Measuring performance of one business process and comparing it to another, has always been a problem whether processes are in-house, or outsourced! How do you compare an Order Processing process to a Warehouse Shipping process?
This is particularly interesting to Business Process Outsourcing service providers. They have the problem of managing the many levels of management that manage business processes for a variety of business processes for very different customers in different domains! How do you compare the performance of a process manager that manages a 250-person order management process to that of a 5-person Accounts Payable process for another customer?
This is where the concept of Performance Scorecarding could come in very handy. Key Performance Indicators (KPIs) provide objective measures of actual performance. Efficiency KPIs like Average Handle Time (AHT) on the phone, Turn-Around Time for Insurance Claims, etc or Effectiveness Metrics like Closed Sales Volume on the phone or Early Payment Discounts collected in a Accounts Payable process could all provide some measure of performance.
But how do you compare the performance of one process in one domain with that of another in another domain?
That’s where assigning Stretch Goals for the KPIs and assigning a score from -5 to +5 or -10 to +10 for each KPI could come in handy. If you just meet your SLA alone you get -5. If you meet the Internal SLA which is more stringent than the SLA, you get 0. If you meet Stretch Goal 1 you get +3. If you meet Stretch Goal 2 you get +5. Stretch Goals are tougher to achieve and needs excellent management of the process. You arrive at a score for each KPI.
All KPIs may not be equal. Some are more equal than others. In a Customer Support process, the Average Handle Time metric may not be as important as the Customer Satisfaction Index KPI. This is where you can assign different Weightages to different KPIs and a weighted average allows you to adjust how much leverage different KPIs have on overall performance.
Performance Scorecarding using weighted scores for different KPIs allows you to arrive at a single score for each level of management. Are they meeting their goals, normal and stretch, no matter what they manage.
Very intriguing and may be very useful!
It is an immutable law in business that words are words, explanations are explanations, promises are promises but only performance is reality. – Harold S.Geneen