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Contact centres are driven by measurement to an extent almost verging on obsession. A wealth of data is available to contact centre managers and this data is used to manage performance. This report considers the context of business performance management and its evolution as a tool for maximizing profits. Through consideration of one BPM model and its use within Holiday Cottages Group this report will evaluate how successful that model is at driving performance within the business. Recommendations will be made as to how this BPM tool could be improved and why those improvements should be made.
2. Business Performance Management
2.1 Historical context to BPM
Business performance management has grown out of methods developed following on from the work carried out by FW Taylor (1911) in his book 'Principles of Scientific Management', in which he stated that planning was the 'one best way' for a business to reach maximum efficiency. He used time and motion studies to determine the best methods for performing a task in the least amount of time and led a revolution in performance management and measurement within businesses. Contact centres are evolving from being an area within an organization concerned with being available to answer their customers' telephone queries, in which Taylor's 'time and motion' approach was adopted wholeheartedly, to multi-channel customer interaction centres, where building, managing and maintaining the relationship with customers is achievable through the use of technology and the skills, knowledge and experience of workers. Taylor's 'one best way' approach is challenged by management theorists such as Mintzberg (1994) who argues that Taylor's model ignores the value of human qualitative interactions to the detriment of the whole customer experience. Evaluations of working practices, such as those carried out by Mintzberg led to 'systems thinking' in which component parts of a business are not viewed or managed in isolation of each other but rather in the context of their relationships with each other and the organization as a whole. Senge (1990) used this approach to develop his work around 'learning organisations' in his book 'The Fifth Discipline', in which he describes organizations as dynamic systems in a state of continuous adaptation and improvement. In order to achieve this state, Business Performance Management theories evolved to encompass a holistic view of organization as a whole, and which include much of the theory outlined above.
The Balanced Scorecard
Fig 1. R. Kaplan, D. Norton (1992) 'The balanced scorecard'
'The Balanced Scorecard' model (Fig. 1) first identified by Kaplan and Norton (1992) includes four perspectives which can be used by businesses to determine their strategy:-
Financial Perspective - this perspective reflects the financial measures which most businesses depend upon to manage the returns on their investments in tangible assets or 'To succeed financially how should we appear to our shareholders?'
Customer Perspective - this measures the ability of the business to meet its' strategic objectives relating to customers or 'to achieve our vision how should we appear to our customers?'
Business process perspective - this addresses internal operations, and measures the ability of the business to meet customer needs and the efficiency of the business operational areas or 'To satisfy our shareholders and customers, what business processes must we excel at?'
Learning and growth perspective - this reflects the business's attitude to individual (worker) and corporate self-improvement. 'To achieve our vision how will we sustain our ability to change and improve?' As previously identified, contact centres are moving away from the 'call-centre' model to multi-channel and multi-skilled interaction centres staffed by 'knowledge workers'. This in turn leads to a more urgent need to measure and manage these workers effectively, whilst allowing them the opportunity to creatively interact with customers.
The balanced scorecard provides balance to the overall picture by the weighing of long-term and short-term objectives, lagging financial indicators ie. those that summarise past events rather than predicting future ones; leading indicators or those that predict a future pattern or trend, and external performance measures vs. internal performance measures.
Management website '12Manage.com' (2010) gives the benefits of the balanced scorecard approach as:-
'Focusing the whole organization on the few key things needed to create breakthrough performance. Helps to integrate various corporate programs. Such as: quality, re-engineering, and customer service initiatives. Breaking down strategic measures towards lower levels, so that unit managers, operators, and employees can see what is required at their level to achieve excellent overall performance.'
'12Manage.com' (2010) describes the four scoring mechanisms for each perspective of the balanced scorecard as:
i) Objectives: major objectives to be achieved, for example, profitable growth.
ii) Measures: the observable parameters that will be used to measure progress toward reaching the objective. For example, the objective of profitable growth might be measured by growth in net margin.
Targets: the specific target values for the measures, for example, increase in conversion rate of 0.5%
Initiatives: projects or programs to be initiated in order to meet the objective.
BPM and the contact centre
Holiday Cottages Group is a well established business selling self-catering holidays throughout the world. The business has been established for over 20 years, and is currently in the top five self-catering operators in the UK. Business Performance Management is carried out at Holiday Cottages Group through a wealth of business intelligence reporting embedded within the business. Each area then also has access to its own set of data which is used to manage that area's performance. Business Intelligence is available through MIS reporting, although these reports have become fragmented over time, with duplication of information; lack of consistency of approach and confusion regarding what is being measured and reported. KPI's and metrics are used extensively in the operational area of the business and to a lesser extent in other areas. Holiday Cottages Group is also measured by its American parent company, against Sarbanes-Oxley legislation, so a great deal of its processes and measurements are related to compliance.
