building a continuous improvement culture · building a continuous improvement culture march 16,...
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Building a Continuous Improvement CultureBuilding a Continuous Improvement Culture
Peak Performance Consulting Group®
www.peakconsultinggroup.comMarch 16, 2009
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 2page 2
IntroductionIntroduction
David Kerstein, Peak Performance Consulting Group
About Peak PerformanceProcess approach
Tom Hunley, PNCPNC BackgroundCase study
BiographiesBiographies
David Kerstein is President of Peak Performance Consulting Group, which specializes in business strategy and productivity improvement for the financial services industry. His clients include PNC, Comerica, Chase Bank (JP Morgan Chase), Frost Bank, Wells Fargo, the Bank Administration Institute and many other regional and community banks.Mr. Kerstein has over 20 years experience in financial services management including senior management positions at Citibank, Bank One and Old Kent Financial Corp.Contact information: [email protected] or 512-607-6332
Tom Hunley is Chief Operating Officer for Branch Banking at PNC Bank where his responsibilities include 1200 branches in 8 states. Previously, he was CFO for Branch Banking, Business Banking and Technology where he was responsible for financial oversight and analysis for the majority of PNC’s Retail Banking Business.Tom began his career as a financial manager at J.C. Penney and Boston Market. He is a graduate of Robert Morris University, where he is President of the Alumni Association and a Member of the Board of Trustees. He received an MS in Finance from the University of Texas.Contact information: [email protected]
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 3page 3
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 4page 4
About Peak PerformanceAbout Peak Performance
Leading financial services process improvement providerProven methodologies tailored to financial servicesEffective implementation with sustainable resultsProven track record of success
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 5page 5
Track record of success Track record of success –– sample clientssample clients
National and Regional Banks
Community Banks and Credit Unions
Specialized Financial Services Providers
Customer satisfaction impacts revenueCustomer satisfaction impacts revenue
65% of customers who receive poor service, would be willing to bring more of their business to their bank, if they received better customer service.
87% of those who rate themselves as highly satisfied with the customer experience say they would ‘definitely recommend’ their bank to a friend, versus only 31% of those who rate their satisfaction as ‘medium’ and 5% who rate their satisfaction as ‘low’.
Highly satisfied customers report having actually made double the number of recommendations of those who had a medium level of satisfaction and six times the number of those with low satisfaction.
.
JD Power & Associates Consumer Branch Satisfaction Study
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 6page 6
Prioritizing initiativesPrioritizing initiatives
Which service problems do you start with? Which are most important?
How do you prioritize?
How do you determine which the return on investment?
“We know how much it costs to fix, but who’s going to sign up for the revenue”
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 7page 7
Defining the impactDefining the impact
Start with problems as customers define themCorrelate problem incidence to specific, tangible impact on customer revenue
Reduced attrition and account diminishmentImproved cross-sellReduced operational cost (simplified process, reduced complaint handling at branch and call center)
Our Value Model projects future revenue streamsKnown cost to eliminate problem (IT, equipment, staffing)Improved revenueReduced cost
ROI based on multi-year cash flows, as in any other capital investment model
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 8page 8
Problem Resolution Outcomes- Percentage of Portfolio -
78%
7% 7% 2% 5%
Customers withoutproblem
Immediate CustomerAttrition
ImmediateDiminishment
Stagnation and FutureDiminishment
Remaining ProblemResolution Customers
with Full NPV
Not every problem is a Not every problem is a ““problemproblem”” ---- measuring the measuring the impactimpact
Real economic cost from increased runoff and lower cross-sell: client data
16% of customers with escalated problems closed an accountCustomers with problems opened new accounts at only half the rate of non- problem customers
Disguised client data
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 9page 9
Problem Resolution Financial Cost in Lost Assets- Millions of Dollars -
$15
Total Lost Assets (f irst 3-years average)
Problem Resolution Financial Cost in Lost Revenue- Thousands of Dollars -
$1,555
$513
$189
Total Lost NPV Total Lost Annual Revenue Total Lost Annual Profit
Defining the ROIDefining the ROI
Example: problem affecting 3,000 customers with average HH balances of $4,000:
Elimination of the problem results in $15 million incremental assets over 3 years as a result of reduced attrition and increased cross-sellRevenue improvement would be $513,000 over a 3 year period
Capital Investment Model compares cash flows from the cost of problem reduction with the incremental revenue to determine the ROI
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 10page 10
Creating sustainable continuous improvement cultureCreating sustainable continuous improvement culture
Strategic Objectives Strategic Objectives
Prioritization Matrix Prioritization Matrix (customer value) (customer value)
CustomerCustomerImpact Impact AnalysisAnalysis
ProblemProblemMetrics &Metrics &
Standards Standards
Service & Service & Quality Quality
ResolutionResolutionStandards Standards
Financial Financial ImpactImpact
Analysis Analysis
Monthly Measurement & ReportingMonthly Measurement & Reporting
DecisionDecisionModelsModels
PrioritizationPrioritizationProcessProcess
Root/Cause Analysis & Continuous ImprovementRoot/Cause Analysis & Continuous Improvement
StandardStandardProjectProject
MethodsMethods
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 11page 11
Prioritizing initiativesPrioritizing initiatives
Cost/difficulty to implement
Impact
Low High
Low
High
Just Do It!
