Award Winner: Culture

Gary Booth, Director of People Services, The Co-operative Group
Gary.Booth@co-operative.coop

Excellence in Culture Creation Award, 2011 - Europe

Strategy
The Co-operative Group is a unique family of businesses ranging from food to funerals, travel to healthcare, banking to insurance, legal services to farming and more besides. It has over 5.5 million members, each of whom has a say in how the business is run. It is the largest co-operative in the world, with more high street outlets than Starbucks and McDonalds combined. Current annual turnover is £14 billion, with 110,000 employees serving around 20 million customers a week in over 5,000 high street outlets and online.

The Co-operative Group’s HR Shared Services (HRSS) – as it was then known - had been established in 2005 to provide efficient, centralised and co-ordinated support to the HR teams at the front line in all of The Co-operatives many businesses. The problem was that it had been set up purely as an administrative function rather than an agency for change and improvement. So by 2008, as The Co-operative Group was preparing for a number of mergers and the complex integration of tens of thousands of new employees, it had an HR Shared Services function which was, in a word, dysfunctional. It had little credibility and even less strategic value to the organisation at a time when it should have been ready to play a critical role.

With morale at rock bottom and a disconnected team, the objective of a three year change strategy would be acceptance and alignment with the rest of HR and a constructive engagement with the business as a whole. A new Leadership team under Gary Booth (Director of People Services) identified the four key pillars of a root & branch improvement programme:

• People
• Processes
• Technology
• Customer

The problems we needed to remove and the things we wanted to improve included:

• The structure of the centre, and the skills within it, were not fit for purpose
• Its role was ambiguous and unclear to the wider business. There was little emphasis on business planning, resource planning or operations planning
• Operating principles were largely manual, inconsistent and inefficient. Consequently there was a lack of management control
• Appropriate measurement and control mechanisms were not in place
• Staff were disconnected and disenchanted. There was no career development structure, too many temporary contractors and a lot of complaints from the business customers.

The improvements we wanted to achieve were:

• A simplified and streamlined set of processes to enable better service and improved management information
• The right conditions for the centre to grow and offer new value adding services
• Improve staff morale
• Improve customer satisfaction
• Better use of technology to help the centre and the rest of the business
• Alignment with The Group’s business objectives
• Reduced waste
• A healthy pipeline of talent for the future
• A strong sense of identity and purpose, starting with a new name – ‘People Services’.

Improvement Methodologies

When Gary Booth joined in August 2008 his brief was to completely overhaul the existing HRSS function. With the major mergers of United and Somerfield on the horizon, change had to happen, and happen quickly and effectively.

These are some of the key steps Gary and his team took on their three year transformation journey:

• The first key step was to carry out a base line review of People Services across both the Manchester and Glasgow sites. This included looking at skills, structure, engagement with employees and the Groups HR customer base.
• Gary then presented back his findings to The Group Senior HR Leadership team and proposed a strategy to move forward. It was crucial at this stage to get buy-in from a disenchanted Senior HR team. If change was going to happen then it had to be endorsed at the highest level.
• The next step was to provide direction, vision, engagement and alignment of the teams to the needs of the business. In Q4 of 2008 the new Leadership team articulated the vision – "Liberating our business through exceptional people and service" and put together a three year strategic framework of action resting on the four building blocks – People, Process, Customer, Technology. Each building block is supported by key initiatives and enablers. All four building blocks are key to the transformation of People Services. All had to be worked on and impacted simultaneously to ensure that everyone was aligned, agreed and aware.

