Performance management in call centers lessons,

pitfalls and achievements in Fujitsu Services

Abstract
TranslateAbstract
This paper provides an overview of Fujitsu's sense and response approach towards performance
management. It is demonstrated using a case example of call center performance as part of Fujitsu
Services. Call centers (or contact centers) are often used as case examples of how not to measure
and manage performance. An operational bias towards efficiency measures often fails to provide the
customer focus needed and even has dysfunctional consequences. This case study demonstrates
how Fujitsu moved away from the efficiency trap, and completely redesigned their performance
management system to focus on their customer needs and the intangible drives of value creation. It
will highlight the lessons learned, the pitfalls as well as the achievements. [PUBLICATION ABSTACT]

Full Text
TranslateFull text

Turn on search term navigation

Headnote
Summary This paper provides an overview of Fujitsu's sense and response approach
towards performance management It is demonstrated using a case example of call
center performance as part of Fujitsu Services. Call centers (or contact centers) are often used as
case examples of how not to measure and manage performance. An operational bias towards
efficiency measures often fails to provide the customer focus needed and even has dysfunctional
consequences. This case study demonstrates how Fujitsu moved away from the efficiency trap, and
completely redesigned their performance management system to focus on their customer needs and
the intangible drives of value creation. It will highlight the lessons learned, the pitfalls as well as the
achievements.
Keywords Performance measurement (quality), Call centres, Performance management, Customer
satisfaction
1. Introduction

Call centers are an integral part of most industries today. They play an essential role in today's
business world, and are often the primary source of contact for customers (Miciak and Desmarais,
2001). The call center industry has experienced incredible growth on both sides of the Atlantic,
which, according to Datamonitor (2002), is set to continue. According to Reuters, the Western
European call center market as a whole is expected to grow by 12 percent annually. In European
countries, such as the UK, more employees work in call centers than in many well-known industries,
and figures estimated that in 2001 2.2 percent of the UK population were working in call centers.
Miciak and Desmarais (2001, p. 351) state: "Call centers are changing the way companies
communicate with customers and are a strategic asset in delivering exceptional service quality.
Companies that focus on customer loyalty are increasingly using their centers to differentiate their
product or service offering and drive customer satisfaction."
According to the Call Center Association (1999), a call center is a physical or virtual operation within
an organization in which a managed group of people spend most of their time doing business by
telephone, usually working in a computer-automated environment. However, it seems that the nature
of call centers is rapidly changing, with CRM being a hot topic in call centers today entailing strong
investments in technology for loyalty and growth. According to Prahabkar et al. (1997) call centers
allow a company to build, maintain, and mange customer relationships by solving problems and
resolving complaints quickly, having information, answering questions, and being available usually
24 hour a day, seven days a week, 52 weeks a year. Mitchell (1998) argues that call centers can
form the heart of successful customer relationship management strategies.
There is increasing evidence that call centers are gradually migrating into customer contact centers
(Acey, 2002). Customer contact centers handle all relationships with the customer and utilize multiple
channels, integrating traditional channels of telephone and fax with newer technologies such as email, SMS, and WAP. According to Reuters (2002) a contact center is an operational group within a
business, which is concerned with the development of customer relationships, using integrated
technology solutions and business processes. Miciak and Desmarais (2001) state that today's call
centers are complex operations that require a combination of technology, process, and human talent
in order to succeed.
However, it seems that the human aspect is often ignored in today's call centers. It suggests
that performance management in call center environments missed the evolution seen in the field of
general business performance management since the beginning of the 20th century right through
until today. This evolution can be described as one from the machine age to the information age

