Measures That Matter

Failure demand metrics upset traditional management thinking about critical data

Published: Tuesday, July 31, 2012 - 12:13

Too many service organizations use measures that disconnect them from customers. The result is predictable: higher costs and worse service.

In service organizations, the systemic relationship between purpose, measures, and method is often clouded. These measures have nothing to do with what matters to customers, but they drive all the ingenuity of the manager and worker. They typically have to do with activity and financial targets but do little to serve the customer.

When organizations understand their real purpose (serving customers), they will be handed a whole new set of measures that can be used to understand and improve performance. Any service organization can achieve cost reductions and business improvement by studying demand in customer terms.

When customer expectations are at the heart of management’s actions, improving the work becomes the focus and replaces the system-deflating act of paying attention to workers through individual measures. When management and workers have a shared aim, useful measures and new methods can be uncovered that create value for customers. Working in unison changes the company’s culture to something positive. Instead of manipulating reports and measures, an organization reduces waste and improves customer service.

What measures are pertinent to the customer aim? Important customer measures are found on the front line in the interaction between the service organization and customers. For an example, let’s look at a contact center. The typical measures are:
• Cost/contact
• Average handle time
• Call quality
• Agent occupancy
• Training hours
• Absenteeism
• Average speed of answer (ASA)
• Call abandonment rate
• IVR completion rate
• Average hold time
• Percentage answered within 30 seconds
• Talk time
• After-call work time

Most of this measurement tracking is a waste of time and resources. The customers could care less about these metrics. The only metric that matters to them is whether you solved their issues. I am always amazed that call centers spend so much time tracking data—and mostly unimportant data at that—and so little time improving the system they work in. The response is usually, “We can only be responsible for our call center, not sales or operations; that is not our job,” or “We can only do our part and hope that everyone else is doing theirs.” This is the stuff of poor customer service—everyone “doing their job” while the customer suffers the end-to-end system. Industrialized management thinkers love to collect data, inspect phone calls, and figure costs. The result is a suboptimized system that provides no business improvement, higher costs, and a sweatshop culture.

Few contact centers have much variation from these measures. If you look at them all, they have something in common: These are all measures born from management trying to control costs. Managing this way seemed to be “best practice” until a concept called “failure demand” (i.e., demand caused by a failure to do something or do something right for the customer, a concept originated by John Seddon) upset traditional thinking about measures. Suddenly, we have a new measure to help dispel the myth of traditional measures of contact centers and other customer-facing workers.

With service organizations running more than 40-percent failure demand, and some times as high as 90 percent, managing activity with the mentality that all demand must be worked is foolhardy. Costs are trapped in the existing work design and management thinking.

End–to-end measures are important for many customers seeking service. For instance, when a customer wants service and expects it within a certain time frame, organizations have to take the demand and navigate multiple functions. These are usually done in back offices, and work is split up multiple times, creating what W. Edwards Deming called “suboptimization.” Service flow is disrupted and oftentimes creates more failure demand from customers.

Failure demand is not the only measure important to customers. Studying our organizations from a customer’s perspective will reveal more systemic measures.

About The Author

Tripp Babbitt

Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business.  Babbitt can be reached at tripp@the95method.com. Reach him on LinkedIn at www.linkedin.com/in/trippbabbitt

Tripp also has a podcast and YouTube channel called, The Effective Executive.