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Originally published:
Nov-24-2002
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By Alan Steinhart, Vice President & General Manager, and Robert M. Tharnish, Vice President, Corporate Quality, ABC-Amega Inc.
with Catherine M. Nowocien
As originally published in the Fourth Quarter 2002 issue of The Credit and Financial Management Review of the Credit Research Foundation.
Abstract
Improving performance in key client-related processes is essential to promoting quality, productivity, and client satisfaction. Searching for a management system incorporating these value-adding benefits, The ABC Companies, Inc., a commercial receivable management firm, found a fit in the COPC-2000® Standard.
According to Alton Martin, Customer Operations Performance Center's (COPC) co-founder and CEO, "Standards provide the structure and focus that assure the continued success of a business." They require management to take a hard look at the processes that make up their organization - particularly those that effect productivity and customer satisfaction. And compel them to find ways to improve or fine-tune them.
This article looks at The ABC Companies' rationale for pursuing Certification to the COPC Standard and the benefits it derived from adopting the Standard as its performance management system. It provides an overview of COPC-2000® and describes some of the inner workings of ABC's certification process.
The article also suggests some valuable applications related to COPC Certification for CFOs and credit managers.
It Starts With the Desire to Be Better
Organizations pursue standards certification for a wide variety of reasons that align with their corporate objectives. The most common center around enhancing customer service; customer and employee satisfaction; improving operational efficiency, processes and measurements; and, gaining recognition as a quality customer service provider in an increasingly competitive environment.
While numerous standards proliferate the business landscape, most of which only define and measure processes, The ABC Companies selected COPC-2000® because of its focus on evaluating and improving them.
The ABC Companies recognized that while it had an excellent work force, it needed to more clearly define its focus in order to move forward in the midst of the demanding pace of the receivable management environment. The goal was to embrace a management system that provided structure and measured actions and results. One which would allow for a better sense of organization in the company's approach to its daily business.
Rather than reinvent the wheel, a search for a proven methodology or system was initiated. Since nothing was being used in the receivable management industry at the time, ABC began looking at call centers, which had many similarities to ABC's business. Coincidentally, while pursuing some Fortune 100 companies as clients, ABC learned that these companies preferred to use call centers that were COPC certified.
A core team of senior management staff was established with the initial purpose of reviewing the COPC Standard to examine what it offered and how it might support ABC's overall goals.
ABC's core team met with COPC certified companies to determine whether the procedures set in place by the Standard made a significant difference in improving how they managed their business. One company credited its huge success and growth to COPC. As a business based on developing strong client relationships and achieving results for clients, and entering a growth spurt of its own, ABC was interested in a proven system that could handle the growth while keeping clients satisfied. The procedures instituted by the Standard appeared to be an operational framework that could move it toward those objectives. It also held the added benefit of enhancing the firm's marketability with key prospects that have come to regard the certification as an important differentiator.
There was some initial reluctance to pursuing COPC certification based on the amount of time, human resources and money that would have to be allocated to the effort. And there was the understandable fear of failure in attempting so broad a task that promised to redesign, in many ways, how the company operated. ABC's strategy of beginning with a core team for whom COPC certification was a high priority was an important step in addressing these concerns.
COPC-2000®
Dissatisfied with the performance of call center customer service providers (CSP), several Fortune 500 companies including Microsoft, Novell, Dell, American Express, and L.L. Bean developed COPC-2000® in 1996. They created the Standard as a stimulus for CSP improvement, particularly in the area of client service and satisfaction. As CSP users, they were also looking for a way to distinguish between quality and mediocre providers. Inspired by the success of standards such as ISO 9000 in promoting improvements in the area of manufacturing, and using the Malcolm Baldrige Award as a model, the COPC Standard was designed to relate more specifically to the call center CSP industry.
The Standard is composed of four major categories. Each category has several specific sub-categories with requirements that must be followed when adopting the Standard. For example:
Planning and Leadership - requires regularly held business meetings and business plans that comply with the COPC Standard
Processes - requires semi-annual process audits
People - requires annual verification of employee skill sets
Performance Measurement - requires annual tracking and management of staff attrition
Since its introduction, over 120 locations in 16 countries have become certified to the Standard. The list includes firms in e-commerce, computer hardware and software, financial services, healthcare, marketing support services, A/R management, and collection services. Organizations such as Levi Strauss, Blue Cross Blue Shield, Bell Canada, Convergys and ClientLogic are among those either using or certified to the Standard.
