COLUMN – OLAF RANSOME | Brittle. Things breaking easily. In organisations, we lose control when one or more of people, processes and tools fail. This post is inspired by some real-life observations about a large bank, a payments company in Africa, as well by a couple of posts from the brilliant Seth Godin. Although he is a marketer by training, Seth is a keen observer of what it takes for organisations and processes to work properly. This is the final piece in Olaf Ransome’s series of six this year on resilience.

In a series of six column contributions with PostTrade 360° throughout 2024, banking operations veteran Olaf Ransome digs into the topic of operational resilience – to help us understand its meaning under changing rules, and get adequately prepared. Find his articles listed here.

Let’s start close to home, at a big bank here in Switzerland. For all our sophistication, work ends up in teams. Teams have a headcount and then have to deal with the big place stuff: holidays, attending meetings, training sessions and with any sick leave. As productivity has increased in the last decades, teams have become smaller and more focused. One team I know well has six full-time-equivalent employees (FTEs). Each has at least 5 weeks of holiday. So, for more than half the year, the team is not at full strength due to holidays. Then comes sickness and all that corporate stuff. If the workload is for 6 FTEs, then for something like ½ to ¾ of the year, at least one member of the team is covering for somebody else.

“When my friend takes holidays, incoming client requests are often not dealt with, due to lack of time and sometimes ability.”

A very close friend of mine works in this team. There is always a heightened stress level because the tools are not great, and the team is just too small to properly cover. When my friend takes holidays, incoming client requests are often not dealt with, due to lack of time and sometimes ability. Then as soon as my friend is back, the next one is away and she is providing cover, whilst trying to do the day job, and catch up with what was not done when she was away. My take is that there are deficiencies across the control spectrum: people, not enough of them in one team; processes are not tuned so that holiday or absence cover is easy; and the tools don’t seem to help either.

Last week I was talking to the CEO of an African payments system. We were talking about controls, specifically good checklist tools. He agreed with me that for the team running daily operations today, the need is to be able to get through the day and get all tasks complete. All the dashboard and management info in real-time will not really help the CEO; it is highly unlikely that the CEO is going to go down to the Ops team and be able to help. Right now, today, Ops teams are on their own; they need the people, process and tools to get things done. That day his team lead was out, so this had my CEO friend wondering how robust the tools were.

My thought on the challenge of small is backed up by one of Seth Godin’s posts: https://seths.blog/2024/10/the-paradox-of-brittle/.  He talks about things blowing up when we try to step on the gas and extract 5% more. 

“Smart leaders build for resilience instead. Power plants, transit systems, careers–they’re built to be sub-optimal some of the time, with slack built in, so they can thrive all the time.”

Mostly, when we hire, we hire for specific skills to solve a specific problem we have now. If the person we hire is forever and always only doing that one thing, then there is some argument to not worry about anything else. You might say you would do that if you hired for the VW production line to fit exhausts. All good, until electric comes along. Again, Seth had a useful way of describing this: hiring for stuck

“I would say that 12 is the minimum effective team size.”

So, we need slack. But then comes the next challenge, we can’t afford to have too much slack as it is costly. Things change, as do priorities. One element in the battle against too much slack and the desire to maximise capacity is to hire people with “T-Shaped skills”, i.e. those who are really good at one thing, but can reasonably turn their hands and heads to other things too. Hat tip to Rhom Rham at Fnality for educating me on this. 

So, what, how can I fix things?

Let’s come back to my formula of control as a function of people, processes and tools. Here are some suggestions for steps for you to consider:

People: first, with the people you already have, you need to offer and enable lots of cross-training. Now this has to go hand in hand with the other two things. If all you do is say: “Go sit with Marcel for half a day and watch what he does so you can cover him when he is away”, then you will fail. First, not everything happens in ½ a day, maybe nothing goes wrong. Then, memories are short and absent a readily re-usable great checklist and procedure, the substitute will struggle if called on. Secondly, you need to re-think your hiring going forward. Are you bringing in “T-shaped people”, so folks who could and would do other things which are not necessarily their forte? Could and would; you need to have a sense that they would help out and not shy away when called on outside their field of expertise. Thirdly, team size. I will make the case that a team of six is too small. Unless, of course, you only have six employees, in the which case, my thoughts on being “T-shaped” apply in spades. I would say that 12 is the minimum effective team size. Yes, you may have more than one flavour of task or speciality to cover in that team, which is when we move on to process and tools. 

Process: the foundation for everything is a Standard Operating Procedure (SOP). Broadly, this is a chronological list of things to be done, together with the detail on how to get each step done. Each process needs an owner. SOPs have their origins in the military, where depending on the unit, the general (sic) requirement is to follow orders and with that the SOP. SOPs will not be static and stay the same for ever. If they need to change, make an update. If for a good reason you are not doing step #17 anymore, then change the SOP and make a note of why. My own special sauce for any SOP is to make sure it helps the team understand what is normal for their business. The process should include control steps that pause processing of anything which is not normal. Too much automation is likely to be a dangerous thing. For more colour, see the 2nd post in this series: here.

Tools: These are the enablers. Let’s assume you have or have hired some T-shaped folk and done some cross-training. Now you want to be able to allocate people to work, so if you look after two processes and one is backed-up, as many team members as possible can work on the backed-up process. Right at that moment, you reach the limits of how much control you can keep if you have paper-based processes. Here is what I think good, i.e. the basic features, looks like in a tool:

1. Create
a. A “daily” task list which dynamically adapts to extra periodic tasks
b. An ”on demand” list – the N things to do for a new issue
c. Allow multiple people to work on one or more lists

2. Basic controls
a. Add time deadlines
b. Link procedures (SOP) and back-up plans to the specific task
c. Escalations via e-mail / text if not completed on time

3. Audit trail
a. Daily, what was done, when and upload evidence
b. Changes, approval process, audit trail of who / when

Very importantly, my view on good has the SOP sliced up and attached on-line to the very task it relates. No more hunting around.

To use a real-life example here, I am a board member for a financial services firm working towards obtaining a Fintech license in Switzerland from the regulator, FINMA. We have to have a whole bunch of policies in which we say some variation on: “it will be our policy to do a, b & c reports to the board of directors at least every six months. Now comes the $64’000 question, or its Swiss equivalent, which is around 50k: “What tools will we have to make sure that we the board actually do do something we said we would in the policies?” And if we do it, we need an audit trail of what we did and when. An Excel spreadsheet is an answer, but just not a good one. Fortunately, I have found an answer. 

In conclusion

When you have people, process and tools properly tuned, you have control and you will gain capacity; you will be able to do more for the same, i.e. you have more capacity, without losing control. You would expect to see this lead to lower costs because you have the same number of heads supporting more activity.

Referring to himself as The Bankers’ Plumber, Olaf Ransome is founder of 3C Advisory LLC – drawing on decades of senior operational experience from large banks. To connect, find his LinkedIn page here, and find an index of his PostTrade 360° columns here.