VOLUME 26 NUMBER 11
1994
Performance Management as
the Key to Customer Service
Stephen Macaulay and Sarah Cook
In this article the authors describe how good
performance management benefits the
organization in serving the customer. They outline
the steps managers can take to develop and
motivate their staff to give of their best.
In energizing the team to deliver superior
business success and customer service, managers
have a difficult but crucial role to perform.
They must encourage excellence without
peering over people’s shoulders, build motivation
and commitment, measure, review and reward
performance. The ability of managers to deal with
these issues rests on understanding and applying
the techniques of performance management. In
today’s customer-driven environment maximizing
staff performance is essential, as staff numbers
have been reduced and more is expected from
those who remain.
What Is Performance Management?
It is an approach to management which seeks to
harness and focus employee performance. A key
visible sign of performance management is that
each member of a team is able to answer these
questions:
● What is expected of me?
● How am I doing?
● what shall I do next?
● What help do I need to do better?
Performance management gives you as a manager
the means to implement your goals and
responsibilities in serving the customer internally
and externally. It allows the components of your
team’s performance to interlock to get the best for
the customer.
Managing performance involves a cycle of
clarifying business goals and then agreeing
individual objectives and standards of
Industrial and Commercial Training, Vol. 26 No. 11, 1994, pp. 3-8
© MCB University Press, 0019-7858.
3
performance. With coaching, development and
reward, improved performance is possible. This
will contribute to success in giving customers
what they want, which leads into a further cycle
of setting goals and objectives, as targets are
raised and refined (see Figure 1).
How Does Good Performance
Management Benefit the Organization?
It provides a basis to manage staff effectively to
deliver quality service to the customer because
everyone is working at full strength and pulling in
the same direction. In particular, managing the
performance of your team effectively will bear
fruit through:
● Accountability – everyone knows what they
are responsible for and can be held
accountable for it.
● Quality improvements – performance targets
are well-defined and capable of measurement
and improvement.
● Good communication – there is a clearly
identifiable means to discuss performance:
roles are clear and so are expected standards.
● Achievement can be readily recognized and
rewarded. In this way work can be
stimulating and satisfying for the individual.
A Framework for Success
There is no simple formula for success in
performance management. However, we suggest
this as a framework:
● commitment by managers to the process;
● an atmosphere of respect and support, so that
communication is open and feedback is
regularly given;
This article is based on a Chapter from How to
Improve Your Customer Service by the authors,
published by Kogan Page, London, £9.99.
 INDUSTRIAL AND
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Serving the customer Purpose

Review, recognize and

reward performance
Performance
Key result areas

Determine company
and department goals
Coach and
develop

Agree individual objectives

and standards

Figure 1.
The Performance Management Cycle
● a definite link between performance and
reward (monetary and non-monetary);
● both the manager and his or her staff are
committed to achieving identified goals.
In the organizational context, how do you ensure
people are working towards the right goals?
Key Result Areas
Managing the performance of your people enables
everyone to know what they are doing and how
they are doing against defined yardsticks. It
provides clarity between managers and their staff.
This clarity starts by agreeing on the
fundamentals. For each job you should ask: why
does this job exist? What is its primary purpose?
What are the key services that the job holder is
providing to others? The answers to these
questions allow you to define key result areas –
what uniquely the job holder is responsible for.
For most jobs you can group all the activities
someone performs under a few major headings.
There are usually about four to eight key outputs
or major things you deliver to others (see Figure
2). Typical key result areas for a restaurant
manager might be the provision of:
● catering supplies;
● restaurant services;
● visitors’ lunches;
● hygiene standards;
● budgeted revenue.
Key result areas are made clearer by defining
standards or measures which provide indicators of
success. Examples include levels of customer
complaints, backlog of work, response times,
value of service contracts, unit cost per employee.
A manager would normally start with an analysis
of his or her own job to set an overall picture and
Figure 2.
Key Result Areas
then work on each role within the team. To be
effective and gain commitment, this should be
done as a joint exercise with the job holder. It can
provide interesting insights and understanding for
both parties.
Setting Objectives
To achieve results against these key result areas,
many managers find it vital to set goals or
objectives. Objectives should be set which
address the priorities of the moment. Typically
such objectives cover three-to-12-month time-
frames, but might be as short as a month or a
week because they are within sight of the
individual, yet long enough away in time to
achieve something meaningful. Objectives can be
group or individual.
To be effective, objectives need to be SMART,
i.e.:
● Specific;
● Measurable;
● Achievable;
● Relevant;
● Time-bound.
Here is an example of a “woolly”, ill-defined
objective, compared with a more explicit and
useful objective. The first objective makes too
many assumptions which could lead to disputes or
a mutual agreement to settle for second best when
an objective is not met. The second provides less
room for disagreement and allows the employees
to measure their own success.
Ill-defined Objective
Reduce customer complaints
SMART Objective
By next April, reduce complaints by 15 per cent
from level at 15 November measured quarterly.

