Year-end goal-setting can be a tricky time, especially as a leader of a collections team. As the bank mapped out goals for the upcoming year, objectives like contractual losses or delinquency levels inevitably made their way onto the list for collections leadership. While these goals are undeniably important for the bankās overall success, I often struggled to fully support them as key performance targets for collection supervisors and managers.Ā
In my view, it is crucial to set goals that supervisors and managers have significant control over. Their objectives should align with the broader goals of the bank but focus on areas where they can directly influence outcomes. My aim has always been to create meaningful goals that empower supervisors and managers while contributing to the bank’s larger objectives.Ā
Here are my thoughts on crafting impactful and aligned goals for collection supervisors and managers.Ā
How Does the Collection Team Impact Losses?Ā
When thinking about contractual losses and delinquency levels, many factors come into playācollection effectiveness, underwriting, bank policy, government regulations, economic conditions, competition, unemployment, environmental impacts, and more. With such a broad array of influences, it is clear that the collection team controls only part of the equation. So how can we determine the role the collection team plays in minimizing losses and delinquency levels?Ā
The collection teamās primary responsibility is to deliver a consistent, repeatable level of effortāor “pressure”āon the account file. By “pressure,” I mean the ongoing, focused work applied daily to encourage payment activity that keeps accounts current or reduces potential write-offs. Here is how the team can effectively contribute within their sphere of influence, using Staffing and Intensity.
Staffing: Ensuring Adequate Resources
Proper staffing is the foundation of an effective collection strategy. While supervisors and managers may not control overall staffing targetsātypically set by leadership using account-to-collector ratios or similar metricsāthey are responsible for executing staffing plans.Ā
Supervisors ensure the team is appropriately staffed each month to meet the bankās collection needs. If staffing falls short and performance deteriorates, leadership may rightly identify this as a factor in increased losses. Conversely, when staffing levels are maintained and issues still arise, leadership should evaluate broader strategies instead of placing undue blame on collection teams.Ā
Intensity: Maximizing Work Effort
Even with optimal staffing, the effectiveness of the collection team depends on the intensity of their efforts. Supervisors and managers must ensure collectors are working toward clear objectives that align with the bankās goals.Ā
Collection intensity encompasses various metrics that measure both the effort applied and the outcomes achieved. These metrics can be categorized as follows:Ā
Effort-Based Metrics (“Cake Ingredients”)Ā
- Account Work Intensity: Total work actions (calls, emails, texts, etc.) taken on the account file. For example, if 50,000 actions were taken on 10,000 workable accounts, the intensity would be 500%.Ā
- Right Party Contact Intensity: Instances where the team contacted the decision-maker. If 5,000 right-party contacts occurred for 10,000 accounts, the intensity would be 50%.Ā
- Unique Right Party Contact Intensity: Measures the number of individual accounts contacted at least once. For example, 2,500 unique contacts for 10,000 accounts equates to 25%.Ā
- Promise-to-Pay Intensity: Customers committing to payments as a result of contact. For instance, 2,000 promises for 10,000 accounts result in 20%.Ā
- Kept Promise Intensity: Customers who followed through on promised payments, including postdated ones. For example, 3,000 kept promises for 10,000 accounts equal 30%.Ā
Outcome-Based Metrics (“The Taste of the Cake”)Ā
- Customer Cured Intensity: Accounts brought current through payments. For example, 1,000 accounts cured out of 10,000 equates to 10%.Ā
- Customer Saved Intensity: Accounts stabilized or rolled back in delinquency but not made current. If 1,000 accounts were saved out of 10,000, the intensity would also be 10%.Ā
Aligning Metrics with StrategyĀ
Metrics like those above must be tied to the collection teamās capacity planning and monthly production standards. Supervisors and senior leadership should collaborate to define appropriate intensity levels for each metric. If the collection team consistently meets these levels and losses or delinquencies still worsen, leadership must reassess the overarching collection strategies rather than fault individual collectors or managers. For example, if the Account Work Intensity is maintained but results falter, this might indicate a need for adjustments in work prioritization, account segmentation, or broader strategic shifts.Ā
ConclusionĀ
The collection teamās impact on losses and delinquency levels lies in their ability to deliver consistent and measurable effort while adhering to strategic objectives. By focusing on controllable metricsālike staffing execution and work intensityāsupervisors and managers can directly contribute to the bankās goals. When these areas are optimized, yet performance issues persist, it is a signal to revisit strategies beyond the teamās immediate control.Ā
With the right focus, tools, and collaboration, collection teams can play a pivotal role in minimizing losses while achieving sustainable results.Ā
Author: Ken Evancic
Ken.Evancic@ResourceManagement.com
As a consultant for Resource Management Services, Ken provides consulting, training and mentoring in all phases of collection and recovery, in addition to auditing third party vendors.
Ken Evancic is a Vice President at Resource Management Services, Inc.Ā Ā Ken Evancic is a collections veteran with over 25 years experience. He has managed all phases of collection, including all levels of delinquency, automated dialer units, early out agency management, recovery, and skip tracing. In addition to collections operations management, he has lead initiatives in the areas of performance management, collections strategy development, collector and manager training, collector desktop design, collections reporting systems, and risk and compliance.
As a consultant for Resource Management Services, Inc., Ken has specialized in developing and completing third party compliance and performance audits for collections agencies and collection attorney firms for many top credit grantors and debt buyers. He has leveraged his 25 years of experience to develop multiple collector and collection management training classes designed to maximize collector performance. In addition to collection training, Ken helped develop and facilitates the RMS Third Party Vendor Auditing training.Ā Ā
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