Tom McCarty knows a thing or two about improving business processes. McCarty was one of the pioneers at Motorola, beginning in 1987, to use a new statistical method to improve the reliability of the company’s radio equipment. Motorola’s work eventually turned the practice of Six Sigma into an industrial catalyst for improving performance and led McCarty to become one of the deans of the Six Sigma movement.

But even McCarty, now 54, was impressed when he heard how James Hylton, a quality assurance specialist working for the Defense Finance and Accounting Service, had made surprising strides improving the agency’s employee benefits call-center service.

Hylton, who is assigned to DFAS’ Shared Services Center, had just presented a report at a Palm Springs, Calif., resort during an annual Six Sigma conference in February. Hylton’s team had reduced the number of costly personal call-center interactions by 40 percent—while maintaining equal or better quality service scores. And he did it on a fraction of the budget many of the Fortune 500 companies making presentations at the conference were investing.

DFAS’ James Hylton and Joyce Short (Image: Photographs by AJ Mast)

What was novel, said McCarty, was how Hylton combined Six Sigma techniques with another science, customer-usability testing.

By analyzing the center’s call activity and then measuring how customers responded to different online information packages, Hylton completed a rapid cycle of iterative designs—testing, redesigning and testing again. His approach reduced the department’s costly call volume dramatically while improving customer satisfaction scores, all in a matter of weeks.

“You would rarely expect to see a government agency demonstrating anything to do with speed-to-market,” McCarty said with a chuckle.

McCarty, who spent 28 years at Motorola and was director of consulting services with Motorola University before leaving recently to lead a Six Sigma transformation at Jones Lang LaSalle Americas, said, “I had never seen anyone incorporate usability principles with Six Sigma. The best [approaches] I’ve ever seen were before-and-after surveys.”

What they did was “shorten their R&D development cycle” by using new “ways to engage the user.” Hylton’s approach, and DFAS’ efforts to streamline operations, may start getting more attention from the private sector.

Hylton is one of a small but growing cadre of specialists at DFAS who are applying a blend of Six Sigma tools and lean-manufacturing techniques to improve the agency’s back-office operations. DFAS calls the approach “lean fix.” Their target is an operation the size of which might even humble Wal-Mart.

Founded in 1991 to reduce the cost of Defense Department financial operations, DFAS is the world’s largest financial and accounting operation. Last year, its 13,580 civilian employees disbursed $416 billion, recorded 121 million accounting transactions, processed 12.3 million contractor invoices and issued the payroll for six million military and other personnel.

That represents a lot of opportunities to make improvements—and why applying Six Sigma makes sense, said Marshall Gimpel, DFAS’ corporate director of quality and performance.

	LEAN MACHINE: DFAS boosted the effectiveness of its shared services call center by applying usability tests and Six Sigma tools

Initially conceived by Motorola senior engineer Bill Smith in 1986 to improve manufacturing quality, Six Sigma became famous for standardizing a method for counting defects and reducing the number of errors-per-opportunity to a level approaching zero. It also gained notoriety for turning project managers into green-belt practitioners and full-time trainers into black belt masters.

The work DFAS does, Gimpel said, is comparable to “high-volume production operations where even a small increase in quality makes a huge improvement” in the accuracy and efficiency of the results.

But the science for reducing errors doesn’t always address the kind of redundant processes that creep into government administration. That’s why DFAS is employing lean manufacturing techniques.

“It lets us look at our processes, look at what customers value and translate that onto what we do internally,” said Gimpel. It also “lets us look at what we don’t need to do” and eliminate steps that don’t add value.

Building a team—and the infrastructure—to extract errors and waste out of a federal agency isn’t easy, acknowledged Gimpel. It takes training, resources and organizational initiative. It also involves applying the techniques in small increments—to establish credibility and attract managers interested in going through the training regimen. DFAS currently has 15 individuals who have been trained to become black belt trainers. Another 88 managers are training for their green belts. An executive steering council evaluates projects that would benefit from Six Sigma and lean manufacturing applications. Those that show sufficient potential for investment return get resourced, said Gimpel.

Support for 25,000 employees. That’s how James Hylton, a Six Sigma green belt, came to help Joyce Short, director of DFAS Shared Services Center. SSC, said Hylton, supports the people who support “the troops” or about 25,000 employees who work for DFAS and five other Defense agencies.

Short’s employee benefits staff had been struggling to keep up with 70 time-consuming calls per day from employees—and a growing number of customer service complaints.

Hylton quickly discovered there was no customer data or intelligence on the call center. That translated into “poor Web content, poor Web design, insufficient phone prompts, confused customers, poor customer service and wasted time and money,” he observed.

So he began by monitoring the kind of calls coming into the center. He then developed a list of 23 frequently asked questions and tracked the incoming call streams. The most frequent calls were about retirement benefits, health insurance benefits, military deposits, the Thrift Savings Plan and Federal Employee Group Life Insurance plans. But one out of every 10 calls had nothing to do with benefits; and another quarter fell into a grab bag of minor queries.

How the calls were handled was also important to know. It turned out that 53 percent of them needed to be forwarded either to someone more senior, or to other departments because callers weren’t sure whom to call in the first place.

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