The COPC Standard does not set specific performance targets that every call center must meet. It creates a set of practical operating requirements expressed in terms of metrics and standards intended to promote consistently high levels of customer and employee satisfaction. This allows entities - as organizations or departments pursuing certification are called - to develop targets that make sense in the context of their own operation and the parameters specific to their industry. COPC assesses these targets and provides guidance based on best practices and customer expectations.
Performance metrics, such as Accuracy, On Time, Backlog, and Yield Rate are tracked, linked to drivers of customer satisfaction, and used to improve overall performance.
Overview of the Certification Process
Deciding to pursue certification to a quality standard and evaluating those available against company objectives is only the first step in a long and exacting process. In the case of the COPC Standard, it begins with a meeting between the applying entity's executives and a team of professionals from COPC. During this initial meeting the requirements for certification are discussed in detail and the stage is set for the nine to twelve month process culminating in the certification audit.
Throughout the certification process, both the entity and COPC staff review the progress made toward compliance in each category of the Standard. Recommendations for improvement are made and plans designed to bring key processes into compliance are implemented.
Part of the improvement process involves contacting companies in the industry which have obtained high audit ratings, and benchmarking to make strides toward compliance with the Standard.
If the applying entity does not comply with the Standard in each required category when it undergoes the certification audit, it may choose to continue to make improvements based on the audit results and submit to another certification audit.
Once an organization receives certification, it must undergo an annual re-certification audit.
Moving Forward
Once the decision was made to pursue COPC certification, ABC appointed a senior staff member as COPC Coordinator. The coordinator participated in a COPC training and certification process in order to oversee the drive toward ABC's certification to the Standard.
A core executive team, including the COPC Coordinator, then set to work re-crafting ABC's Mission/Vision/Values Statement, referred to by COPC as the Statement of Direction (SOD). For a SOD to be compliant with the Standard it must accurately reflect the entity's commitment to clients and end users. It must also address at least one of the following: client and end user satisfaction, service, quality, or cost.
COPC also requires that at least 80% of the entity's staff understand the SOD and that both management and employee behavior reflect an alignment with it. To this end, ABC launched an extensive internal marketing initiative designed to make its mission and values part of the company's culture.
At this point, the process was "pushed down" from the executive to the managerial level where actual work on the certification process began. This group discussed, planned, and began moving forward on the many pieces involved in pursuing certification. It also focused on articulating the benefits ABC hoped to gain.
Much of the initial work at the managerial level was performed in preparation for a Baseline Audit. COPC conducts this audit to determine how the company aligns with the Standard in the given categories. It then provides suggestions for improvement that will bring the organization into compliance for the Certification Audit.
Implementation of a Structured Support phase is also part of this early stage. Structured Support, which positions COPC professionals in a consulting role, is designed to provide feedback to the entity regarding its progress. It involves setting a schedule of tasks and milestones to be achieved in preparation for the Certification Audit. A series of bi-weekly meetings with COPC liaisons was held to review what had been accomplished during the previous two weeks. This approach worked very well toward keeping the process on track and in motivating those responsible to attain each of the milestones.
Total Staff Involvement is Critical
ABC's employees were brought on board early in the process. Buy-in and motivation were facilitated through the Structured Support phase. Success relies heavily on staff at all levels understanding their role and committing to the importance of reaching performance targets set for various tasks and processes. Company-wide meetings presented the big picture and fielded specific questions. Email, departmental meetings, and management bulletins throughout the certification process kept everyone involved. Staff was also enlisted to help with designing tracking tools and gathering information and data as the Certification Audit approached.
Key Client Related (KCR) jobs, which directly impact on client service and/or satisfaction, were determined by careful examination of the components of handling a client file. Work standards and minimum skill sets for each KCR job were then developed by senior operations managers. KCR employee skill sets were assessed and additional training provided, if required.
Data tracking tools were also developed for all work standards that involved completion within a certain timeframe. For example, elapsed time for initial attempt to contact a debtor.
The skills necessary to satisfactorily handle KCR jobs were incorporated into monthly file reviews performed as part of a transaction monitoring process.
The Focus on Key Client Related Processes
Basic to developing a plan for process improvement under COPC is the identification of "key client-related processes"(KCRPs). Examining these is critical to understanding the needs and expectations of clients. These processes, such as new claim activation or processing payments, are those that address client requirements, interface with clients, or directly impact service to clients. They are the most important processes an organization performs because they have the greatest impact on client satisfaction, productivity, efficiency and profitability.
Senior managers of ABC identified 21 KCRPs by taking a careful look at ABC's various processes and determining which directly related to "getting the job done" for the client.
Each KCRP was then broken down into its key elements. An appropriate metric, such as On Time for inputting new claims, was assigned to each element. A reasonable target for compliance, but one that also allowed achievement of a high level of client service, was assigned. With COPC, setting targets is an ongoing process. As targets are consistently met, new targets are set to assure continual improvement.