4
 VOLUME 26 NUMBER 11
1994

The number of objectives set will vary from job If you fail to do this then performance will
to job. Six is about the maximum in any job. It is suffer. Signs of lack of motivation in a team
better not to set too many objectives, otherwise include apathy and indifference, lack of
you will lose their main benefit which is to ownership of problems, poor performance and
direct energy towards the most important poor time-keeping, unco-operative attitude and
priorities. unwillingness to change. Each of these has
profound implications for serving the customer;
How Do You Make Performance Management the bored look, the slow pace, the indifferent
Work in Practice? shrug are insidious signs of a death-watch beetle
All experienced managers testify to the gnawing at the fabric of an organization.
difficulties in achieving consistent high quality Everyone is different and recognizing what
performance. Here are some pointers to consider. motivates each person is hard, particularly when
they may not even know themselves. There is a
Commitment wide range of theories on what motivates people.
Management commitment is key here. Make sure Many of these feel remote to the average
you are prepared to follow a performance manager, but they do help you to understand
management process through and involve your what assumptions you make in managing others.
staff all along the line. It is important that the They help you to formulate your own ideas. One
objectives set are relevant and achievable. If you that has proved useful to many managers was put
or your manager is willing to waive objectives forward by the behavioural scientist, Abraham
aside at the first sign of a crisis, you will fail to Maslow. He said that we all have needs to
make them “stick” – a common problem with satisfy, but what is uppermost will depend on
implementing objective setting as a management where we are in a ladder on hierarchy of needs,
tool. But equally this does not mean pressing on with basic needs of food and shelter near the
regardless with out-of-date objectives – this base and self-respect and self-fulfilment at the
makes the process a sham and demotivates the top.
employee. In these times of change be sensitive to n
the need to review and modify objectives in line
with new business requirements and to set new Managers should
priorities. Do not get too preoccupied with
appearing inconsistent. It is vital that the
allay fears and
employee shares the appreciation of the priority insecurity
placed on the objectives.
n
Motivation and Performance
Porter and Lawler suggest a direct link between
Imagine you are the manager of a busy customer the effort a person puts into a job and the
service department. How do you ensure that satisfaction gained through the reward. In
customers receive a consistently high standard of
practice, it is much harder to be sure what is a
service?
motivating reward which will lead to effort, or
Good performance over time will come only
that it is as rational as this model suggests (see
from well-motivated staff. As a manager this
means having a good understanding of people’s Figure 3).
needs and the part work provides in meeting
those needs. It means creating an environment
where team members can turn to you and one If I
If I try succeed Is it of
another for encouragement and support. It also will I what is the value to
means that staff feel that their work is rewarding succeed? outcome? me?
in some way, probably that it meets some client
needs, and contributes to company objectives and Effort Good performance Reward
success.
Everyone has needs to satisfy and many
important ones relate to work. Your job as a Affected by Assisted by (Not
manager is to help engender the right climate to desire • a meaningful task necessarily
to perform/ • feedback financial)
satisfy these so that each person in your team ability
makes that extra effort to lift and sustain good
performance. This will translate itself into Figure 3.
customer satisfaction. Motivation and Performance

