Development of a
                                  value-driven performance
                                  management f...
Despite positive reports on their performance, our client              • existing measures focused on speed of service
Balanced Performance Scorecard: In alignment with the KPIs workstream, which
“ We faced the really
The effort succeeded in identifying current client ‘good practices’ as well as a series of
 potential process improvement ...
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Development Of A Value Driven Performance Management Framework


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Develop a performance management framework for your customer service business with the unique capability of benchmarking your performance against your peers every year.

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Development Of A Value Driven Performance Management Framework

  1. 1. Development of a value-driven performance management framework Aligning performance metrics with stakeholder value for a customer support center As scrutiny on utility performance intensifies, more attention is being focused on the role of performance metrics in business operations. Stakeholders are demanding more from their service providers at a time of rising commodity costs, increasing capital requirements for refurbishment, new construction and a growing set of customer interests. All these demands seem to pull leadership teams in multiple directions. What levers should they focus on? And more importantly how? PA Consulting Group (PA) stands apart from the field and distribution operations and performance analysis of alternatives as a recognized utility sector expert in and assurance reporting. The customer base included the development and implementation of best-practice a nationwide gas retail network as well as a wide range performance management frameworks as a catalyst for of franchisees and dealers. PA was asked to provide business transformation. standardized service contracts with the client’s business customers and also develop a new Performance Beginning in late 2007, PA engaged with a leading Management Framework. The framework requirements supplier of integrated customer management solutions covered scorecard and strategic and operational supporting oil and gas majors. Our client provided performance metrics. services such as call center operations, billing, accounts payable and receivable, financial reporting, logistics Case study
  2. 2. Despite positive reports on their performance, our client • existing measures focused on speed of service was facing increasing discontent from stakeholders and delivery while completely neglecting quality business customers with low level of service, eg, long call wait. Stakeholders were also impatient to see any Leveraging PA’s experience in the sector, the goal of the return on investment in this recently-established shared engagement was to: services center. The client also felt that they were lacking • provide customers and stakeholders with more or even losing control in certain areas of their business. transparency on services and costs For instance, the project management team had little • develop performance metrics clearly aligned with influence on transformation and IT projects. Other areas business needs of concern included: • focus on proactively-managed customers relationships • lack of service definition with increasing out-of-scope and expectations service delivery • enhance overall performance information and reporting • debatable usage of performance metrics, which were processes often meaningless • increase in the number of reports generated for a large As a result of feedback collected from internal client number of stakeholders. surveys that outlined a disconnect between the client and • complete disconnect between internal performance its business customers, our team worked with the client to reporting and customer experience address the business issues and the customer concerns through a series of initiatives as described below. Figure 1: From issues to outcomes Business issues PA initiatives Outcomes/deliverables Services and costs are Service catalog • Develop service catalog defining not transparent to completed and services provided to the business customers validated by business • Develop business-aligned SLAs defining required performance Performance metrics are not Set of key KPIs and levels clearly aligned with stakeholders’ SLAs validated by and customers’ needs customers • Develop balanced performance scorecard to track and report Customers relationship and Working balanced performance against key metrics expectations are not managed scorecard developed • Benchmark costs and operational proactively and agreed with client performance against comparable shared services organizations for Overall performance information Benchmark-driven targets target-setting and reporting processes could and realistic opportunities for been hanced improvement Service catalog: Our team worked with the client to create a service catalog that provides detailed descriptions of all services offered by client. In addition, the team created a single service contract for each business unit that details the client’s services used by the unit and the service levels to which the client is expected to adhere. The client rapidly identified benefits from this single initiative through a tighter definition its services and therefore higher clarity to customers. It also built the foundations for the KPI, Scorecard, and Benchmarking workstreams. Key Performance Indicators (KPIs): A comprehensive set of KPIs were developed through a series of collaborative sessions with business unit representatives that are focused on measuring service delivery and identifying improvement opportunities. The outcome was a set of flexible SLAs designed to alter behaviors and drive performance improvement. The key benefits of this workstream were the clear representation of customers’ expectations through the KPIs and the deep involvement of customers and stakeholders in the process. With such a cooperative process, the buy-in was achieved rapidly.
