Some say when you fail to plan, then you plan to fail. This is the reason why you should establish a solid strategic planning process for your company. But strategic planning won’t succeed without the right data. Data gathering may sound simple, but you should not underestimate it. Why does it matter and how should you gather your company’s performance data?
Performance monitoring is a systematic process taken by the management in order to track the company’s performance and drive results and continuous growth. Performance monitoring could also send signals to top management which part of their business operations are failing or working below expectancy. This process plays an important part in the strategic planning initiative.
In order to successfully monitor company performance, the management should be able to gather corporate performance data swimmingly.
Data gathering in general should start with KPI activation. This KPI activation consists of four different steps: meeting with the data custodians, securing the activation budget, designing the data gathering template, and communicating the template to the data custodians. KPI activation is a step that allows management to develop infrastructure for capturing and managing data.
After KPI activation is done, the next step is the ongoing data gathering process. This is where the management or the performance management team sends the KPI data gathering notification to the KPI custodians and receives the data relevant to performance monitoring. For this step, it is imperative for the performance management team to gathers and centralize the relevant data before checking the data quality.
After sending the KPI data gathering notification, the management or the performance management team could also send the KPI custodians a reminder via email to make sure the data custodians prepare the data needed.
Once the relevant data is gathered, the performance team should check the quality of the data before calculating the KPI results and analyzing the data. The quality of the data should be checked based on multiple dimensions.The main dimensions are Accuracy, Completeness, Consistency, Conformity, Timeliness, and Uniqueness. In reality, the performance management team may find the relevant data does not meet those requirements/quality. When the data does not meet a certain quality, it is preferred for the top management or the performance management team to clarify the data to the data custodians.
Data analysis is a set of processes of examining, transforming, and modeling data to generate relevant business insights that can be used in the decision-making process. In analyzing KPI results, the performance team should use analytics.
The final step of data gathering is to generate a performance report. In this phase, data custodians, the report generator, and the strategy performance team are collectively responsible for compiling all performance results, business insights, and analysis in a certain format for the decision-makers.
In conclusion, a solid data gathering enables decision-makers to set the right company’s objectives for the next period. A solid data-gathering process will help the performance management team provide the performance report required by the top management faster, making the top management adjust the company’s strategy and objectives properly. If you want to learn more about how you could establish a solid data gathering process, sign up for The KPI Institute’s Certified KPI Professional and Practitioner course.
A well-functioning KPI measurement framework is more important then ever. In the fast-changing post-COVID-19 environment, organizations without a well-designed performance management system are not able to collect data-driven and real-time feedback, which is more important than ever because organizations need to make quick decisions as they respond to new challenges.
Organizations with no formal KPI measurement framework in place might consider implementing KPIs, and thisprocessstarts with a KPI implementation project plan.
The importance of a KPI implementation project plan
A KPI implementation project plan provides a structure for the implementation of an organization’s performance management system. Once the project plan is set, all types of activities would have a clear deadline and designated responsibilities.
Because a KPI implementation plan lays out all pertinent details, it promotes effective communication among the stakeholders of the project and reduces the impact of the project implementation gaps. Some of these gaps are the lack of buy-in from key stakeholders, unrealistic deliverables, and the inefficient assessment of organizational resources.
A good plan also serves as a compass for employees and other stakeholders in uncertain times because it guides stakeholders/employees towards reaching the strategic objectives of the organization.
The most common elements of a KPI implementation project plan are key activities, deadline, responsibility, status, and comments.
A KPI implementation project plan must be aligned to the organizational strategy and objectives. Before the implementation starts, a meeting with the stakeholders of the project should be organized to discuss their expectations and make sure that everybody is on the same page. After the plan is developed by the project team incoordination withthe project manager, the resource assessment of the project needs to be created. Then, another meeting withall employees is necessary in order to share the vision and benefits of such a project and delineatethe first tasks to be finalized.
The second phase is the actual implementation of the performance management system. Start with proper training for the stakeholders to establish a common languageand to avoid any misunderstanding. The appropriate KPIs should be selectedin a KPI selection workshop. Then, they should bedocumented using a pre-defined, standardized template. Moreover, the data should be gathered and reported by the data custodians. The report should be presented with good visuals that are easy to interpret. Thiswill help ensure a clear and effective decision-making process.
