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1This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Applying the KANO model for developing an objective based
performance measurement and
incentive plan
Das MadhavanVP, Engineering and PlanningCiti CardsKansas City, MODas.Madhavan@Citigroup.com(816) 505-6568
Raj ShroffVP, Engineering and Planning Citi CardsKansas City, MORaj.Shroff@Citigroup.com(816) 505-6569
June 2005
2This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Topics
1. Background
2. Why this project ?
3. Approach
4. What is the KANO model ?
5. KANO questionnaire for the project
6. Basis for KANO questionnaire
7. KANO analysis
8. Building the foundation
9. Historical Data Analysis
10. The Objectives Matrix Method for Performance Measurement
11. Primary Components of Objectives Matrix
12. Benefits of Using the Objectives Matrix Method
13. Alternative Matrix Development and Selection
14. Implementation Planning
15. Post Implementation Evaluation
3This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Background
Who we are ?
Engineering and Planning: An Internal Consulting Group within Citi Cards
Provides strategic consulting across Citi Cards and beyond
Staffed by MBBs and BBs
Offices located in Kansas City, New York, and Hagerstown
Project Focus
Development of performance standards & associated incentives
Area of Implementation: Fraud Department
Objective: Improve associate productivity and quality, while also promoting knowledge sharing
4This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Fraud Department is a critical customer touch point that could impact customer experience positively or negatively
The associates need to make judgmental decisions on making proactive customer calls
The management would like to enhance customer experience while meeting business objectives
Well aligned with Citigroup’s “five point plan”
Set appropriate productivity/quality thresholds, while fostering an environment for strengthening employee capabilities
Retain high performing associates
Maintain effective communication within the organization
Why this project ?
5This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Approach
Assess employee needs Focus Groups Kano Model: Basic (Must-be), One-dimensional (Performance), and
Attractive (Delightful) Needs Identify gaps, develop and implement action items This is imperative for ensuring that right success elements are in place
prior to implementation of performance measurement system
Baseline current performance Historical data analysis
Exploratory Deductive
Set performance qualification criteria & goals
Develop an incentive plan
Acquire Unit Manager and Associate Buy-in
Acquire senior management approval, including HR and Legal
Develop communication, pilot, roll-out and tracking plan
Acquire employee feedback post pilot phase
6This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
What is Kano Model ?
Proposed in 1984 by Dr. Noriaki Kano of Tokyo Rika University
Based on his study of Herzberg’s “Motivation – Hygiene” Theory
The model distinguishes between three types of customer requirements
• Basis for entry into the consideration set
• High dissatisfaction, if requirements are not met
• Fulfillment of requirements will not increase satisfaction
Must-Be requirements
• Satisfaction is proportional to the level of fulfillment
• Requirements are usually explicitly demanded
• Requirements can cause reactions ranging from dissatisfaction, through indifference, to satisfaction
One Dimensional requirements
• The very minimal presence can create satisfaction
• These are unexpected, thoughtful, and delightful surprises
• Not much dissatisfaction, if the requirements are less functional
Attractive requirements
Relevant data is generally obtained by administering a KANO questionnaire
7This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
What is Kano Model ?
Basic Features:Minimum features which represent the core functionality of a product or service
Performance Features:Attributes that lead as well to satisfaction as to dissatisfaction
Delightful Features:Initiate satisfaction if they are offered. They increase the noticed benefits of the core functionality
The bigger the descending slope, the higher the benefits rating. The customer dissatisfaction increases if the basic requirements are not fulfilled .
Exceeds all customer requirements
Does not meet customer requirements
Dissatisfaction of the customer
8This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Developing a Kano Questionnaire
“Functional” Form versus “Dysfunctional” Form
How would you feel if the service had feature “X”
How would you feel if the service did not have feature “X”
Kano Questionnaire choices:
I like it I expect it I am neutral I can tolerate it I dislike it
ExampleQuestion Choices
Upon calling into a call center, how would you feel, if IVR is present ?
I like it (5) I expect it (4) I am neutral (3) I can tolerate it (2) I dislike it (1)
Upon calling into a call center, how would you feel, if IVR is not present ?
I like it I expect it I am neutral I can tolerate it I dislike it
9This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Kano questionnaire for the project
QuestionAssoc-1 Assoc-2 Assoc-3 Assoc-4 Assoc-5
1a How would you feel, if the RPH thresholds were increased from the current levels ?
1 1 4 2 3
1bHow would you feel, if the RPH stayed at the current levels ?
3 5 3 3 3
2aHow would you feel, if the adjustment factors were revised to lower levels ?
1 2 2 1 3
2bHow would you feel, if the adjustment factors stayed at the current levels ?
3 5 3 3 3
3aHow would you feel, if efforts were made to educate you on how adjustment factors were computed ?
5 5 4 3 5
3bHow would you feel, if efforts were not made to educate you on how adjustment factors were computed ?
2 3 4 2 4
4aHow would you feel, if the people who set the adjustment factors knew how the HRAM process works ?
3 5 4 5 4
4bHow would you feel, if the people who set the adjustment factors did not fully know how the HRAM process works ?
