Using Six Sigma to Deploy Six Sigma

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About ING

ING is a global financial institution of Dutch origin offering banking, insurance and asset management to more than 75 million private, corporate and institutional clients in more than 50 countries.

In the U.S., the ING family of companies offer financial services to retail and institutional clients: life insurance, retirement plans, mutual funds, managed accounts, alternative investments, direct banking, institutional investment management, annuities, employee benefits, financial planning, and reinsurance.

ING holds top-tier rankings in key U.S. markets and serves over 14 million customers across the nation.

Approximately 8,000 U.S. Financial Services (USFS) employees in 10 U.S. worksites

Strengths: brand, product development, distribution/customer relationships, leadership team

Challenges: integration of processes and technology inherited through numerous mergers, maintaining breakthrough customer service as the company grows, focus on profitable top-line growth

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Overview of Current USFS Program ING began its deployment with a small test case in one business

USFS six sigma governance managed through Quality Council

Each business area has a Quality Leader named to lead deployment

Six Sigma deployed across all USFS business lines and corporate functions

Only full-time resources are Black Belts and Master Black Belts

Full-time scale created (as of 9/07 )

• Master Black Belts 9• Black Belts 50

Cultural Impacts:• Training delivered (number of employees trained)

• Executive Green Belt 598• Green Belt 835• Wave 6 Black Belt training has been launched• Master Black Belt training started

• Inclusion in incentive comp plan for all employees• Dramatic increase in project starts and completions

Savings? $25M in 2006 and $36M expected in 2007

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Program improvement through Six Sigma In 2006, recruited MBB’s to lead the change; established a Quality Council from across all business

segments to serve as a roundtable and oversee deployment; did not assign a Senior Executive champion

In 2006, we began to see results but needed to design structure to ensure Six Sigma implementation gains were sustainable. We were building the infrastructure and were successful in getting some wins along the way.

By yearend, we realized the program design and rollout was not sustainable so Six Sigma methodology was used to ultimately design the Six Sigma rollout

Senior leaders and the Quality Community read the project results and got serious about implementation.

We attribute successes to the Six Sigma project which led us to implement the following:

• 1% of USFS employees are MBB/BBs

• Six Sigma targets within the Incentive Compensation Plan (ICP) that touch every employee

• Redefined the Quality Council

• Leadership of Senior Executive

• Quality Community composition was reset

In addition to the solid financial results, the Quality Community satisfaction level significantly increased over 2006 as a testament to the program changes.

We still have room to grow, but looking back, we’ve made tremendous strides.

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Looking Back…..

We’ve come a long distance in two + years

Even since the Six Sigma project, significant improvements have been made

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Retirement Services (11/05)

CITS (9/05)

ING Funds (4/11/06)

Retail Annuity (3/31/06)

USFS (Corporate Staff) (1/06)

2005 2006

Most groups had begun implementation

Advisors Network (12/05)

Employee Benefits (6/06)

June: reached 1%

Aug: reached 1%

July: reached 1%

2007

IIM not started

2007: The full time resources are increasing and 3 groups have achieved 1%

Fall of 2006: Overview of Six Sigma Implementation

Full time 6 sigma population

7

48

55

0

15

30

45

60

75

90

Jun-05

Jul-05

Aug-05

Sep-05

Oct-05

Nov-05

Dec-05

Jan-06

Feb-06

Mar-06

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Timecum MBB cum BB Cum BB / MBB target (1%)

*

*Many of the BBs are still in training or have not completed their first project

Retail Life - Pilot

Co

un

t

7

0

1

2

3

4

5

6

7

There were over 100 projects being worked which are scheduled for completion in 2007

Most of them were making good progress, but some were taking too long

Project completion is accelerating With some quick results

Project Status

In P

roce

ss T

ime (

Month

s)

5 - Control4 - Improve3 - Analyze2 - Measure1 - Define

18

16

14

12

10

8

6

4

2

0

Boxplot of In Process Time (Months) vs Project Status

Fall 2006: Project Completion Detail

0

5

10

15

20

25

30

2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06

Complete Total1 2 3 4 5 6 7 8 9 10 11 12 13 14

Months to Complete

Cycle Time for Project completion (by Month)

Cou

nt o

f Pro

ject

s C

ompl

eted

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Fall 2006: Summary of Recommendations from Six Sigma Project

Six Sigma Governance is inadequate

New Financial Guidelines: Provide a consistent method to measure 6 Sigma project benefits

The measurement of financial benefits is not consistent

Some QC, QL have an insufficient understanding of 6 sigma to provide oversight, guidance and supervision for implementation

The focus has been on getting started without sufficient enterprise wide six sigma implementation experience

New methods are being introduced “ad hoc” which are diverting attention from completion of DMAIC projects

Roles and responsibilities for 6 sigma are not clear for the QC, QLs and MBBs

All BU/FAs have deployed the 2 USFS objectives but only 4 of 10 have integrated 6 sigma into their business strategy

Improved Governance: QO/Senior Team will clarify objectives annually

The Quality Leader position will be significantly strengthened and be an integral member of the business leadership teams

