scottmadden insights on organizing to improve internal ......they are perceived by their customers...
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Copyright © 2011 by ScottMadden. All rights reserved.
ScottMadden Insights on Organizing to Improve Internal Services
Fall 2011
Contact: [email protected] [email protected]
Copyright © 2011 by ScottMadden. All rights reserved.
Introduction Most utilities focus on ways to improve operational reliability, cost of service, and external customer service
Although internal services organizations are not typically directly linked to external customers, they play an important role in the company’s ability to successfully deliver its products and services to the market
Internal services organizations can range from corporate functions (e.g., Human Resources, Information Technology, Finance and Accounting, etc.) to operational support functions (e.g., Environmental Services, Engineering, Facilities Management, etc.)
The quality and responsiveness of internal services organizations are critical in the company’s ability to outperform its peers and competitors
Additionally, some internal services organizations compete with external companies for providing services to the company’s operating business units
However, many internal services organizations lack the necessary business fundamentals, processes, and tools to manage their internal customers and measure and evaluate the organization’s performance against internal customer expectations
This document provides a brief overview of ScottMadden’s perspective on what an internal services organization can do to successfully deliver quality products and services
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Copyright © 2011 by ScottMadden. All rights reserved.
Internal Services Organizations – Common Issues
The organization does not understand the expectations and
needs of its internal customers
Role of the organization is perceived inconsistently across the company
Products and services provided by the organization are not clearly understood by the rest of the company
Perception that the internal services organization does not understand the unique business needs and intricacies of the company’s operating units
Products and services provided by the organization are not cost competitive with external providers
The organization lacks the dynamics of forward-looking business leadership
The organization is perceived as reactive and inefficient and the value of work is not rationalized
No clear, well articulated and measurable strategy linked to a business plan
Internal services organizations must balance Corporate expectations with those of their internal customers.
Corporate expects costs to be as low as
possible while maintaining adequate
service levels and quality
Internal customer expectations and needs
apply upward pressure on costs
Common Issues
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Copyright © 2011 by ScottMadden. All rights reserved.
ScottMadden Has Developed A Proven Internal Services Evaluation Model
Understanding the expectations and needs of internal customers is critical for developing the organization’s strategy and the supporting infrastructure to deliver value-added products and services.
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Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Mission and values Strategic objectives Strategic issues and
gaps Strategic initiatives Business plan
initiatives and budgets
Organization structure
People skills and competencies
Systems and applications
Culture
Products and services features and costs
Key account management
Internal marketing and communications
Service level agreements
Performance metrics, targets, and benchmarking
Internal customer satisfaction surveys
Employee satisfaction surveys
Products and Services Delivery
Internal Customer
Expectations and Needs
While not exhaustive, the following pages will address the evaluation
model elements shown in bold text and are representative of our toolkit
Copyright © 2011 by ScottMadden. All rights reserved. 4
Understanding Internal Customers Starts (And Ends) With Measuring Customer Satisfaction
Customer satisfaction for an internal service organization is a primary measure of results (along with cost and compliance)
Annual Satisfaction
Transaction Satisfaction Cost
Reliability Service Quality Awareness
Relevance Scope or Service
Cost per Customer
Results
Process Indicators
and Descriptors
Which Lever Do I Pull to
Increase Value?
Output Value = Quality
Cost ( )
Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Products and Services Delivery
Internal Customer
Expectations and Needs
Copyright © 2011 by ScottMadden. All rights reserved.
Customer Satisfaction Informs the Internal Services Organization’s Strategy
Strategic Objectives
Mission and Values
Strategic Initiatives
Metrics and Targets
Strategic Issues
Strategic Framework Element Description
Strategic Objectives – specific areas of emphasis to achieve the overall mission
Metrics/Targets – how success is measured for each of the strategic objectives. Metrics may be balanced (e.g., cost, quality, etc.)
Mission – broadest description of the purpose and focus of the department
Values – desired culture exhibited by the organization and how they are perceived by their customers (the organization’s brand image)
Strategic Issues – Major gaps between where the organization currently is and where it needs to be. Issues that must be addressed in order to succeed in each of the strategic objectives
Strategic Initiatives – High-level actions taken to address strategic issues and close the gaps.
