Do You Measure Up?

“If you can’t measure it, you can’t improve it. And if it isn’t being measured, it isn’t being managed.” That’s the thinking of BDC Consulting Manager Mike Green.

“Tools for measuring, such as those of the International Standards Organization (ISO), are like a scoreboard,” says Green, and are essential for objectively evaluating how a company is performing. “You need to have a scoreboard to really see how your business is doing. And once you can get a handle on your company’s performance, then you’re better prepared to get the most benefit from a quality management system,” he explains.

The first step is assessing what you want to measure and improve in your business and determine a benchmark. You could use ISO, one of the most popular quality management systems, to implement standards that guarantee conformity and quality of products and services. Once the system is in place, your company would be audited by an independent third party and, if all of the requirements are met, awarded official certification. These documented processes allow a company to ensure that it remains in line with its benchmark. Ultimately, it would develop new norms for its processes.

Measuring your company’s performance allows for a host of benefits: standardized processes, more efficient and focused training for employees, quicker detection of problems, more effective solutions and better customer service, to name a few. Entrepreneurs can also improve communications, enhance supplier relationships and increase employee participation in the company.

Measuring key indicators

“Many entrepreneurs don’t appreciate the long-term value of measuring performance because they’re caught up in daily firefighting or consider it too time-consuming,” says Green. “But if they want to compete in a tougher business environment, they need to arm themselves with concrete facts and data.”

Although many entrepreneurs may assume Do you measure up? measurable data is limited to obvious areas such as costs, other “key indicators” are also vital: quality, delivery deadlines, safety, environmental impact and employee satisfaction.

Quality can easily be measured in terms of the number of returned products, credit memos or client complaints.

Meeting promised deadlines and product delivery times are strong indications of a company’s well-being. “Speed is a valuable asset in a company competing for business today,” says Green.

Entrepreneurs should also collect data on safety performance, which is not limited to the manufacturing environment. “You may need to know, for example, how many people are out with back problems, driving-related injuries or repetitive strain injuries in your company,” explains Green.

Environmental impact is an increasingly important measurement, particularly if you want to include the ISO 14001 Environmental Standard in your management system. “Knowing how much waste you generate or how much pollution you are adding to the environment is an important part of being a good corporate citizen and improving productivity,” he says. Finally, assessing employee satisfaction is crucial for entrepreneurs. A reliable rule of thumb is that happy employees are more productive employees. An employee survey could be a useful tool to indicate the level of satisfaction. “You can use the results to improve, for example, your employee reward system,” he says.