3 1 2 1 1
5aHow would you feel, if you were given prior notice in regards to changes in the adjustment factors ?
5 5 5 5 4
5bHow would you feel, if you were not given prior notice in regards to changes in the adjustment factors ?
1 2 2 2 2
Functional
Dysf
unct
ional Rating Scale
5. This would be very helpful for me
4. This is a basic requirement for me
3. This would not affect me
2. This would be a minor inconvenience
1. This would be a major problem for me
10This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Basis for Kano questionnaire for the Project
Voice of Employees (Associates) at the focus groups. A few examples:
Primary focus on productivity, which may not be conducive for coaching or helping your neighbors.
Adjustment factor may not be representative of actual work.
The way the performance measurement system is setup today, there is no reason to over-perform.
Whenever an associate is used for coaching, his/her time is counted as “non-prod” time.
Quality monitoring is neither consistent nor fair.
Write-ups or missed opportunities are not fair. Reasoning given is unclear.
With quality monitors- - no discussion of how-to-do things better, only focus on what-to-do.
There is no communication between different groups resulting in inconsistency on procedures.
11This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Basis for Kano questionnaire for the Project
Management concerns. A few examples:
Associates not applying clear, concise, accurate notes on the account.
Lack of proper risk assessment resulting in potential losses to the Bank’s financial interest by utilizing educated risk assessments.
Not attempting customer contact at all available numbers or failure to call financial institutions or Creditors.
Incorrect/incomplete processing of requests made by customer such as, address change, add/remove authorized users, request for or cancellation of card/PIN/checks.
Failing to update any discrepancies.
12This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Kano Analysis
14
3
11
13
2
1
12 159
4
5 6107
8
0
1
2
3
4
5
0 1 2 3 4 5
Dysfunctional (X)
Fu
ncti
on
al (Y
)
Must Be
One DimensionalAttractive
Indifferent
Several methods of analysis
Pictorial format much easier to understand
The chart is divided into four quadrants
The quadrants are obtained by using overall mean scores for “X” and “Y” questions
The point is plotted at the intersection of the mean scores for individual “X” and “Y” question
13This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Building the Foundation Initiatives identified as a result of Kano Analysis:
Clearly define policies and procedures
Communicate changes in the environmental elements in a timely manner
If possible, move away from adjustment factors or minimize its use
Ensure a more supportive environment, in which associates improve their skill-set
Establish attainable baselines and goals for performance measurement
Restructure Unit Manager jobs so that they spend more time on the floor
Ensure the Quality monitoring group understands how decision making in Fraud Department works and are able to render consistency in their judgments
Ensure that the Quality monitoring group meets regularly with the associates to discuss scoring, feedback, etc.
14This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
181776191612211417719181415N =
Team
70
18
70
17
70
16
70
13
70
12
70
11
30
61
30
60
30
58
30
57
30
56
30
55
30
54
30
53
30
51
RP
H
30
20
10
0
51
59
204201
174
175
97
Historical Data Analysis
13785N =
MDJX
RP
H
30
20
10
0
147
174155
175
158
51
4243
59
Median
75th percentile
25th percentile
Outliers
Outliers
Median75th percentile
25th percentile
Between site differences are significant at 99 % Confidence Level, but not at 95 % Confidence Level (ANOVA)
Team to Team differences are not significant within both sites at 95% Confidence Level (ANOVA)
15This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Historical Data Analysis
Processes at the two sites seem to be stable with a very few special causes
Control Chart: RPH
Sigma level: 3
134
127
120
113
106
99
92
85
78
71
64
57
50
43
36
29
22
15
8
1
26.284
19.292
12.300
5.307
-1.685
RPH
UCL = 21.1544
Average = 12.2995
LCL = 3.4446
HAG
Control Chart: RPH
Sigma level: 3
81
76
71
66
61
56
51
46
41
36
31
26
21
16
11
6
1
25.899
18.553
11.208
3.862
-3.483
RPH
UCL = 17.1404
Average = 11.2078
LCL = 5.2752
JAX
16This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
The Objectives Matrix Method for Performance Measurement
Originally developed by Dr. James L. Riggs of Oregon Productivity and Technology Center at Oregon State University. He named it the Objectives Matrix (OMAX)
An improvement focused performance measurement and reward system that integrates multiple mission critical performance measures in a balanced fashion
Can be designed to measure individual, group, or process performances
The measures included should be within an individual’s control
Widely used by many of fortune 500 companies (TI, Raytheon, HP, Boeing, Pepsi, Mutual of Omaha, Coldwell Bankers, Northrop, etc.)
