Do you open your email and feel bombarded by messages and reports? Do you have to set aside significant and valuable time every day to read your latest reports and determine if a response or reaction needed? Perhaps you return to them later to reconsider, reanalyze and then respond or react. You may review multiple reports on various aspects of your business that sometimes are different, or even conflicting. Your computer provides you with value, but also soaks up large amounts of your time. It can make it hard or even impossible to get around to those management and leadership responsibilities such as coaching, visual inspections, marketing and meeting with staff, vendors or insurers.
It was not many years ago that the collision repair industry suffered from a lack of data and, therefore, a lack of understanding of many aspects of performance. I recall as a dealership body shop manager receiving financial reports from the accounting office. I could understand the basics of profit, loss and expenses. Yet I really didn’t know the difference between a good or bad number in many categories. Then along came 3M ARMS training, which finally revealed how to interpret and influence the data.
When the dealership installed an automated management system, I could access and evaluate financial data. What I learned led to more questions, such as, “Why did the body shop have charges from a horse racing track?” (The answer was marketing, and clarified as an upper management decision that I had to live with. Like I said, it was enlightening.) At the time, I spent a couple hours every week reviewing the provided reports. I could devote the rest of my time to interacting with techs and customers, marketing, estimating, coaching, meeting with upper management, hiring, firing, disciplining and so on.
In today’s world, a typical MSO body shop manager spends at least a couple of hours per day reviewing data, and with other responsibilities, that manager is looking at a computer screen for at least half, if not more, of each day. Yet they still have the same management responsibilities I had at the dealership body shop. While computerized reports and data messages can make us more efficient, there are many duties that take the same amount of time as they always have. While our automated estimating systems provide more accuracy with features to compare different repair methodologies and provide the ability to shop for different parts, it can take longer than it used to, especially when creating a DRP estimate. Have you noticed that most of us are not working fewer hours than we used to? Hence our dilemma: how do we spend adequate time with data to allow us to operate effectively without overwhelming or confusing ourselves? What is the right amount of data and the right amount of time to spend with it to create understanding? How does it affect the efficiencies of our businesses? How does it affect us as people?
“We are now reaching a point in the market where data is driving all processes. And those who don’t efficiently and effectively analyze that data to continue to improve will be left behind,” says Jim O’Leary, VP of repair solutions with Mitchell. “While having access to lots of data and many reports is better than none, we sometimes see people get overwhelmed by having too many numbers to review. The best shops and MSOs focus on the key performance indicators that are most critical to their operating model, and are able to evolve the KPIs that they focus on as their operations evolve and improve.”
An example
I reached out to Denise Koukal, a co-worker and chief information officer with LaMettry’s Collision. She identified 36 reports, not counting reports from DRP insurers, which are shared with upper management. They vary in frequency among daily, weekly, bi-weekly, monthly and quarterly. Of the 26 daily reports, 11 are individualized for each of the seven locations. That amounts to roughly 97 reports per month. The bi-weekly and monthly reports are also individualized for each of the seven shops. As we continued to calculate and run totals, we quickly got to 230 reports per month. The insurers are not always consistent in their reporting, but let’s just assume we get a KPI report from seven companies on a monthly basis. (That’s a conservative number considering the company has many DRPs.) With seven shops, that is 49 more reports. We are now at a total of 279 reports. Our list did not include P&L statements.
When we assume we have a P&L report for each shop, plus the glass department, plus the mechanical department, plus the PDR department, and a grand total report, we are at a total of 290. Essentially, our upper management team sees roughly 300 reports per month. As an MSO, LaMettry’s is a medium-sized regional MSO. There are larger and smaller companies, and also many different ways to slice and dice data. LaMettry’s exact numbers may not be typical, but it is safe to say that other MSOs suffer from the same dilemma.
Seeking solutions
To gain further understanding, Koukal and I traveled to Madison, Wis., to meet with Troy Gates, CEO of Performance Gateway. Gates has been an MSO operator for years, owning Gates Auto Body with seven locations. He developed Performance Gateway, a company that gathers and provides data and information in a number of forms. They currently employ about 90 people. Their customers include insurers, paint companies, OEMs and large and small collision repairers, including consolidators. The business is international, with offices in the UK and Europe.
Gates has clear and firm beliefs about how data should be used to lead and manage. He sees many MSOs facing the data challenge. Time constraints are not the only concern — sending too many reports is inefficient and creates the impression that management is constantly criticizing staff. It is a form of micromanaging. Reporting is a key component of the character of company leadership; it is a tool that can motivate or inspire, as well as demoralize, Gates says. As an analogy, think in terms of a corporate CEO and the board of directors. The CEO’s job is to set a goal and the board — or management — should implement steps to achieve the goal. It is a results-oriented philosophy. He suggested that the owner sets the tone by creating an accountability structure where the staff owns the results. As part of this philosophy, staff is empowered. People want freedom, security and financial responsibility. Accountability can lead to freedom.
Gates also is a believer in exception reporting, a methodology where a reasonable range of performance is established in a given area. You are able to move on to other tasks if the data results fall within the reasonable range. If the results are out of the range, time and effort are extended to understand the cause and changes made to get the performance into the range.
Focusing on the exemptions is a lean way of thinking, says Rick Tuuri, VP Industry Relations for AudaExplore, a Solera Company. “Draw a circle around whatever good looks like, no matter if it is cycle time by tech, parts orders and delivery times, rework, etc. Then focus on everything that falls outside that circle.” There is little value in analyzing performance that is already acceptable, so only extend effort into the areas that can provide value. Think of every minute of your time as dollars in a fund. Spend it wisely and where it can have the most impact.
