1. Information, Analysis, and Knowledge Management in the Baldrige Criteria
Examines how an organization selects, gathers, analyzes, manages, and improves its data, information, and knowledge assets.
4.1 Measurement and Analysis of Organizational Performance
a. Performance Measurement
b. Performance Analysis
4.2 Information and knowledge Management
a. Data and Information Availability
b. Organizational Knowledge

2. Functions of Information Management
Understand customers needs and customer satisfaction
Provide feedback to workers
Establish a basis for reward/recognition
Assess progress and the need for corrective action
Reduce costs through better planning and improvement

3. Empirical Survey Results (William Schiemann & Associates)
Measurement-management companies are more likely to:
be in top third of industry financially
complete organizational changes successfully
reach clear agreement on strategy among senior managers
enjoy favorable cooperation and teamwork
have more employee empowerment
have a greater willingness to take risks

4. Development of Information
Information is necessary for both control and improvement
Information derives from analysis of data
Data, in turn, come from measurement

5. Process Flow
Measurement
Data
Analysis
Information

6. Leading Practices (1 of 2)
Develop a set of key performance indicators (KPI’s) that reflect customer requirements and key business drivers
Use comparative information and data to improve overall performance and competitive position
Involve everyone in measurement activities and ensure that information is widely visible

7. Leading Practices (2 of 2)
Ensure that data are reliable and accessible to all who need them
Use sound analytical methods to conduct analyses and use the results to support strategic planning and daily decision making
Continually refine information sources and their uses within the organization

8. Example: Ritz-Carlton
“We only measure what we must. But, we make sure that what we measure is important to our customers.”
50% marketing and financial data; 50% quality-related productivity data.
Cost of quality is top priority. Are improvements important to customers, providing a good return, and done quickly?

9. Designing Measurements (Metrics) – APQC (1 of 2)
Plan
How will you use the data?
Have you selected and defined your measures?
Collect
How will you collect the data?

10. Designing Measurements (Metrics) – APQC (2 of 2)
Analyze
How can you ensure that the data will be relevant and believable?
What does the data indicate?
Adapt
How will you communicate your findings?
What kind of action should occur?

11. Types of Measurements Strategic Measurements
Measure the effectiveness and appropriateness of strategies
Operational (Performance) Measurements
Measure the effectiveness and efficiency of activities

12. Linkages to Strategy Measures and indicators
Key business drivers (key success factors)
Strategies and action plans
Measures and indicators

13. Functions of Strategic Measurements
Clarify and translate vision and strategies
Communicate and link strategic objectives and measures
Plan, set targets, and align strategic initiatives
Enhance strategic feedback and learning

14. Balanced Scorecard (Kaplan & Norton)
Financial perspective
Customer perspective
Internal perspective
Innovation and learning perspective
Leading measures
Lagging measures

15. Interlinking
Quantitative modeling of cause and effect relationships between external and internal performance criteria
customer
satisfaction
rating
time on hold (telephone)
* * *

16. Use of Comparative Data
Comparative data: industry averages, best competitor performance, world-class benchmarks
Helps recognize the need for improvement
Provides motivation to seek improvement

17. Process-Level Measurements
Does the measurement support our mission?
Will the measurement be used to manage change; that is, actionable?
Is it important to our customers?
Is it effective in measuring performance?
Is it effective in forecasting results?
Is it easy to understand and simple?

18. Creating Effective Process Performance Measures
Identify all customers and their requirements and expectations
Define work processes
Define value-adding activities and process outputs
Develop measures for each key process
Evaluate measures for their usefulness

19. Tools for Data Analysis
Statistical summaries and charts
Trends over time
Comparisons with key benchmarks
Aggregate summaries and indexes
Cause-and-effect linkages and correlations (interlinking)
Data mining
Basic
Advanced

20. Managing Data and Information (1 of 2)
Validity – Does the indicator measure what it says it does?
Reliability – How well does an indicator consistently measure the “true value” of the characteristic?
Accessibility – Do the right people have access to the data?
Security – Do the wrong people have access to the data?

21. Managing Data and Information (2 of 2)
Timeliness – When will the information be available when needed?
Integration – Is it easy to move the data from one system to another?
Modularity – Is it easy to interchange one subsystem to another?
Scalability – Is it easy to adjust the system in response to change in transaction volume?

22. The Cost of Quality (COQ)
COQ – the cost of avoiding poor quality, or incurred as a result of poor quality
Translates defects, errors, etc. into the “language of management” – $$$
Provides a basis for identifying improvement opportunities and successes/failures of improvement efforts

23. Quality Cost Classification
Prevention
Appraisal
Internal failure
External failure

24. Return on Quality (ROQ)
ROQ – measure of revenue gains against costs associated with quality efforts
Principles
Quality is an investment
Quality efforts must be made financially accountable
It is possible to spend too much on quality
Not all quality expenditures are equally valid