Tag Archives: Office cost reduction

Bad Process. Bad Customer Service. Common Practice

Yesterday Bank of America put me through a very unpleasant but very common experience. Their ebanking center tried to pay my BofA card account out of a long-closed checking account. The payment was not made; they didn’t notify me of the problem; then I got a late notice and fee. Happens all too often – no big deal. But when I called to find out what happened and straighten things out, I reached a contact center just out of civilization’s reach. The agent tried persuading me I couldn’t enter my online account using the credentials I’ve used before, and I never could have. She was absolutely clueless. So I demanded a supervisor, got one, identified the problem, reversed the fee, etc., etc.

BofA’s problem is endemic. Companies hire raw, poorly trained front line agents who can’t resolve issues a high percentage of the time, either leaving customers angry or having to reroute them to a supervisor – and the companies believe they’re saving money. Any rudimentary process map showing frequencies and costs would blow their “belief” right out the window. Too bad Microsoft couldn’t patent this process, because then others wouldn’t be able to repeat it. But it’s like “monkey-see, monkey-do” out there (my apologies to any monkeys reading). Microsoft and other big call center players start this practice, and before long it’s standard fare.

Where are these companies’ brains? Guess I shouldn’t ask that in a PG blog.

Why Don’t Companies Base Head Count on Meeting Customer Requirements?

 

I just read two news articles this morning of the type that make me gnash my teeth and shake my head. Both involved Fortune companies planned to cut staff by the thousands based on bad financial results. Say what? To these companies, I ask, “Why were you carrying so much excess staff you could do without?”

Most service companies carry double-digit percentage excess staff. Likewise for product companies in their back and front office settings. How do I know? Process redesign, streamlining in particular, plays a primary role in helping clients meet and exceed customer requirements. And we constantly find excess staffing over-distributing decision-making authority, leading to employee disempowerment and creating excess bureaucracy, both of which drive customers nuts. Today’s customers want to deal with well-trained, empowered employees and as few of them as possible – and on the web an increasing percentage wants to research and order commodity goods without any personal contact.

So how does head count typically change after streamlining? By a negative 15% to 20%, in our experience. But rather than streamlining, most organizations throw people at problems, and the more they add the less efficient and effective work becomes. So instead of streamlining to create a win-win for both company and customers, they create lose-lose by overstaffing.

Why do they do this?

Layoffs – Where’s the Learning Curve?

One touchy subject inevitably arises when we design customer-centric process. And I hate to see it happen.

Redesigning process from the customer inwards produces an ancillary “benefit,” which to many execs becomes their short-term ROI justification. While new process designs are adding new value to customers, they’re also streamlining the organization, which can dramatically reduce front and back office FTE requirements, raising the specter of layoffs.

While we always consul clients to first consider using temporary functionless staff for special projects, then reabsorbing them to create “no hire growth,” some layoffs inevitably occur. One of our clients, post process redesign, eliminated 600 front office positions, and our process reworking contributed to the eventual closing of multiple plants. Worse yet, overall demand in their industry was declining, leading to very slow growth.

Two things really bug me about this situation. First, too many companies practice “boom or bust” staffing. They lurch from overstaff to understaffing, because they don’t have a clue how to avoid either excess. Second, necessary layoffs often cut people but not their functions or positions. Process streamlining should reduce functions and positions and does not target specific workers. And in neither case are they learning anything from experience. They just keep repeating their destructive practices.

Not a pleasant topic at all, but I just read an excellent post an excellent post by Ron Ashkenas (co-author of “The GE Workout”) that spot on addresses both things that bug me. If the subject’s relevant, I strongly suggest reading it (link below).

http://tinyurl.com/c329on8

Does redesigning process to cut waste produce similar outcomes to redesigning process to improve customer experience?

Before you protest, I do understand that waste-cutting process approaches can be applied for the benefit of customers. But here’s the difference I’d like to highlight.

Waste-eliminating approaches change internal operations – albeit increasingly to benefit customers. In contrast, customer-experience focused approaches changes what happens at points of customer contact and works its way back inside the company, almost in concentric rings. While customer-sensitive, waste-focused process approaches work from inside the company outwards towards customers, trying to add more customer value at every step – customer experience process methods move in the opposite direction.

I’ve designed process both ways, depending on context. But I do find the outcomes radically different – with customer-experience-based process design triggering far more organizational change and involving much more application-layer technology support (which is not appropriate for every context).

How does my experience square with your hands-on process work? And I hope this doesn’t sound exclusionary, but this is such a ground-level experience that I’m especially interested in comments from experienced process practitioners who have “been there,  seen that” for themselves.

Are Outside-In Practitioners Becoming Overconfident of Their Future?

Hey – I’ve been through this entirely too many times. At the start of the relationship marketing movement; when B2B database marketing got serious; when “micromarketing” started; with TOC (Theory-of-Constraints); and in spades with CRM. All sure bets practitioners could take to the bank. All supposed slam-dunks coopted by parochial economic interests – whether by advertising agencies, media outlets, Six Sigma & Lean, CRM software companies, etc.. Looking back on this history makes me fear O-I is ready for a face-plant.

We’re hearing too much ungrounded exuberance, too many excessive claims, too many ungounded predictions about O-I. And saying that market conditions will force business to go Outside-In  ignores history. Let’s face it straight up. O-I will succede if we make it sufficiently attractive to companies, not because the market “forces” companies to go O-I. And accomplishing this will require much more from the O-I community than the community’s yet prepared to give.

