How quickly should they answer my call? Keeping on top of KPIs in Facilities Management
21 December 2016
Effectively managing the performance of facilities management suppliers is a challenge for many organisations. Practically how do you monitor and track performance in a meaningful way? What should you do if performance is below par?
Payment on delivery
I get frustrated when I see poor performance management mechanisms. It should be simple. Do the job on time as specified and you get paid, don’t do the job to the required quality or complete it late and you suffer a pre-agreed consequence. All too often contracts are constructed with complicated performance management mechanisms that neither the client nor the supplier understand. It is not unusual to see a really complicated spreadsheet with hundreds of measures and obscure metrics. Inevitably these monitoring mechanisms make it difficult to assess actual performance, weaken performance management and can lead to poor supplier performance. A good rule of thumb is that you should be able to articulate what the measures are and if they are being met without running calculations on a spreadsheet. To quote Einstein, “If you can't explain it to a six year old, you don't understand it yourself.”
Effective performance management needs to start with the team deciding what level of service are needed and translating that into written service levels which are meaningful and target something that matters to your business.
What exactly is the difference between a service level and a key performance indicator?
A common service level reads something like “all telephone calls to the helpdesk to be answered within 30 seconds.” Is this important to your business? Is it targeting something that matters? In your business perhaps it does, but for many organisations it doesn’t. Let’s say it is important for you, the next question is how to measure it? You could have self-reporting by the supplier, assuming that the CAFM system can record and report on call waiting times. You could rely on complaints, but how many of your colleagues are going to have a stop watch out when they ring the helpdesk. In this case it is better to change the measure to the number of rings e.g. “answered within 10 rings.”
The service level is the level of service you require, in this case calls to be answered within 10 rings. The key performance indicator is the target level at which the service level should be delivered e.g. “The number of complaints about the helpdesk taking longer than 10 rings to answer each call must be less than 10% of the total calls answered.”
But what happens if the helpdesk operator answers the call but puts you on hold, they have met the service level, as they have answered the call. But as a customer you are still not going to be happy. You have to think hard about the service level. How you are going to measure it and how might a supplier might get round it. “Respond to repairs within an hour” is another common example. Suppliers can meet the service level by turning up, “responding”. An engineer can come along, having a look, put a bit of hazard tape up and go away without actually fixing anything. They have met the Service Level but you have not received good performance.
Think about the consequences
Once you have service levels and key performance indicators the consequences of failing to achieve them must be meaningful. Good practice is for profit and overhead to be at risk against performance. But you should model the implications of failure. Think of it from a supplier’s perspective. Say you have a contract worth £10m pa and the profit and overhead for one year is £1m. That sounds like a big deduction if you fail your key performance indicators. But you rarely fail all of them all the time. In this example £1m translates as £83,000 in any one month. If you have 20 equally weighted key performance indicators that means that failing one will result in a deduction of just £4,000. If you had 40 KPIs it is only a £2,000 deduction per failure.
But imagine that you are running manufacturing operations in a factory and have to shut down the assembly line for 3 hours because a scheduled maintenance activity was not undertaken and . The cost to your business would be much more that the £2,000 deduction. It is important therefore to try and balance the value of deductions with the actual cost to your business.
Is it really important how long it takes to answer the phone?
You have to have enough key performance indicators to cover what is really important, but not so many as to dilute their impact. I have seen many contracts where it is cheaper and easier for the supplier to fail the measure month in month out than it is to fix the actual problem. In these cases both the client and the supplier have in effect accepted long term poor performance. To my mind that is not effective performance management. If service levels and key performance indicators are well designed suppliers may fail to achieve them from time to time but the deductions should hurt enough to incentivise better performance going forward.
Where they are designed properly performance management mechanisms can be an excellent tool for both clients and suppliers. Get it wrong and it can be ineffective and at worst mask poor performance. Get it right and you can have a good level of transparency of service performance and take action when it is not at the required level.
If you want to take just one thing away from this blog just check that your service levels are specific and that they are measurable.