By measuring your group’s performance, you ultimately manage that performance more effectively. In other words, by pulling away from your daily routine and thinking carefully about how your group does what it does, you can determine how effectively your group is operating. You can then address shortfalls and other problems, whether they stem from your direct reports’ performance, your managing style, or some other source.
Consider the following story about Maura, who heads up a large sales group. Through the process of appraising her group’s performance, she makes some insightful discoveries that help her manage her group more effectively.
Maura was recently promoted to manager of a large sales group. Her company does not use a formal performance measurement system, so she and her boss work together to define objectives for her group. Because the company has defined a strategy for enhancing profitability and market share, Maura and her boss select several objectives—including increasing customer satisfaction, improving sales staff morale, and boosting sales revenues—that support those high-level goals.
Maura also defines critical success factors for each of her group’s objectives. For example, her CSFs for increasing customer satisfaction include “Reduce sales staff turnover,” “Improve sales staff responsiveness,” and “Reduce order-processing errors.”
For many of Maura’s objectives, reducing sales-staff turnover is a CSF. As Maura explains to her boss:
After defining CSFs for each of her objectives, Maura translates them into metrics. For instance, her metric for sales-staff turnover is “Percentage annual turnover in sales staff.” Other metrics include “Revenue per sales staff,” “Number of order-processing errors,” “Customer loyalty,” and “Number of calls required to resolve customer complaints and questions.”
Maura next sets targets for each of the metrics she has defined. She and her boss think carefully about the targets. For example, Maura knows that she can’t eliminate turnover entirely in her group. But she wants to keep it at a minimum. She benchmarks sales-staff turnover in other, similar companies, as well as in other customer-facing groups within her organization. After reviewing the information, she decides that a target of 5 percent annual turnover is reasonable and will help her achieve her objectives. She uses a similar process to set targets for her remaining metrics.
Maura then begins gathering performance data on all the metrics she has defined and compares the data to her targets. For instance, she starts tracking the number of sales reps who leave the company each month and calculating how that rate compares with the 5 percent annual turnover rate she had set as her target. She figures her target is a monthly average rate of 0.4 percent (0.4 percent × 12 = 5 percent annually).
In gathering and reviewing performance data, Maura sees some disturbing developments. In particular, turnover in her group is trending upward. Over the six months that Maura has been measuring performance, monthly turnover rates have slowly climbed from 0.4 percent to 0.5 percent. Turnover for the current month has already reached 0.7 percent, and there are still two weeks remaining in the month. In addition, increasing turnover has clearly begun to hurt customer satisfaction and revenues, just as Maura had feared. Performance on the metrics she defined for those objectives has fallen far short of the targets she set.
Maura knows she must investigate and address the causes behind these performance shortfalls.
Maura sets out to interpret the performance data she’s seeing to determine what it’s telling her and how she might intervene. For example, to investigate increasing turnover rates, Maura takes the following steps:
Through this process, Maura makes several discoveries. For one thing, she finds that her group has been experiencing higher turnover rates than other customer-facing groups in the company. She also determines that turnover has increased steadily since she began leading the group. Equally troubling, she learns that departing sales reps’ exit interviews contain a preponderance of comments about her “unavailability.”
As painful as these realizations are, they enable Maura to design and implement solutions to the turnover problem. For example, she begins holding more frequent meetings with sales reps and getting to know more about their career interests. She also has lunch with several peer managers and asks them how they control turnover in their sales groups. She adopts some of their suggestions. These include responding more quickly to phone calls and e-mails from sales reps who need help resolving problems or who want to explore ideas for better serving customers.
Maura’s efforts pay off: over the next two quarters, turnover in her group levels off. During the following quarter, it even begins to decline. Customer satisfaction rates start improving, and revenues for her group begin to pick up.
By appraising her group’s performance, Maura has discovered how to better manage that performance. As a result, she has begun generating more value for her company and its customers—and is helping her organization achieve its strategic goals.
13.58.108.102