We’re changing market phases now from “Innovators” to “Early Adopters.” To get there, we have to do more than prosletyzing the O-I concept. And to reach some of the penetration levels O-I aspires to, we’re going to have to move on to “Early Majority” clients – which will require an execution level the movement’s not yet close to.

To get O-I into the meat of the marketplace, I believe we have to accomplish four, difficult tasks:

1. Do it right:  Migrating from inside out to Outside-In is a three-step journey: a.) aligning strategy to customers (which requires finely honed planning skills); b.) aligning process to strategy (which we’re best at); and c.) aligning technology to process (which the movement often ignores). Sure we can accomplish quick wins with process change or a customer experience initiative – provided the company already leans O-I, like Best-Buy, Fed-X, Trader Joe’s and USAA . But delivering Outside-In enterprise-wide, to its fullest capabilities requires all three alignment elements, not just one.

2.  Train O-I practitioners across the alignment spectrum:  We have lots of O-I practitioners trained in aligning process to customer strategies. Almost none trained in aligning strategies to customers. And way fewer trained in aligning technology with process. We need to provide training in all aspects of O-I. We’re not doing it.

3.  Focus on the steak. not the sizzle:  It’s easy to toss off claims that O-I is the greatest thing since sliced white bread. It’s another thing to make it work. And making it work in organizations not already O-I of their own volition demands properly and persuasively framing the long-term benefits of the inevitable organizational change required to migrate to O-I, rather than pumping the bellows. We need to stop discounting organizational change requirements and start confidently justifying them.

4.  Over-deliver instead of overpromising:  Overselling sweeping, non-specific benefits or offering growth, profitability or expense-reduction bromides hurts Outside-In in the long run. Face it, helping clients achieve broad-based O-I success requires a “grind it out” mentality. We create value incrementally, step-by-step. Enterprise-wide, O-I does not create whopping revenue gains, profitability gains or expense reductions in a flash – or even a year. Double-digit improvements? Very often. But not quantum leaps. Puffery destroys credibility. Remember, our clients are customers. Overselling them on the benefits of Outside-In is very inside-out.

Outside-In has cleared the “Innovator” phase. But we’ll need to change what we say and what we deliver to make substantive progress penetrating the “Early Adopter” segment of companies. And then we’ll have to make even more dramatic changes to enter the mainstream and penetrate the “Early Majority.” As a community, I believe we have a whole lot of hard work ahead of us before we can  bring Outside-In to the corporate masses. Are we ready?

What do you believe?

Poor Office Process, Poisonous Office Environment (and costs that will send you into toxic shock)

 

Are engineering and sales pointing fingers at each other? How about customer service and parts? Or HR and branch locations? How about sales and marketing management? Or IT and the rest of the front and back office? Okay, you’re like any other company. But do you have even the slightest sense of what all this dissonance is costing you?

Probably not. In which case you ought to grab or access the April 2009 edition of “Harvard Business Review” and read some sobering data. Very sobering.

April’s HBR features a very pithy one-page abstract by Christine Porath and Christine Pearson, How Toxic Colleagues Corrode Performance, which may very well peel back your eyelids. Their data alone might scare you into action–including running some toxic employees out of town.
You can’t fire the problem

But here’s the irony. Just firing these people won’t accomplish much, because a new set of “bad actors” will quickly fill their shoes. A relatively small percentage of inherently dysfunctional folks notwithstanding, the vast majority of these toxic employees didn’t start off toxic. Instead, their work environment created interpersonal strife by giving people and functions conflicting messages and conflicting goals, and they eventually succumbed to the venal side of human nature. 

The primary culprit is bad work design, not bad people.

That’s the case in almost every one of these toxic situations we’ve walked into over many years of consulting. Poorly designed office process creates conflicting sets of personal and functional interests, and when people and functions pursue their self-interests, the sparks fly. That, in turn, brings out the basest human instincts in some; causes others to withdraw or flee; pushes people who can get past their self-interests into the line of fire (punish the innocent); creates discord everywhere; triggers retribution–until the whole office goes dysfunctional. And then the company cans a few perps, only to have new ones almost immediately step up to the plate.

That’s usually the time when clients engage us–when it becomes painfully obvious that replacing people isn’t the answer–and eliminating sources of toxicity is. Unfortunately, a considerable amount of damage has already occurred.

But isn’t this the norm?

Hey–every office is a bit dysfunctional, no? So why get all bent out of shape? Here’s where Porath and Pearson really shine. While I don’t want to violate HBR’s copyright, I will give you this juicy quote:

Berating bosses; employees who take credit for others’ work, assign blame or spread rumors; and coworkers who exclude teammates from networks–all these can cut a swath of destruction visible only to the immediate victims.

Visible only to the immediate victims, perhaps, but damaging the entire company, especially the bottom line.

How much damage?

Unfortunately, the authors lack the data to convert negative employee behavior into specific dollar costs, but they have quantified the frequency of different types of negative employee reactions to office dysfunction. From there, it doesn’t take much imagination to project whether the size of the dollar loss is a golf ball, a baseball, a softball, a soccer ball or a basketball. It’s a damn blimp!

How employees react to dysfunctional office environments

Again, I don’t want to give away the goods so you won’t go buy the magazine, especially because the article is only a page long. But between 80% and 38% of employees reported specific reactions ranging from loss of commitment to the organization to decreased work quality.  From a process designer’s perspective, when I add it all up it’s not a trickle, not a flow, but a damn gusher of dollars flowing out the door.

But since we’re in a recession, we can afford it, eh?