Archive for category: Organizational Performance Measures

There’s this thing that websites do. They use the term ‘metrics’ out of context. Their metrics are arbitrary, and they jerk the chains of sellers with figures that are unsubstantiated. They arbitrarily disable accounts. Sadly, this is what is thought of as “quality” in the digital age.

Websites that sell products are digital platforms, not the arbitrators of quality in the business world.

Metrics are easily skewed and do not reflect the overall customer satisfaction. A criticism of performance metrics is that when the value of information is computed using mathematical methods, it shows that even performance metrics professionals choose measures that have little value. This is referred to as the ‘measurement inversion.’ Metrics seem to emphasize what organizations find immediately measurable — even if those are low value — and tend to ignore high value measurements simply because they seem harder to measure (whether they are or not).

To correct for the measurement inversion other methods, like applied information economics, introduce the ‘value of information analysis’ step in the process so that metrics focus on high-value measures. Organizations where this has been applied find that they define completely different metrics than they otherwise would have and, often, fewer metrics.

Quality is not something that managers assign others to achieve. It is a mindset that permeates organizations from top-down as well as bottom-up. Rather than assume all is wrong or right with an organization and take a defensive posture, management must view quality as essential to their economic survival or growth. Quality entails four concepts:

• Success is determined by conformity to requirements.
• Quality is achieved through prevention, not appraisal. The quality audit by objective outside communications counsel is merely the beginning of a process.
• The quality performance standard is zero defects. That means doing things correctly the first time, without wasting counter-productive time in cleaning up mistakes.
• Nonconformance is costly. Make-good efforts cost more on the back end than doing things right on the front end.

Organizations measure quality by overall involvement. It is not enough for management to endorse quality programs; they must actively participate.

Quality should be viewed as a journey, rather than a destination. It applies to service industries and manufacturing operations. Even non-profit and public sector organizations must utilize quality approaches for staff and volunteer councils/boards.

Employees must buy into the process by offering constructive input. All ideas are worthy of consideration. Life-threatening experiences (loss of business or market share, economic recession) signal the urgency for the team to collaborate.

Empowerment of employees means they accept the challenges and consequences. They must view the company as a consumer would… being as discerning about buying their own services as they are about fine dining, premium clothing, gifts for friends, a car or a home.

What if we were all paid based upon customer perceptions of our service? That would make each of us more attentive to what we offer and whether our value is correctly perceived.

Each member of an organization must view himself/herself as having customers. Each must be seen as a profit center and as having something valuable to contribute to the overall group. Each is a link that lets down the whole chain by failing to uphold their part.

What is missing in most organizations is the willingness to move forward, not the availability of information or room/desire for improvement. Willingness requires complete and never-ending commitment by management. The first time the organization tolerates anything less than 100 percent, it is on the road back to mediocrity.

The most common pitfalls toward success include:

• Taking a piecemeal approach to quality.
• Thinking that quality needs apply to some other department, company or industry, not your own.
• Thinking that you are already doing things ‘the quality way.’
• Failing to address structural flaws that fuel the problems.
• Focusing upon esoteric techniques, rather than true reasons for instilling quality.
• Saying that something is being done when it is not.
• Failing to engage customers and suppliers into the process.
• Failing to emphasize training.
• Setting goals that are too low.
• Communicating poorly with the organization and its publics. Without employee communications, suggestion boxes, publications, training videos, speeches and other professionally prepared instruments, the company is fooling itself and its customers about the commitment to quality. Without good communication from the outset, the program will never be understood and accepted.

Quality improvement is the only action that can simultaneously win the support of customers, employees, investors, media and the public. Productivity translates to profitability in an advantageous climate in which to function.

Investment Toward Economic Survival and Growth

Research shows the by-product costs of poor quality are high for any business, up to 40 percent. Lack of attentiveness to quality has cost the United States its global marketplace dominance. Other nations preceded the U.S. in adopting the quality process and overtook our nation in many areas.

In 1981, more than 70 percent of U.S. automobiles realized defects within six months of purchase. That figure has now dropped below 40 percent, compared with just under 30 percent in Japanese cars. Had quality been a focus in Detroit years earlier, then the obvious would not have transpired.

The Japanese have always viewed quality as a national issue… not just an individual company matter. The real victim of America’s late entry into the quality process was every employee whose livelihood was endangered. Consumers did not worry; they simply bought goods and services elsewhere.

Success via competitiveness has many dimensions:

• Production efficiency became America’s focus by the 1950’s.
• Marketing’s importance was fully embraced in the 1960’s. Marketing departments deal most often and immediately with the side effects of poor quality.
• The 1970’s brought the first wave of strategic planning. Without mapping a course, how can any organization reach a destination?
• The 1980’s brought us the quality process… which is the bow that wraps a package containing the other three elements. At the start of the decade, many executives viewed the quality process with indifference or fear. By decade’s end, virtually all (92 percent) agreed that quality is the main prescription for survival.

Though quality is one element of competitiveness, it cannot cover defects in the other areas. The quality audit by objective outside communications counsel can also examine the production, marketing and strategic planning functions.

