OnTrac Operations Assurance Framework

Imagine the perfect operation! No people! Everything is automated and the outcome is highly predictable. Wouldn’t that be nice? Unfortunately, that is not the scenario in most operations today. Yes, bits and pieces have been automated, and several clever systems and procedures have been put in place. But still, people are the key to running the operation, and there lies the problem.

Management creates a strategy for the company and this is finally broken down into a series of tasks for individuals at various roles and levels. These tasks are parts of smaller processes, that in turn are parts of larger processes. Every individual in the process is counted upon to perform his/her task as per the required schedules. The task itself, when performed, should be of the appropriate quality. In order to gain efficiencies, some of these tasks could be automated. The process could be made more efficient through business process reengineering or through lean/six sigma projects. At times, roles and responsibilities can be changed in conjunction with the new processes (popularly called “transformations”).

Even when all of these are done, we are still left with a set of people who need to do a series of tasks on a sustained basis, failing which the desired results will never be achieved.

Example from Banks: A great example in recent times comes from the banking domain. It wasn’t too long ago, that visiting a bank’s branch was the only way to do most transactions. Among all the transactions, a vast majority were related to withdrawals and deposits. The entire banking system had systems and processes in place to handle customers (who stood in queues) to conduct such transactions. Those of us who remember this era, can relate to several unpleasant experiences when there were delays in such simple transactions. Either the clerk was not available, or took too long to service the customer ahead of you, or was waiting for some input from someone else, before proceeding to service the customer’s request. Lets fast forward to current times where we now use ATMs for withdrawals and deposits. Introduction of ATMs has significantly changed the landscape in terms of utilization of common banking services. It has improved convenience for customers by an order of magnitude. Now that the benefit has cascaded to all customers, we still experience issues. Customers experience several problems with ATMs such as non functional ATMs (due to technical problems, breakdowns, no cash availability etc.). Long queues can be seen in several ATM kiosks. At times, everything is fine, but the ATM is not available because the bank staff is loading cash into the machine (a process that can take 1 to 2 hours).

The glamour of big bang efforts: The act of reengineering processes and/or automating them is definitely glamourous. Those who are involved in such projects (especially those with high impact) end up achieving a high level of visibility in their respective organizations. This means more promotions or better compensations. However, a larger part of the job is to ensure that the new system or process is sustained over a period of time without the service quality suffering. If the bank’s staff is regular in its preventive maintenance schedule, chances of ATM breakdowns will be much fewer. If the time at which the machines are loaded with cash are adhered to (it should typically be done during non peak hours), inconvenience to customers can be minimized. These tasks are completely dependent upon people. Management needs to monitor that these tasks are done as per the routines they were designed for.

Key to sustenance in BPO industry: Taking this scenario to the BPO industry, there are several projects that companies undertake, to improve process efficiency. But once that is done, people need to run the resulting operation efficiently. For this, managers at all levels need to keep an eye on routine tasks that are supposed to be done. More often than not, managers keep an eye on the outcome through metric dashboards (e.g. they keep an eye on productivity, quality, customer satisfaction, sales, turnaround times, attrition, schedule adherence etc.). While these are important, managers also need to keep track of operational routines, the performance of which will result in better outcomes. These are routines that need to be performed by the staff, team leaders/supervisors etc. For example, managers need to keep track of team leader’s routines such as shift briefings, performance monitoring, leave planning, succession planning etc. Monitoring these routines is itself a process and requires the use of tools (such as a simple excel based tracker) or better software that provides a higher level of business intelligence. We at OnTrac are in the process of developing this software that supports our Operations Assurance Framework to help managers track these routines. Write to us at info@iamontrac.com if you want more information on it.

To conclude, the moral of the story is simple. Our premise is that whatever is the desired outcome, it is important to track not just the process outcome itself, but also the tasks that people do, that go as an input to drive the output. What do you think? Do share your thoughts in the comments below.

Monitoring is a key activity that determines consistency of output

But then, again, customers really do not care about all these problems. They expect predictability and reliability from the service provider. They have paid for this service and would like to see their money’s worth.

The case of a restaurant:

Lets take the case of a restaurant. Many restaurants start operations with a big fan fare with a focus on excellent food, service, menu items, hygiene, atmosphere etc. They attract customers and generate a good word of mouth. Over time thought, something happens to many of them (not all, but many). A slow and steady degradation of service takes place. Perhaps some of the waiters have become a tad lax, or the kitchen is a bit slower in service. Perhaps there is a broken piece of equipment that has not yet been replaced or, there is some garbage lying behind the restaurant that has not been cleared for a few days. Bottom line is that there will be a degradation of overall service, the service provider (in this case, the restaurant) may not even realize. However, customers start to see it immediately because they have multiple points of reference across two dimensions.

a. There is a significant time gap between their visits to the restaurant. Therefore, they can easily perceive the difference between the current visit and the last.

b. They are able to compare with many other restaurants, and therefore can judge the relative quality of service

On the other hand, the local management of the restaurant may view things differently. For example, it is possible that one of members of the kitchen staff leaves a bag of trash behind the restaurant one day. The management does not view this as a serious incident. But this incident provides other workers the license to do the same and very soon, there is a hugh pile of trash behind the restaurant. Another example is that of cleanliness. It is possible that the automatic dish washer breaks down. Therefore, the management hires extra hands to manually do the dishes. However, the quality of the wash is not the same. The dish washer is never repaired or replaced and the temporary workers become permanent. Each of these actions by itself adds a small delta to the degradation, and the management is not able to see it. But added together, it can have a tremendous impact.

