Rising Above the Rest: Employee Performance Management Creates Lasting Market Differentiation A Performix Technologies White Paper Copyright Performix Technologies April/2006
Achieving Service Excellence Acquiring market share in a global marketplace requires more than taking a product-centric view of the world. Great products help attract good customers, but keeping them is a different story. In this age where information is proliferated at quantum speeds and where competitors are on your heels to make something better, cheaper and faster, companies must look inside their four walls to create a lasting differentiation that cannot be duplicated by anyone else. It is also a known factor that it costs more to replace a customer than to retain one. This is why so much emphasis has been placed on customer-facing processes and applications to better understand buyer behavior. Knowing how much a customer has purchased over the past years is helpful, but not the complete solution. There is a key element that is being overlooked to fully optimize business performance and create lasting market differentiation. That element is mastering the entire customer experience and maximizing your ability to serve that customer. This understanding goes beyond traditional process optimization; it requires a thorough understanding of how service employees are interacting with customers and performing on a day to day basis. Once you ve attracted a customer, what expectations have been established for future relations? What type of infrastructure and processes have been implemented to protect customers and ensure an exceptional service experience? When your organization is focused on profit today and no thought to tomorrow, it s a quick recipe for high customer turnover. When a customer s experience fails to live up to a promise offered by your organization, customers will quickly find another organization that delivers. The Internet and global economy enable rapid defection for any reason. In order to achieve optimal business performance, organizations must focus on retaining customers and employees, earning both their loyalty and their advocacy. Improving business performance and achieving service excellence requires an understanding of how service employees are performing every day and ensuring that their activities are supporting business goals and enhancing the customer experience. ii
Employee Performance Management Delivers Differentiation There is only one business differentiator that cannot be duplicated and that is your workforce. Everything else can be duplicated, despite all best efforts to protect intellectual property. However no one can ever duplicate your workforce because it is unique, it forms a culture and a face to your business. To achieve maximum business performance, every individual has to work at their optimal level and be focused on the correct tasks. Effective Employee Performance Management (EPM) adoption empowers employees to take responsibility for their own productivity, and allows a business to fully align goals, activities and tasks to support the direction of the company. How effective is your organization when it comes to: Attracting the right talent? Retaining the best talent? Empowering employees to impact change? Giving performance visibility to managers? Developing employees? Employee Performance Management helps organizations improve both the processes and the productivity of managing a workforce. In most service organizations, attrition is critical to consistent performance and success. Studies show that attrition in call centers range anywhere from 20-40% (Mercer Human Consulting), and total recruiting and training costs can range up toward $35,000 per employee. Therein lies the opportunity: Employee Performance Management strategies can help your organization make dramatic business performance improvements and yield tremendous benefits beyond cost reductions. How Does EPM Improve Business Performance? EPM establishes processes and working models that will drive performance today and tomorrow. By setting clear expectations and delivering visibility into how departments, teams, and individuals are measured on a day-to-day basis, a powerful synergy is created and quantum productivity improvements are realized. iii
Many organizations give "lip service" when it comes to valuing their employees. EPM is an opportunity to fulfill that value. If employees are your most vital asset, then it is important to treat them that way. By investing in processes and methodologies that help you attract, manage, and develop your workforce, you will naturally create a strong competitive differentiation. An empowered and appreciated workforce delivers consistent, optimal business performance. Incent and Reward Employees with Consistent Goals, Recognition, and Development A core EPM strategy is to align business goals with tasks and activities of the workforce. Often times, employees miss the vital connection between business performance and their personal performance. EPM helps address this gap by providing a consistent means to communicate business goals down through management to individual employees. Further, it provides scorecards and management dashboards to support both traditional management and self-management of those day-to-day activities. The information provides mechanisms for employees to have a clear understanding of priorities for themselves, their team, and the business. In those companies who have implemented EPM, 70% of employees believe their good performance is recognized by the business, against a national norm of 50%. Further, incentives can be built into the process to increase productivity and reward behaviors. When you look at why employees leave a company, many times it is attributed to not feeling appreciated for their contributions. EPM helps facilitate a reward and recognition program that improves the productivity and morale of your workforce. For example, if goals are established to up-sell or cross-sell customers with incentives, EPM will help your organization implement those programs and track the progress. By motivating employees in this practical way, your company will focus employees on key objectives; improving service, reducing call times, and increasing revenues. Create Processes Built Upon Best Practices When turnover is a critical problem, service organizations tend to spend more time looking at unproductive behaviors versus creating best practices. EPM helps put the focus where it belongs: establishing best practices that can be duplicated throughout the organization. Most service iv