(Crainer, 1998), or from scientific management to the management of today's complex and global
knowledge economy.
This evolution started with Taylor, who was later much criticized for his view that there was one single
best way to fulfill a particular task. According to Taylor it is only a matter of matching people to a task
and then supervising, rewarding and punishing them in accordance with their performance. In
Taylor's view there was no such thing as skill and all work could be analyzed step-by-step, as a
series of unskilled operations that could then be combined into any kind of job (Crainer,
1998). Performance management systems used at that time reflected this view with a focus on
operational efficiency. The stopwatch was the critical tool of that time. Thismanagement approach
was later criticized as inhumane, and it was not long before people like the
French management thinker Henri Fayol recognized that the esprit de corps is a vital factor for the
success of organizations, contrasting Taylor's view that any identification with fellow workers was a
distraction rather than a motivation. The evolution of business performance continued with the
recognition that other aspects than efficiency and financial output are contributing to the
overall performance of organizations. The financial bias needed to be balanced
against performance criteria, such as stakeholder satisfaction including customers and employees,
quality, know-how and intellectual property. This resulted in the development of various performance
management and measurement tools including the balanced scorecard (Kaplan and Norton, 1992)
and the performance prism (Neely et al., 2002) to name just a few.
When we look at the way many call centers measure and manage their performance today it is easy
to forget that the world has moved on from Taylorism and scientific management of mass production
organizations. Sometimes referred to as the "sweatshops of the Western world" or "new dark satanic
mills," call center performance measures are dominated by stopwatches and measures such as time
to answer a call or call duration. Tayles et al. (2002) maintain that call centers are very competent in
capturing information about efficiency, but pay little attention to the qualitative employee
characteristics that create value for the organizations and its customers. The authors continue to
argue that call center agents would normally be assessed in terms of "number of calls taken," "ability
to answer the customer query," or "number of productive hours against the number of hours worked,"
in other words, in terms of their productive value and efficiency. The problem with these measures of
productivity and efficiency is that they are of little worth when it comes to measure value added
(Tayles et al., 2002). Burger and his colleagues from Maastricht University (2000) state that, in order
to manage well, managers in call centers "need to ensure that the measurements accurately portray
what management wants to be measured. The effective management of high quality voice-to-voice
service delivery could be adversely affected by the absence of a valid measurement instrument."

2. Measuring performance in call and contact centers - the efficiency trap

According to Neely et aL (2002) performance measurement can be defined "as the process of
quantifying the efficiency and effectiveness of past action." Call centers are typically producing many
measures of performance, sometimes numbering in hundreds (Miciak and Desmarais, 2001). Miciak
and Desmarais maintain that the majority of measures are operational efficiency measures and have
to do with telephone technology (e.g. average talk time, abandon rates, etc.) in use and adherence
of employee standards of practice (e.g. occupancy rates, calls per hour, etc.). Gilmore and Moreland
(2000) identify the following measures of which all were reported on wall displays in various call
centers.
Number of calls answered within past ten minutes.
Calls waiting to be answered, that is "in the queue."
Number of agents currently taking calls.
Number of agents waiting to take calls (free agents).
Number of "not ready" agents.
Number of agents on outgoing calls or on a call to another agent.
It was identified that agents paid close attention to the display and that they would only go for a break
if the displayed call situation would allow it.
There is little evidence in the literature about performance measures in call center environments.
However, Tom et al. (1997) indicate that call center manuals provide some guidance about common
measures of call center excellence. Anton (1997) claims that the following measures help to track
quality of call center service (summarized in Feinberg et al. (2000)):
ASA (average speed of answer).
Queue time (amount of time caller is in the line for answer).
Percentage of callers who have satisfactory resolution on the first call.
Abandonment rate (the percentage of callers who hang up or disconnect prior to answer).

Average talk time (total time caller was connected to telephone service representative).
Adherence (are agents in their seats as scheduled?).
Average work time after call (time needed to finish paper work, do research after the call itself has
been completed).
Percentage of calls blocked (percentage of callers who receive a busy signal and could not even get
in to the queue).
Time before abandoning (average time caller held on before giving up in queue).
Inbound calls per TSR eight-hour shift.
TSR turnover (the number of telephone service representatives who left in a period of time, usually
annually).
Total calls.
Service levels (calls answered in less than x seconds divided by number of total calls).
Feinberg et al. (2000) claim that the importance of these measures is confirmed in other leading
publications on call centermanagement (Cleveland and Mayben, 1997; Sparrow, 1991). From the
experience Miciak and Desmarais (2001), organizations rarely measure customer satisfaction with
call center experience measures such as the ones stated above. Feinberg and his colleagues (2000)
empirically tested the 13 "critical operational determinants" of call center excellence by using data
from 514 call centers. Their data shows that only two of the 13 operational determinants, namely
"percentage of calls closed in first contact" and "average abandonment," have any statistically
significant, albeit weak, influence on caller satisfaction. One explanation for this is that technology in
call centers enables them to easily track operational measures and that "we make important what we
can measure" (Feinberg et al., 2000). This assumption is supported by Silverman and Smith (1995)
who maintain that ease of measurement leads to automatic reporting which, in turn, can lead to the
deceptive belief that the reported measures are important and motivating.
Our research and experience provide significant evidence that the current focus on efficiency
measures in call centers can in fact be counter-productive to achieving customer satisfaction (Mary
and Neely, 2004; Parry and Marr, 2004). Many call centers seem to have fallen into the trap of
believing that operational measures such as call duration or average time to answer are indicators of

