Enlightened Leadership

How to use Transformational Management and Transactional Lean Six Sigma to produce exceptional customer service business results. By Stefan Vale How many times have you experienced bad customer service from a company with which you have entrusted doing business? Poorly designed websites and phone prompt systems, which leave you in a perpetual vortex of confusion, indifferent customer service representatives who lack the professionalism, skill and empowerment to provide an appropriate level of service, and apathetic management personnel who are not focused on taking business ownership. These are all examples of an organization in chaos. In todays competitive business market, you seldom get a second chance to rebound from a negative customer experience. Every interaction is a moment of truth with potentially lasting consequences to the business. Customer expectations are always high. If your company cant consistently prove, in both words and actions, that they truly value the customers business relationship, then theyll likely leave for the competition and may never return. During tough economic times when many companies are desperate to cut operational cost by resorting to outsourcing efforts and

ramping up their self-servicing capabilities via interactive web channels and intricate voice response systems; the concept of personalized service may seem like a relic of the past, but it is precisely this which inspires customer confidence and differentiates companies from their competitors. Since it is always more costly for a company to first establish a new business relationship than to maintain an existing one, it is essential that the financial investment made to acquire the existing customer base is protected at all cost. The customer service division is where the rubber meets the road as this department usually has the greatest amount of interaction with the companys external customers and it is the first line of defense when things do periodically go wrong. That is why the job of a customer service leader is so vitally important to the organization, for they are responsible for building and maintaining the foundation, which supports the precariously delicate relationship with the customer. Today, far too many companies neglect to place an adequate level of importance on recruiting, developing and retaining competent customer service support personnel at all levels; and instead focus their attention and resources primarily on front-end sales & marketing divisions. This myopic approach to acquiring short-term revenue gains can have potentially detrimental effects on the long-term health of the company. People are the backbone of every servicebased organization, and as such, should be developed with the same level of care and

attention as other business assets. Corporate responsibility and enlightened leadership are the keys to transforming a group of people from simple order takers into a world-class servicing organization. This is accomplished by providing all of the tools, training and motivation required to do the job effectively and empowering people to make sound independent business decisions to go above and beyond the ordinary, to deliver extraordinary service value. Satisfied employees who are well trained and supported by their organization will most often do quality work, which drives customer satisfaction, loyalty and retention. Customers will then have a higher propensity to spend more, which drives shareholder value as money is then reinvested back into the business, subsequently securing the employees job and the possibility for future business growth. This is the basis of the Service Profit Chain, a model, which every successful business aspires to achieve. Conversely, businesses with unskilled or disengaged employees provide a poor level of service to their customers, which can damage the business relationship and tarnish the company brand image. Customers are then more likely to spend less, attrite more frequently and as a direct result, company profits subsequently suffer, shareholder value is diminished and the companys longevity, along with everyones job, are severely jeopardized. To mitigate this risk, companies need effective people (at all levels) who are capable of leading their organization in the right direction. Leaders who are not just

strategic thinkers that can conceptualize what needs to be done or those who simply follow the existing beat of the drum, but rather, agents of progressive change who will roll up their sleeves and transform the business. Transformational Management

The quintessential business manager will possess the leadership competencies of professionalism, organization, accountability, communication, integrity and technical acumen. The ultimate measure of their success being achieved when they have properly developed their staff to be able to function independently without direct supervision while consistently delivering the highest level of service to the departments customers and meeting the established department goals. An exceptional (Transformational) leader, however, will also possess an entrepreneurial spirit with the ability to proactively capitalize on business growth and continuous process improvement opportunities as well; never satisfied with the status quo and not afraid to take calculated risks to find new ways to drive business results. The first step in the developmental process of learning how to be an exceptional leader is to focus on the most important member of the companys three key constituents (Customer/Shareholder/Employee), the customer. Although, of equal importance to the business, the customer needs must be

