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The Bean Counter’s Blind Spot

I can’t help thinking that the financial measures and metrics some organizations use to run their businesses are causing them serious harm. By focusing on narrow measurements some organizations have lost sight of the broader context from which organizational performance is shaped. A disconnect between the measurements used and the full reality of the situation can be a breeding ground for organizational problems.

Having worked in a number of organizations in which billable hours and revenue were the primary measures; it was refreshing to have recently met up with a number of companies in which technical excellence and quality are the central themes around which everyone is focused. By continually developing the organization’s skills and striving to eliminate the waste that poor quality and rework embody, such organizations recognize that delivering value to their customers is the path to organizational success. While billable hours may drive a quarterly revenue target, failure to consider quality issues creates an invisible illness within the organization.

Sadly in the many sectors quality oriented organizations remain the exception and not the rule. While most organizations measure projects in terms of schedule and budget performance, many are completely unaware of the level of rework within their organization or how their productivity levels compare to best in industry standards. As an example, in his excellent book, Software Team – Taking Ownership for Success, Jim Brosseau of Clarrus Consulting reports that typical software development organizations loose 40 to 50% of their budget to rework and the total can be as high as 70%. Unfortunately many organizations are oblivious to the numbers because quality is the blind spot in the organization’s measurements system.

Although I’m not a fan of large scale formal metrics programs (because of the political games they can lead to), I do think management teams need to have their finger on the pulse of the organization. Where management fails to see the levels of rework and the drag poor quality has on productivity, no one wins. Such organization usually struggle to achieve real customer satisfaction, managers are constantly in fire fighting mode and development teams are always under pressure.

Tapping into the pulse of the organization isn’t hard to do, constant firefights and high defect rates are the flashing neon lights of trouble. Unfortunately many organizations are blinded by the light and fail to see the message they bear.

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