Performance Matters

It's a new year and leaders at all levels are in the process of setting annual performance goals.  To turn these goals into results it's important to change the conversation from a focus on what to a focus on what, why, and how.

What.  Goal setting conversations often begin - appropriately - with a focus on what.  What, specifically, is the goal that we want to achieve?  It's important to set a SMART goal that is specific, measurable, attainable, relevant, and time-bound.  After all, the more clearly that people can see a target, the more likely they are to achieve it.

Unfortunately, goal setting conversations often fall short because they fail to consider two other key questions: why and how.

Why.  In most organizations, goals are the outcome of extensive discussions about future direction and business strategy.  Yet too often, leaders fail to "connect the dots" and help their people understand why the goals are so important and how they contribute to broader strategic aims.  If you want your team to buy in to the importance of achieving this year's goals, it's important to communicate clearly the "why behind the what."

How.  From a coaching and development perspective, the most important question to ask and answer is how.  This year's goals are undoubtedly higher - and harder to achieve - than last year's.  So, how are we going to succeed?  How can we build on best practices and execute more consistently and more effectively?  How can we develop and implement new practices to respond to competitive challenges and capitalize on new opportunities?

By focusing on what, why, and how, you can get the year off to a strong start and set a course for turning your goals into results.

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Author: Andy Elkind

Andy Elkind is Vice President of The Elkind Group, a San Francisco-based firm that provides consulting, coaching, and training services to transform organizations.  The Elkind Group aligns strategy and performance so that the front-line makes a greater contribution to the bottom line.  Andy can be reached at aelkind@elkindgroup.com

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A few weeks ago I posted the first of a III part blog entry titled "The Case for Pay-for-Performance- Rationalizing Service Incentive Pay" (http://www.mercedsystems.com/index.php/blog/The-Case-for-Pay-for-Performance-Rationalizing-Service-Incentive-Pay.html). In my previous post I talked about the untapped value of pay-for-performance in service organization for attracting and retaining top talent. In this post, I want to address another concern I often hear from my clients: how do you manage an effective pay-for-performance system without getting lost in the proverbial forest.

Many service managers worry that it will become too costly to maintain, track, control and continuously redesign an incentive system for the right balance of metrics, frequency and incentives. So how do you execute on a pay-for-performance initiative?  This is largely a question of technology - great incentive compensation management systems do not only allow organizations to monitor, analyze & manage pay-for-performance initiatives effectively, but do so quickly and easily. Service managers need to make sure that the system is:

• robust enough to manage a complex set of variable incentive plans;
• simple enough to be managed by a business user;
• agile enough to change with the organization and keep up with emerging industry trends.

Once the right technology is in place, managers can begin to address the remaining key success factors:  people & processes. Implementing an incentive compensation management system often requires identifying new support roles early and staffing appropriately. At this stage, training and communication are key, keeping in mind that processes can and should be kept as simple as possible.

So make sure your service organization has the right technology and buy-in, and your pay-for-performance initiative will be not only manageable, but a key driver of performance and business results.

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With all the new reporting tools that are now available, it's easier than ever to be seduced by the expanding array of performance metrics.  So if you're a sales or service leader, ask yourself this tough question.  What are you actually doing to move the needle on performance?  Are you really coaching, or are you just keeping score?

The difference is in how you answer three questions: What?  So what?  Now what?

What?  The first question is about awareness.  As you look at the metrics, what do you notice?  What has changed?  What has stayed the same?  What's the trend?  How does this individual's performance compare with the performance of other members of the team?  How does this team's performance compare with other teams?

So what?  The second question is about analysis.  What is the root cause of the results?  What are the behaviors that account for the numbers?  What is this person or team doing - or not doing - that is making a difference?

Now what?  The third question is about action.  What are you going to do to help change behaviors so that your team can produce better results?  Do you need to help people develop better skills?  Does your team need access to additional information or new tools?  Do you need to change underlying attitudes and beliefs?

If you're answering all three questions and following up with appropriate action, then you're coaching and improving performance.  Congratulations, and keep up the good work!

