Process improvement: it’s one of the most important investments a business can make. But how do you know if your processes have actually improved? How do you know if they’ve just gotten worse? It’s all in the numbers.
In this article, we cover why you need to measure process improvements. Next, we share some expert methods to measure the effectiveness of business process changes.
Approach to measure process improvement efforts
- PDCA Cycles
- ROI Models
- Needs assessments
Why You Need to Measure Process Improvement Results
Measurable results are an important – yet often overlooked – component of any project. Too often, project managers make the mistake of thinking that performance is self-evident. After all, you can just tell if something is working or not, right?
While business process changes can certainly be felt through day-to-day experience, the only way to understand efficacy is to measure it.
Employee or customer experience is only one measure of process improvement. It doesn’t give you the full picture. Only comprehensive data collection can do that.
Let’s consider an example. Suppose your business implements a new LMS for employee training. And suppose all of the employees love the new system. From the time you launch it, they have nothing but good things to say about the new LMS training program.
Because you don’t gather any other post-implementation data, you believe the new process is a success!
However, weeks later, your quarterly figures tell another story. Sales are down, customer complaints have gone up, and employee errors are unchanged. What happened? How is this possible with such a well-received system?
A number of things might have gone wrong. Maybe the remote training is easy, fun, and user-friendly. But the modules don’t have the right information. Or maybe the training is effective. It just eats up too much of your employees’ time.
If data was tracked from the beginning, you could have caught the problem – and fixed it – much sooner. But now, you have a much bigger mess on your hands. You don’t just have to figure out what’s wrong with the training system. You have to overhaul a system that’s now become routine, and you have to compensate for weeks of lost productivity and revenue.
If you’ve ever found yourself in a process-improvement conundrum, you’re not alone. Process improvement is a science, and it’s tough to nail. In fact, we wrote a whole article on the top 4 missteps leaders make when improving business processes.
At RTG Solutions Group, we want to jump-start you on a path to continuous learning and improvement. That’s why we’re highlighting another crucial part of process improvement: measuring the results!
As we saw in the example, it’s not enough to just make a change and hope for the best. You want to be proactive with your data-collection plan.
Here are three approaches to measure process improvement.
1. PDCA Cycles
PDCA stands for “Plan, Do, Check, Act.” It’s a four-step process-improvement and project management model that is grounded in data collection. What sets PDCA apart is that it was inspired by the scientific method. Therefore, it mimics scientific inquiry and produces quality results.
First, you PLAN. In this phase, you identify the problem you want to solve and its plausible causes. You also collect baseline data to use for comparisons later on. Finally, you hypothesize solutions to the problem.
In the DO phase, you implement a possible solution. You also identify which indicators you’re going to measure once your solution is implemented. Finally, once you roll out your solution, you collect data.
Now comes the CHECK phase. Here, you’re looking to figure out the effectiveness of your intervention. In other words – you’re trying to figure out if your hypothesis was correct or not. To do this, you compare your before-and-after data.
Finally, in the ACT phase, you document your results. Based on your findings from the Check phase, you decide whether your new process will be permanently implemented. If you found, in the Check phase, that the intervention was not effective, return to the Plan phase and start the cycle again!
2. ROI Models
ROI stands for Return on Investment. ROI is a standard measure of performance that is useful for all organizations. Regardless of the process you want to improve, you can create an ROI model to track its efficacy.
ROI measurements are used to justify an intervention based on its financial impact. To calculate ROI in its most basic form, you divide the net return of the improvement by the cost of the improvement. Finally, you multiply by 100 to obtain a percentage.
If you calculate a positive number, that means your improvement is yielding returns. In this case, the larger the number, the better. If your ROI is a negative number, then the process improvement is creating a loss.
To sum it up, ROI measurements can tell you whether or not your process improvement effort is profitable. This is a very useful “bottom line” figure, but it won’t necessarily give you the full picture of an improvement’s impact. For this reason, it’s best to compliment a standard ROI with other data.
3. Needs Assessment
Needs assessments are a fantastic starting point for any improvement project. They’re a lot of work, but they produce results. Needs assessments map out where your business is, where you want to be, and how you’re going to get there.
For this reason, they are very useful for navigating business process improvements. One of the best features of needs assessments is that they lay out a result-measurement plan at the beginning of a project, rather than at the end.
There are several priorities for conducting a needs assessment. You want to identify project outcomes, assess current-state processes, create a scope of work, prioritize workflow, develop a project schedule, and more.
Importantly, however, in a needs assessment, you also create two data sets. First, you identify Key Performance Indicators (KPIs). A KPI is any metric you use to measure performance. Some examples of KPIs include:
- Number of customer complaints
- Number of website visits per day
- Number of new monthly subscribers
- Merchandise delivery times
These are just a few examples of KPIs. Your particular KPIs will be tailored to your business and its improvement goals. By deciding on KPIs during the needs assessment, you can put data at the center of your improvement plan.
The only way to know if your processes improved is by measuring your impact. Remember: it’s not a solution if it doesn’t produce results, and they’re not results if they can’t be measured!
In 2020 and beyond, organizations can use many approaches to collect data on their process improvements. PDCA cycles, ROI models, and needs assessments are three methodologies that can help you measure the impact of your business process changes.
Are you looking to improve a process and collect the data to back it up? Contact us at RTG Solutions Group to learn data-driven techniques for your organization!