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The Tools of Quality

When we introduce a particular method of doing a job, it is natural to consider whether the method is appropriate or not. The decision is usually based on past results and experience, or perhaps on conventional methods. Procedures will be most effective if a proper evaluation is made, and on-the-job data are essential for making a proper evaluation.

KAORU ISHIKAWA, Quality Tools Inventor 1

1Ishikawa, K., “Guide to Quality Control,” Asia Productivity Organization, Tokyo, Japan, 1985.

Quality improvement in manufacturing or services, to be effective, should address the needs of the system as a whole. In this book we have attempted to address quality management from an integrative perspective. This perspective has encompassed the many functional areas of business, including supply chain management, marketing, accounting, human resources, operations, engineering, and strategy. None of these fields of endeavor operate in a vacuum. They are all interrelated and interdependent.

To be successful, a business or organization must balance the needs of these different functional areas around a coherent business vision and strategy. The objective of the system is to satisfy the customer. Customer satisfaction means higher customer retention, which leads to improved profitability.

A quality system (Figure 10-1) uses the business model with a focus on the customer and includes the dynamics of continual improvement, change, planning, and renewal. Continual improvement is necessary for a company to learn to grow. Companies that are unable to adapt find themselves with stagnant cultures and labor forces. Many managers, on discovering that their organization has reached this point, believe they must resort to draconian measures such as layoffs and organizational reengineering to achieve change. If they had pursued continual improvement and learning in the first place, they might not have reached this juncture.

This quality system is not just a series of variables and relationships. It is an interconnected, interdisciplinary network of people, technology, procedures, markets, customers, facilities, legal requirements, reporting requirements, and assets that interact to achieve an end. The most important aspect of the system is the people. People are the engine of creativity and innovation. Technology is very good at performing rote tasks; however, technology in and of itself cannot innovate. Therefore, how we manage people may be the most important key in this system to unlock an organization’s potential. W. Edwards Deming was always adamant that we should continually and forever improve the system of production. The system includes people. In this chapter we present the tools that are commonly used to unlock this human potential for change and improvement.

In this chapter we introduce the basic seven (B7) tools of quality and the new seven (N7) tools (also referred to as themanagerial tools). The seven basic tools are simple to use in continuous improvement efforts. The tools often are used by individuals and in teams, are useful at all levels of the organization, and can be applied by people of different educational levels. As you learn and apply the tools of quality, you too will appreciate their wide application and usefulness.

The basic seven tools of quality may be used in a logical order. Note that this is only a “typical” order of use for these tools. They can be used in any order. Figure 10-2 shows this order. The flowchart gives the team the big picture of the process to be improved. Process data are collected using a checksheet. The data are analyzed using either histograms, scatter plots, or control charts. The root causes of the problems associated with the process are identified using a cause-and-effect diagram. Finally, causes are prioritized using Pareto analysis. These tools are discussed in more depth on the following pages.

Adapted from The Memory Jogger II, published by GOAL/QPC, 2 Manor Parkway, Salem, New Hampshire, 2004.

A process map is a picture of a process. The first step in many process improvement projects is to create a map of the process as it exists. This useful step also determines the parameters for process improvement. The concept is that we must know the process before we can improve it.

The language of process maps can vary from the simple to the complex. A simple set of symbols is provided in Figure 10-3. The diamond indicates there is a decision to be made. Often these identify different paths of sequences in the process map. The parallelogram appears whenever materials, forms, or tools enter or leave the process. The rectangle is the processing symbol—the work that is actually performed. The start/stop symbol and the page connector are used for the convenience of the people using the process map. A few simple rules for process maps follow:

· Use these simple symbols to chart the process from the beginning, with all arcs in the process map leaving and entering a symbol. The arcs represent the progression from one step to the next. (See A Closer Look at Quality 10-1.)

· Develop a general process map and then fill it out by adding more detail or subflowchart each of the elements.

· Step through the process by interviewing those who perform it—as they do the work.

· Determine which steps add value and which don’t in an effort to simplify the work.

· Before simplifying work, determine whether the work really needs to be done in the first place.

The process map in Figure 10-4 shows a simple process used in a city planning department to issue permits allowing applicants to take possession of newly built homes. Figure 10-4 shows the current process. In Figure 10-5 the process is simplified because the front desk is given more authority and training to process the forms without assigning them for analyst review. The analyst review does not add value for the organization or the customer. Therefore, it can be eliminated. Steps in process mapping include

1. Settle on a standard set of process mapping symbols to be used.

2. Clearly communicate the purpose of the process map to all the individuals involved in the exercise.

3. Observe the work being performed by shadowing the workers performing the work.

4. Develop a map of the process.

5. Review the process map with the employees to make needed changes and adjustments to the process map. (Note that it is often helpful to chart processes from the customer’s point of view in addition to the worker’s point of view.)

