In the first installment of this article, we briefly discussed a framework to conduct root-cause analysis on business performance problems. In this installment we’ll discuss the first component of the framework in greater detail and provide some examples of applications.
In the first article of this series, we introduced a framework that consists of the four components shown in the diagram below. The first component deals with identifying the problems that are dragging down performance.
This seems intuitive and straight forward. However, it is much trickier in real life. Most organizations experience two common pitfalls when they try to implement the Identify part of this framework: focusing on issues that don’t drive performance and focusing on issues from a very high level.
An example of the first is a financial services company that had a productivity problem among its employees. Projects that normally took a day were taking more than a week to complete. Client calls were not being returned in time and the company was hurting as a result. To remedy the situation, management increased pay substantially for most of the employees. Still, the productivity problem persisted and, in some cases, even got worse. A closer look revealed that the level of pay the company’s employees were receiving was in the upper 80th percentile of the rest of the industry so the issue was not related to money. In this case the company was focusing on the wrong issue altogether.
Focusing on issues from levels that are too high was evident in a call center’s attempt to resolve the long average call time. The manager had the average call time on display at the call center and was prodding his employees to shorten the call time. The results were opposite to those intended; as customer service reps tried to rush the calls the customers became irritated and the calls transferred to the manager increased dramatically.
In both cases it would have been advantageous to the management of both companies to do a little more digging to identify the actual issues they needed to deal with. In the case of the financial products company, the productivity problem was actually caused by low morale among the employees. Identifying that issue would have caused the management to focus their efforts on ways to improve morale rather than throw money at the problem. For the call center, there was a need to drill down a little to understand what controllable activities impact call times and work on those activities rather than just focusing on the result.
It’s very important to make sure that the issues being tackled are the appropriate ones and that they are studied at the right level. In the next installment we’ll discuss prioritizing issues that have been identified in order to ensure the highest return on resources invested in resolving them.