More Than Math - Key Performance Indicators Are Not Just Mathematical Equations
Using KPI's is a Management Process
I am sure most of you have heard the famous adage, "what is not measured is not managed." Subsequently, what is not measured will not be controlled, improved or even done. Recognizing this, the objectives of developing the performance indicators should become clear: to be able to manage and only to manage. The intention of KPI's should not be to find someone to blame. If that is the case, then as a manager, you will be the first one to be blamed.
Developing performance indicators for maintenance is a process that starts with the company vision, extends to the objectives of the maintenance division and must be linked to employees' targets in their yearly appraisal. Achieving the best practice benchmark is not an individual effort, but takes contributions from the whole team.
Let's think differently about KPI's. They are not simply mathematical equations or formulas where some numbers are added, multiplied or divided to get the value. Then once the value is calculated, decisions are made on whether this number need to be increased or the numerator and denominator values must be changed. Certainly they can be (and, unfortunately, are) used like that. But that is not where the true value of KPI's lie. The importance is not really the numbers, but what is hidden behind the numbers.
Developing a Key Performance Indicator Process
I have a friend who wanted to reduce his weight. He started reducing the amount of food he ate and doing some random exercises. After few weeks he felt some difference in weight. I asked him how he measured his diet progress. He said, "Now I am able to wear my old pants." After several weeks he was able to wear all of his old clothes, which he thought was great. I advised him to go to a diet specialist to measure his body composition and fitness indicators in a scientific way. The measurements that were taken indicated that he had lost body water and muscles while the percent of body fat remained unchanged. So, after several weeks, he discovered that he was, in fact, measuring his pants and not his body.
It is exactly the same in maintenance, to reduce the fat in the process you have to measure the right things. The purpose is not only to measure but to also know what, how and when to measure.
Let's review two scenarios of developing and implementing the key performance indicators process in a maintenance organization, and how both will impact the work.
1. Shortcut Scenario:
- Management decides to measure the performance of the maintenance department (not the maintenance function).
- Maintenance manager conducts a meeting with his subordinates including maintenance heads for different crafts and the planning head. After a short discussion they select some indicators to be measured starting the next month.
- The planning head is responsible for producing the monthly report that shows poor values for the selected indicators in the first issue.
- Maintenance manager calls for a meeting and invites all the maintenance team, presents the report and starts blaming them for the unexpected values (unexpected from his point of view) and urges them to work hard to achieve the targets in the next month. Meeting is concluded while maintenance team was very surprised, wondering why they were there, what these KPI's are and how to achieve the management goals? Some of them start thinking about KPI's as a ghost or evil spirit that should be feared.
- The following month the report is issued. Some of the indicators improved, some became worst, and no one really knows why the improvement or why the decline.
What Happens In This Scenario?
1. The management team does not communicate the proposed KPI's to the maintenance team; they do not explain or share the objectives, methods and benefits with the team that is responsible for achieving the targets. Accordingly, the maintenance staff is not aware of what is required and how to achieve it.
2. Management uses the reported values to blame the team, considering them to be the main reason for any shortfalls.
3. The meeting was concluded without any management recommendations or guidelines to help illuminate the road for the team to perform the work.
4. No real analysis was performed to investigate the actual reasons for the poor performance.
In summary, the management enforced the KPI's categories and values without preparing the work environment for such an important practice. Management dealt with the KPI's as mathematical formulas and numbers without taking into consideration the factors that help to improve the results. This process seems to be a show or only for documentation completeness for audit purposes rather than a real desire for success.
This organization may see some random changes in the values due to the efforts of some individuals, but definite and sustainable progress and improvement will not be achieved.
2. Preferred Scenario:
- Management decides to install a process to measure the performance of the maintenance functions in the organization. The maintenance manager conducts a meeting with his subordinates, including maintenance leaders for different crafts and the planning leader. They start by assessing the readiness of the organization for performance measures:
~ Do we have maintenance work processes in place?
~ Do we have a planning / scheduling process in place?
~ Do we have work request / order flow charts in place?
~ Are strategies, policies, procedures and responsibilities published and communicated?
Perhaps the logical conclusion to draw is that if all the above are ready and in place, then all indicators should be at the optimum level. However, that is not necessarily the case.
The documentation may be in place, but it may not necessarily be implemented and/or correctly adhered to. So that begs the questions, "Are there any changes required in the processes or organization?" and "What are the shortfalls in these documents? "
The availability of documents is not enough to assure excellent performance. It is actually the effectiveness of the documents that counts. Of course, the availability of documents is a prerequisite to the measurement process. It is the baseline from where we will move towards our targets. Starting the measurement journey without processes and responsibilities is the same as starting a journey when your vehicle doesn't have a steering wheel.
Back to our scenario:
- The management team selects a set of performance indicators to be tracked; the selected set is a combination of leading indicators that will measure the work process effectiveness, maintenance cost and assets reliability. The selected set is linked to the company business objectives and will work as a catalyst to achieve company vision. Calculations concepts, preliminary target values and data availability have been confirmed before final endorsement. Planning head will be also responsible to issue the report, analyze the results and communicate the output.
