Management indicators become the vital signs of an organization. Its systemic and systematic monitoring allows to establish the conditions and identify the various symptoms that derive from the normal development of activities associated with the processes and the organization in general. For this reason, reference is made to certain principles and guidelines necessary to establish them, among which are mentioned: knowledge of the organization, support information, identification of the organization's needs, clarity in concepts associated with indicators, among others, and, also, to some attributes of the information associated with them. Emphasis is placed on the importance of always keeping in mind that INDICATORS ARE A MEANS AND NOT AN END in themselves, for which it is necessary to know some negative paradigms about their measurement, aspects also addressed at work.
Finally, some of the most frequent errors when establishing management indicators in a company are mentioned and discussed and some contents of the ISO 9001: 2015 Standard are outlined, which denote the importance of establishing them by processes within the organization, making their systematic evaluation and analysis with a systemic approach, identify non-conformities as a way to detect opportunities for improvement and investigate the causes of their deviation, as well as corrections and corrective actions, as appropriate, timely and precise for the continuous improvement of the management of processes, in compliance, in addition, to certain requirements demanded by the standard itself.
Starting in the last decades of the 20th century, companies are undergoing a process of important and unpredictable changes in many cases, moving from a situation of regulated protection to highly competitive open environments. The nature of business competition typical of the industrial age, where high-tech incorporation has been paramount, is rapidly transforming.
In the current era of marked development of ICTs, information and communication also play an important role, companies can no longer obtain sustainable competitive advantages only by applying new technologies to physical goods or carrying out an excellent management of financial assets and liabilities, it is important to see and apply it in an integrated way. (Luis, 2007, 2008, 2014, 2015)
From an early stage, Luis (2008), in a keynote address on "Management Issues and Quality Management in Commercial Activity", exposes, in order to highlight the value and importance of information and communication in the business context, the following idea:
Modern company management and organization theory tend to study the social microclimate of companies more than traditional economic factors: the behavior of individuals within an organizational structure is more important than the structure itself. Thus, although payment for results and other incentives continue to be key factors to achieve greater profits and market shares, other elements and measures, such as motivation, respect, affable and affectionate treatment, the possibility of active participation, timely communication and transparent, quality management (inspection, control, assurance…) and human resources management, constitute elements of high added value that cannot be ignored or left out of the applied strategies.
Luis himself, in the aforementioned conference, when highlighting the relevant role of human capital in a company, synthesizes it as follows:
“It is an inescapable fact that, where human capital is not properly managed, the destiny of the company cannot be properly managed and that, even when all economic indicators are met, if this is not positively reflected in the level and quality of life of workers and of society in general, the figures will matter little. Therefore, they are two areas of transcendental importance in the proper management of a modern company, based and principle on the integrality of management. "
The achievement of the competitiveness of the organization must be referred to its strategic planning, which sets the vision, mission, objectives and corporate strategies based on the adequate situational diagnosis, while the control of this planning is framed in a series of actions oriented to measure, evaluate, adjust, regulate and continuously improve the activities proposed in it; here comes the role of management indicators. In this way, strategic planning is conceived as a living entity, not as a biological unit.
In this measurement, the management indicators become the vital signs of the organization, and their continuous monitoring allows to establish the conditions and identify the various symptoms that derive from the normal development of activities (Luis, 2010). An organization must have the minimum possible number of indicators that guarantee constant, real and accurate information on aspects such as: effectiveness, efficiency, efficacy, productivity, quality, budget execution, management impact, role of senior management, the level of satisfaction of internal and external customers, and others, all of which constitute the organisation's set of vital signs.
Luis (2004, 2005), considers that an associated Balanced Scorecard is an element of high added value for the ordering, interpretation and decision-making of a management system based on indicators.
In Cuba, the Economic Guidelines of the Economic and Social Policy of the Party and the Revolution, approved by the VI Congress of the Party, recognize the importance of adopting integrated management policies, as decision-making is seen as a challenge for managers. function of achieving business efficiency.
With integrated management, organizations can adopt new ways of approaching activities in order to comprehensively manage quality, the environment, health and safety at work, human capital and the responsibility that the organization has with the environment and society, with the purpose of achieving an integrated management policy, which adapts to the technical requirements in national and international markets.
In this sense, for companies at present it is a great challenge to reorient their strategies to face the impacts of the environment, assuming they have management systems that point towards the effectiveness of functional areas with tools such as systems of indicators that measure the organizational performance, with a view to the effective improvement of the management system and, therefore, decision-making.
It is verifiable that the performance of most organizations is interpreted and evaluated based on the results of their management indicators. Thus, it will be of high interest to identify and / or define them if you really intend to effectively and efficiently manage the company.
