MBA Quality Project Part AMGT 5534

Team 1Kelli BakerAJ DeCato

Mikel LozanoBrian RichardsonMadeline Russell

Outside Editor: Wan Zamjahn (writing center)

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0.0 EXECUTIVE SUMMARY 3

0.1 OBJECTIVE 30.2 BACKGROUND 30.3 CHECK SHEET 3

1.0 INTRODUCTION 4

1.1 COMPANY HISTORY 41.2 PURPOSE 4

2.0 METHODS 5

2.1 TEAM FORMATION/MEETING STANDARDS 52.2 MEETINGS WITH ICCU (MANAGER/WORKERS) 62.3 DEVELOPMENT OF CHECK SHEET 7

3.0 RESULTS 8

3.1 PROCESS 83.2 QUALITY IMPROVEMENT CHECK SHEET 8

4.0 APPENDIX 11

4.1 FIGURE 1: CHECK SHEET 11

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0.0 Executive SummaryQuality Management is something every organization should strive to achieve. The purpose of this project

is to understand the Plan-Do-Check-Act (PDCA) cycle and know how to use it as a quality tool within an

organization.

0.1 ObjectiveThis project grants Team 1 the opportunity to gain real-world experience while, simultaneously, helping

an organization to improve its process to better serve its customers.

0.2 BackgroundTeam1 chose to work with Idaho Central Credit Union’s Mortgage Loan Department. The team first

spoke with the manager to obtain permission to meet with Mortgage Loan Officers per protocol. Upon

receiving consent, the team proceeded to schedule a meeting with the Mortgage Loan Officers in order to

discuss any and all internal issues affecting quality. During the meeting, each team member compiled

notes pertaining to possible quality issues discussed by the officers. Once the meeting had finished, the

team proceeded to meet in order to discuss their own interpretations of the meeting and to compile a

check sheet of the issues.

0.3 Check Sheet Team 1 came up with 8 quality issues from the meeting with the Mortgage Loan Officers. They are as

follows;

The customer voiced concern about contact frequency during loan process

The customer voiced concern about not understanding timeline of loan process

The customer voiced concern about not knowing necessary information of loan process upfront

The customer states it took too long to get contacted after the initial loan application

The customer states they have not received the appraisal

The customer was confused about differences between “Closing Costs” vs “Down Payment”

The customer complained about receiving different information from other ICCU employees

The customer expressed feeling a lack of value due to distance

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1.0 IntroductionAs the class has learned thus far in the semester, the Plan-Do-Check-Act (PDCA) cycle is very important

in the quality process and product improvement. It is a four step model that assists in carrying out

continuous improvement in a business. The Plan step designates an objective and designs a plan to

improve the objective. The plan will be revised several times within the business process. The goal of this

project is to improve an organization’s process by finding an aspect that can be improved.  The team will

issue a check sheet to help analyze the organizations process and to assist in formulating a plan. The Do-

Check- and Act phases will be completed in project part B.

1.1 Company HistoryIdaho Central Credit Union (ICCU) was founded as a state chartered credit union in June of 1940 in

Boise, ID. At the time, officers of a credit union could not use the credit union they were employed by for

their financial needs. ICCU’s membership consisted solely of officers from other credit unions. By the

end of 1941, ICCU had only 22 members and $298.93 in assets. Eventually, ICCU relocated its

headquarters to Chubbuck, Idaho.

“Helping members achieve financial success” is the mission of ICCU. The company has grown

exponentially with over 200,000 members and over $2 billion in assets. Its current membership consists

of employees, students, retirees, and family members in most of Idaho’s counties. There are currently 26

branches throughout the state, and three more are scheduled to open within the next two years; in

Pocatello, Post Falls and another in Caldwell.

1.2 PurposeWhen initially discussing what company to work with, the team decided to use Idaho Central Credit

Union due to its very positive culture and due to the fact that it does a very good job of listening to its

employees’ feedback. The team decided to discuss this project with the manager of the Internal Mortgage

Loan Officers (MLOs) because a team member works in the mortgage department at ICCU. The

customers are the members of ICCU applying for mortgages.

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The ICCU’s members have the option to apply for their loans online. If the online application does not go

through a specific external loan officer’s page, then it is funneled to the Internal Loan Officer Team.