People - key steps

• Established a new identity under the name of ‘People Services’ and in essence created a new beginning for everyone, employees and customers alike
• Relocation to new premises designed for ‘one team’ working, joined-up thinking and communication. The new premises provided vastly improved facilities with break out areas, a kitchen and excellent learning and development resources
• A realignment of the team structures and service offering to reflect the needs of the business based around the employee lifecycle, rather than have teams working in silos with inconsistencies
• A new tier of front line management to focus on people development to drive and control the business change. 15 new Senior Administrator roles were created, which in itself created new careers paths and opportunities
• Audit of skills and capabilities by team and service offeringA big reduction in contract staff to a team comprising 98% permanent (which was previously at 30%).
• This replaced churn with stability, created a stronger team ethic and reduced training costs
• Defined the core values to drive the right behaviours
• Set new standards for all to aspire to and deliver against
• Implemented performance management framework, Personal Development Plan’s and training programmes
• TalkBack committee focusing on specific actions from The Group’s employee engagement survey to drive up engagement
• Created visible leadership – engaging, explaining, inspiring – as opposed to previous ‘command’ style of management.

Customer – Key steps

• A Customer Service team was introduced into People Services. This has involved opening their doors to over 300 customers in the last two years from across the various businesses. Building relationships, discussing issues and seeing change happen. In reverse the customer service champions have been out ‘walking in the shoes’ of the customers
• Launched a quarterly Customer Service Survey to HRBP’s and Regional Managers across the business, to ensure People Services are getting regular feedback from their customer base and to help them shape and improve their services. Customers now know and believe we’re listening to them
• Established a number of Forums with the HRBP’s from across the business. This was about creating a collaborative working relationship on a more formal and constructive basis, through regular meetings and the development of meaningful SLA’s, KPI’s and MI. Each Forum had clear terms of reference, defined membership and meeting times and a structured sign-off process. In the bad old days meetings and discussions were ad-hoc, unfocused and too often duplicated.

Process – key steps

• The People Services Delivery Model was created and aligned to the business needs and employee lifecycle
• The HRBP Forums were used to implement a Continuous Improvement Programme with the HRBP’s to drive change, formalise SLA’s and KPI’S. This was really the key change in terms of engaging with their customers as it was all about consultation and working together to find the correct solutions, rather than change being imposed on them
• For all key projects a Business Change methodology was developed and introduced across the business. So for any major projects, such as the United integration of 18,000 employees and the Somerfield integration of 27,000 employees, a clear communication and engagement strategy was in place for People Services and their customers
• Another crucial initiative to improve service delivery and communication channels for the senior HR stakeholders across The Group was the implementation of the HR Change Board. When Gary joined he was struck by the rather chaotic nature and lack of control of HR projects. Projects were being run with no clear ownership and there was a lot of duplication. It was a drain on both money and resource. The design and implementation of the HR Change Board by People Services ensured a joined–up and strategically aligned approach
• Tier 2 Financial audits were introduced. As a result of the process and change programme People Services have gone from 42% effectiveness in 2009 for their financial controls to 95% in the 2010 audit
• A Governance team was enhanced to monitor: Financial Controls. Data Security. Business Continuity. Management Information. Budgetary Control. Quality Management.

Technology – Key steps

• Listening to feedback from customers, People Services introduced a single number telephony system to help drive better communication and quality of service
• The £12 million Group investment of Oracle in 2005 had hardly been utilised to its full capacity. Highlights of technology-led transformations of the Oracle ERP system since 2008 include:

o Integration of over 55,000 new employees over 15 months
o Implementing OTL across 3,261 branches across 13 businesses
o Enhancing their self service offering. Freeing up precious time for People Services to concentrate on front line support
o Moved from weekly to four-weekly pay cycles for 5,000 colleagues
o Migrating 5,000 pensioners from Delphi to Oracle
o Training thousands of remote employees through Oracles ‘User Productivity Kit’ – delivering quality training efficiently and effectively. Now referenced by Oracle as ‘best in class’
o Oracle’s true functionality is now fully mobilised and maximised to streamline processes, increase efficiencies and drive down waste

• Recognised that any technology programme needs to be supported by a business change programme. The E-HR and Programme Change team has grown from a team of two in August 2008 to a team of 28 to date.
• Technology has become a key driver for change in People Services.

Summary

The whole Transformation programme has been driven from within. Having bolstered the team, People Services were determined to do it themselves and use the experience and expertise in the business. One Specialist Consultant was engaged to support the Process Improvement activity given the volumes and timescales involved, plus the challenge of delivering BAU while facilitating change.