Problem: The Well Construction Unit of a state Department of Water Resources entered into a multiyear project to update its database management system. As part of the process, the Well Construction staff was asked to document its current process flows.

Solution: The resulting process map is shown in Figure 10-6. Through a brainstorming process, the Well Construction team was asked to rethink its processes to simplify the workflow and to take advantage of new technology. The team worked together to develop the new process. This resulted in a streamlined flow that required less time for drillers to receive permits.

Check sheets are data-gathering tools that can be used in forming histograms; they can be either tabular, computer based, or schematic. An example of a tabular check sheet for a Pareto chart is shown in Figure 10-11. This provides a chart for copier operators to mark each time a delay occurs in setting up new jobs.

Figures 10-9 and 10-10 present two examples of schematic check sheets from Ishikawa. The first is for operators to mark bubbles where they occur in the finish of automobile windows. The second is for marking defects in a radiator. From these data, the types of defects are charted on a Pareto chart, cost analysis is performed, and the data are used to prioritize design improvements to the products. Setting up a check sheet involves the following steps:

1. Identify common defects occurring in the process.

2. Draw a table with common defects in the left column and time period across the tops of the columns (see Figure 10-8) to track the defects.

3. The user of the check sheet then places checkmarks on the sheet whenever the defect is encountered.

A Closer Look at Quality 10-1: Extended Process Mapping of Supply Chains

Process maps are being used in the improvement of supply chain processes. Customers and suppliers can collaborate to improve supply chains. This type of mapping has been referred to as extended supply chain mapping.Figure 10-7a shows a supply chain map for Mare Technologies. This includes supplier processes, receiving, internal processes, shipping, and customer service processes.

Figure 10-7b shows a map of the improved process. Some comparisons of the existing and improved processes are as follows:

Source: Horton, P., and D. DelMonico, “Charting A New Course,” APICS: The Performance Advantage, Oct 2004, 43–46.

SOURCE: K. Ishikawa, “Guide to Quality Control,” (Tokyo: Asia Productivity Organization, 1985).

SOURCE: K. Ishikawa, “Guide to Quality Control,” (Tokyo: Asia Productivity Organization, 1985).

Problem: A copying company desires to set up a check sheet so that it can keep track of the sources of errors. Following are the major error types with frequencies.

Solution: Figure 10-11 shows a check sheet for these data. The check sheet will be kept to monitor how well workers are adhering to the new procedures.

As shown in Figures 10-12 and 10-13, frequency charts and histograms are simply graphical representations of data in a bar format. The frequency chart in Figure 10-12 shows the number of occurrences of orders for maintenance on four production lines and the hours used to fill these maintenance orders. Note that a frequency chart is used for categorical data, while histograms are used for continuous numerical data. Histograms are also used to observe the shape of data (see Figure 10-13). For example, how are the data in an interval scale distributed? There are several rules for developing histograms:

· The width of the histogram bars must be consistent (i.e., class widths are the same where each bar contains a single class).

· The classes must be mutually exclusive and all-inclusive (or collective exhaustive).

· A good rule of thumb for the number of classes is given by the model

(10-1)

Equation 10-1

where n is the number of raw data values and k is the number of classes. Solving this equation for k, we obtain

(10-2)

Equation 10-2

Using this formula, we find

Problem: The Big City Cafeteria wants to determine the distribution of its sales during lunch time. On a given day the manager randomly selects 40 sales from the sales register receipt.

The following table shows the sales: Develop a histogram of the sales.

Solution: It is helpful to compute the mean, standard deviation, maximum value, and minimum value when developing a histogram because the histogram is often used to determine if the data are normally distributed. Following are these statistics from the previously given data:

· Mean = 4.20

· Maximum value = 8.95

· Minimum value = .79

· Difference = 8.16

· Sum = 168

· Using Formula (10-2)

k ≥ log 40/log 2

k ≥ 5.32

· The number of classes is 6. Therefore,

· Classes = 6

· Class width = 8.16/6 = 1.36 – 1.40

· Classes = 0.76–2.15; 2.16–3.55; 3.56–4.95; 4.96–6.35; 6.36–7.75; 7.76–9.15

The histogram is displayed in Figure 10-13. Thus the manager finds that sales occur in a skewed distribution with a mean of $4.20.

