Implementing effective key performance indicators is important to any business that focuses on achieving goals. Using KPIs the wrong way can become toxic and may poison a team’s performance.
KPIs are at the top of my list when running a business because they allow me to assess performance and determine focus. Well-designed KPIs allow us to recognise excellence, celebrate success and build a winning culture. This improves morale and team engagement.
Customers notice happy engaged employees. Engaged teams react faster to customer needs, provide a pleasant experience and, most importantly, happy employees create happy customers.
Good KPIs are dynamic and change over time in reaction to changing conditions. Too many KPIs dilute focus, while not enough leaves blind spots. To make KPIs meaningful, we also need goals.
KPIs are Lagging Measures, Not Target Thresholds
Unfortunately, many field service organisations fail to understand that a KPI is a lagging measure. A KPI lets us investigate the past. We establish thresholds on KPIs to narrow our focus or to see if an initiative is impacting our measures.
Setting the threshold as a target, as many field service organisations do, can be dangerous for team morale and customer service.
For example, we expected our first time-fix rates to be greater than 90%, but we consistently measured them to be 80%. After investigation, we found that one of our suppliers regularly sent the wrong parts or shipped them late to the site. We had two choices, change supplier or reduce the threshold to 80% and accept this as the normalised practice.
Guess what we did? Suffice it to say our first time–fix rates now exceed 90%, and we have a new supplier.
It is valid to say that 90% was our target for first time–fixed rates. This allowed us to determine if there were issues worth investigating. The question becomes, what happens to the team if the target is set to 100% for each individual technician and a bonus incentive is offered? Would this have changed the team’s behaviour in a negative way? Would the service team start avoiding jobs or start gaming the type of jobs they are booked on? Would they try to hide reasons for re-visits or record false reasons? To illustrate the point, let's focus on utilisation a common KPI used in service businesses. Implementing this KPI did not go so well.
Keep Focus on the Customer
We began by modelling how the utilisation would be calculated, based on the usual arguments about billable versus non-billable travel time, full-day jobs versus multiple jobs per day, repair versus maintenance, you get the idea. On reflection, the whole conversation was internal, about us, about how the calculation can be gamed. We did not focus on the customer at all.
And that’s when the arguments started. Ok, arguments are too harsh a word, it was more like continuous ongoing disputes within the team. Claims of why the target could not be achieved, questions about why some technicians kept getting the full day jobs, accusations of job padding and overcharging customers to buffer individual results.
The whole focus of the team became time. Service managers started booking appointments back-to-back, with little downtime. Technicians slowed down their onsite visits rather than finishing early. Over-booked technicians rushed the work and paid no attention to customer service. Everybody became overworked and stressed, and our customers noticed.
We had one customer comment on how our technicians didn’t even have the courtesy to say goodbye, they just rushed out the door.
We poisoned (or incorrectly incentivised) a team that previously valued customer service by providing bonus incentives to achieve a utilisation target. We didn’t understand the impact this decision would have on the team and on customer service.
By focusing on utilisation as a target measure at the individual level, we decreased productivity, negatively impacted customers, and reduced customer engagement.
Incorrectly using a lag measure as a target can poison team performance, which impacts customer happiness.
The Right KPIs Guide Continuous Improvement
Fortunately, we caught this quickly and reverted to customer engagement metrics. We now reward individuals who receive positive customer feedback. We still report team utilisation in the management meetings, as it provides a useful insight into overall team effectiveness. If it's below expectations, we focus on what improvements can be implemented or accept it as transitory if it is the result of external factors.
Using KPIs as lag measures rather than target thresholds guides continuous improvement. It shows us where we can improve, or if there has been an unexpected change in business conditions.
Receiving this information in real-time from the field allows us to react faster to customer needs and enables the field service teams to be more responsive and effective.
KPIs are powerful tools if they are used as indicators to measure progress towards a goal. However, if the KPIs become the goal then they can turn into toxic measures that will inhibit team performance and employee engagement.
Getting your KPI reporting right leads to highly engaged teams who are motivated, provide positive customer experiences, care about customers and outcomes, care about your company, have high rates of retention, create repeat business, enable upsells and achieve high levels of utilisation because they know it’s important to the team’s success, the company’s success, the customer’s success, and their own individual success.
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