Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers
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1 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers You can t manage what you don t measure is an old axiom but an important one in today s contact center environment. In an effort to better manage costs, increase revenues, and improve the customer experience, today s contact center managers are focusing more intently on becoming data-driven and on managing by the numbers. Executives find themselves tasked with increasing customer satisfaction and decreasing the overall cost per call, while their supervisors and managers work to decrease their team s average handle time and, at the same time, increase their quality scores. Additional management complexities exist for those organizations that have multiple sites and lines of business, each with separate and unique targets and goals. In an effort to manage all of these goals, organizations often target, measure, and report on all aspects of their contact center without understanding the relationship between various metrics, what the metrics truly represent, or the potential impact of focusing on certain metrics while ignoring others. In engaging with executives, we have found that despite good intentions, these efforts typically lead to missed opportunities across all levels of the organization, frustrated employees, and stacks of reports professionally designed and dutifully published, but severely lacking in delivering any real benefit. Leading utilities, however, are tackling this challenge by establishing a balanced scorecard and measurement framework that reinforces accountability and drives the desired behaviors and actions.
2 2 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers Contents Introduction...2 Define the Important Metrics...3 Define Relationships Between Metrics Within the Organization...4 Determine Which Metrics Are Available at Each Level...5 Assign Targets...5 Create Scorecards...5 Case Study Bringing KPI Clarity To a Growing Firm...6 Conclusion... 7 Introduction If an organization is to achieve its goals consistently and realize the full benefits of its strategic and tactical initiatives, it must align Key Performance Indicators (KPIs) and supporting metrics. Each employee should have a regularly reviewed scorecard and that scorecard should track directly back to how that employee influences the company s ability to meet its targets. While this idea may seem intuitive and therefore easy to implement, most organizations fail at this task. Numerous factors lead to this lack of execution. For example, the complexities associated with trying to formulate one measure across various, disparate entities and employee levels can seem daunting. There also may be a general lack of understanding as to which metrics are most important for a particular organization, as well as a lack of knowledge about how various metrics relate to one another on different employee levels. The five steps to aligning KPIs and metrics throughout the organization include: 1. Defining important metrics by category, starting at the top level of the organization 2. Cascading these top-level metrics throughout the organization by defining relationships between metrics at different organizational levels 3. Determining data availability and substituting metrics where appropriate, based on span of control for each organizational level and reporting capabilities 4. Determining appropriate targets for KPIs or methods for obtaining targets for each level of KPI 5. Creating scorecards for each level of employee
3 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers 3 Define the Important Metrics KPIs are important metrics, or combinations of metrics, which align with the overall mission and vision of the company or department. KPIs should be: 1. Aligned with strategic goals 2. Indicative of the overall health of the business 3. Relevant Additional categories and corresponding KPIs can be included, depending on the industry. For example, many utilities assign a high level of importance to safety and regulatory measures. Determining which of these metrics to use as KPIs depends on the company s goals and the industry in which it operates. For instance, an organization seeking to differentiate itself from its competitors based on superior customer service would likely rank customer satisfaction as a top-level goal. An organization seeking to find its niche as a low-cost provider might target cost per call as the most important metric. 4. Cascaded through the organization 5. Manageable 6. Actionable In a contact center environment, there are certain end-measures that typically serve as good indicators of the overall health of the operation and, therefore, as good initial KPIs. These end measures include cost per call, customer satisfaction, first call resolution/calls to resolution, and agent utilization. These metrics match up well with the typical entities of customer, stakeholder, and employee found on a traditional balanced scorecard. They also reflect the overall efficiency and effectiveness of the contact center environment. Choosing the metrics to target as KPIs provides a foundation from which to identify other needed metrics. KPIs are often end-measures or composite numbers, and are often reported over longer periods of time (monthly or quarterly). So it is important to identify metrics that will allow operational managers to determine whether their teams are on track to make the KPI target. For instance, since labor expense heavily influences cost per call, managers might look at daily occupancy rates to determine if they are on track to hit a monthly cost per call target. Additionally, identifying metrics that allow visibility into process effectiveness is also important to alert management to potential breakdowns in processes, and allow for speedy correction. Mission CSFs KPIs Metrics Data Figure 1 Organizational strategy (as mapped in the mission statement and Critical Success Factors) should be the beacon for determining which metrics are important enough to become KPIs. Metrics and data support KPI management and, in turn, the overall company strategy.
4 4 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers Define Relationships Between Metrics Within the Organization Due to the popularity and wide acceptance of the balanced scorecard concept, many organizations readily adopt the concept of aligning their KPIs with their strategic goals. However, most fail to align and assign KPIs to each level of the organization. In fact, in many customer service organizations, managers and supervisors do not have any KPIs assigned directly to them. In other cases, agents, supervisors, and managers find themselves managed to KPIs and metrics that have little or no connection to the organizational targets. For instance, contact centers often manage agents to an arbitrarily chosen average handle time metric without communicating how the target originated or how individual agent performance affects the company s ability to hit its targets. When possible, there should be a direct line of sight for KPIs in which they cascade directly through the organization. The performance at the lowest levels should directly influence the score of not only that level, but also the levels above it. For example, if First Call Resolution (FCR) is chosen as an organizational KPI, a KPI that directly influences it should be included on the scorecard of every level of the organization. Some KPIs may be easy to report on at a higher level, but next to impossible to report on at a lower level. For instance, First Call Resolution is usually available at the site and organizational level but may be difficult to report on at the agent level. Additionally, even if agent level reporting is possible, it may not be completely fair to score agents on First Call Resolution, as they are not able to control which calls they receive. In these situations, it is important to understand how metrics relate to one another across organizational levels. Figure 2 shows an example of how a First Call Resolution KPI might cascade through the organization. Since agents usually have no control over how many times the caller has called prior to reaching them, measuring FCR at the agent level may not be completely fair. However, agents can, within reason, control whether they resolve the call. So holding them accountable for On Call Resolution assures credit is given where due. In addition, since a strong correlation exists between On Call Resolution and First Call Resolution, improving the first at the agent level will result in an increase in the second at the organizational level. Figure 2 shows an example data hierarchy for First Call Resolution. In this example, the sample contact center environment consists of four levels including Organizational, Site (for multiple sites), Supervisor level, and Agent. ORGANIZATION SITE First Call Resolution /Calls to Resolution SUPERVISOR First Call Resolution /Calls to Resolution AGENT On Call Resolution (Agent) On-Call Resolution Figure 2 KPIs should be visible and relevant at all levels of the organization.