The scatter diagram or scatter plot is used to examine the relationships between variables. These relationships are sometimes used to identify indicator variables in organizations. For example, in a hospital, the postoperative infection rate has been found to be associated with many different factors such as the sterile procedure used by the doctors and nurses, cleanliness of the operating rooms, and sterile procedures in handling the utensils used in surgery. Therefore, the postoperative infection rate is an important variable for hospital quality measurement.

It is quite easy to develop scatter plots using the charting facilities in spreadsheet packages such as Excel. Figure 10-14 shows a scatter plot of the relationship between conformance data and prevention and appraisal quality-related costs in a real firm. Note that the figure shows the unexpected outcome of higher quality costs with higher levels of conformance. Later analysis showed that this firm was trying to “inspect in” quality, meaning that it was throwing a lot of in-process work away as a result of more rigorous inspection. Use the following steps in setting up a scatter plot:

1. Determine your x (independent) and y (dependent) variables.

2. Gather process data relating to the variables identified in step 1.

3. Plot the data on a two-dimensional plane.

4. Observe the plotted data to see whether there is a relationship between the variables. (Note that it is helpful to plot the data in Excel or another spreadsheet and to perform a correlation test to determine whether the variables have a statistically significant relationship.)

Problem: Healthy People, Inc., a company specializing in home health care solutions for U.S. consumers, was a growing company. The company wished to study the relationship between absenteeism and the number of overtime hours worked by employees. Thirty employees were randomly selected, and numbers of overtime hours were graphed against numbers of days absent for the previous year (see Figure 10-15).

This analysis showed that there appeared to be a positive relationship between number of days absent and hours of overtime. Subsequent analysis showed that, in fact, these variables were significantly related. This led management to recalculate the actual cost of overtime.

Control charts are used to determine whether a process will produce a product or service with consistent measurable properties. Because control charts are discussed in Chapters 12 and 13, they will not be presented in detail here. Figure 10-16 illustrates two control charts usually used together.

Often workers spend too much time focusing improvement efforts on the symptoms of problems rather than on the causes. The Ishikawa cause-and-effect or fishbone or Ishikawa diagram is a good tool to help us move to lower levels of abstraction in solving problems. The diagram looks like the skeleton of a fish, with the problem being the head of the fish, major causes being the “ribs” of the fish, and subcauses forming smaller “bones” off the ribs. A facilitator or designated team member draws the diagram after questioning why certain situations occur. It has been said that for each circumstance, the facilitator should ask “Why?” up to five times. This is sometimes referred to as the “five whys.” Fishbone (cause-and-effect) diagrams are created during brainstorming sessions with a facilitator by following these steps:

1. State the problem clearly in the head of the fish.

2. Draw the backbone and ribs. Ask the participants in the brainstorming session to identify major causes of the problem labeled in the head of the diagram. If participants have trouble identifying major problem categories, it may be helpful to use materials, machines, people, and methods as possible bones.

3. Continue to fill out the fishbone diagram, asking “Why?” about each problem or cause of a problem until the fish is filled out. Usually it takes no more than five levels of questioning to get to root causes—hence the “five whys.”

4. View the diagram and identify core causes.

5. Set goals to address the core causes.

Figure 10-17 shows an Ishikawa diagram that was prepared for a wood mill that was experiencing problems with wobbling blades in its saws. The symptom of the problem was the wobbly blades. The major causes were associated with machines, materials, people, and methods. Concerning people, it was found that workers were not properly trained. For machines it was found that the blades were being incorrectly set up off-center.

SOURCE: Patrick Shannon, Boise State University (2006).

Problem: A team of employees from the Adjudication Team at a Department of Water Resources was assigned to improve its process. Adjudication is a process of going through the courts to settle legal disputes, in this case concerning water rights. Prior to brainstorming improvements for the process, the employees were asked to brainstorm some of the causes of problems with the existing system. A fishbone (Ishikawa) diagram was used to help to identify causes of problems they were experiencing.

Solution: Figure 10-18 shows the resulting fishbone diagram. The fishbone diagram shows that three major areas of concern are contractors, region office–state office communication, and database management. The facilitator used the “five whys” to get team members to reach lower levels of abstraction. After reaching these lower levels of abstraction, participants were asked to identify what they felt were major causes of the problems. This fishbone diagram was later complemented with further brainstorming for issues relating to the adjudication process.

