Month: July 2014

There are many types of metrics companies use to measure success, but how do you know what the most effective Key Performance Indicator (KPI) is for your particular business? John Raftery, executive coach at LEAP, explains how keeping a Core Score  can dramatically improve your business performance and drive behavioural change.

The Core Score and Performance Management

One of the key issues that people have when they’re trying to run a business and trying to come up with Key Performance Indicators, is that most of the KPIs are financial. But in order to have a balanced score card you need to have KPIs across 4 elements of the business. One is obviously the financials, the second is people, the third is customers and the fourth is processes.

Sometimes though you can find a unifying score or KPI which is a core score for the business; the Core Score for the business is something you can map in graphic format, as in a bar graph. It captures the essence of the business and it becomes like a flywheel within the business that will drive all the other elements of the business.

The New York Metro Example

I’ll give you an example from Malcom Gladwell’s bestseller The Tipping Point, about how behavioural trends take hold in society. A candidate was assigned to take over the running of the New York City metro, a system which looked and behaved like a sewer in terms of its business performance and its visual impact on the customers. He was tasked with the job of turning the metro around. He disappeared into his office for a number of weeks and thought about the strategy for bringing the subway system back to success. He emerged after a long consultation and thinking process with an answer.

All the staff eagerly waited to hear what the answer was. They thought it was going to be a very complex strategy involving lots of financial data. But his answer was this: we are going to cut down on subway fare dodgers. We are going to adopt a zero tolerance policy towards people who get on the subway without paying. Everybody thought this was ridiculous; if you were going to solve the major problems of the NY metro that’s not where you should start.

But he persisted and added additional security to catch fare dodgers. The security company started catching so many dodgers that the NY police had to become involved and set up their own porto-cabins in the underground platforms to cope with the problem. They were arresting people in large numbers, sometimes with fare dodgers handcuffed and lined up like a daisy chain on the platform. The police also found that when arresting the fare dodgers some were carrying weapons or drugs or they were wanted for some other crime. The message went out very quickly across NY that if you want to travel on the subway, you don’t carry weapons or drugs, you pay your fare and generally behave yourself.

It then became evident that the safest way to travel in NY was by subway which resulted in an increase in footfall. With that increase came an increase in revenue which allowed authorities to clean up the trains, get rid of the graffiti and so on. The clean-up had a further effect of increasing footfall and revenues even more. Essentially what he had identified was a flywheel within the business that was easy to manage and would trigger other positive things throughout the business.

The Core Score Effect on an SME

The question is how would you apply that flywheel effect to the SMEs that we deal with? I’ll give you an example of a service repair business, where a service team was going out to repair domestic equipment in the home and it was €70 for a call out. A lot of the repair engineers were not completing the task the first time.

They had to go away again and return with a different part for the appliance or different tools that they didn’t have in their vans. So we looked at that and decided we had to start measuring first time completion rates on the job. It turned out that first time completion rates were just over 50. Almost half the engineers had to return to complete jobs on another day. That led to customer dissatisfaction as well as loss of revenue because you could only charge the customer for one call out. So there was huge inefficiency within the business.

We began to measure each engineer for their first time fix rate, and we figured out that if they could increase their first time fix rate by a certain percentage it would bring a serious amount of cash into the business, without having to make extra investment in resources. The second effect was that increasing first time fix rate also increased customer satisfaction rates. The third effect was it allowed the business to see which engineers were performing well and which ones were performing poorly. This helped to identify where the deficiencies were in terms of where training was required. Often just by measuring something there is a natural improvement in performance and we began to see improvement straight away. Cash began to flow into the business and there was no requirement for additional resources or investment. The business was transformed as a result.

So the key really is to try and find what the Core Score is, the flywheel in the business that will drive the rest of the activity within the business. Finding the right KPI that not only tells you how the business is performing, but will actually drive performance and drive behavioural change, and will drive other things within your business if its measured in the right way. So what I would recommend is that visual management tools such as a bar graph represents something that can drive behaviour and drive other activities within the business. If you can identify that it can have a very powerful effect on the business.

 

Benjamin Franklin once said ‘an ounce of prevention is worth a pound of cure.’ That would appear to be the case when it comes to stress management, especially for those of you in management positions. Controlling stress levels will largely depend on your ability to prioritise tasks in a systematic way which prevents stress from building up in the first place. Whether you’re a new recruit or a seasoned manager, Tricia Cunningham recommends these 3 steps for stress management in the workplace.

