scottmadden insights on organizing to improve internal … · 2016-03-28 · no clear, well...

Copyright © 2011 by ScottMadden. All rights reserved.

ScottMadden Insights on Organizing to Improve Internal Services

Fall 2011

Contact: [email protected] [email protected]

mailto:[email protected]


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

1


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

2


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.

3

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 ( )



Business Plan



Internal Customer



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.

5



Business Plan



Internal Customer



Key Account Management provides the increased focus necessary to better support key internal customers.

6

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



Business Plan



Internal Customer



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

7

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



Business Plan



Internal Customer



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.



Business Plan



Internal Customer



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


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


Why ScottMadden?

11

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


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

[email protected]

Dan Kohut Director

ScottMadden, Inc. 3495 Piedmont Rd, Bldg 10

Suite 805 Atlanta, GA 30305

Phone: 404-814-0020

[email protected]





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