Pareto charts are used to identify and prioritize problems to be solved. These are actually frequency charts that are aided by the 80/20 rule adapted by Joseph Juran from Vilfredo Pareto, the Italian economist. As you may remember, the 80/20 rule states that roughly 80% of the problems are created by roughly 20% of the causes. This means that there are a vital few causes that create most of the problems. This rule can be applied in many ways, and 80% and 20% are only estimates; the actual percentages may vary.

In a positive sense, a store manager could understand that 20% of the stock in a store holds 80% of the value of the store inventory. Twenty percent of the customers might provide 80% of the revenue. In a grocery store, a small number of quality problems created 80% of the complaints. The good news is that by focusing on the vital few, inventory can be controlled, satisfaction of the most important customers can be increased, or 80% of the complaints can be eliminated. There are some rules for constructing Pareto charts:

· Information must be selected based on types or classifications of defects that occur as a result of a process. An example of this might be the different types of defects that occur in a semiconductor.

· Data must be collected and classified into categories.

· A frequency chart is constructed showing the number of occurrences in descending order.

The steps used in Pareto analysis include

1. Gathering categorical data relating to quality problems.

2. Drawing a frequency chart of the data.

3. Focusing on the tallest bars in the frequency chart first when solving the problem.

Problem: A copying company is concerned because it is taking too long for operators to set up new printing jobs. They decide to use Pareto analysis to find out why setup times are taking so long. The data gathered reflect the following major causes:

Solution: First, order the problems by frequency, and compute the percentage of problems related to each cause.

Next, draw a frequency chart of the results (Figure 10-19). This Pareto chart shows that nonstandardized procedures for setting up copying jobs is the most frequently occurring problem causing slow setups. Therefore, the company can institute a training program to routinize its setups. This will result in a significant reduction in setup slowdowns.

Two points should be made. We also could analyze these data from a number of different perspectives, such as average time per type of delay or cost per type of delay. Also, this chart shows graphically that the law of diminishing marginal returns does have a place in quality thinking. As the group addresses each problem, the savings from correcting the problems decreases. There is no guarantee, however, that addressing the fourth problem will take any less effort than the first.

In addition to the basic seven tools of quality there is another set of tools that focuses on group processes and decision making. These are the new tools for management. The new seven (N7) tools were developed as a result of a research effort by a committee of the Japanese Society for QC Technique Development. They are shown in Figures 10-20 and 10-21 and are discussed in the following pages.

When we are solving a problem, it is often useful to first surface all the issues associated with the problem. A tool to do this is theaffinity diagram. The affinity diagram helps a group converge on a set number of themes or ideas that can be addressed later. An affinity diagram creates a hierarchy of ideas on a large surface, as shown in Figure 10-23. The steps used in establishing an affinity diagram are as follows:

1. Identify the problem to be stated. Create a clear, concise statement of the issue that is understood by everyone.

2. Give the team members a supply of note cards and a pen. Ask them to write down issues that relate to the problem. There should only be one idea per card. Ask them to use at least four or five words to clearly explain their thinking.

3. Allow only about 10 minutes for this writing activity.

4. Place the written cards on a flat surface.

5. Lay out the finished cards so that all participants can see and have access to all the cards.

6. Let everyone on the team move the cards into groups with a similar theme. Do this work silently because it does not help to discuss your thinking. Work and move quickly.

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7. If you disagree with someone else’s placement of a note card, say nothing but move it.

8. You reach consensus when all the cards are in groups, and the team members have stopped moving the cards. Once consensus has been reached concerning placement of the cards, you can create header cards.

9. Draw a finished affinity diagram and provide a working copy for all participants.

As illustrated in Figure 10-23, you should have a table with an issue statement, subissue header cards, and note cards with ideas. This will provide the basis for further discussion and brainstorming.

Zoo personnel at a zoological park used an affinity diagram to help develop a mission statement. The problem was stated as “Issues surrounding the mission of the Metropolitan City Zoo.” The managers and zoo workers filled about 80 sticky notes with issues concerning the zoo’s mission. Next, the team members placed the sticky notes into groups and ultimately defined a mission with six major elements. This provided a foundation for a final mission statement.

Problem: The sales team at HealthPeople Corporation, a supplier of medical information, decided to develop a sales reference tool (SRT) as a means of improving its training processes for new sales people in the field. It was decided that this SRT would be available on the company intranet. A team of experienced salespeople was assembled who cataloged all the current sales material in many different locations. These materials were then reviewed by the team. Prior to performing preliminary design work for the SRT, the team members had to identify issues relating to the implementation of the SRT. The results are shown in Figure 10-24.

