The No Tool Zone

I have been reading about call center KPIs, metrics and measures for several weeks now and I still walk away shaking my head.  Most service organizations are working on the wrong measure and worse working on the wrong problem.  Some of the metrics may be useful to know how to resource, but none hit the real problem in making things better.  For the command and control thinker these metrics are a dream as they can analyze themselves into oblivion . . . and usually do.

We have all types of metrics. Like:

• Cost/Contact
• Cost/Minute of Handle Time
• Call Quality
• Agent Occupancy
• Training Hours
• Absenteeism
• Average Speed of Answer (ASA)
• Call Abandonment Rate
• IVR Completion Rate
• Average Hold Time
• % answered within 30 seconds
• Average Handle Time
• Talk Time
• After Call Work Time

Most of this measurement tracking is a waste of time and resources.  The customer could care less about these metrics and the only one that matters to them is did you solve their issue.  I am always amazed that call centers spend so much time tracking data (and mostly unimportant data at that) and so little time improving the system they work in.  The response is usually, “but we can only be responsible for our call center, not sales or operations that is not our job” or “we can only do our part and hope that everyone else is doing theirs.”  This is the stuff of poor customer service everyone “doing their job” while the customer suffers the end-to-end system.  Command and control thinkers love to collect data, inspect phone calls, and figure costs . . . but no one looks at what the customer demands.  The result is a sub-optimized system that provides no business improvement, higher costs, and a sweat shop culture.  WOW! sign me up . . . I want to work in that environment (sarcasm).

There is a better way.  The systems thinking organization understand that the only metric that matters are those important to the customer (defined from purpose).  Sure the first call resolution (FCR) is useful when applied with knowledge, but the metrics that really matter to the customer are end-to-end from the customer perspective and may cross several functions in their current state.  Very few service organizations understand this.  They pay attention to each function building structures of front office, middle office and back office and then constantly redesigning them into shared services or outsourcing.  All of this activity is done with the aim of saving money and all of these activities typically increase costs . . . a management paradox I have discussed in other blogs.  All the sub-optimization increases costs and waste.

Most call centers still are not tracking one metric that does matter to customers . . . failure demand.  The unwanted demand into the call center that represents 25% – 75% of all calls into any one call center.  Failure demand are calls that are problems, follow-ups and other annoying calls that customers have to make to get served.  Failure demand drives up costs and drives out customers.  I am grateful to John Seddon (my Vanguard partner) for pointing this out to me.  Eliminating failure demand increases capacity, reduces costs and makes customers happy.

By understand the relationship between Purpose, Measures and Method.  A systems thinking organization soon learns that the purpose is to serve the customer, we can then derive metrics important to the customer and allow changes to method to accomplish the measures.  No targets here, just continually improvement of service.  Let your competition get buried in the cost of command and control thinking with their benchmarking, KPIs, and metrics/measures that don’t matter.  A systems thinking organization understands this is just waste and sub-optimization and allows them to work on customer problems with a simple change in thinking.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

I just finished reading Blake Landau’s blog (at customermanagmentIQ.com).  The blog is titled An “AHA!” Moment About AHT Average Handle Time and talks about how agents may “hang up” on customers to keep their handle time down to meet their target or quota.  I have seen such foolishness in almost every call center I have visited.

The Problem with AHT:

The problem here is deep, rooted in command and control thinking born from scientific management theory (F.W. Taylor).  Not only is this thinking old, but is displayed both in the podcast interview and comments on Ms. Landau’s blog.  This productivity mindset is over 100 years old and has run it’s course.  Better methods are at hand, but require a change of thinking from command and control to a systems thinking one.

The AHT target is the problem.  The AHT becomes the de facto purpose of the call center agent meaning their focus is on the target and not the customer.  The agent is left with a choice to either serve the customer or risk being paid attention to or not receiving some incentive for not achieving some arbitrary numerical goal (target).

Additionally, the target does not account for the variety of demand that an agent receives. I have seen on many occasions where the customer demand is a hard call (time consuming) and no agent wants those calls when they are under the gun of an arbitrary target.  Sometimes they hang up and some times they don’t give complete answers to customers leading to more failure demand (call backs, errors, follow-ups, escalations, etc.), this just increases call volume at great expense.