If you're not answering all three questions and following up with appropriate action, then you're just keeping score.  Isn't it time to get off the bench and into the game?

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Author: Andy Elkind

Andy Elkind is Vice President of The Elkind Group, a San Francisco-based firm that provides consulting, coaching, and training services to transform organizations.  The Elkind Group aligns strategy and performance so that the front-line makes a greater contribution to the bottom line.  Andy can be reached at aelkind@elkindgroup.com

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Recently, clients have been asking me about Pay-for-Performance practices in service organizations.  It seems companies are used to applying Pay-for-Performance in their sales forces but the use of Pay-for-Performance in service environments is still a relative novelty. So what is stopping service operations from using incentive pay with their service agents?

The most common fear among service managers is that employees will end up spending all of their time on incentivized activities, e.g. average handle time, at the cost of other activities useful to the service process, e.g. customer experience or brand reinforcement. But in my work consulting for call center clients, it is clear that agents are already evaluated on a clearly defined set of measurable expectations. Some common elements in an agent's performance evaluation include customer service skills, telephone etiquette, knowledge, team development, productivity and attendance. All of these are not only measurable, but are crucial in guiding agents on how to perform well in their service role. So the key to introducing Pay-for-Performance is to find the right balance for these measures, which should be guided by the organization's strategic goals. The right incentive strategy will reflect this balance so that desired behaviors are reinforced and rewarded.

Next time you're thinking about how to motivate and retain your most valuable agents, consider how pay-for-performance can be applied to the key metrics in your service organizations and what the right incentive balance is. In my next blog post I will examine how to manage an effective Pay-for-Performance system.

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First Contact Resolution is a relatively new concept in the marketplace and therefore, often misunderstood.  Similar to the introduction of service levels nearly a decade ago, FCR solutions are creating more confusion than providing resolutions.  Yet confusion over FCR can be extremely costly for organizations.  When customers have to call into an organization multiple times to resolve an issue, the organization's bottom line is directly affected by the higher cost per contact.  But more significantly, a low FCR rate can have a more costly, yet less tangible impact on an operation - many studies suggest a high correlation between low FCR rates and customer churn.  With customer satisfaction as such a potent weapon in today's economic landscape, incremental improvements in FCR can lead to increased customer satisfaction and revenue generation. 

But why are so many companies today struggling with FCR?  In our first FCR Blog post, we talked about the challenge organizations face in simply measuring FCR, as it's not just composed of a single source of information, but rather a combination of data from systems across the organization. 

However, there is another challenge organizations face in addressing FCR, and that is approaching FCR as a strategy, rather than a metric.  FCR is a dynamic measurement because of the multitude of data that must go into calculating it - from CRM, IVR, Quality, Speech Analytics, Customer Satisfaction systems, etc.  As a result, FCR must be considered holistically as a guiding strategy, rather than a one-dimensional metric.

To help you in approaching FCR in your organization, below are a few tips to approaching FCR strategically: 

1. Find meaning in the data -The cornerstone of a performance management solution for FCR is the ability to capture and organize data from disparate systems to provide a complete picture to management.  Too often organizations fixate on a certain metric, such as Average Handle Time, that they believe will solve their FCR problems.  However, this is too simplistic.  A good measure of FCR takes a combination of metrics from various operational systems into consideration.  
2. Deliver actionable information - Without insight into their performance, front line employees cannot improve.  When approaching FCR as a strategy, it is important to deliver contextual and actionable performance information to every role in the organization, from the front line to the executive, and to individuals' performance in different areas, like quality and handle time, to specific activities for improvement.    
3. Establishing realistic goals - Using benchmarking data combined with internal reporting, realistic goals for FCR within an organization can quickly be established.  This analysis also allows organizations to set cost effective short-term and long-term goals for FCR improvements. 

We hope these tips offered some insight into how your organization can approach FCR as a dynamic strategy, rather than a metric, and we'd love to hear your stories about how your organization has approached FCR.

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What separates the most effective performance coaches from their less effective colleagues?