customer satisfaction. The fact is that they are not; they are only measures of efficiency, which in turn
is often seen as a determinant of financialperformance. Most call centers seem to miss the important
link between employee satisfaction, service quality, customer satisfaction, and profitability.
3. The Fujitsu case study
Fujitsu Services is one of the leading IT service companies in Europe, Middle East and Africa. It has
an annual turnover of 2.4 billion (C3.9 billion), employs 15,400 people and operates in over 30
countries. It designs, builds and operates IT systems and services for customers in the financial
services, telecommunications, retail, utilities and government markets. Its core strength is the
delivery of IT infrastructure management and outsourcing across desktop, networking and data
center environments, together with a full range of related services, from infrastructure consulting
through integration and deployment.
In 1999 there was a growing realization at Fujitsu that the traditional approach to performance
management was failing customers. Operating in the IT outsourcing sector, Fujitsu found it almost
impossible to differentiate itself in a very aggressive marketplace. A functional focus resulted in a
lack of cohesion and fragmentation. Many client accounts were operating at contractual obligation
and no higher, while 15 percent were at critical levels of dissatisfaction and were unlikely to be
renewed. Furthermore, the turnover of front-line call center staff was 42 percent.
Fujitsu found that 40-90 percent of incoming service requests were entirely preventable. This
highlighted where Fujitsu were incurring unnecessary costs, and more importantly, where they were
not meeting the needs of customers. The message was stark for Fujitsu. It had to look at what was
creating value for customers, what was not, and then stop doing what was not creating value. It
became clear that if it could identify the causes of institutional waste and remove them at the source,
it could gradually decrease the time spent on value restoration and increase the time spent on value
creation for the customer.
This was an opportunity to not only re-design the organization but to change the way Fujitsu worked
with its customers and even change the service offerings. It was clear that customer satisfaction was
a given. Customer success, however, became the new goal.
3.1 From make and sell to sense and respond
Leadership at all levels

Leadership is fundamental to the success of any change program. A full leadership discussion is
beyond the scope of this paper. However, the leadership principles adopted within the sense and
respond approach are best characterized as "transformational," and are based on intrinsic motivation
and the creation of possibilities for others to succeed in a way that provides choice, not ultimatums.
A few have tried to implement sense and respond by selecting the techniques and tools they feel
comfortable with and ignored the leadership modules, this results in a failure to challenge the
accepted wisdom of current operations. This illustrates the need to develop leadership at all levels,
and break the traditional view that it is the responsibility of "management" alone to challenge the
thinking and working practices. Leaders at all levels address the difficult questions of integrity,
alignment to purpose and provide a view of reality with data.
Implementation phases
Fujitsu began to redesign its services with a new emphasis on people, the problem-solving process
and value creation. This involved the identification of training needs, the deployment of new skills,
and the reorganization of roles and responsibilities. New keyperformance indicators and service level
agreements were built around the business goals and business rules of clients, not the processes
and targets of Fujitsu service staff.
Commercial contracts between Fujitsu Services and its clients had to be restructured to realize
mutual benefit from call reduction. Many clients are now charged for each potential user of the
service, not the number of calls placed. Below we will outline the different phases Fujitsu went
through to implement its new performance management system: Phase 1 - learning to sense
View the organization from a customer perspective.
Evaluate value chain measurement horizontally and vertically.
Understand front-line roles and responsibilities.
Phase 2 - learning to respond
Re-educate management.
Introduce a new theory of management.

Replace make and sell mass production theories, with sense and respond theories which
incorporates systems thinking and lean production.
Phase 3- leading change
Utilize transformation leadership theories.
Employ cognitive behavior methodology.
Operate within a leadership and coaching framework.
Award staff and managers with accreditations.
Phase 4 - mobilizing
Create an organization capable of designing itself against customer demand by implementing an
enterprise value-managementframework:
Provide detailed change programs to transform the corporate infrastructure.
Implement a business process management system including a high-level measuring system for
monitoring end to end business processes such as HR, training, commercial, product development,
technology, etc.
Adopt transformational approaches and principles.
Design mobilization plans to transfer domestically and internationally.
Provide in-country support for operations.
The hierarchy within Fujitsu was essentially turned upside down. The role of managers was changed
from one of authority to one of support. The central responsibility for them became the provision of
the necessary knowledge and tools to allow front-line staff to handle the needs of the customer and
assume responsibility for the end-to-end service, even if that service left the confines of the helpdesk
at Fujitsu and was transferred to other client suppliers.
Many managers at Fujitsu found the new sense and respond approach difficult to adapt to since it
upset the old power structure. Some have resisted the change altogether, either because they felt

