#64 Five Basic Performance Measures

If you're starting out with measurement but don't have a clearly articulated strategy - or any strategy at all - you're probably feeling stuck about what to measure to manage performance. With no goals, no objectives, and no clear priorities, everything seems important. And it's too overwhelming to measure everything.

So if you are at a loss for what to start measuring, then try these 5 basic performance measures. Spend as little time as possible tailoring them to your business; spend more time pilot testing them. You'll learn tonnes more about the best measures for your business through getting started with something, rather than waiting until you've designed the best way to measure.

measure #1 is customer satisfaction

This first is probably the most important of the 5 basic measures. It's the only measure that will connect you with the relevance of the work you're doing. If customers aren't happy, then everyone is wasting at least a portion of their time. Measure how your customer judges the outcome of your product or service, through surveys or at the end of each transaction with the customer. You can ask them directly, give them a survey form, or send them to a website form.

If you also collect data about what aspects of your product or service are most important to customers, it will give you clues about more specific things that might be important to measure also e.g. easy access to support staff or accuracy of bills.

measure #2 is product/service defects

Defects is a measure of quality, and a translation of what the customer expects your product or service to do, into something you can count to assess how often the product or service actually does what is expected.

Your customer satisfaction measure is a companion to this one. And the extra data collected about what is most important to customers about your product or service will help you define what constitutes a defect (e.g. something breaks, something doesn't operate correctly, a delivery deadline was missed, an invoice has errors).

measure #3 is cycle time

The time it takes to produce or deliver your product or service for your customer is a surprisingly useful thing to measure. It's not just about meeting the time commitments you made to your customer. It's just as importantly about focusing everyone on the things that make the cycle time what it is. And this is usually dead time between hand-offs in the process, waste and rework due to errors or lax standards, and even things that didn't need to be done at all.

An alternative or companion measure to cycle time might be on time delivery, which links it more to the customer's experience. Just remember the value of measuring cycle time for internal benefit too.

measure #4 is productivity

Productivity is a measure of your process efficiency, and is essentially the rate at which you can produce outputs, relative to the input it takes to do so. A great measure to focus you on eliminating waste and rework in delivering your products and services to your customers.

For example, one way to think about productivity is to compare how much you're producing relative the time it takes, such as number of work hours. Another way to think about productivity is about quantity versus cost - how much are you producing, relative to what it costs in resources and labour.

measure #5 is innovation (or improvement) ideas

Even if you're not ready to call it innovation (call it improvement instead), this fifth basic measure is about stimulating one of the behaviours that support a performance culture, namely making active suggestions about how to improve performance.

Particularly when the first 4 basic measures are shared and discussed among the team, actively measuring something as simple as the number of improvement ideas suggested, or the number of targeted improvements tested or implemented, encourages everyone to deepen their understanding about performance, and how they can influence it.

The 5 basic measures are a springboard, not a solution

Remember, don't try to get it perfect before you begin measuring anything. It's not until you start using measures that you discover new questions and clearer information needs. Use these five basic measures as a springboard to get used to measuring and through their use, get closer to understanding what you really do need to measure.