ABC set targets for generic metrics such as On Time and Accuracy using benchmarks for high-level performance provided by COPC. In developing ABC-specific targets, ABC used historical data that was consistent with profitable performance.
As part of the ongoing use of COPC for performance management, every KCRP is audited at least twice per year by the COPC Coordinator.
Examples of KCRPs and Metrics
- Processing outbound calls - ABC identified yield rate, revenue produced per department, backlog, call monitoring scores, and efficiencies as metrics to track with regard to this KCRP.
In addition to using a flow chart to determine key elements in KCRPs, ABC spoke directly with its clients in order to understand their needs and expectations. In doing so, it became apparent that the above-listed tracking points or metrics were key in meeting client needs when processing outbound calls.
The results of the process improvements achieved in this KCRP were reflected in ABC's annual Client Satisfaction Survey. 100% of clients surveyed were satisfied or very satisfied with the service level of ABC's collection staff. 100% were also satisfied with ABC's overall performance, earning ABC the designation as COPC's Global Benchmark for Client Satisfaction.
- Attorney process - On time, back log, accuracy, recovery rate and net return to ABC were determined as metrics to track within this KCRP.
By setting targets for these metrics, ABC was able to tighten up claim handling by its attorney network.
Achieving improvements in these two KRCPs had significant benefit for ABC's clients. A more timely and efficient attorney process coupled with a 43% improvement in the average call/collection metric for in-house claim handling shortened the collection cycle. More claims were collected in-house, yielding a quicker turn-around time on money owed to clients. And, the recovery process became more cost effective.
Performance Monitoring: A Breakthrough Strategy
Performance monitoring is a major strength of the COPC Standard. Valuable for analysis and improvement of the company's entire operation, ABC sees performance monitoring as a breakthrough strategy and a powerful tool that allows assessment of key processes. It helps quantify expectations of employees, providing a means to assess and address weaknesses. It gives increased control by zeroing in on any disconnects in processes before they become problems at end product. The performance monitoring approach proves more efficient and cost effective than trying to backtrack and unravel what went wrong.
Performance monitoring under COPC is not done only by ABC staff. Required Annual Client Surveys give clients a voice in the process and provide input to evaluate the company's performance in areas relating to client needs and expectations. The COPC Standard requires that survey results not only be recorded, but acted upon when they reveal opportunities for improvement.
The Role of Key Suppliers
COPC certification also requires the entity to determine its Key Suppliers. These are organizations or departments external to the entity that perform KCRPs or the Key Support Processes (KSPs) that contribute to the effectiveness of a Key Client Related Process. For ABC, Key Suppliers included IT, telecommunications support, forecasting, and recruiting and hiring.
Once identified, the entity is required to establish a Service Level Agreement (SLA) with each Key Supplier. The SLA is a documented statement of the requirements of the supplier. It can be in the form of a contract, letter of agreement or formal Service Level Agreement. It spells out the metrics to be used to judge supplier performance, and the targeted level of performance for each of those metrics. In addition, the SLA covers such things as who are the contact individuals for the entity and supplier, and how often review meetings will occur. The SLA should also outline how levels of performance below target will be addressed, and the steps that should be taken by both parties to amend the SLA.
COPC requires the entity to analyze supplier performance at least quarterly and review performance with the supplier at least semi-annually.
Tracking: Table F
Accurate and consistent documentation of tracking results is a COPC requirement. Target must be achieved in at least 75% of the metrics identified. At least 75% of those not achieving target must show sustained improvement, or management must provide a plan to correct the problem.
A spreadsheet, called Table F, is used to track performance. It lists the metrics, their targets and six months of rolling results for every KCRP and KSP. Table F is the tool managers use to assess standing on each process at the end of the month and to analyze trends.
ABC's managers review Table F performance levels with staff members each month. Action plans are developed to improve the performance in metrics falling below targeted levels. This is key to achieving the COPC requirement of sustained improvement in at least 75% of metrics not achieving target.
Monitoring, Tracking, and Improving the Collection Transaction Process
As a receivable management firm, ABC understood that the Collection Transaction Process played a particularly prominent and critical role in meeting client needs and ensuring client satisfaction. Examining the key elements that make up this KCRP and implementing procedures for controlling, tracking and monitoring this process to bring it into compliance with the COPC Standard has added value in important ways. Not only has quality and accuracy improved, it has yielded benefits in terms of productivity and employee satisfaction. The average numbers of calls per day per collector has increased by 16%. And an annual employee survey reflected an increase in overall employee satisfaction.
