Thursday, May 7, 2009

High-performing teams in action.

Here's an example of what can happen when you remove the impediments that get in the way of high-performing teams.

AT&T Credit Corporation (ATTCC) was established to provide finance and leasing services to AT&T’s customers and others acquiring telecommunications products. The company was organized into two divisions: the General Markets Division (GMD) which handled high volume, small ticket business, and the Business Markets Division (BMD) which took care of small volume, middle-to-large ticket items. Both divisions were organized according to traditional work design principles, emphasizing top-down hierarchical control, functional separation and a high degree of task specialization. Credit approval, funding and collection functions for the GMD were sub-contracted to an outside vendor.

It soon became apparent that smaller customers weren't getting the personal service and flexible financing alternatives they wanted from the GMD. ATTCC didn't "own" their customers' accounts because the subcontractor's leasing processes weren't traceable by AT&T staff. ATTCC's management felt the subcontractor's operations were inefficiently run and unnecessarily costly as a result. Customers lacked a single point of contact for leasing and customer service. Employees had no sense of how their efforts contributed to satisfying customers since work was divided into small, separate tasks and processing groups were functionally organized.

Some managers were familiar with a work reorganization initiative undertaken by AT&T's American Transtech when it moved its operations from New York to Florida. Impressed by the dramatic improvements in service and productivity that resulted from Transtech's high performing team-based work design, ATTCC decided to pursue a similar approach.

ATTCC started by taking back the high volume GMD business, hiring their own employees and operating it themselves. They set out to give the employees ownership and accountability for costs and customers throughout the entire leasing process. While the BMD continued to operate traditionally, the GMD was set up to operate in eleven self-managing teams, each accountable for a specific geographic assignment. Area Sales Managers were also assigned to corresponding regions. Sales agents and processing teams worked together to establish a personal relationship with their customers. Each team took care of all four aspects of the business; credit evaluation, funding, customer service and collection, all of which had previously been managed separately. The new arrangements eliminated the shuffling of calls between different departments and encouraged team members to take responsibility for solving any and all of their customerĂ­s problems. Thus, a culture developed that, "Whoever gets the call, owns the problem."

In two years, it was clear that the new GMD organization was a success. Teams were processing 800 applications a day, up from 400 when they started. Instead of taking several days to approve credit, the teams did it in one day. Teams scheduled their own time off, reassigned work when people were absent and interviewed prospective new employees. Team members could now relate their own success and their team's success with ATTCC's success. Employees who previously had individual, parochial goals shifted their thinking to supporting broader team goals. Sales representatives were no longer just interested in "doing deals." They now had a greater incentive to write "good deals," which fully satisfied the requirements of the team members who made credit approvals. This resulted in lower delinquency rates and fewer write-offs. As a result, ATTCC's business grew at a compounded annual rate of fifty percent a year.

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