BP Trends – December 2010
Authors: Alan Ramias, Cherie Wilkins
This is the third and final Column in our series on process performance measurement. In the first Column we described some of the complications we have encountered in helping organizations install effective process performance measurement systems and then offered some principles for accomplishing this important work successfully. In the second Column we provided a tool – the measures chain – for identifying appropriate process metrics linked to both customer and business requirements.
But once you have the metrics identified, what do you do with them? Who uses these metrics to monitor performance? How often is data collected and reviewed? Who makes decisions about corrective actions, and who takes those actions? Metrics not being used to guide and improve performance are worse than useless -they can get in the way of understanding the performance taking place, they can clutter the landscape with irrelevant data; they can create the appearance of control where it doesn’t exist. It may be hard to believe but we’ve seen a good number of organizations in just this situation – where they have created a “chaos of metrics” but have not put it into use for a variety of reasons. So this final article in our series is about the most important step in creating process metrics…and that is figuring out the “who, when, why, and how.”
A Management Model
Our approach to determining who’s watching performance and taking corrective action is based on the management model shown in Figure 1. This model separates the major activities of performance management into “Performance Planned” and “Performance Managed.” (“Performance Executed” is shown in Figure 1 but is actually the actions of performers inside the organization who are doing work and achieving results.) ln “Performance Planned,” the organization’s leaders are setting goals, establishing budgets and action plans, gathering and assigning resources, and setting the plans into motion. In “Performance Managed,” the leaders are monitoring performance as it takes place, identifying deviations in actual performance versus the established goals, determining what corrective actions are required, and taking those actions to get performance back on track. Metrics are, of course, the key component in use during performance monitoring and variation identification and analysis.
This is a simple enough model in concept, yet it’s applicable to even the most complex of organizations in determining who is responsible for performance at any level. Our use of the model for creating process metrics is to figure out who should be responsible for that particular set of performance indicators.
The Management Domain Matrix
To put the management model into use, we apply a tool called the management domain matrix. Shown in Figure 2, it shows management responsibilities for planning and managing performance. (lt could be called a “role/responsibility chart,” but that term is used commonly for job responsibilities, and our chart is going to contain something a bit different- not just single job responsibilities but collective responsibilities of management teams.) In this particular case, we will demonstrate the application of the domain matrix to a process measurement and management system. We will use it to determine the role (if any) for each level of management regarding a given process. A completed example of this application is shown in Figure 4. But the tool is scalable up to an entire enterprise management system.
Using the measures chain described in our last article (Figure 3), process metrics have been identified for an order fulfillment process. Some metrics are for the entire process (e.g., total cycle time, percent shipped on time), and others are applicable to specific steps inside the process (e.g., number of order entry errors). Now comes the question of who should be responsible for these metrics? What is the logic for assignments of responsibility?
The management domain matrix is organized by level of management. For the sake of illustration, let’s have four layers of management, each of which is a “domain” on the chart. There is Business Management (or management of the entire line of business), Region Management, Process Management (or management of this given process), and Function Management (which consists of the managers of all the functional departments that participate in this process).
To fill out the management domain matrix, we take each domain and fill out the cells by answering these questions:
Mission/Value Add: What is the value of managing at this level in regards to this particular process? What can this level of management do that the others can’t? For example, the executive team may be the only level that can look at global process performance. The Region Managers can only look at regional process performance. And an individual plant manager can only look at the process performance in his/her plant.
Planning: What planning are they responsible for regarding this process? Which goals should they set? What resources do they specify or approve?
Performance Monitored: Which of the measures should management at this level be monitoring? What indicators of performance do they need to fulfill the mission? It is useful to also add the frequency of monitoring (weekly, quarterly etc.) What would be leading indicators to predict performance?
Looking for…: What deviations are they watching for? Are they looking for trends? What variables are they tracking?
Corrective Actions: What corrective actions should they take based on what they are looking for? Should they initiate a resource change? A process improvement?
In our experience, this tool has been extremely helpful in clearing up much of the reigning confusion about process management:
- To start with, it aligns performance planning with ongoing management. Goals are set and resources are allocated in Performance Planned, but as things happen unexpectedly during the performance period, rational adjustments in expectations, resources, or actions can be made, and it is clear who should be making the decisions.
- Identifying responsibilities for planning, measuring, and taking corrective action by management level has been very helpful in getting away from some of the very disruptive management practices that we have seen, with managers from all levels jumping in to put out fires and with nobody practicing fire prevention.
- This tool also helps managers distinguish between managing process performance and managing individual performance. Process management has failed in some companies because there seemed to be little difference between it and what had always gone on, which was generic performance management of individuals. But process management is a different entity, involving the collaborative achievement of people in teams across departments, regions, and whole businesses. The domain matrix makes this kind of responsibility concrete, because a domain may need to be managed by a team whose members are being held jointly accountable for process performance.
With the use of the measures chain and the management domain matrix, we have been able to overcome many of the pitfalls of process management systems that we described in the first article of this series. These two essential tools help create a balanced and logical set of metrics that enable managers at all levels to get insight in critical performance and take action to keep on track. It is process management in the proper context of organization management.
To view figures 1 and 2, download PDF
For more detailed information on the management system, consult our book Rediscovering Value.
For an article on the role of management in performance support, click here.
For information on our workshop about Metrics and Process Management, click here.
For information on our consulting service where we assist organizations in designing a measurement and management system (or “Organization IQ”), click here.
For information on our consulting service where we assist organizations in designing a process measurement and management system, click here.