centers have high-performance employees who embody the ideal profile. With the right tools in place, an organization can create a model established by highperformance employees and integrate this model into the goals and objectives for all service center employees. A strong EPM system will be able to characterize beyond the doing of tasks and will include attitudinal and behavioral modeling to capture why these employees are so successful. EPM Levels the Playing Field for Employees EPM isn t just for management to keep tabs on their employees. It is a powerful tool that enables employees to manage themselves on a day-to-day basis. EPM offers dashboards and scorecards that present multiple levels of visibility to help an employee understand how their personal performance compares with individuals on their team, how it impacts the team performance, as well as other layers that are important to understand. This type of information is empowering as opposed to intimidating, because everyone is on the same level playing field. There are no more secrets or concerns of favoritism because it is all right there on their computer screen. EPM Boosts Morale, Increases Employee Retention, and Reduces Absenteeism Companies who have invested in EPM have witnessed absenteeism drop as much as 33%, well above industry standards. The interesting dynamic of EPM is how it creates a strong team identity and boosts morale. In many instances, when a department or team notices that one of their members is struggling, they step in to help that team member because it helps them too. Employees see the bigger picture rather than focusing on their own tasks. As a result, this increases employee retention because there is a sense of trust and ownership in the business. EPM establishes a greater sense of purpose to their job and employees can see how their performance impacts the business at large. Further, it naturally weeds out those employees who do not fit in the culture. Productivity, Revenue, and Customer Service Skyrocket When employees know how they are being measured and what activities are most important, they adjust their working styles to support those goals. In service centers where EPM has been implemented, return on investment has been realized within six months and organizations have v
achieved dramatic year-on-year improvements in the areas of employee performance, goal management, employee attrition, and customer service. Supplying information that properly guides agents in their daily tasks and priorities enables them to self-manage their activities to sell more product, better and faster, and the entire organization benefits. Successful EPM implementations should result in: Increased productivity of 10% or more Increased revenue of 5% or more Reduced administrative costs of 15% or more Increased staff-to-manager ratios of 25% or more Increased performance (lower average handle time, cost per transaction, etc) of 15% or more EPM Addresses All Aspects of Being an Employee A strong EPM system will have features that address the life cycle of an employee, including recruiting, enrollment, evaluations, and employee development. This comprehensive approach uses performance management practices to improve evaluation processes, provide effective employee development, and recruit the best employees. By hiring the right employees and managing their growth, turnover is reduced and time and cost is saved. EPM Starts Before Day One Often organizations do not hold employees accountable for performance in the first few months of employment. This is not the best approach because too much time goes by before you realize that an employee is not a good fit for your organization. There are sunk costs, lost time and opportunity... and it could have been avoided if the right mechanisms were in place. The power of EPM is that it starts right from the moment you have a job to fill by helping you develop accurate profiles of the candidates you want to attract. It then helps with sorting through resumes, holding effective interviews, delivering tools to match personalities with your culture, and will help develop best practices when it comes to recruiting. Imagine how much time and money your organization would save if you hired the right person the first time every time! Once the candidate becomes an employee, expectations are set right up front that their performance is being measured from day one. The first few months are a critical time period where incompatible behaviors can be uncovered quickly if there are ways to measure what is expected of the employee right from the start. vi
EPM Improves Future Performance In EPM-enabled organizations, 63% of employees agree that they are regularly coached to improve their performance, against a national norm of 26%. Effective employee development is driven by applying the right type and amount of training to those that need it to improve their performance. Using performance information, managers are able to identify training that will help address specific performance deficiencies, saving significant cost and effort. It also creates good will among employees and employers because there is a sense of interest and investment in developing skills to succeed in the job. EPM Realizes Top and Bottom Line Revenue Improvements Instead of subsidizing contact center costs by charging customers for service calls, an organization can transform their contact center into a profit center by generating revenues that more than cover operating costs with effective goal incentives and management. Add in productivity improvements, cost savings in recruiting and operations, and ensuring corporate goal awareness and alignment, and your organization will be well-positioned to deliver consistent business results and retain customers for the long term. EPM Shapes the Future Success of Your Business EPM holds the key to optimal business performance today and tomorrow. It establishes a high-performance culture that maintains a collective view of performance across the organization. This culture differentiates your organization from everyone else, and it will keep your customers coming back time and again. EPM facilitates a culture of continuous improvement, establishes best practices for departments or teams, and encourages employees to go the extra mile to achieve the higher good for the business. An organization s business performance relies upon the quality of work being done on a day-to-day basis. EPM offers the insight and approach to creating and maintaining a high performance workforce and delivers an unmatched competitive advantage. vii