WHAT IS PI?

Performance Improvement is a process of assessing progress toward achieving pre-determined goals, including information on the efficiency with which resources are transformed into goods and services, how well the goods and services are delivered to clients and the extent to which clients are satisfied, the results of a program activity compared to its intended purpose and the effectiveness of operations in achieving objectives. (Source: National Performance Review Fall 1998).

In other words, PI provides clues and strategies to a business about consequences that result from actions taken and actions not taken. Because PI can "cut the grey out" of operating a business, a major benefit to CEOs/COOs is more time to focus on issues that are generally easier to manage and resolve because they are black" or "white."

• success and failure

• large and small profits

• quality and marginal products and services

• satisfied and dissatisfied employees

• superior and inferior customer service

Without question, PI champions and reinforces best practices and continuous quality improvement in organizations.

Based on the survey research of Quality Progress staff and Metrus Group’s Brian S. Morgan and William Schiemann, PI assists companies to relate product quality and employee performance and to find ways to strengthen both. This in turn may favorably impact the bottom line. A case in point is the reduction in operating costs for equipment that previously malfunctioned on a continuing basis because the company missed the deadlines for calibration. If the company had PI in place, the dates and the significance of calibration would have been known and an employee would have been held accountable for not overseeing this task.

There are also those like the Malcolm Baldridge National Quality Award winners who believe that "What gets measured, gets done." Clearly, this was an underlying principle of Malcolm Baldridge, former U. S. Secretary of Commerce for whom this "OSCAR" for excellence in performance is named.

Governments also have adopted PI. In 1993 the federal government instituted the Government Performance and Results Act (GPRA). When GPRA was signed into law the commitment to reinvent government and improve quality and accountability were institutionalized.

Another PI initiative is that of The American Society of Quality (ASQ). ASQ, through its Performance Measurement Study Team (government and business partners throughout the country), is on record as indicating that everything that affects operations should be measured. Among the areas are:

• Technology

• Financial

• Customer Satisfaction

• Customer Service

• Internal/External Business Operations

• Employee Satisfaction

• Investors Relation & Stakeholders

M. H. West & Co., Inc. has assisted organizations to design and implement a PI process. A beginning step is to identify areas of the business that are most suitable for measurement.

The following checklist from the firm's Tool Box Tips provides insights to some of these measures:

Tool Box Tips

Financial Value and Profitability Measures

• Return on Investment
• Return on Equity
• Return on Asset
• Return on Capital Employed
• Economic Value Added
• Market Value Added
• Net Income

• Loyalty/Retention
• Satisfaction
• Market Share
• New Markets
• Number of Prospects
• Percent of Potential Contracts Closed
• New Business
• Product/Service Quality
• Competitive Pricing
• Delivery Service/Timeliness
  

Workforce Measures

• Employee Satisfaction
• Measures of Turnover
• Measures of Retention
• Measures of Absenteeism
• Employee Performance Output
• Quality of Output
• Knowledge, Skills and Abilities
• Knowledge of Mission Statement

Operations/Program Measures

• Confidence in Leadership
• Communication/Response
• Teamwork
• Environmental Safety/Incident rate
• Timeliness/Accuracy of Information
• Responsiveness to Customers
• Product/Service Reliability
• Knowledgeable Employees