Monday, 23 April 2012

The Customer Has Been Neglected


The Customer has been neglected

It is amazing how very little attention is paid to the aspect of customer care by a lot of organisations. While management spends hours on end drafting and crafting strategies, trying to pave the way forward for their organisations, this very important aspect is most often forgotten. It is rather ironic that regardless of what strategies you come up with, the onus at the end of the day rests on the client /customer, without whom you would have no business.

Just trying to get a phone call through to some organisations is a nightmare because the telephone is constantly engaged or no one bothers to answer it, not to mention the time you have to spend on hold after which you are told that the person you are looking for is unavailable, before being unceremoniously cut off without even a chance to ask if someone else could help you.  In some instances you are told that the person you are looking for is not in and upon requesting on being assisted by someone else, you are rudely informed that no one else except that person can help you so you just have to try calling them back later. Honestly some of the things you hear are appalling to say the least. There is a serious need for organisations to become customer focused and realise that they exist to serve the customer and going out of their way here and there to please them is mandatory for organisational success.

A customer can be external or internal and both are important. The Human Resources Department, for example, exists to serve internal clients, whom if dissatisfied cannot carry out their work effectively and this has an overall negative bearing on the organisation as a whole. So whether internal or external, the least service you can afford a customer is to please them with efficiency, good attitude and knowhow of what you are doing.

This concept has been so widely understood by organisations in first world countries but now has to be just as equally understood by organisations in Zimbabwe if they are going to be competing in the big league. This is where customer care courses come in. For a long time Zimbabwean organisations have gotten away with being rude and hostile to customers because at the end of the day, it had no real bearing on organisational performance. Customers had no option for alternative services or products and in most cases had to swallow down abuse being totally at the mercy of the service or product provider. Fortunately dollarization has brought with it customer freedom, where customers can choose, except of course in the case of parastatals where one just does not have any choice for service provision. It is these organisations that perhaps need customer care skills the most.

Customer care courses help to re-orient the employees on what is truly important –customers. The objectives of these courses are to create a mind shift for employees from “I am king and this is my domain’’ to “Customer is king and my job here is to delight them with excellent service.” Employees need to understand that customer service is not in any way linked to the amount of money they are getting on the job or how they are being treated by their superiors. This is often the justification for poor customer service. What we often forget is that each one of us is at some point a customer or client of someone else, and just as you do not understand why someone may go out of their way to be nasty to you a customer who has done nothing wrong except choose them as their provider of goods or services, is the same confusion that customers face at your hand. They do not and should not care about your work conditions or that you are not feeling well or you have just had a fight with your boss. All they should worry about is that their needs are effectively and efficiently met without any emotional pain. The fact that you as a service or goods provider are sitting behind that desk and not at home means you have an obligation to the customer and are bound to deliver good service with a good attitude.

Employees, especially customer facing ones need not only to manage their own behaviour but to understand customer behaviour and how to deal with individual needs. Skills need to be developed and refreshed to address all aspects of customer service and understanding customer care standards.
Other organisations argue that training should be the least on the agenda of things to do considering the tight cash flows that they are facing. It is true that some organisations can really not afford to train but for others it is a mere excuse to make way for “more important” projects. What they forget to realise is that training is a long term investment if done correctly, one that will reap them life time rewards. For once an organisational culture of customer excellence is set; it can be easily perpetuated for as long as long as the organisation is in existence.

A while back I wrote about the importance of employer branding and how some organisations would never get people interested in working for them because they have built poor brands for themselves. An employer brand is what insiders and outsiders to the organisation perceive that organisation to be like. Most of it has to do with customer service. Who would want to work in an organisation in which you have been treated like trash? Chances are when the name of that organisation comes up you are quick to point out how terrible they are and this is how an organisation’s image is tarnished just by word of mouth.

The new age customer is different, more demanding and more aware of their rights than the customer of old. Organisations that are aware of this fact are likely to do better than those that aren’t. It is never too late to make a turnaround for the better and most often the difference between being great and mediocre lies in refocusing and letting the customer be the central focus of all business activity.

Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or cell number 077 2356 361 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com

Why Businesses Should Embrace Social Media




When you need to find information, what’s the first place you look at? “The internet” I guess. The same applies to your clients and potential clients. Now reports say the second most visited website as of 26 march 2012 is Facebook, the social media giant, just after Google ( of course). But reports as of April 2011 have it that it had toppled Google as the most frequently visited site. Chances are, your competitors are plying their wares on the World Wide Web through such social media. If you aren’t using social media for your business, your potential customer base is passing you by.


