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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.