Develop Metrics That Drive Increased Productivity
By: Peter Bendor-Samuel
There is a huge problem with trying to increase productivity in functions, processes and in business teams. Measurements of productivity look at the efficiency of a task. The assumption: if companies focus on making activities more efficient, they will increase productivity. History has not been kind to that belief. So, what enables the ability for teams to break out of their current way of doing business and reassemble the constituent pieces for more effective, more productive results?
I believe companies need to try something different: focus on the results that they want to achieve. They need to challenge their teams, functions and processes to improve the results and use less resources to accomplish those results. And they need a way to make sure the results are what they want. The way to do that is by using what I refer to as “breakthrough metrics.”
Instead of static SLAs-driven contracts (“zombies,” as I called them in a prior blog), companies need fluid metrics. The heart of the new digital platforms and the digital models is data and analytics that enable fluidity and value creation. Data dashboards enable companies to:
- Respond much more tightly to align the service with the direction the business wants
Start measuring productivity and drive to improve it
In a previous blog, I discussed the need for companies to ensure high productivity levels going forward in a post-COVID-19 world. To improve its productivity, a company must first measure it. Breakthrough metrics measure activities that change a company’s performance in a significant way such as affecting its ability to:
- Gain customers
- Increase stock price
- Increase annual revenue
- Improve employee experience
Productivity is inherently complicated. It never depends on just one thing. Productivity is the sum of every component – the technology, people, training, organizational structure, decision rights and dozens of other factors.
Many different technologies, techniques and organizational constraints affect whether a company can fully release productivity. Our studies at Everest Group uncovered well over 20 different variables or components affecting productivity. However, do not make the mistake of trying to affect all 20 components at once.
Instead, tackle just one or two components and make any necessary adjustments. Then use the breakthrough metrics to observe the impact of those changes. For example, did the changes improve the time it takes to deliver a customer experience? Did the changes improve the completeness of the experience for the customer? Did the changes improve the company’s ability to anticipate a customer’s needs?
Companies need to measure productivity monthly or quarterly and review the results with the team delivering the service and monitor progress. Meticulously and methodically measuring the activities and changes as to their success against the breakthrough metrics helps build velocity toward progress in achieving the objectives.
Measuring productivity can be tricky. The metrics need to measure some combination of whether the activity accomplishes alignment with the business, the speed of the service, the error rate and the cost to serve. Companies often make the mistake of breaking these points down into sub-metrics; but in doing so, they lose the forest for the trees.
Here is an example of one of my favorite instances of using breakthrough metrics to improve productivity.
Example of measuring productivity improvement in customer service
The example took place at a major oil and gas company wanting to focus on the customer service “on time” and “in full” aspects of its inside sales organization. The O&G company recognized it had less than one hour to answer questions when customers called to buy lubricants. The productivity improvement aimed not just to answer specific questions but, rather, to resolve the entire problem for a customer. This involved:
- The “in full” aspect: Understanding what the customer really wanted to buy, ensuring it was in stock, ensuring it could be shipped to the customer’s location, ensuring that all the shipping and logistics were taken care of and ensuring the payment terms were taken care of.
- The “on time” aspect: Focusing on the timing important to the customer asking questions and placing the order rather than focusing on how quickly the sales team answered the phone.
One metric measured the completeness of a customer interaction, and the other metric measured the total time to complete the interaction. Completeness measured whether the sales team completely resolved all a customer’s questions. If they left any part of the process uncovered, then the order fell apart and the customer tended to recompete the item. But if the sales team could completely resolve all the inbound conversation around whether it had the right product, whether it resolved payment terms and logistics for getting the lubricant to the customer by the right time, then the individual did not go to another source.
These two metrics aimed at breakthrough performance allowed the O&G company to dramatically improve its customer experience. Rather than focusing on individual components, the metrics focused on the complete activity.
The result? The company gained significant market share, dramatically improved its ability to price, and therefore improved profitability of the product line. These improvements also lowered the total cost to serve by over 60%.
Almost all employees want to be more productive. It creates a much better work environment, and individual satisfaction comes from helping on the productivity journey. But it is difficult to get large organizations to go on a productivity improvement journey. Often, this is because of change management issues.
There is no one formula that allows a company to succeed. But there are consistent technologies, techniques and constraints that a company can relax, which will allow a company to improve its productivity.
Companies can improve productivity by orders of magnitude if they use breakthrough metrics and set up a disciplined and consistent journey. The journey must measure real accomplishment in achieving the goal. This helps build commitment to success and commitment to support the change necessary to unleash the desired productivity.
Developing and monitoring breakthrough metrics is one aspect of the journey. Data management is another. In my next blog, I will explain how the COVID-19 crisis drives companies to make a crucial mistake in data management.