“Eve
rgre
en”
Tem
pora
l
Business Plan/Goals Business Plan/Goals – Tactical initiatives, budgets, and targets that support strategic initiatives.
A strategic framework sets the foundation on which an internal services organization can meet or exceed their customer’s expectations while setting the stage for continuous improvement.
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Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Products and Services Delivery
Internal Customer
Expectations and Needs
Copyright © 2011 by ScottMadden. All rights reserved.
Key Account Management provides the increased focus necessary to better support key internal customers.
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Enhancing Service Delivery Through Key Account Management
Set process objectives
Identify and stratify
accounts Select key accounts
Develop account plan
guidelines
Create account
plans
Review and approve
account plans
Monitor performance against plans
Update account plans
Key Account Management:
Is a process, not a sales transaction
Focuses on building strong relationships within the company that foster collaboration
Is a long term discipline/commitment
Ensures a minimum and consistent level of communication across the company
Helps determine the customers’ needs and expectations up front
Will not work without supporting infrastructure: tools, culture, organization
Does not encompass service delivery, but should be informed of delivery activities
Attributes of an Effective Process
Established Key Account Manager (KAM) role for select employees within the department
Formal approval and communication process for account plans
Development of account plans is integrated into the business planning process and regularly updated
Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Products and Services Delivery
Internal Customer
Expectations and Needs
Copyright © 2011 by ScottMadden. All rights reserved.
Segments the internal market by internal customers and the organization’s services
Defines where strong demand exists for the services provided by organization
Shows where external providers are currently contracted for a significant portion of existing demand for services
Serves as a guide as to where Key Account Managers should focus their time on building strong relationships with their internal customers and finding new opportunities to meet their customer’s needs
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Understanding the Internal Market
Customer Organization
Fossil Generation
Transmission Ops
Distribution Ops
Facilities Management
Demand for the organization’s internal services
Very large Large Large Small
Approximate percent of work not completed by the internal services organization
50% 90% 30% 70%
Key account management begins with understanding the demand for the organization’s internal services.
Total Internal Services Spend By Organization
COO - Kingston
PSO
River Ops
Fossil
FGD&C
NGD&C
Energy Efficiency
FacilitiesManagement
Nuclear
Power Supply &Fuels
Fossil Generation
Transmission Ops
Distribution Ops
Facilities Mgmt
COO
Fuels
Planning
Trading & Mktng
Nuclear Gen.
Safety
Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Products and Services Delivery
Internal Customer
Expectations and Needs
Copyright © 2011 by ScottMadden. All rights reserved. 8
Internal Marketing and Communications
Provides additional information to internal customers on the variety of products and services that can be delivered by the organization
Provides Key Account Manager contact information
Used as a marketing and communications tool to support the Key Account Management process
Many internal services organizations communicate and market their products and services internally using informational brochures.
Evaluation and Measurement
Organization Strategy and
Business Plan
Supporting Infrastructure
Products and Services Delivery
Internal Customer
Expectations and Needs
Copyright © 2011 by ScottMadden. All rights reserved. 9
Example Tools for Improving Internal Services
15% 8% 18%
15%
22%
16%
81%
67%2%2%
4%
8%
43%
0% 20% 40% 60% 80% 100%
Pay roll
Domestic Trav el
Foreign Trav el/PCS
Unimportant Not v ery important Neutral Somew hat important Very important
3%
9%
46%
8%
15%
17%
22%
47%
32%
18%
23%
4%
49%
6%
1%
0% 20% 40% 60% 80% 100%
Pay roll
Domestic Trav el
Foreign Trav el/PCS
Nev er use Rarely use Use occasionally Use each month Use w eekly
1%
1% 47%
48%
47%
33%
35%
27%2%
6%
4%
7% 18%
12%
13%
0% 20% 40% 60% 80% 100%
Pay roll
Domestic Trav el
Foreign Trav el/PCS
Very dissatisfied Dissatisfied Neutral Satisfied Very satisfied
Mean
4.12
3.91
3.52
Mean
4.03
3.03
1.98
Mean
4.76
4.49
3.64
Customer ratings on the importanceof Financial Management services
Customer ratings on the use ofFinancial Management services
Customer ratings on the performanceof Financial Management services
ScottMadden utilizes a variety of tools across the internal services evaluation model to help measure, evaluate, and improve internal services.