MANAGEMENT INDICATORS
- Before mentioning the management indicators, it is appropriate to remember the definition of the indicator which, among other definitions, can be expressed as: ¨Relation between quantitative or qualitative variables, which allows observing the situation and trends of change generated in the object or phenomenon observed, with respect to objectives and anticipated goals and expected influences. ¨ In this way, indicators are means, instruments or mechanisms to evaluate to what extent or to what extent the strategic objectives are being achieved. In addition: They represent a managerial measurement unit that allows evaluating the performance of an organization against its goals, objectives and responsibilities with reference groups.They produce information to analyze the performance of any area of the organization and verify the fulfillment of the objectives in terms of results Detect and foresee deviations in the achievement of the objectives They allow to improve the efficiency in the performance of the company, based on the speed of responses to all your needs, both internal and external.
There are different indicators in order to evaluate the activities associated with them. Thus, we can mention: financial, economic, performance, commercial, sales, purchasing, performance, productivity, efficiency, effectiveness, customer satisfaction, interested parties and others indicators.
When incorporating the term management, the definition of this term and its influence on the concept of indicators must be taken into account. The definition of the term management, seen through the ISO 9001: 2015 Standard, is expressed as "coordinated activities to direct and control an organization"
For this reason, some of the various definitions of management indicators are mentioned below:
- "Mathematical reasons that allow evaluating the performance and fulfillment of the objectives." "Instruments for the evaluation of policies, objectives and institutional goals and they constitute administrative instruments of great utility for the improvement of the organization" "Numerical parameters that, based on previously defined and organized data, allow to have an idea of the fulfillment of the plans established, and allow decision-making to correct deviations. "
To establish the management indicators, certain guidelines are important, among which we can mention: knowledge of the organization and its operation, support information, identification of the organization's needs, clarity in concepts associated with the indicators, among others. The result of each indicator can be a fixed point or a zone, and it can also be stable or variable.
The quantity of indicators constitutes an element and a decision of vital importance for the organization. The ideal number of indicators is difficult to specify, it is achieved with a reasonable time to evaluate those that have been selected in the first place, but it is not healthy to have too few, nor too many. Definitely, this decision responds to the type of company, its specific activity and the rational use that allows evaluating what is really needed, even above what can be desired. Many times, you want to evaluate a large number of elements, mistakenly thinking that, the more you evaluate the better, so the company is filled with indicators, many of which do not contribute to the necessary and really required evaluation to make the most decisions. appropriate, which is counterproductive.It is important to be clear about the difference between what is desired, often due to subjective interests, and what is really necessary to evaluate the management of the company. It is possible to have "infinite" indicators in the organization, whether they are strategic or of processes, but it is necessary to look for which of them truly contribute to the most adequate evaluation of the functioning of the processes, to the decision making and to the continuous improvement of the same and the organization.but it must be sought which of them truly contribute to the most adequate evaluation of the functioning of the processes, to the decision making and to the continuous improvement of the processes and of the organization.but it must be sought which of them truly contribute to the most adequate evaluation of the functioning of the processes, to the decision making and to the continuous improvement of the processes and of the organization.
PRINCIPLES FOR THE DESIGN OF INDICATORS
In practice, it is important to keep in mind certain principles that help in the determination and definition of management indicators, among these:
- They must be specified for each of the organization's processes. They must be measurable. They must be simple, objective and easy to use. They must be tailored to the needs of the organization. The indicators must be linked to the systematic and systemic evaluation of the results of all the processes of the organization.
It is necessary to determine, for each indicator, its status, its threshold and the range of its management. The state is associated with the initial or current value of the indicator. Every indicator must have an associated value, or expected range of values; The threshold is the value that is required to be achieved or maintained for the indicator and the range is the space between the minimum and maximum values that the indicator can take.
Other elements to take into account for the design of the indicators can be:
- Name Calculation procedure Unit of measure Direction Source of information Frequency of data collection Present value (capacity) Value of potentiality Goal Frequency of analysis Responsible for the analysis
Some attributes of the information associated with the indicators must be: veracity, reliability, accuracy, form, frequency, extent, origin, temporality, relevance, integrity and, very importantly, timeliness. They must also be known, communicated, monitored and updated.
The importance of the indicators is that they constitute an interesting source of data that allows us to know how the organization is doing according to the planning carried out, the level of compliance with the planned objectives, they guarantee the monitoring of management functions and activities, they provide data on business, which can become information when properly processed and communicated; in knowledge, when it is made available to all interested parties and is properly applied and, in the end, it becomes intelligence, when it is used as a tool for decision-making by senior management.
It is important to add to the data provided by the indicators some indications and signals that help to interpret them more quickly and, consequently, to make decisions. It should always be borne in mind that the action of the indicators remains at the information level. But decision-making is an innate responsibility of managers or leaders, and it should be their responsibility to determine which indicators to use, how to use them and, above all, what to do with them. But always assisted by great common sense.
It is recognized that, among others, the indicators are used to:
- Control, evaluate, monitor, and update the strategies of the company through the behavior of its processes. Communicate the strategy to the entire Company. Coordinate the strategy with departmental and individual objectives, taking into account the interaction between the different processes of the organization. Link strategic goals to long-term goals and annual budgets. Identify and coordinate strategic initiatives from the processes. Carry out periodic reviews of the performance and performance of the processes to learn and improve the strategy.