During the post implementation assessment phase, aperformance review meeting should be conducted to gather feedback from internal stakeholders and analyze the situation and the progress of the result. It is also important to evaluate the possible corrective actions to be addressed in the performance management system.
KPI implementation project plan example:
In order to arrive at the benefits of a well-functioning KPI management system, companies need to understand how to efficiently implement it and to ensure that all employees have a clear picture of the whole system.
One way to understand consumer behavior is to reflect on how nature works. Studies show that birds have been evolving for a long time now: They grow bigger beaks and longer legs. This phenomenon, described as shapeshifting, occurs because animals are adapting to climate change.
How consumers behave is not that different.
Consumers’ needs, concerns, habits, and preferences evolve. They respond to new technologies, new cultures, or crises like the pandemic.Developing a customer service strategy that addresses those changes is not always black and white.
Change may come with different layers. For instance, in this pandemic, people have to distance themselves from crowds, but at the same time, they are more “connected” than ever before.
PwC’s Global Consumer Insights Pulse Survey in June 2021 shows that in six months, from October 2020 to March 2021, over 50% of the global consumers they surveyed have become more digital. While that suggests less interaction, a meaningful connection somewhere in the transition emerged. Forty-three percent of the respondents have started exploring what their respective regions offer, appreciating local products, and valuing their community more.
Beyond consumer behavior
Consumer behavior refers to how consumers evaluate, choose, buy, and use products and services. As consumers adapt to the changes in their environment, companies are compelled to rethink how they approach customers. However, as consumer behavior trends witness new changes, a one-size-fits-all strategy remains elusive.
The reopening of retail stores in some places and other signs of a return to normalcy could rev up consumer confidence. Or not. Businesses must consider areas where unemployment is high, the ability of the government to minimize the risk of case surges, and how consumers now view and manage their finances.
For the consumers and the businesses, the trends are not just about behavior and how it leads to new systems and strategies. What lies behind these changes is the consumer’s attitude.
Consumer attitudes refer to consumers’ beliefs about, feelings about, and behavioral intentions toward some object. This object could be a product, service, brand, or any area of consumption. Attitude is what drives a consumer’s purchasing decision.
The PwC survey revealed that 50% of the global consumers they asked prefer eco-friendly products, while at-home consumers have become “more environmentally sensitive” than those working away from home. Understanding consumers’ emerging principles, such as sustainability and localism, can affect how customer service agents represent their companies.
The effects of empathy
From financial difficulties to social awareness, the reasons for how consumers behave, think, and feel today call for more flexible, empathetic customer service.
PV Kannan, CEO and co-founder of customer experience software and services company 7.ai, wrote that how the pandemic changed customer service reflects the challenges and difficulties consumers are facing. Some customers ask for extensions on payments, while some request faster delivery of their packages.
Kannan calls on companies to show more empathy, not just because it is a good thing. “If there’s one big lesson we’ve learned, it’s that caring for your customers is good for business,” he wrote.
He made a good point. An empathetic customer service strategy can increase customer satisfaction, loyalty, and revenue. A study published in The Association for Consumer Research affirmed the link between customer satisfaction and a customer’s willingness to pay. Customer experience data suggest that organizations who invest heavily in customer service systems with a human approach experience business growth.
Monitoring customer service capabilities
How will a company know that empathy is working for the business and its customers at the same time?
Empathy can’t be directly quantified. But using key performance indicators (KPI) can help organizations assess and monitor their customer service capabilities.
The KPI Institute has launched The Top 25 Customer Service KPIs – 2020 Extended Edition, which presents the most viewed customer service KPIs based on smartKPIs.com, a database of over 21,000 documented KPIs.
The report can guide organizations as they go through the process of determining the KPIs for their customer service departments. They would be able to further understand how KPIs can improve their performance measurement practices.
The Top 25 Customer Service KPIs reflect three categories.
Complaints handling: It offers an overview of the complaint management system and the ability to reduce customer dissatisfaction.
