Posted: July 15th, 2015

Operations Management

Operations Management

Paper details:
Read the article ‘Getting the numbers right’, Resource Item 6.2. Identify the approaches BT uses to promote TQM in the company. What are the benefits to the customer?

Resource 6.2
Getting the numbers right

Being right first time is the start in the challenges facing BT Operator Services Directorate, the UK’s leading telephone number information and operator services provider. Its rigorous deployment of total quality principles, flexible staffing policies and willingness to put itself to the test help it to meet one of the stiffest service quality workloads in Europe.
Company overview
BT Operator Services was formed in October 1990 following a major company re-organisation of its parent, BT. It was joined by International Operator Services in April 1991 to provide a fully integrated structure for Great Britain. Part of BT’s Personal Communications Division, the organisation provides: national and international telephone number directory information services (including telex and fax numbers); a bulk number list service; special assistance and billing services; call connect services for international travellers; wholesale services for other licensed operators such as cable TV companies; free emergency services assistance; a free blind deaf and disabled persons’ directory assistance service; an electronic database of telephone numbers for remote access by customers; and international directory services for 136,000 BT employees.

The organisation delivers these services through 44 national and three international directory assistance centres, and 20 national and five international operator assistance centres. Its workforce currently numbers 8,900 and consists of both BT employees and some 3,500 agency workers.
BT Operator Services is a volume business. The organisation handles over 700 million calls every year ¬ including some 540 million directory enquiries (people looking for someone’s phone number in the UK or overseas) with the remainder being requests for operator assistance (such as help with placing a call). The organisation’s potential customer base is huge ¬ `any person with access to a telephone’, according to its 1995 European Quality Award application document. In its home market in the UK, this includes more than 20 million customers of its parent company, telecommunications giant BT, together with the customers of other UK licensed telephone operators, overseas telecommunications companies and administrations.
While BT Operator Services does not yet have a single major competitor across its entire range of products and services (see company overview), Mercury Communications provides directory information for its own customers and for Publications Limited some cable television companies. In addition, a growing number of organisations provide number information for niche markets.
Four million new personal customers came onto the BT network over the past ten years to take the total over the 20 million mark, while the number of business customers has risen by 2.4 million in the same period to a total of over six million connections. The number of providers is on the increase, too, largely in the form of cable TV companies offering telephone services as part of their overall package. All of which adds to the volume of business for BT Operator Services, which offers information on behalf of many licensed telephone operators in addition to its parent.
Trevor Boon, quality programme manager, describes the directory assistance operation as a `straightforward number information business’. But the sheer scale of the operation means that it is no simple task to meet quality targets of speed and accuracy of response demanded by both BT and the UK’s telephone regulatory authorities. `The biggest challenge is keeping the database up to date,’ Mr Boon explains. `Every night there are roughly 40,000 changes in the form of people stopping service or changing number and new ones signing up. The number of exdirectory (unlisted) customers is also a major factor in our being able to meet customer requirements ¬ this can be a significant percentage of our residential customers in some areas.’
Having the right number available is certainly the key to the business, but that is just where the complex service quality challenges start. One key issue hinges on the fact that most callers to directory assistance would rather not have made the call. They are really interested in the phone call that follows the one to directory assistance. `People only talk to us because they want to make the next call,’ Mr Boon explains. `They want what the transaction with us enables them to do. But if they do not get through, they will blame us, even if the number is unlisted. That is the price of being a front-end business.’