New research states that local marketers are engaging with Facebook like never before.  According to small-business social network Merchant Circle as of 2011, 70% of small businesses now use Facebook to reach consumers. This was up from 50% for 2010 and is more than the 66% of them that say they currently use Google search advertising. So what this means is that Facebook now ranks as the most popular marketing tool among local businesses.

Consider this:

  1. Fifty percent of active Facebook users log in at least daily and spend close to an hour a day and are posting more than 500 updates a second.
  2. There are 1.6 million active Facebook pages and more than 350 million active users
  3. When it comes to Twitter, there are close to 20 million users who are posting an average of 600 tweets a second
That is a lot of information being exchanged. When you take those numbers and couple it with your competition who might be taking advantage of blogging as a way to spread the word about themselves, you simply need to be swimming in that information ocean, don’t you think?
So clearly, Social Media is NOT a fad. It is not going anywhere. When I first started writing this article, I went really deep into what social media was, the individual platforms and why you should care. Ultimately, none of that mattered because you only need to know one simple fact. Social Media, as a whole, has completely changed our culture forever. What people thought was a fad has now become a complete ‘culture shift’.
The social media phenomenon is global and it is not "just used by teenagers and young adults". This is why businesses should realize the social platform is an increasingly important platform for consumers to learn about companies' branding and problem resolution. However, most companies are "still in the 'crawl' stage of the crawl-walk-run continuum" in catering to this social demand. This is because they, particularly their legal departments (IT could be one of them), are struggling to figure out where and how social media should be managed.
Very good examples of businesses who have embraced such are Marriott Hotels, online travel agent Expedia and budget carrier AirAsia can be said to be doing a "terrific job" using social media to serve many of their customers' needs such as marketing, promotions and customer service through social channels. Malaysian Airlines, for one, allowed customers to book their flights and check-in online on Facebook with MHbuddy. According to Amin Khan, executive vice president of commercial strategy at Malaysia Airlines, the MHbuddy app functions as its "ticket office on social media", giving users greater convenience when booking flights and sharing their plans with online friends. Clearly, social media is a proven tool in marketing your business.
Here are five other reasons to jump into social media:
  1. Stay up to date on your industry
  2. Track what others are saying about your business and respond to those comments
  3. Offer emergency updates or jump in when a breaking trend happens in your industry
  4. Offer amazing customer service through your social media presence. Ask and answer questions
  5. Drive traffic to your website
I will give you enough time to look at the above and consider embracing social media. If you decide to embrace it as a business, check out our next IPC Bulletin (May Issue) for more on Why and How Businesses can embrace social media.

By Lovemore Jokonya

(IT Consultant) For views and comments email lovemore@ipcconsultants.com or call +263 4 481946-8

Friday, 23 March 2012

Profit and Productivity


The Relationship between Profit and Productivity 

As highlighted in previous articles on the same subject, production is the not the same as productivity. Productivity in simple terms means producing more with fewer resources while maintaining or increasing the quality of products.  However it is the relationship between profitability and productivity which must be explored for the benefits of all stakeholders.  Productivity analysis provides key insight into business performance that normally is not shown by the ordinary financial analysis.  In this analysis we try to show the dynamics of change in revenue and expenses between two accounting periods (2010 & 2011) expressed in terms of impact of productivity and price recovery. Such a strategic analysis of the company’s financial performance is so vital especially when the company wants to strategise for the next or coming period.

There is a mistaken belief that making a profit means the company is productive. In productivity accounting PROFIT = PRODUCTIVITY + PRICE RECOVERY. The question that then needs to be answered by every executive is: Is our profit growth productivity driven or it is price driven? A more sustainable business model is where profitability is productivity driven. It is important for captains of industry to note that an increase in capacity utilisation does not mean there is an increase in productivity. 

Using an example, I am going to take you through the process of interpreting your financial performance using productivity accounting. The company below produces 2 products; sweets and chocolates. Profit growth for this company from 2010 to 2011 is US $37.00. Of the $37.00 how much was due to productivity gains and how much was due to price recovery?


