How to Measure the M in SQDCM

The giant letters SQDCM are common sights on visual display boards of teams on the gemba. They stand for the key performance indicator categories of safety, quality, delivery, cost and morale. Many organizations develop or adopt standard layouts to their team boards. This makes it easy to walk into any area, find the Q and begin to understand the quality performance, challenges and improvements under way.

If the long-term success of an enterprise is all about how we treat people, it would seem that M should come first, not last. The placement of M in SQDCM is due to historical reasons rather than importance. The letters QCD were originally used in the automotive industry to provide a balanced measurement of process performance. Without them it is too easy to fall into the trap of “Fast, good, cheap. Pick two.” Many organizations today still sacrifice quality and delivery pursuing the lowest cost, or go over budget to make deliveries in pursuit of sales growth. The three elements must be held steady or improved, none sacrificed.

Safety was a later addition to QCD, as advancing automation and the speed of industrialized processes made safety and health risks impossible to ignore. But securing QCD and physical safety is not enough. The highest performing organizations are filled with people who are motivated, engaged and thriving. Good morale has long been known to result in high performance in the military, athletics, communities and workplaces. It feels odd to tack it on at the end of SQDCM.

Of these five indicators, I observe the widest variation in how organizations measure morale. Some track the level of engagement. This may be the number of kaizen ideas people generate, the depth of cross-training, or employee engagement survey scores. Other organizations correlate continued employment with morale, tracking employee turnover rate, years of service and absenteeism rate in the M section of the team board. Yet others post the photos of pizza parties, family photos, sports team logos or other supposedly morale-enhancing visuals. I have seen smile and frown buttons on team boards, inviting team members to indicate each morning what kind of day they are having.

These are all valid indicators of morale in their own way. If people are not engaging in kaizen, or if they are quitting the company, or straight up telling us they are not happy, there is a morale gap. However, unlike standards for safety, quality, delivery and cost, the standards for morale are often unclear. While SQDC are customer-driven or process-driven, a large element of morale is individual and personal. The best way to measure and improve morale is through a combination of indicators linked to top-level company goals and one or more real-world, day-to-day quality of life indicators for the local team.

Should morale even be a team-level KPI? How much of workplace morale is within the control of the team? Which contributors to morale are related to addressable local conditions and which are due to policies beyond reach or out-of-bounds for the team? How equipped is the area leader to deal with frank discussion of the causes of morale gaps? When SQD or C remain below standard for extended periods of time, there are consequences. How committed is the organization to treating morale with the same level of urgency?

A healthy business needs three things. First, it needs products that customers want to buy. This is a combination of attractive features, fair price and increasingly, a sustainable and ethical the supply chain. Without customers and revenue there is no business. Second, it needs a Lean operating system that eliminates waste, reduces cost and delivers a profit. Daily attention and gap closure on the SQDC charts at all levels of the organization accomplishes this. Third but not least, a healthy business needs a work environment that is pleasant, motivating, and hopeful. Then people can achieve the first two by giving each other their best each day. That’s why we measure morale. What and how we measure should follow from that.

11 Comments

  1. Rick Foreman

    November 11, 2019 - 8:59 am
    Reply

    I’ve recently seen these boards as the primary focus in a facility, while much around sustains a certain level of chaos and little engagement. The numbers are good for showing the current state but at times, I think we miss truly engaging and connecting with Team Members in the Gemba. I’m witnessing first hand a significant focus on the board with almost an intentional ignoring of all that’s going on around them. I think this is a real challenge in custom shops. How successful will a system be without true engagement when if done correctly will lead to greater connection and ownership? A great article for reflection. Thanks for sharing.

    • Jon Miller

      November 13, 2019 - 6:48 pm
      Reply

      Great point Rick. Sometimes people focus on the thing itself (visual board) rather than the behavior it should promote (communication, cooperation).