The WHAT of Monitoring:

Coming back to the BPO industry, the same phenomenon occurs with respect to the quality of transactions. Left unchecked or unmonitored, a similar drift will occur eventually resulting in poor quality. Therefore, most BPO operations have quality monitoring processes designed to observe key elements of transactions (or calls) so that there is consistent output from the customer’s perspective. Typically, these processes involve a quality monitoring form with various parameters that define the transaction. A person from the quality monitoring team observes transactions or calls and rates them. This data (from a sample of transactions) is then observed and analyzed to check for deviations. All of these typically address the “WHAT” of the quality monitoring process. But in the battle for better service quality, this is not enough. Further improvements can be done by overlaying HOW monitoring is done.

The HOW of Monitoring:

Strategic monitoring deals with the HOW part of the activity. Monitoring of transactions must take into account two aspects i.e. observations when the work is being done, and observations after the work has been done. Both of these will provide very different sets of insights. The first type of monitoring is called Synchronous Monitoring because the act of observing and the work are done simultaneously. The second type is called ASynchronous Monitoring because the two do not occur together. Further, in voice processes (unlike data processes), there could be two types of synchronous monitoring i.e. one where the associate knows he/she is being observed (side by side) and one where he does not know he/she is being observed (remote live).

Monitoring processes must involve a ratio of different types of observations based on the requirements. Lets take two different examples:

1. Data Processes: Lets say that the productivity level of an associate is not up to the mark. However, the quality of work is quite good. One of the best way’s to check for low productivity is to physically observe (synchronous monitoring) the associate. It is possibly that he/she may not be using the knowledge base correctly, or may be having issues with certain types of transaction etc. So, the proportion of synchronous monitoring should be higher in the mix (of synchronous to asynchronous monitoring).

2. Voice Process: Lets say that the analysis of an associate’s quality scores shows that his quality scores typically go down during the latter part of the shift. This, at first appears to be strange. However, a higher proportion of side by side (synchronous) monitoring could reveal the roadblock that occur due to physical impediments such as a change in lighting during the latter half of the shift, or the arrival of another team that tends to create distractions in the second shift etc. It could also be associate fatigue or some other factor that can be caught only by physical observation.

The strategy therefore involves creating the right mix of the two types of monitoring. Therefore, Team Leaders and Quality Analysts should have a monitoring plan that takes into account the proportion of synchronous or asynchronous monitoring that need to be done for each associate.

The link below provides one such template for monitoring both data as well as voice processes.

Monitoring Template

Money down the drain?

Prior to the advent of the Japanese automobile industry, the focus of the automobile industry in the US was on the production of large cars or gas guzzlers as they were called. Then came the oil shocks in the 70s and fuel efficient cars suddenly became the rage. As economies recovered, larger vehicles came back in vogue, although they were also a lot better engineered. In recent times, with the price of oil crossing $100 several times, fuel efficiency has once again became a focus are for automobile manufacturers.

The learning from this is that whenever a resource becomes scarce, its usage needs to be moderated carefully. Whenever customers feel the pinch of higher fuel prices, they demand fuel-efficient automobiles.

What does this have to do with the BPO industry? Well, we may not be producing cars, but whatever we produce, clients are now demanding that we do it more efficiently. Post recession, clients have restructured themselves to operate more efficiently. Therefore, there is a trickle down effect of this demand for efficiency to the BPO industry. Clients are demanding better pricing or better quality for the same price. As the industry matures and its rate of growth slows down, the companies that will survive are those that can do “more with less”. So what does this mean for the BPO industry?

Focus on Service Efficiency:
Service efficiency eventually refers to the cost of providing service to the client (this cost include all aspects of service delivery, but for the purpose of this article, we will focus on floor operations). In the early days of the industry, service providers focused primarily on business acquisition. The idea was to become as big as possible, in as short time as possible. Therefore, the types of work that they acquired from clients, and the way they managed that work was not the most efficient. There are several examples of third party companies acquiring captives, with the primary objective of “bulking” themselves up. But as times got tougher, they realized that the focus now needs to shift towards operating whatever they have, more efficiently.

Components of Service Efficiency:
From a floor operations perspective, there are three areas that provide an insight into the company’s operations i.e. productivity, quality and inventory carrying costs. Most client-facing metrics will eventually be part of these larger areas. The challenge for a BPO company, is to be able to meet these metrics with lower number of resources, and/or, cheaper resources.

Lets take the case of quality. Many BPO operations (especially in the non-voice segment) are able to meet stringent quality norms set by clients. During the first phase of their evolution, they used expensive resources to get this done. During the second phase, they used cheaper resources, but developed much better training and coaching mechanisms. In the third phase, they used even cheaper resources, but changed the way they monitored quality. Their sample sizes increased and they specifically started to distinguish between internal quality and external quality. External quality, is what the client really sees and measures. Internal quality refers to rate at which errors are identified through internal quality checks, before the external client can discover them. However, the process of improving internal quality is resource intensive, given that it requires experienced people who could have been deployed into core production. The next phase therefore, is to eliminate internal quality checks and measures. This will require an extremely high degree of accuracy right at the point production is completed, eliminating the need for internal quality. So what does one need to do, in order to use trained low cost resources with zero internal quality checks? The answer lies in a grey area combining technology with human behavior.

1. Deskilling: Deskilling a process to a level where individual components can be automated has become a mantra in the recent past. By deskilling, a complex task can be broken down into simpler activities that can be done by resources that do not require a high degree of skill (this is quite similar to what Frederick Taylor did over 100 years ago at the Bethlehem steel company). The beauty of this process is that it gives companies the ability to further outsource specific pieces of work, to other service provider who focus on providing services either from geographies that have cheaper resources, or who focus on specializing in that type of service, or both. For example, a company that worked in the area of mortgages for a large client, figured out a way to deskill the work being done at their office in Mumbai. As a next step, they figured out a way to outsource a specific component to another company that specializes in documents tagging and that was located in a smaller town. This way, they reduced their cost by about 15%.




