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A bonus from KPIs
00:00 08 Aug 2001
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Mansell is pushing its Key Performance Indicators (KPIs) straight
into its top directors' pockets. In an industry-leading move, the
annual bonus paid to each of Mansell's 20 most senior directors
will no longer be based on the group's profitability alone. Instead
the sum to be paid out will be modified according to Mansell's KPI
results.
The KPI-modified bonus scheme was introduced on 1 January 2001 and it will only be at the end of the year when its full effects become clear. Each director's bonus can rise or fall by 5% depending on KPI evaluations.
Mansell has a range of KPIs, but it ranks the six proactive measurements as the most important (see table). The group's other KPIs, by contrast, tend to be reactive. Richard Woodman-Bailey, business improvement director, said: "We worry less about that group."
The six proactive KPIs have been in place for 18 months and haven't changed. "We use a Mansell standard with its roots in industry-standard KPIs," says Woodman-Bailey.
"Of course it would be nice if we had an industry standard, so we could compare our results with others, but when you get down to the detail of the parameters used in the industry KPIs you find you can make a more meaningful fit for your own company by applying your own sets of figures."
Mansell has found that the best KPIs result from internal benchmarking of its 14 regions. Like other players who want to be at the leading edge of customer relations, adoption of industry KPIs would fail to provide sufficient challenges to staff.
After a project is complete, clients are sent a simple questionnaire: they can either throw it in the bin or complete the row of tick boxes and send it back.
Mansell's view is that clients shouldn't be face-to-face with their contractor when they provide this information. Giving them greater independence means they will reply with greater honesty.
In each of the six tick boxes, the client is encouraged to fill in a figure, marking them on a scale from one to 10.
Last year 60% of forms were returned and Mansell is pushing to get this rate higher in 2001.
Some construction clients, such as Railtrack, have reported bigger differences between the various teams/regions working for an individual contractor than the variation in KPIs achieved by its various contractors. Mansell has found the opposite, its between-team variations being relatively small.
"All the regions' figures have been in the same ballpark," says Woodman-Bailey.
Mansell's policy is to manage any regional differences on a one-to-one basis, leaving its KPI project with the clear mission of grabbing hold of the biggest problem that comes to light and raising the standard throughout the group for that issue.
The acid test is what clients say is the likelihood of repeat business. More than 200 replies were received in 2000 and 90% of these replied positively to the "we'll give you more work" question.
"We're delighted with that," says Woodman-Bailey.
Four of the other questions brought figures in the 80% to 90% range, leaving the issue of defects to bring up the rear at a figure less than that. "It was our poorest figure," says Woodman-Bailey. "Freedom from defects is the area we are now concentrating on and the target for 2001 is an index of 75."
Mansell sets itself the harshest of measurements when it comes to defects. Its description of defects includes work that is incomplete, which could be:
l The result of earlier variations that pushed the entire programme back.
l Late variations, possibly made within days of the end of the job, which means that this work has to be done after handover.
l Snagging of the final trades.
l "Proper" defects, ie. work incorrectly done.
Mansell's policy is to deal with the client direct when seeking responses, rather than copy other contractors who tend to see the designer or architect as the customer.
"We find customers are keen to take up the opportunity of getting closer to their contractor," says Woodman-Bailey.
This opportunity to develop better contacts is enhanced by the provision of a comments box at the end of the evaluation form.
Half of all clients leave the space blank, while the rest take the opportunity for comment. "What they say is very useful," reports Woodman-Bailey. "When it's a compliment about an individual, it's nice to go back to that person and say that the client has spoken highly of them.
"We regard critical comment as extremely useful because if you have shortfalls, it's nice to be able to do something about it.
"I want the truth, as there's no point fooling yourself; when you're not on the next tender list it's a bit late to be wondering why.
"Mansell's bonus, which can be impacted by KPI results, is aimed at helping us make incremental improvements in performance. The target is to stretch ourselves, to prompt our people to move a little beyond where we are now," says Woodman-Bailey.
The KPI-modified bonus scheme was introduced on 1 January 2001 and it will only be at the end of the year when its full effects become clear. Each director's bonus can rise or fall by 5% depending on KPI evaluations.
Mansell has a range of KPIs, but it ranks the six proactive measurements as the most important (see table). The group's other KPIs, by contrast, tend to be reactive. Richard Woodman-Bailey, business improvement director, said: "We worry less about that group."
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The six proactive KPIs have been in place for 18 months and haven't changed. "We use a Mansell standard with its roots in industry-standard KPIs," says Woodman-Bailey.
"Of course it would be nice if we had an industry standard, so we could compare our results with others, but when you get down to the detail of the parameters used in the industry KPIs you find you can make a more meaningful fit for your own company by applying your own sets of figures."
Mansell has found that the best KPIs result from internal benchmarking of its 14 regions. Like other players who want to be at the leading edge of customer relations, adoption of industry KPIs would fail to provide sufficient challenges to staff.
After a project is complete, clients are sent a simple questionnaire: they can either throw it in the bin or complete the row of tick boxes and send it back.
Mansell's view is that clients shouldn't be face-to-face with their contractor when they provide this information. Giving them greater independence means they will reply with greater honesty.
In each of the six tick boxes, the client is encouraged to fill in a figure, marking them on a scale from one to 10.
Last year 60% of forms were returned and Mansell is pushing to get this rate higher in 2001.
Some construction clients, such as Railtrack, have reported bigger differences between the various teams/regions working for an individual contractor than the variation in KPIs achieved by its various contractors. Mansell has found the opposite, its between-team variations being relatively small.
"All the regions' figures have been in the same ballpark," says Woodman-Bailey.
Mansell's policy is to manage any regional differences on a one-to-one basis, leaving its KPI project with the clear mission of grabbing hold of the biggest problem that comes to light and raising the standard throughout the group for that issue.
The acid test is what clients say is the likelihood of repeat business. More than 200 replies were received in 2000 and 90% of these replied positively to the "we'll give you more work" question.
"We're delighted with that," says Woodman-Bailey.
Four of the other questions brought figures in the 80% to 90% range, leaving the issue of defects to bring up the rear at a figure less than that. "It was our poorest figure," says Woodman-Bailey. "Freedom from defects is the area we are now concentrating on and the target for 2001 is an index of 75."
Mansell sets itself the harshest of measurements when it comes to defects. Its description of defects includes work that is incomplete, which could be:
l The result of earlier variations that pushed the entire programme back.
l Late variations, possibly made within days of the end of the job, which means that this work has to be done after handover.
l Snagging of the final trades.
l "Proper" defects, ie. work incorrectly done.
Mansell's policy is to deal with the client direct when seeking responses, rather than copy other contractors who tend to see the designer or architect as the customer.
"We find customers are keen to take up the opportunity of getting closer to their contractor," says Woodman-Bailey.
This opportunity to develop better contacts is enhanced by the provision of a comments box at the end of the evaluation form.
Half of all clients leave the space blank, while the rest take the opportunity for comment. "What they say is very useful," reports Woodman-Bailey. "When it's a compliment about an individual, it's nice to go back to that person and say that the client has spoken highly of them.
"We regard critical comment as extremely useful because if you have shortfalls, it's nice to be able to do something about it.
"I want the truth, as there's no point fooling yourself; when you're not on the next tender list it's a bit late to be wondering why.
"Mansell's bonus, which can be impacted by KPI results, is aimed at helping us make incremental improvements in performance. The target is to stretch ourselves, to prompt our people to move a little beyond where we are now," says Woodman-Bailey.
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