It’s all very well to have a model of capability, as we have described in a previous blog*. But how do we know that it works? What is the experimental evidence supporting it? Here we describe the work we did in a large mining organisation in Australia.
About seven years ago a consultant – Joelle Williams – described to me the work she was doing for a mining company in Central Queensland. It related to facilities maintenance in four townships where that very large organisation had mines. They had a contractor doing the work and wanted to understand how it and its employees were going about the job, and how they related to the client (the managers and teams on the miner’s side responsible for the work). I suggested that understanding the capability of both the contractor and the miner would throw light on what was really going on. The miner had a set of KPIs that it was tracking quarterly. The appeal of using capability as a complement to KPIs was the hope that it would provide a deeper understanding of the dynamics between the teams, and also help identify the predictors of success.
FIRST PILOT STUDY
The miner agreed to try using capability and commissioned a pilot study to run over three reporting periods. One reason for the miner’s interest was that it wanted to move to a longer term contract with a supplier and, if capability could help secure better results, then they wanted to know before selecting the contractor.
The study was to cover three sets of measurements, at the start, the middle and the end of the study period. At each, capability could by studied in relation to the KPI results. The teams would sit together with the consultant, review the results, identify shortcomings if any, and then decide what initiatives should be taken to improve the results. The next set of measurements would then indicate whether the initiatives were successful, and whether they had any impact on performance as shown by the KPIs.
Capability was measured using a survey producing a fine-grained understanding of the situation in the different teams. Survey results were reported along eighteen parameters grouped in the six dimensions described in a previous blog (see How Many Issues Are There in Capability?).
Here are some of the results we obtained.
KPI RESULTS FOR PERIODS ONE TO THREE – VERY PROMISING
The graph shows that performance increased from ‘Poor’ to ‘Excellent’ over the course of the three reporting periods. This, on its own, is a very positive results for the teams involved. It also validates the use of capability. However, a more complete and complex picture is revealed by a closer look at capability.
CAPABILITY RESULTS FOR PERIODS ONE TO THREE – A COMPLEX PICTURE AND A MAJOR CHALLENGE
The graphs above are for the six dimensions of the model described previously. There are three results per graph, each corresponding to a different capability measurement.
All the issues in red were reported to the client and contractor. They were then prioritised and specific initiatives undertaken to correct the ones deemed most important. What is remarkable is the increase in capability from RP1 to RP2 in three areas which is followed by a drop in two essential capabilities between RP2 and RP3, namely ‘Leadership and Management’ and ‘Relationships and Communication’. Also remarkable is the number of major issues (in red) faced by the contractor, not all of which could be addressed in the short period of the pilot.
The challenge for us was to relate the increase in KPIs between periods RP2 and RP3 (see first diagram) with the apparently contradictory drop in capability in two key dimensions in the same periods, as shown above.
CAPABILITY AS A LEAD INDICATOR OF PERFORMANCE
Our hypothesis was that capability was acting as a lead indicator. If this assumption were correct, then the decrease in capability shown for ‘Leadership and Management’ and ‘Relationships and Communication’ between HC2 and HC3 would lead to a decrease in KPIs in subsequent quarters.
In order to test this hypothesis, we undertook to interview a significant number of team members in order to find out what the mood was at the frontline. The image below shows the findings, including some the comments recorded.
REMARKABLE DEDICATION BY TRADESPEOPLE
The frustration of the contractor management and staff in their relationship with the client is plain to see (left column). However, tradespeople, while aware of the situation, are determined to carry on to the best of their ability (right column). This is a remarkable display of intrinsic motivation. It is especially remarkable considering that, as a group, tradespeople did think that ‘Rewards and Recognition’ was an unresolved significant issue. And it remained so during the duration of the pilot.
EARLY ACTION TO MINIMISE IMPACT OF DROPPING CAPABILITY
Based on the above, we felt confident in making strong recommendations to the client about taking pro-active action in the two areas identified above, that is, ‘Leadership and Management’ and ‘Relationships and Communication’. The objective was to minimise the expected future negative impact on performance of poor leadership and management and unsatisfactory relationships and communication.
As we had reached the end of the pilot, we do not have the capability results for the next (fourth) reporting period. However, the client kept tracking KPIs and informed us, later, that KPIs did drop but that the drop was limited thanks to, according to them, the early preventive action that had been taken to correct capability in the two critical areas mentioned above.
The short pilot study described above enabled us to make the following provisional observations:
- Capability measurements gives a deep and practical understanding of the environment teams operate in, their levels of skills and their attitudes.
- It is an essential complement to performance measurements such as KPIs.
- Improving capability leads to improved performance.
- Capability is a lead indicator of performance.
- Understanding capability gives management the opportunity to take pro-active action to avoid problems or, at the least, to minimise them.
- This can significantly increase the level of influence management can have on future performance, including skills and attitudes of staff.
THE CLIENT DECIDES
Although the points above needed to be treated cautiously, the client was satisfied. He decided that capability should be part of the longer term contract they wanted to sign with a contractor. They wanted capability to be used as complement to tracking performance with KPIs. This decision secured our participation to the contract and gave us the chance to study the impact of capability on performance over three years. It enabled us and the client to learn about capability and the best way to use it to maximum effect.
This is the subject of the next blog – don’t forget to check it out when I publish it. Its title:
DOES CAPABILITY REALLY WORK? – PART 2
I hope you’ll join me then