unsure about the new management approach, or in some cases, because the client contract could
not be changed in order to gain mutual benefit from call reductions.
Some 800 members of staff were initially trained in the sense and respond model. Recently, Fujitsu
has taken its UK-developed model and deployed sense and respond into operations in South Africa,
Australia, and Japan.
3.2 Results at Fujitsu
Front-line staff ultimately own the measurement system, so they drive the rest of the organization.
Womack et al. (1990) agree with the importance of staff. They assert: "If employees are to prosper in
this environment, companies must offer them a continuing variety of challenges. That way, they will
feel they are honing their skills and are valued for the many kinds of expertise they have attained."
Managers become part of the support network to front-line staff in order to release the energy and
potential of the whole organization. Front-line staff start to perform the kind of higher-level tasks that
were previously thought to be totally beyond the scope of the average helpdesk employee.
Advisors have the freedom to choose how to solve a problem and meet customer needs. As a result,
issues that do reach advisors are more substantial. Therefore, advisors have a chance to solve more
challenging problems and gain greater satisfaction. They are rewarded for how much knowledge
they create, not the number of calls they handle.
Fujitsu Services are now able to offer many clients reduced annual costs because they are confident
about removing demand. This approach positively impacted customer and client satisfaction,
employee satisfaction and operating costs.
With sense and respond, Fujitsu Services have had the following results:
Customer satisfaction increased by 20 percent.
Employee satisfaction increased by 40 percent.
Staff attrition decreased from 42 percent to 8 percent.
Operating costs reduced by 20 percent.
Contract renewal and service upgrades amounted to 2200 million.

Roles within the call center are constantly changing in response to the proactive actions of the
people within it. This creates a dynamic culture; and feedback from advisors revealed that they are
highly motivated and proud to be part of an innovative and creative organization. Staff were asked
what difference the new way of working made to them. Some of their comments are as follows:
For Fujitsu, the sense and respond performance management model is no longer a theory. It is a
way of life and a core competence. It has transformed the whole organization. Fujitsu have
redesigned their activities not on market intelligence but on customer-knowledge and endtoend performance data. Sense and respond has become a major differentiator and positions Fujitsu
as industry thought-leaders.
3.3 Results beyond the confines of the call center
Fujitsu recognized the potential of sense and respond and applied it in a wider context. In addition to
the call center environment, these principles have now been applied to mobile engineering, human
resource on-line services, payroll, supply chain, remote ITmanagement, mainframe support, and precontract analysis.
Clients that have embraced sense and respond are also reaping the benefits of working with Fujitsu.
At a major European airline company, helpdesk intelligence has managed to reduce queues at ticket
offices, check-ins and boarding gates. Calls into the helpdesk have fallen by 30 percent, system
availability has increased and client IT operating costs have decreased. In addition, at the
Department of Trade and Industry, customer satisfaction ratings have risen from 5.2 to 8.2, a 63
percent increase. Furthermore, the Learning and Skills Council (LSC), a government-funded training
body providing education and skills for anyone aged 16 and over, reported an increase in customer
satisfaction from "acceptable" to "highly-satisfied" in the space of just four months. Additionally the
LSC account saw:
first contact fix increased by 64 percent;
end-to-end service cycle time reduced by 60 percent;
end-to-end costs decreased by 30 percent;
client requesting that traditional service level agreements be replaced in favor of business benefit
agreements; and
value creation to value restoration ratio moved from 10:90 to 60:40.

