PowerPoint presentation Unit 324 (CS 26): Understand the customer service environment Handout 2: Methods of measuring organisational effectiveness in the delivery of customer service, and techniques used to identify service failures

Measuring organisational effectiveness The extent to which an organisation achieves its goals It is vital for all organisations to measure how effective they are in order to meet customer needs, increase business, retain customers and to maintain market share. An organisation that does not measure its effectiveness cannot develop, grow or maintain standards in any delivery area.

Organisational effectiveness There are many methods that can be used to formally measure the effectiveness of an organisation. The methods can differ depending on: size of organisation sector of organisation organisational priorities.

Organisational effectiveness Performance review Generally, a performance appraisal is conducted to clarify job expectations, set goals for improvement of weaknesses and reward for accomplishments and overall performance. When conducted properly, appraisals serve that purpose by showing employees how to improve their performance, setting goals for employees, and helping managers to assess effectiveness. As competition in the market place increases, appraisal systems have become more results-oriented, which means that appraisals are more focused on a process of establishing benchmarks, setting individual objectives, measuring performance, and then judging success based on the goals, standards and accomplishments.

Organisational effectiveness Key Performance Indicators (KPI) KPIs are formal, pre-defined measurements of effectiveness. They are quantifiable – all KPIs must be able to be reduced to a number. KPIs can be used to evaluate the effectiveness of an individual, a team or a particular activity. They differ between organisations and activities and are then monitored to evaluate effectiveness. KPIs should clearly link to the strategic objectives of the organisation. They include: target setting data analysis measurement against objectives.

Organisational effectiveness Sales/performance targets Performance targets are a simple way to monitor the performance of an individual or team. Targets are set based on several factors that could include past performance and organisational objectives. Targets should be monitored to assess effectiveness and adjusted to reflect changing factors within an organisation.

Organisational effectiveness The fundamental principles of target setting are outlined in the SMART Method S Specific M Measurable A Achievable R Realistic T Time-bound Discuss each element of SMART

Organisational effectiveness Competitor benchmarking This is the process of comparing organisational performance and practices to those of competitors. This can be challenging as specific data about competitors can be difficult to locate. A more simple way of benchmarking would be to compare service offers, staff competence and more obvious factors. Some organisations publish their financial records, which can also be a beneficial benchmarking exercise.

Organisational effectiveness Data analysis This is vital in monitoring effectiveness. There are numerous types of data that can analysed to identify trends, shortfalls, good practice and business risks. These vary between organisations but can include: customer satisfaction data profit report overheads staff costs.

Organisational effectiveness What methods work best in different environments? Activity 2 – measuring organisational effectiveness. Complete this activity and discuss the results with your tutor. Give out Activity 2 – Measuring organisational effectiveness Discuss results.

Organisational effectiveness Methods of identifying service failures Analysis of complaints Customer feedback Market research Sales figures Returns Staff monitoring Mystery shoppers Customer focus groups Identifying service failures is more specific than simply measuring effectiveness.

Organisational effectiveness Analysis of complaints Complaint data should be analysed in order to identify service trends, customer expectations and other service failures. This can be both quantitative and qualitative data. Customer feedback This feedback can be in any form ‒ formal or informal. Customer comments or suggestions do not have be complaints. Market research This is a useful indication of customer wants, needs and expectations and can be matched to the current service offer. Discuss each method – ask learners to give examples of each method that they are aware of.

Organisational effectiveness Sales figures This quantitative data can highlight variances from expected or required sales in order to identify failures. Product returns Can be used to identify if the same products are being returned consistently and for the same reasons. Staff monitoring As previously identified in slides 1‒10. Discuss each method – ask learners to give examples of each method that they are aware of.

Organisational effectiveness Mystery shoppers These undercover quality assurance officers can check service from a customer’s point of view, giving valuable insight into how the organisation delivers its offer. Customer focus groups This is a qualitative way of gaining feedback into what customers think about an organisation and how they could improve. New ideas can be generated and highlighted. See the further reading list for details of resources that explore these methods further. Discuss each method – ask learners to give examples of each method that they are aware of. Ensure all learners have a copy of the reading list. Issue Worksheet 1.

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