Category: - BP Consulting (NZ)

What should be included in calculating the cost of FTEs

6/8/2011

There are two elements to the cost of having a FTE:

Direct costs
These are directly employee related (e.g.: salary / wages, non-monetary benefits, stationery, training etc.). These costs go up or down according to the number of employees

Indirect costs
This refers to the apportioning of the overall business costs such as premises, IT, management time and HR. These costs will not necessarily increase or decrease significantly as the number of employees change. Some may be seen as “step costs” (eg: premises – you maybe able to fit in 1 more person, but not 10, so at some point you will need more accommodation).

How to calculate the number of FTEs involved in a process

6/2/2011

Full time equivalents (FTEs) is the:

Number people involved in the process
Multiplied by their hours worked per week
Divided by the weekly hours a standard person would work in a week

FTE includes all part-time workers and overtime. Occasional overtime can be ignored, but if people regularly work overtime during a week or at month end, this should be included in the calculation.

Sorry for the gap in blog entries

6/2/2011

Sorry for not posting to the blog. We have been distracted by a big assignment in Australia but now have this well underway and we have lined up the next seven months of blog entries so we won’t miss blog entries again.

The next 4 blog entries look at measuring the cost of a process
The 14 after that look at measuring the quality of a process
And then 12 look at what influences the performance of a process

Customer Service Surveys

4/13/2011

“Internal Customer Service Surveys” can be a useful tool in improving processes because:

Perception can become reality if you do not deal with it
You need cooperation from people to get the job done (and this means making them feel they are part of what you are doing)
People will not always tell you there is a problem, so you need to ask them
It helps to be seen to be interested, even if you can not always resolve someone’s problem
You need to measure what people think versus the reality to ensure it is supported by fact

A customer service survey is a way of reminding the people (who also have them as a KPI) that they are providing a service and need to remember this when doing their job and interacting with people. They are a great tool but you should not take the findings entirely at face value:

People tend not to answer surveys in the extreme (ie: go for the highest or lowest score – they usually answer somewhere in the middle)
Accept that people will answer a questionnaire based on the last thing that happened, which may just have been a bad experience which in reality does not occur very often. Also people tend to remember bad things before good things
Try not to allow people answering the questionnaire to get personal. It is not a mechanism for someone to get at a person they do not like. We will all have experienced personality conflicts at work but this should not stop professional, mature people from working productively together. The questions in the survey will be fairly generic, this is hard to avoid.
The questions in the survey will be fairly generic, this is hard to avoid.

The survey can cover more than customer service. If you are doing a survey you should include questions or statements that can be used to prove or disprove perceptions on other topics (not just customer service). For example you could ask for people’s views on the following statements:

If you have implemented a new computer system ask for views on:

The new system is settled down and is operating well
Personnel at my location know how to use the system
Personnel at my location do not need further training

If you have just completed a budget round ask for views on:

The budget process worked well
My branch / cost centre owns and is committed to achieving its budget

If you are trying to standardise processes across the organisation ask for views on:

The processes at my branch are well documented
If personnel moved from another branch to my branch they would easily be able to perform the same role

Key Performance Indicators (KPI’s)

4/6/2011

Some people say you should measure everything and that what gets measured gets managed. While it is true that if you measure something you are more likely to manage it, if you try to measure everything you run the risk of data fatigue (there is just too much of it). This could result in:

Reports getting left in in-trays
The review becoming half hearted
Important data and trends getting lost amongst the mass of information
People losing focus because they can not concentrate on everything

Whether you are measuring a person, a process or an organisation you should measure only what is important to achieve the result you are seeking (and this may change over time). There are seven golden rules for KPIs:

Have realistic targets – eg: if your target is on-going cost reduction you must take into account the reducing cost curve which means that as you reduce the cost per transaction each subsequent reduction becomes harder to achieve.
Reflect what you are trying to achieve – eg: if your goal is to process quicker to ensure your financial information is up-to-date, you will want to measure turnaround time. But why measure it every day if you are only really concerned about month end, or maybe the end of the week. Measuring every transaction is probably unrealistic so make it easy to do.
Be fair – you need buy-in for the measure to be effective and people need to feel the measure and target are fair otherwise they will not be motivated to achieve it.
Be supported across the organisation – there is no point having a KPI in one area which conflicts with the KPI in another. And because people need the help of others to get their jobs done, critical KPIs need to be part of everyone’s goals (to the extent that they have an impact on the outcome).
Not be counter productive – eg: an organisation had a stated goal of achieving long-term sustainable growth. Yet its bonus schemes were based entirely on achievement against the annual budget. The consequence was that senior managers made decisions based on the short term result not the long-term benefit. The bonus scheme targets needed to be balanced between the two desired outcomes because short-term gain is not always compatible with long-term sustainable growth.
Be (relatively) easy to measure - if it takes a lot of effort then you should question if it is the right measure or measure it for short (regular) periods. You want useful data with the minimum of effort.
Have a purpose – it is not data for data’s sake. You are measuring either the performance of the people, process or organisation, or that of an improvement initiative.