2. Technology: So what does technology have to do here? Without technology, it would be quite difficult to outsource parts of work to be processed. But a bigger benefit is the reduction of cycle time and improvements in quality that could be achieved. In the above example, the company automated the process of looking through the state laws handbooks for restrictions on property sale at various zip codes in the US. This process shaved off a few minutes from the process, thereby giving the company another about 10% of savings through improved productivity. One need not develop expensive software to automate. There are several other examples where simple macros have helped companies reduce cycle times or improve quality.




3. Behaviour: While there are many people who do not like to hear it, but most work done by people (in any industry) is routine in nature (though there are certain types that are not). Whether it is a taxi driver ferrying a passenger, a software programmer writing code, a BPO associate processing a transaction, work tends to be routine. A well-known business personality once exclaimed that it a CEOs job was routine, because he had been the CEO of several companies and had seen it all. The problem is that human beings are not wired to do routine stuff. We like new food, new clothes, new movies and also new work. Therefore, getting people to stay focused on doing routine jobs, so that physical or emotional roadblocks don’t get in the way is a challenging affair. This is where management comes into the picture. It involves doing a wide range of activities (which are again routine) to ensure that people are happy and productive at their work. More the deskilling, more routine the job. Therefore, it becomes all that much more important for managers to constantly maintain “people connect”.

This trio of Deskilling, Technology and Behaviour is the key to improving service efficiency. Specific implementation of these across various areas will vary, but that tough job is for the managers of the business.

Every business dreads the day when its operations comes to a standstill due to reasons completely beyond its control. The damage to the business in such circumstances could be enormous. It can even lead to the company ceasing to exist. We are obviously referring to the impact of the current situation in Egypt on its fledgeling BPO industry. Till about a week ago, Egypt was a poster child and an example of the enormous potential that North Africa holds with respect to tapping the BPO industry. Several companies have set up shop at various locations in the country with cities such as Cairo and Alexandria being attractive destinations. Egypt is a surprisingly multilingual country. Many companies provide support in English, French, German, Spanish etc. Not to be left behind, some Indian BPOs have also set up operations in the country. Everything was great, till last week arrived.

The current situation is different from, say, a natural calamity such as an earth quake or a tsunami. Natural calamities do not have politics associated with them. Also, they are immensely “forgivable” by investors due to their very nature. However, the case in Egypt is different. This is a case of civil unrest, that can potentially have a longer impact on the industry at large. It is interesting to observe how some BPO companies tried to keep their operations going inspite of such challenges. Each company seemed to have its tolerance limits.

Many companies are new to the industry. They either have no business continuity plans, or, have very rudimentary ones. At the first sign of trouble, operations were disrupted. We would hazard a guess, that perhaps 80% of companies would fall in this range. We would also guess that most of these companies would be less than 2 years old and therefore have not had enough time to develop mature operations. Having said that, there are others who have leveraged their global expertise. They have quickly invoked strong business continuity procedures and transferred work to other geographical regions including India and Eastern Europe. They also kept sufficient number of people at the office given that there were arrangements for people to stay for a few days within the premises. However, with the failing technical infrastructure that resulted from disruptions in telecom lines and internet connections, companies had to resort to alternate modes of service. An example is that of a process in one company which quickly shifted to fax as a primary mode of support for its customers. Agents were “retooled” within a day to support such queries. Slowly, this too died its death as fax was no longer possible. Interestingly, during this period, the companies that transferred support to other geographies, also made arrangements for technical knowhow to be readily available in a “cloud” and not at servers located in Egypt. This was a great decision because data stored in the cloud was easily accessible to the other geographies. There is also an instance of a company flying out its subject matter experts to an East European destination, where they could provide necessary support to the local agents. Of course, at some point, even companies with such excellent BCP plans will throw up their hands, as is the case now. Sadly, almost no BPO company is able to continue providing services to its clients. We know of companies actively involved in getting their foreign nationals out of the country and most of these employees will never return again. They have had to leave their belongings, barely managing to get back along with their passports.

At this point, it is very difficult to say what will happen both in the short and long terms with respect to the industry. If stability is restored in the country in the next few days, and the technology infrastructure assumes normalcy, this might just be a blip in the long term. However, if this continues, the BPO industry will probably be dead for a long time to come in Egypt.

What does it take to keep employees busy?

A major determinant of the viability of any BPO operation is employee utilization. Obviously, when this number is low, it would mean that the operation is saddled with excess capacity costs. Therefore, an important objective of every operation, is to ensure that employee utilization is optimal at all times.

Simple Process with one type of work: The drivers for employee utilization in processes where the staff performs only one type of work, are limited. It primarily depends upon the volume of work, the number of people and their productivity. Its fairly obvious that if the volume of work increases, the utilization rates will increase. If the number of people are more than required, the utilization will decrease. Ironically, if productivity is high, it will tend to decrease utilization. Now lets assume that productivity is at the required level. Lets also assume that the work arrival rates are erratic i.e. it is not really possible to accurately predict how much work will arrive at any point in time. In such a scenario, a vast majority of operations tend to overstaff, to compensate for spikes. This automatically leads to lower utilization. What can be done in this case?

The answer is quite simple. Here is an example:

Pre-Scenario:

No. of inbound transactions/calls in a day (of 8 hours): 7500

Average Handle Time (or Average Processing Time): 10 minutes

Total Workload per day = 7500 x 10/60 = 1250 hours

Assume staff works for 8 hours. In that case, No. of people required = 1250/8 = 156 (approx)

Total number of people in the team on floor = 212

Staff Hours available per day = 212 x 8 = 1696 hours

Utilization = 1250/1696 = 74%

**We are ignoring shrinkage so that we can keep the calculations simple for illustration purposes

Post Scenario:

The Geese Strategy: When geese fly long distances, they do two things. One: They fly in a delta or V formation. As a group, this provides them with a higher lift. Two: They exchange places i.e. the leading geese falls back after some time, and another takes its place. The trailing geese require lesser energy because they get the benefit of the lift provided by the leading geese. This strategy can be used as follows:

Divide the team into three groups. The utilization target for group A will be 90%. For group B, it will be 85% and for group C, it will be 80%. Rewire the ACD (or the transaction routing system) such that all transactions/calls are first routed to group A. Once the target occupancy for group A is achieved, route the overflow volume to group B. When group B achieves its target occupancy, route the remaining volume to group C.

