By Ian Carter, ActiveOps
Cast your mind back to the start of the pandemic – Operations teams everywhere were hyper-focused to transform the way their business operated, as hybrid and remote working became the new normal. But today, the huge strides operations teams made have started to shrink, and the timing couldn’t be worse.
So, if you are starting to see this downwards spiral in your own organisation you are not alone – In fact new research from ActiveOps revealed that operational performance around the world is slumping, with growing levels of capacity being wasted at a time when you are expected to stretch your existing resources further. In some cases, productivity gains made during the pandemic have been entirely wiped out. As businesses brace for turbulent times ahead, you urgently need to refocus and get performance back on track.
This is why getting better at how you run operations deserves a place on the COO agenda alongside digital transformation this year. Running operations effectively is fundamental to an organisation’s success and it is also a differentiator—given the same market context, compliance constraints and customer base; if a company is more agile, it carries less latent capacity and can deliver better service. But you need data and intelligence to make better decisions and achieve peak performance.
In this blog we explore operational trends across different geographies and look into the five metrics that impact operational performance and the levers you can pull to buck the trend to reclaim those gains.
How are operations teams performing around the world?
In our new quarterly OpsTracker: Performance Tracker for Operations report—which draws on OpsIndex data aggregated from thousands of operations functions globally—we’ve mapped the journey operations teams have taken over the past three years and analysed the regional disparities going into the pandemic and how performance has changed.
Despite the scale of disruption caused by COVID-19, operations teams were quick to get to grips with the situation—in part because many had already started to digitise and streamline their processes. This created an environment where operations teams across all regions not only survived the pandemic but meaningfully amped up their performance levels.
For a while, things were looking good. And then… the intensity that had carried organisations through the pandemic faded. The consequence: operational performance has eroded sharply. In the UK and Ireland, for example, back-office operations teams are now performing at a lower level than they were before the virus struck. Organisations in the UK and Ireland posted a score of just 47.5% at the end of last year—down by almost 20% from its pandemic high of 57% in the second quarter of 2021, and over 10% lower compared to pre-pandemic.
While the moves have been most extreme in the UK and Ireland, that trend is playing out around the world, with all OpsIndex scores receding from their pandemic-era peaks. Scores in North America are now higher than pre-pandemic, but performance eroded from peak pandemic levels (from 57.6% to 53.5%). By contrast, Australia and New Zealand have seen steady improvement—though capacity is still left unused and is now showing early signs that it may follow the downward trend in the coming quarters.
The good news is there is a way to turn this post-pandemic slump around—and it involves using OpsIndex data.
The 5 metrics every COO needs to optimise operational performance
The OpsIndex measures how well operations are being run, within the variety and complexity of the underlying business activities. It provides comparisons against five metrics —agility, control, effectiveness, efficiency, and focus—that are agnostic to processes or business structure and focused on the indicator of how well organisations are running their operations. It rates operations on their performance for each metric and then calculates an overall score.
To get an idea of how this works in practice, picture a bank with two back-office departments that operate in complete isolation. One looks after mortgages and the other looks after insurance services. As economic conditions deteriorate, mortgage applications are likely to fall, resulting in less work for the mortgage department. That means capacity gets squandered and may increase the risk of layoffs. At the same time, insurance claims become more in demand, resulting in more work for the claims team than usual, stretching resources to their limits and likely needing overtime to keep up—creating more expense for the bank and increasing risk of burnout.
Now let’s consider how the five OpsIndex metrics could help fix this and how you can use these insights to optimise your own operations performance.
Agility
What is agility?
Agility measures how easily operations teams can flex resources by spreading work between different teams to manage peaks and troughs in workload.
A high agility score therefore signals that organisations are skilled at balancing changes in work volume without forcing employees to work faster or cut corners. By boosting agility, teams can ensure work is completed efficiently and on time.
Take the bank in our example above. Imagine now instead of operating in silos, the mortgage and claims teams can work collaboratively as work volume dictates. If insurance claims are in high demand while mortgages drop off, staff from the mortgage team can simply jump across and take on the other teams’ work.
How can you improve agility?
Prevent your operations team from working in silos and ensure they have the knowledge and skills necessary to work across different departments to manage spikes in workloads. This means using the spare capacity you have to train and cross-skill your team in the areas that require the most support and where demand is most volatile.
What’s the impact?