17This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Primary Components of Objectives Matrix
Matrix Criteria – Quantifiable metrics that measure the performance
Milestones – comprises three components:
Baseline performance level
Performance goal for each criterion
Milestones expressed as a percentage ranging from 0% to 100%
Current Performance – The current level of performance for each criterion in the current measurement period
Current Milestone – The current performance level of each criterion translated to a percentage of goal attainment
Relative Weight – A weighting factor assigned to each criterion that indicates its relative importance
Weighted Milestones – The current milestone of each criterion multiplied by its relative weight
Performance Index – The sum of all weighted milestones
18This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Objectives Matrix Example
Baseline should be satisfied for all measures to qualify for the incentive plan
Current mile stone = (Base – Current)/(Base – Goal)
Maximum payout of $200/Mo, if goals for all the criteria are met
Cri
teri
a
Cri
teri
a
Defi
nit
ion
-0.2
0
-0.1
0
Curr
ent
Perf
orm
ance
Base
Milestones
100%
Goal
Curr
ent
Milesto
ne
Rela
tive w
eig
ht
Weig
hte
d
milesto
ne
Quality Phones PMW 98.0% 96% 97% 98% 98.5% 99.00% 99.5% 100% 0.5 50 25
UPH (Predictive)
cases worked Total hours
26 25 27 29 31 33 34 35 0.1 15 1.5
UPH (Preview)cases worked Total hours
194 170 174 185 196 207 218 229 0.41 15 6.10
AdherenceHrs completed Hrs scheduled
94.0% 96.5% 95.0% 96.0% 97.0% 98.0% 99.0% 99.5% 100% 0.3 10 3
AttendanceHrs avlbl-Hrs unavlb
Hrs available99.0% 98.0% 98.5% 99.0% 99.25% 99.5% 99.75% 100% 0.5 10 5
Performance I ndex 40.6
19This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Benefits of Objectives Matrix Method
Easy to comprehend
Process focused with clearly defined objectives and goals
Capable of normalizing the units of different measures
Flexibility in accommodating measures of quality, timeliness, employee attitude, and productivity
Results/Outcome orientation as against simply measuring activities
Ability to measure trade-offs and produce a single measure of performance
Can be useful in action planning for individual employees
20This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Alternative Development and Selection
Tear 1 (75th percentile and above)
Metric $ AvailableCurrent
Performance Gate 1 2 3 4 5 GoalProductivity 150 27.04 24.04 25.00 26.00 27.04 28.12 29.25 30.42
111.93$ 117.53$ 123.41$ 129.58$ 136.05$ 142.86$ 150.00$ Quality Opportunities 150 1.00 1.00 0.00
150.00Team Work 75
Tear 2 (50th percentile and above)
Metric $ AvailableCurrent
Performance Gate 1 2 3 4 5 GoalProductivity 75 21.50 18.99 19.75 20.54 21.36 22.22 23.10 24.03
55.97$ 58.76$ 61.70$ 64.79$ 68.03$ 71.43$ 75.00$ Quality Opportunities 75 0.00 1.00 0.00
30.00$ 75.00Team Work 50
Tear 3 (25th percentile and above)
Metric $ AvailableCurrent
Performance Gate 1 2 3 4 5 GoalProductivity 50 8.00 15.00 15.60 16.22 16.87 17.55 18.25 18.98
37.31$ 39.18$ 41.14$ 43.19$ 45.35$ 47.62$ 50.00$ Quality Opportunities 50 1.00 1.00 0.00
0.00 50.00Team Work 50
Option 1
Learning and Growth Perspective
Internal and Customer PerspectiveFinancial Perspective
21This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Alternative Development and Selection
Option 2
Option 2
Simple to execute
Is our starting point
Option 1
Requires additional segmentation work based on RPH
Bit difficult to execute
Is our end vision
Metric $ AvailableCurrent
Performance Gate 1 2 3 4 5 GoalProductivity 150 19.00 15.00 16.88 18.99 21.36 24.03 27.04 30.42
26.70$ 35.60$ 47.46$ 63.28$ 84.38$ 112.50$ 150.00$ Quality Opportunities 50 1.00 1.00 0.00
-$ 50.00Team Work 25
J AX 25 15 5 5 2 0 0
HAG 42 11 8 4 3 0 1
J AX (1 opp+ 0 opp) 4+3=7 5+8=13 1+2=3 1+2=3 0+1=1 0+0=0 0+0=0
HAG (1 opp+ 0 opp) 3+11 = 14 3+7=10 2+5=7 1+3=4 0+1=1 0+0=0 0+1=1
# of people qualifying based on RPH alone
# of people qualifying based on RPH & Quality
22This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Implementation Planning
Receive formal approval from HR, Legal, and the senior management team
Develop an Employee Communication Plan
Develop an Employee Training Plan
Develop an MIS Reporting Process
Develop incentive fulfillment process
Capture Lessons Learned
Refinement and Institutionalization
23This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Post Implementation Evaluation
Employee Surveys
What is your overall impression of the incentive plan ?
Do you agree that the right criteria were selected for your performance improvement ?
Do you agree that you have complete control over the criteria ?
Do you agree that criteria weighting was done appropriately ?
Do you agree that the baseline/goal for each criterion was reasonable ?
Do you agree that the incentive amount was adequate ?
Overall, do you agree that the reward system reflected your performance accurately ?
Do you agree that your overall performance has improved due to the incentive program ?
What other changes do you suggest we make to the performance measurement/incentive system ?
24This presentation and the information contained in it are the confidential and proprietary work product of Citi Cards and may not be copied or distributed without the specific written consent of Citi Cards. Copyright c 2005 Citicorp Credit Services, Inc.
Q & A