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Applying the KANO model for developing an objective based performance measurement and incentive plan
 

Applying the KANO model for developing an objective based performance measurement and incentive plan

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    Applying the KANO model for developing an objective based performance measurement and incentive plan Applying the KANO model for developing an objective based performance measurement and incentive plan Presentation Transcript

    • Applying the KANO model for developing an objective based performance measurement and incentive plan Das Madhavan VP, Engineering and Planning Citi Cards Kansas City, MO [email_address] (816) 505-6568 Raj Shroff VP, Engineering and Planning Citi Cards Kansas City, MO [email_address] (816) 505-6569 June 2005
    • Topics
      • 1. Background
      • 2. Why this project ?
      • 3. Approach
      • 4. What is the KANO model ?
      • KANO questionnaire for the project
      • Basis for KANO questionnaire
      • 7. KANO analysis
      • 8. Building the foundation
      • 9. Historical Data Analysis
      • The Objectives Matrix Method for Performance Measurement
      • Primary Components of Objectives Matrix
      • Benefits of Using the Objectives Matrix Method
      • 13. Alternative Matrix Development and Selection
      • Implementation Planning
      • Post Implementation Evaluation
      • Who we are ?
          • Engineering and Planning: An Internal Consulting Group within Citi Cards
          • Provides strategic consulting across Citi Cards and beyond
          • Staffed by MBBs and BBs
          • Offices located in Kansas City, New York, and Hagerstown
      • Project Focus
          • Development of performance standards & associated incentives
          • Area of Implementation: Fraud Department
          • Objective: Improve associate productivity and quality, while also promoting knowledge sharing
      Background
      • Fraud Department is a critical customer touch point that could impact customer experience positively or negatively
        • The associates need to make judgmental decisions on making proactive customer calls
        • The management would like to enhance customer experience while meeting business objectives
        • Well aligned with Citigroup’s “five point plan”
      • Set appropriate productivity/quality thresholds, while fostering an environment for strengthening employee capabilities
      • Retain high performing associates
      • Maintain effective communication within the organization
      Why this project ?
    • Approach
      • Assess employee needs
        • Focus Groups
        • Kano Model: Basic (Must-be), One-dimensional (Performance), and Attractive (Delightful) Needs
        • Identify gaps, develop and implement action items
        • This is imperative for ensuring that right success elements are in place prior to implementation of performance measurement system
      • Baseline current performance
        • Historical data analysis
          • Exploratory
          • Deductive
      • Set performance qualification criteria & goals
      • Develop an incentive plan
      • Acquire Unit Manager and Associate Buy-in
      • Acquire senior management approval, including HR and Legal
      • Develop communication, pilot, roll-out and tracking plan
      • Acquire employee feedback post pilot phase
    • What is Kano Model ?
      • Proposed in 1984 by Dr. Noriaki Kano of Tokyo Rika University
      • Based on his study of Herzberg’s “Motivation – Hygiene” Theory
      • The model distinguishes between three types of customer requirements
      • Relevant data is generally obtained by administering a KANO questionnaire
      • Basis for entry into the consideration set • High dissatisfaction, if requirements are not met • Fulfillment of requirements will not increase satisfaction Must-Be requirements • Satisfaction is proportional to the level of fulfillment • Requirements are usually explicitly demanded • Requirements can cause reactions ranging from dissatisfaction, through indifference, to satisfaction One Dimensional requirements • The very minimal presence can create satisfaction • These are unexpected, thoughtful, and delightful surprises • Not much dissatisfaction, if the requirements are less functional Attractive requirements
    • What is Kano Model ? Basic Features: Minimum features which represent the core functionality of a product or service Performance Features: Attributes that lead as well to satisfaction as to dissatisfaction Delightful Features: Initiate satisfaction if they are offered. They increase the noticed benefits of the core functionality The bigger the descending slope, the higher the benefits rating. The customer dissatisfaction increases if the basic requirements are not fulfilled . Exceeds all customer requirements Does not meet customer requirements Dissatisfaction of the customer
    • Developing a Kano Questionnaire
      • “ Functional” Form versus “Dysfunctional” Form
        • How would you feel if the service had feature “X”
        • How would you feel if the service did not have feature “X”
      • Kano Questionnaire choices:
        • I like it
        • I expect it
        • I am neutral
        • I can tolerate it
        • I dislike it
      • Example
        • I like it
        • I expect it
        • I am neutral
        • I can tolerate it
        • I dislike it
      Upon calling into a call center, how would you feel, if IVR is not present ?
        • I like it (5)
        • I expect it (4)
        • I am neutral (3)
        • I can tolerate it (2)
        • I dislike it (1)
      Upon calling into a call center, how would you feel, if IVR is present ? Choices Question
    • Kano questionnaire for the project Rating Scale 5. This would be very helpful for me 4. This is a basic requirement for me 3. This would not affect me 2. This would be a minor inconvenience 1. This would be a major problem for me Functional Dysfunctional
    • Basis for Kano questionnaire for the Project
      • Voice of Employees (Associates) at the focus groups. A few examples:
        • Primary focus on productivity, which may not be conducive for coaching or helping your neighbors.
        • Adjustment factor may not be representative of actual work.
        • The way the performance measurement system is setup today, there is no reason to over-perform.
        • Whenever an associate is used for coaching, his/her time is counted as “non-prod” time.
