Informal Network & Exception Items

One of the realities in business is that in addition to the “formal organization” (you know, the one you see on the organization chart & the one upon which a company’s policies, processes & procedures are built), there is the “informal network”.

At times, l as well as in the minds of many, the “informal network” is a helluva lot more powerful & effective than its formal counterpart.

The “informal network” shouldn’t be shunned…it’s built mainly from all those personal, working relationships that exist between & within organizations…between internal customers…between the company & its end customer(s).

The formal network may tell you that it takes 3 business days to complete a certain procedure, e.g., process an application, resolve a problem, get a decision from the ABC Unit.

But we all realize that it doesn’t really take 3 man-days to complete that particular task. The item itself can often be completed within minutes.

But the formal network will tell you, “Pls wait 3 business days for the item to be completed or the issue resolved”.

That’s because of all the items already sitting in the pipeline with the FIFO/First In, First Out mentality in place. When dealing with large production volumes, it’s the easiest process to employ…

…but not necessarily the most effective (according to customers) nor the most efficient (according to the company)!

Many times, especially with “problem resolution”, there are instances with “what’s best for the organization” & “what’s acceptable for most people” simply does NOT meet a customer’s…internal or external…expectations & needs, much less, exceed them!

Sometimes, a customer needs something done NOW.

Sometimes, yesterday.

It’s in situations like this where the formal network…with all its strictly-defined processes, hard-core rules & a thirst for conformity…falls woefully short!

As a service provider, waddaya do???


You pick up the phone & call Harry who’s a supervisor in that ABC Unit to see if he’ll expedite the item for you. It may be “disguised” as “I need a favor!”, “Can you pls make an exception?” or “My customer won’t sit still…”, but regardless of what justification is given, someone’s relying on the informal network.

It’s a reality in the business world.

You should actually relish it as it serves as hard evidence of how people view you & how they respect what you’re capable of getting done.

It’s a badge of honor!

But it could also be very telling about the level & type of service that your organization or team is providing.

If you or your people are being overwhelmed by these types of “I need it faster than how you normally handle it” requests, then you need to take a step back & re-evaluate your processes, your timeliness standards & how things are being delivered to your customers (products, services, resolutions, answers, etc.).

Also, look for opportunities to “incorporate what the informal network brings” to your formal organization structure & processes.


At Citi, there were ALWAYS requests to have financial investigations completed & resolved prior to the standard 3 business day resolution timeframe.

In the ‘80s, we developed the Immediate/Provisional Credit process that basically, “put structure around” something that we’d already been doing on an exception basis for many customers. (Branches, in particular, were famous (infamous?) for “fronting money to an important customer or business client” while waiting for the actual investigation to be completed.)

What the Immediate Credit program did was credit the customer’s account upfront…before any formal research was actually performed…in order to “make the customer whole”.

Everything was based on“trusting the customer”.

The Investigation Dept would then actually compete the work needed to render a final determination. If the customer was correct with his initial claim, he got to keep the credit he already received when he first contacted us & we formally acknowledged that fact back to the customer.

If we needed more information (to figure out what happened), we requested that from the customer, but allowed him to keep the credit in the meantime.

If we made a final determination that showed the customer’s claim to not be valid, we would first inform him of our decision, then wait a few days before we “took back the provisional credit”.

Initially, we were actually crediting the customers account upfront manually, after a supervisor reviewed the actual investigation request, applied the appropriate eligibility criteria (dollar amount, type of transaction, date, how transacted, etc.) & determined that the customer qualified.

Later on, when we automated the investigation entry process, we built the appropriate Immediate Credit “eligibility criteria” & functionality right into the system.

And even then, the process was flexible enough to cover situations that exceeded “dollar amount rules.

The original program covered claims up to & including $5,000.

But that meant that customers “problems” of more than $5000 weren’t eligible to benefit from this great program! “More serious” problems (as defined by $) couldn’t be handled by the standard process.