There are many factors that make a difference.  These include: preparing in advance, establishing trust, analyzing for root cause, active listening, asking powerful questions, gaining buy-in, and following up - to name just a few. Many of these critical success factors require coaches to master new skills.  So, as coaches continue to focus on these factors they can make gradual and incremental improvements in their coaching effectiveness.

But one critical success factor is really a mindset - an orientation where a simple shift can yield an immediate and significant improvement in coaching impact. What is this powerful factor?  A focus on urgency. Any coaching session should conclude with an action plan that specifies: who will do what, by when, and how will we follow up to assure success. Less successful coaches tend to answer the "when" question with a date sometime in the future.  "Let's check in during our next one-on-one and see how it's going" or "I'll follow up with you toward the end of next week and see if you have any questions." The best coaches focus instead on what an employee can do right away that will make the biggest difference.  "Let's go take some calls right now and see how this goes for you" or "Try this now and I'll sit with you this afternoon to see how it's working."

In today's demanding and complex performance environment, most coaches have many things to do and not a lot of time to do them.  If something: isn't important, don't do it.  If it is important, do it now.

As the great sage Hillel asked, "If not now, when?"

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Author: Andy Elkind

Andy Elkind is Vice President of The Elkind Group, a San Francisco-based firm that provides training, coaching, and consulting services to transform organizations.  The Elkind Group aligns strategy and performance so that the front-line makes a greater contribution to the bottom line.

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 We just completed our 5th product summit, and it's exciting to see the growing momentum for performance management across industries and functions. While the concept of performance management seems universally applicable across industries and functions,   the executives who attended our summit- each of whom work for companies that are leaders in their industry - can attest that there is still much to learn, and learn from each other they did. It's always interesting and energizing to see people share ideas but what struck me most at this year's conference,  was the degree of sharing and collaboration that went on between two functions within the same company - sales and service.  Colleagues realized that they shared the same problems and that one's ideas, plans and solutions absolutely applied to and affected the other. 

Several years ago when we began serving both sales and service functions, many existing players in the industry said that the groups were too distinct. They had different needs, different cultures, and different approaches. But we saw an insightful trend emerging - executives who were good at aligning and driving performance improvement across complex sales groups were increasingly getting tapped to run service functions and vice versa. The sharing of ideas and practices across functions at our customer executive summit is a natural expression of this trend. Companies are discovering that at the end of the day, it's all about learning what customers want, ensuring the right employees are set up to take care of the right customers, and  managing to hit or exceed targets. Merced customers are living proof that the innovative ideas - both managerial and technical - can make a huge difference in any environment that touches customers. If you run a sales group, are you reaching out to your support counterparts? If you run a call center, are you talking to your sales managers? If not, you should.

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In an economic downturn, it's easy for organizations to feel like they are stuck on a reactionary path. Executives are issuing mandates to their senior leaders to sharpen their pencils and make the organization leaner. When the bad times come, companies have no choice but to turn their attention to improving efficiency. But the process of making your organization more productive is much more than a Band-Aid application but a complex challenge with long term benefits.  The good news is that it pays off and does so quite quickly - for companies and for our economy.

Last week, the US government announced that labor productivity went up 6.5% from April to July, not only above forecast, but also the largest increase since 2003. Labor costs per unit of output, not coincidentally, dropped 5.8%, the largest decrease since 2001. In plain terms, companies are getting more efficient because the hard economic times are forcing them to focus on doing the same or more with less.

Our performance management projects almost always revolve around this theme - whether it's about taking costs out of a service environment, driving sales uplift, or increasing customer satisfaction: how can you get more out of your existing resources. We built our initial business in 2002 and 2003 helping companies drive quick and dramatic improvements in their operations. We are seeing a similar wave of growth in this downturn. It's interesting that in good times, companies often let up a bit on the drive to become more productive and effective. But regardless of what spurs the initial conversation, organizations soon realize that the focus on performance management is always relevant.

