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feature SERVICING Or ig i nat ion By Cheryl Johnson What Could Go Wrong? In response, institutions that received the consent orders submitted plans to comply with the agencies' requirements, and many of those plans explicitly included formalized change management elements. In fact, forward-thinking institutions incorporated enterprise-wide change management programs in order to centralize and standardize their A s Albert Einstein said, "Not everything that counts can be counted. Not everything that can be counted, counts." In any company, there can be a great deal of well-meaning activity that ultimately does not get the job "Today there is no corner in the financial services industry that is untouched by change." —Cheryl Johnson, Lender Processing Services ability to monitor changes in laws, rules, and regulations and react accordingly. The consent orders were just the leading edge of the sweeping changes that began to impact the entire industry when rulemaking for the Dodd-Frank Wall Street Reform and Consumer Protection Act began to ramp done as intended. In the financial services industry, the pace and magnitude of change has been so dramatic and continuous over the past several years that many institutions have rapidly added—then scattered—resources across their organizations in an effort to keep up. This approach can produce unintended The M Report | 65 se c on da r y m a r k e t Now imagine you run a financial institution struggling with hundreds—perhaps thousands— of changes required by regulatory and operational entities, and you must execute them across a complex organization with hundreds or thousands of employees. The sheer magnitude of possible choices is staggering. How should technology, processes, procedures, and policies change? In what order? At what costs? Who should be involved in the change process? What are their roles? How can the firm be sure changes are correctly implemented and on time? Considered in these terms, a highly structured, auditable approach to change management would seem to be exceedingly desirable. And the U.S. government's actions suggest that regulators agree. Consent orders issued by the agencies in April 2011 included a provision that said, in part, that the 12 affected financial institutions were to implement "measures to ensure that policies, procedures, and processes are updated on an ongoing basis as necessary to incorporate any changes in applicable legal requirements and supervisory guidance." The agencies' intent was not just to order changes, but also to require institutions to put programs and measures in place to manage change over time. consequences such as duplication of work, inconsistent processes, and operational inefficiency. However, the real problem is the lack of a comprehensive plan to ensure all actions are optimal for the changes required. Certainly, undertaking dramatic change without a clear vision and change strategy supported by executive leadership is a difficult proposition. It makes it very hard for business units or departments to reach consensus in terms of what success looks like. Without a strong change management infrastructure in place, each project becomes a "one-off " undertaking without important controls and disciplines in place. The difficulties are further magnified when change initiatives, like a major technology implementation, span multiple internal groups. Companies may experience resistance from employees, especially if they see little evidence of executive support for the change; those assigned to help with implementation may not have the right skill sets to do so; and common performance indicators like the amount of time, money, and resources deployed may not be consistently captured or effectively tracked. Decisioning analysis is therefore hindered, blocking a company's ability to correct underperforming projects in a timely way. Certainly, the problem is not that companies fail to pull people together to discuss regulatory and operational changes and determine what steps are needed to address them. In fact, smaller changes, especially those isolated to a specific department or area, may be implemented locally and meet the requirements as planned. But nearly all change initiatives occur in the midst of very busy operations run by people with a great deal on their a na ly t ic s up and the Consumer Finance Protection Bureau (CFPB) was launched. Today there is no corner in the financial services industry that is untouched by change. But the way institutions are managing that change can vary greatly from one organization to the next. Some are doing a remarkable job, and it shows on every front. Others are still struggling mightily with the travails of change. s e r v ic i ng I f you put three people in a room and ask each to make a sandwich using peanut butter, jam, and bread as their ingredient choices, you may or may not get similar results. Two people may make peanut-butteronly sandwiches and the third may simply want bread. In fact, even in this simple example, there are 64 possible combinations of people and ingredient choices.