SOCAP 2007

1. SOCAP 2007 Dealing with systemic issues in a sustainable way; a multi-disciplinary approach to analysis of customer feedback Bill Dee Nicole Cullen Tuesday 4 September 2007 Bill Dee Root Cause Analysis Nicole Cullen

2. Workshop Outline • Use of customer feedback data • Return on investment of complaints handling systems • What is root cause analysis? • Benefits of root cause analysis • Key principles • Process • Next steps Bill Dee Root Cause Analysis Nicole Cullen

3. Customer feedback data • The organisation can become aware of problems from a number of sources • In this session we focus on what you can learn from customer feedback i.e. • Complaints data • Satisfaction surveys • Focus groups • Front line staff perceptions Bill Dee Root Cause Analysis Nicole Cullen

4. AS ISO 10,002 The organisation should establish and implement procedures for recording complaints and responses and for using these records and managing them… (clause 8.1) All complaints should be classified and then analysed to identify systemic, recurring and single incident problems and trends and to help eliminate the underlying causes of complaints (clause 8.2)

5. Discussion How are you currently using your customer feedback data to prevent problems? Bill Dee Root Cause Analysis Nicole Cullen

6. Questions to ask • Are you getting a good return on your complaints handling investment? • How much are preventable problems actually costing your organisation? • Are the problems having any other impact? • What is the cost of that impact? Bill Dee Root Cause Analysis Nicole Cullen

7. The tangible costs of problems • Salaries of front line staff, admin staff, complaints officers, managers, senior executives, board members when dealing with problems, complaints and disputes • Cost of escalation to an External Dispute Resolution scheme or Court • Legal costs • Compensation paid to customer • Loss of staff/absenteeism/replacing corporate knowledge • Compliance costs and penalties • Cost of gaining new customers Bill Dee Root Cause Analysis Nicole Cullen

8. The intangible costs of problems • Loss of loyalty by customer • Negative word of mouth by staff and customers • Damage to reputation • Stress on staff Bill Dee Root Cause Analysis Nicole Cullen

9. 2006 Survey on ROI by SFI International* • 88% of organisations surveyed did not know the cost to the organisation of conflict resolution !! • 45% believed good complaints handling leads to repurchase • 52% did not reward operators for successful complaint outcomes • Organisations that did not survey their complainants believed their retention rates were higher than they actually were *SOCAP conference 2006 Bill Dee Root Cause Analysis Nicole Cullen

10. Consequently… • No clear budget for complaints handling and dispute resolution • No clear guidelines or targets for staff on what success looks like • Complaints/customer relations departments are seen as a cost centre (depleting resources) rather than as a profit centre (value adding) • No clear link between the cost of complaints handling and the value that is delivered Bill Dee Root Cause Analysis Nicole Cullen

11. What is Root Cause Analysis? RCA is a structured process whereby the causes of problems are forensically analysed by a multi- disciplinary team so that problems can be rectified and ultimately prevented Bill Dee Root Cause Analysis Nicole Cullen

12. What RCA is not • Producing statistics • Trend analysis • Superficial guess work by individuals • Discussions in corridors about issues • Blaming others for mistakes These are all useful activities but they do not individually or collectively = RCA Bill Dee Root Cause Analysis Nicole Cullen

13. Multi-disciplinary approach • Effective RCA should be done by a team of people within the organisation under the guidance of a facilitator to bring a range of appropriate skills and knowledge to the table for a more forensic analysis of customer feedback • This “collegiate” approach not only gets the right mix of skills to understand the causes and suggest the appropriate remedial action, but also brings an “enterprise” response to problems rather than a “silo” mentality that exists in many organisations Bill Dee Root Cause Analysis Nicole Cullen

14. Case study - Eastman 14 The cost of customer complaints was manifesting in: • lost business when customers switched to other suppliers • costs associated with investigating and responding to complaints • cost of compensation to customers as a result of defective products Source: www.asq.org Bill Dee Root Cause Analysis Nicole Cullen