In real terms, the team was the whole of People Services. While there was a core Leadership Team driving the programme, the key to success was the focus on engagement and communication – making sure everyone was informed, involved and inspired. Process change involved everyone in the operation; the People agenda empowered every individual. It was a true team effort in every sense.

People Services engaged with their customers every step of the way, from the early introduction of Business Partner Forums. These created a collaborative working relationship on a more formal and constructive basis. Success has changed the dynamic of the relationship, with People Services now able to challenge the businesses and inspire change at their end.

Despite the pressure to change, they were determined this was not going to be a fire fighting exercise. People Services introduced leading edge improvement techniques such as Lean, Value Stream Mapping and Six Sigma into the process – effective but simple enough to embed in the teams. Their approach was to focus hearts and minds on ‘What It Looks Like Now’ and ‘Five Ways To Do It Differently’. It generated fresh thinking and inspired ideas on eliminating waste and streamlining processes.

Previously there had been a complete absence of internal governance, structure or control. Projects were being run with no clear ownership or line of sight and a lot of duplication. It was a drain on both money and resources. People Services developed a system of holistic corporate governance and quality assurance across all their transformation programmes.

Complexity of Change

Change can be measured in two dimensions – the complexity of the change and the severity of the implications on the people impacted. In this story on the whole the change was welcomed and embraced by all concerned because it is a story of dramatic improvement – a real promise of better things ahead.
Inside People Services the change was complex and really significant, getting to the heart of what people hold dear, where they sit, who they work with and what tools they use to do their job. It affected everyone in the function – over 150 people across two sites and it’s not all been plain sailing. The complexity of working across multi sites has had its challenges. The Glasgow payroll function (another part of People Services) had in the past become the great ignored. They had been treated as completely separate and had developed their own culture and ways of doing things. Creating plans and approaches that were aligned, and keeping the transformation journey in sync, was tough. That it was achieved was very much down to good communication and an aligned leadership team.

Outside of People Services, the change was also complex and significant – affecting over 110,000 people across 13 businesses across the UK; it was a change to processes and the way they operated, and changing the dynamics of working relationships that were well established. The underpinning legacy of an ill-performing, limited HRSS had meant that The Group business units were used to getting on with things and solving their own problems. It has taken time to break down this underpinning legacy culture and allow People Services to a take on more responsibility.

At the heart of the successful transformation was an effective and clear plan. The direction was set, there was a focus on stakeholder management, effective communications and change impact planning and training inside and outside of People Services. Change was managed at two levels:

o Programme level – Leadership team managing the transformational change
o Project level – the major projects - United and Somerfield migrations, telephony, the office move – were all treated as a defined change programme needing the very best change management support.

Ultimately, despite the complexity and sheer scale of the change – numbers of people, geographies, business units, and challenging timescales - it was relatively easy to manage because it was welcomed, warranted and well managed. It certainly stretched and challenged the Leadership team – only Gary had managed through a transformation on this kind of scale. They had to inspire and develop a People Services function that was growing, under great pressure and expected to make dramatic change at the same time. Gary says that "supporting and building the capability of my Leadership team, inspiring them with the confidence and clarity of what we were creating and the value, was critical."

The staff were not in a good place at the start of the change journey, which was why engagement and communication was key, with a strong emphasis on the management and development of their people. Building the new skills and competencies required, linking these to customer expectations and focusing on the right behaviours, allowed the change to be managed in a dynamic and effective way.