Costs and quality
The word `transaction’ is a key one for BT Operator Services. While around 80% of the calls to BT operator assistance remain free – such calls to the emergency services as well as directory assistance and special services for blind, deaf and disabled people ¬ the decision to change for the directory assistance service as part of the tariff rebalancing strategy ushered in a series of new business challenges. BT Operator Services was formed in October 1990 following a major reorganisation of its BT parent, whose chairman, Sir Iain Vallance believes that `change, for a large organisation like BT, has to be really big if it is to be successful. `Incrementalism gets you nowhere.’
Six months after its formation, BT Operator Services began a fundamental change after it was allowed by the regulatory authorities to charge for directory assistance. The cost centreorganisation was transformed overnight into a profit centre which had to pay its way. And the costs of the business were significant ¬ the paybill alone in 1991 was a pure overhead of around £300 million.
By the early 1990s, keen cost control was a key objective in the BT organisation as a whole which had started its massive culture change programme and began implementing total quality management (TQM) practices in the mid 1980s. Faced with an entirely new commercial challenge, controlling costs in a quality way was the key objective, says Mr Boon, who points out that there were some very definite advantages to having access to BT corporate quality programmes. `We have been able to pick the corporate programmes up and tailor them for our own use. There has been a very definite quality drive from the Chairman, which has affected the whole organisation.’
`When the business was established, the new Director of Operator Services, Charles Williams, firmly believed in quality. He really led from the top and he would have done this in order to keep the cost down to the business ¬ whether the service was directly or indirectly chargeable. I don’t think our quality drive was a question of having a price on the service, it was a function of the business we are in and was a means of getting better at it.’
An interesting twist to BT Operator Services’ competitive position is that the numbers they provide to people will not necessarily lead to a call on the BT network. In providing directory and operator assistance for cable telephone operators, BT Operator Services is, in some instances, an enabling mechanism for its competitors. A further complication involves keeping upto-date with changes to other licensed operators’ databases. Perhaps because BT is the dominant telecommunications company in the UK and partly because of its historic background as a state owned monopoly, people tend to assume that they will appear on BT’s database if they have a phone, even if their service is provided by another operator. The relationship with competitors is further complicated because many of the UK’s cable television and telephone services are owned by North American telecoms companies who have formidable expertise in providing telephone services, but who also supply some equipment to BT.
Keeping it simple
Meeting the demands of heightened competition and increased volume demands could be expensive, which is why the organising principles of the BT Operator Services TQM approach play an essential strategic role in the business. BT Operator Services cuts through the complexity of its position by connecting with the dominant service quality and business imperatives in order to provide excellent customer service cost-effectively.
Following the lead set by BT’s corporate values, expressed in 23 simple words (`we put our customers first’ we are professional; we respect each other; we work as one team; we are committed to continuous improvement’), BT Operator Services has a clearly defined mission, vision and goals. Its mission is `to help our customers make calls worldwide’ and its vision is `to continuously lead the world through world class people’. While these are admirably straightforward, the real key to the approach is expressed in the goals which represent the measurable components of the vision: `all our customers say we are exciting to do business with’, `all our people are empowered to serve their customers’ and `achieve zero waste’.
The organisation works systematically and energetically towards each of these goals. Its quality council ¬ which consists of the director and his directly reporting managers and is responsible for the mission, vision and goals ¬ drives the total quality programme by directing action aimed at delivering results under nine holistic critical success factors (CSFs). The CSFs are: understanding our customers’ needs; business planning; total quality implementation; customer first leadership; access; customer information systems; committed people; competent people; and managing suppliers. Each quality council member owns and develops one or more of the `strategic programmes’ that address each CSF.
Key change programmes (KCPs) play a pivotal role. These programmes are specifically designed to deliver a measurable benefit in terms of time, cost and quality. KCPs already completed include `Quality Management System Implementation,’ which focused on providing people with clearly defined roles and responsibilities, procedures, standards and processes. In late 1993, it led to Operator Services becoming the first nationally organised part of BT to achieve ISO 9001 registration. The `Leadership Programme& Involving Everyone’ KCP involved all managers during 1993 and emphasised the role of the manager as a role model who lives the BT values, and was extended to all employees during 1994. More recent change programmes are focusing on total quality management implementation and process management implementation.
Clarity of direction is further strengthened by BT Operator Services’ practice of making quality an integral part of the business planning process. Each year the company produces a five year business plan together with a quality plan and budget (QPB), which since 1993 has been structured around the European model for business excellence. The QPB addresses the improvement and resource requirements for the next budget year and is reviewed monthly. KCP improvement activity forms part of this process and is reviewed quarterly to check progress against key measures such as agreed customer perception. Each budget holder is personally accountable for expenditure against the QPB. External measures are important too. Benchmarking plays a key role, with North American and some Scandinavian telecoms companies as key targets. The search for benchmark partners within the telecoms industry is getting harder as competition intensifies, so BT Operator Services has now extended its programme to include other call handlers such as mail order operations, transportation companies and providers of package delivery services.