The Command and Control Solutions:

One comment to the blog suggests that having someone with greater than 15% AHT need to have the agent paid attention to.  The arbitrary 15% bothers me where does that number come from?  Why isn’t it 20% or 7% or some other number.  This person clearly does not understand variation (see Service Metrics: What You Need to Understand). 

Almost all the responses were from command and control thinking.  Items like more quality monitoring, scorecards, coaching, training, etc. that only add waste to a poorly designed system.  Most of these solutions focus on the individual (except scorecards) and the problem here is that 95% of performance comes from the system (work design, technology, management thinking, constraints, regulations, policies, procedures, scripts, etc.) and only %5 is attributable to the individual.  Scorecards are just doing the wrong thing, righter (see: Balanced Scorecard . . . MBO in Sheep’s Clothing).  These solutions have the displeasing odor of command and control thinking.

A Better Way: Systems ThinkingOne thing I have found is that command and control thinking doesn’t work very well.  Systems thinking (by nature) focuses on the customer.  Decisions are made outside-in and not top-down starting with understanding purpose from a customer perspective, deriving measures from this purpose and liberating method.  The focus becomes serving the customer rather than some arbitrary target.  With an understanding of customer demand, we can design systems against this demand.  In a management paradox, this improves service and cut costs by eliminating failure demand.  This is something that command and control (production) thinkers don’t understand . . . to them there is always a trade-of between costs and good service.

The better way eliminates the need for quality monitoring, scripts, mandates, procedures, targets and the like saving organizations from wasteful costs.  Other benefits are improved culture from putting the decision-making back with the work and allowing agents to think again instead of “dumbing them down” with costly technology and monitoring.  The real question is  . . . are you ready to change thinking to get the benefits?

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

I read them all this past weekend.  Technology to the rescue!  We (tech firm) have an IVR systems that is bigger and better than the rest!  Our IVR system will save you time and money!  Everybody uses IVR, you would be stupid not to use this technology!  The conventional wisdom is the IVR!  But we are in need of a shepherd, not sheep!

So why am I the one guy (other than my Vanguard Partners) saying that the IVR is typically a waste of money and worse . . . a customer satisfaction killer?  The IVR is really just a self service “sort and batch” front-end system built off of a functional design (scientific management theory – read more on this here).  This functional separation gives us tremendous opportunities to improve by replacing it by designing against demand.  However, it would be wrong to simply turn-off the IVR system (similar to mistakes made by by manufacturers in 1980s by stopping inspection when W. Edwards Deming said “Cease reliance on inspection”).  The IVR system was built on existing management paradigms regarding work with the aim to increase productivity.  Human Facts International says that “shaving a second off the phone time could save organizations hundreds of thousands or even millions of dollars a year” . . . all I can say is stupid is as stupid does.

In a management paradox, this productivity mindset leads to the thought that saving time on the phone is the end game. It is not.  To lower costs we have to change our thinking from a productivity mindset to a systems thinking one.  Meaning understanding where costs come from to achieve business improvement and designing out the waste.

So, what should be done to achieve a better way?  The process of designing out needs to start with an understanding of the nature of demand.  This means an understanding of the type and frequency of demand from customers.  This will lead to understanding demand as value (calls we want) and failure (calls we don’t want), failure demand offers huge areas of possibilities for improvement and represents between 25% and 75% of all phone calls.  As opposed to the productivity mindset of reducing “a second from talk time” part of the redesign involves eliminating failure demand which represents a larger opportunity to improve.  Over and over again do I see call center management focus on the wrong measures, creating increased costs and customer dissatisfaction.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control thinking and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

Command and control thinking has to manifest itself somewhere and no where is it more prevalent than the call center.  The call center has the worse set-up.  Let’s look at the typical call center:

• Productivity charts for team, unit and individual performance (complete with targets)
• Display monitors with number of calls in the queue (and other worthless information)
• Coaching sessions for those that don’t “hit the numbers”
• 4-6 weeks of training on phone calls one will never get

You get the idea.  I have the greatest empathy for folks who work in the call center environment.  I have heard them be called “lazy, stupid, unmotivated” and the like.  But inevitably (as always) those call center workers are the most savvy, innovative and knowledgeable workers in any organization.  Unfortunately, they are rarely tapped as sources of knowledge.  Worse, they sometimes put that savvy and innovation to cheat the system at the expense of the customer.  Command and control thinkers this means that we need more inspection and monitoring (at great cost), but these call center workers are always one step ahead and the game with its accompanying waste continues and escalates. 

