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Develop a performance management framework for your customer service business with the unique capability of benchmarking your performance against your peers every year.
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Case study
PA Consulting Group (PA) stands apart from the field
of alternatives as a recognized utility sector expert in
the development and implementation of best-practice
performance management frameworks as a catalyst for
business transformation.
Beginning in late 2007, PA engaged with a leading
supplier of integrated customer management solutions
supporting oil and gas majors. Our client provided
services such as call center operations, billing, accounts
payable and receivable, financial reporting, logistics
and distribution operations and performance analysis
and assurance reporting. The customer base included
a nationwide gas retail network as well as a wide range
of franchisees and dealers. PA was asked to provide
standardized service contracts with the client’s business
customers and also develop a new Performance
Management Framework. The framework requirements
covered scorecard and strategic and operational
performance metrics.
Development of a value-driven performance management framework
Aligning performance metrics with stakeholder value for a customer support center
As scrutiny on utility performance intensifies, more attention is being focused on the role of performance metrics in business operations. Stakeholders are demanding more from their service providers at a time of rising commodity costs, increasing capital requirements for refurbishment, new construction and a growing set of customer interests. All these demands seem to pull leadership teams in multiple directions. What levers should they focus on? And more importantly how?
Despite positive reports on their performance, our client
was facing increasing discontent from stakeholders and
business customers with low level of service, eg, long
call wait. Stakeholders were also impatient to see any
return on investment in this recently-established shared
services center. The client also felt that they were lacking
or even losing control in certain areas of their business.
For instance, the project management team had little
influence on transformation and IT projects. Other areas
of concern included:
lack of service definition with increasing out-of-scope
service delivery
debatable usage of performance metrics, which were
often meaningless
increase in the number of reports generated for a large
number of stakeholders.
complete disconnect between internal performance
reporting and customer experience
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existing measures focused on speed of service
delivery while completely neglecting quality
Leveraging PA’s experience in the sector, the goal of the
engagement was to:
provide customers and stakeholders with more
transparency on services and costs
develop performance metrics clearly aligned with
business needs
focus on proactively-managed customers relationships
and expectations
enhance overall performance information and reporting
processes
As a result of feedback collected from internal client
surveys that outlined a disconnect between the client and
its business customers, our team worked with the client to
address the business issues and the customer concerns
through a series of initiatives as described below.
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Service catalog: Our team worked with the client to create a service catalog that provides detailed descriptions of
all services offered by client. In addition, the team created a single service contract for each business unit that details
the client’s services used by the unit and the service levels to which the client is expected to adhere. The client rapidly
identified benefits from this single initiative through a tighter definition its services and therefore higher clarity to
customers. It also built the foundations for the KPI, Scorecard, and Benchmarking workstreams.
Key Performance Indicators (KPIs): A comprehensive set of KPIs were developed through a series of collaborative
sessions with business unit representatives that are focused on measuring service delivery and identifying improvement
opportunities. The outcome was a set of flexible SLAs designed to alter behaviors and drive performance improvement.
The key benefits of this workstream were the clear representation of customers’ expectations through the KPIs and
the deep involvement of customers and stakeholders in the process. With such a cooperative process, the buy-in
was achieved rapidly.
Figure 1: From issues to outcomes
Business issues
Services and costs are not transparent to
customers
Performance metrics are not clearly aligned with stakeholders’
and customers’ needs
Customers relationship and expectations are not managed
proactively
Overall performance information and reporting processes could
been hanced
Service catalog completed and
validated by business
Set of key KPIs and SLAs validated by
customers
Working balanced scorecard developed and agreed with client
Benchmark-driven targets and realistic opportunities for
improvement
Develop service catalog defining services provided to the business
Develop business-aligned SLAs defining required performance levels
Develop balanced performance scorecard to track and report performance against key metrics
Benchmark costs and operational performance against comparable shared services organizations for target-setting
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PA initiatives Outcomes/deliverables
Balanced Performance Scorecard: In alignment with the KPIs workstream, which
focuses on operational excellence only, PA developed a Balanced Performance
Scorecard (‘Scorecard’) covering the key management areas: shareholder value
(finance), customer value (customer), operational excellence (KPIs), and people and
capabilities (HR & training). The Scorecard was aligned with the parent-company’s
objectives as well as the strategy of the business unit. It also provided greater
transparency on the business performance to the leadership team as well as their key
stakeholders. Finally, the Scorecard helped the organization prioritize its transformation
program by focusing on the most significant levers for stakeholders and customers.
Figure 2: Key benefits from scorecard
Benchmarking of costs and performance: The benchmarking exercise was executed
in an effort to understand costs, staffing levels, service levels, performance compared
to best practice. It also provided a point of reference for the client’s new KPI’s. These
benchmarks were used to develop market-based performance targets that the client can
use for setting ‘realistic’ goals and objectives.