There are four Internal MLOs located in the Chubbuck Administration Building. Online applications get

split evenly between the four MLOs who handle the initial mortgage application until closing process is

complete. The MLOs contact the customers to follow-up on the initial application and answer any

questions. Also, they qualify the loan throughout the entire process from start to finish. Once the final

contract is received, the MLOs lock the rate (with secondary marketing with an investor.) The loan officer

is the primary point-of-contact for any and all questions a member may possess, and he/she collects any

information needed from the member as well. The internal MLOs have two processors and two

underwriters whom only handle applications appointed to them.

2.0 MethodsManaging quality improvements requires a strong team. Deming once said, “Teamwork requires one to

compensate with his strength someone else’s weakness.” This is what Team 1 did during its first meeting.

Throughout project part A, Team 1 met internally weekly, met with the manager of ICCU, met with the

MLOs, and developed a check sheet of quality issues.

2.1 Team Formation/Meeting StandardsThe first step in the PDCA cycle is to form a team to champion the quality improvement process. Each

team goes through a forming, storming, norming and performing process. Forming allows team members

to meet. At this point, it is assumed team members will be courteous with one another as they are

normally strangers. Next, team member personalities begin to clash as they get to know one another; this

is known as the storming phase. Some teams never make it past the storming phase which greatly reduces

the team's effectiveness. Afterwards, teams move past the storming phase and into the norming phase.

Here the team members begin to come together and form team norms and processes. The final stage is

known as the performing process. At this time, team members learn to utilize each other’s strengths, in

order to produce the best results.

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The team for this particular quality project consisted of Masters of Business Administration students. Due

to their professional nature, the forming and storming phases went by very quickly and the team entered

into the norming phase with ease and transparency. Ground rules for communication were quickly

established and all members shared contact information. Due to the busy nature of each team member’s

schedule, Monday after class was selected to be the day the team would meet. If the occasion required it,

weekends were determined to be available. Team meetings were held in a standard casual setting and

each member spoke his/her mind on the issues. The open discussion continued until a decision was

reached that all team members accepted.

The team's first task was to select and approach a potential customer to help with a quality improvement.

ICCU was chosen due to its positive culture, its willingness to adapt and change for continuous

improvement, and the close proximity of a team member who works within the organization. Two

meetings with ICCU were set-up. The first meeting was with the manager to explain the process and seek

permission to meet with the employees, while the second meeting was with the employees to gather

information on frequent issues.

2.2 Meetings with ICCU (Manager/Workers)Initially, a single team member met with the Mortgage Regional Sales Manager, Lori Spanbauer, in order

to explain the purpose of this project and gain approval to meet with ICCU’s employees. The project was

explained to Ms. Spanbauer as an improvement plan aimed at increasing customer satisfaction and would

focus on the process and not on personnel. Ms. Spanbauer was also assured that the meeting with her

workforce and all future communications would not interfere with normal business operations or cause

any interruptions. A brief overview of the PDCA cycle was provided to Ms. Spanbauer, who was told the

first step of the planning phase involved meeting with employees in order to gain insight into common

problems experienced on an average work day. The issues discussed would be used to develop a check

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sheet designed to gauge which issues occurred most frequently. Ms. Spanbauer granted permission to

meet with her workforce and to gather its insights.

The team met with the internal MLOs to discuss any issues when dealing with their customers. It was

important in this meeting to listen to the employees and only ask questions to help guide the conversation

to gain clarity on any individual issues. For the PDCA cycle to be effective in its development and

implementation, it was critical for the issues to come from those who performed the work and were in

direct contact with customers. The MLOs brought up several issues primarily revolving around

communication. Two main factors affected communication: frequency (i.e. how often an MLO contacted

a customer) and effectiveness (i.e. how useful and/or informative a customer found the information.) It

appears the online nature of the applicants made communication difficult for the MLOs. Overall, the

meeting lasted about an hour, and the team left with several notes on possible issues facing the ICCU

employees. The MLOs were in good spirits throughout the meeting and believed the team’s work could

allow them to become more efficient for ICCU and provide a better experience for their customers.

