CHAPTER 7

PERFORMANCE
MEASURES
Marc Lester Jose
Laureana Veronika S. Vicedo

Performance Measures (PM)

The sixth and final concept of Total Quality
Management
It plays an important part in the overall
success or failure of a business organization.
Performance measures quantitatively tell us
something important about our products,
services, and the processes that produce
them.
They are a tool to help us understand,
manage, and improve what our
organizations do.

Performance measures let us know:

how well we are doing

1
2 if we are meeting our goals
3 if our customers are satisfied
4 if our processes are in
statistical control

if and where improvements

5 are necessary.

As a process, performance measurement

is not simply concerned with collecting data
associated with a predefined performance
goal or standard. Performance measurement
is better thought of as an overall
management system involving prevention
and
detection
aimed
at
achieving
conformance of the work product or service
to
your
customer's
requirements.
Additionally, it is concerned with process
optimization through increased efficiency
and effectiveness of the process or product.
These actions occur in a continuous cycle,
allowing
options
for
expansion
and

 gives a
Numb
magnitude
(how
er
much)

Uni
t

gives the
number a
meaning
(what)

Production activities uses measures

such as defects per million, inventory
turns, and on time delivery.
Service activities uses measures such
as billing errors, sales per square feet,
engineering changes, and activity time.

Managing a business organization

without performance measures is like
a captain of a ship navigating in the
middle of the ocean without any
instrumentation. The captain of
would most likely end up travelling
circle without a port of destination,
as would a business organization.

Essential Elements of Performance

Measures (by Ray F. Boedecker)
1. Objectives
2. Typical measurement
3. Criteria
4. Characteristics

1. Objectives
-. Performance measurements as used to
achieve one or more of the following six
objectives:
a. Establish baseline measures and reveal trends
b. Determine which processes need to be
improved
c. Indicate process gains and losses
d. Compare goals with actual performance
e. provide information for individual and team
evaluation
f. Manage by fact rather than gut felling

2.Typical Measurement
- What should be measured is frequently
asked by managers and teams.
a. Human resources
b. Customers
c. Production
d. Research development
e. Suppliers
f. Marketing/Sales
g. Administration

3.Criteria
-. All business organizations have
some measurements in place
that can be adopted for TQM. In
order to evaluate the existing
measures or add new ones,
there are seven criteria to be
followed:
a. Simple
b. Few in number

c. Developed by users
d. Relevance to customer
e. Improvement
f. Cost
g. Visible

4. Characteristics
- One of the seven basic characteristics
is used to measure the performance
of a particular process or function.
a. Quantity most common measures;
refers to how many units a
production or business produces
b. Cost amount of resources required
to produce a given output
c. Time

d. Accuracy number of nonconformances in the output

e. Function
f. Aesthetics how the product looks,
feels, sounds, tastes, or smells and
is quite subjective
g. Service service activity

d
e
e
n
e
w
o
d
y
h
?
W
e
r
u
s
a
e
to m

Why do we need to measure?

Control:
- Measurements help to reduce variation
Self-Assessment:
- Measurements can be used to assess how well a process
is doing, including improvements that have been made

Continuous Improvement:
- Measurements can be used to identify defect sources,
process trends, and defect prevention, and to determine
process efficiency and effectiveness, as well as
opportunities for improvement

Management Assessment:
- Without measurements there is no way to be certain we
are meeting value-added objectives or that we are being
effective and efficient

 The basic concept of performance

measurement involves:
(a)planning and meeting established
operating goals/standards;
(b) detecting deviations from planned
levels of performance; and
(c) restoring performance to the
planned levels or achieving new
levels of performance.

Benefits of Measurement
To identify whether the company is
meeting customer requirements.
How do we know that we are
providing the services/products that
our customers require?
To help us understand the companys
processes. To confirm what we know
or reveal what we dont know. Do we
know where the problems are?

 To ensure decisions are based on fact,

not on emotion. Are our decisions
based upon well documented facts and
figures or on intuition and gut feelings?
To show where improvements need to
be made. Where can we do better?
How can we improve?
To show if improvements actually
happened. Do we have a clear picture?

 To reveal problems that bias, emotion,

and longevity cover up. If we have been
doing our job for a long time without
measurements, we might assume
incorrectly that things are going well.
(They may or may not be, but without
measurements there is no way to tell.)
To identify whether suppliers are
meeting the companys requirements.
Do our suppliers know if our
requirements are being met?

Malcolm Baldrige National

Quality Award (MBNQA)
It is an award that recognizes organizations
in business, health care, education, and nonprofit sectors for excellence in performance.
The award promotes awareness of
performance excellence as an increasingly
important element in competitiveness and
information sharing of successful
performance strategies and the benefits
derived from using these strategies.

 The Baldrige National Quality Program

and the associated award were
established after President Reagan
signed into law the Malcolm Baldrige
National Quality Improvement Act of
1987 (Public Law 100-107)
The program and award were named
for Malcolm Baldrige who served as
United States Secretary of Commerce
during the Reagan Administration from
1981 up to his death in 1987 in a rodeo
accident.

 The Award is the only formal recognition for

the performance excellence of U.S.
organizations given by the President of the
United States.
Another is the Ron Brown Award for
Corporate
Leadership
that
recognize
companies "for the exemplary quality of their
relationships
with
employees
and
communities". It is presented to companies
that
"have
demonstrated
a
deep
commitment to innovative initiatives that not
only empower employees and communities
but
also
advance
strategic
business
interests".

Baldrige
2.3.
1.
Strategic
Leader-ship
Planning
4. Measurement,
Analysis
and Knowledge
Customer
Focus
7.
Results
Criteria
6. Process
Manage-ment
5. Work-force
Focus
management

1. Leadership (120pts)
Examines HOW your organizations
senior leaders personal actions
guide and sustain your
organizations governance system
and HOW your organization fulfils its
legal, ethical, and societal
responsibilities and supports its KEY
communities.

2. Strategic Planning (85 pts)

Examines HOW your organization
develops strategic objectives and
action plans. Also, it examines HOW
your chosen strategic objectives and
action plans are deployed and
changed if circumstances require,
and HOW progress is measured.

3. Customer Focus (85 pts)

Examines HOW your organization
engages its customer for long-term
marketplace success. This
engagement strategy includes how
your organization builds a customerfocused culture. Also, it examines is
how your organization listens to the
voice of its customer and uses this
information to improve and identify
opportunities for innovation.

4. Measurement, Analysis and Knowledge

Management (90 pts)

Examines how your organization

selects, gathers, analyzes,
manages, and improves its data,
information, and knowledge, assets,
and how it manages its information
technology. This also includes the
examination of how your
organization reviews and uses
reviews to improve its performance.

5. Workforce Focus (85 pts)

Examines how your organization
engages, manages, and develops your
workforce to utilize its full potential in
alignment with your organizations
overall mission, strategy, and action
plans. The category examines your
ability to assess workforce capability
and capacity needs and to build a
workforce environment conducive to
high performance.

6. Process Management (85 pts)

Examines how your organization
designs its work systems and how it
designs, manages, and improves its
key processes fro implementing
those work systems to deliver
customer value and achieve
organizational success and
sustainability. Also examine your
readiness for emergencies.

7. Results (450 pts)

Examines how your organizations
performance and improvement in all
key areas product outcomes,
customer-focused outcomes, financial
and market outcomes, workforcefocused outcomes, process
effectiveness outcomes, and leadership
outcomes. Performance levels are
examined relative to those of
competitors and other organizations
with similar product offerings.

THANK YOU
AND GOD
BLESS !