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Relationship Between Project Management and Company Performance

Info: 3713 words (15 pages) Essay
Published: 23rd Sep 2019 in Project Management

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Analytical Approach towards the relationship between Project Management and Company Performance

Abstract

The report has identified that Customer Satisfaction Score, Net Promoter Score and Customer Effort Score are the current industry standards used for measuring company performance from the customer satisfaction perspective. Amazon, United Health Group and US Group have been measuring customer value using Net Promoter Score after implementing the Agile software development method. The research has showed that a transition from Waterfall to Agile has helped a company like Amazon to be more successful.  The research concluded by showing that implementation of project management methodologies could reduce speed to market time and improve quality; it could have a direct impact on the company’s performance.

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I. Introduction

Key performance indicators (KPI) help in understanding and evaluating the performance of departments in a company and also the company itself. KPI’s should be used to understand if the department or a company is on the correct path to success, it should be well defined and applicable to the department or the company. For example, a manufacturing firm would use percentage of product defect as their KPI instead of day sales outstanding (DSO) which would be used by a marketing/sales firm. There are financial metrics like profit, cost and cost of goods sold, customer metrics like customer acquisition cost (CAC), customer satisfaction score (CSAT), customer effort score (CES) and net promoter score (NPS), process metrics like efficiency and percentage of product defects and people metrics like employee satisfaction and employee turnover rate (ETR). In the report we will analyze the relationship between the company performance and their implemented project management ideologies from a customer metrics perspective.

II. Performance Benchmarks

Each organization knows that they should be measuring customer satisfaction, but there are so many types of surveys that make selecting one to send out to the customers a difficult task. Listed below are the performance benchmarks currently utilized for measuring company performance from the customer satisfaction perspective.

  1. Customer Satisfaction Score (CSAT): The service industry bases the performance of their company mostly by customer reviews or customer satisfaction. There are numerous techniques or rather metrics that companies utilize. It is one of the most straightforward customer satisfaction survey methodologies, which measures satisfaction with a business, purchase or interaction. It is fairly simple with asking customers for their views on matters that indicate how well or how badly the company is performing. A question could be “How satisfied were you with your experience?” And a corresponding survey scale, which can be 1 – 3, 1 – 5, or 1 – 10. Or “How would you describe your overall satisfaction with this product?”

Measurement: The answers are then quantified and expressed as a percentage between 0 and 100%. Higher percentage indicates that your customers are highly satisfied.

One of the top benefits of this survey is that the company can collect customer’s current thoughts on various aspects of the business, be it the value of the products, the quality of company’s customer service. It helps in gaining insight into how the customer is currently feeling about the company. It also allows company to ask variety of customizable survey questions so that company can explore different strengths and weaknesses to focus on finding the best possible ways to meet customers’ needs. This survey makes it nearly effortless for the customers to respond onto their experience with the products or services on a consistent basis.

80% of the companies in the service industry utilize customer satisfaction score as a metric to evaluate customer satisfaction and customer experience. The need for such metrics arises from the fact that companies are under the impression that there is a direct relation between customer satisfaction and customer loyalty.

  1. Net Promoter Score (NPS): Fred Reichheld developed a metric which would allow a company to calculate customer loyalty and prospective company growth, the scores provided to customers is on a 0-10 scale but NPS is calculated as a percentage. NPS helps in understanding how likely a customer is to recommending a product or a business to another person. The customers get categorized into three groups.
    1. Promoters: The group encompasses customers who continuously purchase the product and refer the company/product to others. The scores for such customers are between 9 and 10.
    2. Passives: The group encompasses customers who aren’t very loyal and can switch to similar companies or products. The customers are very passively satisfied. The scores for such customers are between 7 and 8.
    3. Detractors: The group encompasses customers who are dissatisfied by the product or company and they provide negative feedback and are responsible damaging the growth of the company. The scores for such customers are between 0 and 6.

As stated earlier NPS is calculated as a percentage, it is the percentage of detractors subtracted from the percentage of promoters.

Currently NPS is being used across industries. Insurance carriers, Fast food chains and Auto dealers are the industries which use NPS widely. NPS is all about referrals. This will help in determining the performance of the company as it deals with the customer satisfaction. A satisfied customer is always likely to refer the product, service or the company to his circle. With the survey of the NPS, it will help in analyzing the customer viewpoint regarding the same. When it is analyzed properly it determines the company’s performance. With high NPS score it helps interpreting that the company is performing well in regards of customer satisfaction and vice versa.