Tricia, how can managers learn to reduce stress in the workplace?
In recent times with the downturn in the economy and the increasing need for people to be more productive at work, there has been a noticeable increase in the level of stress people are experiencing. Managers in both small and large organisations often feel pressure as a result of needing to get better business results with fewer resources, be they financial, human or material resources. Working with high levels of stress over an extended period of time can be very damaging to an individual. There are certain things outside a person’s control, about which they can do nothing, but there are many things they can control. The starting point for managing stress is with the individual refocusing and understanding what elements of their job they can control.

Step 1 re-focus
What are your core responsibilities? How will you be measured? What is it that you have to deliver on? And if that is in any way vague then a conversation needs to be had with your manager to make sure you are clear about your responsibilities, and what needs to be delivered on. It needs to be a joint agreement; it’s not about forcing something on somebody but rather having a discussion around it to ensure clarity and agreement on your ability to deliver what is needed.

Step 2 apply management tools
Use management tools to help you manage time and workloads more effectively. One such tool is Stephen Covey’s 4 Quadrants. This allows you to prioritise tasks based on 2 criteria – urgency and importance. Determine what is urgent and important, and what is important but not necessarily urgent, and therefore can be planned giving you more control.

The problem people often face is that they identify tasks that are important and not urgent, but do nothing to plan how they will be implemented. After a period of time passes they suddenly become both urgent and important which raises stress levels. We have a tendency to get addicted to the sense of urgency and we have to eliminate that addiction. We do so by ensuring that items that are not urgent but important are planned for well in advance and we work on executing that plan.

Covey's 4 Quadrants - 3 Steps for Stress Management in the Workplace

Step 3 remain aware of your own responsibilities
When people push you to do something, if your response is always to say ‘yes I’ll do that’ you need to remember that in saying yes you are saying no to something else. In saying yes to one thing, something else has to give. What are you saying no to? If something else gives way that is directly related to your responsibilities and the results you need to achieve, that will create stress for you.

Success in business depends on so many factors – clarity of vision, product innovation, great customer service, leadership, management capabilities, employee retention, new customer acquisition. Many business owners and management teams are aware that these factors are critical to success, but fail to implement performance processes that hold individuals to account. Accountability for delivering on strategic goals and objectives remains a critical issue for many businesses, particularly in the SME sector. John Raftery, business advisor at LEAP, explains what successful companies do differently, and how less successful ones can learn from them.

John, what do successful companies do differently?

I’ve been working with the SME sector for many years now, and one of the most successful things I do with them, in terms of impact is to give them a tour of a multinational company, particularly an American multinational. What they see there is a huge emphasis on clarity of purpose, measuring performance and accountability.

Visual Management

Multinationals are very clear on what their vision is and what they want to achieve. They get huge engagement from their employees through a lot of visual management systems. Their walls are literally covered in charts, graphs, timelines, value stream mapping, process improvement projects and so on. It’s all visual and it’s all there on display. What I find then when I go to less successful companies is that all the information is kept in peoples’ heads, on their laptops or on spreadsheets; it’s not visible at all. As a result there is no clarity about what the company is trying to achieve, there is no clarity about what the performance levels are, there’s no clarity about who is doing what, or what effect they are having. If KPIs exist at all they will only be kept by a few senior managers and hidden away on laptops and spreadsheets. We need to get them out there, we need them displayed, we need to get people buying into them, we need to get people understanding them, we need people taking ownership of them and delivering on them themselves.

Can big business practices work in an SME environment?

There is always a question of ‘how do we do this? Can we take the best practices of the successful multinationals and adapt it to our own SME environment? The answer to that question is yes, we can do it. The first thing people say is that it’s not suited to the Irish culture, but that’s totally untrue. One of the most successful countries in the world in terms of adapting to the American multinational culture is Ireland. The Irish workforce lap this up because it’s about engagement and communication, it’s about ownership and empowerment and teamwork. These are all the things that turn on the lights of the Irish workforce. But how do we do it then for SMEs? Is there a process, a method that can be undertaken to take these good ideas and implement them into a small company? And again the answer to that is yes.

The futureSME process

We have a process called the futureSME which is a well-researched, well developed process and its sole aim is to take the best practices from the most successfullarge multinational companies, and adapt them for the SME environment. It is a well-structured, well organised, well developed programme that undertakes to do just that. It’s delivered through ManagementWorks in the Management Team Programme and creates the culture of accountability necessary for success.

futureSME