In this strategy, it is also important to rotate staff every couple of hours between the three groups, so that each individual is not exposed to high occupancies all of the time. The numbers then work out as follows:

Group A

Target Utilization: 90%

No. of people: 71

Staff Time available: =71 x 8 hours/day = 568 hours

Total Workload handled: 568/90% = 511.2 hours

Group B

Target Utilization: 85%

no. of people: 71

Staff Time available = 71 x 8 hours/day = 568 hours

Total Workload handled: 568/85% = 482.8 hours

Group C:

* This group only needs to handle 256 hours of work (1250 – 511.2 – 482.8).

Target Utilization: 80%

Workload = 256 hours

Therefore, staff hours = 256 / 80% = 320 hours

Therefore, no. of people required = 320/8 = 40

The total number of people now required  = 71 + 71 + 40 = 182. That is a saving of 30 people, who could be used for other purposes.

With this strategy, people will be busy enough, while at the same time, the erratic flow can easily be handled (there is enough buffer in groups B and C). The utilization target rates here are only indicative and should be adjusted downwards to suit the needs to the business.

Processes with Multiple Tasks: In some processes, the staff handles multiple types of tasks e.g. inbound and outbound calls, or inbound calls and transactions etc. The general thought process is that multiskilling employees allows us to get better utilization. While this is true, we can further improve utilization by using the Geese strategy as follows:

Lets take the an example of an operation where the staff has to perform three types of work i.e. handle inbound calls, make outbound calls and handle inbound transactions. Any employee, at any point in time, could be doing any of these three tasks. The problem is that employee utilization in this process was at a low 73%. Again, the issue here is that it was difficult to predict the arrival of transactions or the inbound calls. However, outbound calling was controllable by the process. Here is the data:

Pre-Scenario:

Inbound:

No. of calls arriving per day: 500

AHT: 3 mins

Total workload =500 x 3/60 = 25 hours

No. of people required = 25/8 = 3 (approx)

Transaction Processing:

No. of transactions in a day: 1000

Average Processing Time: 20 mins

Total workload = 1000 x 20/60 = 333.33 hours

No. of people required = 333.33/8 = 42 (approx)

Outbound Calling:

No. of calls to be made per day: 600

AHT: 5 mins

Total Workload = 600 x 5 /60 = 50 hours

No. of people required = 50/8 = 6 (approx)

Total people required = 3 + 42 + 6 = 51

Actual no. of people on the floor = 70

Total available staff hours = 70 x 8 hours per day = 560

Total workload = 25 + 333.33 + 50 = 408.33 hours

Utilization, therefore = 408.33/560 = 73%

**We are ignoring shrinkage so that we can keep the calculations simple for illustration purposes

Post Scenario:

In this case, we can see that the largest volumes are in the transaction processing work. Therefore, create a group A, that will only handle transactions. Target utilization should be 90%. Group B will consist of people making only outbound calls. Their target occupancy will be 70% and the third group (C) will be only take inbound calls. Group C’s target utilization will be about 65%.  The point of keeping sufficient buffer in group B and C is to take care of excess work that could come to group A. If the utilization goes above 90% in group A, the excess work should be moved to group B and then to group C.

Group A (Transactions only):

No. of people: 47

Staff time available = 47 x 8 hours per day = 376 hours

Total workload = 333.33 hours

Utilization = 333.33/376 = 89% (almost 90%)

Group B (Outbound only):

No. of people: 9

Staff time available = 9 x 8 hours per day = 72 hours

Total workload = 50 hours

Utilization = 50/72 = 695 (almost 70%)

Group C (Inbound only):

No. of people: 5

Staff time available = 5 x 8 hours per day = 40 hours

Total workload = 25 hours

Utilization = 25/40 = 63% (almost 65%)

The total number of people now required  = 47 + 9 + 5 = 61. That is a saving of 9 people, who could be used for other purposes.

With this strategy, people will be busy enough, while at the same time, the erratic flow can easily be handled (there is enough buffer in groups B and C). The utilization target rates here are only indicative and should be adjusted downwards to suit the needs to the business. Also, it is important to rotate people across these three groups every 2 hours so that they are not all exposed to high occupancy rates all the time. In this case, multiskilling is a big benefit because it enables such rotations.

Smart routing strategies (such as the Geese strategy) can contribute significantly to help achieve better employee utilization, while helping to use excess resources for other value added activities

Domestic BPOs in India operate under interesting circumstances. There are a wide variety of them offering services related to customer service (inbound and outbound voice processes), financial and banking related back office transactions. The domestic IT-BPO industry is expected to grow between 15% to 17% this year (Source: Nasscom) and should reach US$ 1.8 Billion by 2013 (Source: Gartner). There is a hugh focus by many large companies in providing BPO services to the domestic market. Terms such as “Rural BPO” have now become the buzzword in India today.

While this growth is significant, it does bring about its own set of challenges. A key problem of a high growth industry is employee retention. One would assume that the talent retention problems afflicting BPO companies with domestic operations, would not be as severe as those with international operations. However, many companies in the domestic sector seem to have a far more severe problem with respect to this issue. Domestic call centers are the most affected with average tenures running at about 4 months in some companies. This obviously means that these companies will have challenges in providing the quality of service that their clients expect of them. In order to encourage talent retention, companies are trying a number of different techniques, many of which have already been used in international operations. The success rate, as reported by companies, has not been very encouraging. What then, is the root cause of such low retention?

In order to understand why domestic operations suffer from such situations, we need to understand the nature of the employees they hire. Lets take the example of a BPO company that provides call center services. The nature of work is related to standard customer service jobs including billing, address change, activation etc. Given below, is the profile of one of their employees, Gopal (name changed for obvious reasons).

