Case Study: Performance Excellence Improves 401k Services

Opportunity: A top-ten mutual fund provider had established a well respected 401k services business, providing 401k plan administration and record-keeping services to many major U.S. corporations.  The 500-member 401k service business, only fifteen years old at the time, had enjoyed substantial growth with minimal competitive pressure.  However, as the industry was beginning to mature, there were increasing pressures to compete for the most desirable customers, and to achieve operational efficiencies which would generate acceptable margins.  Plan service teams had struggled to focus on unique requirements of major clients, yet maintain efficiencies necessary for competitive pricing.  Most work processes had evolved informally, with modifications introduced locally, resulting in significant inconsistencies in quality and effectiveness.

Performance Excellence Audit: Reviews of operational procedures, critical incidents and meetings with clients identified several issues which could impact operations effectiveness:

Operating and Management Process Improvements: Centered around the Principles of Performance Excellence, an organization-wide "Competitive Excellence" initiative was launched, specifically to reengineer the most promising core processes of the business.  Sixteen core processes which provided "deliverables" to customers were identified, and eight were selected for reengineering.  Reengineering was defined to mean concurrent improvement of process quality, customer satisfaction, productivity and cycle time - not simply a cost-cutting or manpower reduction effort.  Cross-functional, cross-hierarchical teams were given responsibility and facilitated to map, analyze, redesign, develop and implement whole-process improvements.  Managers adopted the role of "mentors" and participated on all process improvement teams.  Core process redesigns resulted in the creation of high-volume transaction teams organized around core processes, supported by a few specialized support members to handle exception transactions.  Process controls and performance measurements were established for each core process, and performance data for all core processes were made available to all members of the organization on the company's intranet.

Results:  Major improvements were achieved by all process reengineering teams.  The collective impact of the teams' process improvements was projected at nearly $90 million total savings over the next five years.  Specific process improvements included:

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