In the search for low cost items, I am sure many of you have purchased bargain store items. Although some of the items in these stores represent a good buy, other products are inexpensive but do not last or may be of questionable quality. The consumer must know what to look for to save money. This is the fine balance between value and quality.

For business, the fine balance involves maximizing productivity without degrading quality. Dan Slater writes in BetterManagement.com “Productivity is a necessary, but insufficient condition for profitability.” Slater suggests we consider what the customer values and he goes on to explain how poor quality can reduce productivity when employees must deal with warranty claims and returns and how it affects overall sales.

Robert Burnett reminds us how the situation has changed over time when he writes, "Perhaps the emphasis has shifted. Fifteen or twenty years ago we could afford to focus mainly on the quality of our product.” Although Brunett is focusing on the medical/laboratory industry, his comment is applicable to all industries. The emphasis is now on maximum productivity while maintaining quality. As Burnett suggests, error minimization plays a critical role in maintaining productivity and quality.

This brings us back to the performance management process. Are goals clear? Are individual employees given the resources and support necessary to succeed? Is progress, monitored and evaluated? Does feedback inform strategic decision-making?

Clear goals are the first step, but we must also be able to monitor and measure progress accurately. Management consultant Ian Hayes presents a method to measure the quality and performance of outsourcing companies. Along with pointing out the need to define performance standards, Hayes also brings up “quality standards” (p. 2, 4).

How do you build quality standards into your performance management processes?

References:

Burnett, Robert W. “Defect Rates, Quality and Productivity.” Westguard QC. [www.westgard.com]. October 8, 2009.

Hayes, Ian S. “Performance Coefficients.” Clarity Consulting, Inc. [www.clarity-consulting.com]. February 2009.

Slater, Dan. “In The Race For Success, Quality Is More Important Than Productivity.” BetterManagement.com [www.bettermanagement.com]. Obtained November 1, 2009.