An interview with John Frey conducted by Phillip W. Duff

I had the pleasure of interviewing John Frey in January 2013 and began by asking him if his entry into American Express in 1968 was his first introduction into the collection business and why he chose that as opposed to some other department.


John replied, “I got out of the army in 1968, (which I had joined in 1965), and my father said “john, you are my son, I love you very much and you can live here as long as you have a job.  I went looking for a job and ended up at American Express and they put me to work in the credit department.  It wasn’t collections.  It was what today you would call early-stage collection which included pre-billing, because with the open line of credit and no-credit limit, we were monitoring spending and looking for risk.  That was really what was my entry into credit cards”.

“How did you end up working collection agencies from that entry”, I asked.  John said, “I did a lot of things at American Express.

After a year, less than a year, I guess, I was supervising a unit and working with them on some of the technology development?

They were having a very significant problem in the recovery area and at the time asked me to go over and see if I could help them fix it.  That was in 1975.  I had no experience with recovery, but that’s where I started”.  At that time I asked John how long he remained at American Express and he told me it was 22 years.  “That doesn’t happen anymore these days”, I noted.  “No, unfortunately, most corporations wonder why their employees are not more loyal and fail to recognize that it’s because they don’t have any loyalty to their people”.

“When we talked earlier, you had some clear ideas on hiring and longevity of personnel.  Explain those a little, please”, I said.

John replied, “I think the important thing is to get the right people on the job and I have found that Pre-employment testing , if done correctly, (there are some out there that don’t work very well), and you get the right candidate for the job, one who is going to take responsibility for their actions, one who is willing to understand the rules and work through the rules, you are going to get a much better employee and will result in much less turnover.  Then the next thing is to provide good training that gets them trained exactly as you expect them to perform their duties.  I don’t train people on things like FDCPA.  I train them on my policies and procedures here and if someone questions them about FDCPA or bankruptcy law, or whatever, their answer needs to be that we abide by the policies and procedures here which are all constructed to be compliant with the various regulations.  If someone wants to talk about an FDCPA or a bankruptcy violation, I send them to a law firm and they can ask attorneys their questions.  Collectors don’t need to be dealing with that.  To sum it up, you won’t to hire them, train them and follow up on the training.  Once a collector is certified from training, the training manager’s responsibility is to deliver the employee to the supervisor ready to work.  That means the employee can come into work in the morning, say good morning to the supervisor, log on and go to work.  The employee is assigned to a certified coach.  A coach is a successful collector that has gone through some coursework and achieved certain levels of excellence in performance, and that person has been trained in the ability to assist that new guy along the way and get him settled in.  Coaches, of course, get a $1000 a year more in their paycheck plus a coach whistle and a yellow coach hat and they also get some activities.  It’s that crew, that as they are successful as coaches, we test for managerial skill sets and start moving them into supervisor training programs.  This becomes our pool of future managers.

“So you are continually developing and trying to push people to higher levels?”. I asked.  “Absolutely, absolutely”, John replied.

“You need to continue to provide for that person to have an avenue for growth so they don’t get stale in that position.  Now you do find some people that get to be a damned good collector and that’s all they want to be, thank you very much.  And that’s okay, that’s okay.  That’s a good citizen and you don’t want to lose that guy.

“Everybody can’t be President”, I noted.  “No”, John responded.  “And there are some people that don’t want to be.  But for the guys that want to see a future, if you provide the recognition, the opportunity and the development course, you will not only keep those people, if not in collections, at least in the company.  I usually end up becoming a recruiting source for the finance guy, the risk guy and the customer service guy”.

I then asked John to tell me more about how he tied quality or compliance to the bonus of a particular collector and the importance he placed on that.

“I think the compliance is critical” he said.  “And I think every collector needs to be performing, not what they think is going to get the account resolved or methods they think are going to work, but rather the collection strategy that we have established and signed off and in fact want to monitor and measure.  See, you can’t know if the strategy is successful if everybody else is doing something else.  So, what you need to do is to be constantly monitoring.  I believe that the supervisor needs to monitor each of his people.  He needs to certify that each of his people on the phone are handling accounts the way they are supposed to be doing and in addition, I have a third party team that goes in and monitors the same people and we have meetings to ensure that we are monitoring for the same items so you have an alignment of what you are monitoring for and that’s a very difficult thing to achieve.  Forget the piece of paper that’s got 20 boxes on it to check off, it never works.  You really need to understand if that was a good collection call.  Did  we do what we needed to do?  And then you need to have a methodology of providing feedback to the collector.  We record the scores online.  They are moved into a scoring mechanism that looks at other things, as well as the score.  We are looking at productivity, achievement, dollars collected, accounts cured, number of right party contacts, conversions and the number of contacts you converted to a promise.  Okay, but if you have failed compliance, you do not go into the incentive pool.  I believe that incentives are important.  You need to have around half of your people qualify for incentives at the end of the month.  I think that the top 10% should qualify for some really significant incentive money and then I think you need to scale it back and the middle group needs to get some recognition but not at the level the real achievers are getting.  This gives everybody an opportunity to scale up their performance”.  “And to achieve something”, I stated.  “And to achieve something and some real money”, John said. ” I don’t feel like it’s unachievable”, I said. “I’ve been in some offices where they felt the bonuses were unachievable, so they didn’t”……..   John continued, “the way I set  bonuses is to array actual performance, look at the top performers and then go in and do diligence on what those top performers are actually doing to make sure they are not working the system, and then use that information to set the standard for performance in each of those incentive categories.  Now, if you commit a blatant violation knowingly, even if you have otherwise good scores, you may be knocked out of the incentive pool for the month”.


