Learning the difference between goals and standards

From past experience, I know how difficult it is to set good goals. In this article I will share some of my experiences and learnings in setting goals for managing and improving processes on the gemba.

As a manager of a customer care back-office department, I set overall daily productivity goals just to challenge and push my team of agents for improvement. In fact, after an initial start-up fase, the team members set their own goals for the day and my role was to challenge these goals. We discussed actual performance compared to the goals on a daily basis during 15 minute stand-up whiteboard meetings. This PDCA approach was a good basis for discussing deviation from plan and identify issues and improvement actions. However, these goals were not based on anything really ... Honestly, I didn't know if these goals were realistic and achievable, but I just pushed for little baby improvement steps every day.

Then, I had a big insight whilst working as lean consultant for a central heating installation company. Based on an analysis of McKinsey, the suggestion was to improve productivity of individual installation mechanics to the performance of the 75th percentile. I was a bit shocked, as my thinking was "Why don't we just focus on getting the performance of the bottom half up to the performance of the median." I then realised that my approach, which really meant making the mean performance the goal for everyone, resulted in no incentive for improvement for half of the installation mechanics workforce ...

Yesterday, as I was reading through "The Lean Manager" of Michael Balle, my understanding of setting goals went yet another step further. Of course I realised that "Problems are defined as gaps between standards and actuals. And yes, "A standard is the best known performance". But what new was to me, was the true understanding that a (measurable) standard should be set "based on observation of actual work content over multiple cycles". Referring to the customer care back-office example, this would be e.g. the best observed performance in cycle time to complete the administrative steps for re-ordering and picking up incorrectly delivered products to customers. The significance of this is tremendous! First, everybody understands the goal is achievable. And second, everybody - not just the bottom half performers- in the team is challenged to improve.

Now, how realistic is it to expect people to maintain that "standard" performance in cycle time for one hour or one day straight? That's the whole point of Kaizen. We should ask ourselves: How can we reach our best cycle time every cycle? This doesn't mean that the improvement is just for individual customer care agents or mechanics to achieve. It's an objective for the entire team: agents, mechanics, supervisors and managers.

By definition we should never beat the standard. For, if it is possible to beat the standard, the standard does not represent the best known performance and we should change the standard. When we outperform the standard, we must have included waste in the definition of the standard. If we include waste in our standards, there is absolutely no incentive for the team to solve any of these problems.

Summary. A big difference between a goal and a standard is that standards are based on the best observed and measured performance. This turns a standard into a realistic and achievable goal. A standard should not include any waste and should never be outperformed, as it is intended to constantly engage everyone in improvement activities.