Performance Measurement for the Telecom Industry
The telecom sector is a highly competitive sector no matter where you go in the world. Be it USA, UK, Pakistan, India, Japan or any corner of the world. It is still a sector where people are seeing growth. One can easily see how large this sector is when they just look at one player in this industry. China Telecom on its own had 214 million fixed line telephone subscribers, 35. 44 million mobile subscribers, and 47. 18 million broadband customers at the end of 2008. Looking at the huge size of this industry one has to wonder what sort of performance measurements are in place so as to compete in this industry.
By judging the performance of a company in an industry one is able to find weaknesses that need to be worked upon and the strengths which one can use to keep a competitive edge over others. Once you know where you are going wrong and what you are doing right you are also able to assess potential threats and potential opportunities. By identifying weaknesses and by rectifying them they can be turned into opportunities. Potential threats could be those that may mitigate your strengths. All of them are inter related thus companies need to judge their performance with other available benchmarks in the industry.
(Rose India 2008), (Mani, Romijn 2004) suggests that in this case any company in the telecommunications industry needs to measure how well or how bad it is performing so as to give a better performance. The main purpose of this study is to find which sorts of performance measurement techniques, are being used in the telecom sector – specifically in Call Centers. This study will enhance the understanding of how companies use performance measurements to compete with other organizations in this sector. This is mainly based on literature reviews and case studies.
Different articles have been used to gain various insights regarding performance measurement in this industry and various KPIs were analyzed as to how they help in the performance measurement in the Call Center industry. Case Studies were conducted and various insights derived from them. Analysis from both the literature review and the case studies were then used to give recommendations of how Call Centres should measure performance. While no best way has been recommended, this study stresses on the importance of measuring performance in Call Centers and presents a guideline to how Call Centers should measure performance.
2. Literature Review The literature review is aimed at gaining insights from articles and different reading materials so as to gain a better insight as to how performance is being measured in the telecom sector. The main focus would be on different KPIs mainly pertaining to the call centre domain of the telecom industry. 2. 1. Performance Measurement Tools in Business In (Drucker 1954) Peter Drucker said that, “What gets measured gets managed”. In general companies face difficulty in matching their long term strategy with the annual budgeting process.
The problem essentially lies in the budgeting process that does not incorporate enough granular metrics that can be related to this long term strategy. This in turn usually leads to very wastrel budgets that do not deliver as per the expectations of the management. (Drucker 1954) suggests that in order to get the best results, the companies need to set goals and strive to achieve them. In order to determine whether the goals have been achieved, certain benchmarks must be set that reflect when the goal has been achieved. These benchmarks are required to determine the business performance.
According to (Bititci, Turner & Begemann 2000), U. S. 2000, business performance measurement has various uses. This can including: monitor and control, improvements, achivement and alignment of goals within an organization and finally compensation to ensuring maximum effort from the employees. (Wongrassamee, Gardiner & Simmons 2003) consider business performance tools as a balancing act among five major factors within an organization. These five factors are: 1. Profit, growth and control 2. Short terms objective with respect to long term objectives 3.
Performance deliverables across different business units 4. Opportunities and tradeoffs among them 5. Human aspect of the work force and providing motivation According to (Wongrassamee, Gardiner & Simmons 2003) the metric is a qualitative value that can be used to compare temporally, with present target and with other measures. Moreover, as the measure is a total for comparison it does not have to represent an absolute value. E. g. when the measurement is related to customer profitability, it is enough to determine the relative distance between a historical and present value rather than the actual value.
Moreover, in some cases these measures can be subjective. Examples of these measures are customer satisfaction and product quality. Furthermore, these measures can be leading or lagging, where the leading measures are designed to measure the future performance while the lagging measures are designed to measure the historical performance. Proponents of business performance measurement have long been prosing framework that can provide a comprehensive coverage of the business strategy and providing a mechanism to the managers to maximize the rents for their shareholders.
Since late 80’s many such frameworks have been proposed including: Balanced Scorecard, Performance Prism and the Cambridge Performance Measurement Process. In this section we look at the first two frameworks. We try to understand the basic premise behind these frameworks and then eventually take them in context of telecommunication and more specifically the metrics required for call centers. 2. 1. 1. Balanced Scorecards The Balanced Scorecard is a popular performance management tool that allows managers to track and monitor the activities of their subordinates.
Initially introduced in 1992 by Kaplan & Norton, the design of this system is primarily about identifying financial and non-financial measures and attaching targets to them. Thus, it is possible to review each ‘perspective’ of business and determine whether performance meets expectations (Wikepedia ). Typically, the Balanced Scorecard presents four different perspectives for managers to select measures from: Financial, Customer, Internal Processes, and Innovation & Learning (Wikepedia ). The Financial Perspective is from the perspective of the company owners – the shareholders.
When determining what measures to select from this perspective, managers consider those financial aspects that are most important to company shareholders. Similarly, the Customer Perspective encourages managers to empathize with the customers. ‘How to Customers see us? ‘ is the primary question that managers will look at when determining measures in this domain. The Internal Business Perspective forces managers to consider those measures that the business must excel at in order to be successful.
Finally, the Innovation and Learning Perspective helps answer the question: ‘Can we continue to improve and create more value? ‘ These measures differ from those traditionally used by companies. While many businesses use combinations of physical and operational measures for local activities, those are mainly derived by ad-hoc processes. By proposing an all-rounded approach to deriving measures, the Balanced Scorecard is grounded in an organization’s strategic objectives and competitive demands.
Moreover, unlike conventional measurement tools, the Balanced Scorecard explores both internal and external measures (from operating income to new product development). It can reveal trade-offs that managers may have made among performance measures – thus, facilitating managers to achieve their goals without making trade-offs between key success factors (Kaplan, Norton 1995). More recently, the Balanced Scorecard has become more than just a performance measurement tool.
As it encompasses an all-rounded approach to evaluate a company’s health, it has become a powerful framework to co-ordinate and fine-tune a company’s operations and activities such that they are aligned with corporate strategies (Kaplan, Norton 1996). It is important to appreciate however, that the Balanced Scorecard is not a template that can be copied by businesses even within the same industry. Different market situations, product strategies and competitive environments will require different scorecards (Kaplan, Norton 1995).
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