paramount, for without them, the company would have no shareholder or employee. Focus on the Customer By gaining an objective understanding for the actual customer experience with the departments service delivery, leaders are able to get an appreciation for the business dynamics and what needs improvement. Most customer service departments measure the health of their business by relying on their key performance indicators (KPIS), which vary greatly depending on the business itself but can include historical and current metrics for inventory volumes (& aging) from all recorded input channels, productivity of outputs, quality sampling & compliance auditory results, customer satisfaction survey results, employee satisfaction survey results, sales & revenue, etc. These are all good business metrics to monitor, but is the department measuring the right things to truly understand the state of the business and the relationship with the customer? Customer satisfaction surveys are one way of measuring this component but they can be very impersonal and because many customers will only provide feedback when things go wrong this can create low response rates, which can be inherently skewed to the negative, even when they have been given an incentive to respond to the survey. Customer focus groups are a great way of isolating specific areas, which the department may be doing well and areas of needed improvement, but, because these groups generally only represent a small microcosm of the overall customer

population, the data may only be useful directionally. So what can be done to get a pulse on the customer experience? One option is to validate the accuracy, purpose and importance of all existing business metrics, which are presently a part of the department goals and to also use other less conventional external sources of information as well, as sort of an informal checks & balances gauge to measure the overall department performance. An example of this could be for the leader to get to know the customer experience by actually becoming a customer themselves, by assuming a fictitious name and experiencing the departments service delivery first hand and then asking themselves the following questions: 1) How would they rate the overall customer experience? 2) Would they recommend this service to a friend or colleague? 3) In what was could this service have been better? Then armed with this firsthand knowledge, go back and share the anonymous findings with their staff and/or business colleagues and build a coalition of the willing; team of people who are devoted to collaboratively brainstorm new ideas for how to drive customer-targeted process and system improvements. Serving as the team facilitator, encourage the team to think out-of-the-box to create innovative new ideas, which may have never been seriously considered before, leading with passion and purpose, as the beacon of inspiration and the team will aspire to achieve great things and follow willingly,

for involvement breeds acceptance. The outcomes will often amaze everyone involved. Also consider establishing documented service level agreements (SLAs) with all of the external/internal customers, vendors and other company divisions that interface with the department, just another way of continuously measuring business performance against the customers expectations. Focus on the Employee Leaders who demonstrate the utmost personal integrity are engaged in their staffs development by providing them with the appropriate tools to do the job well and nurturing them to succeed; they earn their staffs trust and followership for placing them in the best possible position to succeed. This formula yields the maximum return on investment to the business, for at its core, employees all require the following essential elements to be satisfied with their job and perform at their best: 1) Development via comprehensive new hire & recurrent training programs, which are presented in an informative userfriendly format to foster content understanding and comprehension, including a testing process and post-graduation mentorship on-the-job training (OJT) process, which enables the trainee to develop proficiency with their newly acquired skills within a controlled environment, to avoid adversely impacting the customer. 2) Recognition in the form of award (or monetary) means, role promotion and/or simple verbal recognition for stellar performance and contributions to the

business. People work best when they have been given clearly defined performance targets, which are attainable yet challenging. Most employees will take ownership for their own performance if they have faith in the accuracy of the measurement system used to rate their performance and have an adequate opportunity to improve. 3) Affiliation as a business partner, for people want to have a voice in the company and an opportunity to grow professionally within the organization. Employee development & succession planning programs help organizations retain quality staff members and groom exemplary employees for the opportunity of upward mobility. This is very beneficial to the business for tenured employees who are developed for leadership positions tend to have an excellent handle on the technical side of the business (products and services). 4) Security within their position and work environment, including good working relations with their boss and team members, helps employees feel valued and respected, promoting a sense of family and loyalty to the company. Provided with all of these things most employees would go above and beyond to help drive business results. To ensure customers receive the attention they deserve when they contact the department looking for a human being to service them; leaders need to make sure that the department is adequately staffed with equally skilled customer advocates who are empowered to satisfy the customer, profitably. Structuring teams by job function and maximizing single point-of-contact