Data Period 2010


Data Period 2011





Value($)
Quantity(tons)
Price($)
Value($)
Quantity
Price($)
Products




Sweets
224.00
127.00
1.76
320.00
165.00
1.94
Chocolates
430.00
210.00
2.05
490.00
225.00
2.18
Total
654.00

810.00

Resources




Labour
252.00
21.00
12.00
328.00
25.00
13.12
Materials
260.00
65.00
4.00
303.00
72.00
4.21
Capital
142.00
550.00
0.26
142.00
550.00
0.26
Total
654.00


773.00




Reconciliation


Revenue
654.00
810.00
Costs
512.00
631.00
Profit
142.00
179.00




Productivity Analysis
Effect of
Profit Variance
Productivity Variance
Productivity Variance
Capacity Utilisation
Resources Allocation
Price Recovery
Resources
$
%

Labour
-15.89
-10.34
-3.45
0.00
-10.34
-5.55
Materials
19.02
10.86
3.77
0.00
10.86
8.16
Capital
33.87
21.22
14.94
21.22
0.00
12.65
Total
37.00
21.74
2.98
21.22
0.52
15.26

Total productivity increased by 2.98% with a positive impact on profits of $21.74. This occurred because total output quantities (volumes) increased by 14.95% while resources quantities increased by 11.62%.
Labour productivity declined by 3.45% with a negative impact on profitability of $10.34, while material productivity (or yield, recovery, etc.) rose by 3.77% and capital productivity jumped by 14.94%. The positive effects of materials and capital productivity growth offset the negative effect of labour productivity losses giving increase in total productivity of 2.98%.
The labour productivity loss might simply be a result of staff turnover causing the skills base to deteriorate, or perhaps the appointment of new and less effective supervisors. On the other hand, it might be a strategic act like deliberately employing additional skilled people to manage production line so as to improve material recovery and reduce downtime on the plant. It could be associated with the introduction of a new product line and labour productivity loss will only be temporary. The simple causes of labour productivity losses can be addressed though training while the more complex causes flow from strategic interventions that were designed to trade off labour productivity losses in order to get gains on material and capital.
Profits were further increased because of price –recovery. This came about because product prices increased by 7.75% while total resources prices increased by only 5.89%. This positive profit impact can be seen as either “good” or “bad” depending on circumstances. If the company is simply price gouging then the effect will be to reduce competitiveness or cause people to seek substitutes. Alternately, it might have arisen because the company had endured a period of severe price under- recovery in the past and this was simply redressing the imbalance. It might also be the result of the company’s own accounting conversion of not revaluing capital such that the capital price remained constant.


Of the $37.00 profit growth from 2010 to 2011, productivity contributed $21.74 (or 59%) and price recovery contributed $15.26 (or 41%). This would put the company in the “Awaken” segment of the strategic grid. This performance indicated the best of both worlds where the organisation is improving productivity and price recovery. However, excessive price recovery may create opportunities for competitors to undercut the business’ product prices and thereby reducing the company’s market share. Organisations placed in this category survive through price – recovery because of the nature of their market. It is very likely that organisations in this segment are in a “monopolistic “situation.
We urge organisations to continuously monitor productivity changes to enable them to come up with viable strategies needed to make the business sustainable.
Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or cell number 0772 356 361 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.comor visit our blog www.ipconsultants.blogspot.com

Thursday, 8 March 2012

Performance Management


How managers can conduct Performance Reviews that actually result in increased performance

Based on our experience across many sectors, it has become apparent that performance management and performance reviews in particular are hard to undertake. Executives are not committed to it and employees would not care less. The question therefore is: Do they really work? The good news is that performance management and performance reviews work if management takes time to put the right systems in place.
The first step in any good performance management system is to get the commitment of the Board and senior executives. The CEO needs to drive this process. If this important part of the business is relegated to human resources, chances are it will fail. This process must never be viewed as a human resources department issue. The process produces very good results if every manager views this as a tool to get the best out of their people.

The company board must take a keen interest in measuring the performance of the CEO. If the Board is not measuring the performance of the CEO the system will not work. The Board must continuously appraise the CEO against clear targets. Once that is done the CEO is likely to cascade the system to all his/her direct reports who in turn will cascade the system to their subordinates. My advice is if you find your Board and CEO not interested in being measured and being held accountable through an objective performance management system do not waste your time and resources putting a system in place because it will not work.