  2. Brittany Lucas

    November 13, 2019 - 11:34 am
    Reply

    It is unfortunate that many team leaders put the quality, delivery, and cost aspects of their company before the morale of their employees, almost like they don’t recognize the direct correlation between safe and happy employees to overall success. When the morale of a single employee is low, they often drag down others with them through consistent complaining or even slow performance, which holds-up the entire team. I think when it comes to measuring morale, the most important aspect would be to have an open-floor conversation among leads and employees. Doing so may avoid a lot of the rumored conversation and can directly address any current or potential issues. However, managers must reach out and develop personal relationships to be trusted and therefore, approachable. The feedback will then allow management to know what contributes to the morale of their specific team and should make the employees feel they are understood and that their needs are being made a priority. Observing motivation rather than resentment in the gemba is the ultimate team goal. Thank you for bringing attention to an important but often neglected KPI.

    • Jon Miller

      November 13, 2019 - 4:40 pm
      Reply

      Hello Brittany. Thanks for your comment. Yes, I agree. Trust and open communication are they keys.

  3. Molly McEvoy

    November 13, 2019 - 4:32 pm
    Reply

    Reading this, it makes me astonished Morale is the one that is left in the dark. When I graduate and am working for company I want to love the company I work for and be happy, more than anything. Happy workers put more time and effort into what they do because they feel that they are worth something to the company and their part is as important as anyone else’s. This is definitely something companies need to keep at the top of their priorities in order for them to grow.

    • Jon Miller

      November 13, 2019 - 4:41 pm
      Reply

      Hello Molly. Thanks for your comment. I’m encouraged. Hopefully the expectations of your generation will help change how we prioritize people in the workplace.

  4. Jack Day

    November 13, 2019 - 4:47 pm
    Reply

    Great article by Jon Miller as always. Employee moral is important and directly related to a companies performance; however, many firms don’t understand how to measure or have a positive effect on this. A variety of factors such as family life, financial position, mental health, and physical environment can effect an employees moral he/she brings into the workplace. Managing moral in the workplace and investment to improve the culture surrounding it can have a larger return on investment than many would expect. Firms that are able to create this culture, where employees have a work life balance and are happy to have position, do not loose time and money to retention and training of new workers.

    • Jon Miller

      November 13, 2019 - 6:47 pm
      Reply

      Thanks Jack. Amen to your comments.

  5. Jon Wiederecht

    November 18, 2019 - 8:41 am
    Reply

    Jon,
    First let me say I really enjoy reading your blog . Most of them cause me to reflect and think more deeply regarding the topic. I often then share with colleagues that I’m mentoring. Certainly that will be the case with this blog. I am curious as to why in your wrap up “Third but not least, a healthy business needs a work environment that is pleasant, motivating, and hopeful” you didn’t insert the word Safe as the end of the sentence. Certainly we need to provide an environment that is safe both phyiscally and psychologically.
    Repsectfully Jon

    • Jon Miller

      November 18, 2019 - 10:10 am
      Reply

      Hello Jon. Thanks for your comment. Certainly the workplaces must be safe before all else or there is no talk or quality, morale etc. I suppose I didn’t think to add it to that last sentence because it was implied in the discussion of safety being at the start of the SQDCM metrics. One could also argue that morale is not possible unless we are doing quality work, delighting customers by delivering on-time, and keeping our costs low so as to secure our future employment, benefits, bonuses etc.

  6. Yann Graufogel

    November 28, 2019 - 10:42 am
    Reply

    Thanks for this sharing, great article everybody should agree with…

    We created a solution we call “QCD” as these three letters are obviously the most common ones for now for performance management. And we soon realized that companies used it to measure their employees morale under various forms :
    – ‘P’ for People
    – ‘I’ for Involvement
    – ‘M’ for Management that embeds this kind of topics
    – …
    As human remain the critical factor for success, every performance management system or ‘QCD’ should have this kind of barometer with its relevant KPIs!

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