Therefore, NPS helps the company determine their performance metrics by evaluating the score. With this, the company can check out the bottlenecks on where they are missing out and where they are doing well.

  1. Customer Effort Score (CES) (1): Customer effort score was developed by Matthew Dixon, Karen Freeman and Nicholas Toman from the Corporate Executive Board (CEB) in the year 2010. The metric is based on the idea of how much effort was exerted by the customer to use a product or a service or have an issue resolved. The metric helps in understanding how likely is a customer to continue using the service or the product and continue paying for it. It is crucial for a business’s long-term success. It helps in determining the potential bottlenecks in customer experience. The study presented by Dixon, Freeman and Toman stated that CSAT was a poor predictor of customer loyalty, NPS was better but the CES outperformed both of these and could be used as a powerful tool to estimate or calculate customer loyalty and retention which in turn leads to company growth.

Implementation of CES is impactful on following instances:

  • After customer service support ticket has been resolved, email based CES survey can be implemented.
  • After customer purchase, meetings and other online activity, CES can be used to measure the satisfaction score.

There are various ways a business can measure CES score to keep track of their performance.

Scale Range: Scale range of 1-5 along with the specific feedback questions help to get proper feedbacks and issues and challenges faced by the customers. This approach requires collecting all the score based on 1-5 and the get the average of the total scores. This provides an overall score and rating.

CES is better at predicting brand loyalty and it is less volatile at predicting the score than other tools. This is extremely useful when there is more client interaction and corrective actions need to be implemented. CES asks customer to rate the difficulty faced within the organization’s services. Brand loyalty is reflected when the customer has a positive experience during the service obtained. If a customer has issues then the organization needs to make changes to the business process. CES is impactful because of its straight forward measurement. 

III. Transition to Agile

Agile is a software development tool or concept that is based on a more collaborative and interactive approach towards meeting deliverables. It was developed to eradicate the shortcomings caused by the waterfall SDLC concepts. The transition caused many companies to face the following challenges:

  1. Requirements: The product owners recently appointed were not able to understand the requirements because they were not initially a part of the project hence causing delays in the timelines.
  2. Implementation: The limited knowledge or background on scrum implementation caused a lot of companies to waste time on understanding what would be the best method of implementing scrum rather than moving forward with existing projects.
  3. Learning: Initially sprint reviews were designed for organizational learning but due to the lack of understanding what scrum actually meant, every scrum master interpreted it in a different way and hence the learning aspect became non-existent.

A big company like Amazon faced initial challenges during agile implementation and transition. A recommended step during the transition was to conduct a pilot project. Amazon had a large number of large projects and hence conducted a pilot project because they believed that it would help them understand how the “S” environment would move during the transition from waterfall to agile scrum methodology. Amazon was able to adopt agile successfully after running their pilot project after expending the required amount of time and resources. Jeff Bezos, the current CEO at Amazon during 2004 believed that implementation of scrum methodology would result in smaller teams providing better and more innovative products, the teams would be of sizes which could be fed with two pizzas.

IV. Relationship between Project Management and Company Performance

In all the IT companies the success of its growth lies mainly on how it deals with the respective projects. A project is a temporary objective that is defined as the beginning and the end with respective to the time hence, therefore, defined scope and the resources. It is a unique one that involves a specific set of operations which are designed to accomplish a singular goal. It has to be maintained by the project team which includes the people who usually work together and come from different organizations or teams. The development of the software results in an improved business process, the construction of a building, and the expansions of the sales into a new market regarding all the projects. It must be expertly managed to deliver on-time, on-budget results, learning, and integration that organizations need. Hence, the project management is the application of the knowledge, skills, tools and the techniques to project activities to meet the project requirements. As an employee of any company, we can expect to be a part of the dynamic organization that is driven by the mission in order to help the patients, one at a time that too more independent lives. The employee should contribute to the best practices for designing and implementing the solution according to the practice requirements. This position requires a blend of project management, process knowledge and also strong analytical communication with their clients regarding the project.  The reason behind the success of the top companies like Amazon is by proper management that lies inside their organization and also good managing, soft skills among the employees working in that particular organization. Successful ones will demonstrate the consulting skills and also customer savviness, and verbal business communication skills. It also includes the ability to influence and negotiate legal regardless of the title or the authority and the ability to establish trust at all the level of an organization. The project manager should acquire proper leadership skills. It should be highly visible with an expectation that each practice can be handled appropriately and also with a good experience with a seamless implementation.  Let us know how the project management helped the companies:

•    Amazon’s advertising, engineering and development increased throughout and avoided a three-year project to rebuild the performance monitors and the management tools by shifting data held in an Oracle database to Amazon RDS.