Call center management is playing an expensive and losing game when taking a command and control approach.  The call center worker is a tremendous source of information for any organization and if they realized this they would rarely outsource.  Workers can help tell us what is broken with the system and changes in demand from customers, but call center management must be willing to dump the productivity mindset. 

Productivity measures (and targets that accompany them) like call volumes and handling time may be useful for resource planning, but tell us nothing about how to optimize the system.  Yet, the call center is rife with information to improve any organization.  If we engage the worker to study customer demand (type and frequency)  they can share information management could never have thought of unless they spent time there (which I suggest).  Workers can also help call center management with whether that demand is a value (calls we want) or failure demand (problems, follow-ups, etc.)  My Vanguard partners and I have found that failure demand runs from 25 – 75% of all call center calls.  Instead of pounding the desk for faster handling time, we can reduce the number of inbound calls by reducing failure demand and learning better ways to handle value demand. 

The call center worker is engaged to get the information and can tell us if demand changes more capably than some report a manager gets way too late.  This information provides crucial information to managers to fix the service system or product and maintains a perpetual feedback loop changing culture, achieving business improvement and corporate cost reduction.  All for changing the way we think.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control thinking and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

My wife called Bank of America (used to be Countrywide) to make the last payment on our home and needed the payoff amount and arrange to be sure the correct payment was submitted (timing).  She was taken through an IVR (Interactive Voice Response) system that asked general questions:

• Are you an existing customer?
• Account Number (and annoyingly repeated by the voice)
• Last 4 digits of Social Security# (she put in hers and they had mine even though the mortgage was in both our names)
• Description of Issue (she explained the issue as best she could to the IVR system and it kept trying to give her options that did not fit the request)
   

She then requested to speak to a representative and the IVR told her it would take longer and that it was best suited to answer her question.  Can you imagine a machine telling you how to handle your problem with its standardized responses!

She insisted on a representative and was put through after a less than 2 minute wait.  Where she had to give out the same information to the “human” that she just gave to the IVR.  In another 2 minutes, the issue was resolved by the service rep.  Total time 15 minutes, 11 with the IVR, 2 minutes on hold and 2 minutes with the service representative.

Command and control thinkers only focus on costs, thinking somehow this system is saving them money.  No option out to speak to a service representative without arguing with a machine is simply . . . stupid.  The costs are “unknown and unknowable” as Dr. Deming would say.  However, they are there all the same.

A better customer management process would be to study demand before implementing an IVR and understanding that a customer doesn’t want to listen to an IVR for 11 minutes or  . . . argue with it.  They would understand that call center management could reduce calls by understanding and eliminating failure demand (problems, follow-ups, etc.) that represents between 40 and 75% of the call volume.

Bank of America, you inherited this system . . . now tear down that IVR!

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

Let’s assume that we already have a call center, as opposed to the question of whether we need a call center (different blog).  In command and control thinking organizations they see an expense of $s for personnel or $s per transaction and say if I outsource this to India, Philippines, etc. (doesn’t really matter where) I will save 50 to 75% of my per head costs.  Call center management or some executive thinks “I would be an idiot not to reduce these costs on my financials.  After all, I want to hit that performance target  and get that bonus to take the wife and kids to Disney this year.”  OK, I have embellished a little here, but I promise I am not far from the truth.

This argument is plausible to the command and control thinker.  What they don’t consider is looking at their organization as a system.  Scientific management theory is the root of this thinking where we have the functional separation of work to optimize production.  Economies of scale for that function.  Taiichi Ohno and W. Edwards Deming taught a better way Ohno to thinking in terms of economies of flow and Deming in terms of viewing an organization as a system.  By optimizing one part we stand the chance of sub-optimizing the whole (and usually do) with command and control thinking.

