve performance is fundamental to most modern organizations, and it won't only be your work team that is expected to improve. The initiative will probably come from very senior managers and will run right through the organization.
Let's look quickly at three organization-wide approaches that you may be expected to contribute to.
Total Quality Management (TQM)
TQM is a philosophy that the only acceptable quality is perfect quality. This applies to every single resource, process and relationship in the entire organization.
EXTENSION 2
If you want to remove some of the theory, and get some good anecdotes, try 101 Ways to Improve Business Performance by D. Waters. It's also available as an e-book.
The cost of preventing mistakes is less than the cost of correcting them once they occur. The aim should therefore be to ‘get it right first time’.
And even if you do get it right, there is always scope for improvement. The idea of continuous improvement (getting it more right, next time) is a key part of TQM.
ISO 9000
The ISO 9000 family of standards are set by the International Organization for Standardization, and describe how an organization can set up ‘quality management systems’ to ensure that quality and customer focus is at the heart of everything the organization does.
Organizations that meet ISO 9000's very detailed requirements can arrange to be audited by ISO 9000 Registrars, and get a third-party certificate if they pass.
If there is a TQM or ISO 9000 initiative in your organization you may find it helpful to look at another workbook in this series, Providing Quality to Customers, which covers both in detail.
ISO 9000 is especially important because some types of customer refuse to do business with an organization unless there is some independent assurance of quality. For instance, many government departments and local authorities will only offer contracts to companies that are ISO 9000 certified.
The Business Excellence Model
The Business Excellence Model is promoted in the UK by the British Quality Foundation. The model is now more properly known as The EFQM Excellence Model, EFQM being the European Foundation for Quality Management. Organizations can enter an annual competition and win awards for business excellence.
The EFQM Excellence Model, a non-prescriptive framework based on nine criteria, can be used to assess an organization's progress towards excellence. The Model recognizes there are many approaches to achieving sustainable excellence in all aspects of performance. It is based on the premise that:
excellent results with respect to Performance, Customers, People and Society are achieved through Leadership driving Policy and Strategy, People, Partnerships and Resources and Processes.
The model is summarized in the diagram below.
Diagram © EFQM, The EFQM Excellence Model is a registered trademark. Explanatory text © EFQM.
The arrows emphasize the dynamic nature of the model. They show that innovation and learning help to improve enablers which in turn lead to improved results.
For convenience, we use the terms ‘Enablers’ and ‘Results’ to designate two categories of criteria. Enabler criteria are concerned with how the organization undertakes key activities; Results criteria are concerned with what results are being achieved.
We can only give a very simplified idea of the model here. More information, including useful free documents to download, is available from the EFQM website on www.efqm.org. The sort of questions you might ask, just to see how well your organization is performing in relation to the criteria shown in the diagram, include the following.
1 How do the behaviour and actions of the executive team and all other leaders inspire, support and promote a culture of Total Quality Management?
2 How does the organization formulate strategies and turn them into plans and actions?
3 How does the organization release the full potential of its people?
4 How does the organization manage resources (especially financial resources) effectively and efficiently?
5 How does the organization deliver value for customers through the management of its processes?
6 What results is the organization achieving in relation to the satisfaction of its external customers?
7 What results is the organization achieving in relation to the satisfaction of its own people?
8 What results is the organization achieving in satisfying the needs and expectations of the community in which it is located?
9 What results is the organization achieving in relation to its planned organization objectives and in satisfying the needs and expectations of everyone with a financial interest in the organization?
Activity 36
To which of the questions in the Business Excellence Model might you give the answer ‘via a budgeting system’.
I would say questions 2, 4 and 9 in particular might be answered in this way.
1 Who are your internal customers?
2 What is an ideal standard, and what is the drawback of an ideal standard?
3 Fill in the missing words in the following sentences.
a Monitoring performance is a way of keeping _______________ over the activities you are responsible for.
b When there is a variance from expected performance you should use measures to see where _______________ occurred.
4 What should you do if you cannot meet a performance standard due to circumstances beyond your control?
5 Why should improvement be continuous?
6 Suggest three ways of improving processes.
Answers to these questions can be found on pages 117–18.
To set a performance standard you first need to define performance in overall terms, then find out what is regarded as acceptable performance, and finally define a particular level of performance as the standard.
The standard set may be an attainable standard – the best you can do at the moment – or you can set more ambitious targets.
To interpret variances from expected performance standards you first need to identify all the processes and inputs involved in performing tasks, and the relationships between them. You then need to find out what is normal and use measures to see where failures and errors occur.
Performance reports should concentrate on the exceptions to standard performance.
Modern organizations need to improve continuously because of fierce competition, ever-changing technology and ever-increasing customer expectations.
You can see an organization as a system of inputs, processes and outputs. This approach emphasizes that whatever you do has an impact on other parts of the organization.
You may find yourself taking part in an organization-wide initiative to improve performance such as Total Quality Management, ISO 9000 certification or the EFQM Excellence Model.