It is important to always bear in mind that INDICATORS ARE A MEANS AND NOT AN END in themselves, which is why it is important to know some negative paradigms about their measurement:
Measurement precedes punishment.
There is no time to measure. Such a feeling is noted when many times an unnecessary measurement systematicity is imposed. People perceive that only the desire to show that something is measured is imposed, without even time to interpret, evaluate, make decisions and improve the results.
Measuring is difficult.
There are things that are impossible to measure or are also unnecessary. It is more expensive to measure than to do.
Comments based on previous experiences in the use of indicators
In the development of indicators there are always experiences that should serve as a basis to correct the future, as part of the continuous improvement of the organization's management, and not repeatedly fall into the existence of non-conformities, errors or inconsistencies. Some of these errors are mentioned below:
- Not establishing indicators for all processes. Not having at least one expected value associated with each indicator. Underestimation or overvaluation of goals. Weakness, ignorance, lack of information or strategic vision (in decision-making) of process managers, organization managers and technical teams, to specify, establish and classify indicators. Not establishing limit or alarm values for the indicator Too many indicators Difficulties in establishing responsibilities for compliance and even monitoring and reporting the values previously achieved and those to be achieved. Lack of analysis and proposals for improvement.Lack of coordination between the different stakeholders for the validation of the indicators and their dissemination and communication to the organization through the established methods. Weakness of its articulation with the plans of planning and strategic programming of spending. They do not describe the interaction between the processes. Poor formulation of the indicators. Failure to establish appropriate and timely corrections or corrective actions according to the non-conformity.
Similarly, in the development of indicators, difficulties may arise that must be taken into consideration so that they do not arise in the future. Such potential difficulties are mentioned below:
- How to formulate strategic objectives and disaggregate goals? How to measure the products whose results are obtained in the long term? What units or areas should generate indicators? How to build the formulas? How to measure results of a management of a company or entity that depend on the management of other various entities? Historical data availability. Difficulty in measuring inputs and outputs due to lack of financial accounting systems. The added value of developing indicators is not perceived. Evaluating the indicators becomes a bureaucratic burden and interest in their evaluation is not stimulated.
Measuring our indicators is one of the most advisable tools to evaluate the effectiveness of any organization's processes, in addition to being a requirement of the ISO 9001: 2015 standard, which makes it a requirement for companies, as can be specified in Chapter 9 ¨Performance evaluation¨, and other sections of the standard itself.
With all that has been stated so far, it is interesting that it is perceived that the importance of management indicators is quite alien to a simple utopia, measurement or figure, it becomes a necessity and obligation. Its usefulness is broadened when it is recognized that they make up a series of data that, duly processed, will become valuable and timely information that, in the hands of the right people and at the right time, will allow making the most appropriate and timely decision in benefit of the organization and its processes.
For this reason, it is of interest to express that information is one thing; meanwhile, obtaining the correct information, transforming it into a product of strategic value, distributing it to the people in the appropriate ways and at the right time, and ensuring that it is used correctly, are very different things. With this, it is highlighted that the task does not consist only in measuring and evaluating the management indicators, it is this and much more.
The aforementioned criteria reaffirm the importance of avoiding isolated activities to obtain the information associated with the indicators, making it essential that it reaches the maximum direction to avoid falling into a passive waiting period for someone to make a decision. If this happens, or if, even when the information reaches the highest address, this sequence is not respected, time has been wasted, since they do not constitute an orderly, logical and coherent work system, which implies the performance of legal activities with the purpose of knowing how to optimize the information, with its positive impact on the strategic planning of the organization's activities. Finally, the basic principle of the value of management indicators is no longer met.
Following this logic of reasoning, it is important to refer to the use of a Balanced Scorecard (Luis, 2004, 2005), a tool that arises to definitively relate the strategy and its execution using indicators and objectives based on four perspectives. The benefits of its implementation can be integrated into four concepts:
- Relate the strategy with its execution, defining objectives in the short, medium and long term Have a control tool that allows decision-making in an agile way Communicate the strategy at all levels of the organization, thus aligning people with the strategy. Have a clear vision of the cause-effect relationships of the strategy.
The author himself states that, to achieve these benefits, the Balanced Scorecard uses a model based on indicators and objectives that revolves around four perspectives: financial, customers, internal processes and learning and growth.
Thus, a scoreboard is defined with objectives in each of the perspectives that serve to execute, communicate and control the strategy.
In addition, the strategy map is also used, which is a diagram of the cause-and-effect relationships of the strategy through the four perspectives, and which serves to graphically depict the deployment of the strategy to have a clearer vision for taking decision making.
When implementing a Strategy and Balanced Scorecard project, leaders are needed in the organization to manage the change necessary to ensure the success of the project. Some of the characteristics that these leaders must have are:
- Have a long-term strategic vision. Develop the necessary strategies to achieve it. Align the team with the strategy Be able to balance the strategic aspects with the day to day of the organization
Luis (2004, 2005), refers to different potential weak points in the implementation of a Balanced Scorecard, among which he mentions:
That the strategy is defined at the senior management level and is not communicated to the entire organization. However, the leader focuses on people, uses person-to-person influence and encourages them to follow.