So we increased the system’s $ limit for our senior reps (those in the Sup Gate/Client Escalations), Team Leaders & CitiPhone AVPs to $10,000.

Then we established $25,000 limits for Client Escalations AVPs. Hard to tell a valued, extremely-profitable, long-time Business client whose $23,000 deposit was incorrectly entered as $2,300 by the teller that he would hafta wait 3 business days for his missing $20,700.

And I had a $100,000 systems approval limit.

Now, we always had the ability to “have an investigation completed ASAP/RIGHT NOW” if someone was uncomfortable with the system automatically crediting a customer’s account based solely on program eligibility criteria. But there are times when an investigator wouldn’t have access to the necessary records or documentation to make an immediate & final determination.

Same for 2nd requests.

Probably the most frustrating experience for a customer is to experience an issue or a problem…and then NOT get satisfaction when you raise it to the company’s attention (either the company is unable to fix the issue or you don’t agree with their determination on what exactly happened & their decision to not credit you back for the difference).

And often times, 2nd requests have a very nasty habit of becoming 3rd or 4th or 5th requests!

You should have a process built into your formal network’s processes & procedures that any 2nd requests are handled in an expedited manner (same day or ASAP) & by a “better & different set of eyes”.

I, myself, have experienced situations like this on several occasions (with Avis, Express Scripts, Humana HealthCare, etc.) where I got -0- satisfaction whatsoever initially. My experiences got so frustrating (with the total inability &/or willingness of employees & managers to help me) that I was forced to go the “executive route”.

I wrote letters to the Chairman, CEO, President, Executive/Senior VPs and within a day of receipt of my correspondence, I got a call from “the Chairman’s office” & full restitution.

(In reality, no one from the actual Chairman’s office ever calls/contacts you as all major institutions have “Executive Communications Units” that handle all customer letters, e-mails & phone calls directed to the senior leadership team.)

But none of those companies had any type of 2nd request process that could’ve stopped the insanity, especially since I was 1000% correct in all my claims.

Your organization needs to have “formal processes & procedures” that’ll mimic the informal network.

That’ll handle exception items that call for quicker resolutions, better quality (than initially/normally provided) &/or customized handling.

Remember, your organization’s formal standards for timeliness & quality are build to meet “most customers’ expectations”…not every one.

A standard resolution timeframe of 2-3 days doesn’t really help the customer who needs it today.

(Most sales organizations that offer products usually have expedited shipping options…but at a cost! What about service companies? You can’t “UPS overnight” a resolution to a problem or an answer to a research item. Yes, you can overnight the correspondence, but…)

Look at the different processes & procedures that your organization regularly receives…and not only determine if your official performance standards can be improved/tightened, but see how you can support those “special requests”.

The “exception items.

The items that don’t necessarily “fit nicely into the box”.

Build these “exception processes” into your formal architecture…systemically & procedurally.

Find a way to “do it better or quickly” upon request or even, based on the specific type of situation.

Note: I’ll discuss more about “intelligent/selective supply & demand” in another story, but for now, find a way to incorporate how things get done using the informal network into your everyday processes & procedures.

Think hard.

Identify customers &/or situations that deserve “better than what’s normally offered” to them.

Quick story…

Back in 1980, I had an American Express Gold Card & when I opened my monthly statement, I noticed a fraudulent charge for ~$95 for a meal at a seafood restaurant in Fort Lauderdale, FL.

As I still lived in Brooklyn & had never  even been to Fort Lauderdale (much less, eaten there), I immediately called the toll-free number.

I explained my issue to the rep.

A few seconds later, she says, “Your claim has been resolved.”

“Uh, meaning what exactly?”

“We’ve credited back your account for the $95 charge & your total current balance in now $0. We want to thank you for being a loyal American Express Gold Card member!”

I was absolutely stunned.

💩 my 👖!!!

For that reason alone, I kept the card for another 2 years (at either a $50 or $75 annual fee)! And I had just received a free Corporate Diners Club card from Citi, no less!

