Reassessing Your KPIs to Measure Shared Services Performance that Counts


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Do you want to develop killer KPIs for your Shared Services? Then you need to be able to distinguish internal and external metrics, and know which ones count. View this article to learn 5 Steps to develop KPIs for Your Shared Services

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Reassessing Your KPIs to Measure Shared Services Performance that Counts

  2. 2. 2 | Chazey’s Toolkit – KPIs – July 2014 5 steps to Killer KPIs While most operators prioritize Key Performance Indicators and SLAS when launching Shared Services, a year into service delivery results are often disappointing – and that, despite these KPIs being met. What’s the problem? Mainly, that KPIs as they exist now tend to be static measures of the point of exchange between the SSO and the customer. However, as we all know (or if we don’t know, we are learning) many problems originate upstream, outside the SSO’s scope, but have a significant impact on the SSO’s output. Here are some pointers on how to design KPIs that support better client relationships and provide a more realistic measure of success. 1. Don’t rely on inward metrics when developing KPIs. If you only measure your“in scope”activities, you may draw the wrong conclusions. For example, you may find that your KPI metrics demonstrate failure – say, in cash collection – whereas an end-to-end process review and root cause analysis would highlight process faults upstream of the credit control function that are leading to sub-par performance. It’s important to create metrics that give visibility to areas outside your direct control, and which drive the right behaviors through the end-to-end process. 2. Don’t rely on output KPIs which measure the success/quality/effectiveness/delivery of the“outputs” from the processes owned by the SSO. Although these metrics do link directly to meeting customer require- ments (as agreed in the Service Level/Partnership Agreements) they don’t necessarily measure the most desirable outputs from an organizational viewpoint. Outputs are only one part of the process. Make sure you understand the relationship between different output levels and business impact. 3. Don’t focus overly on operational KPIs which measure whether the SSO is operating effectively or efficiently, whether it’s achieving its objectives and strategic goals, and whether the group is working as a team. These are often informal measures that don’t necessarily impact the SSO’s customer experience. It’s important to track your efficiency metrics but they should not in themselves be a target output. 4. Do include upstream measures like input/reverse KPIs These measure required“inputs”that directly correlate with the quality of SSO outputs. An Input KPI will measure whether the right information is being received at the right time from another department – in other words whether the SSO is being supplied with the right quality of information at the right time. These measures provide a foundation for building expectations, but are not about disciplining or reprimanding. They are an important indicator for the quality of inputs, and effectively highlight the responsibility of the SSO’s business partners. 5. Do leverage individual KPIs to track whether team members are hitting relevant performance targets. These should form part of an SSO’s performance management and individual development frame- work, but they are not about punishing individuals. Rather, these are about creating understanding on how to appropriately manage the workforce, and they can help you identify areas that need improvement or support, for example through training.
  3. 3. 3 | Chazey’s Toolkit – KPIs – July 2014 How do you identify the right metrics? There are a few proven approaches to developing a KPI structure. For example: • Don’t create metrics“top-down”– involve multiple levels in the organization. • Don’t assume – involve your customers. • Don’t expect it to be a one-time meeting – developing KPIs is a process that requires thought and ..................consideration. Hold workshops and keep the conversations going. • Expect your KPIs to change over time – something that is key today may not be important in a year’s ................. time. Be willing to change your metrics on an ongoing basis. • Do consider automation – don’t create metrics that require weeks of manual effort to compile. The Word is “Key” KPIs are about“Key”performance indicators, not a complete measurement of everything that can be tracked. The goal is not to produce an encyclopedia of metrics every month. If you do so, the important messages will be lost and discussions around performance will become muddled. Focus on the key measurements and you will build stronger relationships with your customers and take your Shared Service Organization to the next level. (For more details on the types of KPIs, please read “9 Critical Components to Develop a Successful Client Interaction Framework”) Types of KPIs
  4. 4. Phil Searle CEO & Founder +1 408 402 3008 Phil Searle CEO & Founder Chazey Partners +1 408 402 3008 David O’Sullivan Co-Founder & Partner Chazey Partners +353 (0) 86 384 8573 Chas Moore Managing Director, North America (West) Chazey Partners +1 855 692 6229 Ext 201 Christina Exarchou Head of HR Practice EMEA Chazey Partners +30 6944 525622 Esteban Carril Managing Director, Latin America Chazey Partners +54 (911) 3085 5140 Anirvan Sen Managing Director, Asia, Middle East and Africa Chazey Partners +31 649 133 170 For more articles on Chazey’s Toolkit, please visit or subscribe to our newsletters at Chazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world-class excellence through Business Transformation, Shared Services & Outsourcing, Technology Enablement, Process Enhancement and Corporate Strategy Optimization. We pride ourselves in having built, operated and turned around some of the world's most highly commended and ground breaking Shared Services Organizations, and for implementing many highly successful multi-sourced delivery solutions. Over the last 20 years, we have delivered numerous programs globally, in the US, Canada, UK, Continental Europe, Ireland, India, Eastern Europe, South America, Singapore, Australia, China, Middle-East and Africa. Our experience covers both Private and Public Sectors, providing expertise in a wide spec- trum of business functions, including Finance, HR, IT and Procurement. Learn more about us at Follow us on LinkedIn, Twitter, Facebook and Google+ 4 | Chazey’s Toolkit – KPIs – July 2014 Janey Jux Head of Public Sector Practice EMEA Chazey Partners + 44 (0) 800 644 0649 Emer O’Kelly Regional Director, Europe Chazey Partners +44 (0) 7703 647360 Robert Towle Managing Director, North America (East) Chazey Partners +1 862 812 7851