Who is paying the Bills?

February 8, 2008

Two recent events brought this to mind. First, I was recently discussing organizational performance goals, and the related employee performance objectives with a sales director at a SMB sized organization.

Secondly, reading a CIO Magazine article with Kumud Kalia, CIO and EVP for customer operations at Direct Energy.

While the above interview is geared towards technology executives, the concept is beyond simply IT, and ties in with my conversation on organizational performance and goals.

As stated by Mr. Kalia,

If we define the customer as someone who buys the company’s products and services, then it logically follows that the customer is external to the company. Therefore, customer-oriented employees consider what they do—all that they do—in the context of how this better serves the real customer.

Sometimes it becomes easy to lose sight of this – the customer is the one who pays the bills. So Regardless of what organizational level or responsibility each one of your employees has – they should still be working for the ones that are paying the bills, that is the customer- not their manager, supervisor, department or colleague.

We know who our customer is, right? we know the goals that we want to achieve to improve products or services for these customers, or gain new ones. But do all of your employees know? Are the actions that they are performing and results they are achieving supporting those customers?

The performance review is one opportunity to communicate and measure employee performance towards those goals. And I am not talking wish-washy impossible to measure platitudes such as “Be Nice To Customers”.

First – The performance review process should explicitly take all of your corporate goals;

“Increase customer satisfaction by…”
“Penetrate X new markets…”
“Reduce defects of product by Y percentage points…”

Second, at each level of the organization, the performance objectives must have a direct and measurable link to each corporate goal.

The exact metrics being measured will vary depending on the employees role, but they should all be tied back to those original corporate goals.

The benefits of this include;

1) We can all lose sight of the forest because of the trees – this type of performance goal sheds a light on the “why are we doing this?” question. There are enough cartoons out there joking about performance objective metrics seeming pulled out of mid air.

2) Measurable, concrete results. If an employees objectives are to reduce defects by 10%, it is a measurable fact – it is either met or it isn’t. At the performance review period, you are talking qualitative, factual results. Not opinion, assumptions, or plain guess work.

3) And, as stated by Mr. Kalia, it ensures that all metrics are keeping those top line goals in sight – and those top line goals should be all about the ones that are paying the bills.

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3 Responses to “Who is paying the Bills?”

  1. […] Back in this post titled; Who is paying the Bills? I was stating that your customer is important, and that aligning objectives towards your customer […]

  2. elliotross Says:

    Eva, I appreciate you dropping by!

    For those coming along this post later, Eva had a great post titled; Are You Telling Your Customers Off? (link below)

    In that post she quipped that IT must also realize that customer service is a good thing.

    I put on my most plaintive voice and insisted that this IT guy ‘does get it’.


  3. Eva Says:

    Great insights here Elliot. A clear line of sight to the customer benefit for everyone in the organization is essential.

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