Roles and responsibilities defined

The Chief Quality Officer will chair the Quality Council which will meet monthly to provide oversight and guidance

The QC will develop a 3 year implementation plan which will incorporate best practices

A development program will be provided for Quality Council and Quality Leaders

Establish new governance process

At the USFS level, 6 sigma objectives other than financial and 1% resources commitment are not well defined

2007 Status

Proposed SolutionRoot Cause

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USFS Six Sigma Governance ModelsUSFS in

2006Thin Veneer (Americas)

Central Quality Grp (local control of

resources)

Central Quality Grp (matrix control of

resources)

Centralized Resources (shared resources)

CS CS CSExec. Team

QualityCouncil

QualityLeader

MBB

BB/GB

BU Steering Committee

BU Steering Committee

-Decision-Making? (QL)-Policy Consistency?

Full-time Quality Advisor or Quality Leader and MBB

BB/GB

CQO

-USFS Oversight-Coordination Role-Drives new development

Quality Advisor or Quality Leader and MBB

BB/GB

CQO CQO CQO

-Trng. Wealth Ins.-Stds.

Full-time QualityAdvisors (MBB)

-Solid line business-Dotted line centralized CQO

BB/GB

CS

CQO

MBBs

BBs

GBs

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Summary of Recommendations

Metrics will be developed to support USFS objectivesMeasures have not been defined for non-financial benefits?

Enhance orientation process: Reduce the time for new hires to assimilate

Acceleration of project completion will enhance 6 sigma experience

MBBs and BBs are inexperienced (6 sigma and or ING)

1% full time resource expectation; Will accelerate results/improve MBB utilization

MBB resource alignment suggests inefficient utilization across USFS

Provide Management Incentives: Reinforce the expectation that 6 Sigma will be used to improve performance

Inconsistent levels of support from Business process owners and their managers… resources, ownership and accepting the data

Enhance team data collection skills: Better project selection, MBBs and enhanced training will enable teams to accelerate project completion

Data on current performance of many key processes is inaccurate or does not exists

Project Selection Process: provides process to prioritize all projects

(also Utilize Management Incentives)

Project Selection process does not work well in all BU/FAs

Shared Service Guidelines: Clarify responsibility for process improvement

Lack of Clarity of who identifies/owns projects /benefits that cross shared service/BU lines

StatusSolutionRoot Cause

Solutions

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Six Sigma

• 1% Staffing target• Less than expense

save outlined in MTP • 95% of leadership team

EGB trained

• 1% Staffing target• Meet expense save

outlined in MTP• 10% improvement in

Senior Leadership Engagement as measured by 2007 Zoomerang using 2006 results as baseline

• 100% of ldr team EGB trained

•1% Staffing target•Exceed MTP financial targets (to include cost savings and all other financial benefit categories –e.g.,Increased capacity, Cost Avoidance, Revenue Growth)

•>15% improvement in Senior Leadership Engagement

•10% of cert. BB deployed back into the business

5%

2007 USFS ICP Structure

5%

Measure WeightingIncludes all USFS entities

Threshold(0% funding)

Target(100% funding)

Maximum(200% funding)

Strategic Objectives (cont’d)

Unit Costs • % Expenses/(AUM +

AUA)• % Expenses/Premiums

Work in progressWork in progress Work in progress

Improve Customer & Distributor Satisfaction

Work in progress Work in progress Work in progress5%

Compliance• Completion rate of required

compliance training courses• Closure of audit/exam

deficiency findingsWork in progress Work in progress Work in progress5%

Management Incentive Process

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Current Status of Six Sigma

Learning from our mistakes

Aligning project selection process with newly announced strategic objective for top line growth; translates into more capacity improvement, customer retention and new business projects

On the verge of next phase of our development• In-sourcing training• Training MBBs• More rotations back into business• Fine tuning results• Finalizing first 3-year plan

At various stages of development

Reaching to the rest of the region/globally

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We are Managing to the Key Metrics in our ICP

Life

Retirement Svs

Corporate

Retail Annuity

Ad. Network

EB

CITS

Financial benefit 1% staff

Exec. GB training

Six Sigma training metrics are on target

Total Results

0

5

10

15

20

25

30

35

40

2006 Actual Expected 2007

$25 Million$36 Million

Mill

ions

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We have launched several waves of Black BeltsFirst few are moving back to the business

7 6

10 10

17

24

32

2

9

3

5

0

5

10

15

20

25

30

Wave 1 Wave 2 Wave 3 Wave 4 Wave 5 Wave 6

Currently in Black Belt Role Left ING New Role at ING

(6/2005) (10/2005) (2/2006) (8/2006) (3/2007)

Black Belt Inventory by Wave

(9/2007)

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We are communicating results…

To business units whose results are linked to the projects:

• Top-level managers attend tollgate reviews

• Broader-level population of managers and front-line employees invited to (and attend) tollgates

To the entire employee base:

• Regular updates on project successes in context of business objectives included in all internal company publications (including U.S. successes in global publications)

• Senior executives incorporate six sigma discussions into site meetings with large groups of employees