27 Jun Nailing Back Office Performance Management
Using activity-based management (ABM) principles is one of the most accurate ways of measuring employee performance, particularly in the back office. Furthermore ABM ensures performance targets reflect best practices. Thus ABM is a catalyst for process excellence. When done right, the payoff can be tremendous. Unfortunately, companies all over the world struggle terribly to pull it off…
The thing is – it’s not rocket science. Companies shouldn’t be let down by their performance management (PM) projects and ongoing solutions. With strong executive support and a good team effort an organization can fully implement a cloud-based PM suite in <10 weeks. This solution then has the capacity to deliver a 20-25% performance boost within another 10 weeks. We've seen it and done it many times so we know it's true. We've also seen the flipside where companies embark on a PM project and find themselves still mired in a mud bog ten months later. Cost overruns, frustrated execs, worn out project teams... Unfortunately this is very, very common.
Why is that? Why do companies struggle to implement and maintain effective PM tools in the back office? Where do they go wrong and what can we learn from the many failed PM projects out there?
Let’s take a closer look:
1. Asking Too Much of the Solution: A common problem we see is companies ask too much of their PM solution. We see it all the time: Buyers and sellers of PM get together and the ‘what ifs’ start flying. Customers start dreaming of their new analytical world. Sellers can’t say no – it’s not in their DNA. Before you know it eight months have passed, not a server has been installed, KPIs aren’t agreed to, the project team is over it, the CEO is sick of the excuses and the project is on life support. We saw it three times in 2015 alone. Multi-million dollar spends on enterprise-wide PM solutions that couldn’t get off the ground because they simply asked too much too soon. Let’s face it; companies invest in PM to improve the bottom line. Yes quality and service are important but buyers of PM want ROI and efficiency. Project overruns and delayed implementations aren’t helping but over-asking ALWAYS leads to this. Simplify and stop over-asking. Nail the basics, start with a few small teams, realize some benefit and then dream bigger.
2. Activities Poorly Defined: Companies quite often get waaaay too granular when defining activities. We recently worked with a mid-size health insurance company, an adherent of ABM for 15 years. Over time their activity lists just grew and grew and grew – like neglected alley weeds. One line of business had over 700 activities. 700! And we see it ALL the time. It’s absolutely impossible to manage. Task times are never right and supervisors are terrified of the work required to make ’em right. Many times business units will turn process steps into activities. With the client above we saw two such activities: Walk to Fax Machine and Print Letter. These are not work drivers. These are process steps. Organizations should make a concerted effort to limit the number of activities on the performance report to something manageable. We advise our clients to keep the list at 10 – 15 activities. That’s not always possible but it’s a great goal. Remember – you are implementing PM to manage performance and improve process. You are not implementing PM to replace all business reporting. And we are certainly not trying to account for every second of a staff member’s day. Keep the activity list reasonable in size and you’ve got a fighting chance.
3. Task Times Outdated: Failing to maintain task times is a remarkably common situation we see. On a recent project we worked with an administrative group in a P&C company. There were 36 people on the team and the average productivity was 167%. This had been going on for over a year. The highest productivity for a person each week was >300%. Now you tell me – how accurate is this? Was somebody really cranking out 120 hours of work in a week? Have you ever seen an entire department maintain such consistently high levels of output? The answer is obviously no. This was not reflective of true performance. Task time hadn’t been updated in years even though technology innovations and market conditions yielded leaner processes. This team also had over 100 activities defined – for 36 people! These two issues often go hand-in-hand (dated task times and activity lists in need of a haircut). When this happens, when productivity scores for an entire department are running this high for this long, just stop. If fixing it is too much to ask, just stop. The thing is, in about six weeks we were able to sort everything out. We consolidated activities, conducted side-by-sides, updated task times, partnered with business leaders to gain their buy-in and rolled out the changes to staff. It wasn’t a herculean effort. Bottom line: task times need to be maintained. We advise clients to evaluate task times once a year. You don’t need 4,000 observations of an activity to set an accurate target either. 15-20 is normally enough. Sit with a cross-section of B+ performers, do the obs, updated the task times. Pau! The investment is worth it.
