Key Performance Indicators (KPI’s): Shifting the Paradigm and Bringing Balance to Measuring Employees

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Key Performance Indicators (KPI’s) continue to be a “buzz phrase” and a measuring tool, a flavor of the month managerial concern, and a disastrous issue in employee relations.  Why is this a disastrous issue in employee relations?   KPI’s have no meaning, no value, and are not grounded in reality.  For all the resources invested, KPI’s continue to reflect a bad investment at best.  Yet, hope remains for KPI’s if the paradigm is shifted and new thinking on an old topic is undertaken.

KPI’s are to reflect what is needed for an employee to be adequately measured for performing the role of the position hired.  This KPI definition is the simplest statement on this topic and forms the backbone of the discussion herein.  Since KPI’s are all about measurement, knowing what is being measured, and why this particular aspect is being measured, the specific actions required to improve must be clear, concise, and easily discussed.  Please consider a common thought:  when was the last time KPI’s were reviewed for accuracy and the information being produced evaluated for veracity and actionable application?  If the answer is “I don’t know” or longer than 24-months previous, this is the first problem.

KPI’s should be producing actionable data.  For example, Net Promoter Score (NPS) is a KPI in which a baseline is established.   What is the baseline?  What are the parameters for high/low?  What specific actions can an employee take to improve NPS to meet the parameters?  Does the KPI standard make sense to the new employee?  Can a seasoned employee easily explain improvement to a new employee?  Actionable data is crucial in KPI discussion.  If the KPI is not directly tied to actions, why is this a measurable KPI?

Here is another point regarding actionable data in measuring KPI’s. Active Issues (AI) is a general KPI in many service related call centers.  Can an employee receive a zero (0) as a measurement?  The most frustrating conversation I ever had on a project was being charged an AI because the measurement system could not accept a zero in this category, even though the company preached zero-AI to all employees.  Obtaining the desired KPI meant the employees had to be charged an issue and, in being charged the issue, were then held accountable for not reaching the desired AI goal of zero.  Actionable data must be able to accept the performance desired and achieved to meet the employee performance.

KPI veracity is found in the usefulness of the data to the individual employee and direct supervisor.  KPI actionable application is found in being able to specifically identify actions the employee can take to improve performance on a single indicator.  This actionable application hinges upon the need to understand what is being measured and being able to explain why it is being measured along with the value of that measurement to the overall organization.

For example, Average Handle Time (AHT) is a common call center KPI measurement.  Is AHT being measured because you do not want employees on the phone too long or what about too short handle time?  What value is AHT measuring and how does AHT benefit the company overall?  Can the direct supervisor specifically speak to actions the employee is making to improve performance?  All of these questions must be addressed to empower the employee in how to improve based upon KPI measurement.

During my first performance interview in a call center, I asked about KPI’s, specific actions to take, what the numbers meant and what did improvement look like for each of the 40 KPI’s being discussed.  The answer on the majority of the KPI’s, from my front-line supervisor, was “I don’t know.”  More egregious was the insistence that “it works” and to not “rock the boat.”  The supervisor refused to find out what the KPI’s meant because the supervisor had no idea where the measurements came from, who was responsible for the KPI’s, and did not want to “rock the boat.”

Another issue regarding actionable application and veracity is the power of surpassing expectations.  Should an employee surpass the expectation, is the employee harmed because of being better than the KPI dictates?  An example of this is found in another common call center KPI, After Call Work (ACW).  If the standard for ACW is 10 seconds and the diligent employee drives their ACW to zero (0), per the published company desired goals, can the KPI measurement accurately reflect the employee’s performance?  If not, the KPI process is having significant issues in delivering actionable and truthful data to organizational leaders.

Here is another real world example on KPI failure.  While working a project in a call center, I discovered how to obtain KPI excellence in ACW and taught managers and other employees how to obtain KPI excellence in ACW.  At the end-of-the-month meeting for KPI adherence, I won an award for obtaining 0 ACW, but the bonus check was based upon 1-second ACW because the KPI measurement system could not accept a 0.  More to the point, I also received a counseling statement for having time in ACW.  The award and counseling statement were delivered the same day, and the manager did not see the irony or problem with the KPI issue.  The insult to injury came when pointing out this error and being told by the VP of Customer Service that the business will not change to accommodate.

