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Creating better synergies through KPIs

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The continuous growth of the cleaning industry in the last few years has led to the emergence of professional service providers and end users who believe in not only defining and setting standards but also in finding modes to effectively monitor these and in the process also linking them to the comprehensive performances of their businesses. Julian Harison, Strategic Projects Director, OCS spoke on ‘Understanding Key Performance Indicators’ during the 9th edition of the Clean India Show, 2012.

In India, the contractual relationship in the cleaning industry between a client and a service provider resembles that of a master-servant. The service providers are not equals in that majority of the time. All the intellectual property innovations, technology, management processes & development all is left in the hands of the client. This kind of an order makes it hard for the service provider to add value to the client’s core business and this leads to low cost, low price and commoditising of the cleaning business. To change this order there is a need to usher in professionalism in the business by bringing in the technical information of setting up Service Levels Agreements and Key Performance Indicators in the discussion between the service providers and the clients.

KPIs are loosely defined as a tool that helps the organisations achieve organisational goals through managing and measuring the progress and performance of a given task. The expectations of the client are articulate and for a service provider it is necessary to have definitive and concise set of requirements that will help them to deliver accordingly. When a contract is being set up, the client as well as the service provider sees the benefits in defining the service levels and standards, the specifications including what, when, where and how a given task is completed. The KPI enters the picture after the goals have been setup to ensure the goal is achieved and that it is tangible and measurable for monitoring and management.

The KPIs can be linked to incentivisation; in a basic model it is linked to the contract but it can have a direct approach and could be in the form of financial rewards for achieving the agreed standard. The same implies for penalisation, if the standards set are not met. For e.g. while undertaking a contract in a food production facility, the KPI includes ensuring 92% of cleanliness everyday, if the percentage is not achieved the factory comes to a halt until the given standards are met. This has serious financial implications to the client that may be passed down to the service provider in the form of financial penalties.

When a new relationship is started with the client, a discussion is held on service contracts and service levels where the KPIs are identified and defined as part of contract management system.

The KPIs fit easily into the quality management system as it is structured. The service provider has to make sure that the service provided is not just good but in line with the service levels. The service delivered to the clients changes with respect to the end customer. Care has to be taken to see that the customer is the receiver of the service or the occupier of the buildings where the service is provided or the small group of people that tend to liaise with the service providers in regard to the facility service contract.

The KPIs are measured proactively through timely audits that are carried out through different levels. The audits provide with a proactive feedback for the service provider to check if the standards are bring met. The customer or the client both are subjected to have a subjective opinion that may not necessarily be in line to the technical standards already in place. So the commendations or complaints the service provider receives through customer feedback forms a part of reactive feedback that helps the service provider with the information that can be used as an objective while setting future KPIs. If customer perception is measured as the subjective area of the customer, then customer satisfaction can be used as one of the KPIs. Information collected has to be analysed so that the process can be changed as customer responses are based on emotions that have little bearing with meeting technical perceptions.

The KPIs have to be meaningful and client driven; discussion and negotiations have to centre on the needs of the client as it is the client that is spending money to benefit his business and therefore, the service provider has to ensure that the services provided is adding value by understanding client’s requirements that may not necessarily match its perceptions. The KPIs have to be measurable and specific. There is a need to define everything to a service standard that has to be worked on to make sure the client is aware of the said standards.

KPIs are based on input as well as output. In India, the input model is preferred where majority of the contracts are labour based. Here it is assumed that all the intellectual properties lie with the client and the service provider only provides with the staff and the number of people present at the site takes precedence on the kind of work done by them. So here the attendance of the staff becomes a KPI. In output based KPI model, the goal achieved is taken into consideration; it could be anything from cleaning standards to output specifications for consumables used. While setting up a contract and KPIs, the scope, breadth and service range of the contract have to be taken into consideration, the definition of scope with reference to cleaning contracts and service elements forming a significant part of the contract. The standards have to be clearly defined, as KPIs have to be specific, measurable and tangible. With reference to input and output, the service provider faces an enormous challenge to add value and become a partner to the client as all the intellectual property in input lies with the client. In output, the objective of the client is known to the service provider who then chalks out plans using his expertise to meet the requirements in most efficient labour and cost manner by providing with a high value solution.

The client’s main objective is to put his best foot forward by ensuring better customer satisfaction. So if the service provider can showcase that it can help the client in attaining the goal while establishing a relationship based on partnership, then it would make it easy for the client in selecting a service provider. The service provider is also rightly allowed to protect his interest and work only in an amicable fashion with the client of its choice.

The facility management sector is generally considered as a cost centre and therefore is often based on price alone. The sector is fighting the view that it does not contribute to the client’s core business and being a cost centre the client attempts to source the service at the lowest cost. The client does not consider the value the service is adding to his business; the service is treated as a commodity that is purchased at a cost. The service providers have to demonstrate that there is a link between their core facility services and clients’ business and only when the clients are satisfied with the proof, will they stop buying the service as a commodity. To gain the trust of the client, the service provider has to meet standards with efficient work and not base the work done on head count. To progress forward, the service provider has to invest in training and retention of employees and this will add value to the client and give a better understanding about the service provider to the client.

There is a need for the industry to be strong and support compliance as only when a small percentage of business become non compliant, does it become a competitive advantage. Compliance is a legal statutory requirement and it has to be strongly adhered to. The service provider is obligated to look after its employees and pay them in a legal, honest and compliant manner. The penalty clauses should account for profit instead of turnover and incentives should be included for encouragement. In case of expectations of the clients, the service provider should not only meet the set standards but also supersede it by turning his performance into a benchmark.

The facility management consultants should provide services that will convince the CEOs and MDs of the client that that the service provider is not a cost centre but is a value added service and a profit centre. The client hires a service provider as he believes that the facility services in not his core business and to focus better on his core business, the service is outsourced. So it is up to the service provider to demonstrate the link that will prove that the work done by it has a positive effect on the client’s core business. In areas where cleanliness has a major impact on the footfalls of customers leading to an increase in revenue, the customer satisfaction will help gauge the level of the service being provided. This helps in building a strategic relationship with a client where the service provider and the client are equal partners.

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