Companies must place demands upon their own organizations to embrace customer service tenets. Satisfied customers talk to others… encouraging them to buy based upon quality of the company. Dissatisfied customers will aggressively discourage higher numbers of prospects from buying.

The mark of any professional is the manner in which he/she corrects mistakes. Most often, this means correcting misperceptions about company attitude, rather than the condition of goods. The faster the correction, the better the level of satisfaction. Quality is the sum of impressions made on the customer.

Payroll is the biggest overhead item. Improvement can be quantified by increased productivity, reduced turnover and heightened employee morale.

The empowered team is trusted to seek quality on their own. Bad managers will fall by the wayside. Employees who do not pull their share will stick out like sore thumbs. The team will not be judged by the superstars but, instead, by the average. The whole is greater than the sum of its parts.

In order to complete the chain, organizations must insist that suppliers, professional services counselors and vendors show demonstrated quality programs, as well as ethics statements. Educational and incentive programs should be implemented.

During tough economic times, investment in a quality program is not costly. Anyone who is unwilling to spend for quality is hastening company decline.

Business Strategy Steers the Quality Process

Quality is one of the most vital ingredients of competitive success. Total Quality Management (TQM) is recognized as a prerequisite for survival. One fourth of all corporations now administer quality programs.

The focus on quality has gone beyond the finished product and addresses all processes throughout the organization. Evaluating quality is not just a question of meeting customers’ expectations… but rather exceeding them.

Paying attention to quality can realize:

• Lower operating costs. Research shows they can be cut in half.
• Premium pricing for preferred goods/services.
• Customer retention.
• Enhanced reputation.
• Access to global markets.
• Faster innovation.
• Higher sales.
• Higher return on investments. TQM has increased profitability in some corporations up to six times.

Total Quality Management is customer-focused and strategy-directed. It is a top management activity… steered by public relations counselors. The human relations component is strong, but quality programs are substantially communications-driven.

The successful quality program empowers employees, who will achieve quality on their own. The more positive results are shown, the more universal will be participation. The quality process must have substance–not just rhetoric–in order to build momentum. There are no magic shortcuts. If the process is given proper attention and support by top management, it is a money maker.

How to Institute a Quality Program

Much has been written about Total Quality Management. Change is painful for most people but is necessary. Conducting “business as usual” means standing still… which means losing ground while other companies move forward.

Quality does not mean that true perfection will exist. It is simply a commitment to keep the wheels of progress at top-of-mind motion.

To change and improve requires methodically and systematically undertaking actions that will make your company ‘world class.’ These actions include:

• Education.
• Communication.
• Reward and recognition.
• Employee suggestion systems.
• Involvement teams.
• Benchmark measurements of accomplishments.
• Statistical management methods.

Research shows that most companies implement quality programs as a reaction to a perceived negative image. Data is gathered in scattered areas, usually to produce flashy charts for customers. Because upper management does not know which programs to implement, the quality process stagnates.

Doing things for the wrong reasons or to temporarily pacify someone else spells failure. There are no quick fixes. Applying band-aids will just reopen the wounds at a later date. Quality can never be identified too broadly enough.

In order to put a quality program into place, the following steps must be taken:

• Study the activities of admired companies. Interview them to provide insight. Set meetings to review what works for them. Read case studies of Malcolm Baldridge Award winners. Companies can and should be role models for each other.
• Retain outside experts. Quality programs are communications driven and should be captained by public relations counsel who possess this expertise. They will conduct communications audits and strategic planning. This is not something that can be conducted alone by internal human resources departments. Good experts will tell you the hard facts and what needs to be done.
• Research drives most communications programs. Commission customer and employee surveys. It will provide comparisons between the realities and perceptions that are held.
• Ask counsel to write a plan of action for putting the quality program into place.
• Assemble an internal quality team… making sure that all major departments are represented. Together with outside counsel, this committee will pursue its objectives, per the written agenda.
• Set realistic timelines for putting recommendations into place.
• Set schedules for routine review of the process. This includes repeating surveys to assure that you are making adequate progress.

By successfully combining employee involvement, process improvement, customer focus and demonstrated management endorsement, any company can succeed at quality. Even on a limited investment, quality can be attained.

The challenge is to discover what mix of price and quality the customer wants and to deliver it. Slogans only create adversarial relationships. Once the system owns up to its shortcomings and responsibilities, then a true quality process will occur. Failure to read the ‘handwriting on the wall’ will thwart company growth and, thus, the overall economy.

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About the Author

Power Stars to Light the Business Flame, by Hank Moore, encompasses a full-scope business perspective, invaluable for the corporate and small business markets. It is a compendium book, containing quotes and extrapolations into business culture, arranged in 76 business categories.

Hank’s latest book functions as a ‘PDR of business,’ a view of Big Picture strategies, methodologies and recommendations. This is a creative way of re-treading old knowledge to enable executives to master change rather than feel as they’re victims of it.

Power Stars to Light the Business Flame is now out in all three e-book formats: iTunes, Kindle, and Nook.