When working with KPI’s, the data must be able to be tied to specific actions of those being measured.  The actions are being measured and weighed, and the actions need to make sense by providing logic to the employee.  The KPI might make sense to an organizational leader or a high-level manager, but if the employee being measured cannot logically understand the KPI, the measurement cannot accurately reflect actionable data.

For example, “Voice-of-the-Customer” (VOC) remains a favorite call center KPI, but many times, the VOC score does not make sense as the actions the employee is told to take often do not impact a VOC because the customer survey is all about the perception of the customer, not the work of the employee.  If the customer does not like the data presented and with spite and envy fills out the VOC survey with malice and vindication, how is the customer agent expected to make improvement inVOC?  The customer service representative cannot influence the customer after the call and before the survey is completed; the customer is making choices; providing the best service is irrelevant and the employee is punished for a low VOC.  If the agent delivering service does not control the actions, the KPI is both inaccurate and ineffective!

ACW and AHT bring up an excellent auxiliary topic, baselines.  Baselines are averages and beg the questions as to when and who established the basic data being averaged to measure performance?  How were the baselines established originally?  Have the baselines been reviewed for application in the current business environment?  Do the baselines still make sense?  More specifically, if the baselines and averages do not reflect current reality, why are they still a KPI?  If training to meet the KPI is insufficient, how can an employee meet the rigors the KPI demands?

On a call center project, I asked when the AHT/NPS/ACW/VOC and other KPI’s were established.  The front-line supervisor was part of the project in their first year of employment to establish KPI baselines.  The supervisor was a 15-year veteran of the company and I asked when the baselines would be reviewed due to new technology, new processes, new procedures, and business changes since inception of the original baselines.  The response remains classic, “Why should the baselines change.  This is why they are called baselines.”  Baselines should change as the KPI’s are reviewed.  When products and services change, the baselines need to be reviewed to ensure veracity and applicability.  More specifically, actionable data takes a downturn when baselines are insufficient to proper measurement of performance.

What does this mean for the paradigm?

  1. Plan to review the KPI as a process at a minimum of every 18 months and sooner if products and services change. Review sooner if technology shifts and every time a trigger in the company processes occurs, e.g., back office changes, legislation, etc.  Regardless, set in place plans to maintain KPI shelf life and allow the KPI process to live, change, and become a tool to improve people.
  1. Make a single person responsible for each KPI being measured. For example, if there are 15 KPI’s in an employee’s performance review, then 15 different people should have a collateral duty to be responsible for the life of that KPI.  These people should be approachable, knowledgeable, and have an in-depth knowledge of the job being done to adequately measure the performance of others and how this influences the company’s goals and objectives overall.  More specifically, if those in charge have not performed the job, why are they in charge of the KPI to measure the job?

I worked on a project where the senior leaders, team leaders, directors, etc., were required to spend 8-hours a month on the phone as a front-line customer-facing representative in an effort to keep the leaders knowledgeable of the front-line tasks, current customer environment, and to gage process and procedure application in a real-world.  The customers and the customer-facing employees appreciated seeing this, and it made the leaders more cognizant of what is happening in the business from a front-line perspective.

