ASQ - Team and Workplace Excellence Forum

September 1997


Education 101: Redesigning Schools
Site Based Management Relocates Decision Making

Take the Good with the Bad
Positive and Negative Feedback in Creativity Sessions

Site Council Learns About Growth, Power And Communication

Knowledge Management
Taking Control of the Information Age

Etymology of a Buzzward

Investment Tip: Stay In For The Long Haul
Van Kampen American Capital Perseveres to Win AQP Excellence Award


It's About Time
by Peter Block

You Have to Be a Little Different
by Cathy Kramer


Brief Cases
Business News Briefs

Views for a Change

Book Review

Letters to the Editor


Investment Tip: Stay In For The Long Haul
Van Kampen American Capital Perserveres to Win AQP Excellence Award

Money managers know that investing in the market takes time. If you want a quick buck, forget it. Look beyond short-term fluctuations, stick with your investment and the payoff will come. But could the same theory apply to quality? Just ask the investment experts.

Van Kampen American Capital (VKAC) controls over $58 billion in assets for small investors. Ten years ago then-named American Capital of Houston, Texas, began development of a quality initiative that - like the market it depends upon - would thrive, suffer and nearly crash before winning the 1997 AQP Organizational Excellence Award for the Service Industry.

Quality Starts With a Crash
In 1987 VKAC ranked near the bottom (third to last) of their industry in customer service. Then in October the stock market had a problem. Call it an adjustment, correction or crash - it had a drastic effect on everyone in the financial community.

The three year period that followed brought dramatic change within VKAC: management was fired and TQM began. Out went the old senior level managers and in came the quality consultants. In 1989, the investment in TQM, commanded by an inspirational CEO, created a team management approach called the American Capital Quality Commitment. Tamara Scott, vice president, The University, VKAC, directs operations at all VKAC training campuses. She recalls, "The consultants brought in a TQM box with a big bow and said we're going to put people in teams and have tee-shirts and pizza parties, and said 'quality is a job done right the first time!'" She also admits the box included mandatory quality training, management steering committee meetings, quality goals linked to corporate goals, and quality awareness classes.

As the program took hold, American Capital Quality Commitment improved how the Houston office did business. Scott explains, "We had some managers that really didn't know how to manage. The TQM box gave them something to grab hold of, a set of processes to follow that made them more effective." The following years would see upwards of $1 million in savings through implementation of 1500 team-generated ideas. On top of that - VKAC got rich. The post-crash focus on diversification in money management caused mutual funds to skyrocket.

Life at the Top
In 1990 VKAC won the DALBAR Quality Tested Service Seal, an investment industry recognition Scott equates with the Good Housekeeping Seal of Approval. Other companies came from all around to witness their transformation. "We got cocky," Scott admits. The consultants left and the "TQM box" was brought inside and administered internally by a small group of trainers and quality specialists - the Total Quality Commitment team. In 1990, the University was developed. At this stage, the University's role was teaching classes in product information, computer systems and customer service skills, while leadership and quality training remained a TQC function.

Everything seemed great. While growth leveled off, management seemed content to float atop their recent success. No one would reevaluate the current system. It took six years to fully develop, it won awards - why let go? For one thing, many VKAC employees went home with those companies that came to visit. Scott admits, "We lost a lot of storytellers and history during this time." And for another, things were about to get a little crazy.

Merger Weakens Quality Effort
In 1994 American Capital merged with Chicago-based Van Kampen Merritt to form Van Kampen American Capital. The merging cultures and increased production caused quite a stir. Service people were moved around, funds and products were merged and sales forces reassigned. People were laid off to avoid redundancies and overlap. Many of the 100 teams existing at the end of 1994 restructured or disbanded entirely. With the merger - and loss of the CEO who started and strictly enforced the quality effort - some American Capital employees began openly rejecting the TQM box.

Strangely enough, amidst the chaos they continued achieving DALBAR certification. Scott reflects, "Everyone else [in the industry] was under the same kind of turmoil, but we had enough of a head start to stay in the lead."

New Beginning
Following the merger, VKAC surveyed team members to assess the state of the American Capital Quality Commitment program in hopes of rejuvenating the effort in a new form.

The assessment indicated that employees needed their training to be continually reinforced. Subsequently, training was tied into VKAC's reward and recognition program, encouraging employees to continually update their education. To create ownership and increase accountability, responsibility for creating team guidebooks was handed to the teams themselves. The guidebook includes the team member roles and responsibilities, team charter, mission statement, ground rules, opportunity for improvement form, rewards and recognition, and objectives.

A list of critical success factors defined and measured by customer feedback, highlight each team's areas for improvement. These factors are linked in the company's strategic plan, affect planning and policy decisions, and are linked directly to the compensation plan. The greatest challenge has been getting employees to buy in to the program. Fortunately, as teams have realized that the ability to customize their own process is beneficial to their business, they have increasingly come aboard and completed their guidebooks.

Lessons Learned
As VKAC's program has developed, one thing has become clear: quality practices are more effective when the values are internalized and ownership rests within the teams. Scott reflects, "When there was a whole other arm just for quality it created a whole quality business outside of the normal operating standard. Now, instead of having 'quality meetings,' we just teach them to have a good meeting that integrates quality pieces." And the results have been impressive. In the first year Houston reported a decrease in turnover and an early savings of $122,000.

While no one can be sure exactly what the future holds, VKAC has learned to stay proactive. Scott believes, "You can't get stagnant - can't just sit on your box with the pretty bow." Their ability to confront these issues successfully will draw in large part on the lessons they've learned in creating an organization worthy of this year's AQP Organizational Excellence Award.

Sept. '97 News for a Change | Email Editor
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