Which indicators should we be using to measure operational efficiency?
Do the indicators used in one industry differ to that of another?
Should we only measure success or should we be keeping an eye on something else as well?
KPIs – focus on what is working well
Key performance indicators are defined as being “commonly used by an organization to evaluate its success or the success of a particular activity in which it is engaged.” (Wikipedia). The emphasis here is on measuring success. KPIs can be defined with color codes (or performance grades) that allow someone to whom the indicator has relevance and meaning to easily identify if the indicator target is being met.
An example of this type of indicator is the number of requests being closed on a daily basis by a Shared Services Center. If agents are meeting their call closure targets then they are likely to be rewarded, financially or otherwise. 73% of Shared Services Centers use service level agreement adherence as a KPI to measure success (see the Winshuttle 2013 Shared Services Survey Report for more detail). Managers would be looking at call closure figures and comparing them to targets for each of the agents. In this case, at the close of business it should be easy to spot which agents met their daily target.
KPIs are very useful in keeping abreast of the operational components to ‘run a tight ship’. Having the ability to view a performance snapshot for the day, week or month is critical to checking progress as an individual, as a team and as a business. While KPIs can also inform you when targets are not being met (poor performance) they do not always ask and answer sufficient questions to ensure that potential loopholes are being considered.
KEIs – focus on what is not working well
Key exception indicators focus on assessing compliance, on measuring whether or not controls are being adhered to. While the KPI example of call closure volumes may be useful to one supervisor, it doesn’t check whether the agents closing those calls are the ones that should be doing so.
Dan French of Consider Solutions discussed the importance of looking out for exceptions in a recent webinar and blog. Dan used an example of a car park access boom that appeared to work perfectly fine, allowing drivers to swipe access cards to operate the boom and gain entry to the car park. Only in winter, with the ground covered in snow, did they see clear evidence that (some) drivers were avoiding the boom altogether by driving around it – the tracks on the grass were accentuated by the snow.
This example clearly pointed out the need to look beyond measuring success. We need to ask ourselves what could go wrong.
How could someone bypass the process?
What would happen if they did?
How do we become proactive and warn ourselves of this happening?
KIIs – focus on what is stagnating over time
Change is good, in the sense that it tells you whether or not things are operating as expected. While KPIs are useful, they should be incremental to ensure that continuous improvement is retained as a key objective. For this reason, we should also consider key improvement indicators.
Complacency comes in the form of indicators that are consistently performing well (or poorly) and where the trend is absolutely flat. In this case, the measure is neither getting better over time, nor getting worse. This is a sure sign that potential improvements could be suggested for the process involved.
For example, if the KPI mentioned earlier (for measuring and assessing calls closed each day) produced the same actual results over a six month period, this could imply that:
- The target volumes need refinement, or
- The duration spent on calls could be optimized (especially if targets are not being met), or
- Staff could be redistributed to own certain types of calls or requests received, or
- Some processes could be outsourced (due to better knowledge of performance), or
- Additional indicators could be introduced to track performance, exceptions and trends.
Improvement indicators are more challenging to define than KPIs or KEIs. To find a KII look for something that seems to be going right, then poke holes in it and see if it can be improved. In this train of thought, the well known clause ‘Don’t try to fix something if it’s not broken’ is appended with ‘but see if you can make it work better’.
Questions or comments about this article?
Tweet @mervynonline to continue the conversation!