Why averages don’t work

This title is so apt to businesses today. This not something new and has been put into practice by companies since the time human capital gained strategic importance and even much before. Good performer always got recognised, rewarded and benchmarked and this is very much the norm in every company.  It is also prominent in sales function where better clients get more attention from all functions of the organisation. Companies now have different levels of customer service based on what kind of business they get for example if one has a platinum card she does not have to wait to get her call answered at the helpdesk

This is however not the case  across all functions of an organisation, take for example the case of plant maintenance I have not heard about better machines getting better attention. This phenomenon is pretty much the same in case of most operations related functions. In one of the discussions we had with a client in area of equipment maintenance we realised the maintenance tasks had standard times allocated and employee skill had no bearing on the task. A simple calculation was enough to explain that if employee skill was used as another dimension the employee utilisation would increase by almost 12% which was a big gain for them.

With the promise of more for less being made by virtually every services industry it is but natural that standard averaging of resources across tasks will not work. The since of simulations as a part of Operations Research can be used effectively to take into consideration unique inputs at an individual level to arrive at optimum decisions. Operations research along with advanced computational techniques is pretty much the answer changing averages and creating new benchmarks.