% Customer complaints due to poor service or product quality
# Complaints received
% Complaints resolved
# Frequency of customer complaints
% Customer satisfaction with complaints handling
# Time to resolve complaints
% Complaints responded to within a standard time
Customer interaction: It measures the ability to respond and solve clients’ requests.
Service responsiveness: It indicates how fast and efficiently a company responds to its customers.
# Speed of answer (SA)
# Call handling time
% Customer satisfaction with service levels
% Calls answered within service level time
# Longest call hold
% Customer calls answered in the first minute
# Pick-to-ship cycle time for customer orders
% Visit customers served within 3 minutes
% Call abandon rate
Time, context, and communication skills matter in the customer service process. While companies do not have complete control over the disruptions on consumer preferences and mindset, they can set up strategies, improve their performance, and streamline their processes to influence consumer journeys.
And it starts with knowing what works and what doesn’t.
The COVID-19 pandemic has left a strong mark in all aspects of our lives. It has impacted society – our habits, routines, and the way we interact. It has pressured the economy, its financial stability, and the way we do business.
Thus, what has changed in the way managers are doing performance management in these volatile times?
1. The way we do strategic planning
Before the pandemic, risk management, scenario planning, and business continuity plans were specific to large corporations. Nowadays, even small organizations will have a plan B ready for different scenarios of the COVID-19 evolution. There are industries, like retail, where all planning revolves around foresting based on historical data. Nowadays, using data from the past to plan the future seems a futile attempt to regain the feeling of control.
Moreover, most organizations, regardless of their industry, rely on annual if not 3 to 5 years planning. It is obvious that in the present circumstances and given the complexity of managing a business nowadays, these strategic planning practices seem useless.
2. The importance given to performance measurement
More than ever before, real-time data is a vital management tool. Access to data is critical in managing a crisis. One of the positive side effects of the pandemic was the pressure to digitize operations that create opportunities for data collection and better measurement of operations.
3. The way employees can be evaluated
Remote work and hybrid systems (combining work from home with office time) are no novelty, but in the COVID-19 circumstances, they gained significant recognition and became the norm rather than the exception for many organizations.
Managers and team leaders can no longer directly observe employees. There is a series of soft competencies, like communication, collaboration, proactivity, and creativity that are very difficult to evaluate in an online working environment, and yet they are essential skills for many jobs.
What is the way forward?
1. A different way of planning
Risk management must be an inherent part of organizational strategy, regardless of the company size. You don’t need a risk management office to have a proactive management approach and handle risks well. Small organizations can use their performance scorecard and populate it with leading KPIs or Key Risk Indicators.
For example, setting a red line level for # Days in accounts receivable can help you manage better cash flow, monitoring # Safety non-compliances can provide insights into the risk exposure to # Work accidents resulting in mortality. Identifying different scenarios in key areas of business and having contingency plans can give any organization a heads-up in case of a crisis.
Strategic planning must concentrate on shorter time horizons and reassess a series of factors that organizations may not have considered on a quarterly basis.
Government interventions, international economic context, competitors’ reactions, customers’ preferences, customers buying power, suppliers’ situations, internal capabilities and optimization potential, and employees morale and productivity are factors that have changed post-pandemic and need to be investigated. Moreover, agile strategic planning processes must be set in place to enable the organizations to react fast to changes.
In the face of chaos, the most effective tool to put everyone on the same page is to use clear objectives, KPIs, and initiatives, even short-term ones. The challenge is to adapt the measuring and reporting of performance to respond to tight deadlines. Data must be available fast, preferably in real time.
Thus, identify five to 10 KPIs that are easy to use, concise (tackle the problem directly), and can be collected with high frequency (weekly, monthly). These will be the ones that help you navigate a crisis. Now is the time to replace complex measurements and reports with simple yet relevant tools.
In the medium term, most likely for many organizations, the entire strategy must be reconsidered and linked to relevant performance scorecards in which simple measurements can be combined with more complex KPIs to provide a holistic overview of performance.
3. Focus on building the right mindset for each job than defining the specific job outputs
Many organizations invest a significant amount of time in identifying the right KPIs and targets to capture as precisely as possible the employee’s performance or productivity. Moreover, the more complex the job is, the more difficult it is to capture all contributions in relevant KPIs. In a volatile business environment, such an approach makes targets and KPIs obsolete the moment they are communicated.
