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Get a service level agreement organised

Do not get ripped off in an outsource agreement the staff notice it first

The success of the Service Level Agreement (SLA) is also observed closely by your staff. We have seen in our outsource work that staff notice only too well whether their original employer is getting value or just being ‘ripped off’ and often have great fun when it does go wrong. This keen appraisal of how it works in practice impacts upon their own motivation and their relationships with both you and the outsource organisation. This excerpt from an interview gives an indication of how staff can view the situation:
The supplier had people who knew the sites, knew the systems, and so they put a sensible bid in, but the (clients) have always been screwed over contracts, we don’t have a contract team of professionals who know how to handle them (the suppliers). A classic one was colour printers in certain areas, that would not work, couldn’t get colour printing, and in the end there was a lot of banging on the table ‘you said in the contract that you would get us colour printing’ and the outsourcer turned round and said ‘the contract says we will get you colour printers, we did not say they would print in colour (laughs)! So my old company always got screwed on contracts because they didn’t understand what they were reading.

and it happens all the time…

Royston

SERVQUAL – measuring service quality

When determining whether service delivery is meeting service expectations, it is useful to seek the views of service users. Quite often, an organisation will use a SERVQUAL questionnaire to gain the views of service users.

SERVQUAL (Service Quality) is a self-administered questionnaire designed to measure how customers view/judge service quality. Parasuraman et al (1994) defined service quality as the degree of discrepancy between customers’ normative expectations for the service and their perceptions of the service performance.
Parasuraman made the assumption that customers judge service quality by making a comparison between their expectation of the service that they should receive and their perceptions of the service that they actually receive.

Differences between expectations and actual performance are referred to as ‘gaps’. The SERVQUAL instrument can be used to measure any or all of the following five gaps.
Gap 1: Consumer expectation – management perception gap
Understanding the difference between consumer expectations and management perceptions of customer expectations.
Gap 2: Service quality specification gap
The different service standard between management perceptions of consumer expectations and service quality specifications.
Gap 3: Service delivery gap
The difference of service performance between service quality specifications and the service actually delivered.
Gap 4: External communication gap
The difference of communications between service delivery and what is communicated about the service to customers.
Gap 5: Expected service – perceived service gap
The difference between expected service and perceived service from customers’ point of view. Based upon these gaps, five behavioural dimensions of service quality have been identified and are now used in most studies using the SERVQUAL approach.

The 5 Service Quality Dimensions.

  1. Tangibles – Physical facilities equipment and appearance of personnel
  2. Reliability – Ability to perform the service with the promised dependability
  3. Responsiveness – Providing a prompt service
  4. Assurance – Knowledge and coutesy of employees
  5. Empathy – caring and individualised attention to customers

Users of the SERVQUAL questionnaire rate questions on a Likert scale (1 = strongly disagree to 7 = strongly agree). The SERVQUAL instrument comprises 22 statements used to assess service quality across the five dimensions outlined in Table 2 with each statement used twice – once to measure expectations and once to measure perceptions.
I have attached an example of a generic SERVQUAL questionnaire as a PDF feel free to use. Also I have set up an free on-line version that you can use for your own assessments – you can find it here:SERVQUAL Questionnaire

HR Operational Improvement – managing your care staff and delivering better care

Delivering to the NHS effective workforce planning, scheduling and establishment.

The need to effectively manage human capital is placing increased demands on the human resources team in every enterprise. Especially in those organisations managing diverse highly skilled workforces.

  • Are you over-budgeting on agency staff spends?
  • Never totally sure which people will be available for shifts?
  • Spending too much time and money on scheduling?
  • Subject to shutting down facilities due to lack of staff?

These are just some of the issues we have seen within many major institutions including the NHS in the UK. In our experience the staffing and budget issues within many NHS trusts is at least partially due to the difficulties of workforce planning and control. It is necessary in these cases to develop an assessment process that will identify cost improvements and recommend changes in organization and processes that will improve workforce utilisation. You are then able with software providers to implement solutions that deliver the benefits we have found.

To-Dos

  • Scoping the value – the building of hypotheses and identification of improvement areas.
  • Strategic operations review – validation of hypotheses and detailing of the benefits and solutions.
  • Benefit delivery – actions and programmes to deliver the benefits.

Benefits include:

  • Increased understanding and control of working practices and the precise reasons for over-spend at the ward or unit level.
  • Reductions in agency nurse spend by efficient and transparent scheduling of core staff and management of agency staff resource.
  • Reduction in the time taken to schedule and increased staff retention through ability to manage and respond to staff preferences.
  • Reduced training and recruitment spend through ability to target recruitment and training needs ahead of time.
  • A clear establishment procedure

To confirm the potential for substantive improvements the initial two-day scoping should be asked for from suppliers – carried out a non-cost to enable you to assess whether there is indeed scope for improvement and if the consultants are up the job and understand your business. If the answer is negative, you will still have the benefit of a report that outlines how efficiently your operation is organized!

Should we include service credits when we design a service level agreement?

Service Credits in a SLA good or bad idea?

In terms of a general principle it is not recommended to build into an SLA a so-called ‘service credit’ process. In such schemes, when the service measure falls below the agreed levels, a form of credit to the buyer is given.

As an example, a payment schedule is defined for, say, a 98 per cent service level and, should service be 95 per cent, a lower price band becomes applicable – I have also seen SLAs with performance credits, with increased revenue for a supplier should the ‘standard’ performance be exceeded. There are several reasons why this is old-fashioned and bad practice.

* First, the point of a service level is to define the required levels needed to support the business and no more. Improvement levels over time can be defined but the service needed is what the business should pay for – if it is exceeded you may have to increase your targets, but certainly not pay more for just doing the job.
* Second, with a service credit clause you have no leverage over the supplier to fix the problem. The focus should be to restore the service to the agreed levels as soon as possible.

Rather than a service credit clause, it is far better to put in place governance that forces the supplier to act to fix the issue, perhaps to the extent of the customer being able to call in independent consulting advice at the supplier’s expense to support service resolution. This use of an ‘independent’ adviser can be useful in monitoring the overall value of the outsource deal as it matures through its stages. It is important to include this in the SLA and agree the principles and ground rules for such an ‘independent’ with the outsource partner.

Your staff will often see the problems much later down the line if you get it wrong, as one of our research participants said:

“Because the company have these people, they’ve got professionals who only write contracts, and they know how to work them, and the client haven’t got a clue, eventually they tried using some outside firm of solicitors, to read through the contract, but it’s too late then, and even they might not have been professional contract people. And they still got screwed in the end, and they still don’t understand, nobody, I haven’t met anybody who understands what the hell outsourcing is all about, has it saved them a lot of money, no it’s cost them more, have they got an improved service, no it’s much worse, why? Why have they done it? They say ‘oh well we are saving money on pensions’, you are not, you’ve transferred the pension money over, ‘we’re saving money on accommodation’ well you’re not really, ‘we’re saving money on pay’ well you might be saving money on some aspects of pay but look at how much money you are paying the outsourced companies to run these things, and of course the classic mistake they made is, they’re paying for a fixed sum of money, millions of pounds a year, for maintenance of the existing system, nobody mentioned, changes to the system, like, I don’t want the machine here any more I want it in the room next door or in the new building, ah that’s a change to the contract, it will cost you an extra x hundred thousand pounds, and I think the contract in the first six months was something like thirty million over the estimate because they are moving things all the time, closing buildings, building new ones, every time you get a change of hierarchy, it’s new broom, right we will change all this we’ll have the (Dept.) over here and that group over there, we’ll swap those two over, and they do it regularly and it all gets charged!”

Royston