COLLINGWOOD VIC 3066
o Measurable – It can be easily measured and reported on in reports or
             scorecards (e.g. 100 phone calls per d...
Org Level              Report Recipient           Lowest unit of reporting
All Call Centres       Head of Call Centres    ...
•     Enabled management to have visibility of performance reporting across the entire
   •     Ena...
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Effective Performance Management: Scorecards and Performance ...


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Effective Performance Management: Scorecards and Performance ...

  1. 1. 61 OXFORD STREET COLLINGWOOD VIC 3066 TEL: +61 3 9473 3600 FAX: +61 3 9473 3699 Effective Performance Management: Scorecards and Performance Reporting that Work © 2006 Business Development Partners Pty Limited. All rights reserved When businesses wish to manage the performance of their staff and ensure that they are meeting their Key Performance Indicators (KPIs), they need a good performance reporting system that enables them to track their employee’s performance. Similarly, employees need to know how they are performing against their own KPIs, and this is frequently done in the form of individual scorecards. However, more often than not, the performance reports and the scorecards do not accurately report on the KPIs and may not do so on a regular basis. The performance reports and the scorecards may also source information from different sources, leading to discrepancies between what the employee receives and what management sees. The end result of all this is that the performance reporting for the organisation is not linked to business outcomes, and because “what is measured gets done”, the lack of measurement means that the business outcomes are frequently not achieved. This whitepaper looks at an integrated approach to performance measurement that intimately links KPIs at all levels of the organisation to business outcomes. It promotes the use of a hierarchical performance reporting system and scorecard that ensures consistent, accurate and appropriate information is provided for each level. The result of applying this approach is a reporting system that is closely linked to business outcomes, and helps to ensures that KPIs are achieved. Key Performance Indicators This whitepaper assumes that Key Performance Indicators (KPIs) have been effectively designed. Effective Key Performance Indicators have the following characteristics: • Linked to business outcomes – KPIs help the business to achieve its desired outcomes (e.g. a customer service promise or financial targets). • Hierarchical – For a particular individual, the KPIs of their subordinates help achieve their KPIs, and similarly their KPIs help achieve the KPIs for their managers. • Targeted – Individuals are focussed on the KPIs they need to achieve (typically 3 to 6). • SMART – KPIs are: o Specific – It is clear what the individual has to achieve. BUSINESS DEVELOPMENT PARTNERS PTY LIMITED ABN 69 085 361 995 ALSO IN SYDNEY: LEVEL 8, 2 BULLETIN PLACE, SYDNEY NSW 2000. TEL: +61 2 9252 5166 FAX: +61 3 8610 2082
  2. 2. o Measurable – It can be easily measured and reported on in reports or scorecards (e.g. 100 phone calls per day or 100 sales per week). Where possible, KPIs should not be recursive (e.g. if the calculation of the KPI is iterative because it affects the measure it is calculated against – see next section for an example) o Agreed upon – It has been agreed between the individual and their superior, and the individual and their subordinate(s). o Realistic – It can be achieved within the knowledge, resources and time available to the individual. o Time-bound – KPIs must be achieved by a certain date or within a certain period of measurement. Why is performance reporting poorly done? Performance reporting is poorly implemented for the following reasons: • Reporting has not kept track with changes in KPIs. • Reporting for KPIs is performed in different areas of the organisation, leading to a myriad of measures that are not integrated into a single report, or worse, may result in different data for the same KPI measure. • Data is obtained from multiple systems that have become out of sync. • KPIs that cannot be effectively measured (e.g. recursive measures – for example bonuses paid on Profit Growth for the year, but the payment affects Profit Growth itself). Implementing effective performance reporting The following represents a staged approach to creating an effective performance reporting system in an organisation to help it achieve its desired business outcomes. The reports can be organised by the following three groupings: • Broad category • Hierarchy • Frequency 1. Categorise the KPIs The KPIs should be categorised into broad groups to facilitate reporting and sourcing similar information. 2. Establish the reporting hierarchy following the organisational hierarchy The performance reporting and scorecard hierarchy is determined following the organisational and KPI hierarchy. For example, in a call centre, the following hierarchy exists: Page 2 of 4
  3. 3. Org Level Report Recipient Lowest unit of reporting All Call Centres Head of Call Centres Call Centre Call Centre Call Centre Manager Teams Team Team Leader Individuals Individual Operator Individuals 3. Establish the frequency of reporting The performance reports have to be distributed at various frequencies. Typically, there are four frequencies of distribution: • Daily – For lower levels of the hierarchy and day-to-day operational aspects, to provide information on the previous day’s performance. • Weekly – For lower and mid levels of the hierarchy and day-to-day or medium term information, to provide information on the previous week’s performance. • Monthly – For all levels, to provide a snapshot for KPI discussions. • Quarterly – For all levels, to provide a record of the quarter’s performance and for KPI discussions. 4. Automate distribution Performance reports and scorecards should all derive from the same data source, so that the information is comparable across all levels of the hierarchy and across all the reports provided at various frequencies. To ensure that this is done, and to efficiently utilise the scarce reporting resources, the generation of the performance reports and scorecards should be automated. Automation yields the following benefits: • Consistency – performance reports look the same across the hierarchy of reporting and across different frequencies of reporting. This facilitates understanding of performance measures within a level in the hierarchy and across levels. • Accuracy – the same methodology of calculation from the same data sources ensures that all the reports have accurate data. • Timeliness – automation provides the means to provide the performance reports on time and within agreed Service Level Agreements. • No further processing – providing the reports in its final form (and in an uneditable format such as pdf) means that the end users do not have to further process it to obtain the result they require nor can they change the results. Examples of where effective reporting has paid off This example shows the performance reporting hierarchy that was developed for the in- bound call centres handling service calls for a major retail bank. The new reporting hierarchy helped to achieve the following: • Cut down on the number of unnecessary reports received. • Reduced the need to further process raw data at each level to produce their own highly individualised and non-comparable performance reports. Page 3 of 4
  4. 4. • Enabled management to have visibility of performance reporting across the entire organisation. • Enabled operators to have timely scorecards (and interim scorecards) that informed them on how they were tracking across their KPI goals, and also what the forecast bonus would be for them if they continued to perform at their current levels. As a result of this new performance reporting hierarchy, performance reports and scorecards were consistently produced on time, MIS resources were freed up, and management and staff had an accurate view of how they were tracking against their KPIs. Performance Reporting Hierarchy Daily Weekly Monthly Quarterly Report type Report level Report recipients Metrics Team Leader Centre Manager Head of Call Ctr GM Call Centres Centre • Required vs available FTE by skill group per half hour Skill Forecast National Long range • Staff logged in Centre • AHT Performance • Calls offered, answered, abandoned National • Grade of Service Team • Shrinkage • Adherence to schedule Labour Centre • ACW, HT, TT • Sales and referrals National Centre • Staff attrition Staff Attrition • Staff replacement National Centre • CET Customer • CCQ Service National Centre • Sick days ranked from most taken to Sick Leave least taken by individual National How can BDP help BDP has strong experience in helping large organisations create an effective performance reporting and scorecard system to ensure that they meet their KPIs and business objectives. We also provide implementation support and skill development in this area. Please contact us at info@b-d-p.com to learn more. Page 4 of 4