If Time Is Money, Then Efficiency Is Profit.

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 incent employees to participate in what for some agencies may be a significant cultural shift.

A few important considerations:

Don’t Just Track Financial Performance

Well run agencies operate under defined key performance indicators (KPI) that are 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% of respondents have developed a strategic plan. If your agency does not have a working strategic plan, it should. If you’re agency operates under a working strategic plan be sure it includes well defined KPIs that include a focus on improved operational efficiencies.

Quick Tip: Include an efficiency ratio and/or opportunity cost ratio in your KPI dashboard.

Get Creative Outside Your Bubble

While encouraging your agency to develop creative ways of fostering an efficiency focused culture is essential, it’s important 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 to become an expert in efficient business principles.

Quick Tip: Task those that do the job with pointing out inefficiencies. They know better than you.

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.

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 employer and how they would improve it.

Get Excited About Technology

Technology is and will increasingly become a leading competitive advantage for agencies. You can’t commit to be being an efficiency focused agency without committing to embracing technology. Tasking your management team with remaining up to date on the latest technology is a must. Work with your collection software vendor to ensure your maximizing the potential of your software. If you’re not outsourcing your letters, look into it. You’ll find that in most cases you can greatly reduce the overall cost to serve 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.

Tags: ARM industry, collection software, collector performance, debt collection, efficiency, financial performance, hiring, productivity, technology

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Comment by Sandy Glover on February 23, 2011 at 12:24pm: Great article Mark! May I suggest one way to be more efficient is to out source pre-employment screening. This is a vitally important part of the hiring process especially in this industry where you are dealing with the client's money. A complete screening report should include:

1.   Verification of name, date of birth and social security number. It has been estimated that as many as 33%

      of all applicants omit these facts or put false information on the application.

2.   Nationwide criminal check.

3.   Nationwide sexual predator and offender search

4.   Credit activity.

5.   A search of civil records in every county the applicant has lived.

6.   Education and professional license verification.

7.   A DPPA approved driving record search.

8.   Military records verified.

9.   Results of interviews with current or former employers and references.

Clearly all of this can not be found in a simple background screening and takes specialized knowledge and resources that are legally compliant, and takes valuable time...time you could be doing what you do best, take care of your business. The solution is simple, contact a licensed private investigator who specializes in pre-employment screening. Many states ( such as Florida) have strict laws that govern the profession thus the licensed private investigator is held to a higher standard than those who so screening (or person locates) and are not licensed. Taking this approach to screening is an efficient way to save you both time, money, and a whole lot of hassle.

If you have any questions, feel free to contact me.