Is your data driving the right performance?

Posted: 10th September 2019

We are living in an increasingly data-driven world, there’s no doubt about that.

Savvy businesses now track and measure just about everything they can in an effort to get the best performance out of all activities.

And with increasing efficiency being a key goal for so many organisations, it’s not surprising that the ‘data-led approach’ has become so popular across pretty much every industry. It is, after all, essential to understand how you are doing regularly and whether changes and improvements made are working or not. No one should be ‘flying blind’ nowadays.

But could there be hidden consequences to such a heavy reliance on data and analytics?

Firms need to be critical of how metrics are selected and used to track performance, as well as the variety of data included in reporting, otherwise they risk running into a number of issues that they could – and should – have been able to avoid.

PAINTING AN ACCURATE PICTURE OF PERFORMANCE

When trying to obtain an accurate picture of the performance of any business process, it’s important to understand all of its component elements from customer, commercial and conduct perspectives.

For example, a complaints handling team will need to capture information on how customers are perceiving the experience of interacting with staff, how their complaint handling is affecting the business bottom-line and how they are meeting any regulatory requirements. Clear mapping of the process, including the internal tasks and the customer journeys that may be intertwined with it, ensures that every important element you need to understand is tracked.

Just about any operational process needs the following four strands of measurement to be in place if you are to paint a holistic picture of process performance:

1. Operational tracking – for example, volume of transactions, average time to process, transactions per FTE, % completed within target time, error rates, rework rates, etc.
2. Commercial tracking – for example, cost per transaction, cost of failure, and so on
3. Conduct tracking – quality assurance pass rates, risk measures are just a few examples
4. Customer tracking – retention rates post transaction, customer satisfaction post transaction, customer-initiated contact points per transaction, complaint rate, etc.

Looking across all of these measures and tracking regularly (and consistently) will provide your firm with a balanced view of how the process is performing against the business-wide benchmark.

DRIVING CONSTANT IMPROVEMENTS

Having a holistic view of performance means that unintended consequences of change and investment can be identified as early as possible, and continual improvement activities or more wholesale transformations can be enacted.

It really is worth repeating again that you need this holistic, balanced view. Focusing too heavily on one of two key metrics – perhaps metrics important to an influential senior manager’s goals and targets – can mean that deterioration in performance in other areas is missed.

For example, an initiative to drive up the number of complaints handled in a specific time period could lead to an unintentional increase in the number of errors, further complaints or time needed to redo work.

Although such an initiative may look successful by one metric – the leader that called for the increase can certainly prove that they’ve met their target – the right behaviours and customer outcomes will likely not have been generated. In fact, the business may be losing out or wasting valuable time and money – or worse, risking regulatory action.  

It would be a good idea to create a detailed ‘dashboard’ system (even if this were to be done in a simple spreadsheet) to allow for various teams to methodically track and report against every necessary metric as needed. This will give your team confidence that nothing is being missed out or wilfully ignored.

This should also help foster a culture where an iterative, ‘test-and-learn’ approach is considered acceptable and valuable, helping your firm to build upon success and learn from failure with much less effort.

FRONT-LINE CONSIDERATIONS

Likewise, tracking individual performance against a limited number of measures can drive similar unintended consequences.

Survival instincts no longer needed in modern life generally encourage us to respond to tasks with the least amount energy possible. In other words, we’ll normally look for the easiest route to success, which doesn’t always lead to the best results.

For example, a focus on speed may lead to a reduction in quality or customer satisfaction, whereas a focus on increasing customer satisfaction scores could lead to an increase in cost per transaction.

People who are given specific targets to achieve or metrics to measure up to will usually, instinctively, focus on those elements which are tracked, regardless of whether they believe them to be the right focus or not.

When performance reviews – and financial compensation – are linked to specific measures or key performance indicators, real care needs to be taken to ensure other areas are not neglected. If the wrong outcomes are identified, there needs to be some flexibility to reporting and perhaps even a reassessment of how people are assessed in general.

QUANTITATIVE VS QUALITATIVE

You may be asking yourself: should people have their performance measured using quantitative measures at all, then? If a focus on one or two metrics often leads to neglect in others, wouldn’t it be better to have a more qualitative, holistic system of measurement in place?

These are interesting questions and require a fair bit of thought. While simple quantitative measures can make it easier for both employee and manager to understand performance and “what success looks like”, they can mean that poor behaviours are hidden from the performance management process.

A more time-consuming, in-depth qualitative approach to performance management that allows time for evaluation, discussion and appraisal could not only ensure that the right behaviours are being generated but that employee morale is bolstered. People want to feel like more than ‘just a number’ (or set of measures), after all.

Driving retention of good employees and valuable customers should be the goal behind all key measures. With this as your ‘guiding light’ you will soon see a clear path towards getting the best value from your operational activities.