A few years later, I’m working & living in Long Island (the suburbs to the east of NYC) when I receive my monthly Diners Club statement.

Amongst a few business-related items, there’s this ~$64 charge from a Chinese restaurant in (I believe) Syosset, LI.

I had never eaten there in my life.

Naturally, I called Customer Service & explained the situation. The rep replied that they would send me a photocopy of the charge.

I repeated to the rep that this hadda be a fraudulent charge as I’ve never been to that restaurant in my life!

I tell her that I’m a Citi employee, an Asst VP (BTW, Citi owned Diners Club at that time) & I mention a similar experience I had with American Express a few years earlier.

She said that they’ll mail me a photocopy of the charge slip (in case it jogs my memory) as well as an affidavit of forgery (where I can attest to the fact that the charge is, indeed, fraudulent).

About a week later, I get a letter from DC.

The charge slip was COMPLETELY HAND-WRITTEN!!! My account number was printed & the restaurant’s name was also handwritten!!!

And the signature?

Definitely not mine!

Not only wasn’t it my signature (which is extremely, er, distinctive as it’s basically illegible…on purpose!), but MY NAME WAS MISSPELLED!!!

“Mike Luroso” vs “scribble” vs “Michael LoRusso”!!!

I hit the ceiling, then call Customer Service again.

“I filed a fraud claim, for God’s sake! You send me a copy of a hand-written charge slip, meaning that my card was physically not used.

“My name was misspelled & the signature doesn’t remotely resemble my actual signature, for which you have dozens & dozens of examples!

“Seriously now, didn’t any of this stuff, like, ring a bell with you people?!? Shouldn’t a light have gone off somewhere?

“Are you gonna credit my account back now?”

Silly me.

“You’ll have to complete & sign the affidavit, then mail it back to us.”

“Still!?! You guys can’t determine that a fraudulent signature which doesn’t match my signature…which was actually misspelled…is not mine & that someone hand wrote everything, meaning my card was never used? That’s not enough solid evidence for you? And I’m an officer of Citibank!”

“No, sir, we’ll need the completed & signed affidavit before we can credit back your account.”

“I don’t suppose that I can actually fax the form to you to quickly the process, right?

Ah, don’t worry, I know what your answer’ll be!”

Later on, I locate an investigator for Diners over at Court Square in Long Island City & call him.

After giving him an earful on DC’s crappy process, I ask him if they’re gonna investigate this place as this may only be the tip of the iceberg.

Or, perhaps, they’d like to “flag” all incoming charges submitted by this establishment to see if there’s a pattern.

“Nah, I got way too much stuff to handle!”


No wonder why Diners Club US franchise was losing millions every year!

Most people thought the card could only be used in restaurants. Nope, it’s a “travel & entertainment” card, similar to American Express (no credit line, pay off balance monthly).

So many stores did not accept the card.

Nowhere did they piggyback onto the fact that they were actually part of the Citi family. “Citi” was an incredibly popular & well-respected brand name. They had little-to-no process or programs in place with our branches or CitiMortgage to capitalize on cross-sell opportunities, nor was their affiliation with Citi displayed or publicized anywhere.

And they laughed at me when I suggested (on numerous occasions) that they change their name to somehow incorporate “Citi” (to boost awareness & gain popularity).

How ironic it was that, several years later (~1998), I was part of a special task force, initiated by Dick “Monster Man” McCrossen, that visited Diners Club headquarters in Englewood, CO to “do our due diligence” & complete a feasibility study regarding our humongous Bankcards organization absorbing the entire DC back-office into their organization!

(While our analysis cleared showed that it was doable…in terms of expense reduction, processing efficiencies & overall effectiveness…Citi never proceeded forward with it as corporate politics played a huge role in the ultimate decision to leave them as is.)

OK, I lied.

It wasn’t a quick story.


As always, thank you so much for listening!

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