•    Amazon prime video used the cloud to stream live NFL games to millions of the global fans, ensure the reliability and help the advertisers optimize ad performance. The online streaming, video-on-demand service offers the original content as well as the movies for purchase.

•    Amazon web services reduce latency, increase the scalability and also reduce the management complexity.

The primary role is: working closely with the practice leadership. The internal product experts and the operations team ensure the detailed requirements and timeless milestones to ensure the quality and on-time delivery of all the implementations. The service framework and the processes need to be end-to-end, involving all parties from networking through day-to-day operations teams project manage cross-functional teams and to establish a program level work plan with the visibility and cross-project issue for each phase to ensure the progress on schedule and satisfy the customer specifications. This is represented in a detailed and an accurate status report in order to resolve the work gaps and the issues to keep the implementation related to the project scope and the requirements obtain and maintain all the required project setup data for executing and managing the development of training, user documentation and implementation of the new systems.

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By providing the strong leadership effectively the project manager can be maintained and build the relationships across the business groups within the practices to create a team-oriented work enabling the professional development, encouraging and establishing the collaboration on the quality and cost.

V. Evaluating Company Performance via NPS

As mentioned above, NPS is a client faithfulness metric that estimates clients’ readiness to return for another buy or administration as well as make a suggestion to their family, companions or partners.

Amazon:

Net Promoter Score is a metric estimating size of client achievement via brand reliability. Amazon has a high NPS score because they have tremendous brand reliability. Amazon has always maintained a streamlined approach towards client benefit involvement to be progressively associated and open to their clients which has resulted in a net positive effect on client satisfaction and brand reliability which has enhanced their Net Promoter Score.

Amazon has a Net Promoter Score of 69, which is over 30% over the industry average. Amazon’s capacity to hold clients is profound. Projects like Amazon Prime, created a network of people who are faithful to Amazon because they are able to receive their goods without any delivery charge. The reason for the high NPS score is due the reason like their incredible client encounters, paying little respect to the span of your request and the recurrence. It doesn’t make a difference whether you arrange from the application or through the site, the shopping background remains predictable. Amazon as a brand has an awesome verbal showcasing because of their high image promotion rating. Since Amazon clients are such dynamic advertisers, they can acquire new clients at no critical promoting cost for their individual brands.

United health group:

In 2017, UnitedHealth’s Net Promoter Score climbed in excess of 4 points crosswise over Commercial, Medicare and Medicaid to a NPS score of 40 and they enhanced their client degrees of consistency for the third back to back year consecutively. United Healthcare business and individual developed to serve 65,000 additional individuals through hazard based business items in the second from last quarter. The developing piece of the overall industry and completely guaranteed items were the reasons of the rising NPS with clients, buyers, care supplier and accomplices. United health group have provided solid degrees of consistency which is expanding their esteem with purchaser driven items, custom-made systems, and more noteworthy customer commitment. In 2019 and 2020, they will present extra items upheld by execution arranges and will dispatch progressed computerized capacities giving significantly more noteworthy personalization, effortlessness, and incentive for shoppers. UnitedHealth Group Inc. is an American overseen medicinal services organization situated in Minnetonka, Minnesota. It is sixth in the United States on the Fortune 500. UnitedHealth Group offers items and administrations through two working organizations, United Healthcare and Optum, the two backups of UnitedHealth Group. Optum is another business brand of UnitedHealth Group and working business and Business Process Outsourcing administrations. UnitedHealth Group serves roughly 70 million people all through the United States. In 2015, the organization revealed a working salary of $11 billion.

US Bank:

The American bank USAA has a NPS score of 75 – one of the most astounding in the industry, the normal NPS for a money related administration is supposed to be 34. The simple approach of working with the organization and the manner in which the clients are dealt with has helped USAA accomplish the noteworthy NPS score of 75. USAA has been diverting its resources towards ease of use for their clientele thus generating its group of dynamic advertisers, which are their clientele themselves. The reasonable relationship between NPS, client satisfaction, deals and benefit of a budgetary organization has driven a great deal of monetary administrations organizations to receive the NPS framework.

 

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