Tell us YOUR story: Improvement & Innovation Award Winner 2011

Shared Services Excellence Award Winner 2011, North America: "Excellence in Improvement and Innovation": The US Postal Service – HR Shared Services

Head Office of SSC: Washington DC, USA
Number staff (Full Time Equivalents): 400
Date Shared Service operations started: 03/01/2005
Number of business units served: 76 Districts Nationwide
Number of Employees served: 600,000

Q: What is the strategic growth or transition plan of your SSC for the future?
A: To offer HR services to other Federal Agencies.

Q: What were the drivers for your improvement initiative?
A: Faced with declining mail volumes and recession effects, The United States Postal Service (USPS) needed to strengthen core operations and services and reduce costs across the organization. The USPS Human Resources structure consisted of personnel departments in 80 districts, staffed with nearly 1,400 employees, and supported over 200 HR/payroll processes in using over 70 systems. Strategy was developed to increase efficiency through SAP technology, while implementing standardized and streamlined processes. In 2005, the USPS closed personnel offices in the 80 districts and opened an HR Shared Service Center (HRSSC) to process repetitive and routine HR transactions. Staffed with 400 employees today, the HRSSC handles personnel transactions for nearly 600,000 employees.

The USPS moved from a decentralized to centralized business model while reengineering and standardizing HR business practices by adopting a lean six sigma methodology. The USPS recognized additional cost savings by reducing stove-pipe systems, leveraging corporate assets and streamlining infrastructure expenses. In 2007, USPS replaced outdated HR systems with a state-of-the-art, fully integrated system called the Human Capital Enterprise System (HCES). HCES allows for streamlined and automated personnel transactions, and removes manual, independent processes and outdated systems. Now, HR transactions are completed at either our Shared Service Center or through the Employee Self Service option more timely, accurately, and efficiently. HR costs are reduced, and data analysis is utilized to enhance future programs.

In 2009 we completed the implementation of an electronic employee personnel folder system. Over 1 million records were scanned and converted to digital format, accessible to employees through self service. The USPS will save over $60,000 annually with the destruction of hard copy files, which resulted in over 600,000 pounds of recycling.

We also increased the cost effectiveness of enterprise investment and reduced infrastructure expenses. We eliminated shadow systems by reducing development and maintenance costs while freeing up resources. Our strategy is aligned with the postal vision by aligning our workforce accordingly with business needs, continuing sustainability initiatives, embracing new technology and reducing waste by improving process flows in every department in the company. We removed redundant data activities, including reduction in paper and physical storage requirements while reducing labor costs. We needed a single data source, enabling the USPS to improve decision making, increased employee satisfaction with access to real time information; we standardized and streamlined core human resource transactional processes and reporting capability and reduced administrative costs. Upon implementation of the initiatives covered in the business case, we realized a savings of $150 million annually to the bottom line of the organization.

In 2007, USPS replaced outdated HR systems with a state-of-the-art, fully integrated system called the Human Capital Enterprise System (HCES). HCES allows for streamlined and automated personnel transactions, and removes manual, independent processes and outdated systems. Now, HR transactions are completed at either our Shared Service Center or through the Employee Self Service option more timely, accurately, and efficiently. HR costs are reduced, and data analysis is utilized to enhance future programs.

Q: Tell us how you introduced these improvements. Which methodologies did you apply?
A: In 2005 the USPS opened an HR Shared Service Center (HRSSC) in Greensboro NC, which is now the central location responsible for handling personnel transactions for all postal employees. The HRSSC is staffed with only 400 employees and processes retirements, bargaining employees’ job bidding, managerial job vacancies and employee health benefits, to name a few. This was the first step in implementing our goal of increasing technology, eliminating unnecessary processes and placing the right person in the right job to maximize efficiencies.

To achieve this benchmarking initiative a team was built consisting of executives, senior leadership, Information Technology (IT), corporate communication and project managers from impacted functional areas. This team’s initial task was to draft policies and procedures and staff the HRSSC with the best-qualified employees. The project team consisted of 20 dedicated resources, who coordinated ad hoc activities with cross functional representatives. Consultants were used for a short period to facilitate process mapping and improvement activities. A key strategy of the initiative was to leverage current assets, including people with necessary skill sets within the organization, such as communications, change management, IT, etc.

During this same period, we also awarded a contract to SAP America to partner with us in designing and implementing the Human Capital module of the SAP software. In 2007 we partnered completed the implementation with SAP and built an integrated system called Human Capital Enterprise System (HCES). This new technology afforded the USPS the opportunity to streamline and automate processing of personnel transactions. We coordinated all activities with stakeholders throughout our organization, with the SAP team and contractors. This implementation is the single largest instance of SAP HR in the world.