Following is an overview of improvements ABC has implemented to create quality, efficiency, and, as a result, increased client satisfaction in its Collection Process.
ABC recognized the importance of providing its collection staff with both quantitative targets and qualitative goals, as well as a detailed understanding of expectations. Providing collectors with this information gives them a "road map" to gauge their work efforts against. Tracking forms were created, a call monitoring program was instituted to ensure consistent quality of outbound calls, and monthly scoring and review of every collector was implemented. The monthly review session includes development of action plans to address areas that require improvement.
In addition to the individual call monitoring and reviews, results of call monitoring are aggregated at a collector level, an attribute level and at team and departmental levels. This allows managers to review trends for individual collectors and overall team/department results. This trend analysis is used to determine what, if any, supplemental training might be needed at an individual collector level or team/department level.
Each month a random selection of in-house files and attorney files, together with letters written by the collector are chosen from each collector's portfolio and reviewed. Like the collection calls, these are evaluated for quality and accuracy. Results of this review are also recorded in the collector's Monthly Review Spreadsheet.
To ensure consistency in the scoring process and the integrity of the scoring data recorded in Table F, monitors hold quarterly calibration meetings. During these meetings monitors score each collector by listening to the same calls and reviewing the same files. The collector is scored on: Quality - determined by factors such as approach, content of messages left, and obtaining all details of a dispute. And, Accuracy - reflected in such factors as correctly identifying clients, demanding the correct amount, proper notes entered into the computer record, and correct event code used.
Each monitor scores the collector separately. All scores are then compared and any scoring inconsistencies are discussed by the group to reach an agreed upon score.
Technology
A considerable investment by ABC in technology was necessary to achieve the levels of tracking and monitoring required by the COPC Standard.
Remote monitoring capabilities were added to ABC's telephony. Proxy software, allowing monitors to "shadow" in real-time the screen on which a collector is working and to write comments or notes directly into the record itself, was purchased.
Significant enhancements were also made to ABC's proprietary collection system to provide clients real-time access to account status and handling.
Valuable Applications for Credit Departments
As the first commercial accounts receivable management firm to become certified to the COPC Standard, The ABC Companies, Inc. recognizes several compelling reasons for credit professionals to consider implementing a quality standard, such as COPC.
- Effectiveness. A formal process management system helps credit managers to be more effective and proactive in overseeing their departments. A COPC compliant mission statement would help create and promote focus on Client and End User Satisfaction, as well as a cohesive sense of purpose and team work throughout the department.
- Control. Identifying Key Support Processes (KSPs) and Key Suppliers, such as credit reporting bureaus and outside collection agencies, and considering how they impact the functions performed by the credit department, is an important step in gaining control over those support processes. Establishing Service Level Agreements (SLAs) with Key Suppliers, which outline expected performance levels, further extends the credit manager's control.
- Value. Credit departments often struggle with the challenge of showing value to upper management. A standard providing documentation to measure and quantify processes that otherwise are difficult to assess, gives credit managers the tools necessary to demonstrate value. Achieving the quality, productivity, efficiency, and client satisfaction gains that result from following certification requirements, while at the same time driving costs down, would certainly help them meet that challenge.
- Reliability. Understanding the benefits represented by certification provides managers with an important differentiator when selecting service providers and outsourcing partners. Credit managers and CFOs who are standard savvy can use certification to identify "best-in-class" providers, one of the objectives of certification the developers of the Standard initially had in mind.
Conclusion
Pursuing certification to a quality standard is a challenging and demanding exercise, but organizations that have done so see it as worth the effort. The ABC Companies have found COPC-2000® to be more than just a measure of performance. It has provided criteria for continual process improvement together with a comprehensive performance management model covering all aspects of their operation.
Paul F. Catalano, president of The ABC Companies Inc. states, "Instituting a standard becomes a total business philosophy and process. It has allowed us to establish a sophisticated, results-oriented culture where expectations and accountability are clearly defined for us everyday. Adopting a standard is not about becoming certified. It's about becoming better."
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Alan Steinhart is Vice President and General Manager, ABC-Amega Inc., a subsidiary of The ABC Companies, Inc. His responsibilities include overall management and supervision of operations and client service functions. He joined ABC in 1983, and holds a Political Science degree from SUNY Fredonia.
Robert M. Tharnish is Vice President, Corporate Quality for ABC-Amega Inc. Robert is responsible for working with all departments to ensure processes and systems meet client needs and expectations. He began his career with ABC in 1978, and holds a BBA in Management.
Catherine M. Nowocien is a free-lance writer of marketing communications. She holds a BA in Business Administration and an Ed.M. in Education.
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