Over the years, I have written extensively about the importance of gathering information and using it to improve performance. In any company, there is certainly a wealth of information to choose from and decisions are needed about which is the most meaningful. Yet, if information is power, then sharing that information puts the power to good use.
Excellent companies formally display as much performance information as they can. These companies believe that it is better to over-communicate and bridge any information gaps than to under-communicate and allow the rumor mill to dominate. Their approach is to determine what information should be displayed, and then decide how, when and where it should be displayed.
Let’s start with what should be displayed. Some companies struggle with this issue because they worry about the consequences of communicating bad news. In reality, if a company is experiencing difficult times, then it is most likely known throughout the organization well before any specific measures are posted. What the employees may not know are some of the good things that are happening. This is an opportunity to get that out there. Start by displaying something from each of the major business performance categories—customer service, quality and cost.
The most common customer service performance measures are “on-time shipment” and “order lead time.” Although on-time shipment can be measured in a variety of ways, such as shipment date versus promise date or shipment date versus original customer request date, the necessity of measuring and sharing something outweighs the benefit of a lengthy investigation to determine which is truly the most meaningful. After all, the only difference is that one measure will make you look better than the other initially, but once focused improvements take hold, both should improve over time. Order lead time, or the elapsed time from the receipt of an order to the shipment of that order, is a good indicator of how long it takes to satisfy your customers’ needs. Options here include averaging all lead times into one number or measuring individual products, product types or product families.
There are many choice measures related to quality. “First pass yield” is useful in describing what is made right the first time. Scrap rates can prove useful in certain industries, as can measures of rework or repair. Some companies even capture a “cost of quality” figure to describe the costs associated with meeting customer specifications.
Cost can be tied into sales as a net-revenue-per-employee measure, as a material price variance or even as a productivity measure of output over input (for example, products shipped per hours worked). As long as something is selected to start, refinements can come later.
The second step in the measure-and-display process is determining how to display the information. As a rule, graphs and charts are better than numbers alone because they provide more immediate recognition of how things are going. For some measures, such as on-time delivery, output levels and first pass yield rates, an “up is good” approach works well. For others, including lead time, scrap and cost variances, a “down is good” means of presenting the information is preferred.
The third step is deciding where to display the information. Common areas in the plant, such as cafeterias, conference rooms, training areas and aisleways work well. Company lobbies, in which employees and visitors alike may enter the building, also make for a great display area. As the price of large digital displays drops, it may be feasible to link a number of these displays to a computer and deliver a company performance slide show to multiple areas of the company. It certainly is eye-catching, especially anytime new or updated information is displayed.
The final step of deciding how often to display the information will also vary from organization to organization. Some companies may wish to post sales or shipment information each day. Others may think weekly is a good time frame. I have found most information can be effectively communicated on a month-by-month basis. This time frame makes information gathering and dissemination both manageable and meaningful. In addition, a monthly display of information may make it easier to see and understand performance trends over time.
No matter what you measure and display, adopting this practice will enhance your company’s communication and aid in focusing effort on the areas of the business that need improvement.