Normalized data is compared to high performing target companies and is used to define
stretch, market-based targets and objectives for overall performance. Best practices
of the better performing companies are identified for implementation by the Client and
initiatives created to enable achievement of stretch targets and associated move from
second to first quartile performance.
Figure 3: Charting the normalized results drives target-setting and best practice initiatives to improve performance
Pre-scorecard Post-scorecard
Number of reports
Level of details
Target setting
Performance review
Over 100 reports generated across the organization
Uneven report granularity
Lack of market – driven targets
Areas of business without clear performance review
Market – and consensus – driven target-setting process
Fact-based strategy discussions enabled by the scorecard tool
Reports being rationalized using the scorecard framework
Clear top-down reporting structure
Average time to answer – seconds Longest time to answer – seconds Average time to answer – seconds
Customer satisfaction survey by customer type(regular, key, new customers)
Abandonment rate Inbound agent call wrap-up time – minutes
Q1
Q2
Q3
Q4
COA
20.00 40.00 60.00 80.00 100.00
32.50
32.50
42.30
79.25
84.00
Q1
Q2
Q3
Q4
COA
2,000.00 4,000.00 6,000.00 8,000.00
178.75
253.8
515.125
1946
6900
82%
81%
78%
75%
Q1
Q2
Q3
Q4
COA
65% 70% 75% 80%
88%
85% 90%
74%
73%
70%
Gap
Q1
Q2
Q3
Q4
COA
0% 20% 40% 60%
82%
80% 100%
Q1
Q2
Q3
Q4
COA
5% 10% 15% 20%
2%
3%
6%
8%
15%
0%
46.00
69.00
127.00
841.00
Q1
Q2
Q3
Q4
COA
200.00 400.00 600.00
23.75
800.00 1,000.00
“ We faced the really daunting task of both re-defining the services we offered and completely overhauling our performance reporting structure. The primary challenge was that we needed to inform the new performance metrics through a combination of customer input and industry benchmarks. After spending the time to genuinely understand our business and organization, PA conducted interviews with over 70 customer representatives and managed to identify the services required to support their changing business and formulated metrics that provided a genuine depiction of the customer experience. Further, they provided incredibly detailed and customized benchmarking that gave us real insight to the things being measured by industry leaders.”
Business Unit Leader
of Performance
Management
Client Confidential
The effort succeeded in identifying current client ‘good practices’ as well as a series of
potential process improvement efforts by:
clarifying underlying information relating to volumes associated with calls,
transactions and business processes
highlighting best practices in use in the industry
identifying and clarifying barriers to success
defining best practices suited to the client environment to yield best results.
Of the approximately 45 operating and cost metrics benchmarked, a portfolio of potential
improvement opportunities was identified and categorized based on implementation
complexity and benefit. Implementation of such improvements will propel the client to a
Quartile 2- and even Quartile 1-performer in the areas of customer value, operational
excellence, people and capabilities and shareholder value.
Figure 4: Moving to best-practice
By the end of the engagement, the client was able to gain control of their organization
by putting in place a series of transformation initiatives based on the new Performance
Management Framework. The framework helped identify and prioritize the transformation
initiatives and select those with the greatest impact on long-term success. The scorecard
was also an effective communication tool to stakeholders and customers. The business
not only improved its focus on the bottom-line while enhancing customer experience
and stakeholder satisfaction, but also clearly identified the next steps to enhance its
performance rapidly.
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Corporate headquarters123 Buckingham Palace Road
London SW1W 9SR
United Kingdom
Tel: +44 20 7730 9000
Fax: +44 20 7333 5050
E-mail: [email protected]
Global Energy Practice1700 Lincoln Street
Suite 4600
Denver, CO 80203
Tel: +1 720 566 9920
Fax: +1 720 566 9680
Contact: Carolyn Misage
Tel: +1 720 566 9845
E-mail: [email protected]
www.paconsulting.com
PA Consulting Group is a
leading management, systems
and technology consulting firm,
operating worldwide in more
than 35 countries.
Principal national offices inArgentina, China, Denmark,
Germany, India, Ireland,
Malaysia, The Netherlands,
New Zealand, Norway,
Sweden, United Arab Emirates,
United Kingdom, United States
© PA Knowledge Limited 2008. All rights reserved.
00960-0
Balanced Scorecard Quadrant
Customer value
Operational excellence
People and capabilities
Shareholder value
Overall
Q1 Q2 Q3 Q4
“ The work that was done has exponentially improved our relationship and credibility with customers – materially improving engagement and fundamentally changing our conversations from highly anecdotal to fact based and metric driven. We now have a performance structure that allows us to accurately measure and manage performance.
I have worked with all of the big consulting firms over the last ten years and PA has unquestionably delivered the most useful and tangible results – all at a comparatively outstanding cost.”
Business Unit Leader of Performance Management
Client Confidential