Strength in flexibility
Maintaining high quality performance in a highly flexible workforce is one of BT Operator Services’ key challenges. The business makes extensive use of agency workers and its most productive centre is staffed entirely by part-timers. Far from jeopardising the quality of service provided, this flexibility serves the business well in a number of ways. Lower direct costs is one obvious benefit ¬ as the agency workers are not directly employed by BT, the cost to the business is minimised. The decision to move to agency workers was taken early and, though it has contributed to the release and redeployment of some 20,000 people since 1991 in voluntary programmes under BT’s extensive corporate downsizing efforts, it has not led to any reduction in the overall quality of service. Some workers who left under the voluntary release have even returned as agency employees, a situation which pleases BT Operator Services because it can be doubly sure of their abilities.
The effective use of sophisticated technology plays its part in ensuring consistency of service, but because the workers are provided by companies who qualify for inclusion as key suppliers on the BT Operator Services Supplier Index their quality is assured. The nature of the job of a telephone operator points to a further quality and business benefit of flexible working arrangements. `It is a pretty relentless task being a directory enquiries operator ¬ a very good one can clear 600 calls in a standard day,’ Mr Boon explains `Part-timers usually do fewer hours so they are a lot fresher at the end of the shift.’
Variations in the volume of traffic are a further reason for maintaining a bank of high quality workers on call. Demand for international numbers peaks during the summer tourist season, for example, and BT Operator Services has found that foreign students are particularly happy and well-equipped to meet this seasonal need. Getting the balance right between agency workers and a core of full-time people is important, but many of the headaches are minimised by BT’s policy of not discriminating between agency employees and its own. All employees participate in team briefings and refresher training and have full use of all BT facilities. Indeed, surveys undertaken under the people satisfaction criterion of the European model for business excellence produce consistently higher results from agency employees than from BT’s own people ¬ although Mr Boon points out that satisfaction ratings were 87 and 91% respectively.
Measuring satisfaction
There is a close connection between employee satisfaction and customer satisfaction at BT Operator Services which speaks volumes about the depth of its total quality culture. This link is maintained by presenting monthly customer satisfaction results and longer term trends in a form that shows how individual directory assistance centres have performed in the eyes of their customers. The information is gleaned from an extensive BT corporate exercise involving 6,000 to 7,000 customer interviews each month.
The results feed into a scheme for recognising success. Centres have to achieve certain scores in terms of speed of answer, customer satisfaction and a range of other measures in order to get the quarterly award for best centre. The winning centre is given a certificate from the director of operator services and money to hold team events. In recent times one centre team went on a trip to Spain, others give the money to charity. But there is no doubt that it is a prize worth winning and it has led to healthy, quality-based competition between centres. The recognition model, based of the European model for business excellence, has had a very positive effect on people satisfaction and is currently being refined to take more account of performance in terms of the `enablers’ as well as pure `results’.
As front-line service providers, the operators themselves not only directly influence the customer satisfaction, they are actively involved in complaint logging and resolution. Operators are encouraged to take ownership of problems and do all they can to ensure that customers have their problem solved by the first recipient. This key empowerment issue is reinforced by training operators to be fully aware of the range of options they have available in helping customers reach a satisfactory conclusion to their call. The cost implications on both ends of the line are given careful consideration: there is only so much help a caller wants when he is paying for the call. Some customer service measures are more complex than they seem. Speed of answer, for example, is not a one-way improvement street. The number of customers who complain that their call is being answered too quickly, thereby throwing them off their guard and resulting in a longer handling time, is closely monitored.
One major cause of customer dissatisfaction was easier to predict: price. But thanks to the efficiencies delivered through its total quality programmes, BT Operator Services was happy to respond by introducing a 45% price cut on the inland directory assistance service in 1994. Mr Boon points out that the move was particularly satisfying because it allowed BT Operator Services both to share the benefits of its total quality programme with customers and send a serious message to existing and potential competitors. He is hopeful that the focus group exercises aimed at empowering all employees to work together to identify and eliminate the root causes of customer dissatisfaction will have a similarly beneficial competitive impact.
Doing it faster
Eliminating dissatisfaction is one thing, but satisfaction of itself seems too neutral a word to associate with the BT approach to change (even though BT Operator Services won the 1994 BT Award for Quality in Customer Satisfaction). BT Operator Services’ goal of becoming `exciting’ to do business with was deliberately stated as such to convey a challenging and extraordinary target.
According to Mr Boon, this impatience for change will be carried forward into the next phases of the total quality programme. `At the end of our total quality management implementation key change programme, we said we should have done it faster. We should have done it in two years and not three. We are a more resilient organisation than we thought at first,’ he says. `Do it faster, that’s the lesson. Perhaps people underestimate how enthusiastic and adaptable their people are. It is actually harder to keep the momentum rolling over three years than it is over two. We are just going round into relaunch and we are going to do it in two years this time. No doubt we’ll get to the end and say we should have done it in one.’