Exemption reporting is a valuable tool that allows you to see the areas where you are not achieving your goals, Koukal says. “It allows you to drill down so that you can determine what specific areas need to be addressed in order to achieve your goals, essentially determining where you need to concentrate your efforts. Some current reporting only tells you that something is wrong, and then you have to try and determine through numerous means what the issue or issues were,” she says. “Some of us struggle to even know where to turn for that information. The easier it is to access that information, the more successful you will be.”
Gates also believes in the power of change management and data utilization to drive behavior. “Avoid management by conversation. Document an action plan that is results oriented,” he says.
This means focusing on a very limited number — one to three — of initiatives. Provide the needed tools and information. Make the individual accountable for the results. The more accountable they are, the more emotional ownership there is. Don’t micromanage. Frequently review the data with the individual. Bring the initiative to some conclusion before moving on to another.
However data is evaluated and used, it must be tailored for each individual business model. “There is no silver bullet or a list of reports that every collision repairer should use. Each repairer needs to evaluate the reports they need to measure their business based on a number of factors including business priorities, roles within the organization and the best mechanism to communicate the information,” says Mark Fincher, VP of Market Solutions, CCC Information Services.
“When defining what it is you want to measure, you first must identify what the goals are for your business and next prioritize those goals. These should all tie back to your business strategy. Are you looking to grow top line sales? Improve gross margin? Increase your net margin? Decrease cycle time? Create more efficiency among your direct labor? Improve customer satisfaction? Many of you may be saying ‘yes’ to all of the above.”
But priorities are key, Fincher says. “Like a pilot looking at a cockpit instrument panel, a lot of information is important and you need to understand what measurements have an impact on your goals. But what is the most important to you? Pilots watch altitude and airspeed first and if either of those changes unexpectedly, they start to look at the other gauges to identify the issue. So think about what measurements are your altitude and airspeed and what underlying metrics have a direct impact on those KPIs.”
Motives of reporting
As you contemplate your current reporting and its value, consider the motive for each report. Some are to simply inform the reader of a level of performance, such as a sales or cycle time report. The motive is to inform and motivate the individual to strive toward higher performance. Reactions to the report may include inspiration, gratification, disappointment or frustration. Consider the possibilities and the reaction. Will it drive the behavior you seek?
Another motive is to prove action or due diligence. For example, you may have a shop manager create a report that shows they researched the situation to the extent that they can report to you, thus proving their involvement. Again, it is prudent to consider the human aspect. What is their true reaction to the report? Does it motivate or discipline positively? Or does it cause the individual to feel micromanaged? Do they feel that their reporting is only busy work that doesn’t accomplish anything? Are they disciplined enough to address the issue without you requiring evidence? Is there another way to know that they are in fact managing the issue?
Consider the three zones of control for any topic reported on:
1. Control — where the opportunity is great enough to truly control a situation
2. Influence — you can, to some degree, change or alter a situation, but can’t completely control it
3. Observe — where you cannot change or control the situation, only observe its behavior
The zone of control will influence the value of report data. Generally, the more control you have, the greater the value of the report data.
What data to deliver
Consider the need to send reports. It is emotionally satisfying to management to provide lots of data to staff. It allows us to feel that we have done our job in providing tools to them, and thus put the responsibility for performance on their shoulders. It takes away the potential excuse that they didn’t know about a situation.
Yet, we know if our staff is busy, the reality is that they won’t, or perhaps can’t, read and analyze a lot of communication and reports. The influence on our staff is big. Again, this is an issue of our management/leadership style. Our actions as leaders influence their reaction. An alternative to consider is having some reports easily accessible. For example, imagine you have set a goal for a shop manager to have the shop provide X percent of paint and material gross profit. Certainly you would want to provide a monthly or quarterly report on the performance. If the performance was exceeding the goal of X and improving, there would, perhaps, be no need for additional data. In that case, it may be far preferable that the manager devote their time to other areas where they could provide more significant results for the shop. If the performance is below X, the manager’s responsibility would be to research the performance and change it for the positive. It may be helpful that they have access to a report that breaks down material usage by components such as sealer, clear or other supplies. Again, this is a results-oriented philosophy where the shop manager has been empowered and their performance is judged on the results.
One solution
After considering our list of reports and what we had learned, Koukal and I brainstormed how to address the issue for LaMettry’s. The list of reports is the starting point. We considered the company’s three major goals for the year; they include a sales goal, a cycle time goal and a CSI goal. We selected key reports for each that should continue to be sent. We then came to the conclusion that we should segregate all the remaining reports into three action categories: send; make easily available for reference; and eliminate.
Then we considered who should receive each report and who should have access to those made easily available for reference. We came up with a list of five access categories:
- Owner
- Corporate leadership staff
- General/shop managers
- Office managers
- Staff with computer access
With these categories, we went through our list of existing reports and assigned an action definition, action frequency and access definition. This significantly reduced the numbers of reports sent while and re-emphasized company priorities. Additional data is available for those who need or wish to reach out for it.
Stay focused
There are many factors that contribute to determining which reports are right for you. While there are a number of common KPIs that most repairers use, there is no magic list that can be applied to every business. Take some time to think about what is most important for your business in 2014; then determine what measurements will help you achieve those goals. But remember to stay focused. If you select too many measurements, you will end up with analysis paralysis. Once you have your goals prioritized, distribute them to your staff based on the outcomes they can control. Provide them with the proper tools to measure their individual performance at the right level of detail and frequency. Consider the behavioral changes needed to achieve the goals. Consider which reports will provide the tools and drive the behavior.
Start now. So many of us get so busy running the business that we forget to manage the business. Properly measuring performance will put you in control of the outcomes you desire.
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