Sam Chari, Vice-President of Global Operations at AllianceBernstein, joins Process Excellence Network to discuss how the company is applying BPE Methodology to drive efficiency.

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Presenter Interview: Balanced Scorecard Business Metrics:
How it Works
Interview by Helen Winsor, Process Excellence Network
Sam Chari, Vice-President of Global Operations at AllianceBernstein, joins Process
Excellence Network to discuss how the company is applying BPE Methodology to drive
efficiency.
Process Excellence Network: Could you tell us a little bit about how Process Excellence
fits into the culture at AllianceBernstein?
S Chari: Process Excellence has been, I would say, a relatively recent journey for us since
the past two years. So, the primary emphasis in the Global Operations organisation that I
belong to, the focus really was on reducing risk and supporting growth. From a legacy
perspective, we had two firms, Alliance Capital and Sanford Bernstein come together in
2000 and we had a lot of change related to that and we were obviously, like all other
financial institutions, going through a high growth scenario. So we were really focussing on
that and then, starting in 2008, we started an operational excellence journey where we
tried to fit the whole Process Excellence umbrella using what we call the health of
excellence, and it had basically five pillars, so resources, process, technology, metrics and
risk, and the goal was to support our overall goal of consistently providing superior service,
supporting new products, managing risk and reducing costs.
And then also last year, in 2009, we introduced an overall concept of Lean Six Sigma to
enable managers to look at their processes, identify value added activities and that has
been actually quite a good success story in 2010 as well.
Process Excellence Network: Thank you, Sam. And how do financial institutions typically
collect and interpret performance measurement data and what should be done to improve
this, do you think?
S Chari: Yes, that’s an interesting question because I come from a manufacturing
background and my first sense when I came to this industry about five years back was, I
don’t think financial institutions really are as organised or disciplined. I like doing
performance metrics as maybe manufacturing does and there’s probably many reasons for
this, but I think one of the primary reasons is that in manufacturing you can easily
conceptualise what the product does. It’s easy to touch and feel, while that can be a
challenge and it can be pretty vague. So what we’ve done at AllianceBernstein is, we’ve
taken on the development of a proper framework that organises our entire business through
the business processes, both within operations and across the firm. We’ve also designed key
metrics at every level of the organisation, so there’s summary level metrics for senior

