Benchmarking (performance management)

Client:

European Investment Bank

Project Type:

Completion:

Mid 2019

Project Scope

The client had created new outsourced contracts for services over the previous year and was in the process of reviewing the performance management approach and its effectiveness. The intention was to learn how best to incentivise the contracts and achieve optimum performance;
The client was unsure how stringently to apply risk and reward strategies and was in favour of punishment as a tool for avoiding underperformance. They were dissatisfied with efforts to reward what they saw as easily achieved and produced mediocre performance;
The client wanted to determine what other large institutions were doing about performance incentivisation and learn from them where possible;

The client created an in-house steering group to oversee the development of the initiative and procured Coretex Consortium from a seven-year term consultancy framework. The client brief for the assignment included:

An analysis of the effectiveness of the current performance management arrangements, by service contract;
An international benchmarking exercise to determine good performance management practices in large institutions;
Production of a refreshed set of KPI’s for each service area, including a proof of concept;
Production of a performance improvement strategy;

The client for the initiative had responsibility for policy setting and not operations within the organisation. This meant that the work required close working with operational leaders that had accountability for the performance of contracts, and needed an active involvement in setting standards.

There was no client relationship management approach within the organisation, which meant that the operational managers were responsible for setting standards without directly engaging with the business to determine if the standards were optimised to produce the best valuer for customers.

Project Outcome

The client transformed their approach to quality from 5-star (which had become both unworkable and expensive) into a balance of contractor incentive with customer essential need.
Malus (punishment fines) were reduced and supplier performance was realigned to meet essential client needs;
The focus of measurements changed from measuring activities to measuring outcomes and benefits;
In house operations leaders felt that their concerns over the excess reward of suppliers for mediocre performance had been addressed and were satisfied with the project outcomes.

Coretex Process

The first stage of the assignment was to understand the current contracts and the performance management regimes. This involved face to face interviews with supplier management and review of quality reporting and monthly client reports;
Key service stakeholders were interviewed to ensure that the service expectation broadly met with their expectations;
In house service leaders were interviewed to determine their view on the effectiveness of the performance measurement regime;
Coretex identified 10 large international institutions including the EU Parliament, EBRD, European Central Bank, NATO and the World Bank. The benchmarking exercise included research into the maturity of their approach and how effective they thought their processes had been. Balanced scorecards, malus/ reward regimes and active customer engagement were identified as good practices;
A broad range of potential KPI’s was identified for each service area, based on good practice. These were prioritised to establish the highest value to the customer outcome; deprioritising measurement for contract governance and basic operational compliance.

Note – In addition to this Performance Measurement focused benchmarking assignment Coretex have carried out many numerical, organisation design and process benchmarking projects including the following organisations: Nokia, Sanofi Pasteur, Anglia Ruskin University, EIB (to create a Benchmarking Protocol), Imperial College London, Sheffield Hallam University, University of the West of England and Liverpool John Moores University.

Benchmarking (performance management)