Management & Organizational Consulting Accelerating Change and Continuous Improvement: Presented by: Barbara Mahoney, SR VP, HR Leominster Credit Union & Ray Gagnon Gagnon Associates How HR Led the Way at Leominster Credit Union...

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 – –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”

Management & Organizational Consulting 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, 3 rd party” look? objectivity?  Decide on 3 rd party –Key factor: “GEWork-Out” capability

Management & Organizational Consulting 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

Management & Organizational Consulting A bit about “making change” “Change has no constituency.” -- former GE CEO Jack Welch

Management & Organizational Consulting

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

Management & Organizational Consulting 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 PerspectiveWork-Out Perspective Managers (Directive) Doers (“Salute and execute”) Internal “Experts,” “ Closest to the Action” Leaders (Facilitative) empower

Management & Organizational Consulting 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 TIME RESULTS % BAU Scenario Work-Out Scenario Accelerating Positive Change

Management & Organizational Consulting Work-Out: Implementation Phases Design Conduct Implement

Management & Organizational Consulting 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

Management & Organizational Consulting Team Challenge Examples  “How do we decrease lead time to engineer, manufacture and build electrical controller cases by 50%?”  “How can we find at least $4 million in incremental annual cost savings in professional services expenses that are controllable and sustainable?”  “How do we eliminate all product contamination occurring in plastics production line #3?”  “How do we accelerate the implementation of our new Marketing Model across our Operating Unit?”  “How do we improve the efficiency (speed) of the process by which we replace a Member’s lost/stolen debit card by at least 30%?”

Management & Organizational Consulting Conduct: Kickoff and Overview Team #1 Team #2 Team #3 Team #4 Decision- Making Team Lead Facilitator This is going to be great !! Sponsor All teams start the session together with the Sponsor giving the overview of objectives and expectations

Management & Organizational Consulting Conduct Phase: Sample Agenda DAY ONE DAY TWODAY THREE 8:00 KICK-OFF 8:00Start 8:00 Start Bus. Challenge - Spons.Team Work SessionsTeam Work Sessions 8:15 Topic Overview - Champ. “Main Tent” 8:45Process Overview – GA “Main Tent” Finalize Presentations Teams Start-up 12:00 LUNCH12:00LUNCH12:00LUNCH 1:00 Team Work Sessions Team Work Session1:00Practice Presentations 3:00“TOWN MEETING” -- Team Presentations -- Decisions 6:00Adjourn DAY ONE 6:00Adjourn DAY TWO 6:00Adjourn DAY THREE (Possible evening work) DAY ONE DAY TWODAY THREE 8:00 KICK-OFF 8:00Start 8:00 Start Bus. Challenge - Spons.Team Work SessionsTeam Work Sessions 8:15 Topic Overview - Champ. “Main Tent” 8:45Process Overview – GA “Main Tent” Finalize Presentations Teams Start-up 12:00 LUNCH12:00LUNCH12:00LUNCH 1:00 Team Work Sessions Team Work Session1:00Practice Presentations 3:00“TOWN MEETING” -- Team Presentations -- Decisions 6:00Adjourn DAY ONE 6:00Adjourn DAY TWO 6:00Adjourn DAY THREE (Possible evening work) Decision-Makers Briefing

Management & Organizational Consulting Issue: Recommendation: Cost/Benefit Analysis: Action Steps:Who:When: Owner: Work-Out Team Output: Action Plans , etc.

Management & Organizational Consulting  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

Management & Organizational Consulting 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

Management & Organizational Consulting Action (What?)Who?By When? 1Create contents template to identify information to be included in manual Daryl Robinson Carl Weeks June Collate and analyze existing regional data for the following functions: – Manufacturing process – Quality – Testing – Packing & Shipping Daryl Robinson Carl Weeks (appropriate regional mgrs.) July for some items. Other items - TBA contingent on completion of roller GDM 3Use data to create global standardized procedures and rules for each function Daryl Robinson Carl Weeks TBA 4Document procedures and rules into a global manual for each function Daryl Robinson Carl Weeks TBA Work-Out: Sample Team Output Action Plan for Recommendation # 2

Management & Organizational Consulting Conduct Phase: Sample Agenda DAY ONE DAY TWODAY THREE 8:00 KICK-OFF 8:00Start 8:00 Start Bus. Challenge - Spons.Team Work SessionsTeam Work Sessions 8:15 Topic Overview - Champ. “Main Tent” 8:45Process Overview – GA “Main Tent” Finalize Presentations Teams Start-up 12:00 LUNCH12:00LUNCH12:00LUNCH 1:00 Team Work Sessions Team Work Session1:00Practice Presentations 3:00“TOWN MEETING” -- Team Presentations -- Decisions 6:00Adjourn DAY ONE 6:00Adjourn DAY TWO 6:00Adjourn DAY THREE (Possible evening work) DAY ONE DAY TWODAY THREE 8:00 KICK-OFF 8:00Start 8:00 Start Bus. Challenge - Spons.Team Work SessionsTeam Work Sessions 8:15 Topic Overview - Champ. “Main Tent” 8:45Process Overview – GA “Main Tent” Finalize Presentations Teams Start-up 12:00 LUNCH12:00LUNCH12:00LUNCH 1:00 Team Work Sessions Team Work Session1:00Practice Presentations 3:00“TOWN MEETING” -- Team Presentations -- Decisions 6:00Adjourn DAY ONE 6:00Adjourn DAY TWO 6:00Adjourn DAY THREE (Possible evening work) Decision-Makers Briefing

Management & Organizational Consulting The Work-Out “Town Meeting” Team #1 Team #2 Team #3 Team #4 Decision- Making Team Lead Facilitator Sponsor Yes No F.S. xx xxxxx xxx x Team Representative Action Plan 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. xxxx I approve!