That the strategy cannot be executed because there is no clearly a relationship between the strategic, tactical and operational level. However, with the Balanced Scorecard it is possible.
The definition of objectives without taking into account the cause-effect relationships of the organization with which there are incoherent objectives between them.
That the strategy is "static" and that it is not revised with the agility that a changing environment like the current one requires. However, the leader is interested in effectiveness, asks what and why, takes the initiative. The leader encourages change.
Failure to correctly manage the necessary culture associated with a project of this style, since the indicators and objectives not only have to be defined, but also must be "lived".
In this sense, it is a requirement to cultivate in the organization a culture open to constructive criticism and in which all people can contribute to the company's strategy, in addition to their criteria being valued.
Most frequent mistakes when working with Management Indicators
Some of the most frequent errors, not the only ones, regarding the selection, establishment, design, classification, evaluation and analysis of the indicators are discussed below.
Not establishing indicators for all processes.
To establish indicators it is necessary to previously define the process map. This will allow to identify and classify them by processes with better criteria and precision. An idea, not the only one, could be: by operational processes, support processes and strategic processes. The classification may vary according to the criterion taken in classifying the organization's own processes.
Now, it is important not to fall into the error of establishing only indicators for operational processes, even though these are usually considered the most important processes, since they generate the activity and with this the financial source is created to give continuity to the business. But the support processes must be taken with the same importance, since it affects the operational and strategic ones very directly. Note that in the process map they are all related, and none will be independent. This will always be true.
In fact, many times there are faults in a support or support process, and by not measuring it or not doing it properly, it will not be possible to realize that this is the cause of affecting the results of an indicator of operational or strategic processes. Then, it will be difficult to identify the true source of the non-conformity and, consequently, the associated causes and the appropriate corrective actions that must be taken to improve the indicators of the affected processes.
There is something that is appropriate to comment, and comment is expressed, since it is not outlined with the intention that it is seen as a rule that everyone must follow, because each organization must make its own decisions depending on its experience and work style, even if it has been a rule in the way of designing, implementing, implementing and evaluating quality management systems, in the companies in which the authors have worked assuming the responsibility of representing the management for the same.
The comment is rather aimed at companies that have several geographically distributed representations in a territory, country or countries and consists in recommending that the design of the document through which the indicators are specified to evaluate each process, be conceived as a Single scope document for the entire organization, that is, containing all the possibilities or indicators whose evaluation may be of interest in each process, I mean a true interest in its real impact on its effectiveness, for the evaluation of the same, and that each of the entities, both the Headquarters and the subordinates, evaluate those that apply taking into account their activity, performance and responsibilities at any given time.
The opposite could lead to the generation of as many documents as there are differences between the activities of the different entities, which can be an element of high variability over time, falling into something that the norm tries to avoid, the documentary disease syndrome. No one doubts that the proposal should require more time dedicated to the design and creation of the document that contains the indicators by process, but practical experience has left no doubt that the solution may be something more "intelligent", since, among many other points of view:
- It facilitates the handling of documentation, It allows everyone to see what others are doing and that, perhaps, at some point, they themselves could do on occasion, It makes it possible to react faster to any change of roles. By varying the interests or needs of the clients or possibilities of the organization can vary; Let's say, it is necessary to incorporate other activities to the entity and, consequently, it is necessary to modify the document used for the indicators. It generates less maintenance to the system. The time dedicated to maintenance could well be used in the continuous improvement of the system. It contributes to systemic thinking and, consequently, contributes to a better corporate image, denotes greater "collective intelligence" by being able to generate in a single document something valid for all the organization.Reduces the possibility of using outdated documentation.
Some will think that, taking into account the advances of ICTs, it may be unnecessary to spend time on this reasoning, taking into account that during a subsequent process of digitization and automation of the system it will always be possible to handle a large amount of diverse data with a certain ease. And they are not without reason, only that, in these same times of ICT development, a variable that will always have great value in the design or selection of any platform, software or application for data management will be the time of capture, ordering and processing of the same and, obviously, the possibility of comprehensive interpretation of the results. For the rest, the principle of standardization of information is being complied with, advantages added by management systems.
Remember, and always keep in mind that, in any activity to be developed, the presumed time lost in design will be gained in execution, processing and interpretation of the results, and that a distinguishable virtue of a quality management system over another similar one is the possibility of standardizing information and the least amount of documents and time required to achieve the same end.
Weakness, ignorance, lack of information or strategic vision (in decision-making) of the organization's managers, process managers and technical teams, to establish indicators, values to be achieved and limit values.