        • Quality monitoring is neither consistent nor fair.
        • Write-ups or missed opportunities are not fair. Reasoning given is unclear.
        • With quality monitors- - no discussion of how-to-do things better, only focus on what-to-do.
        • There is no communication between different groups resulting in inconsistency on procedures.
    • Basis for Kano questionnaire for the Project
      • Management concerns. A few examples:
        • Associates not applying clear, concise, accurate notes on the account.
        • Lack of proper risk assessment resulting in potential losses to the Bank’s financial interest by utilizing educated risk assessments.
        • Not attempting customer contact at all available numbers or failure to call financial institutions or Creditors.
        • Incorrect/incomplete processing of requests made by customer such as, address change, add/remove authorized users, request for or cancellation of card/PIN/checks.
        • Failing to update any discrepancies.
    • Kano Analysis
      • Several methods of analysis
      • Pictorial format much easier to understand
      • The chart is divided into four quadrants
      • The quadrants are obtained by using overall mean scores for “X” and “Y” questions
      • The point is plotted at the intersection of the mean scores for individual “X” and “Y” question
    • Building the Foundation
      • Initiatives identified as a result of Kano Analysis:
        • Clearly define policies and procedures
        • Communicate changes in the environmental elements in a timely manner
        • If possible, move away from adjustment factors or minimize its use
        • Ensure a more supportive environment, in which associates improve their skill-set
        • Establish attainable baselines and goals for performance measurement
        • Restructure Unit Manager jobs so that they spend more time on the floor
        • Ensure the Quality monitoring group understands how decision making in Fraud Department works and are able to render consistency in their judgments
        • Ensure that the Quality monitoring group meets regularly with the associates to discuss scoring, feedback, etc.
    • Historical Data Analysis
      • Between site differences are significant at 99 % Confidence Level, but not at 95 % Confidence Level (ANOVA)
      • Team to Team differences are not significant within both sites at 95% Confidence Level (ANOVA)
      Median 75 th percentile 25 th percentile Outliers Outliers Median 75 th percentile 25 th percentile
    • Historical Data Analysis
      • Processes at the two sites seem to be stable with a very few special causes
      HAG JAX
    • The Objectives Matrix Method for Performance Measurement
      • Originally developed by Dr. James L. Riggs of Oregon Productivity and Technology Center at Oregon State University. He named it the Objectives Matrix (OMAX)
      • An improvement focused performance measurement and reward system that integrates multiple mission critical performance measures in a balanced fashion
      • Can be designed to measure individual, group, or process performances
      • The measures included should be within an individual’s control
      • Widely used by many of fortune 500 companies (TI, Raytheon, HP, Boeing, Pepsi, Mutual of Omaha, Coldwell Bankers, Northrop, etc.)
    • Primary Components of Objectives Matrix
      • Matrix Criteria – Quantifiable metrics that measure the performance
      • Milestones – comprises three components:
        • Baseline performance level
        • Performance goal for each criterion
        • Milestones expressed as a percentage ranging from 0% to 100%
      • Current Performance – The current level of performance for each criterion in the current measurement period
      • Current Milestone – The current performance level of each criterion translated to a percentage of goal attainment
      • Relative Weight – A weighting factor assigned to each criterion that indicates its relative importance
      • Weighted Milestones – The current milestone of each criterion multiplied by its relative weight
      • Performance Index – The sum of all weighted milestones
    • Objectives Matrix Example
      • Baseline should be satisfied for all measures to qualify for the incentive plan
      • Current mile stone = (Base – Current)/(Base – Goal)
      • Maximum payout of $200/Mo, if goals for all the criteria are met
    • Benefits of Objectives Matrix Method
      • Easy to comprehend
      • Process focused with clearly defined objectives and goals
      • Capable of normalizing the units of different measures
      • Flexibility in accommodating measures of quality, timeliness, employee attitude, and productivity
      • Results/Outcome orientation as against simply measuring activities
      • Ability to measure trade-offs and produce a single measure of performance
      • Can be useful in action planning for individual employees
    • Alternative Development and Selection Option 1 Learning and Growth Perspective Internal and Customer Perspective Financial Perspective
    • Alternative Development and Selection Option 2
      • Option 2
      • Simple to execute
      • Is our starting point
      • Option 1
      • Requires additional segmentation work based on RPH
      • Bit difficult to execute
      • Is our end vision
    • Implementation Planning
      • Receive formal approval from HR, Legal, and the senior management team
      • Develop an Employee Communication Plan
      • Develop an Employee Training Plan
      • Develop an MIS Reporting Process
      • Develop incentive fulfillment process
      • Capture Lessons Learned
      • Refinement and Institutionalization
    • Post Implementation Evaluation
      • Employee Surveys
        • What is your overall impression of the incentive plan ?
        • Do you agree that the right criteria were selected for your performance improvement ?
        • Do you agree that you have complete control over the criteria ?
        • Do you agree that criteria weighting was done appropriately ?
        • Do you agree that the baseline/goal for each criterion was reasonable ?
        • Do you agree that the incentive amount was adequate ?
        • Overall, do you agree that the reward system reflected your performance accurately ?
        • Do you agree that your overall performance has improved due to the incentive program ?
        • What other changes do you suggest we make to the performance measurement/incentive system ?
    • Q & A