“To what do you attribute your longevity in the industry?”, I asked.  “Tenacity”, John replied “you know you can’t quit, you can’t let those bastards win.  You probably shouldn’t print that!”.   I responded,”I think that’s the perfect answer.  I think it’s very true.  I think most of the people I know that have been considered consistent in one industry and have been successful, think that same way”.

John said, “I think you have to have a good work ethic, you have to have objectives, you’ve got to believe in yourself that you are doing the right thing and you’ve got to convince others that you are doing the right thing.  Most of my jobs after leaving American Express were being hired to improve a process that was not working the way people like it to work, and I think I have been successful in every case doing it”.

I continued,”back when you worked in American Express, and back when I was a collector working some of that type business, that was the preferred client and was the client everyone wanted.  So why do you attribute that to that and what did that bring to American Express?  Did they feel like everyone  was courting them and that they were the best looking bride on the block?”  John answered,” American Express at the time was a very profitable portfolio to work.  It was a very high unit yield paper and American Express was okay with that.  Their philosophy at the time was that they were not going to invest bricks and mortar in collection work because it’s not their business, that’s not the industry , and they were happy to have the accounts placed with reputable firms that would do a good job, that would treat their customers right, and they didn’t mind it being profitable.  It was good paper, it was usually placed early, it wasn’t real old paper at placement time.  Again that goes back to not wanting to invest in bricks and mortar for collections.  So the reason they were so desirable was because they were so profitable.  They were also quite demanding.  We would audit every branch every quarter.  We had very high standards, the work we expected to be done on our accounts.  When I first got to the recovery world in 1975, it wasn’t unusual to see collection agencies having 1000 accounts per collector in their file.


They never returned an account, it could be there for years.  When I left they were averaging about 125 accounts per collector and that really got to the point where you were getting a number of accounts per collector that was manageable to get really good, high quality work down on the file”.  I added “when I was working at American Express, we would have 80 to 100 accounts and we were pretty much working every one  every day to some extent whether it was skip tracing or calling nearbys”.

John recalled, “doing something, but doing the right work, and today one of the things I based my strategies in managing collection agencies on is ensuring that I have a good partnership relationship with the agency and that the paper is profitable for them.  Nobody works for free and if you put a portfolio out and underpay it, the agency is going to take the portfolio and work it at a level that causes them not to lose too much money and that’s not what you want.  What you want is, you want to be the reward queue, you want to be the queue that the collector at the branch wants to work your paper because he can make some money on it and it’s a good paper for him, and to some extent I even funded programs for the branch collectors.  I think you’ve got to recognize that, I think you’ve got to understand that part of your team and you’ve got to know who they are.  You’ve got to know if someone changes them if they move them.  I mean how many times have you not made your recovery number this month because the top collector in the unit was promoted to supervisor and wasn’t replaced,or was replaced with a new guy, or quit, or whatever happened, so you really need, your collection agency managers really need, to be very closely in communication with the branches to understand the inventory, to understand who’s working the paper.  If somebody is not performing well, you need to question that so you need to know at the collection agency level who are your best performers, just as you need to know in-house, who your best performer is if it’s not good”.

