Do you have a culture of accountability, clear purpose and the pursuit of profits?

As a consultant to the ARM industry I see the lack of these things in almost every agency and law firm I visit.  Most of the managers that I am ask to work with do not create a CLEAR structure for the staff to follow, and when there is a breakdown in the process there is no CLEAR accountability.  Very few collection shops are built on a profit-based business model.  They instead have the same old model that provides whatever profits it provides which is why so many operators are complaining about their reduced profit margins.

Many firms have multiple people responsible for the same things, so when something goes wrong there is no clear chain of responsibility and accountability, and therefore, no obvious way to isolate the person or persons accountable in order to implement and effective way to train better to avoid the problem again. If you run a shop of accountability then the fault clearly lands on someone’s plate and then solutions are more clearly defined and enacted. When the entire office misses goal; who do you blame?  But if you have several KPI’s defined and the entire team misses goals, but 7 of the 10 KPI’s were hit, the contributing factors to missing the goals can be identified and isolated and the individuals or department responsible can be retrained to prevent a similar occurrence next month.

The truth is you can have whatever level of profit margins you desire if you build the right collection process and can locate the right type of business capable of delivering those profit margins. OK…if  you don’t believe, me look at it this way.  If you say I need a 20% profit margin and have a collection process that is accountable and traceable, all you need are placements that can provide that profit margin within your defined process.  Now you say this 20% business does not exist, well maybe not much these days can provide a 20% profit margins after all costs are accounted for but you see the point.

The problem with the old process of collections is that it is not based on a profit quotient; it is merely a tradition that has been carried on from days when profit margins were 40%.  This is the philosophy, “We’ve always done it this way, so we should always do it this way.”  In the past, we incented the collectors to collect more, as that is what drove profits.  Now we have more costs buckets to consider than years past. The cost of consumer lawyers, skiptracing, technology, asset location, licenses, dialers, marketing and more that has all changed over the years.  Profits now come from controlling expenses!

If you want to focus various collectors groups on profits, then set them up as a small business within your business. Give the unit manager a budget for skip, letters and payroll and then determine the overall costs he faces with overhead.  It’s a cost per seat equation;

Total costs divided by

Total number of FT revenue makers= Cost per seat

So if you have a group of 10 collectors and one manager, and the cost per seat is $5,000.00 monthly, and you desire 20% profits the group must collect $55,000 in gross fees to cover expenses and another $11,000 for the 20% profits. Once the group has reached the $66K mark the owner has his profits of 20% and is in bonus mode. Now the owner has taught the manager how to use costs and profits to run the company. The owner can reward that staff for overachieving by sharing the overage at a high percentage maybe even 50/50.

This not only teaches the staff to work based on budgets and a fixed cost but encourages profits not just production. If you need help creating a culture of accountability, purpose and profits call Lighthouse Consulting LLC.

Are You Teachable? If not, Then Learn How To Be Teachable Here

As a consultant serving CEO’s in the ARM industry for the past decade, I have learned that most CEO types are not very trainable. The ones that are trainable, and embrace new ideas and new processes, are clearly leading the industry.

I have dealt with many “Collector Kings” in my career when I was an owner or manger of collections agencies, but the level of “I Know It All” in the C-Suite is astounding.  I do realize the owner/manager needs to act and carry him or herself confidently, but many will not listen to new advice from their staff, or entertain progressive processes and most shun away any type of change in general.

So how do you make sure are teachable and trainable? It’s only done by embracing change and learning! Now if you are one that does not like change (80% of the population) then you will have to create a plan and follow it.  Now you are asking “What kind of plan? I don’t like change or new stuff plus I am too busy being stagnant to learn new stuff.  No thanks!” The biggest excuse is I am too busy to _____. This is just that, an excuse to stay stagnant and to avoid change.

If you are still reading you are on the road to recovery.

To become trainable try these simple tips:

→    Set aside 3 times a year to attend training classes. Not the sessions you attend at the ACA or DBA but something you would not normally attend such as;

♦      Excel class

♦      Chrystal reports

♦      Collection Software classes

♦      Sales training

♦      Customer service seminar

♦     ACA fly in

♦      DBA retreat

♦      Motivational seminars (Success 2012)

→    Read, Read and Read. Read the industry sites like Inside ARM and browse LinkedIn for articles daily.  Also encourage your staff to do so by providing access to these sites in the office and pointing them to good articles found there.  But also read business books or use audible versions (this is my preference).  Have a library of books available to your staff like;

♦      Good To Great

♦      Art of War

♦      Fish

♦      Delivering Happiness

♦      Great by Choice

♦      Fred Factor

♦      The Zappos Experience

♦      Drive

♦      The Tipping Point

→    Listen! Learn to listen to your staff, have town meetings and allow the staff to make suggestions for improvements and listen to them. Listening is especially hard for the successful CEO, so try hard to hear the message that the staff is sending.

If you need help with these tasks then you should get a mentor or join a group like Young Presidents or Vistage.  Lighthouse Consulting LLC has been helping ARM companies unlock profits that are being concealed by meager operating practices and procedures and overlooked opportunities.  Call us for more info at 904-687-1687 or contact Phillip W. Duff at phil@armvend.com