Managers need to make decisions

3/27/2011

Part of a managers job is to make decisions. The decisions will not always be the right one's, but it is better to make a decision and be wrong than to dither and not make a decision at all. And face it, we probably learn more from our bad decisions than we do our good ones. To make a good decision (more often than not) you should:

Clarify the real objective
Develop creative alternatives
Understand the consequences of the decision
Make appropriate trade offs amongst conflicting objectives
Deal sensibly with uncertainties
Take account of your risk taking attitude
Plan ahead for decisions

Managers need to lead

3/17/2011

We will all have experienced good and bad leaders during our lives. Unfortunately having the title “Manager” does not make the leader, which is a shame as management roles involve leadership either directly through managing people, or indirectly by influencing the actions of others.

Hopefully you know at least one good leader:

Someone people want to follow
Someone who makes ideas real for people
Someone who creates energy and drives people towards a common goal

So what is it about a good leader? Research has shown that effective leaders have these common traits:

They think about the job at hand and the people
They are able to achieve goals by enhancing productivity and job satisfaction
They are proactive
They start with the end result in mind
They prioritise and put first things first
They aim for a win-win situation
They listen before they speak / act
They make sure all things work well together
They make sure the right tools / skills are in place

If you know a good leader, take the opportunity to learn from them. You will learn more about leadership from their mentorship then you will from a book. Now, not everyone can be a great leader but that should not stop them from being a good manager. . As a good manager it helps to know the various styles of leadership:

Autocratic – do as I say
Bureaucratic – we must follow the process
Diplomatic – not lazy, just work challenged
Participative – what do you think?
Task-Oriented – we must finish this tonight
People-Oriented – how are you today?

Most managers will have a “one style fits all approach”, but good managers know that they need to adapt their management style to the people they are managing. This is because they will be a diverse group and will differ in: gender, age, race, culture, religion, education, lifestyle, and sexual orientation. They will also know that different people react differently to each style because people are both rational and emotional in behaviour. A persons response is a consequence of rational (conscious) and emotional (unconscious) influences.

To improve a process you'll need to change people's behaviour

3/6/2011

Because people act in response to both internal choices and environmental influences, their behaviour is a function of both who they are and the environment they are in. You also need to remember that everyone is unique and will act differently because of their individual differences in abilities, needs, motivation to work, and work attitudes. This means that to motivate someone or change their behaviour, you will need to select the most suitable approach for the person and situation you facing to achieve the desired change.The basic approaches you can use to change behaviour are:

Positive reinforcement (the carrot) - this is the best way to ensure the behaviour will be repeated
Punishment (the stick) – this can have an immediate effect but it may not last
Extinction (getting left behind) – this achieves change through recognition that the person has no choice
Avoidance learning (bad things happen) – here the person learns that the consequences of not changing are outweighed by the need to change

Ensure master data is consistent

2/28/2011

Master data is crucial and drives an organisations processes, being both an enabler and a control point. Anyone who has implemented an ERP system will know the importance of master data.

What you can do
Set standards for your master data

Formats for capitals, abbreviations, addresses, post codes, tax numbers, contact details, bank accounts, etc

Cleanse your master data

Check that all master data fits within your standards, if not, fix it
Ensure there are the minimal number of vendors, customers, materials, etc., remove any duplicates
If you can not delete files, block any that have not been used for 13 months
Avoid “sundry” accounts - the volume of transactions will be higher than you expect and they are hard to check

Place controls over the creation and maintenance of master data

How a master file is created and who can create it
If it is a significant control point then maintaining master data should be separated from transactional access (eg: setting up vendors should be separate from processing invoices and making payments).

Segregate maintaining master data from other roles to improve focus and control

Trained personnel should maintain master data
Database maintenance is a specialist skill set. Personnel should be methodical, detail focused and almost pedantic.

Ensure forms are standardised, understandable and easy to complete

2/15/2011

Forms give standardisation to a process, but only if they are used. To be used they need to be understandable and easy to complete.

What you can do
Review every form

If there is more than one version reduce it to one
Check each box on the form is used and has a purpose
If possible make forms electronic via email templates, your intranet or even just formatted Excel spreadsheets. This is a good way of forcing people to complete forms fully and you can include authorisation paths for approvals.
Avoid allowing local variation of forms. People will add things that are unnecessary and are probably more about them exerting their own control / influence over the process. Overtime this interference will almost certainly lead to process variation.

Ensure people complete the forms

Forms should be fully completed. If they are not, seen them back. If you keep filling the blanks in for people they will never complete the form correctly.
The first time someone sends in an incomplete form could call them, explain they have not completed the form correctly and, if possible, get the required information over the phone. But the second time just send it back. If they want something urgently they will ensure the form is completed correctly.

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