I added’ ” as a former auditor, I agree with that 100%, because I did know exactly, and I would even go “John, so good on that one collection last month, here’s $20.00.  Nobody else could find this guy, how did you find him?, or whatever”.  John responded, “just call the guy up and thank him or I don’t know how many times we’ve provided lunches for the collection floor, or a TV or whatever, something, a little incentive, you know, here is a couple hundred bucks, do something special for the collectors”

“You were involved in computerization?”, I asked.  “Yes”, John replied.  I continued” do you have any interesting or funny stories in that regards to that because we all know that it was difficult , but there were also a lot of just strange and funny things that happened along the way as well?”  Laughing loudly John said, “the funniest one I can tell you is any old story, and it was going back to American Express, probably in the early 1970’s, when one of the Vice Presidents, ( I think I was a supervisor or an entry level manager at the time)’ brought In a staff of temps to refile 80 column cards because they didn’t realize that the 80 column card sorter could actually do that”.  “That’s interesting.  How did that turn out, who went and told him?”, I queried.  John said “I did, yeah, I brought a box of cards up to the 80 column thing and put it in the sorter.  But I knew how to work it.  You must understand your technology and how to work it.  You can’t be held hostage by someone that doesn’t understand, so to be a leader, if you are going to introduce technology into your organization, you have to understand it yourself and provide the leadership as to how it’s going to be installed and how it’s going to be best used and you better know what you are talking about”.

I continued,”as we talked earlier, we’ve both seen dialers,  and people using them incorrectly”.  John responded,”they just know how they’ll go out and invest in this technology and think without spending a lot of time learning about it, at the highest level.  I really think that theguys of my level (I was Executive Vice President) if I didn’t know how to work a dialer, I’d go sit in at the assistant administration class.  Why?  I need to know what the capabilities of this technology are so I can provide leadership to these people that are going to actually implement the technology in the collection strategies”.

What would you say was the best advice somebody gave you many, many years ago that still rings true and that you still think about over the years”, I asked.  John replied “so many.  I’ve been blessed.  I’ve had so many really credible mentors over the course of time.  Probably some Key advice is from a guy named Pete Maddie at American Express who encouraged me to understand technology and not let it drive me, but to have to be able to understand to drive the technology and Pete was an old time factoring guy.  He was Vice President of American Express and was an early adaptor of things like computerized collection and encouraged development of things like predictive dialers and gave me the opportunity to really understand them.  So Peter, I think, was a great guy.  I also think along the way we run into a lot of people.  I think Bill Barton with whom I worked at American Express was one of the brightest guys I have ever known in my life.  Bill was an MIT graduate and he would give you an impossible task and then roll up his sleeves along side you to help you get it done.  Don’t be giving tasks that are going to take all night and weekend and walk away.  So you’ll give an impossible task, help them get it done and they’ll learn from that.  And then there was Fred Murkoff for really just understanding your portfolio, understanding all there is to know about it”.


Next I questioned,”what advice would you give somebody entering the industry today?”  John responded” when you ask somebody about entering the industry today, I tend to think of the  entry-level collector, or the entry-level customer service representative or the entry-level credit guy, not necessarily the guy with a graduate degree in statistics who’s also a very important guy in our industry, so I think the advice to the entry-level collector is that this business is not for everyone.  You need to decide early on if it’s for you.  You’re going to have to pay your dues and learn the industry and improve yourself.  Get your education, keep developing, see how you are doing competitively with your peers to be better and you’ll advance.  You have an opportunity to be a leader in this Industry. To the person coming in at the graduate degree level, very much the same advice.  This is a good Industry to work in and you can be very successful.  But you also need to understand the  industry, not just the statistical assumptions.  Statistical assumptions may often lead you down the wrong road, so you also need that, you need to be well grounded in reality, in making assumptions based on data.  That data is really what’s going to drive your decisions and drive your business and drive your success”.


“Without a doubt”, I stated.  “I agree with that.  I really think that if you really want an agency now, what you do, is you need good data, good scoring, and then good skills-based routing and then you’ve got the right people and the right results”.  John agreed, saying “absolutely.  And the skill-based routing really gets us back to our understanding of technology.  When you set up a collection system, or typically on an ACD is where we talk about skill-based routing in your collection system”.  “Absolutely, in his queue or not”, I replied.  John continued “we were very successful at Compass when the mortgage crisis first came in, firstoccurred, in training  a core of collectors and how to screen those calls for mitigation or mitigation opportunities or default, opportunities to avoid a default, and those accounts would get routed, didn’t matter where that collector was sitting, didn’t matter what bucket he was in.  If a call came in and it was that kind of issue, it went to the collector that was skilled in that issue, so skill-based routing , both in your inbound calling system and in your collection system are very critical.  You certainly don’t want to have your 30 day collector, your new guy that just came  in, and he’s brand new, working an account that was 90 days last month and was cured, is now coming back into collection.  So that account that is new into collection as he was current now he’s moving into collection but the month prior was 60 or 90 days past due, that needs to go to a very different collector set and those are the things that we, as leaders, have to understand and direct those activities that occur in our systems”.  I agreed and added “as a leader, it’s your responsibility to help them to get better, and that’s a part of how you do that, is by giving him something, they have a skill to handle”.  “Absolutely”, John replied.  Continuing, I said “they have to have a skill to handle.  If, and like you mentioned a minute ago, they don’t then sit down with them, roll up your sleeves and help reach the skills to handle”.  John added,”you have to look at your system very much as if you were asking a specific account and handing it to the collector and saying I want you to work this account.  Think about who you are giving it to and what file you are giving to him, what skill levels he needs.  And if you can’t do that in your system, your system ain’t working”.


