“Managing collections teams in 2021 is an art.” Why do we say Collections Leadership is an art? Let’s look at the definition of Art:
“Art is generally understood as any activity or product done by people with a communicative or aesthetic purpose.” And when you think about it, Collections leadership is all about the art of communications, with the explicit purpose of empowering the customer to reach an improved financial situation. It also improves cash flow to support businesses and jobs. The complexities of managing collections and hardship teams are getting more challenging each day. Sometimes it is easy to lose sight of the fact that to be effective in collections leadership; we need to consider the ‘art’.
How do we develop our collections ‘artists’ to be the best they can be, both in customer engagement and internal interactions within the team?
The art of communications is without doubt the paint to complete the artwork.
An effective leader needs to influence, develop and grow its people positively. The following crucial elements: The ability to engage your staff, no matter how challenging the conversation.
Sounds simple? Not so. Companies can spend thousands on leadership and coaching programs that don’t pay off. Leadership training and coaching concepts like SMART Goals and GROW Models can provide good theoretical frameworks. However, collections leaders need to know how to have effective conversations, influence staff behaviour, understand root causes of problems, and learn how to work with someone based on their individual needs.
The generic and theoretical nature of some leadership training and coaching can make it hard for collections staff to translate into the practical on-the-job application.
As Sir John Whitmore, co-creator of the GROW model himself, points out, “Any dictator can use GROW. The concept should not be used in isolation but in conjunction with fundamental coaching skills that make it transformational.”
Mental health issues are increasing. Collection leaders lack the art of communication in handling these situations.
Unfortunately, mental health issues are coming up more and more for collections leaders who are untrained in these essential people skills. Leadership structure and theory help, but they also need personal interactions skills.
It is particularly tricky to balance managing staff wellbeing and tip-toeing around underperformance and poor behaviours. Sometimes it’s easier to let things go.
So, when we talk about the art of communications and people skills, we all know the theory. It is about building trust and respect, empowering people to do a great job, being empathetic, etc. No one tends to have a problem identifying those traits in leadership, so why is it so hard to put into practice? Let’s take a look.
What prevents us from bringing out the best in our people skills?
Leaders have received promotions because they have the innate skillset and X factor. They are technically sound and usually are the highest performers. They tend to be passionate about their work but lack many other vital skills.
In running many leadership and coaching programs throughout 2020/2021, we have identified –
Top 5 challenges in Collections Leadership team face in their day-to-day people management:
1. What we walk past, we are prepared to accept.
We use this favourite quote at eMatrix when training managers to have ‘tricky’ or ‘awkward’ conversations. Leaders tend to be able to reward good behaviour and address bad behaviour, but the odd, in-between stuff gets ignored because the conversation gets awkward. Yet, these things plague and can become toxic if not addressed. It includes little passive-aggressive comments in meetings; poor time management practises daily, inappropriate discussions with customers, even a little gossiping that becomes the norm. Knowing how to deal with this, without ignoring it nor making it a big deal, is a skill.
2. KPI’s aren’t always the inspiration.
In observing leaders having performance conversations with staff, they often pepper the whole discussion with the word ‘KPI’s’ as the go-to. Unfortunately, this does not usually resonate with employees.
We train collectors to sell benefits to customers and make them care about paying us, and we train leaders to do the same thing with staff. If job security is essential, then coaching habitually late people is about protecting the role. For team players, it is about the impact on their teammates. For aspirational people, it is about how performance impacts that.
3. Show empathy, not sympathy and not apathy in Collections leadership.
Out of all people skills, empathy is arguably the most essential for successful leadership. A recent Forbes article identified the many ways it contributes to positive outcomes. From encouraging innovation within your team to improved engagement (76% of people who experienced empathy from their Manager reported being more engaged), retention, inclusivity and even work-life balance, an empathetic leader can deliver hugely successful results.
Empathy sounds like this:
“That doesn’t sound like your usual self, are you ok?”,
rather than,
“Why didn’t you complete that on time?”
