In my job, I get to see the strategic objectives and KPIs for dozens of organizations, large and small, commercial and public sector, US and International. I’ve previously remarked that customer satisfaction is one of the most often used – and least understood – measures. Despite the popularity of Six Sigma and Total Quality Management programs, another area that is not well understood is quality.
Most of us might instinctively want to measure quality using defect rates. However, defect rates only refer to conformance to specification, not overall quality. Twenty years ago, Garvin established that there are eight dimensions of product quality: conformance to spec, completeness of features, reliability, durability, serviceability, aesthetics, perception, and performance. (For those of you that sell services instead of products, there are five dimensions of service quality: responsiveness, reliability, assurance, empathy, and tangibles.)
A product with a zero defect rate (i.e. conforms to spec in every way) and a low completeness of features (i.e. is not fit for the purpose for which it was sold) is not likely to be considered high quality by the customer. In addition, it is important to distinguish between mistakes, which are largely an inevitable by-product of production, and defects, which result when a mistake reaches a customer. Quality processes are designed to ensure that mistakes are detected internally before they are delivered to the customer and become defects.
Given this distinction between “completeness of features”, “mistake-free processes”, and “conformance to spec”, I usually recommend that a quality objective have at least measures:
- % of products/services that are fit for purpose
- % of products/services that are completed without mistakes
- % of products/services that are delivered to customers without defects
These measures might be adapted to the particular circumstances of an organization. For example, software companies often substitute “% of customers that experience priority one defects” as a way of capturing the industry practice of identifying and proactively patching defects before they are widely experienced by customers. Likewise, consumer packaged goods (CPG) organizations would want to add measures that capture some of the other dimensions of product quality: durability, serviceability, and perception.
As always, having the appropriate objectives and measures is just part of the solution. If you assign harsh penalties for causing mistakes or fail to reward discovering defects before they reach customers, employees are unlikely to report them or fix them. However, they will eventually be caught, leading to lower customer satisfaction and higher costs to repair. Remember, performance management is more about motivating employees towards common objectives than mandating compliance to specific behavior.