To centralize or not to centralize? That is the wrong question.

michael's picture

Under the mantra of operational efficiency, banks and credit unions wrestle with which functions to centralize versus decentralize.
Many even equate standardization and centralization, wrongly believing that centralization results in standardization or that standardization requires centralization.
In reality there is one simple test for how a process should be designed.
What does the customer value? Or in financial speak, what will the customer pay for?

If the customer values the activity, then it should be performed as close to the customer as possible with as few people involved as possible.
Letting one person do it all and leveraging technology to do it fast, and do it correctly will create customer value, the standard phrase in bank mission statements often ignored in practice.
This is the hard work of process reengineering coupled with employee empowerment and education.

In cases where it is impractical to have one person do it all, design the process around a small team that has all of the skills to do it, do it fast, and do it correctly.
The team knows what the customer wants. The team will hold each other accountable for meeting those needs. The team will create customer value.
The customer interacts with the team leader who will have intimate and current knowledge of the customer's request.
In many cases, tomorrow's team members live today in departmental silos with disconnected processes overseen by supervisors who have competing and conflicting interests.
This is the hard work of process reengineering coupled with employee empowerment, team building, and organizational change.

If the customer doesn't value the activity, and it can't be eliminated, then by all means it needs to be automated, standardized, and removed as a burden from those creating customer value.
Making a process less burdensome allows centralization, decentralization, and hybrid approaches to all be viable process design options.
This is the hard work of process reengineering disguised today in the question of "To centralize or not to centralize?".
Exception handling becomes the determining factor.

In all cases, process reengineering is the key to:
• creating customer value,
• employee empowerment, and
• operational efficiency.

Process reengineering involves plenty of hard work.
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