I agreed and then asked,”anything else you want to say that you want  the world to hear-cause you don’t look like the kind of guy who’s not going to say what he thinks?”  Laughing heartily,  John replied,” very few people, if any, ever question what’s on my mind, cause I usually told them”.  “I’m exactly the same way” I said, “and most of the people  I’m interviewing probably are.  We are probably all pretty outspoken”.  John added, “one of my bosses at one time, who I think I had a good relationship with, did tell me that I was, to him’ a bully.  I would bully my boss”.  “I’ve done that.  I’ve done that many times”, I stated.  John reiterated, “Absolutely, you’ve got to bully your boss”.  I went on to say”that’s one thing I didn’t know how to do when I was at GC but I learned after that because  I probably would have stayed longer if I could have, and I had some really good ideas, and they ended up doing some years later that it was just too corporate and I could not figure how to get through the corporate bull shit”.


John continued, “there also comes a time when you’re a learner.  You’re always a learner, you never stop being a learner but there is a time as you come in as an entry-level guy into the  industry, in your learning the industry, in developing your skills and then there’s a point in time you become a teacher, and that role changes somewhat gradually.  It doesn’t happen, you don’t come to work one Monday morning and I’m the teacher. It probably happens over a period of a few years that you sart becoming, sharing more knowledge, and championing more strategies and technologies, than you do as a learner, but you still are always learning”.

I acknowledged, “I like that thought because it makes good sense and it’s something I can use in my own consulting.  The biggest thing with my consulting is, as you probablyFigured out from this whole thing, it’s not finding a solution, it’s wetting to buy into the solution and the. Getting everybody to actually just buy into doing it and then to buy into doing it right, like you were talking about.  You can have a great strategy, but if this guy’s doing this and another’s doing that, nobody’s actually doing the strategy.  How do you know if the strategy is working or isn’t”?  “Right”, John added.  “I can’t tell you how many reputable consulting firms have come in and given very good advice.  And a higher-level guy, you know, maybe the chief finance officer says, ” well, how much is this gonna cost?  No, we’re not going to do it”.  That doesn’t help you.  You really have to understand what tools they have at hand, what they’re willing to do, as far as the expense, and it’s not all expense, sometimes it’s taking your understanding of your existing technology,how doesn’t work, am I optimizing it, do I have a collection strategy in place, or is everybody just doing whatever the hell they want?”  Smiling, I said “which is what usually happens.  It is often not anymore than the cost, other than the cost of consulting because most of the time it’s redeployment of resources you already have or redeployment of technology that is not being used right”.  “That’s true, that’s true”,

John said.  “I find that very often”, I mused.  John continued” unless you get into place, where I’ve been, that the technology they are using is old technology and will not support the growth the company would like to,achieve”.  “Or the growth fits even hardly growing sometimes”, I added.  John said ” right, and especially when you look at things like Benchmark, I think Benchmark is great stuff, but it’s nice to know how your peers are doing, and I actually know that because I told to them, but you have to understand is the guy in the same technology realm that you are, is the guy as sophisticated in scoring.  How many accounts do you have the collector is a meaningless number if you don’t know automation is available to somebody”.  “And what his accounts really are what the quality of them are” I followed.


Finally John said “what is your loss rate to a competitor if you don’t know what their risk strategy is.  I mean, loss rate is more a reflection of risk in your account origination than it is of collections and it’s also geographic.  If you’ve got a portfolio in Louisiana and we start putting California,, Texas and Florida into your loss mix and you’re heavily biased there, the guy in Chevy Chase when I was there in the mid-Atlantic when you’re in DC, Maryland, Pennsylvania, Delaware, he’s going to outperform you every day without  even trying.  He can be an idiot and turn better numbers than you because of his employment rates, so if you are in Chevy Chase (a very conservative lender, mid-Atlantic states, beautiful portfolio), then you come into Compass, or First Card, with heavy presences in California, Texas, it’s just the rates are different.  GC used to have a scoring system that I think had a baseline of 100% and if you are in the forecast and you are a California or Texas guy, you maybe needed to achieve 80% and if you were a New York guy, you need to achieve 125% of this”.  I said. ”

As I reflect back on my conversation with John the point that comes to mind is his commitment to training and development. This is something I’ve been teaching for the last decade and very few people truly here, the importance of developing your staff.

If we can all learn one thing from John and his many years of experience it is to train and develop everyone; we need to become a better citizen for the ARM industry. Thank you John!

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