Accelerating Change and Continuous Improvement:

Management & Organizational Consulting

Accelerating Change and Continuous Improvement:

Presented by:

Barbara Mahoney, SR VP, HRLeominster Credit Union

&

Ray GagnonGagnon Associates

How HR Led the Way at Leominster Credit Union . . .


AgendaHow it all began at LCUA bit about “making change”GE Work-Out

– Where it came from & how it worksWork-Out at LCU: the “Pilot” PhaseWork-Out becomes “On-TRACK”

– Developing LCU internal change capability LCU: On its own with On-TRACKSummary, Q&A


LCU’s Change Agenda: How It All Began

Strategic plan – 2001-2005– Key Goal: “Achieve World-Class Productivity”

• Supporting Strategy: “Analyze current business processes to determine if best suited to optimize productivity”

• Organizational agenda: eliminate boundaries, barriers, to X-functional collaboration and teaming – “silos”


How to Do It?

Two sides of the question:– “We know this stuff better than anyone; we

can do it on our own.”– Value of a “neutral, 3rd party” look?

objectivity?

Decide on 3rd party – Key factor: “GEWork-Out” capability


LCU Change Objectives

Improve:– Effectiveness & efficiency of key business processes– Member experience

Bring about:– Improved communication– Increased employee knowledge, appreciation and

understanding of practices/procedures in other departments

Break down “silos” to improve teamwork & collaboration across the Credit Union


A bit about “making change”

“Change has no constituency.”

-- former GE CEO Jack Welch


Change Management Model Making the Case for Change

– Creating:• a Shared Need• a Sense of Urgency• Dissatisfaction with the Status Quo

Shaping and Sharing the Vision– Describing the Desired Future State– Building a Guiding Coalition

Mobilizing Commitment– Empowering Broad-based Action– Generating Short-term Wins

Making Change Last– Reinforcing/Celebrating Success– Anchoring Change in the Organization

UNFREEZE

TRANSITION

REFREEZE

adapted from Kotter, Tichy, Lewin.

(ADKAR)

Awareness

Desire

Knowledge

Ability

Reinforcement


Work-Out: After a Decade

“GE had another huge advantage that accelerated our quality effort: we hada Company that was open to change, hungry to learn and anxious to move quickly on a good idea. This learning environment came from a decade-long, soul-transforming cultural initiative called “Work-Out.” Work-Out is a continuing effort to achieve what we call ‘boundaryless behavior’-- business behavior that tramples or demolishes allbarriers of rank, function, geography and bureaucracy in an endless pursuit of the best idea -- in the cause of engaging and involving every mind in the Company.”

-- Jack Welch, former CEO, General Electric Letter to “Share Owners and Employees”

1997 Annual Report


Work-Out: A Proven Approach GE IBM Philips Frito-Lay Bristol-Myers Squibb Borden Novartis Joy Global Serono


Work- Out: Empowering Internal “Experts”

Traditional Perspective Work-Out Perspective

Managers(Directive)

Doers(“Salute and execute”)

Internal “Experts,”“ Closest to the Action”

Leaders (Facilitative)

empower


Work-Out: How it works . . .

Carefully defines initiatives into discrete team ‘missions’ or ‘challenges’– High focus– Fast-track

Enlists cross-functional teams of process owners and those with a vested interest

Uses “guerilla tactics”– “get in, get the job done, get out”

Puts pressure on management to lead vs. direct Engages and empowers “end-users”


TIME

RESULTS

%

BAU ScenarioBAU Scenario

Work-Out ScenarioWork-Out Scenario

Accelerating Positive Change


Work-Out: Implementation Phases

DesignDesign

ConductConduct

ImplementImplement


Design Phase: Components

Due diligence– Sponsor’s “take”– Interviews

Design Team Meeting– define Team Challenge, Scope, Metrics, Deliverables – select participants; size session

Reference Data Package Logistics


Conduct: Kickoff and Overview

Team#1

Team#2

Team#3

Team#4

Decision-Making

Team

LeadFacilitator

This is going to be great!!

Sponsor

All teams start the session together with the Sponsor giving the overview of objectives and expectations

All teams start the session together with the Sponsor giving the overview of objectives and expectations


Conduct Phase: Sample AgendaDAY ONE DAY TWO DAY THREE

8:00 KICK-OFF 8:00 Start 8:00 Start

Bus. Challenge - Spons. Team Work Sessions Team Work Sessions 8:15 Topic Overview - Champ. “Main Tent”8:45 Process Overview – GA “Main Tent”

Finalize Presentations

Teams Start-up

12:00 LUNCH 12:00 LUNCH 12:00 LUNCH

1:00 Team Work Sessions Team Work Session 1:00 Practice Presentations

3:00 “TOWN MEETING”-- Team Presentations-- Decisions

6:00 Adjourn DAY ONE 6:00 Adjourn DAY TWO 6:00 Adjourn DAY THREE (Possible evening work)

DAY ONE DAY TWO DAY THREE

8:00 KICK-OFF 8:00 Start 8:00 StartBus. Challenge - Spons. Team Work Sessions Team Work Sessions

8:15 Topic Overview - Champ. “Main Tent”8:45 Process Overview – GA “Main Tent”


Teams Start-up





Decision-MakersBriefing


Issue:

Recommendation:

Cost/Benefit Analysis:

Action Steps: Who: When:

Owner:

Work-Out Team Output: Action Plans

1.

