This is the second of a two-part article on performance measurement for mail centers. In the February issue of Mailing Systems Technology, I covered the fundamentals of workload measurement and two key measures based on workload: cost per piece and pieces per FTE. If you measure nothing else, you should measure cost per piece and pieces per FTE. They are basic to any mail center. As important as they are, however, they don't tell the whole story. A mail center can have impressive numbers for cost per piece and pieces per FTE, but provide lousy service and be a horrible place to work. That hardly describes a successful mail center. So success is obviously defined by more factors than just cost effectiveness and productivity.
Developing measures for these other factors is the focus of this article. This is actually a book-length topic, so my main goal is to outline the process for developing measures and provide some suggestions for you to consider. The basic process is quite simple: identify the successfactors for your mail center, then for each factor identify appropriate indicators of success. An indicator of success is an objective measurement of some critical aspect of a success factor.
For example: cost per piece, which we covered in Part 1, is an indicator of success for the success factors of cost effectiveness. A successful mail center must be cost effective. To know if it is, you need a measurable indicator, and cost per piece fits the bill very well.
Identify Success Factors
Begin the process by identifying the success factors for your mail center. That is, what are the terms in which you would describe success for your mail center? One way to approach this is to look at the two groups who care the most about the success of your mail center: your customers and your "stakeholders." What factors do they look at to determine your success?
Customers care because they depend on you to meet their mailing needs. In their eyes, success is defined by how well you do that and includes factors such as: timeliness; accuracy/quality; cost effectiveness; service quality (human interactions); flexibility; and knowledgeable, professional management and staff.
Stakeholders are those who have a vested interest in the mail center. Upper management and mail center employees are the main constituents in this group. They care because they need you to meet your customers' needs in a certain manner. In their eyes, success will be defined in terms such as: cost effectiveness; productivity; meeting financial goals; customer satisfaction; employee satisfaction; and market share (if applicable).
These factors will be common to most mail centers, but since every mail center is different, you need to do this exercise for yourself. When you have done so, you will have a complete picture of what success entails for your mail center. Each factor you identify describes an important aspect of success, and true excellence requires you excel in all of these areas, not just some.
Choose Success Indicators
Now comes the hard part. For each factor, you need to identify the indicators of success. That is, what can you look to measure in an objective way to know whether success has been achieved or not?
Let's start with a simple example: productivity. The success factor productivity is concerned with the relationship between workload and staffing. Ideally, the ratio between the two continually improves. What indicators can you look at to see if this is happening? Pieces per FTE, which we covered earlier, is a good candidate because it speaks directly to this relationship.
Could there be other measures of productivity? Absolutely. In a large mail center, you might find an aggregate productivity measure to be less meaningful than separate measures for each of your various sub units. An alternative approach would be to look at the ratio of production staff to administrative staff. A mail center with a higher ratio is going to be more productive than the same mail center with a lower ratio.
The number of measures you choose depends on many factors. A basic principle here is that the benefit you derive from the measure must justify the time and expense involved in producing it. For example, if the ratio of productive staff to administrative staff is only marginally useful to you but takes time to produce, you have to ask yourself if it's really worth it.
For some success factors, one measure isn't adequate. Timeliness of service is a good example. The typical mail center works several different mail streams, including: incoming letters and flats; incoming accountable mail; incoming parcels; incoming express shipments; internal mail; outgoing (desktop) mail; outgoing express shipments; and production mail (bulk mailings).
Timeliness is important for all of these mail streams, but there's no single measure that can easily encompass all of them. Theoretically, at least, you could measure cycle time for each one. If you have the wherewithal to do so, great, but if you don't, select the few that are most important to your customers and develop measures for those.
Timeliness is an example of a success factor where your customers' perspectives are larger than what you can easily · measure. Customers tend to think of timeliness in terms of end-to-end delivery time, which includes operations beyond the mail center; e.g., the Postal Service. That makes it a less than ideal measure of the performance of your mail center. A better measure is cycle time, which is the time it takes for mail to move through a process within your mail center. Here, everything is under your control, so it's a very good indicator of success.
Cycle time can be difficult to measure because it involves recording the time movements of mail, which is not ordinarily done for most mail operations. That makes it an add-on activity. Perhaps the simplest way to measure cycle time is to measure the percentage of mail that does not meet a certain time standard; for example, the percentage of outgoing mail that is not dispatched the day it is picked up from the customer. Such a measure cannot tell you average cycle time, and it is only meaningful if the percentage of mail that does not meet the standard is relatively small. Nevertheless, it's a valid and cost-effective way to measure cycle time.
Measuring Success
The process is similar for other success factors. For customer and employee satisfaction, however, many of the indicators of success are likely to be opinions; for example, customer satisfaction with the timeliness of your internal mail service. Surveys are often the best way to measure these opinions. If you survey enough customers, the aggregate score will be a good representation of how your customers actually feel about your service.
Conducting surveys can be laborious, and in the case of employee surveys, the results have to be tabulated outside your mail center in order to provide employees with the confidentiality that will allow them to respond honestly. To minimize this effort, keep customer and employee surveys brief. Focus on the top 10-12 issues. This will not only reduce your costs, but it will encourage a higher response rate. Perhaps most importantly, craft your survey questions so at least some are asked year after year. This allows you to track changes over time.
Using the provided examples and a few others, we can begin to assemble a matrix of all the success factors and measures. It might look something like the chart on page 8.
This does not include all of the success factors identified earlier, but it covers enough so you get a clear idea of how this eventually shapes up. As you build and refine your measurement system, you will come to rely on it to manage. You will find it invaluable for setting continuous improvement goals, for obtaining needed resources, for fending off baseless criticisms of service and perhaps most importantly, keeping your employees focused on things that contribute most to your mail center's success.
Don't Be Intimidated
There is no doubt the process of developing performance measures takes time. Getting started, however, is not that difficult. It's very likely you already have much of the raw data you need to develop several basic measures. Your initial effort would therefore consist mainly in developing ways to formalize and report information you already have. Other measures, particularly those involving timeliness or customer and employee surveys, may require much more time and effort to launch and will have to be implemented over a period of time. Performance measurement is basically a work in progress. Over time, your measures will change as the needs of your customers and stakeholders change, so you will always be tinkering with some aspect of your system. But the key is to get started. Once you do, you will come to understand why you can't manage what you can't measure.
Bill McCart, CMDSM, is the director of Mail Services at the
