Are Your Shared Services KPIs for Good or Evil?


PHIL SEARLE CEO & FounderGlobal/AmericasTel: (408) [email protected]

Phil has more than 20 years of experience in Finance, Shared Services, Technology and Outsourcing. Prior to his current role, he was Group VP and CFO of Cendant TDS International, which encompassed all areas of Finance across four continents, including Decision Support, Financial Planning & Analysis, Controllership and Financial plus certain HR Shared Services.Phil was granted O1 visa status by the US government in 2008 which resulted in him gaining accelerated Green Card status in 2009 through the “Extraordinary Ability” classification. This classification is for “ability…demonstrated by sustained national or international acclaim” and was based on Phil’s unique experience in Shared Services and Outsourcing. Phil also was issued a C10 visa by the Canadian federal government in 2010; this visa is only granted where there is “significant benefit to Canada" [R205(a) CEC C10]. Phil is a Chartered Accountant and has a BA Honors Degree in Economics from the University of Exeter. He is a member of Financial Executives International (FEI).

ROBERT TOWLERegional DirectorEast Coast, USTel: (862) [email protected]

Robert has over 20 years of experience in Finance, Shared Services and Technology implementations. He has managed multiple shared services transformation projects and has held multiple roles managing shared services operations in the U.S., U.K. and in multiple locations in India. Prior to his recent assignments, he was the Vice President of Finance for Pinkerton Consulting.Prior to Pinkerton, Robert was the Vice President of Global Operations Finance for Travelport Limited, with responsibilities including the management of company’s Indian Shared Service Center, global corporate travel and North American payroll operations. He is well suited to developing transformation activities, but is comfortable focusing on daily operational issues, managing staff at all levels and ensuring a high level of customer service.Robert holds an MBA with dual concentrations in Finance and Information Technology from Auburn University.

Your Speakers

mailto:[email protected]





Purpose of this SessionAre Your KPIs being used for Good or Evil?It is commonly accepted that leading Shared Services Organizations measure performance in order to drive continuous improvement. In this interactive session:• We cover best practices in performance measurement and how

KPIs are one of the most important elements of the Client Interaction Framework

• We share stories from the frontline that expose the good, bad and ugly about KPIs• “Good" examples that drive sustainable improvement• “Evil” examples where the KPIs can actually damage the

relationship with the SSO’s clients• Learn how to set the correct KPIs, achieve alignment between

functions, establish relevant targets & utilize KPIs to grow your SSO


Chazey Partners Profile

Critical Importance of the Client

KPI Best Practices

KPIs for Good or Evil?

Winning Strategies & Takeaways

Agenda


KPI Best Practices

KPIs Good or Evil?


Agenda




Chazey Partners is a practitioners-led global management advisory business. We bring together a unique wealth of experience, empowering our clients to strive for world class excellence through

Business Transformation, Shared Services & Outsourcing and Technology Enablement

We have operationally delivered and consulted on numerous programs globally, over the last 20 years, in the US, Canada, Latin America, UK, Ireland, Continental Europe, India, Singapore, Australia, China, Middle East and Africa

Our end-to-end capability offers advice, guidance and implementation expertise, covering strategy setting and business case production, program management, implementation and process optimization

Who We Are · Overview


Who We Are · Services Portfolio

FINANCE & ACCOUNTING●

HUMAN RESOURCES●

INFORMATION TECHNOLOGY

●PROCUREMENT

● TRAVEL & EXPENSES

●CONTACT CENTRES

Expertise In Public Sector & Private Sector

INVENTORY & LOGISTICS●

STAT & TAX COMPLIANCE●

SUPPLY CHAIN ●

LEGAL SERVICES●

FACILITIES MANAGEMENT●

MARKETING BACKOFFICE

BUSINESS TRANSFORMATION

−SHARED SERVICES & OUTSOURCING

−TECHNOLOGY ENABLEMENT

−BUSINESS CONTINUITY

−CHANGE MANAGEMENT

−LEAN SIX SIGMA

Functional Breadth of Experience

Other Supporting Services


Who We Have Worked With

OUR CLIENTS

WHERE HAVE WE COME FROM




KPI Best Practices



Agenda


Client• Service orientation in place• Structured way of dealing with customers• Customer satisfaction levels understood• SPAs in place • Reality versus perception• Account management