2.

3., etc.


Issue # 2: –Global standards for quality control, testing and manufacturing of

rollers are inconsistent between the regions due to:– Different product designs– Different machinery and requirements to produce rolls– Inherited production methods

Recommendation # 2–Document global standards for roller quality control, testing and

manufacturing practices Owner

–Daryl Robinson & Carl Weeks

Issue # 2: –Global standards for quality control, testing and manufacturing of

rollers are inconsistent between the regions due to:– Different product designs– Different machinery and requirements to produce rolls– Inherited production methods

Recommendation # 2–Document global standards for roller quality control, testing and

manufacturing practices Owner

–Daryl Robinson & Carl Weeks

Work-Out: Sample Team Output


Cost/Benefit Analysis Benefits

–Creates documented global standards for:• Manufacturing processes• Quality Control• Testing• Packing & Shipping

–Creates best practice for manufacturing using knowledge from existing regional processes

–Potential increase for productivity Cost

– General travel and documentation cost

Cost/Benefit Analysis Benefits

–Creates documented global standards for:• Manufacturing processes• Quality Control• Testing• Packing & Shipping

–Creates best practice for manufacturing using knowledge from existing regional processes

–Potential increase for productivity Cost

– General travel and documentation cost

Work-Out: Sample Team Output


Action (What?) Who? By When?

1 Create contents template to identify information to be included in manual

Daryl Robinson

Carl Weeks

June 30 2010

2 Collate and analyze existing regional data for the following functions:

–Manufacturing process–Quality–Testing–Packing & Shipping

Daryl Robinson

Carl Weeks

(appropriate regional mgrs.)

July 31 2010 for some items.

Other items - TBA contingent on completion of roller GDM

3 Use data to create global standardized procedures and rules for each function

Daryl Robinson

Carl Weeks

TBA

4 Document procedures and rules into a global manual for each function

Daryl Robinson

Carl Weeks

TBA

Work-Out: Sample Team OutputAction Plan for Recommendation # 2


Conduct Phase: Sample AgendaDAY ONE DAY TWO DAY THREE

8:00 KICK-OFF 8:00 Start 8:00 Start

Bus. Challenge - Spons. Team Work Sessions Team Work Sessions 8:15 Topic Overview - Champ. “Main Tent”8:45 Process Overview – GA “Main Tent”


Teams Start-up





DAY ONE DAY TWO DAY THREE

8:00 KICK-OFF 8:00 Start 8:00 StartBus. Challenge - Spons. Team Work Sessions Team Work Sessions

8:15 Topic Overview - Champ. “Main Tent”8:45 Process Overview – GA “Main Tent”


Teams Start-up





Decision-MakersBriefing


The Work-Out “Town Meeting”

Team#1

Team#2

Team#3

Team#4

Decision-Making

Team

LeadFacilitator

Sponsor

Yes No F.S.

xx xxx

x

TeamRepresentative

ActionPlan

The teams then present their action plans to the Leadership Team to get feedback and immediate decisions. “Further Study” decisions must have a specific time frame for closure and usually require some additional data before a decision can be reached.

The teams then present their action plans to the Leadership Team to get feedback and immediate decisions. “Further Study” decisions must have a specific time frame for closure and usually require some additional data before a decision can be reached.

xxI approve!


Progress Checkpoints Progress Checkpoints

30 days 60 days 90 days

Teams meet informallyto share information andrequest help in removing

roadblocks

All Work-Outparticipants meet to

share results and CELEBRATE!!

Teams meet with Decision-Makers to report

progress

The time frame for implementation is usually 30-60-90 days

Work-Out: 30/60/90 Check-Points

Consultant/facilitatorprovides Team/Sponsorw/ support as needed.