Gopal’s Profile:

Gopal is 20 years old. He has studied till the 12th Standard, but never really took the 12th exam. His father was a mechanic at an automobile workshop and had an annual income of Rs. 200,000/- (Approx US$ 4500 per year). His father never finished high school. His mother is a home maker, but does odd jobs on and off, primarily as a domestic help. His mother studied till the 4th grade, after which she dropped out. Gopal has an older brother who does not hold a steady job. He is also a mechanic and has worked at various auto garages. He took up a job as a driver for a while, but went back to being a mechanic. Gopal’s younger sister, who is 19 years old, stopped going to school a few years ago. She works in a garment factory. His extended family consists of various cousins and uncles, all of whom are normally employed for about 8 to 10 months in a year. During this time, they tend to change 2 to 4 jobs. Most women either do not work, or hold jobs similar to that of Gopal’s mother. Gopal was smart and managed to learn English in an otherwise poor education system. While he would never qualify for a job in an international call center, his communication skills are sufficient for domestic centers. Gopal has held 3 jobs in the last 18 months, all of which were in domestic call centers. Each time he quit a company, he never informed his employers. Also, he quit on the day he received his salary. When asked a question as to why he quit, he could not pinpoint a specific reason, but cited many such as inconvenient work timings, stress at work, uncaring supervisor, better salary elsewhere etc.

There are many Gopals working in the BPO sector and they are the driving force behind the industry. But they also, unwittingly, place dampeners on their own growth and that of the industry through frequent job changes. What is it about the Gopals, that makes them behave the way they do? During the course of our assignments with clients in the Domestic BPO sector, we have had several realizations:

Reasons for Gopal’s Behaviour:

1. Emotional Maturity: Gopal’s background is such that he did not have the opportunity to emotionally develop himself to handle various situations. Both at school and at home, he probably never had the right role models, whose examples he could emulate. Therefore, his reactions to various situations he encounters, are not well thought through. For example, his inability to plan and prioritize would result in a perception that the work is very stressful. Also, poor social skills to manage various stakeholders at home and at work, would place addition pressure on him.

2. Peer group: Gopal’s peer group would probably have a similar profile to his own. Even as a group, their collective knowledge and maturity would still be limited, primarily due to lack of exposure earlier in life. They may not, for example, feel comfortable speaking their mind to the management. They will find it easier to stop coming to work. Its far easier for them to advice each other to quit companies rather than stay and resolve problems.

3. Job versus a career: This is, by far, one of the most important contributors to Gopal’s behavior. As of today, many domestic BPO companies are founded and run by professional managers whose background is quite different from that of Gopal. These managers are professional and understand the concept of building a career in a company over a longer period of time. However Gopal does not understand this concept. He has seen his brother, cousins and uncles view their own work as an independent series of “jobs”, rather than, as an integrated set using which one can build careers. To his father, who is a mechanic by profession, it did not really matter where he worked, because he will be doing the same type of work. There was no talk at home about career advancement, promotions etc. Given that this is the environment in which Gopal grew up, it is not surprising that he views his work as a “job” rather than as a “career” that can be assiduously built over time. Unfortunately, not all managers are able to recognize this because they have never been exposed to Gopal’s life. Therefore, they may continue trying retention techniques, that will not work on Gopal. What then, can be done, to retain Gopal in the company?

Solutions:

Solution 1: At OnTrac, we have helped domestic BPO companies address retention by creating a career simulation that new joiners will undergo as part of the onboarding process. This simulation lasts for a day, during which, participants need to make decisions for a hypothetical employe who faces a variety of realistic scenarios at the workplace. These could include an unsympathetic supervisor, high workload that lasts several days, frequent changing of shifts, working overtime, night shifts, temptations from friends to join other companies, calls from head hunters etc. Participants are divided into groups. Each group will need to make decisions based on the scenarios they receive. The decisions they make will determine the next scenario they receive. The decisions will also determine the career progress of the hypothetical employee. Finally, the instructor shows the right decisions that should have been made, to maximize career growth. The objective of this simulation, is to help participants:

a. Prepare for the situations they are likely to encounter in the workplace so that they can respond appropriately

b. Get them to understand the right decisions that they should take when they encounter these situations

c. Help them see the value of building a career and not look at their work as “just another job”

Further, we encourage our clients to conduct “mini” simulations every quarter to help employees remember the concepts of career building. This is to counter the recency effect, that afflicts most people, where they tend to remember events that took place in the recent past. Therefore, if employees have any reason to quit because of events in the recent past, it would be addressed by the simulation.

(The above is a generalization based on OnTrac’s consulting assignments with several clients in the domestic BPO sector. There are people with different profiles who exhibit other sets of behaviors)

Solution 2: Another solution, is for companies to de-skill tasks as much as possible. This provides two key benefits to companies. The first benefit deals with the expansion of the available workforce pool. Deskilling makes the work simpler and hence the number of people who can potentially do the job expands significantly. Therefore, the impact of attrition is reduced considerably. Also, the effect of wage inflation on the profitability can be brought under control. The second benefit is the potential to automate some of the operations post deskilling. When this occurs, it further reduces dependence upon high skilled workers, thereby reducing the impact of attrition. Deskilling, in general is somewhat harder to do because it involves re-engineering processes and will impact various stakeholders including customers. Also, it requires a higher degree of management. Therefore, it is an activity that needs to be well thought through.

Conclusion:

Tacking retention in companies catering to the domestic market requires a different set of strategies as compared to those serving international markets, primarily on account of the talent profile. A lift and shift of methods that worked in international BPO operations may backfire. Therefore managers need to be able to look deeper into the profile of people they hire. They need to understand the concerns and aspirations of employees before deploying strategies.

