SIG University Certified Sourcing Professional (CSP) program graduate Thomas Moran shares the different types of KPIs that are vital to an organization and the importance of performance management.
A KPI is a Key performance indicator; this is a measurable rate or value that demonstrates how effectively and efficiently a team or objectives is performing. Many companies use KPIs to evaluate success in reaching goals or targets. They should have a clear objective and align with your business goals.
Why are they important?
KPIs are necessary to determine if a business is meeting its goals, give accountability, and leverage the health of outsourced relationships based on performance metrics. If we look at BPO ( Business process outsourcing ), KPIs are critical to determining the work's weekly, monthly, and quarterly health of the outsourced work. It creates accountability to ensure. Vendors are meeting and maintaining these values and ensuring the work they are supplying is consistently kept to a high standard.
Setting and Measuring KPI
KPI should be directly related to your business goals. These should be quantifiable measurements to gauge the health of your work. For instance, in some BPO work, your KPI could be based on customer satisfaction rates, turnaround time, quality of action taken, or how effectively and efficiently the team is performing productively.
Type of KPI -
Depending on the nature of your business, you can identify different KPIs for your business needs. For example, if you are monitoring Sales, your KPI could capture increasing sales or improving the return on investment, percentage of new clients, and new business streams. Whereas in Call centers BPO, you would focus on more customer satisfaction, call turnaround time, and ACS average customer spend. Then in my work in Outsourcing Content Moderation and User experience, we would monitor such KPIs as TAT ( Turnaround time on a ticket ), Team productivity, and Team Quality. Return tickets.
It is also essential to determine what you need to know from the information you are monitoring and the targets you are setting. This is the difference between lagging and leading performance metrics. The Lagging metric usually captures data that has already happened/ I,e total ticket actioned in a month. Lagging KPIs are excellent when keeping accountability for your Vendor or outsourced work. Where Leading KPI helps you identify improvement opportunities and get new goals for future planning. I.e., Conversation rate in sales. Inquiry call for a sales team.
The majority of KPIs we would use in my company are for our Outsourced workflows ( BPO ) for Content moderation & User support, and we use these to determine the health of the work our vendors are supplying. These KPI targets change depending on the success of previous scores and the support needed for the team.
By using KPIs to monitor our Vendor performance, we ensure accountability. This would be defined in our MSA as outlining the performance of work they do for us. We hold them to a specific SLA - Service level agreement. The reporting KPI we use in our outsourced work falls under two main categories: content moderation and user support and experience. And both need different KPIs to ensure we can track and monitor the progress and performance of the program.
For our content moderation workflows, we would track are
Operations KPI -
- Productivity rates - the rate the team is working at.
- TAT ( Turnaround time ) We have an agreement that all our working queues would be cleared to Zero within a given a timeframe
- Utilization rate - How productive the whole team is during a particle time frame
- This is usually measured at a weekly rate )
Quality KPI -
- Accuracy - Accuracy rate of the action taken
- Precision and recall - Precision is a metric of how precise it was in action, and memory is how many errors were made during the ticket.
- QA Rate - This is an accuracy rate we measure to ensure our outsourced
- The quality Analyst Team is performing at the same standard as our internal team.
- For our User Service support workflow, we track these :
- Tickets TAT - Turnaround time for each ticket.
- First Response rate - How the quality of the first response was actioned on the tickets
- Turnover ticket rate - Closing the final ticket rate
- Customer Satisfaction rate - A CSAT score given by the person opening the ticket.
Quality Operation rates :
- Accuracy - Accuracy rate of the action taken Ticket Health rate
- QA Rate - This is an accuracy rate we measure to ensure our outsourced quality Analyst Team performs at the same standard as our internal team.
By evaluating these KPIs weekly or monthly, we can create accountability for the work we have outsourced. And hold them accountable against our MSA. We need to enforce penalties if the target has been unreached for a specific time. In Addition to accountability, our KPI also gives us visibility on the health of the work and opportunities to identify areas of optimization, cost saving, and innovation.
The Certified Sourcing Professional (CSP) Program is a 10-week course that focuses on the hard and soft skills of sourcing, including strategic sourcing and outsourcing methodologies, as well as best practices in negotiations.
I have been working in Vendor Management for the last six years. Where I have managed multiple teams across EMEA for multinational IT companies. A majority of the team I have worked with are under Content moderation and user support. While managing these teams, I have led multiple projects with a cross-functional support team to achieve operational excellence. I am currently a Global outsourcing senior programme manager for Pinterest. Where I manage our relationship with our outsourcing BPO Vendor Partners, ensuring accountability for our outsourced work.