November 16, 2018, 10:49 am

Using Performance Measures to Drive Maintenance and Asset Management Performance Improvement

Element 8 – Make sure you “Close the loop”

The final vital step in establishing an effective performance management system is to ensure that the control loop is effectively closed.

As we saw earlier, an effective control system requires four key elements, as illustrated below:

  • A target or reference point against which measured output can be assessed
  • A measurement system for measuring actual output
  • A means of comparing actual with the target, and
  • A method for adjusting inputs so that the desired output is achieved

figure 7 

Figure 7


In this element, we focus on the last of these points – closing the loop so that effective improvement action takes place.  This is one area where, in comparison with other countries and cultures that I have worked in, Australians are not particularly good.  There is a tendency to assume that, just because performance is measured, reported, and explained, then improvement action will automatically take place.  But this will only happen if an effective decision making, and improvement action process is in place.  There are a few requirements for this to happen, among them:

  • Those capable of influencing performance actually have the performance reported to them.
  • Those capable of influencing performance think that it is important that improvement takes place
  • Those capable of influencing performance have an incentive to improve performance
  • Those capable of influencing performance are part of the action planning process, and commit to taking defined actions to make improvements, and
  • There is follow up to ensure that the improvement actions which have been committed to, actually happen.

You would be amazed at how rarely there is any formal mechanism for reporting and discussion of performance results amongst those that can affect performance within Australian industry.  This is particularly true among shop floor level personnel.  Frequently, in performing my consulting work, I ask tradespeople how, at the end of the day or the week or the month, they know whether they have done a good or a bad job.  In almost all cases, their response is that they either do not know at all, or that they are satisfied when they have met their own personal standards.  Rarely do they get any feedback, either formal or informal, on their individual performance, or the performance of their work team in comparison with targets that have been set in conjunction with their supervisor, or the management team. 

On the occasions that they do get some feedback, this is generally by means of posting a few charts on a noticeboard, which they can either choose to look at, or ignore as they wish.  These charts are generally produced by somebody else, in a distant office, usually using a computer, and so there is little ownership of the results by these  people – the computer produced them.  In any case, simply posting a few charts on a noticeboard clearly indicates to them that these charts are for information purposes only – they are not required to take any action based on this information (other than, perhaps, looking for a new job elsewhere if it looks like the company is about to go out of business!)

Even amongst higher level personnel, performance reporting meetings are generally treated as an opportunity to explain poor performance, rather than to take action to resolve poor performance, or to take advantage of performance improvement opportunities that may arise.  The focus is on writing a list of excuses on a report, or a whiteboard, rather than on removing those excuses once, and for ever.

Clearly, if we are going to generate improvement, we need to create an environment where we get out of the “blame game”, and start effectively using reported performance as an opportunity to identify improvement opportunities.  This can only be achieved if those being held responsible for measured performance have a high level of ownership of the performance measures (as we discussed earlier), and also have a high level of ownership of the recommended solutions.  There can be no better means of improving the ownership of performance measures than by getting those who are expected to act on the measures to also produce these measures – that way they cannot ignore the real results, and pass them off as being somehow “inaccurate” or “irrelevant”.  In addition, they must be part of the discussion and action planning process to improve performance – this includes shopfloor personnel.  If these discussions are led by a manager or supervisor, then this sends a clear message that this activity is important to the organisation, and to them.

And once the improvement actions have been agreed upon, there must be an effective follow up process in place to ensure that the agreed actions have actually taken place, and that they are resulting in the desired improvements.  This, once again, requires active management by supervisors and managers.

Finally, the incentive for improvement is far greater if those responsible for making the improvements have some “skin” in the outcome – either financially or non-financially.  There should be some form of reward for those that generate performance improvement.  This could be through some form of financial bonus scheme, or could be simply through inclusion in the regular performance appraisal process, or both.  Equally, informal opportunities should be taken to celebrate success through such activities as providing certificates, gifts or awards for reaching significant targets, or simply through organising a celebratory social function.  And never underestimate the impact that a simple, public “pat on the back” can have in motivating individuals and teams.

So the message here is to focus strongly on closing the loop in order to generate real improvement.

Conclusion

So in summarising, there are a few key points to take note of if you wish to develop a truly effective performance management system, and use Performance Measures to drive improvement.  These are:

  • Ensure that there is a high level of ownership of the performance measures used by those that can actually influence performance.
  • Make sure that the measures that you select are:
    • Few in number
    • Balanced, and focused on the key areas that are important to your business
    • Congruent with your business goals
    • Controllable by those whom you are holding accountable for performance
  • Ensure that targets (and more importantly target ranges) are established for all performance measures used
  • Make sure that you effectively close the control loop – ensure that the performance management process is action-oriented, and that improvement actions are actually put in place

Sandy Dunn

Director 

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[1] Ref: Collins & Porras; Harvard Business Review Sep/Oct 1996

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