5 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers 5 Determine Which Metrics Are Available at Each Level Once key metrics and supporting metrics are identified, managers must determine metric availability. For instance, Cost per Call is an important metric in many contact centers but it is often not available at an agent level. If a key metric is not available for each level, the preferred option is to determine how the metric can be made available. If the metric cannot be made available, management must decide what appropriate proxy measure can be used and determine how to correlate that proxy measurement with the original metric. For example, although cost per call is not available at the agent level, it usually correlates strongly with agent productivity. Agents and supervisors might be held responsible for an agent productivity target that would correspond with the organizational Cost Per Call target. Assign Targets While there are many methods used to set performance targets, the principles behind each method remain the same. Performance targets for KPIs should promote continuous improvement and align functional business areas with the overall company vision. Keeping with these principles, targets should be set by using: Historical performance data to create acceptable ranges of performance. Historical metrics can be correlated with other metrics to determine the best target range. For instance, some companies correlate AHT ranges with quality scores to determine AHT targets based on desired quality performance. Statistically determined ranges based on process control methodology Step improvement functions based on business objectives and needs Regulated performance targets, which are usually stationary Targeting a range, rather than a specific number, typically generates a more manageable result. Create Scorecards After completing the preceding four steps a company is ready to create scorecards. There are many different tools that can be used such as applications made especially for the task, standard office applications such as MS Excel, and home grown solutions. Between the multiple choices there really is no standard right choice but rather what s best for the company at that given point in time in achieving their goals. Regardless of the tool, scorecards should be created at the lowest organizational levels first so that those scores can be rolled up to create higher level scores. Following this pattern ensures all scores correlate accurately and that agent level activity is appropriately represented at the higher levels. After the company has chosen the most appropriate tool and created its scorecards it must then implement them. Implementation requires solid change management planning and execution. The implementation plan needs to be created well in advance of the actual roll out with the goal of ensuring that all levels of employees buy into the process and the data. Agents and team leads must buy into their role of driving organizational success, and upper management must endorse and lead adoption. Insufficient change management at any level can undermine the entire effort. Indeed, at its core, the scorecard frequently accompanies a fundamental cultural shift in how you do business.
6 6 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers Case Study Bringing KPI Clarity To a Growing Firm A Vertex client found itself operating a much larger and complex operation due to growth and acquisition. Faced with trying to manage multiple performance and various regulatory goals, as well as different corporate cultures, the company had invested significantly to develop a robust reporting package. Unfortunately, they found that while executives had access to reams of data, they were still unable to see what was truly important for managing their business. Vertex met with the client and determined that they needed a clear and simple report that reflected the most important metrics at each organizational level. Clarity was vital because the company needed to know what actions to take to make the most impact; simplicity was key because the client expected its business would change frequently, and did not want to rely on consulting support for each change. Vertex consultants worked with the client to: a. Define important metrics by category. Starting at the top of the organization, categories included Efficiency and Effectiveness, Customer, Employee, Regulatory, Safety, and Financial. b. Develop calculations that allow metric results and targets to be rolled up from different lines of business and organizational levels c. Define relationships between metrics at different organizational levels based on span of control and organizational alignment d. Determine availability of data and identify proxy measurements as appropriate e. Determine appropriate targets for each metric or ways of identifying baseline targets f. Create scorecards for each level of the organization that rolled lower level data up for higher level scores At the conclusion of the project the client had a simple, easy-to-use report that clearly showed how well the service organization was performing. KPIs were assigned to each employee level, along with baseline targets that could be used to gauge overall performance and, more importantly, promote a culture of continuous improvement. The most significant outcome was that leaders could see clearly where they needed to focus their time and attention.
7 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers 7 Conclusion Service organizations can better realize their goals if they align Key Performance Indicators across their entire structure. However, aligning KPIs across an organization can be a daunting task. Contact center leaders should take time in the beginning to ensure they are measuring the activities that will help them achieve their strategic goals. They will then have the tools to help all employees understand the impact their individual contributions make towards that effort.
8 8 Five Steps to Aligning KPIs and Balanced Scorecards in Contact Centers About the Author Lee is a Managing Consultant with Vertex Business Services where he is responsible for leading and executing transformational initiatives. He has over ten years experience in managing and improving customer care organizations in a variety of industries including utilities, health care, finance and wireless. Send inquiries to info@vertexgroup.com Copyright Vertex Business Services Holdings LLC 2012
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