Work-Out at LCU

The “Pilot” Phase


Pilot #1: Lost/Stolen Debit Card Issue:

– Goal: “Deliver ‘Best’ Customer Service”– Ave. 7-9 days to return lost/stolen card (occasional 13-15)

Approach: 2-day Work-Out– X-funct. team: Deposit Ops., IT, Contact Ctr., Retail Branches– “map” “as is” process; ID causes for excessive “cycle time”– problem-solve causes– “map” “to be” process to reduce “cycle time”

Results:– Replacement time reduced to ave. 3-4 days– “Greatly reduced FedEx costs”– Fixes leveraged across other “card-related” processes for bigger

win


Pilot #2: Home Equity Line/Loan Approval

Issue: – Approval process too slow– Additional goal: increase rate of loans approved

Approach: 2-day Work-Out– X-funct. team: Consumer lending; IT; Contact Ctr.;

Loan Servicing; Branch Mgmt.; Vendor on call– “map” “as is” process; ID causes for excessive “cycle

time”– problem-solve causes– “map” “to be” process to reduce “cycle time”

Results:– Loan/line approval cycle-time improved by >30%– 13% increase in Lines/Loans approved


“On-TRACK” at LCU: Consultant-Led &TransitionActivity Process Timing

Pilot #1 Lost/Stolen Debit Card Replacement

March 2006

Pilot #2 Home Equity/Line/Loan May 2006

Training Developed November 2006

Training Delivered January 2007

On-TRACK III

(co-led)

Portfolio/Account Initiation/Maintenance

February 2007

On-TRACK IV

(shadowed)

Cross-Selling June 2007

On-TRACK V

(shadowed)

File-Maintenance Procedures

June 2008


On-TRACK Representative ResultsConsultant-Led & Transition

Key, internal file-maintenance procedures between Branches & Deposit Ops. better integrated

Steps reqd. by Branch personnel reduced by 56%, freeing up retail capacity to support CEO’s “sales culture” initiative

Reduced front-line file maintenance errors by >50% in key product area

Eased work-loads and reduced “system stress” between Branches and “back-office”


“On-TRACK” at LCU: Self-Sufficiency

Activity Process Timing

On-TRACK VI Loan Checklist/Cross Sell

Sept/Oct 2009

On-TRACK VII Collection Dept. Processes

May 2010

On-TRACK VIII IRA Processes October 2010

On-TRACK “8.5” Check Reconciliation May 2011

On-TRACK IX Project Mgmt. Process September 2011

On-TRACK X User/Responsibility Codes

March 2012


On-TRACK Representative ResultsSelf-Sufficiency

Loan application process modified to collect more data to maximize cross-sell opportunities

Collections process cycle-time improvements:– Telepayment: –65%– Hold-harmless: –50%– Address changes: –40%– Set-off process: –100% (automated)– Payment shortages: –100% (automated)

IRA account opening process: –83% IRA reduced error rate: –66% Defined global, X-funct. “project-mgmt.” process


On-TRACK Representative ResultsSelf-Sufficiency

User/Responsibility Codes Simplification– Reduced from 2 to 1 per employee– Created efficiencies in tracking teller/MSR

activity– Deactivated former employee codes

eliminates member account inaccuracies– Improved accuracy of employee activity

tracking


Qualitative Results“There were many intangibles that came out of this process improvement work.

This process improved teamwork and collaboration across the credit union. . . . It has brought understanding among our people of how changes they make can impact other areas of the credit union and, based on this, how important it is to share information/policy/process changes across functions. In short, it has made us a more aware and better-functioning team as an organization.”

-- Barbara Mahoney, VP HR, Leominster Credit Union, Leominster, MA


On-TRACK: “A Way of Life” at LCU

Integral part of annual Strategic Plan– Commitment to 2 On-TRACK’s yearly

L’ship recognizes sustainability as critical to success

Employees “waiting in line” to participateHas become a part of our day-to-day –

“the way we do things around here”


Critical Success Factors Senior management commitment & active

involvement, continuity– Executive Sponsor: CEO– Process Champion: Sr. VP HR– “Process” vs. “Event” Mindset

Resources – “calendar time,” $ investment, people

Clear “missions” and “boundaries” Key players – not just most available Offsite sessions Follow-through during Implementation Phase Publicized, celebrated “wins”


Change Management Model Making the Case for Change

– Creating:• a Shared Need• a Sense of Urgency• Dissatisfaction with the Status Quo

Shaping and Sharing the Vision– Describing the Desired Future State– Building a Guiding Coalition

Mobilizing Commitment– Empowering Broad-based Action– Generating Short-term Wins

Making Change Last– Reinforcing/Celebrating Success– Anchoring Change in the Organization

UNFREEZE

TRANSITION

REFREEZEadapted from Kotter, Tichy, Lewin.


Thanks!

Q&A, Discussion??


Your Presenters

Barbara Mahoney, Senior VP, HR– Leominster Credit Union– 978 466 7228– [email protected]

Ray Gagnon, Principal– Gagnon Associates– 978 635 9836– [email protected]

Accelerating Change and Continuous Improvement:

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