High Customer ValueMajor Changes, Requires Detailed Analysis
DeferInsufficient value for the effort
High Customer ValueMeasure benefit, Implement
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 12page 12
Define process from customer point of viewDefine process from customer point of view
Traditional drivers of operational effectiveness (examples)
Speed of answerAbandon rateLength of call (time on phone)
Customer centric drivers of satisfaction (examples)One-and-done measures: “They provided a complete answer”, “I only had to tell my story once”
o # of transferso % first call resolutiono # re-keyed customer data
Speed of resolution: “My problem was resolved quickly”
o # calls unresolved after 24 hourso Member survey data
Personal interaction: “The rep took a personal interest in me”
o Call monitoring metrics
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 13page 13
Contact Center Example
Deconstruct the customer experience (example)Deconstruct the customer experience (example)
Loan Set-upBrowser enable the Plastic Card SystemBB - Expand Tool Kit
Application of Promotional Codes
Error in Set Up3rd Party Vendor
Related Pricing Packaging
NewRefinance
Account vs. Relationship Driver
CIFBSH Support Required
KYC ExceptionsNon Standard Titling
Forms simplificationForms Flow assessment
Outbound calling on sensitive issuesCustomer on Boarding
Call follow-upprocess up to solidify Relationship
Issue Resolution Follow-up
Branches/Wealthvs. Mass Market
LOB CommunicationRelationship Model/Segmentation
Sales/Service leadsProduct conflictsManaging referralsUnderstandingrelationship valueand treatmentsLoans andinvestment coordination
BB loan pymts:on-linestatements/ loan paymentsredesign paymentcalculationrelease of collateral
Transaction SpeedGenesis speedCash handling skillsReverse trans.processing FX order vs. exchange
Debit / Credit Memo Advices
Customer doesnot understand
Travelers Checks/SalesPhotocopy requestprocess for Loans
Inquiry/problem tracking numberUse of shared notesService Level trackingCRISS interfaces with other applicationsManaging unresolved CRISS cases and/or cases closed prematurely
Pricing changesNotification onStatementsOnline Bankingnotices
Return ChecksExpand use of on-line auto alerts Email addresses
AccuracyRequired fieldin the set-up/acct. opening process
Dispute ProcessFee Related/NSFBB – issue tracking processWealth Mgmt.– large deposits & cashier’s checksIVR Tree Assessment
Faster routingService Model
Problem ownershipSeamlesshandoffs One contactresolution
When to escalate
Address ChangeAcct. vs. CIFPost Office(Customeruses wrongform)
KYC MaintenancePerformed inHost not Genesis
BB account closing by NFSC Statement Changes
Full cycle plus 1 toimplement
AccountOpening Maintenance Monetary
TransactionsInquiries/Requests NotificationsProblem
ResolutionBank Initiated
ContactAccountOpening Maintenance Monetary
TransactionsInquiries/Requests NotificationsProblem
ResolutionBank Initiated
Contact
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 14page 14
Disciplined process creates resultsDisciplined process creates results
Define the Issues
Measure and
Analyze
Identify
Sustainand
Control
StabilizeEngineer
Re-engineerthe process
Pilot & Implement changes
Define business issues and project goalsCollect and analyze dataIdentify root causesDevelop potential solutions and impact
• Define new processes• Prioritize implementation• Develop project plans• Pilot and analyze results• Measure effectiveness
• Manage rollout • Define Performance
Metrics• Manage continuous
review process• Transfer knowledge
so client achieves sustained improvement
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 15page 15
What weWhat we’’ve learned: ve learned: ““Finding the moneyFinding the money””
Peak Performance Consulting Group, Inc. Peak Performance Consulting Group, Inc. | 512512--607607--6332 6332 | page 16page 16
Process improvement means:
Improved revenue:Lower attritionDeeper relationships
Lower cost:Simplified processLess re-workLower labor cost
Disciplined process required to implement and sustain:
Analytical rigor: move from anecdote to financial measurementDefined and sustainable process
Building a Continuous Improvement Culture
March 16, 2009
About PNC
Leading market share across our footprint2,589 branches6,232 ATMs2.9 million customers$291 B assetsGrowing, profitable at a time when industry is under severe stress
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Our business model has performed well
Commitment to moderate risk profileWell positioned balance sheetAbility to grow high quality, diverse revenue streamsFocus on continuous improvementStrong execution against clear strategies for growth
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Our journey
Manage costs– One PNC initiative focused primarily on cost savings
(2004-5)– Tools in place at branch level to continue momentum
(2005-6)Win though improved service (2006-8)– Problem Resolution process– Monthly Gallup Survey
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Jump-start with “One PNC”Comprehensive effort to save $300 million in costsInitiatives came from the ground up6,500 ideas, average value was $50,000Senior Management Steering Committee for quick implementationEstablished process that we still follow today for gathering, valuing and implementing ideas
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Sustain with branch level tools and metrics
Quarterly branch P&L incents focus on the right metrics– Controllable expenses– Balance sheet/revenue– Household growth– Manager incentives and recognition tied to performance
Branch Staffing Model provides tool to manage largest controllable expense– Manage service levels and optimize staffing to meet demand– Improved part time and peak time staffing by 10%
