Situation

Many back-office processing and sales support units in banking, health care, insurance, telecommunications, and other service environments struggle to maintain high operational efficiency in the face of extremely variable customer demand. For example, a global asset manager’s transfer agency (an internal group that processed 50 types of account-related transactions) had trained all its employees to handle every type of transaction, thinking that the resulting flexibility would more than offset higher training costs. As the company expanded its operations globally, however, executives were surprised to find the productivity—and service levels—of the unit’s teams eroding. At the busiest periods, up to 80 percent of them failed to meet their service-level agreements.

When the executives looked more closely, they found that the variety of tasks the employees undertook actually made it difficult for them to meet the promised service levels and for management to measure or manage their performance accurately. Frontline workers trained to do everything, for example, didn’t encounter some tasks often enough to do them really well. Certain workers therefore cherry-picked the easier assignments—a pattern that damaged morale and delayed the harder transactions. Worse, customer inquiries about service delays added to the volume of incoming calls, slowing turnaround times for all transactions and resulting in expensive overtime.