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Measuring performance in services
Service companies can't measure and reduce variance as easily as manufacturers can. Service tasks vary, depending on the person performing the service, differences in customer behavior, and the business environment.Services can be measured and their variance controlled by following three principles: benchmark internally, measure the drivers of cost, and make metrics accurate enough to identify all relevant costs.A cost tree is an invaluable tool for spotting activities and locations in which variance destroys margins.Implementing a measurement system is a tricky but important first step to reducing variance and improving the productivity of services.
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© 1992-2003 McKinsey & Company, Inc
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