Organizations that strive for continuous improvement outpace the competition, regardless of the types of products or services they offer. From retail and manufacturing to healthcare and construction, the intensity of effort dedicated to daily positive change in an organization is directly tied to customer satisfaction and financial success.
What’s Important Gets Measured
If you examine the metrics most commonly used to track an organization’s results, you’ll probably find a robust reporting framework based on financial performance in place. Profit and loss is an obvious indicator of a company’s health. Customer service is another, which is why companies of all types measure and track customer satisfaction metrics. HR metrics, like turnover, are also carefully measured in most industries.
Tracking success toward these and other metrics is useful only to the extent that you are using that data to adjust and improve processes across the organization. This means that continuous improvement is a component of every metric that senior executives care about.
While many organizations track the downstream artifacts of improvement work, fewer do a great job of keeping tabs on process improvement activities and results. But we’d argue that measuring, monitoring, and reporting on improvement work is an essential thing your organization can do to ensure that you meet your strategic goals and outperform the competition. Here are five reasons why.
1. Things that get measured improve.
Measuring and reporting continuous improvement metrics shows the organization that this improvement work is as important as all of the other things that you regularly track. When people know that you’re following the activities and impacts associated with improvement, there’s an increased sense of accountability that contributes to engagement. This is especially true when the metrics are visible, which is why the use of wallboards to display the current state of improvement projects are so popular and effective.
2. It becomes natural to align projects with strategic goals.
When improvement projects are tracked and widely shared, it is easier to determine which projects are aligned with strategic goals and which are outliers. Not every effort will directly affect a stated goal, of course, but the bulk of the work should be in the furtherance of the essential objectives. This is difficult to achieve if you don’t have a consistent platform for collecting information about improvement work and a standard method of reporting engagement, activity, and impact metrics.
3. The discipline of measurement forces people to set smarter goals.
Many organizations are too vague when they discuss their current and future states. For example, they may worry that production costs are too high, but fail to document what that means exactly. How much do costs need to come down? By when? Who is responsible? Without answers to these questions and more, success is unlikely. When you start to measure improvements of any type, it is necessary to set SMART goals. SMART goals are: Specific, Measurable, Agreed upon, Realistic, and Time-based.
4. Everyone has the data to make better decisions.
Making solid decisions that promote the spread of continuous improvement requires data. Having a view into which areas of the organization are struggling and having a consistent, objective way to measure performance, helps leaders focus their coaching resources for a higher return on improvement investments.
Understanding what types of activities result in high-impact improvements makes it easier to put more energy into efforts that are likely to succeed. Decisions at every level are better when they are made based on up to date, relevant data.
5. Well document improvement efforts earn additional resources.
Measuring the tangible impact of continuous improvement makes it possible to demonstrate for executives how the effort is impacting the highly visible metrics they care most about, including profitability and growth. The ability to point to actual data regarding engagement and activity metrics will give leaders confidence that the improvement culture is indeed alive and growing.
We often say that there is a snowball effect related to improvement. Once one successful improvement happens, the next one is more manageable, and people are more likely to get excited about participating. This is only true, however, if the impact of improvement is quantified and shared.