The following KPIs were set for 2007/08, with our performance against them detailed on page 3.
We must achieve a consistent, strong financial performance if we are to continue investing in the future success of the business and reward our shareholders through the payment of a dividend. Operating margin – which we define as operating profit divided by revenue expressed as a percentage – is the main way we measure our financial performance.
In 2002 we set ourselves a target of achieving a 10 per cent operating margin through the economic cycle. In 2007/08 we set ourselves the goal of hitting a 10 per cent margin for the year for the first time.
Customer recommendation is a key measure of our success. Our Global Performance Monitor (GPM) survey, an onboard customer survey covering all the key stages of the flight experience, together with a follow-up online survey on the arrivals process, provides monthly insights into customers’ views. The survey is carried out by GfK NOP, the independent market research company, and involves more than 55,000 customers each month.
The customer recommendation measure is based on the percentage of customers who, when surveyed, would highly recommend British Airways to friends, family or colleagues. Apart from being extremely important in its own right, we believe that this measure indicates how the customer experience will affect future profitability. Our target for 2007/08 was for 63 per cent of customers to be ‘extremely likely’ or ‘very likely’ to recommend British Airways.
We must run a robust operation if we are to meet our customers’ expectations and create a cost-effective business. Having Heathrow at the heart of our operations, with all its infrastructure constraints, puts a significant strain on delivering operational excellence, day in, day out.
Within our business plan we have focused our efforts on five key areas of operational delivery – the ‘BA Basics’. Among these, departure punctuality is our primary operational performance measure. Punctuality ensures other operational processes run smoothly and remains a key factor in whether customers would recommend British Airways to other travellers.
We call our chosen measure of punctuality ‘Ready to Go’. This measures how many of our flights are prepared for departure at three minutes before the scheduled departure time. So many issues can have an impact on punctuality, but using this measure ensures we focus on the aspects of the departure process within our control. The target range for ‘Ready to Go’ punctuality for 2007/08 was set at 44-48 per cent.
Progressive, high performing organisations are increasingly recognising that involved employees are more committed to organisational goals and values, and more willing to embrace change and improve customer service. Last year we started using an Employee Involvement index, as measured by an all-employee Speak Up! survey. This is run twice a year, with a full version in September and a shorter tracker version in March.
The Speak Up! surveys are conducted and hosted by the independent research organisation, Ipsos MORI, and are completely confidential. As a business we aim to match the involvement scores of other leading service sector organisations, and a target of 73 per cent for Employee Involvement was set for 2007/08.