Crossing Over - When Operations Managers Leave a Creditor to Join an Agency

Over the last couple of years there has been an increase in the number of collection professionals leaving the first party creditor side of collections and moving over to the third party agency side of the business. In years past this career progression was far less common. Previously there were concerns from the candidate who would be leaving a creditor to take an agency position, as well as concerns from the agency as to how the successes a collection professional had on the creditor side would translate to success on the agency side of the business.

Having recruited for the collection industry for over a decade now, I have taken many job orders for collection operation professionals from both the creditor side and the agency side of the business. Typically, if the job order is for an agency, the client has a strong preference for agency specific experience and the same can be said for creditors. Part of the reason for this is certainly because as recruiters we are paid to find candidates based upon the requirements and nature of our clients business. However there are additional reasons for this preference.

The belief for many years has been that although collecting money is a common business practice, the strategies, techniques and methods differ depending on the type and age of the paper. Thus the success of an individual in collecting that specific type of paper varies as much as the strategies and techniques used to collect it.

There are also concerns about work environment. On the creditor side of collections, strategies, analytics and technology are used to recover outstanding balances while retaining the debtor as a customer. On the agency side of the business, where fees are generated and dependant on the amount of money collected, similar tools are used but it’s a much more production driven environment.

Determining whether or not a creditor-side operations manger would successfully acclimate between the two businesses is as dependent on evaluating a candidate’s psychology as it is in evaluating their past achievements.

Creditor-side collection people were hesitant in the past to join agencies because the agencies were seen as being far less stable than established creditor operations. New contracts meant the collection agency would need bring on staff, and the loss of a contract meant cut backs and reorganizations. Additionally, creditors had the ability to put together far more attractive compensation/benefit packages to lure qualified candidates. In years past collection agencies were ill equipped to compete with the well-developed creditor compensation plans or packages.

Today the collection agency world is far more mature, with multi-million dollar operations and publicly traded companies. As a result, agencies have begun to get more creative with compensation packages. At the senior level we are seeing a lot of agencies offer a percentage of profit or compensation tied to an agency’s performance. Another alluring feature of the agency world are the performance incentives. Where on the creditor side it’s not unusual to see performance incentives in the 15-20% of base range, agencies are paying in the range of 20-40% (and sometimes above).

Agencies have become far more sensitive to how they are collecting from debtors. Debtors are far more familiar with the FDCPA and lawsuits against agencies are just a phone call away. The customer-friendly techniques used by creditors are being integrated with the production goals of the agency world. Collection agencies have caught up with creditors when it comes to collection technology and strategy. Agencies have also learned that there are certain advantages to hiring creditor operations people because of the relationships they have developed on the creditor side of the business. It is not unusual to see a candidate who at one time managed the agency network for a creditor being employed by an agency.

Collection agencies and creditors have many more similarities today than in the past. However, one area that continues to differentiate the two is the motivation driving the process. A collection agency’s strategies tend to be far more entrepreneurial and dynamic, where a creditor operational environment tends to be more bureaucratic. Agency managers must have the ability to change direction, policy and strategy on a moment’s notice.

Over the last decade I have seen many collection professionals come from the creditor side to the agency side of the business. However, over the last two or three years there has been a tremendous upward spike of this progression. Historically, there are far more failures in this progression than successes. Only time will tell if this trend is a successful new hiring strategy.

John Fiumano is CEO of Executive Alliance, a leading national recruitment firm that specializes in the debt collection and accounts receivable management industry. John grew up immersed in the credit and collections industry. He’s proud to come from a family of well-respected credit and collections professionals.

John has nearly a decade of industry specific recruitment experience. He has recruited for major banks, telecommunications companies, utilities and service providers to these industries.