In a life insurance organisation a new piece of business – a customer wanting to buy a product – would be turned in to as many as nine separate work tasks by the front office. These work tasks would be sent off to the respective back-office functions. In designing the work this way managers assume that each task will arrive in the right place, that the people receiving each task will have the right expertise, that the people would do the work in the standard times and within the service level (five days).

Managers went out to study the work. Their first task was to find out how many pieces of new business went through ‘clean’. In other words, how many went back to the customer right first time? Every manager found that the first one they studied didn’t. Their reaction was ‘this was probably not representative’. So they studied more cases. And as they studied more and more cases, they found none went through clean. That’s right, NONE!

The work had been specialised on the basis that this would reduce costs. Did it?

Front-office back-office designs drive costs up.