  1. Never allow the KPI to be a punishment tool. Training, yes; development, absolutely; punishment, never.  Should actions have consequences, yes; but these consequences must be separated from the KPI measuring system.  Triggers for front-line supervisors from the KPI’s need to be removed and placed into the hands of human resource managers and non-frontline superiors/directors.  This allows for the relationship of training to remain with the front-line supervisor and places the control for KPI consequences at a level where the employee can receive a neutral assessment of performance.
  1. Never allow a KPI to be measured if the employee does not have 100% control over how to improve that KPI. While NPS is a fine item to measure, do not allow NPS to be a performance item, use this as a bonus item at best or a team item for judging team performance, but individuals must have 100% control over their own performance for a KPI to be actionable.
  1. Simplify KPI’s. Remember the elevator speech.  Can the KPI measurement be discussed in an elevator speech?  If not, the KPI’s need to be simplified, honed, and focused.  Imperative to effective KPI’s remains actions the individual can control.
  1. Drop the canned phrases, key words, and other “flavor-of-the-month” managerial gimmick. KPI’s should never be based upon word adaptation.  Every person does not successfully use terms someone else uses to succeed.  Personalization helps the customer feel their problem is original.  Canned responses rob the customer of this feeling and the customer feels “shoehorned” into the one-size-fits-all answer.
  1. Remember the individuality of the employee when choosing which KPI is to be measured and how that measurement is created. For example, once a baseline is established, does the employee retain the freedom to control their own destiny in meeting the KPI or is the employee “shoe-horned” into one-size fits most measurement device?
  1. Action plans need KPI’s; KPI’s need action plans. As a measurement tool, gauging actions and placing a statistical variable onto that tangible, a non-static atmosphere enveloping the KPI conversation is needed.  If the plan needs measuring, there must be a KPI.  If the KPI is to achieve the most use, an implemented action plan to be measured must exist.
  1. Don’t settle for what every other business measures in the industry. If AHT does not fit your call center, remove it.  If a manufacturing employee cannot control cycle time, do not use it to gauge employee performance.  KPI’s should be a hybrid solution to measuring employee actions and not represent KPI measuring to an e3-direectional-balancentire industry.  Allow the KPI measuring system to be individual, explainable, and conducive to all employees being able to detail the “why” and the “what” in measurement.
  2. Do not forget to include the “how.” How does an employee improve?  How do the numbers directly represent actions?  How easy is the KPI measurement system explained to another person?  Once the “why” and the “what” are known, the “how” should be a simple extension of the logic in the KPI process.

 © 2016 M. Dave Salisbury
All Rights Reserved – Note: I do not own the rights to the images used.

Fundamentals of Customer Interaction: A Leadership Primer

Gitomer (1998) was very specific about why customer satisfaction is worthless and provided keen insights into how to build loyalty.  While many businesses value and find the “voice of the customer” desirable to the organization, the focus is on satisfying the customer and not interacting with the customer.  Sinek (2009) adds the variable needed, why, as in why are businesses still trying to satisfy when loyalty is needeAre we in trouble?  We didn't do it!!!d?  Why are customers still being taken advantage of when logic claims the long-term relationship is more critical than short-term gains; thus, making the need for loyalty that much more valuable in dollars to the business.  Why serve the customer when the customer needs more than simple “service?”

Customer service is simply geared to expeditiously interacting with the customer in a mass environment.  For example, a recent call to a cell phone provider remains an excellent illustration of mass service hysteria.  During this call, a simple question was asked, why is my statement so high?  The representative placed the caller on hold four separate times, never answered the customer’s question, and because the customer changed their plan, the call was considered a success.  The customer then went online, spent an additional hour in Instant Message (IM) with a second customer service rep, and finally was given less of an answer before quitting in exasperation.  Foolishly, the call center sends an automatic survey to the customer asking for his or her opinion.  The customer is going to express his or her dissatisfaction in the “customer satisfaction survey.  Why was it sent?  Why place the financial future of a low-paid customer service rep in jeopardy simply because the customer remains upset, and the managers deem that information valuable?

The customer call center remains the epitome of the carrot and stick approach to customers with the customer and the front-line customer-facing representatives squeezed into numbered boxes, small cubicles, and an individuality draining environment making the customer and the customer representative soulless zombies held captive in an endless cycle of frustration.  Offer a carrot to a customer to go away, threaten the customer representative with a stick if they do not fit squarely into the business environment and achieve all the key-performance indicators (KPI’s) demanded by the business, although the KPI is in direct opposition to serving the customer.  The above incident is a perfect example of KPI’s being anti-customer.  The representative needs to make a quota for call plan changes and sales, the customer needs serviced, but to actually answer the question means that the time the representative spent on the phone would have surpassed a KPI.  The carrot and stick approach is to offer the customer bill credits to go away quickly so the representative can move onto the next call, a KPI mindset causing frustration for the representative and the customer.