2.3 Development of Check SheetIn meeting with the MLOs at ICCU, the team was able to understand several issues customers experience

on a regular basis. A few days following the meeting, the team met to analyze the concerns brought up by

the ICCU employees. Because each team member took notes, the development of the check sheet was

fairly straightforward. This process only required each member to scrutinize his/her notes and recollection

to identify key issues which could be possible areas of improvement for ICCU within their mortgage

customer interaction. The team meeting was very successful and proved it had reached the

norming/performing stage. Eight key issues were determined to be areas of revision or growth that could

be statistically analyzed by the MLOs with a check sheet.

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As previously stated, ICCU’s particular issues were mainly centralized on communication. These issues

were developed into contact frequency, overall understanding of timeline, process needs and

requirements, delivery of appropriate loan generating materials, and employee consistency in

communicating information. Customers were being confused by standard industry terms used by

employees during various parts of the application process. Another issue brought to the team’s attention

pertained to member value. According to the MLOs, members felt as though they were being treated as

“orders” and were not being seen as real people with real needs and real concerns.

3.0 ResultsThe objective of Plan Quality Management is to determine the requirements, procedures, and standards

for the project and the product. Through the development of a check sheet, ICCU will be able to gather

data to help with quality control.

3.1 ProcessIn order to gain insight on any and all quality issues, Team 1 met ICCU’s employees regarding the

services provided to their customers. This information was used to create a check sheet of the issues. The

check sheet will be issued to the ICCU employees in an attempt to determine the most frequent quality

issue the company is facing. However, important issues in which the company commonly contends with

needed to be determined first. Since issuing the check sheet is part of the Do phase, it has not been issued.

The check sheet is attached in the appendix (see figure 1).

3.2 Quality Improvement Check SheetThe employees at ICCU explained the process of how their customers are referred to them for housing

loans used to purchase or remodel a house, apartment, condo or other housing unit. At this time, the

customer submits information needed to begin the loan process to ICCU. The process takes

approximately seven to ten days in order to finalize. The employees discussed eight separate issues, as

listed on the check sheet, often heard from their customers:

The first issue arises from a lack of contact frequency during the loan process. This process takes

approximately seven to ten days to complete. During this time, no information is presented to the

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customers. This leaves customers completely in the dark for almost two weeks as to how the process

is going or if any more information is needed.

The second issue pertains to customers not understanding the timeline of the loan process. Many

customers are confused as to why the process takes so long and what exactly is involved in the

process.

The third issue involves customers not fully knowing all necessary information needed to begin the

loan process. Because they are being referred to ICCU, the customers are not being made fully aware

as to exactly what documents they need to disclose.

The fourth issue pertains to the amount of time taken for customers to be contacted after their initial

loan application. Once applications are submitted, customers hear nothing back from ICCU as to

whether or not they’ve begun the application process or what stage of the process they’re currently in.

The fifth issue involves customers not receiving their appraisals. For whatever reason, appraisals can

either be lost or never sent out in the first place.

The sixth issue involves customers being confused about the terms “closing costs” and “down

payments”. The down payment is a portion of the purchase price which goes to the seller at closing of

the transaction. Closing costs are all expenses associated with the closing of the transaction such as:

prepaid interest, taxes, attorney fees, title insurance, and so on. Customers do not receive this

information and they assume the two are bundled together to produce one cost, which goes

uncorrected.

The seventh issue arises from customers receiving different information from ICCU employees. The

entire process is very automated in order to increase productivity. Because of this, different

employees handle many different applications and no one is assigned to a particular client. When a

customer has a question, they have to call ICCU and speak to whomever is available and not

necessarily the person they originally spoke to at the beginning of the process.

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The eighth issue arises from customers feeling they are being undervalued. Since the process is very

automated, there is very little employee-customer interaction causing customers to feel as though they

are simply “orders” and not valued customers.

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4.0 Appendix

Check SheetProject: Idaho Central Credit Union

Start Date: __/__/__   End Date:  __/__/__Issue: Please check every time

issue arises

Customer voiced concern about contact frequency during loan process.

Customer voiced concern about not understanding timeline of loan process.

Customer voiced concern about not knowing the necessary information of loan process upfront.

Customer states it took too long to get contacted after the initial loan application.

Customer states they have not received the appraisal.

Customer confused about “Closing Costs” vs “Down Payment.”

Customer complained about receiving different information from another ICCU employee.

Customer expressed they are not feeling value due to distance.

4.1 Figure 1: Check Sheet

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