Finally, in the case of a leading Fujitsu client that decided to share its IT infrastructure outsourcing
between many suppliers initially awarding Fujitsu its helpdesk contract. Using sense and respond,
the helpdesk staff observed 30 percent of the incoming demand was a direct result of third parties
failing to meet customer needs. When action was taken on the data, incoming calls were reduced by
24 percent in one month. Fujitsu later went on to win the client's entire IT business.
References
References
References
Acey, J. (2002), "Is your call center predictive?", Management Services, February, pp. 20-1.
Anton, J. (2000), "The past, present and future of customer access centers", International Journal of
Service Industry Management, Vol. 11 No. 2, pp. 120-30.
Burgers, A., de Ruyter, K., Keen, C. and Streukens, S. (2000), "Customer expectation dimensions of
voiceto-voice service encounters: a scale-development study", Internation.
Call Center Association (1999), Web site, www.cca.org.uk
Cleveland, B. and Mayben, J. (1997), Call Center Management on Fast Forward, Call Center Press,
Annapolis, MD.
Crainer (1998), "Key management ideas", Financial Times, London. Datamonitor (2002), "Call
centers", Datamonitor, London.
References
Feinberg, R,A., Kim, L-S. and Hokama, L. (2000), International Journal of Service
Industry Management, Vol. 11 No. 2, pp. 131-41.
Gilmore, A. (2001), "Call center management: is service quality a priority?", Managing Service
Quality, Vol. 11 No. 3, pp. 153-9.
Gilmore, A. and Moreland, L. (2000), "Call centers: how can service quality be managed?", Irish
Marketing Review, Vol. 13 No. 1, pp. 3-11.

Kaplan, R.S. and Norton, D.P. (1992), "The balanced scorecard - measures that drive performance",
Harvard Business Review, Vol. 70, No. 1, pp. 71-9.
Marr, B. and Neely, A. (2004), Managing and Measuring for Value: The Case of Call
Centre Performance, Cranfield School ofManagement.
Michell, P.J. (1998), "Aligning customer call centers for 2001 ", Telemarketing and Call Center
Solutions, Vol. 16 No. 10, pp. 64-9.
References
Miciak, A. and Desmanais, M. (2001), "Benchmarking service quality performance at businesstoconsumer call centers", Journal of Business and Industry Marketing, Vol. 16 No. 5, pp. 340-453.
Neely, A., Adams, C. and Kennerley, M. (2002), The Performance Prism: The Scorecard for
Measuring and Managing Business Success, Financial Times, Prentice Hall, London.
Parry, S. and Marr, B. (2004), "Case study -- Fujitsu Services -- designing for value", in Marr, B. and
Neely, A. (Eds), Managing and Measuring for Value: The Case of Call Centre Performance, Cranfield
School of Management.
Prabhanker, P.R., Sheehan, M.J. and Coppett, J.l. (1997), "The power of technology in business
selling: call centers", Journal of Business and Industrial Marketing, Vol. 12 No. 3/4, pp. 222-35.
Reuters (2001), The Future of European Call Centers: From Telephony to Multimedia.
References
Silverman, M.K. and Smith, C.S. (1995), "The effects of human versus computer monitoring
of performance on physiological reactions and perceptions of stress", in Sauter, S. and Murphy, L.R.
(Eds), Organizational Risk Factors for Job Stress, Americal Psychological Association, Washington,
DC.
Sparrow, L.B. (1991), "Managing the telephone enquiry bureau at British Gas West Midlands", in
Littlechild, S.C. and Shutter, M.F. (Eds), Operations Research in Management, Prentice Hall,
London. Tayles, M., Bramley, A. and Farr, J. (2002), "Dealing with the managementof intellectual
capital: the potential role of strategic management accounting", Vol, 15 No. 2, pp. 251-67.

Tom, G., Burns, M. and Zeng, Y. (1997), "Your life on hold; the effect of telephone waiting time on
customer perception", Journal of Direct Marketing, Vol. 11 No. 3, pp. 25-31.
Womack, J.P., Jones, D.T. and Roos, D. (1990), The Machine that Changed the World, Simon and
Schuster, New York, NY.
AuthorAffiliation
Bernard Marr and Stephen Parry
AuthorAffiliation
Bernard Marr is research fellow in the Centre for Business Performance at Cranfield School
of Management and visiting professor at the University of Basilicata, Italy. Bernard's research and
consulting work focuses on organizational performance management, with an emphasis on the
strategic management of intangible value drivers. He can be contacted at
bemard.marr@cranfield.ac.uk Until recently Stephen Parry was Head of Strategy and Change at
Fujitsu Services. As the architect and developer of the Sense and Respond approach he was
instrumental in leading the initiative across many Fujitsu operations in Europe and Asia Pacific.
Stephen is now the managing director of his own consulting firm specializing in organizational
transformation and customer service strategies. Stephen can be contacted at sgparry@aol.com
Word count: 3991
Copyright MCB UP Limited (MCB) 2004