Sometimes, more than what is dictated by the most elementary reason and good ethics and business management practice, people are selected for certain positions who do not have a true leadership capacity, who are not capable of inspiring others with their projects and proposals, who are not capable of making decisions if they are not previously consulted, who fear that their decisions do not coincide with the points of view of their superiors, showing an evident weakness of character with regard to decision-making. In these cases, indicators frequently arise that, by not committing senior management, are accepted, even when the result of the same does not meet the objective of fully evaluating the management of the process and, consequently, of the company. It constitutes, moreover,one of the main sources of underestimation or overvaluation of the values associated with an indicator, often coinciding with "what the superior boss says".
On other occasions, there are people with decision-making capacity but who do not have sufficient technical preparation and knowledge of the process they direct, or having them, lack orderly, coherent and timely information due to the lack of communication in the company, and Either because of the lack of an orderly communication system, or because of its compartmentalisation, the lack of disclosure that, accidentally or deliberately, does not give them the possibility of selecting the best indicators and the values associated with them.
Another is the case of people with a lack of strategic vision, who are unable to appreciate what is happening or may happen not only in their immediate environment, but beyond it. They do not have any type of information, nor are they interested in many cases, since "for them" everything is going as they wish, about how the environment and the business context in which they carry out their activities will evolve and are expected to evolve. They forget, or try to avoid, that the only thing that is constant in life is change. They don't want to break their status quo.
Too many indicators.
Although it may seem contrary to some of the previous sections, in reality it is not. Fair and necessary indicators must be established, we reiterate, something very complex in practice, to know the effectiveness of our processes, of all the processes of the organization. But, bearing in mind that the balance between the time required for monitoring, the effort to record and subsequently analyze this data must outweigh the benefit of knowing the status of the indicator.
In short, don't waste time defining and measuring indicators that don't say anything. The indicators must be aimed at knowing the status of the process, detecting opportunities for improvement, making the most appropriate and pertinent decisions at all times, identifying the causes associated with non-compliance, and proposing adequate and timely measures through corrections and / or corrective actions to improve them when necessary and possible.
Poor formulation of the indicators.
We suggest that, to be able to carry out a true management by processes, the indicators should be formulated by the specialists of each process. They must be the most knowledgeable about its process and, at the same time, those responsible for its proper management, regardless of the fact that the main responsibility lies with the highest management.
Once it is clear which indicators should be formulated, it is time to carry out a fairly important task, which is their formulation or definition. It is important at this level to ask the following questions:
- What do you want this indicator for? What does this indicator want to convey to me? Can I easily measure this indicator? Does the final result of the indicator depend exclusively on the effort of my organization? What are the risks associated with the indicator? Does it help me to control and improve my process? How do I realize that the indicator provides the information I require and tells me that it must be improved or that its value is not appropriate?
These questions and the associated answers will facilitate the selection, definition and formulation of the indicator. You should always think that the purpose of the indicator is to measure, to later analyze, plan, make decisions and act on the measured process for its improvement.
The description, formulation, statement, treatment, grouping, relative value (weighting), may differ from one indicator to another and from one entity to another, and even, within this, from one scenario to another, depending on its specific activity., needs, strategy, interests, objectives and motivations of a given moment, but in no case should the experience accumulated up to that moment be ignored. The weighting can become an element of high potential and practical interest to stimulate the achievement of the desired value, and it constitutes an interesting tool to rank indicators and prioritize the achievement of objectives and strategic results that need to be prioritized at a given time. (Luis, 2010).
On repeated occasions, when formulating a management indicator, only the fulfillment or not of an associated value is conceived. However, there are indicators that depend on other entities to achieve this, as mentioned previously. In these cases, it can happen, and it does happen, that all the actions that depend on the organization or process itself have been carried out as planned; However, the culmination of the result depends on another process within the organization itself, or another company outside ours. In these cases, if it is not planned to give values to the different stages and activities associated with the indicator, it can be incorrectly evaluated since the effort associated with the result would be ignored.
Frequently, more than what is dictated by the most elementary reason and the recognition of man as a psychosomatic-social being, it is heard to say "what I evaluate is the results of the work, not the effort." Such an obvious slogan is what is recognized by all: "an indicator is not an end in itself, but an instrument, a means, an important tool that aims to measure and improve results"; then ,If we only evaluate the results without recognizing the effort, we could be contributing directly or indirectly to not stimulating it. Here, it would be legitimate to ask: what good result is not preceded by a good effort, or is it obtained through a fleeting effort? When the latter happens, then the value associated with the indicator is not correct or is undervalued as occasionally happens “to watch our backs”.
Although it is very important to AWARD the result, it is also important to highlight, respect and recognize the effort, because not all people show a willingness to make an effort and, although sometimes, a great effort does not guarantee obtaining a good result
(multifactorial problem), it is important to stimulate effort as a very effective and safe way to achieve results. Not for pleasure many times you hear people say "… life always rewards those who make an effort.", a very popular phrase, but without a doubt, out of experience.
In short, it is our personal consideration that, when an indicator contains in itself several activities with sequential dependence in time, value must be given to each of these to measure it properly.
This, thus, allows evaluating the indicator and the status of compliance or not of each of the associated activities, which facilitates identifying opportunities for improvement. It should be conceived this way from the beginning.
