In the spirit of Billy Beane, here are examples of "Moneyball Metrics": uncommon and non-obvious metrics which we have found to have a major impact on performance:

• Coaching frequency -- can be tracked using web Forms and is always highly correlated with subsequent agent performance management
• AHT or ASA variation -- permits superior forecasting and scheduling -- which in turn permits smaller shifts -- as a result of separating controllable and random variation
• Supervisor effectiveness indexes -- comparative impact of coaching, agent improvement under their management, and impact of rotating team leaders
• Balanced scores -- indexes of agent or team performance with data from multiple data sources, weighted by importance
• Bonus calculations -- weighted averages, eligibility rules (such as attendance or quality minimums), dollar payouts
• Metric tracking sessions -- frequency with which Supervisors and other managers check and use statistics on their teams to make better, fact-based decisions

Links:
http://www.imdb.com/title/tt1210166/
Moneyball white paper on www.mercedsystems.com

In the 2003 bestseller and now major motion picture "Moneyball," (opening nationwide on Sept. 23) we learn how Oakland A's general manager Billy Beane used data-driven management to reshape a laggard major league baseball team into a world-class winner.  Instead of focusing on traditional metrics, Beane discovered that winning baseball games was more strongly correlated with lesser-known statistics.  He also focused on elements of the game where success metrics hadn't been developed in the past due to lack of data.  He trained his organization to track new types of statistics to gain a data advantage in recruiting and player development, and, critically, he got his entire organization aligned around the new metrics and philosophy.  As a result, the A's became one of the winningest teams, with one of the lowest cost structures, in major league baseball.

Like the Oakland A's and other baseball teams before "Moneyball," many contact centers use time-honored measures but miss the opportunity to truly redefine and improve performance. 

During the last few years many teams have begun emulating the A's "Moneyball" methods to transform their organizations to better compete.  Given the large financial opportunity for operational savings and customer loyalty impact in the contact center, it's likely that as Performance Management proves itself in this environment, the same competitive ripple effect will take place.

Links:
http://www.imdb.com/title/tt1210166/
http://web.mit.edu/newsoffice/2011/sloan-sports-conference-0308.html
Moneyball white paper on www.mercedsystems.com

 In consumer marketing research there are 4 P’s, with the first “P” being People.  Marketers segment consumers by income, geography, gender, age, etc. in order to prescribe the right “treatment” or create the right message to the population.  We are now taking that same segmentation concept and applying it to employee development. 

All employees are not created equal.  We suggest that team leaders and managers segment their employees and then target each segment specifically to get the most from that population.  Segmentation will help the team leaders and managers determine how much time they should spend in meetings, coaching and training with each segment.  Since their time is always tight, we want to make sure we can maximize the benefit team leaders deliver while minimizing time constraints. 

What does employee segmentation mean?  Segmentation is just a way to divide up the team based on performance.  The team can be divided in to:

• Quadrants
• Stack Ranked
• Outliers
• Statistical or Mean-based
• Or divided up manually by the team leader

Not all segments need to be equal in size, as not all segments will need the same coaching or meeting time from the team leader.  For example, I can easily divide a team in to four categories:

• Top Performers
• Solid Performers
• Weak Performers
• Bottom Performers

Depending on the priorities of your business, whether in Sales, Productivity, or Customer Experience, the best way to start employee segmentation is to select one key metric or a balanced score to stack rank the employees; use a metric that is well aligned to your business initiatives.  From there you can decide how to divide up the population, keeping in mind this division will also dictate the team leader’s meeting, coaching and training time for each population group.  Employee segmentation can also address some of the common questions you answer in your organization today, such as, “Who are your top performers, who are your bottom performers, who is struggling?”

For a typical team leader in a Call Center, their team of 21 agents might look something like the graph below:

From the segmentation above, I can easily see I have:
3 Bottom Performers
5 Weak Performers
10 Solid Performers
3 Top Performers

Where would a team leader in your organization likely spend their management and coaching time? Do they get the results your company needs from the current time management decisions (or ‘formula’)?

What we do with these Employee Segments will be covered in my next post – "Where do Team Leaders spend most of their time?"

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Author: Diana Leccese
Diana Leccese is Principal Business Consultant with Merced Systems.  Diana has over 15 years experience in Sales and Service Performance Management as both pre and post sales consultant.  She has worked with Fortune 1000 companies in Telco, Finance, Insurance, and Travel industries.  Diana can be reached at diana.leccese@mercedsystems.com

Incentive Compensation Management in Sales Operations can be the strangest of corporate beasts.  Sure, it’s a cold, hard, financial problem, but it’s a soft, squishy, psychological one too.  You are using money or other rewards as a lever to try to modify the behavior of your sales people, but the lever isn’t applied directly to the behavior.  At best, you pay on the outcomes of the behaviors after the revenue recognition process and the comp plan terms and conditions have been applied.

