Steve Downton, Downton Service Management Consultants Ltd, Noventum Group
The impact on a business of changing its measurement strategy can be dramatic, and will influence the whole ethos of the business and how it is run. This is easily seen if we compare the difference between measuring “Cash Flow”, “Revenue” or “Profitability”, when each different focus will drive a very different outcome. This is also true when the service operation has been set up as a cost center or profit center. One of the reasons for the notoriously low investment in service can be attributed to service operations being established as cost centers; expecting revenue to be generated from a service operation would appear naïve, and certainly would not be a valued operation within the business. Measuring productivity through visits per day compared with measuring customer satisfaction by questionnaire, illustrates the difference between arbitrary measurement and reality, as it would seem to exist in service operations.
All these measures are valid and which one is used will depend upon the desired outcome. A problem arises when the measures in place do not direct the business towards the outcome (strategy) required.
The issue of measurement in many businesses often seems to be an after-thought. Measurements are often made but the reports produced, however valid and substantial they might appear, prove inappropriate and unrepresentative for the business. The measures might not yield accurate information but the results may be taken very seriously, and distort the image upon which a strategy will be based. For example, a swat team could be put in place to solve a problem and get the measures back to an acceptable track, without questioning whether the measures are valid or verified. This is like building foundations on shifting sands and must be regarded as a suspect business practice.
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