Remember that what is not measured cannot be evaluated or controlled and that what is measured incorrectly will be poorly evaluated.
Do not set limit or alarm values to the indicator.
When establishing limit values for the indicators, it is common to set a certain value, or values, that indicate that the indicator is adequate or not. Later, follow two lines of thought: one, consider that an indicator is fulfilled or not fulfilled, something like that it has to be only black or white; the other, to establish certain ranges of values between which the indicator can move, which makes it possible to recognize and manage a certain level of risk that may be associated with it. This makes it possible to differentiate different levels of compliance.
In business practice there are indicators that will have a unique value; while others must be defined considering certain ranges.
For example, a company that depends on the results of another to meet a certain indicator, as already mentioned for processes, must be more careful when specifying the compliance values that it will give to its indicators, since the presumed problems of the company on which the achievement of its objectives depends and the fulfillment of its own indicators, can significantly influence its results. In these cases, experience and common sense are worth a lot in the precision of the value associated with the indicator. It is recommended not to set the desired value in a value, but in an interval that allows taking into account the possible associated risk.
Indicators are true emotional springs for people who see through them the fulfillment or not of their management. Therefore, unattainable values in the indicators can significantly demotivate people and have a very negative influence on the management and the results that are intended to be achieved. At the same time, inadequately low values can motivate a performance below the real possibilities.
What, if it is obvious, is that it is very demotivating when, due to non-compliance by others, the own indicators deteriorate, knowing that all the conditions were foreseen and that the possibilities existed to reach the established goal. This, do not doubt, will be a high-level trigger in reducing people's motivation and, consequently, will have a significant influence on the decrease in their work performance. The indicators with this particularity, in general, are not usually only black or white, that is, fulfilled or not fulfilled, but must have associated ranges of values that allow evaluating one's own effort and taking into account, preventively, possible aggregate noncompliances by other entities on which its own management depends.
In all cases, it is important to set the alarm value or limit value to know if the indicator is within normal, acceptable or desired values. If, previously, limit values have not been established, it will not be possible to establish appropriate corrective actions to return to within the desired limits.
Something that must be commented, the values associated with the indicators can be modified to the same extent that they are achieved with greater or lesser ease, to achieve better performance and encourage people's motivation. Here, the role of the leader and her work team is important to achieve better management of the activities associated with the results that are intended to be achieved.
Underestimation or overvaluation of goals.
Goals and objectives are not always easy to pin down. On the one hand, a very optimistic but unrealistic vision can motivate them to fixate on really unattainable values; While, on the other hand, the fear of not being able to achieve certain goals, either due to lack of preparation, motivation, incentives, means, resources or dependence on the activity of the company from other organizations that may present difficulties similar to those mentioned, makes that the goals assumed as their own can be very different from those that can be, desired or need to be achieved. Such a situation compromises the state of compliance with the values associated with the indicators, through which it is intended to evaluate the level of management of the organization.
This is one of the cases to which it has been referred that experience is very important, and being able to have a historical database of the relationship with product and service provider entities and with customers, in addition to having identified the risks associated with the indicators, having well identified what depends on one's own management and what does not, and it is even recommended that the indicator move within a certain range, threshold or interval of minimum and maximum values that can cover the uncertainties.
There are certain indicators that may be of interest at other levels that have to be assumed and on which there is no possibility of modification. These, which are outside the scope of this assessment, will definitely constitute necessary indicators.
In any case, it is appropriate to always keep in mind what is stated in the ISO 9001: 2015 standard, regarding the setting of goals and objectives in section 6.2, valid when establishing indicators:
With reference to the objectives it is specified:
- Consistent with policy. Measurable. Consider the applicable requirements. Relevant for the conformity of products and services. Monitored. Releases. Updated.
It is suggested to see what was raised by Luis and collaborators (2015) regarding the objectives that, due to their scope and description, is applicable when defining and establishing indicators.
Lack of analysis in the indicators
Although it seems obvious, the reality is that on many occasions the indicators are measured and recorded, but they are not analyzed in a timely and adequate manner. And it is that measuring and recording is not the same as analyzing, evaluating, validating. All the necessary and established records must be taken to carry out the pertinent analyzes and reach conclusions. The analysis should be done, in the first instance, by the head of the process and her work team and, later, with the senior management. This also generates and creates an environment of collective participation and helps to create the bases and consolidate teamwork.
But it is also important and necessary to provide information at all levels, which contributes to forming a culture of cooperation. It is advisable to generate a culture of contribution of ideas and collaboration in decision-making based on management indicators; This helps to eliminate subjective criteria and personal appraisals, moving to a higher level of collegiate decision-making based on facts, seen through the results of the indicators. A common mistake among companies is that information usually only flows at high levels, in such a way that middle management workers and operational personnel are unaware of the data they need to be able to evaluate their work and make it more efficient.