The performance criteria used for employee evaluations should be flexible, easy to adapt and more focused on the extent to which the role is successfully achieved, as compared to looking at operational details. For example, it should be less important if the employee delivered one or three safety awareness sessions to factory workers if their awareness level is at the desired level.
One methodology that can be used at the employee level is the Objectives and Key Results Framework. OKRs are set and reviewed quarterly, but they can be changed even more often if the result set is no longer of interest. They emphasize on the importance of personalizing the objectives and key results and making the employee accountable for setting and monitoring them. Not all key results have to be KPIs; some of them can be reflected by completing an initiative or other types of results.
The end purpose of an OKRs system is not to compare employees or indicate what percentage of your staff are high performers. This methodology aims to facilitate communication, clarify expectations, align work activities to corporate strategy, and to provide a tool for managers and employees for discussing individual performance and improvement opportunities.
Organizational processes should be designed in such a way that they effectively enable the strategic implementation of corporate objectives. Successful execution of strategy demands well execution of processes from all perspectives.
Processes that are properly understood and deeply rooted in the organizational realities will produce results that are reliable, easily controlled, and effectively managed. The documentation of processes allows for meticulous work to be conducted in relation to a company’s effort of architecting process frameworks and solutions.
Moreover, process documentation is intended to accurately describe the landscape of a process, the activities included within that landscape, the standardized workflow associated with a particular process, and its current state by comparison with a desired one. Process templates generally reflect on the degree of process documentation within an organization.
“Process templates are created to describe some aspect of a process, a process landscape, process flow, process solution or state. […] Process templates enable the capture and relation of process-centric objects within the same template or across multiple templates, each of which promotes its own view of a process.” (Von Rosing, Von Scheel, & Scheer, 2014, pp. 175-180)
With decomposing processes into KPIs, proper documentation that involves process description and the internal procedures should be in place. Meanwhile, process management tools such as process maps are consulted for a better perspective on the process itself.
The basic process management tools and templates that can be used for an effective process design are the following:
1. Process description: The process description is a template that supports the organization in understanding the functionality of each process in turn. It is vital that the process description concentrates on the purpose of the process as a constituent part of operational activity rather than the steps in the process.
The purpose of the process becomes a focal point around which processes are defined. This is especially important due to the fact that processes around which the company is currently organized may not be the most suitable for strategy. It is not excluded that the process description includes more than one purpose for a process in place.
Purposes can be main or secondary. The main purpose refers to the strategic purpose that the process serves for the organization. Secondary purposes are the ones that are directly tied to the main purpose of the process; however, they have a more functional or operational focus that generally derives from the process steps or activities.
Such a way of working with the process description not only helps to validate the linkage to organizational objectives but also leads to a more accurate distribution of KPIs. This will be measured by levels of organizational performance.
2. Process map:The process map is a process management tool “that shows input-output relationships among process dependent operations and departments and that documents in a step-by-step process sequence the activities that are required to convert inputs to outputs for the specific process.” (Hunt, 1996, pp. 8-10)
A process map provides an illustration of organizational processes as well as the interactions between the main process steps. A process map is especially important as it helps identify the main inputs stepping into the process and the main outputs stepping out of the process, while reflecting on the “as is” or” current state” of the process itself.
One of the most important roles of the process map is it helps identify bottlenecks in the process or waste that needs to be eliminated in order for the company to achieve process optimization.
3. Internal procedures:Internal procedures are a necessary tool in breaking down processes into KPIs and process optimization thereon forward. They also deliver a standardized template for capturing specific process information.
Internal procedures provide a more detailed view of how processes are conducted for the organization as well as the Service Level Agreements instituted as part of the interactions with other processes in the organization.
Internal procedures also provide a set of detailed steps on how to perform process tasks, which significantly aid process performance measurement through KPIs.
Those basic process management tools and templates provide a simple and cost-effective solution to breaking down processes into KPIs. If used effectively, they can deliver tremendous benefits, such as preservation of process knowledge, documentary evidence of process understanding, a framework for process performance measurement, and overall improvement of business processes over time.