[Collections & Credit Risk - Table of Contents] September 2001

Training Translates To Higher Returns

Training is not just a cost of doing business. A recent study finds it can boost the bottom line. And agency execs say it helps with employee retention. What's not to like?

By Kate Gibson

In times of economic upheaval, many companies looking to shore up their bottom line lay off workers and slash programs viewed as expendable - such as employee education and training.

One notable exception may well be the highly regulated collections industry, where a lack of training can translate into government-enforcement actions, consumer lawsuits, and fines. Beyond those sticks, the carrot for maintaining a well-trained staff includes knowledgeable, more satisfied collectors, who become better revenue producers, and a healthier bottom line.

Still, investment in employee development varies wildly among agencies, financial institutions, and other entities involved in credit risk and debt collections (story, page 60). "It is a great mix - there are small agencies that spend a lot and large agencies that spend nothing," says Patricia Boyland, director of education for the Minneapolis-based American Collectors Association Inc. "As with any industry, some have a stronger belief in training than others," Boyland adds.

The latter approach may be near-sighted, according to the ACA and research recently released by the American Society for Training & Development, an Alexandria, Va.-based association for workplace learning and performance professionals. The ASTD study found that publicly traded companies that spent an average $1,595 per worker in training saw 24% higher gross profit margins. "The new economy is not based on productions systems. It is a knowledge economy, and for companies to get competitive they have to invest in their human capital," says Mark Van Buren, the ASTD's director of research.

"Learning should be recognized as an activity with bottom line impact," says Harry West, a product manager with vendor Saba Software Inc., a Redwood Shores, Calif.-based provider of electronic learning solutions. "Financial services firms need to deploy Web-based learning to keep customer-facing employees up to speed on product updates and other information....In today's economy, successful organizations need to hire and retain people who are ready to learn on an ongoing basis."

Few Budget Specifics
While it is easy enough to get heads of companies to talk about the importance of investing in their employees - oftentimes referred to as their "greatest asset" - it is tougher to get CEOs to detail the actual time and money spent on employee education and training programs. "There is a lot of fickleness around training, especially when you don't have good systems to track it. It's hard enough to get companies to tell us how many people they train," says Van Buren.

"Very few people running companies want to admit that employees are a cost," says academic-turned-consultant Laurie Bassi, a former Georgetown University professor who now presides over a two-person consulting firm, Human Capital Dynamics, in Chevy Chase, Md. However, in a distressed climate, the price of funding employee training programs is perhaps more visible than any eventual rewards, which may take weeks, months, or years to realize. Part of the trouble is that firms generally do not have a good idea of what they are spending on worker training and education, Bassi says. However, when profits take a dive "all they can see is the cost - which makes it [employee development] expendable," she adds.

Another major stumbling block is the fear that trained employees will take their expanded skills elsewhere, or in Bassi's words: "pack up and get a higher wage across the street." That concern is particularly prevalent in a tight labor market and in industries - including collections - that endure high employee turnover rates. "That is the argument: 'I'm not going to train anybody who may not stay around,'" Boyland says.

"We observe the opposite," says Bassi, who maintains that employees able to learn and develop on the job are more apt to remain.

Incentive to Stay
If everybody is being paid well, intangible benefits [such as training] can be a determining factor in whether employees stay or go, adds Van Buren, who says numerous surveys have shown training and development to be among the top three to five items that make people stay put.

Those results hold in the collections industry, according to Boyland. "People tend to stay with an organization where there is a valid training program," she says, noting that in recent years, there has been a great rise in the number of agencies hiring in-house trainers.

Some agency executives agree. "Training is critical from day one and has to be ongoing," says Mike Burroughs, senior vice president of operations for C.B. Accounts Inc., Peoria, Ill. His firm has full-time training managers in its Peoria and Schaumburg, Ill., facilities. "When they stop learning, collectors move on to new agencies, or become ineffective," Burroughs says.

Beyond employee retention, training is a tool to get new clients, says Boyland, who adds the ACA is stepping up its training seminars and certification efforts in response to members' demands. "Some agencies when they are recruiting look for [ACA] certified collectors - they view it as a competitive edge," she says. To that end, the ACA is expanding its training vehicles to include CD-ROMs, video seminars, and eventually, Web-based products. In July, the ACA released a new video program to help in-house agency trainers, with the video expected to be sold through the ACA's online store. Volunteer instructors certified by the ACA teach nearly 20 different seminars by working with 44 local ACA units throughout the country. Beyond instruction on the latest interpretation of the Fair Debt Collection Practices Act, or FDCPA, the ACA instructors cover a variety of topics for third-party and first-party collections, including when and when not to ask for payment in full, professional telephone techniques, sales, and skip tracing.