Solution: This analysis helped team members identify key issues in the design and implementation of the SRT. It was discovered that they needed to focus on eight issues in implementation: evaluation, support, training, current information, buy-in, size, features, and timing. The notes underneath the headers present some of the issues identified by the participants.

After completing the affinity diagram, it might be useful to understand the causal relationships between the different issues that surfaced. Also, it is helpful to identify the most important issues to be focused on in pursuing the solution to a problem. A finishedinterrelationship digraph is shown in Figure 10-25. This interrelationship digraph shows the relationships between different issues. We will address how to develop this digraph, but you should notice that the shaded boxes are major issues that need to be addressed in developing improvement strategies. The steps to complete the interrelationship digraph are as follows:

1. Construct an affinity diagram to identify the issues relating to a problem. After you have done this, place the cards with related issues in columns with gaps between the cards. It is helpful to use sticky notes on a large piece of flipchart paper.

2. Create the digraph by examining the cards one by one asking, “What other issues on this digraph are caused or influenced by this issue?” As team members identify issues that are related, draw a one-way arrow from the first issue (the cause) to the second issue (the one influenced by the cause). Do this until all the issues have been discussed.

3. After reviewing the arrows and making needed revisions, count the numbers of arrows pointing to each note, and write the numbers on the notes.

4. Identify the cards with the most arrows as the “key factors.” Experience has shown that there should not be more than 5 to 10 key factors, depending on the issue being discussed. Some cards may have several arrows, but for one reason or another they are not really key factors; these can be dropped from consideration at this point. Boxes with the most outgoing arrows tend to be root causes; those with incoming arrows tend to be performance indicators.

5. Draw a double box around the key factors and brainstorm ways to address these issues.

Problem: For the issues relating to sales reference tools in Figure 10-24, team members were interested in knowing what issues had the greatest effects on other issues. This would help them to know where to focus their efforts in coming weeks.

Solution: The cards from the affinity diagram in Example 10.7 were used to identify the relationships between the different issues. For presentation purposes, we only used the cards from the first four columns in the affinity diagram (these were evaluation, support, training, and current information). The relationships were outlined using sticky notes and markers on a large piece of paper. The results, shown in Figure 10-26, reveal that the need for a backup system, training, and keeping the links current were key issues in developing the SRT. The team paid special attention to these aspects of the project. On a larger project, they might have established subteams to monitor these aspects of the project.

The tree diagram is useful to identify the steps needed to address the given problem. Figure 10-27 shows a tree diagram. A tree diagram is very similar to a work breakdown structure used in planning projects. The following steps should be used to complete a tree diagram.

1. Assemble the header cards from the affinity diagram. From these cards, choose the header card that represents the most important issue.

2. Once the goal statement has been determined, ask, “What are the steps required to resolve or achieve this major objective or goal?”

3. Once the major tasks have been identified, move to the next level under each task, and ask for the second level tasks, “What are the steps required to resolve or achieve this objective or goal?”

4. Continue doing this for successive levels until you have exhausted your ideas for steps.

A prioritization grid is used to make decisions based on multiple criteria. For example, in choosing a technology, we might have a variety of options. Also, the decision criteria vary as to how to choose possible desired outcomes. When there are multiple alternatives and multiple criteria, a prioritization matrix is a good method to inform your decision making without resorting to more sophisticated analysis. Following are the steps required to make a prioritization grid:

1. Determine your goal, your alternatives, and the criteria by which a decision is to be made.

2. Place the selection criteria in order from most important to least important.

3. Apply a percentage weight to each of the criteria for each option. Apply a weight to each of the criteria such that all the weights add up to 1 (for example, A = .40, B = .30, C = .25 D = .05).

4. Add the individual rating for each criterion to come to an overall ranking. Divide by the number of options to find an average ranking.

5. Rank each option with respect to the criteria. Average the rankings, and apply a completed ranking.

6. Multiply the criteria weight by its associated criterion rank for each criterion in the matrix. Notice that in this case a ranking of 4 is best and 1 is worst. The result in each cell of the matrix is called an importance score.

7. Add the importance scores for each alternative.

8. Rank the alternatives according to importance.

A company had to choose between five possible machines for a service process with five criteria. The criteria were ease of use, necessary maintenance, cost of the machine, expected life of the machine, and reputation for the quality of the machine (see Table 10-1).

