Embrace a Culture of Continuous Improvement

Continuous process improvement is one of the most important ways operations and technology can support the CU.

September 13, 2010

Continuous process improvement: In business, it’s one of the most important ways operations and technology can support the credit union and enhance its effectiveness.

Several years ago I became interested in Six Sigma—the business process methodology—and how to apply it to the services industry. At the time, I worked at Kinecta Federal Credit Union, Manhattan Beach, Calif. Like any organization, we had lots of opportunities for improvement. We discussed process improvement extensively every year, and always concluded additional automation was the solution.

My interest in Six Sigma increased after reading Jack Welch’s book, “The GE Way.” Tom Graham, then CEO at Kinecta Federal, supported my quest and insisted I become certified as a Six Sigma black belt. (The certified Six Sigma black belt is a professional who can explain Six Sigma philosophies and principles, including supporting systems and tools.) The goal was for me to learn the system and have credibility to start a Six Sigma program at Kinecta Federal, which I did.

Shortly after that, in 2005, I joined Alliant Credit Union in Chicago (my current employer), and started its Six Sigma program. Alliant now has five green belts (one step down from a black belt) and a black belt in training. Only one green belt is a Six Sigma full-time equivalent, the others have other responsibilities. The green belts come from various disciplines and departments within the credit union.

What appealed to me about Six Sigma was its rigorous, flexible standardized methodology for continuous improvement. At Alliant, we’ve completed several projects using it. None were bigger than our first project, which reduced our plastic card losses from nearly $700,000 per year to less than $200,000.

Other Six Sigma projects the credit union has completed include requirements engineering, instant-issue plastic, address enhancement, and account opening/membership application.
Current projects include physical records preservation, government tax reporting, account adjustments, plastic card settlement, and month-end closing.

You can apply Six Sigma to just about any process in just about any industry. Even banking giant Bank of America depends on Six Sigma. One of its projects was to reduce the number of screens in its online loan application from 10 to four. Its online banking team also developed improved desktop authentication techniques and introduced live text chat to facilitate new sales and provide improved customer support.

Six Sigma as a quality measurement equals 3.4 errors for every million opportunities, which is near perfection. For example, Six Sigma would mean only one wrong drug prescription in 25 years.

The Six Sigma process includes five steps:
1. Design: At this step, we define and measure quality from the perspective of the customer (member or employee). We establish the goals for process improvement, the problem and opportunity for improvement, and the project charter.

2. Measure: We identify key process performance metrics and determine—in great detail—how the current process is performing.

3. Analyze: We use collected data to develop and test theories related to root causes, and to identify gaps between current and desired performance levels.

4.  Improve: In this phase, we’re ready to identify and test options for improving the process.

5. Control: The last step is to establish monitoring procedures as the process goes to a live environment.

As we continuously improve our processes, we reduce costs and improve quality. Six Sigma works. When championed by top credit union leadership and applied throughout the organization, it helps create a culture of continuous process improvement.

Six Sigma is a well-established methodology used globally in thousands of companies. Its practice becomes familiar to the participants—generally the same key people from project to project. That familiarity becomes a great asset to the organization.

RUDY PEREIRA is senior vice president of operations and technology at Alliant Credit Union, Chicago, and chair of the CUNA Technology Council. Contact him at 773-462-2147.