Qualitative -v- quantitative approaches
Reporting on the performance of the business is coordinated by the completion by each area of a weekly 'board report'. This contains elements of the 'balanced scorecard' already discussed, and is used by the senior leadership team to measure and manage the business as a whole; to ensure that strategic aims and objectives are being met; to map performance trends and formulate corrective action if necessary; and plan future initiatives. All of the data used is quantitative data and all the measurements within it are judged to be key indicators of the health of the business by the business itself and not its customers. However in a study carried by Cranfield School of Management for Fujitsu (2004), Marr and Neely identified that there is a definite link between operational efficiency and performance, which is measured by operational metrics, however there are is also a clear link between other factors which impact performance. Four inherent expectations which contact centre customers' have are:-
Adaptiveness - the customer clearly expects call
centre employees to adjust their behavior to the
customer, handle interpersonal situations, and adapt
to various situations
Assurance -call centre employees are expected to
provide security and explanation, treat information
discreetly and assure customers of confidentiality
Empathy - customers expect call centre employees to
empathise with their emotions and/or situation, they
do not want to be treated as a 'number'
Authority - customers expect that call centre
employees have the authority to deal with their
various problems or questions
As previously discussed, contact centres are moving away from hard operational metrics such as AHT; abandon rate; service levels etc. to more qualitative measurements; customer satisfaction; service quality and employee satisfaction. Miciak and Desmanais (2001) identified that contact centres fail to measure service quality which would lead to customer satisfaction and stated that "in the absence of listening to the customer about how they perceive service quality at the call centre, management makes assumptions about satisfaction using operational measures such as service levels, abandon rates, call monitoring (which may not actually be a good indicator of overall satisfaction with call centre service quality)". This move towards an in interest in quality of performance as well as efficiency, has prompted an interest in the introduction of qualitative measures in addition to the collection of quantitative data. Indeed research into contact centre performance is increasingly acknowledging links between customer satisfaction and customer loyalty and therefore, profitability as stated by Zeithami and Bitner (2000); Heskett, Sasser and Schlesinger (1997) identify the link between service quality and customer satisfaction and Rucci, Kim and Quinn (1998) that between employee satisfaction and service quality. This chain of cause and effect was described by Heskett, Sasser and Schlesinger (1997) as the Service Profit Chain in their book 'The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value'. It is useful to compare definitions of quantitative as 'hard, measurable (through suitable measures such as dollars, degrees, inches, millimeters) and verifiable data amendable to statistical manipulation" (business dictionary online, nd), or indeed, AHT; Calls per hour; SLA and that of qualitative as "research conducted that cannot be quantified or analyzed quantitatively. Qualitative data requires subjective analysisâ€¦.." (market research terms, nd). Neill (2006) cited Myers (2002) as stating that "A major strength of the qualitative approach is the depth to which explorations are conducted and descriptions are written, usually resulting in sufficient details for the reader to grasp the idiosyncrasies of the situation" and it is these idiosyncrasies or 'soft' measurements which hold the key to quality of service. The online management resource 12 manage.com (nd) explain the importance of "Breaking down strategic measures towards lower levels, so that unit managers, operators, and employees can see what is required at their level to achieve excellent overall performance.'
Considering the operational area of the business quantitative data is collected, reported and used to manage performance. Qualitative or soft measurement is carried out, but is only used within the operational area as a trigger to intiate corrective action which will result in an improvement in qualitative measures. Mapping against the balanced scorecard HCG demonstrates understanding and strength in the areas of 'financial' and 'process' perspectives but weakness in the areas of attributing metrics to 'customer' and 'learning' perspectives. A wealth of data is available within the business, but it is not presented in a balanced format, which in turn leads to a lack of focus throughout the workforce, for example the business has recently moved from a quantitative approach to recruitment of properties to a qualitative one; that is the business is no longer concerned with recruiting any property in any area, but now targets its recruitment towards the right property in the right area. This has led to conflict within the business as the switch involved redefining the working brief of the recruitment teams, affecting their potential work stream and commission payments. This is one example of where a move towards a structure where qualitative measures are important has caused problems within the business.
Contact centres have, historically, concentrated their efforts towards hard measurable metrics such as AHT, abandon rate, average speed of answer etc. when implementing business performance management. However, this approach is evolving to one of a more balanced approach, with recognition being given to the value of a business' intellectual capital and the need to measure this aspect. In conclusion HCG currently adopts a Tayloristic view of BPM with the call centre viewed as a cost centre rather than a repository of valuable qualitative information which could be used as a performance indicator. Research supports the idea that this 'quality of service' approach leads to an in improvement in service quality which in turn leads to profit, and acknowledges the importance of employee satisfaction in this equation.
Whilst elements of the balanced scorecard are used, these are not universally used by the business. Greater emphasis should be given to customer perspective and learning and empowerment of employees to report and measure customer perception of the service they received from the business.
Recommendations to enable this to take place are:-
Development of a Balanced Scorecard, by carrying out the following actions:-
Develop definite quantitative metrics to measure customer satisfaction.
Develop definite quantitative metrics to measure and learning and growth
Benchmark to develop effective targets for all balanced scorecard metrics
Communicate balanced scorecard business performance management methodology to whole business at all levels, to improved understanding and ensure buy in.
Develop feedback loop from balanced scorecard into strategic aims to enable continuous correction and adjustment, giving particular attention to leading and lagging indicators.
Each area (marketing, operations, finance, e-commerce, IT) to develop metrics and balanced scorecard feeder reporting on an individual basis. Appendix A shows how this balanced scorecard may look for the operational area of the business.
In addition the following supporting actions should be undertaken:-
Development of programs to drive customer perception indicators such as customer satisfaction scoring metrics through net promoter scoring and mystery shopping.
Develop call quality calibration scoring.
Develop programs to measure employee engagement and report on a monthly basis.
In order to drive these metrics and to enable measurement an investment in systems will be required, particularly to measure customer satisfaction.
To this end the following recommendation is made:-
Investigate suitable customer satisfaction measurement methods and software.
Prepare a business case leading to implementation of customer satisfaction measurement programme, taking into account return on investment using metrics contained in balanced scorecard.
Holiday Cottages Group - Operational area
Cost per booking
Cost per booking
<10% ops budget
Debt management program
- 2% YOY
0.5% increase YOY
1% increase YOY
Customer satisfaction score
Best in class customer service
Introduce net promoter program
Repeat and recommend
Holiday provider of choice
Repeat bookings following complaint
Customers willing to try again
% voucher redemption
promote voucher reclaim
Root cause analysis
>3% total staffed time
First Call Resolution
To be determined
Empowerment and training
Learning and Growth
Motivated and prepared workforce
High performing team
We are the team'initiative
Back to work scheme