The three team members provided subjective importance ratings for each of the different decision criteria. These are in Table 10-2.

The team members then provided ratings for each of the different machines as they related to each criterion (see Table 10-3).

The final rankings were computed by multiplying the various rankings by their importance. It looks like alternative A is the best choice. Note that the lowest score is the best (see Table 10-4).

The matrix diagram is similar in concept to quality function deployment in its use of symbols, its layout, and its application. Because the matrix diagram is one of the N7 tools, we mention it here. However, the prior presentation of QFD is much more complete, so we will keep this short. Like the other N7 tools, the matrix diagram is a brainstorming tool that can be used in a group to show the relationships between ideas or issues. Matrix diagrams are simple to use and can be used in two, three, or four dimensions. For our purposes, we provide an example of a simple two-dimensional matrix in Figure 10-28. The steps are as follows:

1. Determine the number of issues or dimensions to be used in the matrix.

2. Choose the appropriate matrix.

3. Place the appropriate symbols in the matrix:

Figure 10-29 shows a responsibility matrix diagram. The legend at the bottom of the figure shows the extent of responsibility among the different people. No example is provided here because we discussed QFD earlier in Chapter 7. This grid in Figure 10-29 gives a simplified version of the QFD demonstrated earlier.

A process decision program chart is a tool to help brainstorm possible contingencies or problems associated with the implementation of some program or improvement. Figure 10-30 shows such a chart in tree form (the outline form is not presented here). The steps are as follows:

1. In developing the tree diagram, place the first-level boxes in sequential order. (These are the boxes in the first column inFigure 10-30.)

2. Moving to the second level, list implementation details at a fairly high level. Try to be all-inclusive at a macro level.

3. At the third level, ask the questions, “What unexpected things could happen in this implementation?” or “What could go awry at this stage?”

4. At the fourth level, brainstorm possible countermeasures to the problems identified at the third level.

5. Evaluate the countermeasures for feasibility, and mark those that are feasible with an O and those that are not feasible with anX.

The activity network diagram is also known as a PERT (program evaluation and review technique) diagram or critical-path(longest path in time from beginning to end) diagram and is used in controlling projects. Figure 10-31 shows an activity network PERT diagram with its nodes and times. The nodes are circles and the times are given in days. Activity network diagrams are discussed in depth in Chapter 11.

As you can see, the N7 tools are useful for managing long projects that involve teams. With the B7 and N7 tools, you have a reasonably good set of skills that will help in managing many projects. They have been used successfully in many different settings and for many different purposes.

The power of these tools is that with the Plan–Do–Check–Act (PDCA) cycle, they give companies a simple, easy to understand methodology for solving unstructured problems. They are especially useful when used in teams. Many of these tools are also fun to use. By using them effectively, managers can reduce unproductive meeting time to a minimum and make good, fact-based decisions.

There are other tools used in communicating performance to employees. The justification for these tools is to present data in an economical and understandable way. We will present three such tools.

Spider charts are graphs that present multiple metrics simultaneously in a two-dimensional plane. Figure 10-32 shows a spider chart. In this case, we show six different metrics (A–F) and report goals and results. A quick review of the figure shows that the firm has not met performance goals on metrics A, B, D, and E. The firm has met the goal relative to metric C and has exceeded the goal on metric F.

Other values that might be included on spider charts besides current performance and results are baseline performance measures and benchmark values. At times, this information can be found in QFD matrices.

A very important tool for measuring performance is a balanced scorecard. Balanced scorecards are usually spreadsheets that are communicated to management on a regular basis—weekly, monthly, quarterly, and annually. The usefulness of the balanced scorecard comes from integrating financial measures of business success, such as key metrics, along with nonfinancial, operational information about the business, such as customer satisfaction and process performance measures.

Figure 10-33 shows a very simplified layout for a balanced scorecard. Notice that this balanced scorecard combines financial, customer, process, and employee information into a single form. Often these forms are color coded to show if goals are being met or if performance is unsatisfactory. Scorecards, if used effectively, can be used to monitor and drive improvements in performance.

Dashboards look like electric meters or car dashboards. Figure 10-34 shows a dashboard that looks like an electric meter. Each of the “gauges” on the dashboard shows a different metric.

Notice in this case that the gauges in Figure 10-34 match the metrics reported in our balanced scoreboard discussed in Figure 10-33. This dashboard quickly communicates whether or not performance objectives have or have not been met. Again, the focus is on easy, clear communication.