Changing the Culture in Collections

Changing the culture of collections with two simple steps

Hopefully you’ve read part 1 of our blog around the culture in collections. We spent some time analysing what culture is and we found that the best explanation was “it’s the way we do things around here”. We left this blog with the promise of two simple ways your organisation can start to improve and focus on culture - you’ll find these below.

The first simple step is understanding humanity.

At a very basic level, humanity means that we’re all humans and in collections it’s more important than ever to remember that. Humans are not logical - even though we like to think we are - we’re emotional. It’s important to remember this within the credit and collections industry and it’s really important to not fall into the trap of thinking of customers as numbers, entries into a database or lines on a spreadsheet.

One clear example of how we’re not thinking of customers as humans within collections is the language we use. Businesses will talk frequently about “buckets, penetration and liquidation” but these aren't very human terms, they are cold and impersonal. Maybe to change our culture we need to start by changing our language? Maybe we should be using words like “restoration, rehabilitation, and resolution”. Isn’t resolution what the industry is about, resolving the underlying challenge behind an unpaid account or bill? In fact, shouldn’t we change the term “debt collection” to “debt resolution”?

We all have the ability to be more human. The recent Covid-19 crisis has caused many parts of our society to reflect on this and most of us have understood the need to take actions that protect the most vulnerable. So how do we translate this to collections? We do this by looking after those who are most vulnerable, whether that’s those who suffer from personal vulnerability, mental health issues or those who are financially vulnerable, we have a duty of care to do the right thing and that has to be embedded in our culture.

As financial institutions we have a duty of care to identify financially vulnerable customers. But right now it’s the norm for businesses to use customer’s personal financial data when selling a loan, line of credit or mortgage but not to use the same data when the customer is showing signs of arrears. We believe this should change. Customer data could, and should be used, for the benefit of the customer, and used at the point when they need it. The collections industry has the perfect opportunity to make this part of the culture, to do whatever they can to identify vulnerable customers and hardship before taking any action, before sending a letter, and before dialing a telephone number. Collections agents should arm themselves with as much information as possible before taking any action with the sole intent of treating a customer as the individual that they are. Only then can companies be sure that they’re offering differentiated treatment that is designed to communicate with the individual, listen, and help them with their needs. In doing this, customers who are potentially vulnerable would not be treated the same as someone with a blemish free credit record.

Whilst a lot of companies may be content with the idea that a vulnerable customer will ask for help or use in bound communication methods, the data shows that vulnerable customers are least likely to make contact. Relying on a policy that will only treat a customer as vulnerable when they’ve told you places too much responsibility on the customer. It feels like a culture of turning a blind eye and right now people need us to behave differently.

The collection industry has a unique ability to save lives. That may sound like a bold statement but there are many studies that show a link between problem debt, self harm, alcoholism, and suicide. More than ever we need to adopt the culture of humanity. This isn't just about customers either, it's about colleagues and suppliers - it needs to permeate every part of what we do.

The second step is to commit to continuous improvement.

The desire to do better is a notion that sounds easier than it is as it’s difficult to put into practice - admitting today that you can do a better job than you did yesterday requires putting your ego and pride to the side and believing in failure. We can, if we choose, work hard to make sure today is better than yesterday. Start small and make something, anything, better.

When done right, the culture to be better will affect all parts of your organisation and positively impact everything that you do. Opportunities for improvement can appear unexpectedly. A clear recent example for TDX Group was that during Covid-19 when collections activities stopped, we seized the opportunity to change all of our communications. Everything was re-written and we will continue to move forward.

Every aspect of our daily lives whether that’s outwardly focused on customers or inwardly on colleagues can be improved but a “test and learn” culture is crucial to progress. This means being prepared to test (and fail) when the answers aren’t clear and preparing to test again. The collections industry can have the attitude that we should do better and we must do better.

In summary, culture in the collections industry has always been important, ethical behaviour has always been important but it’s more important than before. We’ll be talking and interacting with many more people over the next few months which means many more people will need our help. These communications will likely be in more challenging circumstances with more people. So whilst it’s clear that, yes the collections industry has written policies, documented standards and guidelines, the regulator has released its principles and our statutes have its laws but is it enough? We don’t think it is and we believe that every company’s north star will be the culture. Remember, culture is “the way we do things around here” so let's start by remembering it’s about people: customers, colleagues, suppliers whilst recognising that we can always do better.