Further, what no one accounts for is failure demand that call centers receive from customers.  These are the number of phone calls that a call center receives because of a failure to do something, chase calls, errors, etc.  This failure demand accounts for between 25 and 75% of all calls into a call center (and if you are in the public sector even higher).  Essentially by outsourcing call centers we wind up outsourcing our failure demand or waste. Locking in the costs that can’t be seen by the command and control thinker.  Also, we lose our feedback loop to help optimize economies of flow which usually leads to finger pointing between the outsource vendor and it’s customers.

Wrong metrics are used in outsourcing.  Outsource vendors talk about their functional measures like talk time, abandon rate, etc that appeal to command and control thinkers without considering broader system measures.  In one bank, talk time was reduced at the expense of additional failure demand making customer service worse.  We can take more calls by reducing talk time, but in a management paradox increase failure demand leading to more calls and escalations.

You also have to deal with additional costs to manage a contract with the outsource vendor, sometimes hiring someone to help with this, SLAs, performance metrics and a slew of seldom talked about costs.

We live in an outsourced world, but service organizations need to run their organizations as systems as Deming outlined and have consideration for economies of flow.  In addition, technology has enabled our ability to outsource . . . at great cost to service organizations.  Failure to recognize these aspects leads to increased costs and poor service.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

I spoke to a reporter from India (Reed Business Information) this morning regarding outsourcing and more specifically the impact on Infosys.  He informed me my view was “different” than everyone else and I could only reply that I was used to that comment.  Most Americans want “in-sourcing” because they want to bring jobs back to North America, I want service organizations to realize it is a poor financial decision to take this call center or IT outsourcing strategy. 

Decisions are made in command and control fashion from the financials without knowledge of the work and/or based on scientific management theory that has long proven . . . outdated.  So here are 3 things to consider before you outsource:

1. The Work.  For a call center what is the type and frequency of demand.  More importantly is the demand value or failure?  Most call centers have between 25 – 75% failure demand in their call centers and after outsourced lock in the costs of this failure demand.  For software development it is the realization that software is not developed in a production line, software is developed from knowledge about the work.  When developers are separated from the work it almost guarantees a poor outcome in what is coded leading to multiple rounds of rework that quickly lose their “cost advantage.”
2. Economies of Flow.  Economies of scale drives American business.  Few understand ”economies of flow” is the real driver of costs.  Trapped in this wrong paradigm service organizations separate functions of work outsourcing pieces leading to sub-optimization (improving the cost of one area at the expense of all others increasing total costs).
3. Ancillary Costs.  There are technology costs, contracting costs, turnover costs, training costs, meeting costs, customer impact costs, etc.  Look hard at what really is involved and you will probably find other hidden costs.

Evaluating these 3 areas before outsourcing can lead you to better decision-making about what your service organization should do when considering an outsourcing strategy or even an in-sourcing strategy. 

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our evaluation of in-sourcing or outsourcing strategies at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt.

As a customer I hate them . . . and as a consultant I hate them.  The IVR (Interactive Voice Response) system that you have to call and usually guess what to say or which button to push to speak to a person.  The questions are usually asked about your account number, number of visits (Disney), phone number, etc., and after answering these questions you are asked to repeat them again when you talk to an agent.  If you hit the wrong button, back into the queue you go and typically with another 8 – 12 minute wait.  The IVR “choices” are not always the way I would communicate my order or problem and I find myself guessing whether what I said or pushed was “correct” and I am occasionally chastised for being so  . . . ignorant.  Or sometimes the agent will tell me no one ever really “figures it out.”  I am not sure that makes me feel better.

Organizations that try to break calls down into pieces mostly find themselves with a significant number of lost or mis-routed calls.  Working to standards (method, procedures, scripts or work volumes) usually increases costs. That business improvement and business cost reduction exercise winds up increasing costs and creating a poor customer experience . . . a management paradox.  This problem becomes worse when people are removed from the call center in anticipation of “efficiencies.”