15. Case study - Eastman 15 • Corrective action plans “we’ll try harder” were not working • Needed method to identify the root causes of complaints • Needed action to eliminate the causes of recurring problems • Established a Review Team • Found that most complaint investigations were not getting to the root (organisational) causes but stopped after learning who caused the problem. • Using RCA they cut their complaint figures by 50% between 1997- 2000 Bill Dee Root Cause Analysis Nicole Cullen

16. Case study - Eastman 16 Bottom Line Results • The effective use of root cause analysis reduced the number of complaints by 50% worldwide in a three year period between 1997 and 2000 Benefits • Improved customer satisfaction • Increased sales • Reduced waste • Lower costs • Value of its enhanced reputation Bill Dee Root Cause Analysis Nicole Cullen

17. Typical skill sets • Consumer affairs professionals/ customer service • Compliance • Legal • Operations • Communications • IT • Human resources • Lateral thinkers Bill Dee Root Cause Analysis Nicole Cullen

18. RCA key principles • Structured “logic tree” process • Multi- disciplinary approach cuts across silos • Analysis goes beyond human cause and identifies process, system organisational causes • Analysis does not stop at the first root cause found but keeps digging to identify and eliminate themultiple causes • Problems are typically the result ofmultiple causes rather than a single cause Bill Dee Root Cause Analysis Nicole Cullen

19. RCA Process • Pick a problem • Brainstorm for causes • Build the tree • Rectify the problem • Evaluate the outcome • Implementation plan - prevention Bill Dee Root Cause Analysis Nicole Cullen

20. What are the benefits of RCA? 20 • Fix problems on an enduring basis • Lessen unacceptable risks • Vehicle to improve relationships and to bring a sense of collegiality amongst relevant stakeholders • Improved customer relations • Assists to embed quality service throughout the organisation • Has a positive impact on morale Bill Dee Root Cause Analysis Nicole Cullen

21. Hypothetical cause tree Gush of wind RISK FACTOR Fire and rescue inadequately equipped Wing flaps not configured for landing ? Travelling too fast Poor Design of runway RISK FACTOR runway too short RISK FACTOR bad weather conditions Failure to properly Service plane Plane crash Mechanical failure fire from ruptured fuel way Poor design of plane Bonus payments to pilots who conserve fuel Impact 21 die Plane burns Airport closes Costly investigation Pilots arguing Policy to conserve Fuel pilot decides to continue landing Pilot wanted to conserve fuel Pilot motivated by money Bill Dee Root Cause Analysis Nicole Cullen

22. Case study Insurance company stops preventable problems and reduces costs through analysis of complaints data and implementation of new procedures Bill Dee Root Cause Analysis Nicole Cullen

23. Next steps • RCA workshop • Develop a clear understanding of root cause analysis – how is it different to what you already do? • Learn the RCA methodology and apply it to several high priority problems within your organisation • Develop an implementation plan for change • Agree on how to measure the improvements • RCA Review • More detailed analysis of problems working together with an internal continuous improvement team Bill Dee Root Cause Analysis Nicole Cullen

24. What some participants in our RCA workshops have said • “There is definitely a need for a more formalised approach to problem solving within our organisation.” • “It’s helpful to have all relevant people involved in the process and to use a step by step approach to thinking the events through to arrive at a logical conclusion“ • “The workshop adds a lot of value and insight on how to create a culture and environment where people can work together to solve problems rather than individuals (not being able to see the issue)"  • As a result of this workshop “we might change our complaints handling process - the way in which complaints are regarded and the involvement of compliance in the complaints process" Bill Dee Root Cause Analysis Nicole Cullen

25. The new frontier for complaints handling • Old Goal = process the complaint as quickly as possible + provide a satisfactory resolution for the customer. BUT - this does not necessarily reduce the frequency of complaints • New Goal = Recurrence of similar complaints can be eliminated only when you uncover the root organisational causes Bill Dee Root Cause Analysis Nicole Cullen

26. Next steps? Discussion Bill Dee Root Cause Analysis Nicole Cullen

27. More information? Bill Dee compliance@ozemail.com.au 0419 210 379 Nicole Cullen nicolecullen@financialservicescomplaints.com 0402 003 200 Bill Dee Root Cause Analysis Nicole Cullen