An element of high esteem and highly recommended for some time, which facilitates and enriches the analysis of management indicators and collegiate decision making in the company, is to stop being an organization that works with large amounts of paper when they already exist electronic formats that allow digital feedback. One of the basic principles of the development and continuous improvement of a company is closely related to the feedback of the processes through its management indicators, and the development of an intelligent company. To the same extent that we are able to impregnate and achieve the development of skills and habits in the use of digital technology by company workers, in guaranteeing their knowledge of the organization and its functions, methods,management procedures and indicators, among others, we will be contributing with our business and social function to create and form a smarter company, which exceeds the primary stage of indicator measurement.
In this sense, it is important to organize the company with a high level of Internet access that gives it the possibility of optimizing its processes, knowing the skills of its collaborators and detecting the levels of competence that workers require to improve and, if necessary, redefine each and every one of the activities and positions; this, too, based on management indicators and their continuous improvement.
To guarantee a more effective analysis of the management indicators, it is necessary to know them immediately, this will require digital means, which can be achieved from the use of the Internet Web and the application of the Corporate Web (Digital Organization Model); at the same time, it will guarantee that the activities of the company always have a logical congruence with the real situation that will allow to make correct decisions regarding the opportune and appropriate actions that must be applied. The use of statistics, especially the techniques of projection of statistical behavior, will be sources to be applied in decision-making based on knowledge; In this logic, Bill Gates says, “I have a simple but firm conviction: the way it is captured,manage and use the information will determine profit and loss ”; therefore, companies that use digital media for the operation of their efforts, will make better decisions, with greater security and speed and, at the same time, will find positive ways of direct contact with their customers, internal and external, which will allow them execute its actions, operations, activities, processes, with the brevity of thought, a key condition of success for this new stage and millennium in companies.operations, activities, processes, with the brevity of thought, a key condition of success for this new stage and millennium in companies.operations, activities, processes, with the brevity of thought, a key condition of success for this new stage and millennium in companies.
All of the above reaffirms the importance of the systematic and systemic analysis of the indicators, both qualitatively and quantitatively, of their digitization and automation. Once again it is shown that, not only the figures are enough, but the proper and timely interpretation of them.
Failure to establish adequate and timely corrective actions.
This could be one of the errors that occurs most frequently in practice. On several occasions, managers feel satisfied with the fact that the indicators have been measured, ignoring the importance of their evaluation and analysis, the true raison d'être of these as has been reiterated. And it is essential that when the data analysis is carried out and deviations arise, apply appropriate and timely corrective actions to return to the path traced, seen through the strategy, or make the relevant and timely changes that lead us to achieve the planned objectives. How to do it is a choice of each company, open a non-conformity with its complete treatment, directly apply a corrective action, do a correction task,… The important thing is to do it, communicate it through the appropriate channels, means and people, with a sense of urgency and opportunity and with an inclusive and participatory nature of the workers, and that it is evidenced.
In this sense, it is timely and convenient to refer to some paragraphs of the content of the ISO 9001: 2015 standard.
The ISO 9001: 2015 standard specifies in its section 9.3.2 Management review inputs "The management review must be planned and carried out including considerations on:" and described in section c.
- c) information on the performance and effectiveness of the quality management system, including trends regarding:
- customer satisfaction and feedback from relevant stakeholders; the degree to which the quality objectives have been achieved; the performance of processes and conformity of products and services; nonconformities and corrective actions; monitoring and measurement results; the results of the audits; the performance of external providers;
The importance of not only measuring the indicators, but also of evaluating and analyzing them, is evident in order to respond to these requirements of the standard. This criterion is reaffirmed when the content of paragraphs d to f, referred to below, is analyzed. d) the adequacy of resources;
- e) the effectiveness of actions taken to address risks and opportunities (see 6.1); f) opportunities for improvement
One might wonder, How to adapt the resources if, once they have been evaluated and given the need for such adaptation, no actions have been implemented to improve them? This question is closely linked to item e) referred to above.
Later, in section 10.1 General, it sets out the standard “The organization must determine and select opportunities for improvement and implement any action necessary to meet customer requirements and increase customer satisfaction.
- improve products and services to meet requirements, as well as consider future needs and expectations; correct, prevent or reduce unwanted effects; improve the performance and effectiveness of the quality management system.
And expand through the following note:
It continues to deepen the importance of the analysis of the indicators and the information derived from them in the decision-making of the managers, with regard to the non-conformities in section 10.2 10.2 Non-conformity and corrective action
- react to the nonconformity and, where applicable:
- take actions to control and correct it; deal with the consequences;
- the review and analysis of the nonconformity; the determination of the causes of the non-conformity; determining whether similar non-conformities exist, or potentially may occur; c) implement any necessary action;
Some other frequently occurring errors are mentioned below, although comments on these are omitted.
Management indicators that measure activity rather than performance provide less useful data and information overload.
Focusing on short-term goals at the expense of long-term goals is inconvenient, due to pressure for immediate performance.
The lack of knowledge of the different activities associated to achieve the desired value of an indicator, and a focus only on results, can cause management indicators to be used poorly and contribute to a demotivation of their scope.
