Recently, I was discussing why I focus on making work easier rather than “fixing” employees with JetBlue University’s Learning Technologies Team. I shared the following true story.
It was the mid-90’s and I was an internal consultant working for a medical cost containment company. The CFO called me into his office and asked me to find out why his Accounts Receivables were unacceptably high when our customers swore that their payments had been sent. His best guess was that the A/R clerks weren’t posting the checks correctly. In other words, we probably needed to fix the people.
That sounded odd to me, so I interviewed a couple of the A/R Clerks. One of them opened a series of drawers located inside a locked cabinet to reveal thousands of unposted and uncashed checks. There were literally thousands of checks grouped into large bundles bound by rubber bands. Mystery solved and yet I was stunned!
The A/R Clerk said that there was no way to post these checks but her explanation wasn’t clear. Maybe this was a training issue after all. In an effort to find out more, I analyzed the end-to-end system that the Accounting department supported.
Back then, it took me a week to accomplish that task; today I can map the value chain in about 15 minutes using an approach I learned from Geary Rummler. Here’s a partial sketch representing what I found:
I learned that we had two separate types of technology: Re-pricing technology and Accounting technology. The root cause became clear when I created a linear map of the high level process:
Step 1: Receive physician bill (aka “claim”) from insurance company for re-pricing.
Step 2: Enter codes off physician bill into the re-pricing system.
Step 3: Re-pricing software applies volume discounts to each claim.
Step 4: Re-pricing software produces an invoice to be attached to the re-priced claim.
Step 5: Batch 100 re-priced claims and invoices together.
Step 6: Consolidate 100 individual invoices into one consolidated invoice.
Step 7: Mail batch with consolidated invoice to insurance company.
Can you se the systemic problem yet? Well, that’s a lot to ask from such a short overview, so I’ll just cut to the chase:
The re-pricing technology created 100 individual invoices and pushed that data into the Accounting technology but the individual invoices were overwritten when the consolidated invoice was created manually.
The average individual invoice within the batch is only $2 and this is why the decision was made to batch them and produce one invoice (average charge of $200). Yet, in reality, we had a high volume of low dollar transactions.
Regulatory compliance in certain states required that insurance companies apply the payment of our invoice directly to the patient’s (aka claimant’s) file. In these cases, the insurance company could not pay the consolidated invoice. They had to pay the 100 individual $2 invoices.
The high volume of $2 checks being received overwhelmed the A/R Clerks and there was no way to determine which consolidated $200 invoice to post each $2 payment against. And, how important is a $2 check when you also have a ton $200 checks to post? They posted the larger checks and let the smaller ones sit.
Yes, the A/R Clerks needed training (or procedures) for depositing unposted checks each day. This would ensure that the checks didn’t expire, but this was not going to fix the issue of being able to post the checks correctly.
Recommendation to the CFO:
Focus on making work easier. Fix the process. I facilitated a cross-functional team to redesign the process and we won the President’s Award for our efforts.
Please use this story or one of your own to convince your clients and coworkers that you cannot improve workplace performance by fixing the employees. You must also focus on making work easier!