The cost of attrition

A lot has been written and discussed about attrition. The term conjures, in general, a serious operational problem for BPO businesses. At the current rates in the industry, it is indeed a serious issue. But there is an unsung positive impact of attrition too. Without this “necessary problem”, most BPO operations would be inherently unprofitable because they currently operate in an expanding industry, which is unable to staff itself adequately to keep up with the growth. An employee would need to be paid 30% to 40% more for doing the same job in his third year of work (assuming 15% annual pay rise), unless he gets promoted or quits the company. But more about this later. What this article refers to, relates to operation’s inability to staff itself appropriately given high attrition levels. This in turn leads to cost of lost opportunity and performance problems. Lets take an example:

Cost of Lost Opportunity:
Lets say that the BPO industry is growing at 30% annually, in terms of headcount (for the sake of this example, assume that the growth is uniform across all sub segments within the industry, and the type of resources being used by all companies, is uniform).

Lets say that the number of people working in the industry is 100. Therefore, in year two, the industry will need 130 people, and in year 3, it will need 169. Now assume that the supply of new people entering the industry is growing at only 15% (on the base of 100). Therefore, at the end of year 1, there will be a shortfall of 15 people (130 – 115). At the end of year 2, that shortfall would widen to about 37 people. Obviously, this means that existing resources will be coveted by competitors in the industry, resulting in an increase in salary. However, the BPO company’s revenue (or notional revenue in case of captives) will not increase and will, in most cases, face a downward pressure due to various factors such as increased commoditization, competition etc. Therefore, a revenue decrease coupled with an increase in resource cost will naturally affect the profitability of the company. Now imagine a scenario, where the company is able to replace employees every 2 years (assuming the company is good at sourcing). In such a scenario, it will be able to maintain a much lower cost of delivering services (due to lower employee costs) as compared to its competitors. Therefore, there is a case where some attrition is good for the company. When an operation is not able to staff itself appropriately (through poor sourcing and/or high attrition), it results in revenue leakage i.e. the company will have to forgo revenue it could have earned. Therefore, many companies end up paying higher salaries, rather than foregoing the revenue. While this may work in the short term, it impacts profitability in the long term.

Cost of Poor Performance
But apart from this cost of lost opportunity, there is another cost that is significant. This is the cost of poor performance and this occurs much before the employee attires. It is a well established fact that a disengaged employee will most likely quit the company and look for other options. Or, he may stay in the company and bide his time, but will jump ship at the first available opportunity. The problem starts about 2 to 3 months before the employee quits. At that point, we have observed that the disengaged employee no longer cares about his performance and therefore affects the profitability of the company. Here is an example:

Lets say that a company has an attrition rate of 50% on a monthly annualized basis (50% is quite optimistic given today’s industry status). This means that about half the company is being replaced at the end of every year. Assume that productivity drops by 20% as soon as the employee decides to leave. Therefore, over the year, half the company is working 20% below its actual capacity. In order to compensate, the company must increase its staff strength by 10% in order to compensate for this loss (see calculation below).

Ideal Situation:
Assume No. of Employees=100
Assume productivity rate = 10 (e.g. 10 transaction per day)
Total production per day = 100 x 10 = 1000

With Attrition:
No. of employees disengaged = 50
Productivity rate = 8 (20% loss)
Total production per day = 400

Production of the other half who are engaged = 500 (50 people x 10 per day)
Grand total production of all 100 employees = 500 + 400 = 900

This is a loss of 100 units (1000 – 900) and in order to make up, the company needs to hire 10 more people (100 / 10) who will work at the desired rate. This has a direct impact on the bottom line of the operation due to higher salary costs. This example does not take into account other factors such as the time taken for new employees to ramp up, the cost of poor quality of production by disengaged employees (leading to higher auditing costs to maintain quality) etc.

The question therefore, is, what is the right level of attrition for a company? If the attrition levels are high (as the the case in the industry today) what strategies can be used to bring it back to acceptable levels? An even more intriguing question is, how can companies motivate employees to leave, in situations where attrition levels are very low. We would love to receive comments from our readers on this topic.

Plug in a measure. It will improve!

The maturity of an operation is generally, directly proportional to its ability to track and measure various components within itself. However, this is easier said than done. The easiest part of measuring any operation, is the eventual outcome such as total sales, customer satisfaction, productivity, quality, accuracy and so on. These are the parts that the consumer of the service is actually paying for, and hence likes to see. Therefore, most operations start by creating reports and dashboards that provide insight into these “output” metrics.

As the operation evolves, it becomes important to start measuring the input variables that impact the eventual outcome. This is where problems occur, because identification and measurement of these variables are not always straight forward (although it is not difficult either). Companies use techniques such as six sigma, on a project specific basis to solve such problems. But these are initiatives that are usually driven at an organization wide level. So how can people involved in core operations identify and come up with ways to measure input variables?

Need for measuring input variables:

The need for measuring input variables usually occurs because of specific problems that the operation encounters. For example, a company had problems getting trained resources onto the floor and therefore created a system of measuring all stages from recruitment to resource deployment. They knew exactly how many people had offers to join, how many actually joined, dropout rates during training, assessment scores etc. All of these were published in dashboards and were made available to various stakeholders. These were relatively straightforward to measure, because the process of recruitment and onboarding is well defined. What if this is not so? Lets take a couple of examples.

Example 1:

Angry Employee

1. While the team leaders had good intentions, they were not really great at listening and giving feedback. Employees often felt that they were not listened to and that the TL did not understand their concern.

2. There was no follow up mechanism in place. Each feedback session was independent of the other and action points from the previous session were not followed up in the next session.

