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Enlightened Leadership
1. 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 today’s 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 can’t consistently
prove, in both words and actions, that they
truly value the customer’s business
relationship, then they’ll 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 company’s 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 service-
based organization, and as such, should be
developed with the same level of care and
2. 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 employee’s 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 company’s
longevity, along with everyone’s 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 department’s
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 company’s three key constituents
(Customer/Shareholder/Employee), the
customer. Although, of equal importance to
the business, the customer needs must be
3. 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
department’s 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 (KPI’S),
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 department’s 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,
4. for involvement breeds acceptance. The
outcomes will often amaze everyone
involved.
Also consider establishing documented
service level agreements (SLA’s) 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 customer’s
expectations.
Focus on the Employee
Leaders who demonstrate the utmost
personal integrity are engaged in their staff’s
development by providing them with the
appropriate tools to do the job well and
nurturing them to succeed; they earn their
staff’s 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 user-
friendly 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
5. 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
employee’s 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 employee’s 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
6. 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 under-
performing 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
department’s 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 department’s 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
7. 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
learning’s 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 defect’s 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
X’s) 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 &