Client Expectations
While a trained staff used to be an added incentive to select one collections agency over another, many clients now expect trained collectors to work their accounts, and will not use an agency that does not have a formal system in place, says Gary Williams, president of Williams & Fudge Inc., a 15-year-old agency in Rock Hill, S.C. The agency, which specializes in servicing student loans, continues its practice of training in-house, but began using the ACA as a training resource about five years ago at the request of clients, which currently include about 400 colleges and universities around the country. Beyond a working knowledge of the Fair Debt Collection Practices Act and similar regulations, collectors need to be trained in how to best "communicate the rewards and results" of paying debts, Williams says. "You have to overcome the consumers objections before they are going to pay you," he says. "There are a lot of permutations, depending on whether a debtor disputes the bill, doesn't have the money, or is just mad at the school or the doctor." And hardball tactics are not always in the client's best interests. "Our clients are just like a medical doctor in small town USA - they still want them [debtors] as patients if they pay their bills," Williams says.

"Everybody needs training," he adds. "Even in your accounting department you are also dealing with the FDCPA." Training, he points out, "is an ongoing issue. We have training scheduled every month. We find our weakest link and focus on that. It may be skip tracing or not working the smaller balance accounts."

C.B. Accounts Inc. conducts a minimum of two weeks training in the initial orientation period, and ongoing training is conducted regularly, says Burroughs, an 18-year veteran with the agency. Every new hire's initial, in-house training covers the FDCPA and state law training and testing, sexual harassment training, employee policy and confidentiality training, basic collector training, advance collector training, skip-tracing training, live recorded collections telephone call training and analysis, and computer training on the actual system in a classroom environment. "It is a large investment and will usually separate those who will survive the industry past the first 30 days," Burroughs says. Beforehand, the agency devotes substantial time and money to finding and screening prospective employees. Says Burroughs: "If it is accomplished right, turnover is reduced and clients are satisfied with your performance."

From Burroughs prospective, it makes more sense to cut employees than training. "Usually the labor itself is cut when times get hard or when business is down," he says. "In spite of the tightening economy, or perhaps because of it, when companies cut head count to reduce costs, learning management and the retention of knowledge become paramount to remaining competitive," adds Saba product manager West.

As for payback from their investment, both Burroughs and Williams boast strong track records, at least by industry standards, in employee retention. "Our turnover rate is so low that last year we added 20 [new collectors] and lost two, while this year we have added 19 and lost one," says Williams.

Burroughs reports similarly results. "I have three of my original six collectors still working for me 18 years later as part of my management team, and they are still learning and being trained daily," says Burroughs. "It never ends!"

Who's Who in Training and Education (partial list)
Company Location Website Services
Adaptive Training Inc. Towsen, Md. http://www.adaptive-training.com Computer-based instruction for collection professionals: FDCPA, skip tracing, collection psychology, and more. Also provides consultant services.
American Collectors Association Inc. Minneapolis http://www.collector.com Provides a variety of certification and educational programs for credit and collections professionals.
Solomon-Lawrence Partners New York N.A. Provides consumer credit management training program, design and development of customized training programs, and human resource consulting.
ARSI Group Itasca, Ill. http://www.thearsigroup.com Provides consulting services, on-site training, seminars, newsletters, and other publications.
Association for Financial Professionals Bethesda, Md. http://www.AFPonline.org Provides research, continuing education, career development, professional certifications, and other services, as well as development of industry standards.
Bankers Training & Consulting Co. St. Louis http://www.btcc.com Offers training services for card issuers.
NCC Assessment Technologies Jacksonville, Fla. http://www.ncc-assessment.com Provides assessment tools, such as Collector-Selector, which evaluates collector candidates, plus consultation on employee recruitment, selection, and training.
Ohio State Bar Association Columbus, Ohio http://www.ohiobar.org Provides educational programs and services to Ohio attorneys, judges, and related professionals.
Omega Performance Charlotte, N.C. http://www.omega-performance.com Leading provider of training and performance improvement services for the credit and collections industries, especially technology-enhanced solutions.
Professional School of Collections Peoria, Ariz. N.A. Offers training in FDCPA, skip tracing, communications, negotiations, and basic collection techniques. In-house and onsite training seminars and consulting.
Saba Software Inc. Redwood Shores, Calif. http://www.saba.com Offers a full range of education offerings in a variety of formats, including instructor-led training, Web- and technology-based training, and Train-the-Trainer forums.
Service Dimensions Inc. Boiling Springs, S.C. http://www.sdi-net.com Customized training solutions that focus on reinforcing positive collections approaches through workplace coaching processes.
SkipMaster Inc. Eureka, Mo. http://www.skipmaster.com Publishes the SkipMaster Collection Reference Manual, a 600-page reference guide for collectors and skip tracers.
TBC Consulting Group Atlanta http://www.sellbyphone.com Offers training, teleservices consulting and management, quality assurance services, scripting services, and call center auditing, among other services.
Team Builders Plus Cherry Hill, N.J. http://www.teambuildersplus.com Customized training for the financial services industry, focusing on performance enhancement through relationship skill development.
TrainingServer Inc. Baltimore learning.thinq.com Now part of Thinq, a provider of enterprise learning solutions, TrainingServer's training management software is a client/server solution.
Universal Training Northbrook, Ill. http://www.universaltraining.com Offers custom training and performance improvement solutions.

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