Accelerating Change
and Continuous Improvement:
How HR Led the Way at Leominster Credit
Union . . .
Presented by:
Barbara Mahoney, SR VP, HR
Leominster Credit Union
&
Ray Gagnon
Gagnon Associates
Management & Organizational Consulting
Agenda
How it all began at LCU
A bit about “making change”
GE Work-Out
– Where it came from & how it works
Work-Out at LCU: the “Pilot” Phase
Work-Out becomes “On-TRACK”
– Developing LCU internal change capability
 LCU: On its own with On-TRACK
Summary, Q&A
Management & Organizational Consulting
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”
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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
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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
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A bit about “making change”
“Change has no constituency.”
-- former GE CEO Jack Welch
Management & Organizational Consulting
Management & Organizational Consulting
Change Management Model
 Making the Case for Change
(ADKAR)
– Creating:
• a Shared Need
• a Sense of Urgency
• Dissatisfaction with the Status Quo
UNFREEZE
 Shaping and Sharing the Vision
– Describing the Desired Future State
– Building a Guiding Coalition
TRANSITION
Desire
 Mobilizing Commitment
– Empowering Broad-based Action
– Generating Short-term Wins
 Making Change Last
REFREEZE
Awareness
– Reinforcing/Celebrating Success
– Anchoring Change in the Organization
adapted from Kotter, Tichy, Lewin.
Management & Organizational Consulting
Knowledge
Ability
Reinforcement
Work-Out: After a Decade
“GE had another huge advantage that accelerated our quality effort: we had
a 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 all
barriers 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
Management & Organizational Consulting
Work-Out: A Proven Approach
 GE
 IBM
 Philips
 Frito-Lay
 Bristol-Myers Squibb
 Borden
 Novartis
 Joy Global
 Serono
Management & Organizational Consulting
Work- Out: Empowering Internal
“Experts”
Traditional Perspective
Managers
(Directive)
Work-Out Perspective
Internal “Experts,”
“ Closest to the Action”
empower
Doers
(“Salute and execute”)
Management & Organizational Consulting
Leaders
(Facilitative)
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”
Management & Organizational Consulting
Accelerating Positive Change
%
Work-Out Scenario
BAU Scenario
RESULTS
TIME
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Work-Out: Implementation Phases
Design
Conduct
Implement
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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
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Conduct: Kickoff and Overview
All teams start the session together with the
Sponsor giving the overview of objectives and
expectations
This is going
to be great!!
Sponsor
Team
#1
DecisionMaking
Team
Lead
Facilitator
Team
#2
Management & Organizational Consulting
Team
#3
Team
#4
Conduct Phase: Sample Agenda
DAY ONE
8:00
8:15
8:45
DAY TWO
KICK-OFF
8:00
Bus. Challenge - Spons.
Topic Overview - Champ.
Process Overview – GA
Start
Team Work Sessions
DAY THREE
8:00
Start
Team Work Sessions
“Main Tent”
“Main Tent”
Finalize Presentations
Teams Start-up
12:00 LUNCH
1:00
6:00
12:00 LUNCH
Team Work Sessions
Adjourn DAY ONE
Team Work Session
6:00
Adjourn DAY TWO
(Possible evening work)
Management & Organizational Consulting
12:00 LUNCH
Decision-Makers
Briefing
1:00
Practice Presentations
3:00
“TOWN MEETING”
-- Team Presentations
-- Decisions
Adjourn DAY THREE
6:00
Work-Out Team Output: Action
Plans
Issue:
Recommendation:
Owner:
Cost/Benefit Analysis:
Action Steps:
1.
2.
3., etc.
Management & Organizational Consulting
Who:
When:
Work-Out: Sample Team Output
 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
Management & Organizational Consulting
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
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Work-Out: Sample Team Output
Action Plan for Recommendation # 2
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.
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
Management & Organizational Consulting
Other items - TBA
contingent on
completion of roller
GDM
Conduct Phase: Sample Agenda
DAY ONE
8:00
8:15
8:45
DAY TWO
KICK-OFF
8:00
Bus. Challenge - Spons.
Topic Overview - Champ.
Process Overview – GA
Start
Team Work Sessions
DAY THREE
8:00
Start
Team Work Sessions
“Main Tent”
“Main Tent”
Finalize Presentations
Teams Start-up
12:00 LUNCH
1:00
6:00
12:00 LUNCH
Team Work Sessions
Adjourn DAY ONE
Team Work Session
6:00
Adjourn DAY TWO
(Possible evening work)
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12:00 LUNCH
Decision-Makers
Briefing
1:00
Practice Presentations
3:00
“TOWN MEETING”
-- Team Presentations
-- Decisions
Adjourn DAY THREE
6:00
The Work-Out “Town Meeting”
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.
Team
#1
Action
Plan
Lead
Facilitator
Team
Representative
Team
#3
DecisionMaking
Team
Sponsor
Management & Organizational Consulting
x
x
x
x
x
I approve!
Team
#4
Team
#2
Yes No F.S.
x
x
x
Work-Out: 30/60/90 CheckPoints
Teams meet informally
to share information and
request help in removing
roadblocks
30 days
Consultant/facilitator
provides Team/Sponsor
w/ support as needed.
Progress Checkpoints
60 days
Teams meet with
Decision-Makers to report
progress
90 days
All Work-Out
participants meet to
share results and
CELEBRATE!!
The time frame for implementation is usually 30-60-90 days
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Work-Out at LCU
The “Pilot” Phase
Management & Organizational Consulting
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
Management & Organizational Consulting
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
Management & Organizational Consulting
“On-TRACK” at LCU:
Consultant-Led &Transition
Activity
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
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On-TRACK Representative Results
Consultant-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”
Management & Organizational Consulting
“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
Management & Organizational Consulting
On-TRACK Representative Results
Self-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
Management & Organizational Consulting
On-TRACK Representative Results
Self-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
Management & Organizational Consulting
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
Management & Organizational Consulting
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 participate
Has become a part of our day-to-day –
“the way we do things around here”
Management & Organizational Consulting
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”
Management & Organizational Consulting
Change Management Model
 Making the Case for Change
– Creating:
• a Shared Need
• a Sense of Urgency
• Dissatisfaction with the Status Quo
UNFREEZE
 Shaping and Sharing the Vision
– Describing the Desired Future State
– Building a Guiding Coalition
TRANSITION
 Mobilizing Commitment
– Empowering Broad-based Action
– Generating Short-term Wins
 Making Change Last
REFREEZE
adapted from Kotter, Tichy, Lewin.
– Reinforcing/Celebrating Success
– Anchoring Change in the Organization
Management & Organizational Consulting
Thanks!
Q&A, Discussion??
Management & Organizational Consulting
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]
Management & Organizational Consulting