The solutions were obvious now.

a. A training program was put in place for TLs on how to listen and address employee concerns.

b. A live “satisfaction” dashboard was instituted within each team. Team members could rate their interaction with the team leader (anonymously after a few days of their interaction), on their satisfaction levels with him/her. This was made very simple with a visual of a thumbs up and a thumbs down image. Therefore, TLs received a constant update of what their team members felt about such interactions. The goal was to get a higher proportion of thumbs ups.

c. A simple tracker on a spread was introduced, which the TL needed to fill after every interaction. This tracker was a to-do list with dates on it. During the one-on-one meeting, TLs would need to fill in any item that he/she needs to work on and get back to the team member. During the next meeting, the team member would need to close the issue in the presence of the TL. The tracker could extract the percentage of open items, which was reviewed by the manager.

The results of this initiative were stunning. Employee complaints virtually vanished within about 2 months. A big benefit of reduced employee complaints was increased productivity and quality scores (it made sense because happy employees tend to be more productive). Over time, the client stopped using the tracker as it was not necessary any more, though the satisfaction dashboard is still alive and well.

Example 2:

Team Briefing

Since both these modes of communication were in place, it was not clear why associates continued to make mistakes. One of the managers decided to observe a pre-shift briefing and came to a team’s bay unannounced at the beginning of the shift. To his surprise, he observed that there was no team briefing done. When he quizzed the team leader, he was told that there was nothing new to discuss, and hence there was no briefing. The manager decided to come to the team bay the next day too. Perhaps due to his previous day’s visit, the team leader conducted the shift briefing this time. However, he did not cover any process related changes. The manager then decided to institute the following:

1. Measurement the percentage of days team briefings are done in a month
2. Tracking the agenda for each briefing

As soon as these were put in place, the manager started to receive a report of the percentage of working days in a month, team briefings were conducted by team leaders (e.g. Team briefings were conducted on 80% of the working days this month). Further, he also received inputs on the percentage of times, process related updates were covered in these briefings (e.g. 80% of briefings this month covered process related updates). The mere measurement of these led to increased number of team briefings and better coverage/discussion of process related changes within the team. The results were, of course, self evident. The quality problems reduced significantly, as the accuracy increased. Continuity is key here and therefore, the manager ensured continuous monitoring of these metrics.

There are many other examples where tracking and measurement of input variables lead to improvements in output variables. The trick, as mentioned earlier, is to identify them, and put a reasonable measurement system in place.

The management process consists of three key components i.e. Capability of managers, Managerial Capacity available and Maturity of managerial operations.

The Trio of the Managerial Process - Capability Capacity Maturity

Manufacturing and ITES/BPO Production ResourceThe manufacturing industry holds many learnings for. For instance, a production resource i.e. a machine, is completely "owned" by operations. One can argue that the factory worker is also a resource, but then again, labour costs could be less than 10% of total costs in many a manufacturing setup. In highly automated manufacturing setups, labour costs could be lower than 5%. In a service oriented business such as ITES/BPO, labour costs could could be upwards of 60%. Therefore, the equivalent of the production resource (i.e. the machine) in the ITES/BPO setting, is the employee; because without him, there is no production. In a manufacturing setup, operations will not just define the specifications for the machines it uses for production, but will also be responsible for its periodic maintenance, to maximize uptime, productivity and quality of output. Does the same phenomenon take place in the ITES/BPO industry?

BUSINESS REQUIREMENT

Unmaintained machines, eventually produce faulty products or do not produce anything at all. They either lose calibration, or incur downtime. In the ITES/BPO business, a similar situation occurs when the production resource (the employee) is not maintained. One of the major reasons businesses face operational challenges (in any function) is a lack of alignment of skills and knowledge with respect to specific job functions. Closing the gap between the required skills and what actually exists amongst employees is a constant endeavor, and is an operation in itself.

OPERATIONAL CHALLENGES – LOSS OF PRODUCTION TIME

One of the biggest challenges with traditional capability building methods from an operations perspective, is the loss of production time. Upskilling 15 people for a period of 2 days is equivalent to 30 days of production time. Flipping this around, this is equivalent to one person not working for 30 days. Usually, this is an unacceptable situation.

Now consider an operation with a 100 people and assume that each person undergoes some form of upskilling initiative for 10 days a year. That is equal to 1000 days of production time. This is a large investment by any stretch. Therefore, smart companies adopt methods that are much more fine-tuned in terms of their efficiency and effectiveness.

When we refer to production time, we are also including the time of supervisors, managers and the leadership team.

WHO OWNS THE SPECS FOR PRODUCTION RESOURCES?

Most companies have systems through which they identify the competencies (and hence knowledge and skills) required for various roles. The ownership for these systems, unfortunately, lies with HR or Training functions. In the services industry, the “employee” is the production resource (unlike in manufacturing, where it is the machine). A production resource is the responsibility of operations. In a manufacturing setup, operations will get involved while acquiring a machine. Operations managers will define the specifications of the machine and once it is acquired, will ensure that it remains production worthy all the time. The same should be true of the services sector. The “specifications” that we spoke about a few moments ago, are nothing but the competencies of the production resource. If operations does not take ownership of defining this “spec”, the results are inevitably inaccurate because HR and Training do not run Operations. Operations runs Operations!

In smart companies, we have observed that heads of operations pour through competencies required for each role and are intensely involved in defining the knowledge and skills required for various roles. They constantly evaluate the current capabilities of their resources vis-a-vis a set benchmark. This involvement by operations, introduces a high level of accuracy because a clear distinction is made between “must have” knowledge and skills, versus “good to have”. Therefore, the total amount to capability building actually reduces. It is very difficult for HR to make this distinction.

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CASE STUDY: The training department of a company approached us to help fix certain problems related to customer centricity among employees.  As per the initial brief given to us, there were many complaints from customers about employees not being customer centric i.e. they lacked warmth, did not greet well enough, did not proactively offer additional help etc. The training department was quite vocal about the requirement for better customer service skills.

However, we were aware that this company is a price-value leader in its segment. Its customers probably get the best possible price at this company for a certain category of products. Therefore, we challenged the training function by asking them what possible difference will it make to sales (or profitability), if customer centricity among employees improves? We went further and asked, will it make a difference to sales and profitability, if customer centricity actually deteriorates?  To get answers to these questions, we were put in touch with the operations function.