5
 INDUSTRIAL AND
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Security
Some managers manage by fear. This, coupled
with insecurity caused by the economy, will
almost certainly lead to reduced performance.
The more insecure people feel, the less willing
they are to risk change or to be very productive.
While no one can give predictions with certainty
in an uncertain world, the least you should aim
for is to keep people well informed of the
business situation and to avoid nasty surprises.
Spell out clear objectives and give feedback on
successful performance and remove excessive
ambiguity or overlap in roles to give a greater
sense of security.
Belonging
One strong motivational need that you can
address is to encourage your group to feel a sense
of identity and belonging. You should do
everything you can to help promote this through,
for example, recognizing achievements and
successes by a team. Other means include
birthday celebrations, business review meetings
with a buffet afterwards, a department team in the
local charity run, an outing for a meal.
Responsibility
Employees will usually feel good about being
given responsibility, a chance to take decisions in
their own way and be accountable for that. This
needs trust and offers help and training, should
they be needed. Customer service often benefits
from this approach, as it allows problems to be
sorted out quickly without red tape.
Involvement
People perform well when they feel part of a
team. You can help encourage a team approach by
involving everyone as much as possible and
keeping people well informed. Some companies
have successfully set up employee service quality
teams to promote improvements from employees
themselves. In this way people work because they
enjoy working together to solve issues and they
feel proud of their group.
Feeling Valued
To help meet the need to be recognized and
valued, create a climate of noticing and
celebrating success. Recognize publicly when
someone has done a good job. Ken Blanchard and
Spencer Johnson have made famous the phrase
“catch someone doing something right”. Success
will often breed success. Regular feedback will
make even the negatives more palatable. Many
managers are diffident about giving praise. Our
6
advice is “Do it sincerely and do it often. You
can’t give enough praise”.
Coaching for Performance
A manager has a vital role to play in enhancing
employees’ skills. This can be achieved by
providing day-to-day coaching on the job rather
than relying purely on training courses to develop
skills. When coaching your staff, set realistic
performance objectives, provide guidance and
support to your staff and, importantly, feed back
how they are doing and encourage them.
n
Coaching is
vital to
develop skills
n
In the same way as managers encourage their staff
to treat customers as individuals, remember to be
flexible in the style and approach of each of their
staff.
Reward and Incentive Methods
Pay
It has become increasingly common for managers
to advocate that pay should be linked to
performance, to provide motivation and feedback.
The extent of this will differ from job to job and
from company to company, from 100 per cent
commission to a token reward as part of a fixed
remunerable package. The introduction of
incentive methods can help you achieve better
results. But to be effective you should ensure
individuals can influence the desired outcome and
that the results are measurable.
You should consider:
● who – individual, team or company;
● what – money or a token;
● where – which locality;
● when – monthly, quarterly, annually;
● why – what behaviour you are supporting.
Payment for achievement of objectives. This can
have a powerful impact on getting target tasks
achieved, though you need to take care that
other, non-targeted areas do not suffer and that
competition between groups or employees does
not become destructive.
Employee good performance awards can lead
to definite improvements if the culture is right.
However, such schemes need to have clear and
 VOLUME 26 NUMBER 11
1994
fair selection criteria if they are not to
demotivate lots of others who wonder why they
have not been chosen.
Payment for suggestions. Suggestion schemes
can work well, though they may “run out of
steam” after a while. To work successfully there
needs to be an easy method to send suggestions
and they need to have a fast turnaround. Some
companies award attractive prizes such as a
foreign holiday.
Non-monetary rewards can be beneficial
