Implementation of change is sometimes strategic and sometimes more tactical in nature. Managers in most organizations have a general responsibility to control, and often reduce, costs and improve performance. Understanding the responsibility to do that is more common than
managers knowing how to do that.
The first trigger of the need for performance improvement for most managers is a report indicating performance that does not meet expectations, usually the budget. In that regard, many managers use financial reports to manage operations. The problem with financial reporting for operational performance management is that many organizations do not budget at a detailed enough level to be useful for most operational management. As a result, many managers find that costs, either material or personnel, are higher than expected, on a gross or per-unit basis, and must start an examination of the operation to identify the real, root cause of the problem. Many managers have neither the training or experience nor the time to successfully perform such an analysis.
Many organizations collect data and keep it in inaccessible forms, often paper. To successfully identify root causes of problems, or even identify the actual rather than the perceived problem, organizations need ready access to historical operating and financial data. Ideally, organizations will develop and maintain an electronic data warehouse that provides easy access to every piece of data that the organization collects. For too many organizations, nearly 30 years after the introduction of the PC, the only data warehouse they maintain is a decentralized set of filing cabinets.
A serious look at sustainable performance improvement takes more than a plan to chop the payroll. The 1950s through the early 1980s saw the rise and the beginning of the fall of so-called productivity consulting firms. Some of these firms did good work; I worked for two such firms, but many simply sold the client a promise to reduce costs by reducing payroll, often in a predetermined ratio to the firm’s billing. The good firms improved productivity by actually improving the processes of the client operation.
As the world entered the 21st Century, consulting firms and clients faced a reality that they had already capitalized on most of the easy improvement opportunities. Since at least the most recent turn of the century, performance improvement has been more sophisticated, more strategic, and more tactical. Lean and Six Sigma tools provide great insight into improvement opportunities. Rigorous data analysis, in many cases relying on data stored in 4-drawer vertical file cabinets, archaic data warehouses, adds substance to the scope and scale of the opportunities and provides evidence of actual change.
Operational improvement that is strategic usually appears in the company’s financial statements somewhere. Some improvements may appear
in human resource, environmental, or other non-financial sources. Because today’s performance improvement consultants generate results that are not limited to payroll costs, a Balanced Scorecard or management dashboard may be useful to many companies seeking performance improvement. Whichever the company selects, the reporting tool should have a view or a report or page that highlights the financial and non-financial impact of performance improvement efforts.
In 2007, eProcesses Consulting helped a mining client develop a dashboard that included links to dozens of performance improvement projects, some of which the consulting team initiated and some of which the client initiated. The dashboard included a summary page showing the status of each project and allowed drill down to each specific project to facilitate timely examination of each project’s detailed history and plans. The dashboard linked each project to corporate and location-specific goals for the year. The dashboard also enabled the management team to identify new projects to address new needs and opportunities.
The next generation of this dashboard will include a workflow automation tool to help automate semi-manual processes while providing real-time process reporting. The dashboard of the future will include built-in diagnostic to alert managers of the need to focus attention on specific performance anomalies. The next generation may be closer than you imagine.