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Win with serviceFocus on the customer -- make it easier to bank with usProactive process simplification: measure and manage– Define source of problems and prioritize– Streamline operations: eliminate “scratch & dent”– Fuel revenue growth through deeper relationships, improved
retention
Customer driven measurement– Shift from annual customer satisfaction surveys to monthly
Gallup tracking– Immediate knowledge of problem levels, type of problem,
branch location
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Retail defines the experience
Retail’s size, number of branches, geographic coverage dominates the PNC experience– If we don’t get it right in Retail, we don’t get it right in the
customer’s mind– But…the very size and breadth of Retail makes it hard to
deliver the consistent quality service customers demand Strategies– Bank wide approach– Identify and inventory high problem sales, service and
fulfillment issues– Increase ability to solve problems at initial point of contact
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Making it workSenior Management Steering Committee
– Maintain organizational focus– Maintain staff enthusiasm and belief “it can be done”– Resolve conflicting organizational demands (e.g. IT resources)
Dedicated support: project leader– Maintain momentum– Provide analytical support– Keep teams moving forward, manage team composition
Working Teams– Subject matter experts– Typically department heads or managers of key operations groups
Proving success– Prioritizing key initiatives– Identifying “home runs” that can be used as proof of concept
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Identify and prioritize key initiatives (working team example)
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Complexity - Difficulty of Implementation LowHigh
Low
High
Cus
tom
er Im
pact
Acct. Opening (Multiple CIF keys) 3
CIF File Structure (3) Account Opening
MaintenanceMonetary Trans.Inquiries/RequestsProblem ResolutionNotificationsBank Initiated Contact
Shared Notes -- 4
Managing Unresolved CRSS Cases -- 3
Service Model (includes Relationship Model/Segmentation and LOB Communication) -- 5
Open book coverage (4)
50 initiatives identified
14 initiatives received votes
6 items received 3 or more votes
Disciplined improvement methodology
Make changethat results in improvement
from the viewpoint of the customer
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Principles of performance improvement
Stay focused on the goal – “What are we
trying to accomplish”
It’s about the customer, not people or internal
organization
Manage by data vs. assumptions – “How do
we know this will result in improvement”
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Example: “Disputes Made Easy”
The problem: Reg. E Disputes– Dramatically improve the customer experience “in the moment” by
simplifying the process for the customer and employee Why?– 150,000 dispute transactions/year (ATM,POS, Adjustments, ACH) – Process is hard for customers and PNC staff to understand – multiple
forms and different back office procedures based on dispute types What changes did we make? – Simplified the internal process, ensured greater accuracy– Provide immediate credit to customers (based on established criteria)– Allow customers to file a dispute using the On-line Banking channel
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Disputes Made Easy: Results
Surveyed 1,596 employees (Branch/Asst. Mgrs., Financial Services Consultants)
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86%
7% 6%
89%
8%2%
71%
18%11%
0%
20%
40%
60%
80%
100%
Easier forCustomers
Easier forEmployees
Better DisputesConversations
Yes No Don't Know
What they liked most:
All dispute types are found in one place
Forms print automatically without having to go into e-forms
Fast/Saving time - all the pop-ups were clear and fast; ACH prints directly saving time
No more guessing - employee appears to be more competent to the customer; we no longer have to guess what procedure to follow
Engage employees: Ideas for Leading the Way
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Ideas for Leading the Way
Help us make Ease, Confidence and Achievement come to life for customers and employees by sharing your great ideas with us!
Click the Ideas for Leading the Way link to submit your suggestions for ways to improve processes or systems or barriers that may get in the way of providing great service to our customers. When submitting your ideas and suggestions, please be as specific and as detailed as possible, providing examples if appropriate.
Leading the Way: Results
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Ideas for Leading The Way
7294
5827
159
212
0
50
100
150
200
250
Q1 07 Q2 Q3 Q4 Q1 08 Q2
Ideas for Leading the WayIdea Status as of July '08
651
269 147115120
0
100
200
300
400
500
600
700
Ideas Received PendingDecision
Go Ideas No Go Closed/Resolved
Customer and Financial Outcomes
Reduced customer problem incidents by over 25%An annual reduction of 750,000+ errors that lead to problemsIdentified process simplification initiatives impact over 1.5M customers annually Improved customer problem handing Established 12 Cross Functional Workgroups involving 140+ Service PartnersGenerated over 800 “Ideas for Leading the Way” employee suggestions to improve the customer experienceIncrease customer retention Reduced problem handling cost
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A final word…
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Strategy matters, but high
performing organizations
win on execution
ManagementManagement
PracticesPractices
Roles & Roles & ResponsibilitiesResponsibilities
TrainingTraining
ReportingReporting
Reward &Reward &RecognitionRecognition
Tools &Tools &ProcessesProcesses