This is a guest blog post from CDS Software.
As we navigate the most impactful economic downturn the ARM industry has experienced, it’s important that efficiency be the ultimate litmus test for operational decisions. Efficiency-focused agencies realize increased productivity and greater profits.
Developing an efficiency-focused culture requires a top down approach. Upper management needs to set the tone by developing an efficiency-based methodology, clearly communicate the focus, and incentivize employees to participate.
A few important considerations:
1. Track More Than Financial Performance
Well run agencies operate under defined key performance indicators (KPI) benchmarked against historical performance, business projections and comparative peer data.
According to a CAC Member Survey published in the January 2011 issue of Collector’s Ink, 66.1 percent of respondents have developed a strategic plan. If your agency does not have a working strategic plan, it should. Be sure your plan includes well defined KPIs with a focus on improved operational efficiencies.
Quick Tip: Include an efficiency ratio and/or opportunity cost ratio in your KPI dashboard.
2. Get Creative Outside Your Bubble
While it’s important to encourage creativity when fostering an efficiency-focused culture, it is also essential to get outside of your bubble and tap into other qualified resources. Don’t limit yourself to the scope of content within the ARM industry. The internet offers a wealth of information. Leverage it and become an expert in efficient business principles.
Quick Tip: Task those that do the job with pointing out inefficiencies. They know better than you.
3. Keep It Simple
If you find yourself saying it shouldn’t be so hard, you’re probably right. For example, standard operating procedures are an important part of an efficiency-focused agency. But standard operating procedures must be created with efficiency in mind. Inefficient policies create less productive agencies. Efficiency should be the ultimate litmus test when developing policies.
Quick Tip: Review policies to ensure they are in practice as efficient as they are on paper.
4. Hire Efficient People
Develop hiring practices that ensure your agency hires candidates with the aptitude to not only function in an efficiency-focused agency, but thrive. Include in your interview process questions that will help you determine how efficient the candidate will be as a member of your team.
Quick Tip: Ask about the workflow at their previous place of employment and how they would improve it.
5. Get Excited About Technology
Technology is a leading competitive advantage for agencies. You can’t commit to be being an efficiency-focused agency without embracing technology. Task your management team with remaining up to date on the latest technology. Work with your collection software vendor to ensure you maximize your software’s potential. If you’re not outsourcing your letters, look into it. In most cases, you can greatly reduce the overall cost to meet your letter requirements.
Quick Tip: Focus on your core competency, collecting debt. Invest in the tools to do the rest.
Become passionate about efficiency, and you’ll put your agency in a position to realize greater profit. Agencies are constantly searching for competitive advantage. Demonstrating to prospective clients the value of an efficiency-focused agency can greatly strengthen your value proposition.
The equation isn’t complex. Efficiency reduces operating costs and increases productivity. Increased productivity is a key driver of improved liquidation rates. In an environment in which agencies are challenged by unprecedented circumstances, there is no better time than the present to get focused on making your agency more efficient.
This article was written by Mark Bergmann