A 1% increase in agility equals a 1% increase in capacity.
Control
What is control?
Control measures how good operations teams are at planning and delivering on those plans.
Organisations with high control scores typically excel at forecasting future workloads across teams and therefore have a solid understanding of workforce capacity, to ensure they are always operating close to their optimal level of performance.
Now that the bank in our example has ditched its departmental silos, it becomes much easier to allocate work to the right people at the right time. No mortgage staff sat around twiddling their thumbs, for example.
How can you improve control?
Improve your understanding and get better at using data to more accurately predict inbound work levels. This helps you to plan more effectively and manage your team so they are consistently delivering against those plans.
What’s the impact?
A 5% increase in control equals a 2% increase in capacity.
Effectiveness
Effectiveness measures how well operations teams can keep work in progress on track or ahead of schedule. The effectiveness score highlights the overall service level being provided and therefore whether or not the operations team is meeting service expectations. A very high effectiveness score can potentially indicate that organisations are only staffing for peaks, resulting in frequent periods of unused capacity.
In the example of our bank above, a very high effectiveness score could indicate both mortgage and claims teams are overstaffed, so even when sharing resources, there are still too many people for the overall amount of work coming in.
How can you improve effectiveness?
By better flexing resources and having more control over planning and delivery, you can ensure your teams is more effective and avoid amassing hefty work backlogs.
What’s the impact?
Increased effectiveness equals improved service levels.
Efficiency
What is efficiency?
Efficiency measures how successfully operations teams can meet challenging but attainable work targets.
A high efficiency score indicates that organisations are getting the most out of their employees, whereas a low score suggests they are squandering capacity. Boosting efficiency levels is the best way to improve employee productivity.
In our example, by sharing resources across teams, workers will be more efficient because there will be less idle time even if their department is quieter than normal.
How can you improve efficiency?
By improving agility and control scores, you can ensure you are squeezing the most out of your team and resources.
What’s the impact?
A 1% increase in efficiency equals a 1% increase in capacity.
Focus
What is focus?
Focus measures how much time operations teams are spending on core day-to-day activities. Focus scores are reduced by time spent on non-core activities, such as holidays, sickness, meetings and training. A high focus score could mean employees are overworked, risking burnout in the future. It could also suggest that organisations are failing to invest sufficiently in the training and development needed for teams to be more agile and to competently handle different types of work.
What is focus?
Focus measures how much time operations teams are spending on core day-to-day activities. Focus scores are reduced by time spent on non-core activities, such as holidays, sickness, meetings and training. A high focus score could mean employees are overworked, risking burnout in the future. It could also suggest that organisations are failing to invest sufficiently in the training and development needed for teams to be more agile and to competently handle different types of work.
In our example above, the bank has been able to scrap its silos because it has invested in training to ensure mortgage staff are agile enough to seamlessly absorb any excess cash services work.
How can you improve focus?
It’s important to align focus levels to the requirements of the business—if agility levels are low, your organisations should seek to reduce focus to concentrate on skills training. If efficiency levels are low, your organisations can ensure workers are more focused on core activities.
What’s the impact?
A 1% increase in focus equals a 1% increase in capacity.
Striking the right balance
It’s important to understand that all five metrics are interconnected. If you push too hard or pull too little on one metric, it could negatively impact another. Other metrics require you to strike a careful balance—to boost your agility levels, you may need to reduce focus on core work by increasing training and development (getting the balance right is important—too much training and those new skills may end up going unused). By monitoring how these metrics interplay with each other, you can maintain the right balance, fine-tuning levels as needed to achieve optimal operational performance.
But 2023 is going to be tricky – cutting costs will need a different way of thinking- as simply reducing headcounts won’t be the answer this time. The winners in the coming months will be organisations that can create an operating environment that is both efficient and also a satisfying place to work. To achieve this organisations need access to better data and metrics that can help operations leaders to more effectively plan and manage incoming workloads, while balancing the peaks and troughs through smarter work allocation, ensuring your teams is always operating at peak performance.
By making improvement across these five key metrics, you can transform the way you run your operations and help your organisation build the operational resilience it needs.
Want to know more?
If you’d like to know more about operations around the world and get inspired to improve your operational performance you can read the full report here.
Though light on romance tips, our latest report, Are you recession ready? How to do more with less, gives you plenty of tips for how to handle your operations during a recession to not just survive, but thrive. Click here to download.