2. management, for the process owners, and so on and so forth. We also introduced our
version of the balance scorecard which basically has people focussed on different aspects of
their organisation, not just purely on, let’s say, service quality. And then ultimately, I
guess, our guiding principle has been you really cannot manage or improve what you do not
measure, so we’ve really focussed over the last two years on measuring what we think is
critical to our operations.
Process Excellence Network: Now you mentioned balanced scorecard business metrics,
could you give me some examples of how this has guided your improvement at
AllianceBernstein, outlining the challenges and solutions?
S Chari: So our balanced scorecard is maybe a slightly different interpretation of what you
will probably constantly see in the industry, but pretty much organised along the same
categories. So we have service quality, which is things like timeliness; financial or
productivity metrics most around cost, cost per unit, capacity and things like that; talent,
which would voluntary progressive rates, mobility and so on; excellence risk, which is errors
and a lot of error related metrics. So when we first started looking at organising the
metrics, we found that most of our metrics are really geared more towards service quality
or risk, so we wanted to help our managers understand their organisation from a broader
context, so we introduced the concept of a health scorecard, but in order to avoid
proliferating the number of metrics we track, and frankly we were tracking too many
different things and not all of them are really key metrics, so we focussed on really
narrowing down our focus to ones that are really critical in helping both operations as well
as our internal and external clients. So I think organising the metrics across all these
categories instead of focussing on the important ones has really helped our managers focus
on what’s critical to deliver against.
Process Excellence Network: What top tips can you offer listeners looking to emulate your
success?
S Chari: So I think, as I mentioned, there’s a couple of things that I found personally pretty
useful. One is, let’s focus on key metrics, so let’s not proliferate the number of data points
that we constantly monitor because, before you know it, managers will just be flooded with
lots of information and they really won’t know what to focus on. So I think that’s one key.
The second is, I think what we’ve done over the last couple of years, we’ve linked key
metrics to our smart goals. So what that basically means is the ten to 15 key metrics at
each level of the organisation all end up as part of that critical process of smart goals and
then it filters down even to the individual levels. So what that basically means is that
against your goals will be your overall performance and then, starting last year, since
they’re comfortable with the process now is we started linking a small percent of their
performance against the smart goals to compensation, so now you have a real financial
incentive to improve on your smart goals as well. And I think the third best practice that I
would suggest is, metrics should not be a policeman or a cop, so our philosophy has been to
partner the managers, both in operations and the firm, to help them understand the
metrics, report on the metrics and also help them improve their processes based on data,
and I think that’s where we’ve had a real success story.
Process Excellence Network: It’s always useful to share some tips. How would you say that
Process Excellence metrics can be used to improve risk management?
S Chari: We see risk as maybe just one of our components of our overall metrics, so as I
mentioned earlier, risk is one of our balanced scorecard categories. I think one thing that
we learnt historically, we’ve just looked at errors after they have happened, so we look at
errors and we’ve actually made a lot of progress in reducing the number of errors, but what
we want to do in 2011 especially is we want to focus on the leading indicators of risk, so
how do we come up with data points that would help us eliminate errors before they
actually happen; so things like attrition rates of our people, so if you have a lot of new
hires, for example, that could be a leading indicator. In our reconciliation process, if we
start seeing a lot of breaks that happen at month end, but are now not being resolved in a
timely manner, but to a result in a future error. So we are trying to find what these key
leading indicators that can help us catch these negative trends actually during the process
that will help us prevent errors from happening in the future.
In addition, what we’ve done is we’ve introduced a really comprehensive risk training
programme this year. We’ve taken about 400 of our staff through it already this year, and

3. that focuses on various aspects of the process from a risk perspective, so things like
documentation, how do you do failure mode ethics analysis for SMEs, how do you do risk
mapping, how do you manage error in general? We try to educate our managers to be a lot
more proactive about thinking about risk.
Process Excellence Network: Now, finally, can you tell us a little about your industry
benchmarking programme and how and why you’re doing it?
S Chari: This is an interesting topic. I think we, like anyone else, want to compare
ourselves to how we stand against our competition in terms of the various elements of the
balanced scorecard, especially cost and service quality. Now, what we’ve found
traditionally in our past is that the normal benchmarking efforts that we’ve participated in
have really not been very useful because they’re not actionable and the reason why they’re
maybe not as actionable as we would have hoped, it’s really not easy to figure out whether
the data you’re getting back compares your firm to another firm from a pure like to like or
apple to apple comparison, plus the results are really anonymous, so there’s a third party in
the middle who aggregates all the data and then you see where you stack up against the
others, but you’re really not sure which firm you’re comparing yourself to and some firms
may be better in some processes, other firms may be better in other processes, so it’s
really tough to look at this and say, okay, what can we do better? So that’s the struggle
we’ve always had in the past, so one thing we’ve tried to do recently is, we started
reaching out at a couple of like-minded firms who also want to get some more value out of
their sparking and we’ve actually started doing this one on one just with them.
So, as an example, I’ve sat with my counterpart at one of our competitor firms and said,
this is all our data – we’re very upfront and try and spread with our data and they are the
same as well. Then we are quickly going through and saying, okay, this process is really not
comparable, let’s eliminate and let’s really come down to the ones that are like for like;
and then let’s start drilling down into where they may be differences and why, and that
gives us... hopefully, as we haven’t completed it yet, but I’m already pretty comfortable
with the process so far, that we can start drilling down into the causes where one firm may
be better than the other, and then we can figure out what to do about it. So that’s the
approach we’ve started taking and hopefully in another month or so, we should have some
pretty good information out of this.
Hear more from Sam Chari at Business Process Excellence For Financial Services Online