Process• Processes documented• Standardized, controlled & repeatable activity• Recharging methodology• Benchmarking – internal/external• Metrics: Control Based; (ii) Efficiency &

Effectiveness

Technology• ERP implemented• Document Scanning Solution• Workflow• Automated Payments• Elimination of Side Systems• Self services tools• Automated Score Cards

People• Skilled Leadership in place – do not compromise on

competencies• Team shape & stability – process shaped/spans of

control/staff – perm v temps• Team members – culture, values & behavioral competencies

assessed • Team morale, reward & retention• Working environment conducive to team working

CRITICAL SUCCESS FACTORS

Typical Transformation Focus: Technology & Process,sometimes on the People …but Client-focus is missing


Without CIF• Lack clarity on who does what• “Perception versus reality”• Focus is on negative aspects of

service delivery• One-way traffic without traction• Strained client relationships• Not proactive; takes effort to

maintain morale• Takes emphasis away from

customer service

With CIF• Outward looking and proactive• Client-orientated• Deliver to pre-defined standards of

service to meet agreed client needs• Accountable and measured, using

metrics and KPIs• Drive cost of service towards a

world-class standard• Active management of client

relationships

Through a formal framework: The Client Interaction Framework (CIF) distinguishes a leading practices Shared Services from a simple act of centralization and drives a spirit of partnership between the SSO, its clients, and all key stakeholders

How to Achieve Client Engagement?


Client Interaction Framework

Account Management• SSO to client; via reporting,

interaction, escalation & communication

Client Contact Management• Client to SSO; to manage

and resolve queries and drive learning/improvement

Service Partnership Agreements• SPAs are 2-way agreements

clarifying both SSO services and client inputs

Client Feedback• Client satisfaction

continuously monitored both informally and formally

Continuous Improvement• Mechanisms to identify the

areas for improvement and to develop solutions

Process Control Database• Documents end-to-end SSO

processes; highlights activity of both SSO & client

Performance Measurement• Comprehensive KPIs,

measures and metrics framework, SSO & client

Performance Reporting• Process performance will be

reviewed monthly by SSO and client

Recharging Methodology• Define basis for charging for

SSO services to turn consumers into clients




KPI for Good or Evil?


Agenda

KPI Best Practices


KPIs Enable the Client Interaction Framework

Recharging Methodology

Performance Reporting

Performance Measurement

Process Control Database

ClientFeedback

Client Contact Management

Service Partnership Agreement

Account Management

ReaffirmSpirit of

Cooperationand Partnership

Bring reality check to client conversations

Measure input volumes and exceptions

Documentation of negotiated service levels

Processhandover points

Reported regularly to all stakeholders

Full framework of input, output, and operational KPIs

Measureclient satisfaction

Chargebacks typically linked to KPIs

Continuous Improvement

Support culture of continuous improvement


OutputProcess

InputKPIs

Operational & Individual KPIs

OutputKPIs

Measure effectiveness and efficiency of SSO“The engine room”Achieving targets?

Working as a team?

Measures the success, quality and effectiveness

of service deliveryDownstream part of

processAka “lagging” indicators

Types of KPIs

Measure client input to processTimely, standardized and in the

prescribed format?Upstream part of processAka “leading” or “reverse”

indicators

Input


•Socialize framework to develop buy-in•Engage providers and clients•Ensure aligned to best practices

•Clarify strategic goals of organization•Establish governance and project teams•Identify stakeholders

•Establish teams of providers and clients•To identify service line contribution to goals•To develop framework

•Assess current performance measurement framework•Cover client satisfaction, quality, efficiency & control•Eliminate existing KPIs that do not add value

•Address gaps and ensure have input, output, operational & individual KPIs•Consider targets•Leverage technology to automate and reduce manual entry