Management & Organizational Consulting Progress Checkpoints 30 days60 days90 days Teams meet informally to share information and request help in removing roadblocks All Work-Out participants meet to share results and CELEBRATE!! Teams meet with Decision-Makers to report progress The time frame for implementation is usually days Work-Out: 30/60/90 Check- Points Consultant/facilitator provides Team/Sponsor w/ support as needed.

Management & Organizational Consulting 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 Building Internal Process- Improvement Capability at LCU INITIAL PHASE Outsider-Led Work-Out “Pilots” TRANSITION PHASE Outsider-Led/Internal “Shadow” -- to Co-Led -- to Insider-Led/External “Shadow” SELF-SUFFICIENCY PHASE Insider-Led Work-Outs TIME

Management & Organizational Consulting “On-TRACK” Facilitator Training Day 1: Start 8:30  Program Overview  Intro. to Process Facilitation Neutral vs. Expert Content vs. Process  Meeting Simulation (Video)  LUNCH 12:00-1:00  Decision-Making Model Consensus  Observing Group Dynamics Types of Behaviors Video Observation Lab  Interventions Types & Techniques Intervention Practice  Intro. to Work-Out Phases Single & Multi-Team Adjourn: 5:00 Day 1: Start 8:30  Program Overview  Intro. to Process Facilitation Neutral vs. Expert Content vs. Process  Meeting Simulation (Video)  LUNCH 12:00-1:00  Decision-Making Model Consensus  Observing Group Dynamics Types of Behaviors Video Observation Lab  Interventions Types & Techniques Intervention Practice  Intro. to Work-Out Phases Single & Multi-Team Adjourn: 5:00 Day 2: Start 8:30  Review/Preview  Work-Out: Conduct Phase  Facilitator Tools Workshop “Designed Meeting” Brainstorming Affinity Diagramming Multi-/Priority Voting Payoff Matrix  LUNCH 12:00-1:00 Process Mapping Action Planning  Facilitation Video Lab Agenda Planning Exercise Extended Individual Practice Individual Feedback & Coaching Adjourn: 5:00 Day 2: Start 8:30  Review/Preview  Work-Out: Conduct Phase  Facilitator Tools Workshop “Designed Meeting” Brainstorming Affinity Diagramming Multi-/Priority Voting Payoff Matrix  LUNCH 12:00-1:00 Process Mapping Action Planning  Facilitation Video Lab Agenda Planning Exercise Extended Individual Practice Individual Feedback & Coaching Adjourn: 5:00 Day 3: Start 8:30  Facil. Video Lab (Cont’d.) Extended Individual Practice Individual Feedback & Coaching  LUNCH 12:00- 1:00  Facil. Video Lab (Cont’d) Extended Individual Practice Individual Feedback & Coaching  Wrap-Up Indiv. Dev’t. Plan Evaluation Adjourn: 3:30 Day 3: Start 8:30  Facil. Video Lab (Cont’d.) Extended Individual Practice Individual Feedback & Coaching  LUNCH 12:00- 1:00  Facil. Video Lab (Cont’d) Extended Individual Practice Individual Feedback & Coaching  Wrap-Up Indiv. Dev’t. Plan Evaluation Adjourn: 3:30

Management & Organizational Consulting “On-TRACK” at LCU: Consultant-Led &Transition ActivityProcessTiming Pilot #1Lost/Stolen Debit Card Replacement March 2006 Pilot #2Home Equity/Line/LoanMay 2006 Training DevelopedNovember 2006 Training DeliveredJanuary 2007 On-TRACK III (co-led) Portfolio/Account Initiation/Maintenance February 2007 On-TRACK IV (shadowed) Cross-SellingJune 2007 On-TRACK V (shadowed) File-Maintenance Procedures June 2008

Management & Organizational Consulting 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 ActivityProcessTiming On-TRACK VILoan Checklist/Cross Sell Sept/Oct 2009 On-TRACK VIICollection Dept. Processes May 2010 On-TRACK VIIIIRA ProcessesOctober 2010 On-TRACK “8.5”Check ReconciliationMay 2011 On-TRACK IXProject Mgmt. ProcessSeptember 2011 On-TRACK XUser/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  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.

Management & Organizational Consulting Thanks! Q&A, Discussion??

Management & Organizational Consulting Your Presenters  Barbara Mahoney, Senior VP, HR –Leominster Credit Union –  Ray Gagnon, Principal –Gagnon Associates –