The power of alignment can be seen in the results Baldrige Award winners deliver, a sampling of which you can review here. These organizations prove that alignment is critical to performance excellence.

A recent study by IndustryWeek and MESA International showed the frequent disconnect between objectives and metrics throughout manufacturing companies. The chart shows that only about a third of respondents believe their objectives and metrics are well or very well aligned across their companies. In which category would your organization fall?

One of the interesting results of the survey was the discrepancy among positions of those who “always” leverage metrics to improve performance: 28% of senior leaders said they did, 35% of department heads, and 50% of team leaders or supervisors. At the “staff” level, 40% claimed they always leveraged metrics. IndustryWeek tried to explain the low figure for senior leaders as agreement with W. Edwards Deming’s caution against running a company on visible figures alone, but the survey doesn’t say anything about just using metrics to improve performance. Senior leaders who don’t leverage metrics to improve performance are missing critical information that has been proven to make their organizations—and their leadership—more successful.

To read more about performance measurement and alignment, click on these articles:

• KEYSTONE: Alignment and Integration
• Baldrige and Superior Execution
• Strategy Deployment at MEDRAD
• 10 Critical Questions: Data, Information & Knowledge
• Core Value: Management by Fact

1. Communication Effectiveness Index. The frequency and media used to communicate important messages is worth 30-40% and the effectiveness of the communication is worth 60-70% of the index.
2. Customer Relationships Index. The index includes two major components: customer attractiveness (based on such factors as profit margin, volume of business, timely payment, ease to work with, and history/partnering with suppliers) and customer relationship (i.e., number of years working together, products purchased, knowledge of customer’s business and needs, etc.).
3. Employee Satisfaction Index. This index may include casual absenteeism, complaints/grievances, voluntary turnover, employee focus groups, overtime, and employee survey data.
4. Distraction Index. Employees record hours worked each week, sorted into three categories: (a) job – tasks that are directly part of doing your job; (b) administration – activities you need to do, such as preparing budgets, attending meetings, learning about new programs, etc.; and, (c) programs – management programs such as Six Sigma, balanced scorecard, and strategic planning. The goal is to minimize administrative requirements and time spent on management programs.
5. Trust Index. The index addresses honesty and integrity and may include an outside review board’s review of major decisions and performance, audits by objective outside organizations, and the communication of clear rules to employees.
6. Aggravation Index. The index looks at how difficult it is to do business with your organization. Brown uses an airline example that includes measures of how long customer wait on hold when calling the airline, how long it takes them find needed information on the website, the number of calls that are accidentally disconnected, lost luggage, and delayed flights.
7. Supplier/Partner Index. Factors in this index include the criticality of supplier to mission, ease to work with, supplier knowledge of your organization/products/services, responsiveness, timeliness, and quality of goods/services.
8. Project Management Index. Submeasures include budget/cost performance, schedule/milestones met, quality/performance, and innovation. Brown explains how to weigh the factors to create the index.
9. Intellectual Capital Index. This goes beyond the number of hours employees are trained or the percent of individual development plans completed, which don’t tell you if employees have the skills they need for the organization to be successful. Brown provides an example of a client who has employees and their managers rate their competency levels.

To read more about balanced scorecards and measurement, click on these articles:

• Core Value: Management by Fact
• How to Develop a Balanced Scorecard
• Aligning with Strategies & Measures
• Product Performance and Process Effectiveness Results

Minitab, an industry leader in statistical and process improvement, addresses that gap. Virtually every major Six Sigma initiative worldwide uses Minitab software, which is also used to teach statistics in more than 4,000 colleges and universities.

The great thing about Minitab software is that it turns anyone into a statistician. The latest version of its software, Minitab 16, uses an interactive decision tree to help users choose the right analytical tool and walks them through their analysis step-by-step. It can then assist with interpreting the results and producing reports.

You can see how it works by clicking on the green box on the right. A short video introduces you to the features and benefits of Minitab 16, including the ability to use the software in seven languages.

If you want to learn more, click on the “Webinars” link at the top of the Minitab 16 web page for a list of free webinars about the product, or click on “Tour” for a list of videos about the software.

If you want to take it for a spin, click on “Free Trial” and sign up for a free 30-day trial version.

To understand how organizations are using Minitab software to improve performance, check out 51 case studies by clicking here.  For example, Ford used Minitab to minimize vehicle surface defects during ocean transport, saving more than a half-million dollars on that one project. In the two years Thibodaux Regional Medical Center used Minitab, it increased its operating margin to 12% and created a cash reserve of $24 million.

Find out more by clicking on the green box on the right.

Next to blaming people for process problems, making assumptions is a surefire way to miss the right solution. Which of these scenarios is more common in your organization?

(a) Options are debated based on what people think about a problem or issue and how they think it should be handled; or,

(b) Options are debated based on reliable data and information that illuminate the nature and causes of the problem or issue and point to possible solutions.

Most people act as if “a” is really “b”: My assumptions are based on experience and they’re as good as facts. They’re wrong. Guessing that you know what’s going on is not the same as actually knowing what’s going on, and the only way to know what’s going on is to collect and analyze relevant data and information. That’s where the second smart question comes in: How do we know that?

You have to be careful how you ask this question. If your boss says, “We’re getting customer complaints about how long they have to wait for service so we need to put more people on the phone lines,” you can’t just blurt out: “How do we know that?” It’s absolutely the right question to ask. Just don’t say it out loud quite yet.

