As we’ve discussed over the past few weeks, timing is everything in the debt collection industry. A great way to use time efficiently is by optimizing processes and making procedures run as smoothly as possible.
Lean Six Sigma and the Continuous Process Improvement approach are a common set of industry-proven tools that are applied throughout most organizations. Applying these tools to the practice of debt collection is invaluable.
The approach includes constantly evaluating your processes in an effort to improve them. This is done with a focus on both the big picture (how it impacts the business overall) as well as the individual team member (the whole is only as great as the sum of its parts).
The big picture starts with understanding the overall vision of where you’re trying to take your practice. This includes ensuring your organization is able to accomplish its goals with its current resources and that the process has the support, or “buy-in,” at all levels. The goal at the team member level is to consistently train and educate, which will ensure that each member’s role is being executed and fulfilled at the highest level of performance possible.
Think of the actions of debt collection as an assembly line process. A case is received and begins to go through the collection process. Typically that process will include evaluating and inputting information into the system you use, followed by pre-litigation, litigation, execution and with any luck, payment in full followed by a recorded release of judgment.
What must be evaluated throughout the entire process is three-fold: How long did this process take? How efficiently, and to what level of quality, was it performed? What was the cost and was it as cost-efficient as is reasonable?
This is where Lean Six Sigma comes in.
You can take the name quite literally—applying this approach to any business means trimming the fat (or the unnecessary steps) from your business process. The “lean” aspect focuses on efficiency. It takes a systematic approach to identify and eliminate waste (whether measured in time, effort or money) in the overall process. This is all evaluated with an overall goal of achieving perfection in the process, which brings us to the “Six Sigma” aspect of the approach.
Six Sigma is a methodology used to manage process variations in order to eliminate waste or defects with a goal of delivering the highest possible performance. In collections, our focus is providing the client with results as quickly as possible while also maintaining an emphasis on managing and minimizing risk. Achieving our goals will ultimately improve both customer and employee satisfaction.
Executing a Continuous Process Improvement project must focus on one piece of the process at a time. That piece may be client satisfaction, operating concerns, improvement ideas, etc. and must always be tied to the overall goals/vision of the organization. To determine opportunity for improvement, you should ask several questions.
What is the problem or improvement opportunity?
Where does the problem exist (internally or externally?)
How long has it been a problem?
What is the extent of the problem and what is the impact?
Once you have identified and analyzed the problem, put it through the Continuous Process Improvement cycle, and implemented change, you must test your results. Remember to get the employees involved in the process. Resistance to change is a normal reaction; however, involving all parties in the decision for change and having them be a part of formulating the required change will instill a sense of ownership and a stake in seeing the change(s) achieve success.
While these approaches are meant to make your businesses more efficient and result in a more profitable process, you may run into mixed emotions from your team. Some will see the glass half full, believing everything is working just fine. Others will see the glass half empty, with a “this is how we’ve only done it” mentality. But with team empowerment and an environment that fosters patience in working toward a common goal, you may end the process with a common mindset that the glass is neither half empty nor half full—you were just using the wrong sized glass.