resolution servicing capabilities eliminates inadvertently shuffling customers from one company resource to another. Giving customer service representatives a high approval level to resolve complex customer issues themselves verses escalating indiscriminately to senior leaders helps promote a single point-of-contact business model, which inspires customer confidence. Aligning work schedules based on business operational needs and maintaining acceptable associate-to-leader ratios (spans of control) also helps to maintain adequate support for customer requests. But how do you determine how many employees are required to handle the customer inquires? Staffing models are frequently used in forecasting this requirement, which base its estimates on the trending inventory volume, rep productivity and work hours. There are many different staffing models used to determine this predictive equation, from simple to more complex. But at its core, the basic formula is as follows: Estimated input volume divided by average productivity level equals the number of required work hours to process the work. This number divided by the operational work hours equals the total number of employees that are required. In order to manage the quality of the employees service delivery to the customers, and also identify any training gaps, it is important to continuously monitor employee performance. In a call center environment this means quality reviews through call monitoring. This should include a carefully designed call evaluation process to accurately measure how well employees are handling

customer calls in terms of professionalism, accuracy, timeliness and driving customer satisfaction. Because most leaders simply cannot monitor every call they rely heavily on sampling, but how many samples should be taken for each employee to gauge their overall performance? There are many different sampling models designed to determine a statistically valid sample size for measuring employee overall quality. One of the most effective ways is to sample in accordance with the employees trending performance, using the premise that the smaller the sample size the least amount of errors are acceptable and vice versa. Example: If you sample 20 calls per month and the employee has zero errors, then it is safe to sample less. Conversely, if you sample only 20 calls per month and there were 15 errors, then perhaps you should sample more, because imagine how many errors you are missing by having such a small sample size. Based on this philosophy, one way of determining an appropriate sample size is to first take as many random samples as possible until you get at least 5 correct and 5 incorrect samples (a minimum of 30 overall samples total), this way you get a good range for the overall performance capability. Whatever total number of samples it took to acquire this range, continue to use that sample size moving forward. Based on the employees trending quality percentage (errors divided by total samples) over a rolling 3-month period, increase or reduce the number of samples accordingly. If an employee has a consistently greater number of errors month over month (or fails

to meet the department goals), consider providing them with quality retrainment first, before immediately resorting to a counseling process or termination. Effective leaders believe in protecting all valued company assets and nurturing underperforming ones, to maximize their potential. By assigning an under-performing employee to a mentor (or quality coach) and putting them on a comprehensive action plan, complete with progress reviews and subsequent consequences, and by supportively managing their performance, the employee will have the highest potential to succeed. Remember, in a service-based business environment employee staffing is generally the highest department expense. It cost the company a great deal of money to recruit, train and develop staff. Treat this company asset with the utmost care. Focus on the Shareholder Shareholders are most interested in the health, longevity and profitability of the company as a whole. To this end, sales & revenue generation, capital expenditures, productivity and anything else, which will impact the business performance, are all areas of particular interest to the shareholder. One of the most challenging elements of managing a customer service department is in being able to isolate, measure and fix all of the inherent process defects, which exist within the business. Often times, it is not until things go wrong in a big way or until companies benchmark their competition and compare business models that they realize just how many pitfalls exist within their departments internal processes and the impact on service delivery.

Convoluted procedures, system glitches, antiquated software, excessive hand-offs, documentation and paperwork are all signs of an organization in desperate need of reengineering. Continuous process improvement initiatives, which drive increased revenue, improved productivity and/or reduced cost by providing state of the art systems and efficient processes that enhance the departments servicing capabilities, workflow management and inter-company communication all drive shareholder value for when a company is able to produce more with the same level of resources then it has achieved economies of scale. Transactional Lean Six Sigma

Enlightened leaders benchmark the competition to proactively keep abreast of the latest industry trends to find new ways to do things better, creating innovative solutions to drive sustainable improvements, which can be leveraged as best practices across the entire business. One of the most innovative methods for driving continuous process improvement is Lean Six Sigma, the combination of two battle-tested reengineering methodologies. LEAN (originally developed for Toyota Corporation) focuses on reducing non-value added time (rework & idle time) and Six

