Baldrige National Quality Award 1997 Recipient
Merrill Lynch Credit Corporation
When Merrill Lynch Credit Corporation (MLCC) first began operations in
1981, its singular focus was providing financing to customers by offering
a new, highly innovative credit product -- home equity credit lines. Today,
powered by intimate knowledge of its customers' needs and a systematic,
data-driven approach to performance excellence, MLCC offers a diverse
line of credit products and services. MLCC strives to enable its clients
to manage their liabilities to optimize their entire financial port-folio.
Building client net worth and total balance sheet management over the
client's financial life cycle is the dominating business strategy to assure
that MLCC not only survives the accelerating consolidation in the financial
services industry but also significantly increases its market share. At
the heart of MLCC's aggressive strategy is the conviction that quality
service is not a goal -- it is an imperative to achieving growth objectives.
A wholly owned subsidiary of Merrill Lynch & Company, MLCC
offers real estate and securities-based consumer credit products -- including
home financing, personal credit, investment financing, and commercial
real-estate financing -- to primarily affluent individuals.About 90 percent
of its approximately 830 employees, known as partners, are located in
MLCC's Jacksonville, Fla., headquarters. The company's field representatives,
the Mortgage & Credit Specialists, are MLCC's primary sales force. These
partners market all MLCC products through the nationwide network of over
14,000 Merrill Lynch Financial Consultants.
Led by Michael Johnston, chairman and chief executive officer, MLCC will
originate over $4 billion in loans for 1997 and has a servicing portfolio
of nearly $10 billion. MLCC also has been a leading force in creating
new vehicles for managing liabilities. For instance, by enabling investors
to pledge stocks and bonds as collateral against home financing, personal
loans, and investment financing, MLCC offers its clients a way to borrow
without liquidating those assets. The investment portfolio remains intact
and continues working for the client.
With a host of competitors -- including major banks and investment firms
-- MLCC distinguishes itself with a comprehensive line of innovative products.
MLCC's senior managers set the direction and tone while seeking future
opportunities for the company through a systematic Business Planning Process
(BPP), quarterly meetings with all partners, Monthly Management Reviews
to evaluate overall performance, regular training, and continuous interaction
with partners at all levels. Leaders are expected to serve as role models
in every respect, with a premium placed on involvement with community
and industry organizations.
Data-Rich' aptly describes MLCC's management-by-fact approach. Relying
heavily on a continuous flow of information, the company's BPP -- "championed"
by MLCC president and chief operating officer Kevin O'Hanlon -- encompasses
both long- and short-term plans. Its longer term, strategic planning component
is a continuous process; the Business Development Department constantly
adapts this plan to business factors and information about trends in the
mortgage, credit, and financial services industries. Company strengths
and weaknesses as well as opportunities and threats are identified. Monthly
and quarterly information about MLCC's performance in eight core processes
and 10 support processes needed to generate and complete a transaction
are factored into this plan -- as are customer characteristics and market
As part of the BPP, every July senior managers translate the strategic
imperatives intothe company's Critical Few Objectives, key performance
measures for those CFOs, and specific targets for the next one and three
years. (For example, a CFO to increase process productivity with an aim
of increasing shareholder value is measured by the number of days to approve
applications, with specific, ambitious, and measurable goals.) In turn,
these CFOs provide the basis for determining partner performance management
plans. By involving all of the firm's partners in providing information
for the business planning process, and in regular refinements and progress
reviews, MLCC ensures that its plans are fact-based and linked to individual
goals and objectives.
Voice of the Client
MLCC segments its market into several categories of current and potential
customers, stratified by their asset levels and age.Working with its parent
company, MLCC uses in-depth research to target and deliver appropriate
products and services. Its "Voice of the Client" process spells out customer
satisfaction drivers for each client segment and for each of its credit
categories. These priority requirements provide the basis for aligning
the company's processes and work groups, and for identifying indicators
and key performance measures for each of its eight core processes. In
turn, each of those indicators are tracked and used to identify and put
in place improvements in areas having the greatest impact on customer
needs and satisfaction.
Information about the customer is truly paramount for MLCC. To ensure
that its market research is always current, MLCC continuously evaluates
and improves its data on what its clients need and what they might want
in the future.
The client data come from an array of sources, ranging from surveys of
clients and Financial Consultants in the field to written or telephone
feedback, internal audits, syndicated research, and benchmarking studies.
Satisfaction levels of competitors' clients also are used in analyzing
client needs. Customer complaints are analyzed in depth, reviewed monthly,
and reported back to MLCC regions to identify any sudden changes and to
share lessons learned. Negative trends and recurring problems trigger
process improvement teams to develop countermeasures and to prevent recurrences.
Clients receive acknowledgment of any complaint within two business days,
and resolution is arrived at in no more than five business days.
MLCC considers partner empowerment critical to its success. Partners are
encouraged to take initiative and responsibility, especially in being
flexible, responding rapidly to customer needs, and in individual development.
An example: MLCC partners received an average of 74 hours of training
in 1996, nearly twice that of benchmarked companies. The company strives
to be the employer of choice in a tight labor market. Alternative work
arrangements are one element in an approach that is clearly working: partner
satisfaction with the company's recognition programs improved from 42
percent in 1994 to 70 percent in 1996. And in an industry that typically
has not put technology at the forefront, MLCC is placing far greater emphasis
on technology approaches to enable partners to meet the ever increasing
expectations of clients and the company's financial consultants.
MLCC has impressive results to show that its focus on quality management
and performance excellence is a wise investment. Net income rose 100 percent
from 1994 to 1996 and exceeds the industry's average. Return on equity
increased approximately 74 percent and its return on assets improved approximately
36 percent in that same period. Key indicators for loan delinquency rates
and writeoffs compare favorably with the rest of the industry and are
clearly improving -- as are the firm's total loan originations, market
share in originations, wholesale volume as a percentage of first mortgages,
and size of servicing portfolio.
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Last updated: 11/29/2011