If you work in an office where assumptions pass as facts, you have a terrific opportunity to differentiate yourself from the crowd and establish yourself as a thoughtful leader—no matter what position you hold. Start by looking for answers to the question: How do we know that? Pay attention to the problems and issues that your work group or department is facing. Keep track of what’s aggravating your boss. Pick one problem or issue that you can get information about, either because you do some work in that area or because you have coworkers who you can get you what you need.

Start with our first smart question: What’s the process? Consider the bigger picture: Who is affected by the problem or issue and what they require, who supplies what to the process, and where the process seems to be breaking down. Look for data related to the process such as:

• Service data (recent customer survey results, complaints, etc.)
• Quality data (errors, defects, warranty claims, etc.)
• Delivery data (on-time delivery, time taken for steps in the process, etc.)
• Cost data (cost per transaction, material costs, rework costs, etc.)

You may not have much or any of this data. Don’t despair. Organizations where decisions are frequently based on assumptions have shown that they do not place a high value on data, which is probably why their problems never seem to go away and new ones keep piling up and people spend big chunks of their days fighting fires.

You can be a leader in fire prevention. Figure out where the problem seems to be and identify how to measure service, quality, delivery, and cost performance in that area. If you can’t start collecting all of the data yourself, partner with coworkers who have access to other parts of the process. Describe what you need. Tell them you want to understand what’s going on to see if you can help solve a problem that’s been bothering your unit and irritating your boss. Plead ignorance, which is true since nobody has probably done what you’re trying to do.

You may not choose the best measures out of the gate. Not many people do, so don’t worry about it. If the data you’re collecting for a particular measure isn’t helping you better understand current performance, or if improving performance on the measure doesn’t really improve the process, try a different measure.

Once you’ve gathered data on your measures for a few months—you can’t begin to see a trend until you have at least three data points—you are ready to start bringing facts to your meetings. You may still feel uneasy asking the boss, “How do we know that?,” so answer your own question by presenting the data you’ve been collecting. You will find that people who sat silently while others voiced their opinions will quickly become engaged in debating the data because they’re challenging information, not their coworkers or managers.

And that will make you and your contribution even more valuable.

Tomorrow: Smart Question #3: Who are our customers and what do they require?

1. Options are debated based on what people think about a problem or issue and how they think it should be handled; or,
2. Options are debated based on reliable data and information that illuminate the nature and causes of the problem or issue and point to possible solutions.

Most people act as if “1” is really “2”: My assumptions are based on experience and they’re as good as facts. They’re wrong. Guessing that you know what’s going on is not the same as actually knowing what’s going on, and the only way to know what’s going on is to collect and analyze relevant data and information. That’s the purpose of a compelling question that needs to be asked during these discussions: How do we know that?

If you work in an office where assumptions pass as facts, you have a terrific opportunity to differentiate yourself from the crowd and establish yourself as a thoughtful leader—no matter what position you hold. Start by looking for answers to the question: How do we know that? Pay attention to the problems and issues that your work group or department is facing. Keep track of what’s aggravating your boss. Pick one problem or issue that you can get information about, either because your work involves that area or you have coworkers who you can get you what you need.

Look for data related to the process under discussion such as:

• Service data (recent customer survey results, complaints, etc.)
• Quality data (errors, defects, warranty claims, etc.)
• Delivery data (on-time delivery, time taken for steps in the process, etc.)
• Cost data (cost per transaction, material costs, rework costs, etc.)

You may not have much or any of this data. Don’t despair. Organizations where decisions are frequently based on assumptions have shown that they do not place a high value on data, which is probably why their problems never seem to go away and new ones keep piling up and people spend big chunks of their days fighting fires.

You can be a leader in fire prevention. Figure out where the problem seems to be and identify how to measure service, quality, delivery, and cost performance in that area. Collect the data and bring it to your discussions to inform the debate with reliable data and information.

To read more about management by fact, click on these articles:

• FREE REPORT: Baldrige Award-Winning Performance Measurement
• Making Better Decisions, Faster
• Which Side of the Digital Divide Is Your Organization On?
• My Personal Baldrige: Measurement
• Get the Information You Need

You can see a diagram of the City’s performance measurement system at the end of this article. You can read more about the City’s system and the performance measurement systems of six other Baldrige Award winners in our free report, “How Baldrige Award Winners Measure Performance.” Just follow the arrow in the column on the right to sign up for this free report.

The City’s measurement system links all activity to the strategic plan and business plan, defines success in measurable terms, measures success, and uses data analysis to improve processes.

For example, the City noticed that its crime rate was creeping up slightly in 2006. It compared that trend to regional and national trends and found that, while its rate was lower than neighboring communities, the City’s upswing was not part of a general upward trend. Further analysis of its data showed that one particular type of crime, larceny, was the primary cause of the upswing. By focusing on larceny, the City uncovered and broke up an identity theft ring, which reversed its crime rate trend.

Key intended outcomes in the City’s strategic plan are the basis for a performance agreement between the city manager and City Commission. The city manager negotiates performance agreements with each department, which, in turn, are incorporated into each staff member’s performance evaluation. In this way, the actions in the strategic plan and the measurement system are cascaded throughout the organization to all employees.

As the figure below shows, the City of Coral Springs’ uses performance data at all levels to align resources, support decision-making, and communicate results.

To read more about performance measurement, click on these articles:

• FREE REPORT: Baldrige Award-Winning Performance Measurement
• 10 Critical Questions: Data, Information & Knowledge
• How to Develop a Balanced Scorecard
• Aligning with Strategies & Measures
• Baldrige ROI