Accountability is one of the keys to success. The greatest idea with the best-laid organizational plans will achieve modest success or even failure without clearly defined roles and responsibilities, KPIs, and assigned accountabilities.
The client is a modestly profitable distributor and service rep for currency, coins, and check counting and scanning equipment manufacturers. Their historical territory was in the Midwest, and they serviced financial establishments and casinos. The business has successfully served this territory and niche product line since its founding in the 1980s. However, they want to position themselves to grow into other regions and markets and add new product lines like electronic signage. They traditionally sold and serviced premium equipment but recently added economy equipment offerings as a defensive move to sell to customers who only sometimes wanted to or couldn’t pay for better brands. The client has also successfully added internet sales as an additional sales channel to offer small desktop machines.
The client is profitable with a high market share within their industries. However, they need to be in a position to grow either by entering new territories markets or adding new product lines. They do have an extremely high performance in post-sales support. This support is the momentum that keeps them ahead of the competition.
Although equipment sales generate profit, the service aspect of the business generates a much higher gross margin %.
The client needed to provide clear expectations for the staff regarding roles and responsibilities, goals, and accountability. Many times, multiple people would step in to do like kind functions. There needed to be clearer guidance on who had primary responsibility for particular functions and who were the backups when the primary person was unavailable to perform specific functions. There were no SOPs in place to ensure that functions get done the same way every time.
The client services well over 50 machine types. Due to the variety and locations of these machines, no one field technician can be completely proficient at maintaining each machine. No skills matrix was in place and available to the technicians as to whom to call if they needed to speak to an internal subject matter expert for a specific machine.
The client has a good electronic system to assign work orders and their field technicians to specific work orders, so they quickly address any breakdowns or preventive maintenance work at the customer’s locations. This system also includes remote login features for the field techs to log in their travel and work as well as their arrival and departure time by work order number; however, the % of travel plus work time logged into the system would indicate that the client had too many technicians for the work at hand. It was unclear if technicians were not logging in all of their work activity or if they were working part-time for a full-time position.
The client expected Backlogs, but the electronic system only allowed for a daily backlog report and could not look at the backlog levels over time.
Accountability needed to be improved, and the electronic system needed to generate better management reports. There were a lot of detailed reports available, but no reports that addressed and summarized particular issues like on-time arrivals, early departures, overall utilization of travel + work time vs. available time over time, and other issues. In the past, field technicians had not been held accountable for their poor time utilization nor rewarded for good time utilization performance.
Salespersons did have fundamental sales growth and profit margin goals to support commissions. All other bonuses (for all employees) were mostly subjective, leading to a culture where employees believed favoritism was at play. In reality, the employees often received more overall incentive pay, and the client took little or none.
Employee surveys found that management and workers needed more accountability and efficient processes to reward and improve performance.
The people were loyal and committed to servicing the customer, but they needed and wanted better processes and leadership. The client would also need a significant profit improvement to expand sales into other regions through acquisitions. Strong sales growth going forward through other avenues without addressing the issues hindering performance would perpetuate the inherent inefficiencies driving moderate profits. Solutions were needed as soon as possible.
Solutions Put in Place During the Project
Opportunity Wall: This brown paper exercise starts with the Leadership Team and then all the employees. It identifies opportunities for improvement across the organization, by functional area, or by the department from a profit perspective, as well as for more intangible actions that can improve organizational efficiency that will indirectly impact profitability. Profit improvement can be sales growth, cost savings, or better utilization of company resources and assets. Other efficiency improvements can be projects to write and implement SOPs, Job Descriptions, vendor management, warehouse organization, and processes that will indirectly improve profitability. Transparency and regular communication with the organization is critical to effectively using an opportunity wall. Defining and prioritizing actions, assigning persons responsible, and due dates are critical. When completed, they come off the Opportunity Wall but are maintained in a separate document so people can reflect on previous accomplishments. They need to communicate if some ideas don’t fit into the future vision for the organization to the people in the organization as well.
The Opportunity Wall is a dynamic and ongoing document. The business environment changes, and so must the Opportunity Wall.
KPIs: Key Performance Indicators are performance measurements over time. They should be “SMART,” an acronym for Specific, Measurable, Attainable, Relevant, and Time Based. They must impact the success of the organization. Everyone in an organization should have KPIs. Wherever possible, they should roll up individually to the higher goals for the organization to drive overall success.
Job Descriptions with SMART KPIs: Each person in the organization now has a clear description of their expectations day-to-day and individual KPIs that will drive the organization to success. Each employee signs the Job Description along with the owner of the company. It is a signed agreement between the employee and the employer. They also know that the KPIs can change over time as they meet objectives and new objectives arise. Job descriptions can be updated as well since the business environment is dynamic.
As part of this process, the client realized that too many service personnel (over 25) were reporting to the Operations Manager. Field Supervisor positions were created to act as the first line of management for each service territory. The Operations Manager was still responsible for improving the group’s performance, but he now had motivated supervisors to support him.
Employee Performance Reviews: Each employee has a quarterly review tied to their KPIs and behavior related to the company values. Quarterly scoring of these reviews based on KPI and value performance drives the person’s quarterly incentive pay. There will also be an annual scoring, which adds up to the quarterly performance. The same document can be a performance improvement plan for poorer performers.
Rollout meetings: The client gave presentations to employees to explain the changes and why they made them. They gave a high-level introduction through a Company-Wide meeting with mandatory attendance. The following meetings were group meetings by major departments. These meetings provided group performance for the new history based KPIs and compared them to expectations for the rest of the current year. They will also communicate other expectations for improving group performance. After that, there would be individual meetings with each employee to review their individual KPI performance in the same manner, with discussions of not only KPI expectations for the rest of the current year but also any specific individual improvement expectations.
The client is implementing Independent Customer Satisfaction Surveys after a service call and quarterly peer reviews to maintain the client’s high-quality expectations.
New Management Tools:
- Basic Management Tool for weekly and monthly follow-up on KPIs and other metrics.
- Wealth Budget and Cash Management System to allow for proper forecasting of cash, profits, and distributions to clients.
- Clear Time Utilization Reports showing the impact of late arrivals, early departures, and general underutilization of time for field staff members. These reports summarize the information by person, territory, and group and tie it into the KPIs.
- Strategic Plan for quarterly follow-up.
- As well as other Cogent Reports
Implementation is ongoing with a solid commitment from the client and his leadership team. Success is still a work in process.