One of my goals at Merced is to facilitate an ongoing discussion with customers about how they can best use performance management in their organization, in good economic times and in bad. The upcoming Merced Systems Executive Summit is designed to facilitate exactly this type of discussion among a global group of customers. We have created a forum for sales and service performance management leaders to share success stories and challenges and learn from each other. This year, the goal is to use each other's insights to address immediate needs as well as lay the foundation for new avenues of growth as good times return.

So act, don't react - and you might just see benefits to your organization long after the recession has come and gone.

I will share more stories from this year's summit in future posts.

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On a recent flight I found myself seated next to a career officer in the US Army.  I thanked him for his service and we spent the flight talking about the Army's approach to leadership training and its "up or out" policy.

"Up or out" means that military officers are expected to continue to acquire new skills and advance in their careers.  If they don't consistently move "up," then they are asked to move "out."

Later that week the "up or out" approach came to mind as I was working with a call center client.  Like many call centers, this one had a large team of friendly, capable, hard-working, and highly productive CSRs.  But they also had a group of persistent poor performers - reps who had failed to achieve service, quality, and productivity standards for months and sometimes years.

This group of poor performers was only about 10-15% of the total workforce.  But the supervisors were expected to spend 40-50% of their coaching time with this small group.  And despite this intensive and focused coaching, many of the poor performers did not improve.

Firing employees is never easy.  But who benefits when perpetual poor performers stay on the job without any obligation to improve?

Not customers - who don't receive the courteous and high-quality service they deserve, or have to wait far too long to receive it.

Not other CSRs - who have to work harder to take up the slack and correct the problems caused by their less capable colleagues.

Not supervisors - who squander most of their precious coaching time with agents who cannot or will not improve.

Not the company - which pays for poor productivity and pays again when customers defect to competitors because of poor service.

The bright side of today's challenging economic environment is that there are plenty of people with good skills, strong experience, and positive attitudes who are eagerly looking for work.  Isn't it time for your company to take an "up or out" approach to managing performance?  If not now, when?  

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Author: Andy Elkind

Andy Elkind is Vice President of The Elkind Group, a San Francisco-based firm that provides training, coaching, and consulting services to transform organizations.  The Elkind Group aligns strategy and performance so that the front-line makes a greater contribution to the bottom line.

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Are you feeling up-to-date with the latest research on effective performance management?  Try this simple quiz.

True or false?  To perform at their best, employees . . .

1. Need to understand the dynamics of their industry and their company's strategy and competitive positioning within that industry.
   
2. Need to know the specific behaviors that they have to demonstrate on the job in order to implement their company's strategy.
   
3. Need real-time information about how well their company is doing.
   
4. Need timely and specific feedback about how well they are performing and where they have opportunities to improve.
   
5. Should get their feedback from their immediate manager.

All Done?  Check Your Answers

The correct answers are: 1) True.  2) True.  3) True.  4) True.  5) False. 

Wait a minute - number 5 is false?  Feedback from management is practically a sacred principle of modern management practice.  How can this be? 

It turns out that each of us has a self-image that we've created and refined over a lifetime of experience.  When we experience something that conflicts with this self-image - for example, negative feedback from our manager - it creates internal conflict which psychologists call cognitive dissonance.  In response to this feedback, we could learn new skills or change our behavior.  But we usually don't.  Instead, we maintain our self-image by "rationalizing away the feedback, and either attributing the cause of the performance failure to external factors out of our control or discounting the source of the feedback."

That's the conclusion of Charles S. Jacobs in his new book Management Rewired - Why Feedback Doesn't Work and Other Surprising Lessons from the Latest Brain Science. 

Jacobs emphasizes that employees do need timely and specific feedback.  "It just can't come from the manager.  Instead, managers will need to install systems to provide employees with an objective source of feedback."

Hmmm.  An objective source of feedback - sounds like Performance Management applications will continue to be one of the most important applications in the Enterprise!

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Author: Andy Elkind

Andy Elkind is Vice President of The Elkind Group, a San Francisco-based firm that provides training, coaching, and consulting services to transform organizations.  The Elkind Group aligns strategy and performance so that the front-line makes a greater contribution to the bottom line.

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