Despite the fact that the units of an organization use the same procedures, processes and systems and offer the same products and services, and even may operate in the same market circumstances, they can still achieve different results. A closer look reveals that management and employees of different organizational units focus on different things. The units that are paying specific attention to the HPO characteristics perform the best.

The HPO Center was invited to do an HPO Diagnosis at a division of the largest multinational banks. One of the bank’s divisions sold a broad array of financial products to more than one million clients, with 2,500 employees distributed over 200 branches and headquarters. The division was divided into 13 regions, each headed by a management team who managed the sales teams which serviced clients. The sales process of the division consisted of several steps. First, the sales teams visited (potential) clients. After that, proposals were offered to a (potential) client. In the third step, proposals were accepted or declined by the (potential) client. And finally, if a proposal was accepted, a calculation was made of the financial value of the proposal, measured in achieved capital, and it was recorded in the division’s ICT system. For example, two loans of €1 million at an interest rate of two percent would give an achieved capital of € 2 million (and a deal margin of €40.000). The financial result of a region was calculated based on the total achieved capital and the total deal margins.

HPO Questionnaire to management and employees

The HPO status of the division was assessed by distributing the HPO Questionnaire to management and employees. For each of the 13 bank regions the average HPO score was calculated by the HPO Center, and a ranking was made from the highest scoring region to the lowest scoring region. Then the financial results over the past three years were collected for all 13 regions, and a ranking was made from the regions with the best financial results over those three years to the regions with the lowest financial results. Finally, the HPO Center matched both rankings. The result is given below:

Table 2.2: HPO ranking versus the financial results ranking for the 13 regions

The matching yielded a clear group of ‘HPO leaders’ which showed both the highest HPO scores and the highest results: regions 1, 3 and 12. The comparison also gave a clear group of ‘HPO laggards’ which showed both the lowest HPO scores and the lowest results: regions 6, 7 and 11. For many of the remaining regions the match between the HPO scores and the financial results was quite close. The context was the same for all regions as they all used the same management systems, products, processes and IT systems. All regions were therefore operating in the same way and differences in HPO scores could only be explained by differences in management and employee quality in the regions and differences in the way they behaved and emphasized specific actions and issues. To evaluate whether this was really the case the HPO Center conducted a number of interviews at one of the leading regions (region 1) and one of the lagging regions (region 7). These regions were chosen as the HPO Center expected to find the strongest differences at the top and bottom of the ranking. The interviews revealed that the regions did deal differently with the HPO characteristics. Below are some quotes from managers of regions 1 and 7 to illustrate the differences in attitude and behavior.

Q. How do you engage your employees in dialogue and important processes?

• Region 1: “That is always difficult as you only have so many hours in a day. But I visit every branch at least every two months and then I stay a whole day. Not just talking to the branch manager, I arrive an hour early and then I walk around on the shop floor so I can easily speak with the employees. In those conversations you as boss have to take the first step by opening up about your affairs and what is going on in the region. This will build the trust needed for a good dialogue. You also have to be transparent about what you are doing with the suggestions and complaints you get from employees, you have to show you take these seriously.”
• Region 7: “Management used to sit here in their ivory tower, people hardly ever saw them let alone that management ever asked employees for ideas or suggestions. And even when the previous director spoke to them, they would normally give socially acceptable answers. When I came here I had a hard time getting straight, honest answers from employees. If people didn’t agree with me they wouldn’t talk to me but complain to each other, and I would hear about it indirectly.”

Q. How do you go about improving the region?

• Region 1: “I have set up what I call an active moaning system. I put a lot of pressure on people to increase productivity and efficiency and I know that if something in the processes prevents them from achieving better results, they will start to moan about it to me. Then I know in which part of the process to focus the improvement effort and I can do something about it, quickly. An added advantage is that people see that I take their complaints seriously, so they are more motivated to help fix the problems. Sometimes you cannot implement certain improvements when managers higher up the hierarchy decide there are other priorities. Then you have to be honest and say ‘Hey guys, this cannot be solved, so let’s move on.’ This way, you keep your credibility. Another thing we do when we are undertaking an improvement project is to have daily heartbeat sessions. In these sessions, we get management and employees together early in the morning and discuss the state of affairs: What is going right? What wrong? Have we seen any benefits of the improvements yet? What are the problems? Who is going to fix them? What happened to yesterday’s problems? This way you keep on top of the improvement process.”
• Region 7: “To be honest, we kind of have a zigzag policy in this respect. One day we are doing this and the next day we are doing that. This is because we have an attitude of ‘let’s go!’, if we have a good idea we go for it, right away. We don’t really question the constant course changes as we are real go-getters. And if an improvement idea comes from headquarters we tend to wait out the storm and then go back to our own ideas.”

Q. How do you make sure your region services its customers optimally?

• Region 1: “We have close relations with our customers. We make it our business to know as much as possible about customers and we talk regularly to them to keep up-to-date with their situation and possible needs, wants and demands. In addition, every year we choose a theme on which the region will focus. These themes always have to do with customers. This year, for example, we have the theme ‘surprise the customer’ where we look at ways to do something extra for the customers so they will be pleasantly surprised. And we all participate in this theme, not only the employees but also management who in fact start off the theme by surprising employees. At the last meeting, I had brought along a rose for every employee to let them experience what it is to be pleasantly surprised.”
• Region 7: “To be quite frank, we could be a bit more customer-oriented. I will give you an example that happened last Monday. Some people had made a mess outside at the cash machine during the weekend and no-one had bothered to clean it up so customers couldn’t use the machine. Somebody in the office said they had called the cleaning company who would come over later this afternoon but I said this was way too late. It concerns our customers and we have to treat them with all regards, and having a mess on the doorstep isn’t that. It should have been fixed right away!”

Q. Is your strategy different from that of your competitors?

• Region 1: “One of the major differences with our competitors is that we’re not looking for a quick buck but for long-term benefit. For example, despite the recession we have hired many sales trainees and we have given these a good education, while our competitors did exactly the opposite and send many trainees home. Now business is picking up and we have skilful and knowledgeable people in both our front and back offices while the other banks are struggling to hire new, qualified people. I also spend a lot of time explaining our strategy to the branches because it is especially branch people who have to know and understand the strategy. After all, they are the ones that make the difference to our customers.”
• Region 7: “Headquarters announces the strategy to us and we basically follow it. It frustrates me that people in the branches here are not that concerned about the strategy but worry more about what the other branches in the region are doing and how these are performing, and whether people at the other branches will get higher bonuses.”

Q. How do you increase the speed of decision-making and action-taking?

• Region 1: “Short communication lines and discipline. If I decide this afternoon that we need a conference call the next morning at eight o’clock, I can contact my people directly and everybody knows he or she has to participate in the call, no exceptions. For this to be successful you need engaged people, people who are strongly committed to the company and in addition to that willing to go the extra mile.”
• Region 7: “We still have a culture of ‘saying yes, doing no.’ This is inefficient because it can take quite a while before you discover that the things you thought would be done have not been taken care of at all. Why make any agreements when half of the people are not sticking to it anyway? It leads to a sliding scale where more and more people think: why bother to do this when nobody else does?”

Not surprisingly, the general atmosphere at region 1, the leading region, was much better than at region 7, the lagging region; management was genuinely interested in employees and clients, and people focused more on improvement and integrity. On the basis of the HPO diagnosis the division was able to discover ‘best ideas’, for example activities of regions which proved to be very successful and from which other regions could and should learn, not necessarily by copying these ideas but by thinking about the ideas, tailoring these to the specific situation of the region and then implementing the adapted idea.

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