Being a large organization spanning the entire country, we developed a phased implementation approach as each component of the project was introduced. In order to assure acceptance and minimize change impact, we conducted several strategies, including a series of regional informational shared services seminars and fairs to afford employees the opportunity to demo the new technology and ask questions. Prior to implementing a new segment of the HCES technology we conducted focus group sessions with field users, IT and stakeholders. This provided critical feedback for developers to ensure the new process and technology were intuitive and in terminology understood throughout the organization. Consistent, timely communications, using multiple mediums to reach employees at all levels were used throughout the project phase. This initiative literally impacted every single postal employee.

The organization adopted a lean Six Sigma methodology to streamline business processes practices. This allowed us to remove redundant data activities, including a reduction in paper and physical storage requirements while reducing labor costs significantly by eliminating 600 HR positions. Additionally, we reduced overall costs of ownership due to flexibility in responding timely to business changes. We are now able to provide information within a single data source, enabling improved decision making, increased employee satisfaction with access to real time information; standardized and streamlined core human resource transactional processes and reporting capability and reduced administrative costs.

We increased productivity and incorporated best business practices (utilizing industry standards) and increased the efficiency of daily operations. Implementing an HR Shared Services Center and a human capital enterprise system was an historic event – the system is the largest single install with SAP for HR management technology worldwide. The Self Service feature allows employees to conduct HR transactions 24/7. Transactions historically processed via paper and requiring manual data input are now automated.

In 2008, we re-engineered and automated the hiring process, as well as the process for internal mid-level managerial selection and promotion. We designed and implemented the eRecruitment module of SAP. At the same time, we outsourced new hire screening and assessment, and fully automated the integration within the hiring process and system. These efforts resulted in annual savings of $55 million, due primarily to a reduction in labor, paper, and testing activities.

In 2009, HCES was upgraded to include a learning management system (LMS), and the ability to report employee accidents with Employee Health & Safety (EHS). LMS delivers a comprehensive learning solution that enables the US Postal Service to maximize the benefits of its learning strategies. EHS is leading the industry by automating a process that previously required multiple forms and took 2.5 hours to complete.

Additionally HCES provided us with the technology to implement security-based roles for each of these applications. This was a critical and needed feature we required to ensure we protect our employee’s personal information and be compliant with Sarbanes Oxley regulatory requirements.

Concurrent with the SAP implementation and standing up the Shared Service Center, another major initiative completed during this timeframe was the conversion of approximately 1 million paper Official Personnel Folders into a digital format. We outsourced the scanning and indexing to a vendor.

As we developed our detailed project plan through all phases, we benchmarked with several private and public sector companies. We could not find a company that had implemented an ERP system and re-engineered business processes at the same time while shifting to a shared services environment. Once we had implemented the system and the center, and after a reasonable period of time, we then employed industrial engineers and Six Sigma experts to further design and improve the processes within the center to gain further efficiencies. As a result, we were able to reduce numbers from 520 to 400 over the course of a year.

Q: How complex was this improvement initiative? What were your challenges and how did you succeed?
A: Two years prior to the opening of the HR Shared Service Center (HRSSC) and the implementation of HCES technology, we began communications throughout the organization. Having the support of The Postmaster General and Senior Leadership was critical to the initial implementation and ultimate successes we experienced.

We began with a series of high-level net meeting conferences to the leadership teams in our 9 areas. We conducted initial communications with our 600,000 employees through home mailings and "payroll stuffers," explaining the changes with HR operations. We coordinated and conducted a number of HR Shared Services employee fairs in a few hundred selected areas throughout the country. This served a two-fold purpose by allowing the team to provide a more in-depth explanation of the strategy and how it would benefit them; and also answer questions and concerns. In addition, throughout the project, we conducted meetings with national labor unions from all represented crafts to ensure they were apprised with the initiative.

In 2005 when the HRSSC opened, we were tasked with closing all 80 district personnel departments throughout the organization. We anticipated and experienced resistance from most of HR, but especially from our closing personnel offices. This meant they would need to find new jobs, retire or resign or face separation from the postal service. They additionally expressed concerns about the internal customers they serviced. Many did not have the necessary vision to understand how the USPS could provide quality service to their employees without one-on-one contact. Once again, we conducted a series of meetings with each of the 80 HR departments to provide assistance and guidance for displaced employees. We provided counseling sessions on retirements, resume writing, USA job opportunities and employee assistance program support.

The initial plan called for a "one time" implementation of all processes and districts. Once we begin began to execute the plan it became evident, because of the complexity of the project, that we needed to make modifications and use a phased approached. The team conducted meetings with all stakeholders involved to reengineer the remaining components of the project. This proved to be a wise decision as we moved through each phase by introducing more processes and districts each time. This strategy also allowed us to make crucial improvements so other districts were not involved, making for a more structured, organized and successful roll out.