4. Task Times Set Wrong: There is one right way to set a task time. No technique will ever be better. And it’s simply sitting down with the agent and observing the work. Side-by-side observations are the gold standard for setting performance targets. Estimating task times is easier. Pulling reports is easier. Self-timings are easier. Side-by-side observations are not the easiest way. Totally agree. But it is the most accurate way. And when you’re talking about a system to measure performance, promote staff development, control costs, develop cost benefit analyses for improvement initiatives or product rationalization, form the basis of employee reviews and ultimately create the right culture – then you’d better put your best foot forward. Don’t go low-budge! Poorly set task times yield meaningless results. The interesting thing is nearly every improvement opportunity we’ve identified over the years was surfaced during a side-by-side observation session. So not only are you setting accurate targets, you’re surfacing improvement opportunities and enhancing the business. Do the obs. Get it right.
5. Data Feeds not Right: Often system flags (e.g. pend reason) are used to map transactions to activity types. These work great the first few months post go-live. But as time passes and things change the data feeds driving your PM solution require attention. New system flags (work queues, disposition codes, pend reasons) come online – and if they’re not brought into the feed and mapped to the correct activity, you end up with bad information. These are not always obvious and can lay dormant for some time. Typically these issues are surfaced by employees who notice they are not getting credit for the work they’ve done. The most common fixes to this are system generated audit reports and manual audits.
6. Poor Communication: More than anything though, the most common crime against PM is simply not using it. At its core PM is about coaching, training and improving the business. It’s a centerpiece for daily and weekly conversations. It gives supervisor a specific reason to talk with agents, to tell them great job or determine coaching needs. It gives agents immediate feedback – feedback most of them want. It gives execs business insight. It informs and directs continuous improvement efforts. We worked with a customer in 2015. The execs brought us in because they didn’t see any real improvement after their PM deployment. They asked us to analyze its impact and report back to them. They were six months post go-live at the time. During the very first supervisor interview we learned staff received their reports via an automated email once a month. Supervisors didn’t really talk to their team about the information and execs didn’t follow up with supervisors. By the end of that 1st interview it was immediately obvious they were getting out of it exactly what they were putting into it. Nothing. Absolutely nothing. But the issue here is not so much with staff or the supervisors. The issue is with the execs. And it’s the #1 reason PM solutions succeed or fail. Executive engagement. If it’s important to the execs, it’s important to the front line. The most successful deployment of PM I’ve seen in 20 years was with the controller of a transportation company. She also had direct responsibility for eight finance teams, 70+ staff. We worked with her in 2007. I just talked to her in March and she still looks at the reports daily and meets with her direct reports weekly to review results. She’s been doing this for nearly 10 years. Do you think her managers show up to the meetings prepared? Damn right they do. Do you think they continue to benefit from the solution? Damn right they do. She has made incremental improvements to the business every year. After an initial 23% reduction in labor costs she has gone on to realize 5-10% labor cost reduction year over year, every year since. That’s the power of executive engagement. And you know how much time she spends with it – about 15 minutes per day a few times each week and then a one-hour meeting with her leaders weekly. That’s it! So execs – stay engaged. It doesn’t take much time, just discipline.
After being in the business 20 years we’ve seen companies get it wrong and we’ve seen plenty get it right. Those who get it right take one step at a time. They invest in a strong foundation. They maintain the solution and data integrity. They keep it front and center. These are the companies that not only realize 25% improvement in 20 weeks but they also realize 10% the next year, another 10% the next year, another 10% the next year, so on and so forth. That’s the power of an effective activity-based performance management solution. It delivers in the short run and continues to pay dividends in the long run.
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