Measuring and Driving Performance in a Technology Shocked Industry
The change in the complexity of vehicles over the last five years is absolutely staggering. We live in an age where every aspect of the automobile is being transformed. Cars are now being produced with a combination of substrates that allows manufacturers to reduce the weight of vehicles to achieve greater fuel efficiency while at the same time improving crash performance. Safety is on everyone’s minds, and Advanced Driver Assistance Systems (ADAS) are now standard on almost every make and model. In addition, automakers are starting to go all-in on electrification as their primary propulsion system for future models. These factors have created an environment where collision repairs are rapidly becoming much more costly than ever before, and the risks associated with failing to perform a proper and safe repair are magnified. This is why it is more important than ever that collision industry organizations have a clearly defined performance management strategy in place.
There are four primary steps to implementing an effective performance management strategy:
- Embrace Competition It seems like over the past five to 10 years, competition has started to carry a negative connotation and is being replaced with collaboration. This should not be an either-or situation: both competition and collaboration are essential. Collaboration is essential to success in organizations, and healthy competition is also extremely beneficial. For example, why do people love sports? We are innately competitive to some degree, and sports fans live vicariously through their favorite teams and feel the excitement of competition. It is important for team members to have an idea of how they stack up against their peers. Simply posting results, in a positive, and constructive manner, can motivate people to achieve excellence.
- Focus on Measuring KPIs that Inform Behaviors There’s a big difference between metrics that are indicators, ones that simply inform businesses about certain functions, and actual accountability metrics that truly give insight into behaviors. The accountability metrics are the ones that should be emphasized to drive performance. In the world of collision repair and auto insurance, there are a number of accountability metrics that can assess results that matter, such as repair labor hours per day, Net Promoter Score, and the percentage of OEM repair procedures accessed as a repair is estimated and performed. These measures provide insight into the efficiency and safety of a repair as well as the overall customer experience.
- Less is More Measuring too many variables poses the danger of diluting the significance of the components that have the greatest impact on the business. Janneke Van Geuns, Head of Insights and Analytics at Google, stated, “The biggest misconception is the perceived need to capture and measure everything and anything.” Organizations must distill their KPIs down to the handful that provide leadership teams with the deepest insights into the behaviors that help them achieve their goals. One example of how “Less is More” can be applied is efficiency metrics. Instead of measuring a variety of cycle-time metrics and trying to make sense of them all, it is much more meaningful to choose one, such as “keys-to-keys,” which measures how many days it took between when a customer dropped off their car at a repair facility and when they picked it up. This one metric can provide insight into repair efficiency, length of rental, and customer service. When a shop is performing well in their “keys-to-keys” cycle time, the odds are that they are also performing well in their other ancillary efficiency metrics.
- Create Visibility In order for performance management to be effective at all levels, teams must have a clear understanding of the organization’s goals and what it means to be successful. The use of scorecards is a critical component to enhancing performance visibility. Team members need to be able to continually access their scorecard to see how they are performing on an ongoing basis, so they can determine what effect their changes in behavior or decisions are having on results. If someone has to wait until the end of a month or end of a quarter, then they have lost any opportunity to make adjustments along the way, in the period for which they are being evaluated.