What this distinction can lead to is the need to make exceptions to the rules when the right behaviors haven’t led to the right results.

The most obvious example of this is when the economy crashes and burns.  The collapse of the Asian economy in the late ‘90s caused comp plans to be rewritten, quotas to be slashed, and drastic measures like guaranteed incentive payments to be slammed into place to keep the sales force alive and selling through the downturn.  In this kind of situation it’s critical to do what’s “right” rather than what the comp plan says.  Your sales guys didn’t cause the economic crisis, so holding them to the terms of the plan causes financial hardship to the people who made you successful the year before.  You have to do what you can to keep your best reps productive until the economy comes back.

A more localized example is when Rep A lends an active hand on Rep B’s deal.  The deal falls in Rep B’s sales territory, but you should absolutely give some credit (and commissions) for the deal to Rep A for the help given in landing the customer.

Okay, we all get it – ICM systems must support some level of exception-based payments.  But the word “some” is important here.  I’m reminded of a Comp Manager who told me that her company’s monthly process was to calculate commissions, print a report, and carry it to the VP of Sales.  The VP would cross out the numbers and write in the amounts he felt like paying each rep.  And that’s how much they paid.

I laughed.  She didn’t.  She was serious – that was their comp process.  And that’s just insane.  Random amounts of money showing up on the commission check each month do nothing to drive good selling behaviors.  We’ve all seen comp plans with conditions like “if it’s Tuesday and a red car passes, pay an extra 25% unless we decide not to”.  Do the reps really know how to behave with a plan like that?  And we’ve all seen the situation where any sales rep who whines loudly enough gets to go to President’s Club, even when they haven’t earned the trip.  That trip doesn’t do anything to make your company successful either.

The takeaway is that some exceptions to the rules must be made to keep the company on the right track.  But some exceptions do nothing positive for the company, and sometimes can be insidiously harmful to the company’s long-term success.  The comp admins know the difference, but often don’t have the authority to stop the harmful exceptions.  It’s a top-down activity to make your compensation plan exceptions work for your company, not against it.

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Author: David Kelly

David Kelly is an ICM Solutions Architect with Merced Systems.  He has more than a decade of experience in translating ICM business requirements into maintainable, high-performing systems for many companies across various industries.  He can be reached at david.kelly@mercedsystems.com.

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" click here to view. 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.

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.

As the initial shock over the receding economy has started to fade, smart companies are starting to think more strategically for the long-term - not just what the end of the quarter will bring.  With long-term business plans in mind, what are some of the guiding principles companies should follow?

1. Alignment - What really matters to your business - to your customers, employees, and shareholders?  What are the measures and metrics that align with those stakeholders' values?  And most importantly, what actions must be taken to make progress against these measures?  Doesyour operation have the integrated coaching and workflow to close the performance gap?  Are there effective public recognition or incentive programs to reward both performance and progress toward goal?  Can your organization focus and align your employees' activities on the 3-5 critical measures they can impact, empowering them to act appropriately to attain both personal and company goals?  Giving front-line employees and managers the power to track their KPI's daily and their rank among peers helps bolster self-correction.  Giving supervisors the information and tools they need to improve their coaching drives accountability for the alignment of staff with results.

2. Reducing Variability - Variability limits an organizations' ability to improve performance and attain business goals. By identifying sources of both rep performance and business process variation, and then defining initiatives to reduce the occurrence of variability, operations can significantly improve customer experience while reducing operational expense. Where does your organization see variation in performance? What approaches have you taken to reduce this variation? Most organizations focus on the "outliers," or invest too much time singling out bottom performers. Instead, try to identify the employee segments where improvement can have the biggest impact (often mid-performers), and develop the necessary coaching and employee development processes around the needs of this group.

3. Accountability - Accountability within an organization is what makes a strategic plan stick.  But where does accountability come from?  When front-line employees have visibility into their current and past performance, and can see the business impact they and their team are having on the organization, strategic initiatives can mature from a "flavor of the month" program to an embedded or ritualized aspect of the business.  Engagement and accountability at the executive level is critical to developing the organizational infrastructure needed to succeed.  And without buy-in and program commitment at the top, any strategic initiative can prove to be a dead end.

Taking action on all of these principles simultaneously may appear daunting, but attempting to answer any of these questions will yield progress. What would it take to answer only 1-2 of these questions in your organization this week?