Recommendation

FutureState

CurrentState

Service LineTeams

Vision and Governance

Establishing or Rebuilding


Targets that Are Practical, Relevant & Achievable

Identify Goal

Define KPI

Set Target

Develop Initiative

Criteria: Relevant – “move the needle”Simple To UnderstandDynamic – move up and down, not always constantTimely – not out of dateEasy to measureActionable – drive business decisions


KPI Best Practices

1. Include all types: input, operational, and output KPIs2. Link KPIs to strategic goals and cascade from strategy/goals to strategic

KPIs to operational/output KPIs then to individuals KPIs3. Negotiate and agree with the client and departments4. Include targets for current and future operations and comparisons to

external benchmarks5. Establish a process to refresh KPIs as targets are achieved or become less

relevant6. Include key exception indicators to go after exceptions/defects in

processes and drive continuous improvement7. Enable with technology to minimize/eliminate manual data collection8. Cover the key targets of customer service level, quality of service, cost

and efficiency.9. Use to drive continuous improvement and all elements of CIF





Agenda


KPI Best Practices


• Introduction of input KPIs

• SSO concerned about client reaction

Input KPIs

• Positive reaction• Clients embracing

concept

Client Reaction • Client actively asking

for information• “How can I make this

better?”

Evolution

• Finding efficiencies• More partner-led

initiatives

Growth

Good: Engage Client, Drive Improvement


• Manufacturing Co.• Credit controller and

SSO Head fired due to poor collection of accounts receivable

Act First

• End-to-end process review

• Focus on root cause analytics

Investigate • Weakness in cash collection was upstream of SSO

• No relevant input KPIs

Discover

• People fired unnecessarily

• Need effective KPIs to manage

Lessons Learned

Evil: Fired Employees Unnecessarily


• Corporate demanded explanations & remediation plans if targets not achieved

Aggressive

• SSO groups resented corporate function

• Seen as paper exercise

Pushback • Took “extra care” that reports showed targets @100%

• Reports less meaningful

Impact

• Impact ≠ intent• People will see to

avoid pain• About getting better,

not about punishment

Lessons Learned

Evil: Metrics as Punishment


• Krakow-based SSO for German manufacturer

• Suppliers not being paid

Critical Issue

• Invoices approved in plant due to lack of PO compliance

• Lack of process governance & consequence

Discover • Very slow approval process

• Culture of blaming SSO when fault was elsewhere

Impact

• Strong performance measurement

• Governance & sponsorship

• Consequences

Identified need for

Evil: Lack of Accountability


• Travel & expenses used to enhance personal lifestyles at expense of company

Loss to Company

• Published T&E statistics• # non-compliance• $ non-compliance

Transparency • Compliance now seen as not just a corporate role

• Massive cultural re-orientation & savings

Impact

• Right metrics will drive the right behaviors

Lessons Learned

Good: Drive Correct Behaviors





Agenda


KPI Best Practices


• Create vision and develop clear roadmap• Don’t expect immediate buy-in on KPI framework• Negotiated and agreed with client

Achieve Buy-In

• If you go too fast, you’ll lose everyone• Build understanding through working with teams• Build skills in analysis, management and continuous improvement

Watch Speed

• KPIs done properly improve client engagement• Dig deep to understand issues• Frank, open and honest conversations with the client

Overcome Resistance

• Push/Pull Dynamic (client expectations vs. affordability)• Plan/Do/Check/Act approach• Choices are data-based

Set targets

• If achieve 100% every period, change target or drop KPI• Continually evaluate to ensure meaningful, aligned & relevant• Consider introducing KEIs (Key Exception Indicators)

Continue to Evolve

Winning Strategies


Top Three Takeaways

1. KPIs enable and support a proactive, structured approach to client relationships

2. KPIs can be used for good or evil – don’t be evil

3. Picking the right metrics is just as important as deciding to use metrics – wrong choices will drive wrong behaviors

Leverage our Experience for Your Success


Got CIF?

Go to www.chazeypartners.com/cif and complete the Client Interaction Framework (CIF) Self-Assessment

Obtain your free report and access to resourcesRemember that without client engagement, there is no

Shared Services


Contact us

[email protected]


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Are Your Shared Services KPIs for Good or Evil?

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Transcript of Are Your Shared Services KPIs for Good or Evil?