Benefits Achieved/Hard Improvements

To reflect the strategy that was set out by People Services was very clear about the desired outcomes from the start: to enable People Services to deliver results and be recognised as a professional and value-adding function. Hard evidence of success over the last three years includes:

• Improved operational efficiency by introducing SLA’s, managing at 95% conformance, increasing volume of delivery without a corresponding increase in headcount
• Improved their ability to match the demand for service with the right people, with the right capability and mindset in the right place. This has enabled People Services to introduce reverse SLA’s that has shaped the provision of an end-to-end HR service offering. This has made a difference to The Group staff in real terms
• Improved morale and employee engagement. The Groups employee engagement survey – ‘TalkBack’ has shown that People Services has had the biggest increase in satisfaction across The Group from 66% (2008) to 78% (2010) despite going through an incredible business change programme and transformation, on top of dealing with their existing BAU service delivery
• Members of People Services now feel more empowered and enagaged with the organisation. A recent internal communications survey shows that 77% felt they knew more about the goals and plans of People Services. 80% felt more informed about other teams in People Services since the internal Communications Forum started and 80% felt generally more involved with change
• Able to demonstrate audit compliance through committed people delivering a consistent service. They have now achieved Tier 2 status on our financial controls. In 2009 People Services financial controls we’re rated as 42% effective and that has now risen to 95% in 2010
• As part of the people development plan, 29 new roles have been created and 51 people have been promoted internally
• People Services is now being seen as a proving ground for talented HR professionals to move across The Group and take on new roles. It demonstrates that they have the highest calibre people and ensures that managing our exceptional talent pipeline is a key priority
• Moved from 30% of staff being permanent to over 98%. This has hugely impacted on the quality, communication and engagement of People Services employees
• Reviewing how customers feel about People Services and the results have provided some great insights. Customer satisfaction with the service has risen from 40% satisfaction to 75% since the new telephony system was introduced last year
• Leveraged the £12 million Oracle system to enable a common IT landscape for business change
• Impact of telephony system means People Services now manage an average of over 1,000 calls a day. They can predict call volumes and resource accordingly
• People Services have successfully migrated 55,000 employees and pensioners onto The Co-operative payroll in the last 15 months.

Ultimately the proof of People Services sustainable success is that the customers perceive them in a new light – they receive an efficient, friendly and effective service. This has led to a significant shift in the perception of People Services across the organisation. We now have the credibility to continue to deliver, and to start challenging the organisation to deliver even better service and results.

HR Managers are now focused on working more strategically with Operational Managers in addressing the HR issues which are affecting business performance, rather than worrying and chasing People Services for activity not completed.

The three year transformation has proved to be a model for other functions to follow. At leadership level, the strength of strategic engagement that Gary and his team now have with their peers across The Group businesses has increased dramatically. People Services is on the map and now considered as a function that has a reputation for innovation, delivery and ongoing improvement.

An external assessor for Investors in People recently described People Services as "the benchmark for The Co-operative Group – a model for Best Practice that would clearly meet the IiP Gold Level".

Differentiators

People Services have successfully delivered against all the aspirations they set out, and exceeded them. They have not looked for quick fixes, but focused instead on creating a talented, learning organisation with the right skills and capabilities absolutely connected with each other and their customers. It has been built from the right foundations – a new vision; a workable strategy; a new beginning and brand for the Shared Service centre, including new premises for a larger but leaner and more unified organisation.They have transformed a Shared Service function to enable truly great delivery of value adding and efficient transactional support. This in turn enables an organisation to deliver significant commercial returns.

The transformation is sustainable. It has been driven from within and powered by their own experience, knowledge and expertise. Where external consultants can walk away once the job is done, the people who built it have stayed with it. They have been stretched but not overstretched, creating an appetite for change without wearing the function out. Gary and his team have combined innovation with pragmatism, focusing on real results rather than re-inventing the wheel. It must be said that the starting position allowed them to make a big impact with some basic improvements.

The circumstances against which these changes were achieved make the successful outcome all the more remarkable. Trading was very strong and the business was growing fast – a situation which puts a great deal of day-to-day pressure on any HR function. So there was more business than usual for HR to manage. On top of all that, the Group’s acquisition strategy was preparing to go into overdrive, particularly with the mergers of United Co-operatives and, biggest of all, Somerfield. The skillful juggling of the change agenda with BAU priorities meant that, in the end, 55,000 additional employees were smoothly integrated by People Services because of, not in spite of, the transformation.