Winner, Financial Services Category - Birmingham Midshires Building Society.
Mike Jackson, Birmingham Midshires Building Society chief executive, is now so confident of his customers' satisfaction that his home phone number is prominently displayed in the society's annual review. Five years ago, when Jackson joined Britain's 10th biggest building society, customer satisfaction had withered to the point that ex-directory might have seemed a wiser option.
In the decade prior to his arrival, Birmingham Midshires had transformed itself from a healthy, if modest, £151 million society into a sick £3.6 billion whale. The recession had been accompanied by some woeful lending decisions, and performance had slumped. Ever-increasing customer expectations and intense competition from other building societies and the banks had created, in the words of one analyst, a need for 'major surgery'.
The society's Lazarus-like leap from its corporate sick-bed is entirely due, says Jackson, to the simple but radical decision to focus on the customer above all else. Since 1991 the 120-branch society has pursued an ambitious re-engineering and culture change programme with that end in view - and it has succeeded remarkably. Last year, customer satisfaction ratings hit record levels: over 97% compared to 88% four years ago. On the basis of National Opinion Polls' figures, Birmingham Midshires has opened a 35% gap between itself and the average scores of its bank and building society competitors.
The society's Exceeding Expectations initiative has increased the proportion of 'highly satisfied' customers from 50% in 1990 to 75% last year. Four customers in 10 believe that service has improved again during the latest year. Six out of 10 say the society gives better service than its competitors; more than two-thirds maintain that its service is superior to their bank's.
And more than nine out of 10 now say they recommend the society to others.
The Exceeding Expectations programme aims to ensure that 'we will be First Choice for our customers, business partners and each other, growing profitably and sustaining improved value for our members'. The achievement on the financial front is even greater than the change in customer attitudes.
Profits climbed from £6.3 million in 1991 to £44.6 million last year.
Over the same period, assets have more than doubled, from £3.6 billion to £7.7 billion, and the society's customer base has expanded from 860,000 to over a million.
The turnround was not achieved without pain. Of the society's 10 former senior executives, only one remains. But Jackson's vision anticipated a customer-focused, continuous improvement process that would attract and retain people, and build lifelong relationships. In translating this vision into reality, the top team was assisted by employees from all levels of the organisation, backed by extensive customer research. And so the objective was articulated: to be First Choice, the first word 'First' (from First, Informed, Responsive, Service-oriented, Trustworthy) reflecting values which customers indicated would incline them to prefer Birmingham Midshires.
The society then formulated a 10-point statement of values (or aims or beliefs) which it called the Pillars of Excellence. These included the following: people in the organisation should be innovators and take risks without fearing punishment if they were to fail; a belief in attention to detail; informality as a means of improving communication through the organisation; superior quality and service; the importance of people as individuals; of growth and profits; of an organisational philosophy developed and supported by those at the top, and of having fun through work.
Measures developed in tandem with the vision and values statement created a continuous loop of action, measurement and feedback. In January '91, the vision and values statement, a revised organisation structure, news about divestments and a novel strategy based on quality were communicated to all employees in a 26-page document. This was supported by a series of 17 top management roadshows. Later in that year, the society's vision of its future was fleshed out in three booklets: Our Strategy and Goals, Our Behaviours and Our Structure. These endeavours have underpinned all subsequent ventures in the area of customer service.
The latest initiative, launched last February, aims to 'exceed our customers' expectations by always treating them better than they expect to be'. (Incidentally, Birmingham Midshires' customers include not only 850,000 depositors and 165,000 borrowers, but also its 2,200 staff and anyone to whom the society provides services.) The programme's Seven Service Values came from analysis of 8,500 customer comments about preferred modes of behaviour. Customers wanted staff to be helpful, friendly, willing, attentive, obliging, smiling, polite, professional and cheerful.
They also wanted staff to provide an efficient, prompt service, always to keep customers informed, to respond to individual needs, to take ownership of problems and earn customers' trust. 'These values are based on what our customers actually told us they wanted, not what we believed they might want,' emphasises corporate relations chief Tony McGarahan.