- Before start implementing the new process, maintenance manager calls for a meeting where all maintenance staff and representatives from the operations team are invited. The maintenance manager starts presenting the KPI's concept, objectives, targets and the responsibilities of each team member to achieve the required values. Management communicates many important points in this meeting:
~ The objective of the meeting is to share information and communicate the new KPI process
~ The objective of the process is to assess where we are, how to improve and evaluate our success. It is an alert which will allow us to:
• Evaluate availability and utilization of production facilities
• Indicate areas for improvement
• Measure progress after corrective actions
• Indicate effective use of resources
• Improve cost effectiveness
• Eliminate unnecessary work
• Improve employees training opportunities
• Add sufficient control to maintenance process
• Give clear direction to the total organization:
~ The objective is not to blame others and find a victim or guilty party
~ What the impact of implementing KPI's is on both individuals and organization
~ The return on achieving the KPI targets are detailed to attendees
~ The KPI's values, calculation concepts and parameters affecting each indicator are illustrated.
- In the meeting, management listens to concerns, fears and other constraints that may work as barriers in achieving the targets.
- The meeting is concluded to make everyone aware of the process, their role, management expectations and the way forward.
- The following month, the report was issued: management studied the results, analyzed and published the report. A follow up meeting was conducted with all the concerned parties to discuss and agree on recommendations to improve the performance.
What Happens In This Scenario?
1. Management assesses and confirms the readiness for the KPI process implementation before starting. This guarantees a rigid foundation for the process.
2. The selected KPI's are linked to the company vision, business objectives and the individuals' objectives. All constitute a chain and have influence to each other.
3. Calculations logic is well set and understood, so there is no way for different manipulations by different users.
4. Both operations and maintenance teams are invited to the kick off meeting. They are both key players in the process. Maintenance is only one hand, and it can't clap alone.
5. Objectives, methodologies, responsibilities and expectations are clearly communicated to teams; no clouds to block the vision.
6. Analysis, sharing of results and feedback from staff, with management recommendations and actions are well understood to be vital to the process.
The above scenario is an ideal case for a workable KPI's process. This will assure the sustained improvement in the maintenance function.
KPI's Sustained Improvement (Kaizen)
When the process has started, management has to give its full support, ensure control of the process and deploy the proper tools that allow continuous improvement in the KPI's and, subsequently, in the maintenance function to occur. Below are a few quick tips to get the proper output:
- Management holds the main responsibility for process success or failure.
- Management has to promote the concept among the staff. The maintenance team must believe in the value of KPI's. Promoting objectives only related to company vision and business goals is not enough. Staff wants to see individual benefits like how this will reflect on their annual salary increase, bonus or job stability.
- KPI's are developed to measure the success, not to measure the shortfalls. Success is the final destination. Everyone must see KPI's from a positive point of view.
- In the journey to excellence there is no end line, if there is end line. Just like records will be broken in subsequent Olympic Games. If you achieve the preliminary targets, don't stop, there is always something better to do.
- A key element in the process is to assure the data availability, completeness and accuracy. Work process flow and regular data audits must assure the added value of the recorded data.
- Establish a controlled recognition and reward system for best CMMS users and good contributors in the process. Changing the culture of understanding the KPI's is essential, this will create protection against entering false data just to be in good shape.
- Management must be ready with alternative plans to deal with deficient implementation or poor values, the proverbial "what if" scenario. Encouraging and inspiring words are necessary but not enough; you must be ready with practical recommendations.
- Don't be driven by the numbers, but be driven by the analysis results. KPI's again is not just a formula need to balance the numbers. For example;
• Backlog reduction can't be achieved solely by hiring contractors, additional crew or work overtime. These are short term fixes, for a permanent fix think about work process, job estimates, staff organization, performance, utilization and efficiency, training required; otherwise you will be tied with contractors, overtime and illusion of manpower shortage for ever.
• Schedule compliance; think about what interrupts the schedule, you may need to change your maintenance strategies.
• Planning accuracy figure, again review your planning process, planners profile, scope and span.
Finally effective implementation of KPI's is a management process, but output is extremely influenced by staff culture and attitude. You will get the expected deliverable depending on the quality of managing the work process and the staff who work with it. These are leading indicators for the maintenance function indicators. Don't restrict your view to the absolute numbers, they will definitely improve automatically with the proper conditions are in place.
Tarek Atout is currently a maintenance planning engineer with Qatar Gas in their new expansion project. He has 20 years experience in maintenance planning and scheduling in oil and gas industries. Tarek has worked with many international organizations as a consultant in maintenance planning, work management and inventory control, and has worked in many countries in the Middle East e.g. Egypt, Syria, Abu Dhabi and Qatar. He has had planning leadership positions in many industrial organizations where he participated in improving the maintenance planning function by developing the planning process and work management flow and roles and associated performance indicators. His experience also includes CMMS development, implementation and training. Tarek has an excellent record in developing training programs for planning teams in the maintenance organizations to fit with newly introduced best practices. Tarek is a member of the Society of Maintenance and Reliability professionals (SMRP). He can be contacted at email@example.com
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