The discussion with the operations function resulted in a clear decision. Any improvement or reduction in customer centricity from its current levels will NOT have any impact on the sales and profitability. While it is nice to have employees who are customer centric, operations was absolutely sure that customers reach out to them because of one fact alone, that is price. All that the company had to do, was invest in being the the price-value leader in its segment.

We of course, did not get any business from that company, but we received tremendous good will, as we saved them a significant amount of money. At the end of the day, Operations was able to distinguish clearly between “must have” and “good to have”

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THIS IS LEARNING NO 1  - TOTAL NUMBER OF CAPABILITY BUILDING INITIATIVES REDUCES WHENEVER OPERATIONS TAKES OWNERSHIP

MAXIMIZING PRODUCTION TIME

Earlier, we spoke about the fact that 15 people attending a two-day program amounts to 30 days of production downtime. Operations, at the end of the day, is responsible for maximum possible production uptime. Therefore, this should be a cause of concern.  If it is a cause of concern, then there are two options; A: Do not send anyone for any capability development initiatives or B: Send them. The problem with option A is similar to not maintaining a machine in a manufacturing setup. A machine that has not been maintained or calibrated is bound to become a liability over time. The problem with option B, is the cost of lost production. Assuming that Operations owns capability building, they would choose option B, but implement it in a way that minimizes production downtime.  Therefore, smart operations people dig further and realize that there are two distinct types of capability building that need to be done.

Knowledge: The first type of capability building is with respect to building core knowledge on various topics. Knowledge is easy to impart and there are multiple channels available. Classroom based upskilling is one of them. Others include elearning, books, articles, magazines etc. The best part about knowledge is that it is binary. Either you know it, or you don’t. Therefore, it is imminently “testable”.  Whenever operations is involved, they will choose the best channel for disseminating this knowledge. Some of these channels WILL require employees to be away from work (thereby resulting in downtime) . But others can be done asynchronously, with minimal loss of production time.

Skills: The second type of capability building is with respect to building skills in various areas (such as technical skills, or behavioural skills).  By their very nature, skills are best developed through practice. Imagine teaching someone how to swim using powerpoint slides and role plays – it won’t work. Therefore, smart companies will try to address this issue through CONTEXTUAL capability building i.e. through systems such as coaching on the floor, on a one-on-one basis.  When people don’t leave work to learn, production uptime is maximized

THIS IS LEARNING NO 2 – WHEN PEOPLE DON’T LEAVE WORK TO LEARN, PRODUCTION UPTIME IS MAXIMIZED

MAXIMIZING ROI

Every investment needs to have a return and the same is true of capability building initiatives. Production time is precious currency, and it should buy solid return for operations. However, most skill building initiatives that are classroom driven, may not be able to offer this return (remember learning swimming through powerpoint ?). As was mentioned earlier, skills do not typically fall into the “know” and “don’t know” categories. People usually have a range e.g. some are great at prioritizing while others are not, some are great at building rapport on calls, others are not. Getting all of them into a classroom for a standard sessions, may not add value. Secondly, participants need to be able to take the generic concepts taught in class and apply them to their own specific scenarios. This capability may not exist in all participants. This is an inherent defect in the “one-to-many” models. Therefore, that leaves us with the “one-to-one” capability building model, and this provides the maximum ROI. Individuals can be taught to use prioritization techniques in their specific circumstances, thereby maximizing ROI.

THIS IS LEARNING NO 3 – INVESTMENT IN CAPABILITY BUILDING IS MAXIMIZED IN ONE-ON-ONE MODELS

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ONTRAC’S METHODS

We (at OnTrac) have always been extremely sensitive to the requirements of our eventual clients, i.e. people who run operations. We understand their constraints and have mastered methods to help them improve operations. Lets take a look at the three key learnings again:

LEARNING NO 1 – TOTAL NUMBER OF CAPABILITY BUILDING INITIATIVES REDUCES WHENEVER OPERATIONS TAKE OWNERSHIP

LEARNING NO 2 – WHEN PEOPLE DON’T LEAVE WORK TO LEARN, PRODUCTION UPTIME IS MAXIMIZED

LEARNING NO 3 – INVESTMENT IN CAPABILITY BUILDING IS MAXIMIZED IN ONE-ON-ONE MODELS

All of these three point towards the following set of actions that OnTrac adopts in its solutions:

a.    Direct interaction with operations is required to understand their real challenges. The requirement, for example, may not be to enhance communication skills. The requirement may be for reducing the number of customer complaints, and communication skills may not be the biggest contributor. On the other hand, the solution may involve developing a combination of skills including communication, prioritization, data analysis etc. It may be a program on basic finance that will help show employees the impact of their behaviour (through poor communication) on the bottomline of the company. The actual solution may even be a simple set of “tips and tricks” that will take no more than 15 minutes of coaching.

b.    The solution needs to maximize production time. Therefore, there should be minimum classroom based programs and maximum workplace based coaching.

c.    The solution needs to be effective. One on one coaching at the workplace with immediate feedback works very well in this scenario. It is specific to the requirements of each individual, contextual to the work of the individual and quick. It requires much less time to impart a concept one-on-one, versus in a classroom. Feedback on actual actions by the individual provides authenticity required for learning.

d.    The solution needs to be layered i.e. concepts need to be imparted to individuals one at a time. A classroom-based program may teach multiple concepts in a two-day span. But the ability of people to remember and apply is limited. On the other hand, one-on-one coaching helps participants have a better uptake.  Also, it allows for concepts to be learned one at a time.

CONCLUSION:

Those Operations, which really own their resources, will be intimately involved in ensuring that the resources meet the required specifications, both at the definition stage and at the calibration (upskilling) stage. Also, they will do so in a manner that minimizes production down time. They will employ methods that provide them the maximum ROI. They will not just delegate it to other functions.