What is the key to creating and maintaining a quality benchmarking methodology?
APQC recently talked to Kathryn Kendall and James Moore of MSS Management Consulting about best practices for quality benchmarking. Among the topics discussed were mistakes people make, engaging senior staff, and identifying right KPIs.
Kathryn and James will present “On the Road to Quality with Benchmarking Best Practices” a breakout session at APQC’s 2015 Process Conference on October 29-30.
What are the first things an organization must consider when establishing a metrics program?
Kathryn: Spending time on the goal or objective of the metrics program is important. It’s also vital that the metrics program connect to the organization’s strategy. If you don’t know where you are going, then how do you know if you are on the right path? You need to know what you want to achieve and have that defined.
James: You also have to make sure there are reliable data capture mechanisms in place that drive visibility around information that supports progress or identifies challenges. You should also understand how to follow-up with timely analysis and feedback to the team members or impacted parties for making the appropriate adjustments.
In your experience, what’s the best way to engage senior management in the value of a metrics program?
James: Ask the pointed question like “how do you measure success today”. This is a catalyst for a deeper conversation on how to frame the value proposition of a metrics program. Ultimately most senior managers understand the need for continuous improvement and the best way to objectively know how you are improving or where you need to improve, is by having a metrics program in place.
Kathryn: Yes, I also think it is important to frame a performance management program in terms of how it drives strategy. It keeps an organization on track and drives improvement. As James called out, it’s accomplished through measurement. If you don’t have metrics in place, how do you know you’re making progress?
When a company decides to use benchmarking what is the most common mistake they make?
James: Most organizations are unclear on what to benchmark; people, process, or technology. An organization has to ensure it has a comparable industry to benchmark against is imperative; an apples-to-apples comparison is important. I also think it is important to have a clear vision of where you want to go.
Kathryn: I think it is important to be realistic with the ‘wish list’. Only use key performance indicators (KPIs) when you know the data is available and if the results can be tied to higher-level operational, tactical, or strategic objectives. Less is more when you first start. Also James makes a good point in the importance of the apples-to-apples comparison. The benchmark has to use the same process framework as the organization, or you’ll face interpretation issues. Of course, this is where APQC comes in and brings value! We will also be pointing out some specific lesson learned at the conference.
Can you give an example of a benchmarking strategy that started off on the wrong foot?
Kathryn: When the cart comes before the horse you can really start off on the wrong foot! So following the steps of a methodology in order is key. Stakeholders should have a direct need and planned use for each reported metric. Starting with creating the objectives and then moving on to defining what will be achieved is key, you don’t want to measure just for measurements’ sake.
James: Not having a clear picture of where the company realistically wants to be in reasonable timeframe; or biting off more than you can chew. Another issue occurs when organizations don’t have a clear understanding of the work involved for initial set-up. As Kathryn said, we will be sharing some stories from the trenches for this area at the conference in hopes that others will avoid the common pitfalls.
On the flipside what is an example of a benchmarking strategy that starts off on the right foot?
James: When an organization gains a clear understanding using a formal methodology to benchmark where it is today is a great example of starting off on the right foot. Other examples include when the organization effectively works with the leadership team to gain consensus on where you want to be in a reasonable timeframe or has a clear picture of what is going to be measured and how.
Kathryn: Yes and this may sound simple; but process and strategy should drive the requirements for data, not the requirements for metrics. Some organizations confuse data with metrics. As James said, reliable data capture mechanisms should be in place. You want the ‘effort to insight’ ratio to be positive. There is a cost to collect the data, and you do not want to design a program that results in hiring multiple FTEs to support it with data collection!
What is the key to identifying the right KPI’s to know you are measuring the right things?
Kathryn: Taking the time to define what is being improved while you set the objectives really helps. You want to define the results in terms of what will be achieved. You have to be careful not to define an activity or even set a target. Following a methodology will help and taking steps in their specific order will keep you focused.
James: Also spending time to determine what drives your business; determine what success means and then how to measure it.
Over time KPIs and what companies need to measure changes, what is the key to making sure your measures methodology is always current?
Kathryn: That’s a great question, and for those that have taken an approach to continuous improvement, know you have to build continuous improvement into the process. So a review of methodology for your approach to the metrics program should be done annually. Here you want to stay current with best practice approaches to the program itself. Secondly, as your organization’s strategy is reviewed, and typically this is done annually, you want to review the metrics program to make sure the alignment is still there.
James: For the metrics themselves, you may want to review every three months if you are in the initial stages. Review what you are measuring and ask questions from each of the methodology steps such as: are the leading and lagging indicators appropriate, are the targets still reasonable and achievable now that you have some trend data, is the data integrity as expected, is the frequency appropriate, how are the stakeholders responding, and are they interpreting appropriately. Checking more frequently initially allows for adjustments.
Both Kathryn and James are Consulting Managers at MSS Management Consulting. James is the lead in Business Process Management and Kathryn leads the Healthcare vertical.
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