by Elizabeth M. Ferrarini

When Tom Durkin became senior vice president and head of North American Solutions Management for ABN AMRO, one of the largest banks in the world, he quickly realized that the transaction banking industry was moving toward more sophisticated metrics focusing on increased productivity and return on investment.

The North American division of ABN AMRO, which has $171 billion in assets and more than 18,000 employees, had a good growth rate compared to the rest of the industry, according to Durkin. "Our costs and our efficiency ratio, based on how we measured our revenue versus costs, needed improvement."

Durkin, who oversees the development of products and services used by ABN AMRO's commercial clients, turned to a new best practice, called the Productivity Maturity Ladder, to track and to manage employee efficiency, resulting in lower costs, higher customer satisfaction, and better employee retention.

Enterpriseleadership.org recently spoke with Tom Durkin to discuss how the Productivity Maturity Ladder works, and what other steps he has taken to improve commercial client relationships. Here is what he had to say:

EL: How did you learn about the Productivity Maturity  Ladder?

TD: We learned about it after we brought in Witness Systems to look at one of our client-facing functions. We asked the company to tell us how to move and how to create an environment that would focus on our core productivity approach.

The banking organization we were looking at didn't have clear, actionable success criteria for dealing with external clients. We looked at the overall business, including all of the functions, to determine how we could go from status quo productivity to optimized productivity. We defined a top-level strategy, along with prioritized goals and objectives that could be pushed down throughout the organization.

Both the strategy and the priorities have metrics-driven performance management objectives that tie to financial results and also tie to individual performance objectives.  It was also a mindset change about how we do business.

EL: Can you describe the steps in the Productivity Maturity  Ladder?

TD: There are four steps going up the ladder. Each step consists of processes that each, in turn, consist of individual steps. The ad-hoc first step measures the impact and the effectiveness of status quo process. During this step, managers down through analysts aren't working cohesively together, but independently. To this end, there isn't a coordinated effort for accountability, nor is there a strong appraisal focus. When we started, we were just above the ad hoc stage.

The second step consists of moving to the repeatable stage. Here, you integrate your data and make your processes more uniform. You begin to do a periodic metrics review.

The third step consists of managing.  It's where you move to more of a common approach. You want to enable your stakeholders to be in sync and to understand what your results are, and what your performance indicators are. You focus more on metrics through a monthly or weekly review. You have created an enterprise database, and you've also defined the data sources that come in. You're using the data to focus more on capacity management and resource planning.

The final step up to the top of the ladder consists of optimization, where productivity management becomes a core component of your business.  A daily review of the metrics is key here. This step also focuses more on where you are and how to get to a certain point.

EL:  Besides the steps, what other things go along with the  Productivity Maturity Ladder?

TD: You have more enterprise tools, such as formal score carding for measuring employee performance. You also need to focus on where you're going to be three months from now, and six months from now; how you're going to be in sync with the organization's financial objectives, such as lowering costs; and you increase effectiveness and productivity so you can do more business and reduce costs.

EL: Does the Productivity Maturity Ladder come close to other best  practices like Six Sigma?

TD: It's close to Six Sigma. In fact, I've had discussions with colleagues who are Black Belt certified in Six Sigma. The Productivity Maturity Ladder enhances and focuses on increasing the sense of transparency in the business. It enables managers to understand where they are today tactically, and then to get them to think more strategically.

EL: What types of leading indicators do you have?

TD: We've develop leading indicators for measuring each specific business. We have individual product line measurements for how we're doing with revenue, with transactions, and with products that measure the pulse of the business.  We also have leading indicators that get expanded as you go down to what each individual has to focus on. We measure the effectiveness of each person's performance daily. This information helps us to do a better job of focusing, scheduling, and compiling data analytics.

EL: Can these indicators be used with IT professionals?
  
TD: They can be used with IT people, especially if they're doing repeatable managed processes, such as application support and product development. Whether or not an organization gets to the optimized state depends on how committed they are to the process.

EL: Are managers' annual reviews tied to these metrics?

TD: Yes. There is one thing that is important about metrics: you can use a number of different metrics with any line of business. We focused on one key indicator called "time to revenue," which anyone can understand. It's the time from when a sales person sells the individual product, to when it gets put into production, to when revenue for the service to the client comes in. You really want to measure the gap between when you get the mandate and when you move into production. This is the time to revenue. You can squeeze that time to revenue through processes, such as people, operational, technology, or through metrics. Our line managers needed to understand time to revenue and to convey it daily down to the analyst level.

EL: At an industry conference, you talked about creating a strategic treasury services partnership with clients. How did you do that?

TD: Commercial client feedback drives our product development efforts and determines the success of our products. The more information we can get from our customers, the better off we will be.

That concerns our advisory service, which reports to me. Developing client relationships is key to the way we operate across all of our lines of business.  We need to understand more about the business process on the client side, so we established a client advisory board  to feed information to clients.

We also do ethnographic research, which consists of sending  representatives from our business line to client offices to look at their accounts receivable process and their payments process, understand what they do, and question certain parts of their processes. We videotape certain parts of this discussion and share this information with the different business units.

The feedback we get from this helps our product managers to better understand how clients use our products. We've been able to tie our products and services to a sticking factor with our clients. We thus have a better understanding of how our products work for clients, and how important each product is to the end client. This understanding is what differentiates us from our competitors.

EL: What technology do you use for client relationship  management?

TD: We built a Web-based application portal to drive where our clients interact and conduct their payments, and their reporting. This high-touch approach enables us to deliver the information they require to manage their business.

Our first step consisted of getting our clients to do more on their own. We've focused on enabling a 24/7, self-service client support concept through a Web-based portal.

We also worked on an online "university" to provide clients with textual information about how our products work, and with videos about how the applications work. This portal complements our existing relationship-driven approach to services.

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Elizabeth M. Ferrarini is a technology writer based in  Boston, Massachusetts. Contact her at elizabethferrarini@yahoo.com.