Let’s use one more recent example as a comparison.  The Department of Veteran’s Affairs has been in the news a great deal recently.  Veterans remain the forced customer trapped in an endless cycle of bureaucratic red tape.  The result is that veterans are now being called for a customer service survey to determine how veterans feel they were served.  Why would this information be valuable with all the customer hostility in the veteran population?  Why waste taxpayer dollars to obtain veteran “customer” insight when the bureaucracy has not changed, the red tape remains stifling, and the officers enforcing the bureaucracy continue to kill and harm veterans as the captive customer?  Veterans are reporting that after every interaction with the various VA bureaucrats a customer satisfaction survey is thrust upon them and sold to them as an improvement tool.   Doubt remains as to the value to the veteran, and to the VA as a whole, and provides more KPI’s harming the customer, eliminating service to the customer, and destroying any hope of correcting the actual problems; but the VA is gathering a ton of additional information for office clerks to sort through and make reports upon.

With these thoughts in mind, what do we do and where do we go from here?  Better yet, why are these the preferred actions when logic relates there is a better path forward?  Finally, since KPI’s are needed, how should KPI’s be adjusted to provide more actionable data personalized to the individual employee while remaining valuable to the entire business?

On the subject of KPI’s, when was the last time that each KPI was evaluated and the questions “Why” and “What” were asked to justify that specific item on a list of measurable actions in a KPI process review?  If the answer is “I don’t know” or longer than 18-months, there is a significant problem with the KPI’s reporting obsolete data and doing more harm than good.  As a consultant in a call center, I walked item-by-item through the KPI matrix my first day on the job and successfully concluded a project shortly thereafter by simply moving the KPI matrix back into providing actionable and non-obsolete data.  If each piece of data cannot be explained and justified by the newest member on the floor receiving scores on performance, the KPI matrix is obsolete, confusing, and ineffective in driving actions that actually benefit the employee and those the employee contacts.  Ask the managers to define what the KPI’s are, what is being measured, and detail specific actions an employee should be coached in to improve a specific indicator.  If the answers are not clear and easy to understand, the KPI is ineffective and doing more harm than good.

Juran’s rule that the KPI is expected to form a pathway to progression as a business process remains powerful.  When problems arise in KPI data and employee adherence, the problem is 90% of the time not the employee, but the KPI in question.  Is Juran’s rule being applied consistently, effectively, and powerfully to drive understanding and communication in the organization or is the answer to “blame the employee?”  Dandira (2009) remains powerfully applied here: ineffective KPI’s can be, and many times are, a dynamic source of organizational cancer because of employee confusion about what to do to improve, resulting in employee morale problems.

Moving forward, the way remains clear:

  1. Never allow a business process or procedure to be older than 12-months without a full and comprehensive review justifying that process and every step in that process.

I was called in to discuss a customer influencing process.  The process had more than 30 steps involved and 12 separate employees to accomplish the task.  The process could not be described in 30 minutes, and customers were upset from experiencing this process, adding to the already upset nature of the involved customers and the frustration in the front-line employees assisting them.  Technology improved this process by a third, but the company could not determine how to improve the process.  I asked why on each step and employee involved.  Four hours of discussion resulted in cutting 8 of the involved employees from the process.  Asking “what” resulted in further steps cut in the process.  At the conclusion of the contract, the complicated process was described in a single elevator ride, which simplified the results for the customer and set the business on the road to continuous improvement of business processes.  Pick a process, look at the age, and ask in an elevator ride for the process to be described.  Keep riding the elevator until the entire process from beginning to end is detailed.  How many elevator trips were needed?  Never create a process or a measurement that cannot be explained in a single elevator ride.

  1. Who is catching the blame on recorded calls: technology, the customer, or the customer service rep? The problem is not with any of these parties, and properly naming the problem remains the first step in solving the problem.

