Client Activity:

Financial

Headline:

Bad debt release increased by £4 million in year 1

Background

The collections function in this major bank was already arguably the most effective in a huge worldwide organisation. Bad debt figures were consistently on plan and teams from across the globe regularly paid ‘best practise visits’. However, the forward thinking Head of Collections requested consultant support to further strengthen his function and implement an improved incentive for his teams.

Solution

- Consultant worked full closely with strategy team to build understanding and trust before even beginning project
- Agreement made to link coaching to incentive, and incentive to bottom line reserve release impact so collectors would effectively be coached towards and measured on financial impact
- Financial modelling undertook to establish the key drivers for effective collections performance which were in collector control
- Only those measures proven to statistically correlate to bottom line impact included in performance measures (plus necessary hygiene factors)
- This meant the number of metrics measured and coached moved from 61 to 12, significantly streamlining reporting and coaching requirements
- Collectors formed key part of project team and provided invaluable ongoing challenge and support in helping team understand how old system was worked/ manipulated and to ensure that new system was as robust as possible with minimal opportunity to ‘beat’ it (classic problem with any incentive system).
- This provided the essential bridge between statistical analysis, management theory and operational durability!
- Supporting IT systems built and implemented
- New measures rolled out across collections

Outcome

- Excellent collector feedback regarding tighter focus on fewer, critical measures
- Ability to pay higher bonuses for better performance as reserve release impact known each month
- Increased understanding of performance drivers allowed better strategic alignment of key effective personnel to areas of maximum reserve impact
- Bad debt release increased by £4 million in year 1 of rollout
- Viewed as worldwide collections best practice and implemented in other countries operations within 2 years