Personnel are your collections department’s biggest expense and biggest opportunity to improve performance. The difference between losing money on staff and having staff produce more than you thought possible is effective management.
When you effectively manage collectors, you increase productivity, accuracy and performance. Well-managed collectors positively impact the bottom line and customer satisfaction rates. But there are three major management challenges anyone who runs a collections team faces.
Keep reading to discover what they are and how to avoid them.
1. Lack of Communication
In any industry, open communication is the glue that holds teams together. Within a collections department, effectiveness of communication between team members or with customers impacts collections results.
After all, if collectors don’t have clear directions from managers, they don’t perform as well as they could. Internal communications affect collector morale, motivation and productivity. Without clear communication channels, messages can get lost and delay projects. Collectors understandably get frustrated, and bosses don’t see the results the bottom line demands.
When team morale or individual collector motivation is down, the quality of communication with customers suffers, too. Unproductive, unmotivated or unhappy collectors don’t exactly present your company’s best face. And they certainly don’t put the customer’s best interests first. Both are clear to debtors, and could spell the difference between a positive settlement and a delinquency.
Centralized systems are one way to help. They keep communications and files in one place, and are organized under a central authority, so communications are consistent and clear throughout the organization.
2. Poorly Designed Incentive Programs
Incentive programs use financial and non-financial means to motivate collectors to perform better. Without them, entire departments will struggle.
In today’s collections environment, simply providing feedback and praise isn’t enough. Collectors who do well expect to—and should be—rewarded. And it’s not just about money, though that is one key element of a successful incentives program. Poorly designed incentives don’t communicate to staff that they’re valued, making it difficult or impossible to demand greater performance or additional work.
A poorly designed incentive program may have a number of consequences. If it doesn’t reward top talent enough, that talent may seek employment elsewhere. If it rewards collectors too generously, a culture of entitlement may result that damages the organization in the long run.
While every organization has different needs, the right incentives programs are simple, appealing and engineered with dynamic goals that prevent collectors from slipping into complacency. Financially, bonuses of 10 to 15 percent of monthly salary are usually appropriate for exceptional performance (though don’t go above 20 percent). You might also supplement financial incentives with appropriately valued non-financial rewards like concert tickets, gift certificates, etc.
3. Improper Capacity Planning
Capacity planning is a critical way for collections departments to forecast how many personnel hours are needed to service accounts. But when managers don’t plan correctly, they can alienate collectors and impact productivity.
When managers underestimate how many collectors you need, it’s easy to end up assigning staff too many accounts. Collectors will become overworked, frustrated and the bottom line will suffer because there is too much responsibility put on one person.
The opposite is also true. If you overestimate how many people you need, the bottom line suffers and collectors don’t have enough to do.
There will always be obstacles to managing a collections department, but with this information handy, you’ll be able to ensure your personnel are happy and motivated to bring in the best results.
For even more information on how you can manage your collections personnel and set your department up for success, download our guide on six actionable steps retail banks can take to improve operations.