For example, on a contract for a manufacturing company, a problem existed that could not be explained causing issues in quality control and proper billing to customers.  The problem observed was not the problem; the process and actionable data capture were the problems.  Until the company could properly identify and act on the real problem, they continued to blame the employee and burned through several highly talented employees in the process.  The action taken began with identification of the real problem and the underlying processes.  Then, we began working out the actual solution.  The first and second actions projected and beta-tested were abject failures.  Once the full measure of the problem was identified in a series of continuous events, the third proposed solution worked, not great, but worked.  The fourth and fifth solutions worked better.  Finally the sixth review fixed the problem.  Identify the problem, and then make the resolution an intuitive process of learning and developing.  Failure is okay provided the current failure is moving the problem forward towards solutions and new thinking.

  1. Who is the customer? Are we wasting time on separating internal and external customers when that time would be better spent treating them both equally?  Rarely should the internal customer be treated better than an external customer, but many times resources are limited and external customers must come first.  Do internal customers know why this decision is being made and when the experience is projected to end?

During a merger, I was contracted as a W-2 employee on start of contract.  At the conclusion of the merger, employees were told external customer resources were being moved back to support internal customers, and benefits and resources would flow back to the employees.  Upon the successful completion of the merger, this policy was not honored, and the mass of employees leaving the company was monumental, as employees felt betrayed.  Knowing the “why” and the “what” behind organizational decisions by all customers is important.  If this company had been more forthcoming about the “why” and the “what,” the loss of so many employees would not have been so great.  More to the point, the loss of employees created post-merger problems resulting in “right-sizing efforts,” “down-sizing,” and finally “post-merger consolidation of facilities,” all of which are euphemisms hiding the real problem, failure to treat all customers with respect and valuing the customers.

  1. The “Why” and the “What.” While the “Why” is critical, both remain powerful, and communicating these simply, effectively, and persuasively remains the role of leadership.  Ask yourself, can employees define “what” we do?  Can employees define “why” we do the things we do?  Do employees know “why” we compete in our marketplace the way we do?  What are the answers and why are the answers coming in with the trends?  Can you answer this, and what is the action to move forward?

I had the pleasure of working as a W-2 employee for a company that did this right.  On the first day of training, the employee learned the “Why” and the “What.”  Then, everyday the employee learned how each process, procedure, and daily task fed into the “What” and the “Why.”  This promoted the employee to understanding and becoming an agent for action in the business.  This pattern is replicable, but employees must know the “why” and the “what” and business leaders must know the “Why” and the “What” and disclose this information to the full organization?

  1. Stop only “serving” the customer. “Serving” the customer is useless, wasteful, and ruins the power of customer interactions reducing these opportunities to filling needs, not building relationships.  If your customer-facing employees are only providing “service,” the business has settled for failure and has become a self-fulfilling prophecy.

This is not a subject of semantics, word plasticity, and mind games.  This is a fundamental mindset of the power possessed by loyal customers acting as marketing tools to drive profitability.  If the customer only receives “service,” the customer is not satisfied, the customer-facing employee is not satisfied, and precious resources are wasted on fruitless gimmicks and useless action.  Worse, the ROI is zero at best, but usually negative.  If internal and external customers are simply treated as customers, how can a business leader expect to build customer and employee loyalty or experience bottom-line growth?  Make time to build customer-reaffirming experiences and the bottom-line will grow.  Stop serving the customers, stop blaming the employees, stop looking for solutions in technology without knowing the business and identifying the problems.  If not, Dandira’s (2012) counsel will be the reward, organizational cancer, and organizational death.

References

Dandira, M. (2012). Dysfunctional leadership: Organizational cancer. Business Strategy Series, 13(4), 187-192. doi: http://dx.doi.org/10.1108/17515631211246267

Gitomer, J. (1998). Customer satisfaction is worthless – Customer loyalty is priceless. Atlanta, GA: Bard Press.

Sinek, S. (2009). Start with why: How great leaders inspire everyone to take action. New York, NY: Penguin Group.

 © 2016 M. Dave Salisbury
All Rights Reserved