When someone calls in late, instead of directing them to complete the sick leave form, it’s showing empathy such as,
“That must be stressful for you at the moment”.
A great role-play/discussion with leaders is always how to respond to a staff member calling in sick on a Monday morning when you saw a photo posted on social media of them partying the day before! On the flip side, how far into the conversation do you go when someone has personal issues such as mental health?
So, let’s look at how Collections leadership gets misunderstood:
Too much we! Empathy in leadership gets misunderstood. Empathy does not mean we ignore issues or avoid tough conversations. We do it compassionately and humanly. Often, it gets interpreted as sympathy, as we are here to be Counsellor, and we are here to take on all the accountability of the staff member. Not so. We continually hear leaders asking staff ‘what can we do?’ before the staff member becomes aware of the issue and takes accountability.
Asking open questions for the staff member to work through the issue and how they plan to address it is vital, followed by ‘and what support can we give you?’ We see the classic mistake when teaching leaders to discuss staff being late. They naturally try to solve for the person “Have you thought about getting up earlier?” “Have you got an alarm clock?” “Why don’t you get an earlier train”. Not the leader’s problem. The question should be, “What do you need to do to get here on time?”
Recently we had a leader whose field officer shared he had mental health issues and started crying. Untrained, the leader, to make his staff member feel better, shared that he too had dealt with mental health issues and shared his story. Unfortunately, this takes the spotlight off the staff member and onto you and can minimise their problem.
4. Keep your foot on the pedal and close the coaching loop
Managers can often have an initial conversation around an issue, e.g. sick leave, but then take their foot off the pedal. The behaviour continues, usually because the leader is time-poor or the ongoing effort is exhausting, particularly in today’s virtual and increasingly complex world.
The same applies to any coaching leaders are doing. The staff member relapses and the process begins again. As a parent, it’s like asking your child to clean their room one day, and then you walk past it messy for the next week before addressing it again. Doing that does not set expectations, and you lose credibility in how important the issue is. Timeliness is key.
5. Compliance
A common issue in an industry as highly governed and regulated as collections and credit management is that the focus on compliance often comes at the expense of effective communication and people skills.
Because of all the compliance rules and regulations, we are not teaching people to make common-sense decisions. As a result, managers and team leaders tend to fall into ‘managing’ their teams without ‘influencing’ them. They become complacent with getting the job done rather than growing the team and the people involved.
Many organisations we work with will tell us that they have previously undertaken leadership and coaching programs. Still, participants open their eyes to another side of the story, explaining that the highly compliant context they work in often makes it challenging to apply what they have learned into their daily roles.
Sometimes, team leaders and Collections Managers want to empower their team to take ownership of customer interactions and solutions. But find their hands tied with excessive scripting and prescriptive processes, which in many cases are developed by legal and compliance teams far removed from frontline conversations.
Strict call quality frameworks don’t allow good scoring based on quality conversations. Instead, people get marked down for thinking outside the box and ‘veering off script’.
The importance of genuine and human interactions, both for internal and external communications, is more critical than ever, of course, in a world where financial hardship and customer vulnerability is high on the agenda for many collection and hardship teams.
In Summary
So, if you find yourself struggling with any of these common challenges within Collections Leadership, take a step back and consider the ‘Art’, the whole picture as it were. Maybe this is an opportunity to ‘brush up on your people skills? You can perhaps engage compliance and legal departments in more open dialogue to allow more genuine conversations and ownership over collections, yet still within a compliant framework? Either way, these could be the last strokes towards completing the masterpiece of your final collection!
Jodie Bedoya is Director of eMatrix Training and a Collections, Vulnerability & Communication Training Specialist with over 25 years experience within the Credit Management Industry. For further detail on how eMatrix Collections Leadership & Coach the Coach Programs can help you, call her on 0438 391 500 or email jodieb@ematrixtraining.com.au.