The current design of most call centers does not allow for value to be pulled by the customer.  Straight talk:  The poor service and inefficiencies (waste) are caused by the way call centers are designed and managed.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and terminating bad service through application of new thinking . . . systems thinking.  Download Understanding Your Organization as a System and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  You can Twitter him at “TriBabbitt.”

I have seen it over and over again in service organizations.  The over-prescribed use of information technology in service.  I have already blogged about The Evil of Information Technology.  Where two command and control systems (buyer and seller of technology) create a scenario that almost ensures creating waste.

The issue at hand is that good customer service is pulled from service organizations at the points of transaction (or I like to call them “touchpoints”).  These often ignored front-line workers ARE the company to most customers.  How well the customer management process performs at the touchpoint is crucial to the performance of the organization.

“Lean” manufacturing likes to standardize as the first step and those using “lean” service like to start here also.  This is wrong first step in service industry.  Service customers bring a variety of issues to the table and standardization makes the customer fit into the company’s process, where what the customer wants is the service company to absorb their different varieties of demand.  With technology change management leading the way with scripts and coding to “standard work” service organizations can not absorb this variety of demand.  Worse, the software has locked in the waste.  Why?  Because when customers don’t get what they want they either go somewhere else or they complain and/or call back to get the service they seek (failure demand).

Organizational change management in service begins with understanding the work (beginning at the touchpoints) and the ability to absorb the variety of demand posed by customers.  This variety can only be absorbed by a human, not technology or scripts or standard work.  Command and control managers believe they should be the ones making decisions about the work . . . the work that they don’t understand.  A systems thinking manager understands that the best person to make decisions about the work is the worker and the job of the manager is to work on the system.  Only a human can absorb the variety of demand from customers and the human worker should determine what technology, scripts, standard work, etc. will be valuable to enhance the service.

How is your organization’s customer management process?  The stories are pouring in from readersof my articles and blogs.  This one from a reader in Indianapolis.  You just can’t make this stuff up.  He writes:

“I bought my wife a new touch screen cell phone from Sprint.  When she got it, she just didn’t like it (couldn’t text well, not user-friendly, etc).  Sprint’s policy is that any new phone can be returned for any reason within 30 days of activation (Feb. 17th for us).  On Sunday, March 1st, I called to initiate the return process only to find that the phone could only be returned via mail and not to a store.  When the return kit hadn’t come in the mail by Thursday (it was promised on Tuesday), I called customer service to find that I actually could bring it to one of two corporate stores in Indianapolis.  When I went to one of the stores the next day, I was informed by the completely imcompetent employees that in fact I could NOT return it to a store and had to go via mail again.  Now I’m coming up to the end of my 30-day refund period.  So I called customer service again.  I was transferred from department to department, put on hold while agents spoke to supervisors, transferred again for a 2 hour period until they eventually said there was nothing they could do.
 
I said, “Fine, then put me through to the disconnection department.”  Suddenly every supervisor wanted to do anything and everything to keep my business.  But I’d had enough.  Altogether, I spent 6 hours and 45 minutes on the phone over a 5-day stretch AND spent a useless trip to one of the corporate stores.  Low and behold, the return kit arrives in the mail the next day, I sent her phone back, and proceeded to AT&T where I was in and out in 20 minutes with a new IPhone and cell phone plan.
 
If someone at Sprint would have spent the time I deserved, I would still be spending by hard-earned dollars with them.  Now AT&T gets their chance.”

The only thing I would challenge the reader on was the “incompetent” employees.  Employees that are “incompetent” are only so because the systems they work in are broken.  Sprint does not understand that a customer draws value end-to-end, only a systems thinking organization would understand this.  The failure demand (progress chasing, rework,etc.) phone calls are driving up costs at Sprint and losing customers for good. 

My guess is that if command and control thinkers get a hold of this they will look for some heads to roll, but a systems thinker understands that only 5% of problems are associated with a worker and the other 95% comes from the system (management, work design, technology, etc.).  More training, rewriting scripts or new targets will not fix this problem . . . it is systemic.  A better leadership strategy is in order and it begins with a change in thinking from command and control to systems thinking.