There are literally hundreds of metrics that business leaders can use to run their business today. Some are very valuable, some not so much. For Engineering, think of an engineer as a continually developing employee who will take years, if not decades, to become fully trained and proficient in a field of study. So the focus of metrics should not only be in performing a task on time and within budget, but also developing said engineer through training and daily challenges.
Listed below are 5 areas of metrics you should consider for your engineering department. Why 5 metrics? Why not 3, or 2, or 20? There’s not a right answer here, but the metrics you measure should say something about your business and what stage your company is in. The right number of metrics is the number you LOOK AT! Companies spend gobs of money collecting numbers and data they will never see! The saying is “What’s measured, get’s managed”, a reverse to that could be “Don’t measure what you don’t manage”…if it’s not important to you to run your day to day department or company, then why measure it? Each business is unique, use the information below as a starting point and if you have no metrics, my advice would be to pick one, start there, and add more as needed. As long as you are continually looking at the data collected and making adjustments, you can do no wrong.
I’m also a strong believer in ever changing metrics. Your business and customers change month to month, year to year, so should what you measure from your employees. A stale metric becomes one no one looks at and wasted time spent collecting…keep them fresh! A benefit of this is if you happen to choose the wrong metric. Say you measure quality but that has a negative effect on your on time delivery, then you can change it. Changing metrics keeps employees on their toes.
The first three metrics listed below are what I call “general metrics”, these are elements that you should measure but how you measure and what you measure will vary depending on your company and the role engineering plays. The last two are more specific, but I consider them fundamentally important (engineering or other).
These have to do with the daily processes and what could be called “Value Added Time” that your engineers spend on task. For those not involved with “Lean” this would be any task that contributes towards the bottom line, or for an engineer, if you bill for a task then it could be considered Value Added. Remember, you don’t bill for Engineering changes, Revisions, or Paperwork (outside of some reports).
Some examples of process style metrics to measure:
- Estimation Accuracy
- Scope Variance
- Schedule Variance
- Productivity (hrs worked vs. hrs billed)
- Order processing time
- Response time to RFQ
- Product development Cycle time
- Product development cost
- On time delivery
Quality metrics are pretty easy to discern, anything that relates to the quality of the product coming out of Engineering or the quality of information going in. Remember, no matter what your operation is you are shooting for 100% First time success. Many will say “this is impossible in our industry”, it may be tough to achieve but that doesn’t mean it shouldn’t be the goal. Engineering departments and companies become very comfortable with accepting less than perfect results. No doubt, there’s often more variables in Engineering’s success that clouds that “perfect” result, but we should strive for it none the less.
Some examples of quality style metrics:
- Number of Engineering changes
- Number of revisions (Depending on your business, revisions could be a bad thing)
- First pass yield
- Six Sigma for Engineering
- Customer satisfaction (Engineering’s customer, not end user)
- Supplier defect rate (often the supplier is whoever is supplying specs and info to Engineering)
This is a big one that is often ignored. Computers and software are just as critical to Engineering as a CNC machine is to your production capability. I’ve seen companies that invest heavily in IT and those that do not, when it comes to Engineering those that don’t, suffer. Think of Engineering as another equipment operator on your production floor (albeit a highly paid one) and any minute that he or she has to wait for a computer to load, an analysis to run, or a model to refresh is costing the company money. Hold your IT to the same level as your Industrial Maintenance person and use metrics to determine if computer downtime is costing you money or causing a bottleneck.
Some examples of IT Metrics:
- Computer/Software Uptime
- Preventative Maintenance
- % of files managed by a PDM software
As you make these investments in process, quality, and technical improvements you need to keep your Engineers/Designers engaged and employed at YOUR company. Turnover rate and Absenteeism will tell you all you need to know. Frequently absent or sick employees, typically do not enjoy his/her job and that employee leaving in the next few months is a high possibility. What’s worse is those that don’t leave, but instead become a cancer upon your organization, until you take action.
Watch turnover rate as well, a lot of dollars in training and knowledge is lost when an engineer decides to go elsewhere. The cost to replace a technical employee such as an engineer could be as much as 1.5 times their annual salary2…Ouch!
On the other side of the spectrum, a happy Engineer without training and development has equally negative effects. A field like engineering revolves around technical software and scientific information, there are always new things to learn. Look into developing a skills matrix and training budget, as well as training days that engineers use to sharpen their skills. If you haven’t seen a skills matrix, google will help, just list every skill you could possibly like that engineer to have and then make the chart public. Hidden charts offers no challenge, and employees often have an area they think they are skilled in, when you feel differently. If you do a skills chart and find that your employees are highly qualified in each skill…then you probably don’t have the right skills listed.
I hope you this information helps you and your organization become engaged with metrics, it’s a great place to go when you have a problem that you’re not sure how to solve. Typically, when you measure that problem area, it magically starts to fix itself! Rye Design offers Engineer training and organizational help, if we could be of assistance in these areas, let us know.
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Sources: 1)“A few words about Metrics” by John Stark; http://www.johnstark.com/wmet.html 2)“Cost of Employee Turnover”; http://www.isquare.com/turnover.cfm