BPO Thought Process

BPO Thought Process

Why a Green Scorecard Could Still Have The Client Seeing Red

Category : BPO
If you went into a quarterly meeting with a BPO client, knowing that you were reaching all your Service Level Agreements (SLAs), delivering against all your KPIs, and that your scorecard was a uniform green, you would probably be feeling fairly confident and cheerful. What, then, would you do if you discovered that “green may not be green” in the mind of the client?

Your first reaction might be a defensive one; that they weren’t playing fair, and that you were doing a good job that they were failing to recognize you for. However, then you might remember that clients’ perceptions are your reality – and you might start to see how a green scorecard may not mean a satisfied client.

The number of metrics we apply in a typical BPO engagement can be huge, often over 30. Tremendous thought and effort is put into constructing outsourcing agreements which effectively track these performance indicators in order to demonstrate delivery performance in the areas of efficiency, effectiveness, value and control. But the best laid plans often go astray, resulting from any number of factors.

The first is about working style. KPIs normally relate to concrete, quantifiable things that we do, such as processing orders and reconciling accounts. It is rarer that they relate to how we do it. An example of this might be in collections where we are essentially chasing outstanding invoices. We could be very effective at actually getting the money in, meaning we would be hitting all our goals. However, we could be perceived by the client as less effective at delivering the desired customer experience, which we are not being measured on, but which could nonetheless affect the client’s relationship and brand reputation with their customers.

This sort of problem might occur because there is a misalignment between contractual terms and the measures that matter in the mind of the client. We may be preoccupied with the outcome (e.g. reduction of DSO) or the “what” while the client is focused on inputs (e.g. updating of call notes, application of scripts, dispute resolution style, etc.) which relates to “how” we do it. Less tangible variables such as delivering a positive customer experience can take on a life of their own and completely overshadow the fact that at the end of the day we are “getting the cash in the bank”. Thus, you find you are being measured on “Black Market” KPIs – criteria that were not formally agreed upon or perhaps even discussed, but become blemishes in an otherwise highly “green” operation.

In a similar vein, KPIs can also become unbalanced. What might have looked like the right mix at the start of the relationship may no longer work well in the later years of a contract. There might be too much emphasis on one set of KPIs or a lack of alignment between input (e.g. volumes), output (savings) and outcome (working capital improvement) measurements.

Finally, there simply may be too many KPIs – and in measuring them all you overload the operations and cause confusion about what really constitutes good work and strong operational performance.

Again, it is not difficult to see how this occurs. BPO is not a simple, short-term activity. BPO agreements are not only complex, but generally come with year over year improvement commitments to be sustained over the long term. Our business is enduring and relationship-driven. And, as with any relationship, we are subjected to changing expectations. What worked for both parties at the outset of an engagement may no longer be relevant or adequate in terms of (perceived) value delivered. Consequently, we must evolve the partnership with the client in a manner that keeps us in lock-step with their changing priorities and needs.

So, what is the key to staying aligned on measures? Well, at the most basic level, it comes down to “transparency, trust, and flexibility”. Both parties need to be open and flexible, operating within the spirit of the contract, rather than the letter of the law. And we as providers need to gain the client’s trust by demonstrating that we will do the right things the right way. This starts with truly listening and embracing what matters most to the client. As with any relationship, both parties must work hard to stay on the same page. If it’s time to reset measures because of changing circumstances then having a strong relationship foundation will make those often difficult conversations easier and more balanced.

So, the next time you rightfully show pride in a green operational scorecard, pause and ask yourself the question: “Is green really green”?

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