Q: What benefits have you achieved? Describe the impact of the changes
A: The USPS Board of Governors approved investment funds totaling $103M for the implementation of (HCES) and the establishment of the HRSSC. The result was an annual savings of $150M through 2011. In total, 11.9 million Employee records were entered in HCES with 0 errors. Savings came from the elimination of HR positions, the elimination of paper-based processes, and the consolidation of HR Systems. This technology gives employees the flexibility and convenience of conducting sensitive and private HR transactions 24/7 from the convenience of any computer using personalized logon credentials. Transactions historically processed via paper application and requiring manual data input are now completed electronically and processed immediately. Employees can now conduct the following HR transactions: Job Bidding, view their Official Personnel File, submit applications for managerial/supervisory positions, establish/change direct deposit options, apply for savings bonds, change their mailing address, change federal deductions, change health benefits and obtain retirement information.

Our online employment application (eCareer), provided an automated assessment process with a $500K annual savings in paper and automated third party initial employment assessments resulting in a total of $55 million annual savings. eOPF (Official Personnel Folder) provides employees access to personnel files. eOPF resulted in the scanning of all employee OPF's and the destruction of 20,465 cubic feet of paper, over 627,940 lbs. All paper files were pulped and recycled into paper. In FY 2010 Job Bid Management (JBM) processed 8853 job postings which included over 78,000 positions and accepted over 832,000 bids from craft employees. Over 2.8 million craft employee bids have been accepted since 2007. HR Shared Service Center (HRSSC) processes over 145,000 transactions each month, 2600 calls per day and handled a total of 656,647 calls in FY 2010. They additionally processed over 20,800 separations from October 2009 thru December 2009 as part of the Early Out Incentive.

Additionally, supervisors reporting employee accidents now utilize Employee Health and Safety (EHS) application within HCES. The USPS processes nearly 113,000 accidents annually. These reports average 7+ forms, requires 225 different pieces of information, information in 5 or more separate systems, and average report creation took 2.5 hours. The EHS reporting tool automates accident/injury reporting process, pre-populates required forms and can be easily generated and printed. Additionally, EHS automates the management of accidents/injuries, increases accuracy and completeness of reports. The USPS input 84,148 records in FY 2010. HR Shared Services has received over a 98% satisfaction rating through focus groups and survey provided at the HRSSC.

Q: Why do you think your improvement initiative/innovations strategy stood out? What differentiates you?
A: The $150 million savings the USPS experienced by implementing the HR Shared Service Center (HRSSC) and incorporating HCES technology has aligned with our strategy of cutting cost, streamlining processes and provide employees with intuitive technology to process HR transactions. Employees save time with the flexibility of completing HR transactions on the self-service option. Managerial staff can submit accidents/injuries, review job applications and coordinate training for employees utilizing LMS technology. Allowing employees to provide feedback throughout the project has resulted in a better product and "buy in" at all levels of the organization.

The EHS segment allows us to provide mandated data to OSHA and the Deportment of Labor (DOL) for accidents and injuries. EHS ensures prompt medical treatment and notification to OWCP for adjudication action on injury claims and updates required OSHA forms automatically to ensure compliance with federal regulatory requirements.

The USPS is currently working on additional technology within HCES to improve and streamline other HR processes. Projects are now in full operation to automate many of our personnel forms and worksheets used by management in field operations. This new initiative will process employee job movement more quickly and efficiently with an additional reduction in paper usage and processing time. A knowledge management component will be introduced this year as well. This additional technology will allow Personnel Specialists at our HRSSC to research employees’ questions much more quickly and accurately. Our Learning Management System (LMS) technology will be enhanced as well this year, with on-line training options for field users needing instruction on our HR processes.

Our objective is to constantly review options to streamline and automate transactions, and remove manual processes. By continuously leveraging technology to eliminate and automate process steps and push more transactions to employee and manager self service, we increase the capacity for knowledgeable and experienced specialists to perform complicated transactions for USPS and potentially other government agencies.

This initiative has not stopped since our initial implementation. We continue to realize benefits for employees and the organization by enhancing the significant technology we have in place as we routinely review processes using lean Six Sigma methodology. Every system enhancement is justified with rigorous Return on Investment analysis considering quantifiable business value. New initiatives underway demonstrate this on-going vision and strategy, such as end to end automated on boarding for new employees and a state of the art knowledge management system for employee self service.

For Europe (still taking applications for all categories till March 25, People’s Choice Award nominations till April 28) please email: naomi.secor@iqpc.com by April 28.