Company A
Company B
Company C
Company D
Company E
Company F
Company G
Company H
Company I
Company J
Company K
Company L
Company M
Company N
Company O
Company P
Client Organization
Company Q
Company R
Company S
Company T
Labor Billing Rate Comparison
$131.10
$126.70
$123.98
$117.05
$114.32
$112.82
$108.20
$102.26
$101.93
$99.36
$96.27
$95.88
$94.17
$92.73
$86.44
$81.86
$80.32
$74.31
$70.17
$66.61
$60.04
Mean = $94.94
Top Quartile = $80.70
$40.29 $41.18 $39.30
$30.51
$-
$10
$20
$30
$40
$50
$60
ES&R 2011 Mean Median Top Quartile
Environmental Engineer Unit Cost
Provide quantitative data to gauge current performance and measure improvement
Provide objective feedback from internal customers and employees
Allow you to pinpoint specific attributes of your services, products, or organization for improvement
Can be used as a marketing tool to educate internal customers on service offerings
Compare service delivery labor and non-labor billing rates and costs with similar service delivery organizations
Allow you to pinpoint costs for potential improvement
Can be used as a marketing tool to educate internal customers on service offering billing rates and costs as compared to outside providers
Customer Satisfaction Surveys
Internal Services Benchmarking
Copyright © 2011 by ScottMadden. All rights reserved. 10
Example Tools for Improving Internal Services (Cont’d)
ScottMadden utilizes a variety of tools across the internal services evaluation model to help measure, evaluate, and improve internal services.
Establishes the key performance indicators and metrics on which to measure the internal services organization’s performance
Provides real-time and timely key performance information to employees and managers
Creates the input required to perform gap-based business planning
Aligns organizational and individual goals with the organization’s and the corporate strategy
Provides the structure and process for identifying performance gaps and developing initiatives to close them
Focuses managers on key success factors and desired results
Improves internal service performance and customer satisfaction
Performance Metrics and Dashboards
Gap-Based Business Planning
2010 2011 2012 2013 2014 2015 2016Customer Satisfaction Index N/A 51.0 59.1 65.1 69.9 74.0 74.0Benchmark 70.0 74.0 74.0 74.0 74.0 74.0 74.0
Initiative Reference
Primary Performance Gap Driver
Total O&M($000s)
Total Capital($000s)
Expected Gap Impact
CS-01 8.25
CS-02 4.00
CS-03 4.00
CS-04 3.75
CS-05 3.00
Initiative 3
Initiative 1
Basis for Gap (Root Cause)
Sub-optimal internal customer engagement and communications
Initiative
Initiative 5
Initiative 4
Initiative 2
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014 2015 2016
CSI S
core
Customer Satisfaction Index
Customer Satisfaction Index Benchmark
0
10
20
30
40
50
60
70
80
2011 CS-01 CS-02 CS-03 CS-04 CS-05 2016 Target
CSI S
core
Customer Satisfaction Index
Initiative Impact
GoodGood
Copyright © 2011 by ScottMadden. All rights reserved.
Why ScottMadden?
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We have recent and relevant experience in improving internal services
We have developed a full-service web-based internal customer satisfaction survey methodology and a five-phase customizable approach
We have led multiple service delivery improvement projects to develop and implement the key account management process
We have assisted numerous utilities internal services organizations with all areas of strategic planning
We have substantial experience in gap-based business planning, and we understand how to integrate it with strategic planning
We have developed standardized approaches and evaluation tools that we can deploy to assist internal services organizations with measuring and evaluating customer satisfaction, developing the key account management process, and developing strategic and business plans
We have worked with hundreds of energy clients over almost 30 years including 90% of the top 20
Copyright © 2011 by ScottMadden. All rights reserved. 12
For more information on organizing to improve internal services, please contact us.
Contact Us
Randy McAdams Partner
ScottMadden, Inc. 2626 Glenwood Ave
Suite 480 Raleigh, NC 27608
Phone: 919-781-4191
Dan Kohut Director
ScottMadden, Inc. 3495 Piedmont Rd, Bldg 10
Suite 805 Atlanta, GA 30305
Phone: 404-814-0020