  3. 3. Balanced Performance Scorecard: In alignment with the KPIs workstream, which “ We faced the really focuses on operational excellence only, PA developed a Balanced Performance daunting task of Scorecard (‘Scorecard’) covering the key management areas: shareholder value both re-defining the (finance), customer value (customer), operational excellence (KPIs), and people and services we offered capabilities (HR & training). The Scorecard was aligned with the parent-company’s and completely objectives as well as the strategy of the business unit. It also provided greater overhauling our transparency on the business performance to the leadership team as well as their key performance stakeholders. Finally, the Scorecard helped the organization prioritize its transformation reporting structure. program by focusing on the most significant levers for stakeholders and customers. The primary challenge was that Figure 2: Key benefits from scorecard we needed to inform the new performance Pre-scorecard Post-scorecard metrics through Over 100 reports generated Reports being rationalized using a combination of Number of reports across the organization the scorecard framework customer input and Clear top-down reporting industry benchmarks. Level of details Uneven report granularity structure After spending the Lack of market – driven Market – and consensus – Target setting time to genuinely targets driven target-setting process understand our Areas of business without Fact-based strategy discussions Performance review business and clear performance review enabled by the scorecard tool organization, Benchmarking of costs and performance: The benchmarking exercise was executed PA conducted in an effort to understand costs, staffing levels, service levels, performance compared interviews with to best practice. It also provided a point of reference for the client’s new KPI’s. These over 70 customer benchmarks were used to develop market-based performance targets that the client can representatives and use for setting ‘realistic’ goals and objectives. managed to identify the services required Normalized data is compared to high performing target companies and is used to define to support their stretch, market-based targets and objectives for overall performance. Best practices changing business of the better performing companies are identified for implementation by the Client and and formulated initiatives created to enable achievement of stretch targets and associated move from metrics that provided second to first quartile performance. a genuine depiction of the customer Figure 3: Charting the normalized results drives target-setting and best practice initiatives experience. Further, to improve performance they provided incredibly detailed Average time to answer – seconds Longest time to answer – seconds Average time to answer – seconds and customized 88% 32.50 Q1 Q1 Q1 178.75 Q2 32.50 82% Q2 Q2 253.8 benchmarking Q3 Q3 81% 515.125 COA 42.30 that gave us real 79.25 Q4 1946 78% Q4 Q3 insight to the things COA COA 84.00 75% 6900 Q4 being measured by 20.00 40.00 60.00 80.00 100.00 2,000.00 4,000.00 6,000.00 8,000.00 65% 70% 75% 80% 85% 90% industry leaders.” Customer satisfaction survey by customer type Abandonment rate Inbound agent call wrap-up time – minutes (regular, key, new customers) Business Unit Leader 23.75 82% Q1 Q1 2% Q1 46.00 Q2 Q2 3% 74% Q2 of Performance Q3 69.00 6% Q3 73% Q3 Management COA 8% 127.00 70% Q4 Q4 Client Confidential 841.00 Q4 15% Gap COA COA 0% 5% 10% 15% 20% 200.00 400.00 600.00 800.00 1,000.00 0% 20% 40% 60% 80% 100%
  4. 4. The effort succeeded in identifying current client ‘good practices’ as well as a series of potential process improvement efforts by: • clarifying underlying information relating to volumes associated with calls, transactions and business processes • highlighting best practices in use in the industry • identifying and clarifying barriers to success • defining best practices suited to the client environment to yield best results. Of the approximately 45 operating and cost metrics benchmarked, a portfolio of potential improvement opportunities was identified and categorized based on implementation complexity and benefit. Implementation of such improvements will propel the client to a Quartile 2- and even Quartile 1-performer in the areas of customer value, operational excellence, people and capabilities and shareholder value. Figure 4: Moving to best-practice Q1 Q2 Q3 Q4 Balanced Scorecard Quadrant Customer value Operational excellence People and capabilities Corporate headquarters 123 Buckingham Palace Road Shareholder value London SW1W 9SR United Kingdom Overall Tel: +44 20 7730 9000 Fax: +44 20 7333 5050 E-mail: By the end of the engagement, the client was able to gain control of their organization Global Energy Practice by putting in place a series of transformation initiatives based on the new Performance 1700 Lincoln Street Suite 4600 Management Framework. The framework helped identify and prioritize the transformation Denver, CO 80203 initiatives and select those with the greatest impact on long-term success. The scorecard Tel: +1 720 566 9920 was also an effective communication tool to stakeholders and customers. The business Fax: +1 720 566 9680 Contact: Carolyn Misage not only improved its focus on the bottom-line while enhancing customer experience Tel: +1 720 566 9845 and stakeholder satisfaction, but also clearly identified the next steps to enhance its E-mail: performance rapidly. PA Consulting Group is a “ The work that was done has exponentially improved our relationship leading management, systems and credibility with customers – materially improving engagement and technology consulting firm, operating worldwide in more and fundamentally changing our conversations from highly anecdotal than 35 countries. to fact based and metric driven. We now have a performance structure Principal national offices in that allows us to accurately measure and manage performance. Argentina, China, Denmark, Germany, India, Ireland, I have worked with all of the big consulting firms over the last ten Malaysia, The Netherlands, years and PA has unquestionably delivered the most useful and New Zealand, Norway, tangible results – all at a comparatively outstanding cost.” Sweden, United Arab Emirates, United Kingdom, United States Business Unit Leader of Performance Management © PA Knowledge Limited 2008. Client Confidential All rights reserved. 00960-0