Supersize or Specialize – Michael Dennis, CBF

Supersize or Specialize

Another friend of mine lost her job after many years when her credit department was combined with customer support and order entry and her position as credit manager was eliminated.  I honestly and sincerely don’t get it.  The skills required to be effective in the collection role are very different from the skills required to handle the order entry and customer support functions.  How do I know?  At various times, I have managed all three departments… and I never once thought:  What a good idea it would be to take an order entry representative and turn them into a collector… or… Wouldn’t it be great to cross train everyone and make one supersized Collections/Order Entry/Customer Support department!

I don’t disagree that creating a larger combined department would enhance the customer’s experience when placing an order, asking a question, or requesting assistance for the simple reason that more people working generally means shorter waits and quicker responses.   That is certainly good for your customer.  However, I cannot imagine how combining job functions could possibly improve collection performance for the company for all of the following reasons:

  • Not everyone is cut out to be a collector, but this Supersized department assumes that individuals will be equally adept at collections as they are in their other roles
  • The economist Adam Smith wrote that specialization leads to greater efficiency.   Creating generalists, which the Supersized department requires, is the opposite of specialization
  • Expecting most if not all the employees trained in customer support to become effective collecting outstanding debts is unrealistic.  Why?  Because collections is not for everyone and given a choice, I believe that most people will spend more time helping customers and less time calling for payment
  • The skills needed to manage a Supersized department are different than the skills required to manage the collection process, and
  • By eliminating the credit manager’s position this company apparently overlooked a very basic fact.  The credit manager’s biggest value add involves establishing appropriate policies to monitor and manage risk before orders are released, not in managing the collection team.  Unless credit limits and credit terms are set appropriately and credit risk is managed proactively, the chances of collections improving as a result of this departmental merger and the layoff of the credit manager are somewhere between (a) highly unlikely and (b) it’s never gonna happen!
Michael Dennis, MBA, CBF, LCM

That’s my opinion anyway.  What’s yours?

Michael Dennis’ Covering Credit Commentary. Michael’s website is  www.coveringcredit.com

The opinions presented are those of the author.  The opinions and recommendations do not necessarily reflect the views of CMA, or their Officers and Directors.  Readers are encouraged to evaluate any suggestions or recommendations made, and accept and adopt only those concepts that make sense to them.

 

5 Replies to “Supersize or Specialize – Michael Dennis, CBF”

  1. My company has most of our employees cross trained, including me, the credit manager. I am lucky that they recognize my top priority as collection management, and sales order approval. Nobody wants to do my job at collections, and that’s fine, Others in my company will cover my work when I am out from work, but they leave the collection calls to me, and I make it a priority to keep the cash coming in.

  2. Working for a small company, I sometimes am forced to do double duty as both a collector and an order taker. It is hard to switch roles, from the good guy generating the RMA requested by the customer to the tough guy calling and expecting an immediate payment. Like Mike said, I am happy to have one primary role – in collections and risk management.

    Both roles involve customer interaction and problem solving. In the case of order entry, you are the hero – at least most of the time. In the case of collections, you are the goat – the person everyone loves to hate.

    I agree these skills are not readily interchangeable, and I am glad Wanda reminded us that no one other than the credit manager can make the tough calls relating to ship or hold, or whether to increase or decrease the credit limit.

    Karen

  3. My vote is to specialize. It takes a long time for people to become proficient at one task. Imagine how much harder it would be to train them and then expect them to be exceptional at such diverse tasks as approving and issuing RMAs and resolving post-audit deductions. The chances of someone doing both well are low and on this basis I agree with Michael.

  4. I have to agree with Wanda. It seems unlikely that anyone in order entry and customer support would want to do collections, or dispute resolution, or research, or customer financial statement analysis, or approve and assign credit limits and terms. These are specialized skills not easily taught and not the best fit for everyone.

    I agree with michael that this is just a bad idea.

  5. I don’t work in customer service on either end (ordering or collecting); but as a customer I would appreciate it if someone calling about a collection could at least answer my questions about ordering or sales without having to transfer my call all over the place. I think it would be an advantage to the company if the employee taking an order would also have the ability to accept a payment (again without having to transfer the call) and/or to see if the customer placing an order has an outstanding balance and then ask for and accept a payment while they’ve got the customer’s attention.

    I agree that these are two different skill sets and specialization does create more effective departments, but I don’t think cross training should be completely dismissed. I work in a small company so vacations, sick leave and lunch hours can quickly wipe out an entire department. I would hate to tell a customer they have to wait an hour or a day to get the service they need. I expect all our employees to be able to provide at least a basic amount of customer service.

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