Once you get the commitment of the Board and CEO you can now start to put the other building blocks in place. A word of caution, Board and CEO commitment means they must all walk the talk.  What worries me when I look at most organisations is that if managers and subordinates are not talking about performance what are they talking about. Organisations are set up so that they can perform for the benefit of the stakeholders.
If your organisation goes beyond the month of April without agreeing on the targets for the year you must know that you are working for an organisation that does not care about performance. How do you get to 4 months into the year without agreeing on the target for the year? There are many cases where managers start running around talking about targets for this year in October and November. This shows lack of seriousness on the part of the CEO and the Board. The time to agree and sign performance contracts is in the first quarter of the year. It is even better to have agreed your targets for the year by end of January of each year.

For you to be able to agree on targets for the year, you need to agree on a way of setting goals and targets. The challenge is in most cases managers want to use sophisticated systems to set goals and targets. Whatever system you decide to use, the goals and targets must be clear. In too many cases managers want to come up with complicated systems and things not measurable in order to fix their employees. When a simple system is used, measurable goals and targets based on outputs for each job can be agreed. I hear a lot of people saying my job is not measurable. That is not true and it just shows that the person concerned does not understand their role. For each job non-controversial goals and targets based on output can be agreed. To be able to come up with the goals and targets, managers and employees need to work together.

In situations where the system is not based on objective performance criteria, you find that accusations and counter accusations are flying around. Personality’s issues come into play and employees generally resent the system. In companies where there is no objective performance measurement system, people are not paid based on their performance. Instead people are paid based on what we call “corridor mileage.” In such a situation those who move around offices talking to people and building relationships (corridor mileage) are rewarded. Again those who talk a lot and are always visible are recognised at expense of those who add value to the organisation. Non- performers normally know how to position themselves politically within the organisational hierarchy to mask their non- performance.

If you want your performance management system to work, stop measuring behaviour and focus on results. If you are still measuring punctuality, decision, teamwork etc. and such other behavioural aspects of performance you are a century behind modern trends and what works in practice. We are not saying you must ignore behaviour, NO. We are saying agree on the objective outputs first and agree on targets. If the person is not delivering on the targets agreed you can then look at the cause of the non- performances as part of your coaching as a manager. This is normally where behavioural issues come in. Maybe the person is not performing because they do not cooperate with others (teamwork). Work on the behavioural aspects and see if performance improves and if not there could be other causes such lack of skill, motivation etc.

With an objective performance management system, managers are able to build trust which is critical for any performance appraisal process. Without trust appraisals are a painful process. You can build trust in the system by building mechanisms that allow managers to give their subordinates feedback more frequently. If managers are allowed to wait until the day of the appraisal, your system will not work. Managers must also take note that appraisals are not a history lesson on what went wrong. Appraisals are futuristic in situations where managers continuously give feedback to their subordinates. Subordinates look forward to the appraisal process in such a situation. Managers must learn to focus on appraising agreed targets and nothing else. If they have other issues with the employee they must be dealt with in another forum. Unfortunately managers love to feel important and show their power so they dig out things that happened five years back. If you do this you kill the whole process. We have also found in practice that managers are terribly short of performance coaching skills. Instead of investing resources in things that do not add value to the organisation, companies can invest in training their managers on performance coaching, the returns are massive.

Trends have changed. Instead of the managers gathering data to support their assessment of the subordinate, it’s now the employee who must keep records related to agreed targets. When the subordinate goes for an appraisal they must carry a file with all their evidence to support their performance. Managers and subordinates must realise that only hard evidence must be used in performance assessments. Also, do not do your appraisals in a hurry. Give subordinates 2 weeks to prepare for appraisals. Do the appraisal in an appropriate place or office and also at the appropriate time. If managers and subordinates dialogue during the course of the time under review surprises will not happen.

My last word of advice to all companies is that even if your system is not the best that you would want the first and more important step is to appraise people quarterly and this must be done religiously. All records of appraisals must be kept in employee files. This is the only way to build a high performance culture.

Memory Nguwi is the Managing Consultant of Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm. Phone 481946-48/481950/2900276/2900966 or cell number 077 2356 361 or email: mnguwi@ipcconsultants.com or visit our website at www.ipcconsultants.com or visit our blog www.ipconsultants.blogspot.com