Transaction Error Rate - What is it?

The error rate is the percentage of processing errors that a department generates. It is important to avoid processing errors as the cost of correcting them is multifold compared to doing it right the first time around.  The error rate should be monitored in conjunction with the total number of actions processed by each person, in order to understand the cause of the error. It could be due to employee oversight, caused by lean efficiency management techniques or a misunderstanding of the process during onboarding. The measurement can be further refined by focusing on those transaction errors that require the most time to fix.

The error rate is useful as a measure of performance, as the time of senior staff members would be required to fix most procedural errors. The other staff can't be tasked with this activity, since they won't have sufficient knowledge or access to correct the error.



How to Calculate the Error Rate

To formulate the error rate, add up all process-related errors in a reporting period and divide them by the total number of processes completed within the same reporting period. This calculation should match errors to the pool of the same types of processes completed, which will result in a separate error rate for each general type of process.

Formula for Error Rate
(Errors in a reporting period / Processes completed within the same period) * 100