Customer feedback has been at the root of most recent initiatives. The society sends out some 200,000 questionnaires every year. 'We use questionnaires everywhere, even at our AGM or for visitors to our new corporate headquarters at Pendeford,' says Jackson. 'Where we can ask, we ask - the questionnaire process is the absolute bedrock of this business.' All customers who return their questionnaires are thanked. This is no cosmetic exercise. In 1991, 10% of the criticisms came from customers who thought their money could be earning a better return. Two years ago, the society abolished all obsolete accounts and upgraded customers to the most appropriate available account at a cost of £13 million. Over the years 1992-95, the number of customers seeking more competitive interest rates fell from 949 to 327. All complainants receive an apology card that invites them to comment on how the complaint was handled.
In the early '90s, the society was, in Jackson's words, 'pretty unfocused'.
Areas such as property services and commercial insurance have since been declared non-core, and abandoned in favour of a clear-cut product range which includes savings, investment, lending, protection insurance and cash management. Value-added services are constantly introduced (eg, a will-making service), and plans to introduce a credit card and current account are under consideration.
On the subject of customer retention, Jackson maintains that the society was one of the first organisations in the financial services sector to recognise that 'the bucket was leaking'. 'People were being poured in at the front end, in terms of new business. Then no one cared about them and so they gushed out of the bottom and were lost.' In 1991 the society established a 'customer retention team' which has had a dramatic effect on the leakage.
'We are constantly trying to find out what went wrong if customers leave us,' says Jackson.
The society's magazine First Focus, which outlines products, services, activities and results, is a further attempt to foster long-term customer relationships - as is its use of media advertising, newspaper coverage, community action programmes and the publicity created by awards including Investors in People and the 1994 CBI/Price Waterhouse West Midlands Business of the Year Award.
'We don't chase awards,' Jackson insists. 'We are more interested in learning than winning. But winning builds awareness and pride in the business.' Incidentally, external market research suggests that public awareness of the company has grown from 30% in 1993 to 65% last year.
To embed the customer-first culture, the society has launched an extensive programme of staff development, training, reward and recognition. Some 8,500 days per year are devoted to training. There are 50 different types of course, three-quarters of them focusing on values and behaviour (only a quarter are skills-based). In addition, business and support team leaders spend most of their time communicating with people at all levels, encouraging them to share the vision and uphold the values.
Birmingham Midshires has a huge passion for communication, according to Jackson. Methods include video, weekly newsheets, regular financial updates, a house magazine and in-house 'quality day' workshops. Separate departments and offices have been eliminated in favour of a democratic open-plan environment, shared even by the chief executive. Parking places are for general use - and first names are used throughout the society.
Employee satisfaction is monitored via an annual attitude survey and a monthly climate survey. A recent MORI poll showed 89% of employees claiming to understand the society's goals, 70% would recommend it as a place to work and 77% were proud to work for it. A variety of methods are employed to recognise performance. 'Team leaders can give instant cash awards, or thankyou cards, to anyone they see doing great work,' says Jackson.
Colleagues can nominate each other for a Magic Moment award in recognition of some unprompted act of service. Each month's award-winners receive £100, and go on to a further award ceremony at a gala dinner in December.
Since Birmingham Midshires replaced its aim of satisfying customers with a mission to exceed their expectations, the percentage of those agreeing that expectations have been exceeded has increased from 15.5% (two years ago) to 16.6%. Satisfying customers is old hat, argues Jackson. What's important is that they should be highly satisfied. But exceeding expectations isn't easy, as they grow along with the organisation's ability to satisfy - or anticipate - them. 'It's like a treadmill. Once you get on, you can't get off,' says Jackson. The pace simply hots up.
Mike Jackson, chief executive: since joining in 1991, he has breathed new life into the 120-branch society by pursuing an ambitious re-engineering and culture change and focusing on the customer above all else
KEY BUSINESS LESSONS
- Communicate customer service values clearly and consistently: Birmingham Midshires' programme of customer-focused culture change is continually reinforced internally and externally
- Ask customers what is important to them: the society's Seven Service Values are drawn entirely from customer feedback
- Lead from the top: Midshires' board provides energetic and visible leadership; inviting customers to phone board members underlines commitment and confidence
- Identify your customers: having decided which ones it wanted, Midshire makes huge efforts to keep them; it has left sectors where it could not deliver service consistent with its vision and goals.