motivators, from a thank-you letter, to a meal out.
Link rewards to customer satisfaction. Both
monetary and non-monetary rewards can be
linked to the attainment of customer satisfaction
targets. In our experience this is a powerful means
of reinforcing the importance of customer
satisfaction throughout the organization. Rewards
can be made when teams reach improvement
targets or for specific achievements such as speed
of telephone response or friendliness and courtesy
with customers. Such rewards can be made to
both teams and individuals. Importantly, they
must be seen by those involved to be relevant and
fair.
n manner. Agree the agenda.
Targeted rewards
help focus on
the customer
n general. Follow the same principles to
Make certain that the target level of customer
service is not attained at the expense of other
aspects of the service. For example, the
improvement of overall telephone response is a
more customer-oriented achievement rather than
the speed of answering the phone. In the latter
case the customer’s call may be answered
quickly, but the customer may be kept holding
on the phone and may not be transferred
efficiently.
Performance Reviews
The relationship a manager builds with his or her
staff is critical to sustained performance. A vital
part of this is letting employees know how they
are doing. Everyone needs feedback. If they are
to perform well, this should take place on a
regular basis and culminate in a formal
appraisal. Periodic performance review repays
the time and effort involved. Above all, do not
wait until appraisal time to agree actions and set
7
new targets – this should be part of an ongoing
process.
Many managers fight shy of carrying out
appraisals: they prefer to “let sleeping dogs lie”
rather than risk an uncomfortable meeting. Maybe
they fear a drop in performance. Such fears are
rarely borne out if reviews are skilfully carried
out. A performance review is more likely to lead
to a full exchange of views and clarity of
commitment to actions if you heed the following
guidelines:
(1) Prepare beforehand. Select examples of
different kinds of performance – good, poor
and average. Think about the most
appropriate style for the discussion –
telling, joint approach, consultative, largely
self-appraisal.
(2) For major reviews, give plenty of notice –
at least a week – to allow the employee
time to prepare.
(3) Confirm understanding of the purpose of
the review, which is improvement not
blame.
(4) Ensure a quiet, uninterrupted setting.
(5) At the review, start in a positive, receptive
(6) Listen carefully and summarize regularly,
checking joint understanding.
(7) When you criticize, describe what you
observe and its effect. Be specific, not
praise.
(8) Do not hold a defensive post-mortem; look
forward to what you can do to make things
better in the future. Cover all aspects of
performance – good, bad and average, and
certainly do not just dwell on problems.
(9) At the end, summarize each key point.
Check understanding and commitment. End
on a positive note.
(10) Do what you have agreed to do by way of
follow-up action.
Summary
Good performance management provides direct
benefits to the organization through a rigorous,
focused approach to the achievement of goals.
The manager is pivotal in providing leadership to
make this happen.
A manager can create conditions conducive to
a high performing team by:
 INDUSTRIAL AND
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● agreeing roles and key responsibilities;
● setting clear, measurable and realistic
objectives;
● monitoring how well these are achieved.
To ensure optimum team performance, managers
need the skills and knowledge to:
● have a good understanding of what motivates
their staff;
● decide on the most appropriate rewards and
incentives;
● provide regular feedback;
● review performance and set new objectives.
No one pretends this is easy or that, once a
process is running, a manager can sit back. But
few organizations have a choice in today’s
competitive environment.
As one manager commented: “We are on a
tightrope of rising customer expectations and
intense cost control. Our people are what pull us
through. We owe it to them to manage them
well”.
Stephen Macaulay is Training and Development
Manager for the international computer software
company, The Santa Cruz Operation. Sarah Cook
is Director of the customer care specialists, The
Stairway Consultancy, located at Richmond
Bridge House, 417-421 Richmond Road,
Twickenham, Middlesex TW1 2EX. Tel: 081 744
9936; Fax: 081 744 0469.