Sigma (originally developed for GE and Motorola) focuses on eliminating process defects and controlling variation. Although both methodologies were initially developed for manufacturing business environments, they have been used successfully in numerous transactional (service-based) environments as well to produce exceptional business results. Projects are led by trained project managers (called Black Belts), who are certified in the utilization of robust statistical and project management tools, which follow a rigorously structured phased project framework: Define, Measure, Analyze, Improve and Control. Through each phase of the DMAIC, the Black Belt closely manages project deliverables to completion where the goal is to reduce (or completely eliminate) the defect itself and control future variation. Although a typical Six Sigma project may take a few months to complete; the key learnings and results to the business can be absolutely phenomenal. Depending on the enormity of the project scope itself and the type of data being measured, the number of actual project deliverables may vary, but most projects will include some, if not all, of the following: 1) DEFINE the project plan by outlining in the project charter the problem (or opportunity) statement, defect definition, project goal, objective & scope, proposed timeline & milestones, a listing of team members, process flowcharts & business model diagrams, stakeholder analysis, critical to quality (CTQ) definitions, voice of the customer analysis, etc.

2) MEASURE current process performance capability by calculating the estimated number of defects in relation to the overall process volume (Defects per Million Opportunities or DPMO), sigma level (a statistical measurement of the process capability), the defects overall cost to the business (Cost of Poor Quality or COPQ), benchmarking analysis, a measurement system analysis (Gauge R&R), etc. 3) ANALYZE data to determine the root causes of the defects using visual process illustrations and statistical analysis. Isolate the relative number of existing defects, the key contributing factors (Vital Xs) and the amount of variation that exist within the process itself, in terms of its distribution and standard deviation from the mean (average). Tools may include graphical analysis (histograms, pareto charts, scatter plots, statistical process control charts, etc), statistical hypothesis testing (correlation, regression, ANOVA, etc), detailed process mapping (with time studies), cause & effect (fishbone) analysis, failure mode effects analysis (FMEA), etc. 4) IMPROVE or eliminate the number of defects by developing potential solutions, performing design of experiments to determine the optimal settings for success, mistake proofing (referred to as poke yoke), aligning the newly designed process or system elements with the customers expectations (using a tool called the house of quality), outlining new system requirements, developing standards & procedures, financial assessments, business & staffing models, workflow management processes & procedures, scripting models, training &

development plans, technology, reporting, etc. 5) CONTROL future process performance by establishing a statistical process control plan (with process charts), monitoring & control systems, process capability & control plans, calculating the cost benefits analysis (CBA), return on investment (ROI) analysis, recalculate the DMPO, Sigma & COPQ and project closure.

For businesses operating under strict resource and/or timeline constraints, there are ways to implement quick hit reengineering initiatives using a version of Six Sigma called Six Sigma Lite. This involves engaging a Certified Black Belt to facilitate a Kaizen Event. Kaizen (from the Japanese word: improvement) involves a 2-3 day crash course in reengineering where everyone involved in the process all meet in a central location to jointly map out the existing process using value stream mapping techniques to ascertain how to best reengineer the process by eliminating nonvalue added (NVA) time including idle time, rework, and hand offs and implement quick short-term improvements, while also capitalizing on long-term gains as well. Some additional project management tools, which are also useful in project lifecycle & financial management include precedence diagram mapping, risk management

assessments, earned value management (EVM) and net present value (NPV) estimating. Training (and certification) on the practical application of these reengineering tools and methodologies are available through many educational programs, online courses and books. These recommendations for how to transform a customer service department into a world-class service oriented organization are mere recommendations, but at the end of the day, the most effective way to drive results in any business environment is to cut through all of the process and system boundaries, and corporate politics hindering creativity, and focus on people; for real customer service is best provided by caring employees, led by enlightened leaders who are devoted to customer, shareholder and employee satisfaction. ----------------------------------------------

Stefan Vale is a published author, freelance writer and Certified Six Sigma Black Belt with over 18+ years of customer service management experience (Fortune 500).
Email contact: StefanValeOnline@yahoo.com Professional business resume available at: www.StefanVale.com (and LinkedIn.com) Copyright 2009 Stefan Vale