significant work activity must be measured.
- Work that is
not measured or assessed cannot be managed because there is no
objective information to determine its value. Therefore it is
assumed that this work is inherently valuable regardless of
its outcomes. The best that can be accomplished with
this type of activity is to supervise a level of effort.
work should be minimized or eliminated.
measurement must include the resources (manpower, expenses,
and investment) required to accomplish the desired results.
performance outcomes must be established for all measured work.
provide the basis for establishing accountability for results
rather than just requiring a level of effort.
outcomes are necessary for work evaluation and meaningful
performance in terms of desired results is how managers and
supervisors make their work assignments operational.
time phased performance baseline must be developed to evaluate
total organizational performance.
performance outcomes that define the desired results from
operations and the operational resources (manpower,
material, assemblies, etc.) required to achieve these
performance outcomes that define the expected revenue and
expense results, and investment required to support operating
performance that defines when these results and investment
are expected to occur.
and financial performance reporting must be synchronized with the
same reporting periods and reporting frequency.
reporting and variance analyses must be accomplished frequently.
THE PERFORMANCE MEASUREMENT BASELINE
should be planned at the organizational level accountable for the
results of that work.
marketing expense requirements into advertising, promotion,
production manpower requirements into direct manpower,
indirect manpower, and overhead manpower.
sales expectations into product A sales, product B sales, etc.
planning begins by determining the operating results to be
achieved and estimating the physical resources needed to achieve
planning involves estimating the income and expense results from
the operating plan and the investment needed to support the plan.
performance measurement baseline integrates operational and
financial planning results and displays them on a common timeline.
plans and budgets must be consistent with the performance
to the performance measurement baseline must be controlled and
purpose of variance analysis is to determine the corrective
action needed (if any) to accomplish the desired operating and
the estimating relationships used to develop the baseline
with current measured values provides advance notice of the accuracy
of the baseline estimates.
the baseline to an estimate using these updated
relationships will show how current results are impacting
decision whether to take corrective action is driven by the
impact of current performance on estimated final results.
analysis contributes to learning and understanding the system
dynamics that causes the observed results.
analysis has the following objectives.
will determine whether corrective action is indicated.
the estimated final results are unacceptable, corrective
action is needed.
results must be reported promptly and on a consistent schedule.
Sigma can help you develop or enhance a performance measurement
process for your organization.