Case Study: Performance Excellence Improves Debt Management Business

Opportunity:  A leading debt-management program (DMP) processing business faced the need to make critical business and cultural changes to survive in a rapidly maturing industry. This company had grown from a home-based startup to a highly profitable $90 million, 700-employee business in less than four years. But the market was maturing quickly, as competitors implemented better technology and reductions in bank fair-share contributions and other marketplace pressures were rapidly reducing profit margins. This company was at risk of going out of business as fast as it had grown to dominate its industry unless it could achieve some aggressive near-term business goals that would dramatically increase productivity and reduce costs.

Performance Excellence Audit:  Meetings with the company’s senior executive team and its management team identified a number of challenges and potential opportunities:

• The senior executive team had identified a set of goals critical to surviving the next 12 months, but the second-level management team had been excluded and was now threatening to refuse ownership of those goals. Although the goals were rather specific, no one knew what changes in the business processes might lead to their achievement. Brainstorming hardly seemed an adequate methodology to identify and prioritize improvement opportunities directly aligned with these goals.

• The company had grown largely on the merits of its primary service line and needed to identify new revenue-generating products or services, but lacked a defined marketing process and organization.

• The business was organized into functional units that demonstrated little understanding of the complete processes that produced customer deliverables. Consequently, improvement projects weren’t identified in the context of their potential contribution to the performance of the whole process, but rather as local improvements. These projects lacked prioritization vis-à-vis their relevance to the newly established critical goals, and created resource conflicts, particularly within the technology organization.

• Over half the company’s employees worked in call center processes, either for new account origination or for existing-account servicing, creating a high dependency on human behavior, yet the company’s performance management system was almost non-existent.

• Call center performance, both for new business development and customer service, was struggling to achieve necessary productivity levels and to reduce costs.

• Revenue opportunities were being lost because prospect follow-up was badly neglected.

• Basic business processes were not mapped and process performers had few performance measures to support problem-solving and decision-making.

Operating and Management Process Improvements:  Having attempted productivity enhancement and performance improvement programs previously with marginal success, the company was initially wary about launching a high-visibility, company-wide initiative. But the executive team agreed that unless a comprehensive approach was taken they would be unlikely to identify and prioritize necessary changes fast enough to obtain substantial current-year benefits. They engaged us to help them conceptualize and implement this initiative, drawing upon models and methodologies we have refined over the past fifteen years.

The Performance Excellence initiative was designed to follow a four-step change management approach:

1.  Awareness: Make the organization aware of the challenges facing the company and develop commitment for the efforts which would be required. A goal achievement sponsor team was formed combining senior executives and middle managers, and they worked together to craft a consensus-based charter and to promote it to the organization. Volunteers were solicited to participate in process improvement teams.

2.  Strategy: Link the initiative clearly to the business strategy. The executive sponsor team worked together to define the core customer processes of the business, and to create a matrix that illustrated which of those processes impacted specific essential business goals. Four key customer processes were identified as having the highest potential impact on those goals.

3.  Process: Cross-functional teams of volunteers were assembled for each of the four targeted customer processes. Using our rapid process improvement methodology, the teams developed flow charts of each process, then conducted analyses for goal-impact opportunities. When analyses were completed all improvement opportunities were aligned and prioritized by the goal sponsor team. The process improvement teams then developed project plans for the highest priority projects and assumed responsibility to execute and implement the projects.

4.  Performance: Because the core customer processes all were highly dependent upon human performance, the next step was to provide Applied Performance Management training to the organization’s supervisors and managers. Drawing upon the detailed process maps, key behaviors were identified and managers were taught to selectively deliver positive reinforcement to performers for improvement of those behaviors. Process controls and performance measures were also derived from these detailed process flows.

Results:  Results were rapid and substantial:

• Identified nearly $7million in revenue increase and cost reduction improvements that could be achieved within the remainder of the current-year.
• Identified over $23 million in annualized revenue increase and cost-reduction improvements.
• Tripled the productivity of the new-business call center operation over a period of twelve months, while reducing its cost.
• Designed a marketing process, recruited key positions and rolled out new products in less than 12 months.
• Within one year, a noted state Work-Life Alliance, a coalition of public, private and nonprofit organizations committed to developing and recognizing favorable working environments awarded the company recognition as an "Excellent Place to Work."

Culture Change:  The Performance Excellence model first and foremost led to rapid achievement of critical business goals of productivity, revenue enhancement and cost reduction. But it also provided several additional, lasting benefits to the company.

• Knowledge transfer: With the guidance of our facilitation, virtually all the work was done by the client’s organization. Skills in process definition, process analysis, project management and performance management were transferred to many members of the client organization.
• Organizational changes: The success of the cross-functional process improvement effort convinced the client to create permanent cross-functional process management teams, as well as an overview alignment team and an integrated strategy development team. Although the functional organization was largely retained, it worked under the guidance of the alignment team and the cross-functional process management teams.
• Cultural changes: The Performance Excellence initiative emphasized a customer-focused, process-centric view of the business, which dramatically changed the company’s functional orientation. Once the capabilities of empowered cross-functional teams were recognized, leadership adopted a more facilitative approach and turned over problem-solving and decision-making responsibilities, so they could focus on strategic opportunities. It became clear that hierarchy and negative reinforcement had been the underlying motivators in the organization’s culture, frequently undermining employee commitment. Executives, managers and supervisors were trained in the basic principles of Applied Performance Management, and taught to deliver positive reinforcement to strengthen important behaviors, and Human Resource policies and practices, as well as incentive compensation, were refined to encourage these management practices.

Revised: April 13, 2008.
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