Too many financial indicators compared to the indicators of quality, leadership, human capital, information and communication, risks, innovation and technological development, purchases, sales, customer and stakeholder satisfaction, supplier evaluation, for example, can cause an unbalanced performance and neglect essential areas.
Manipulating data to improve performance, especially when reward or "punishment" depends on indicators.
Use the indicators as the phase prior to "punishment" and not to identify opportunities for improvement.
Danger in specifying the data, because it may be only interesting rather than really necessary.
Risks of measuring only work processes that are easy to control, rather than those that have greater potential value and complexity.
Not comparing similar activities, which can lead to feelings of injustice and a lack of confidence in performance indicators.
So, do not hesitate, and always keep in mind that the indicators of the processes should be a tool to know their health, but that it will only depend on the top management to keep them healthy.
Inadequate management of non-conformities arising from the indicators.
When detecting non-conformities, derived from the analysis of the indicators, these must be properly managed. In this sense, the following cycle is proposed, modifiable and adjustable to the characteristics of the company. In short, when an indicator does not meet its desired status, it is necessary: a) to declare and open at least one non-conformity; b) record the nonconformity; b) investigate the associated causes, which may correspond to a different process from the one evaluated; c) specify the corrections and / or corrective actions, as the case may be; d) assign responsible parties and specify participants in its application and monitoring; e) specify the time for compliance and the dates of partial reviews; e) need for date changes f) closure of the non-conformity.This entire sequence must be duly recorded as evidence of the management of non-conformities.
The aforementioned non-conformities management cycle is summarized and schematically shown below.
Regarding item d) of the non-conformities management cycle exposed, it is of paramount importance to stimulate the participation of all workers, in which it helps to use and implement digital tools to keep them informed, ask for their opinions, criticisms, ideas, suggestions, let them know the deviations of the activities they perform, activating a salary incentive system according to their participation, effort and contribution to the achievement of the results and objectives of the company, that they understand how much they depend on others and vice versa; It is essential that the workers know and feel familiar with the company and its activity, that the managers know about them and that it is possible to engage in topics of discussion and analysis that raise the capacity, desire,the initiative and the cultural level of the organization.
This is an incentive of high interest and that adds value to the management of non-conformities.
And, most importantly, it must always be borne in mind: the corrections and / or corrective actions must be timely and appropriate to the non-conformities detected, and must be applied by the workers involved, as their commitment to the continuous improvement of their activity and that it should be included within their work functions, which will help to achieve active and conscious participation.
In a future work we will address the importance of digitization and automation of management systems and associated indicators, referring to several existing digital platforms and free software that can be adopted and adapted to the characteristics of each company, which facilitates the capture, management and interpretation of data and, consequently, help in decision-making.
We will comment on some advantages of CRM and ERP for the creation and management of the database, its interpretation and decision-making in companies. But, for this, it is necessary to have the management system and its indicators designed, since the only thing that can be digitized and automated is what is previously designed.
CONCLUSIONS AND RECOMMENDATIONS.
CONCLUSIONS.
Management indicators are a means, not an end in themselves, which makes them important instruments or mechanisms to assess to what extent the strategic objectives of a company's processes are being met, effectively contributing to decision-making and to the continuous improvement of their operation.
They must be specified for each of the processes of an organization, which will facilitate their management by processes, an essential requirement of the current ISO 9001: 2015 standard, which makes them a requirement for companies.
Select the really required amount of management indicators that guarantees the most adequate evaluation of the operation of the processes, bearing in mind the guidelines, principles and attributes of the information associated with them to make the most appropriate decisions.
When deviations arise, it is necessary to apply appropriate and timely corrective actions or make the pertinent changes that lead to achieving the objectives set. It is important to communicate it through the appropriate channels, means and people, with a sense of urgency and opportunity and with an inclusive and participatory nature of the workers, and that it is evidenced.
RECOMMENDATIONS.
They should be aimed at knowing the status of the processes, detecting opportunities for improvement, making the most appropriate and pertinent decisions at all times, identifying the causes associated with non-compliance and proposing the appropriate and timely measures through corrections and / or actions. corrective measures to improve them when necessary and possible. The evidences must be duly registered.
Generate a culture of contribution of ideas and collaboration in decision-making based on management indicators; This helps to eliminate subjective criteria and personal assessments, moving to a higher level of collegiate decision-making based on facts, a requirement of the ISO 9001: 2015 standard.
Corrections and / or corrective actions must be appropriate to the identified non-conformities, and must be applied by the workers involved themselves, as their commitment to the continuous improvement of their activity and included within their work functions, which will help to achieve an active and conscious participation.
Organize the company with a high level of Internet access, which gives you the possibility of optimizing your processes, knowing the skills of your collaborators, evaluating their performance and detecting the levels of competence that workers require for the continuous improvement of their work.
The digitization and automation of management systems and associated indicators is important, which facilitates the collection, handling, processing and interpretation of data and, consequently, helps in decision-making. In this sense, it is required as a preliminary step to have designed the system and specified the associated indicators.
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