Award Winner 2013: Royal Mail delivers Excellence In Improvement & Innovation

Introduction Royal Mail's shared services group serves 20 business units across the UK, covering 130,000 employees. The organisation won the 2013 SSON Excellence Awards (Europe), and was honoured at the glittering Awards ceremony in Prague earlier this year. The decision to treat Continuous Improvement as a Service Stream in its own right – the trainees were managed centrally and when they had completed their training, were seconded to specific teams to drive improvement on a day to day basis – was what most impressed the judges. In support of promoting best practice and learning across our members, Royal Mail's Mike Hitchens, Development Manager/Master Blackbelt at Royal Mail, Royal Mail HR Services (pictured above) has agreed to share its winning application with the SSON community. You'll read about the continuous improvement programme that was introduced and embedded in the SSO team, and you'll also be walked through the design of an entirely bespoke improvement methodology – the Service Improvement Review, which proved to be the silver bullet to achieve increased engagement. The SIR's structured,100-point scoring system – as opposed to the ambiguity and lack of granularity associated with other methodologies – meant teams were able to fully understand where they stood and what they needed to do to achieve the required standard. Also: learn lessons from each of the 4 stages of deployment, gained across 10 years of practice. Services suppied: 1. Centralised Service Offering 2. Is this process Outsourced? 3. Fully Automated? (F) Accounts Payable Accounts Receivable Auditing Benefits and Rewards Administration X Budgeting Business Performance Analysis X Business Performance Reporting X Call Centres: Employees, Suppliers, Customers X Call Centres: IT Help Desk X Collections Cost Accounting Credit Customer Billing Employee Data Management X External Reporting X Facilities and Real Estate Fixed Assets Forecasting General Accounting (G/L, I/Co. Inventory) Management Reporting X Payroll F Planning Purchase Order Processing Staffing Services X Supplier Management X Tax Services Time & Attendance X F Travel Expense X F Treasury Workforce Development X Other: Recruitment administration X Other: Learning administration Other: Talent administration Other: Organizational Management X Other: Mobile Employee Tax Compliance Strategy Since the inception of HR Services as a shared services centre in 2004, improvement and innovation has been at the heart of everything we do. Cost and headcount reduction has been our primary focus; in terms of a strategy we were very clear in what we wanted to do and how to do it. Our approach can be broken up into four individual elements: Initiation, Growth, Maturity, Business as Usual. 1. Initiation The aim here was to centralise our HR offering – the main objective being the standardisation of our processes to create a smaller yet more effective and knowledgeable workforce. We recognised that the process is key. With this in mind we decided to work with BSi with the aim of becoming accredited in ISO 9001. 2. Growth Building on this success, we cast our net wider to perform improvements WITH the business – looking to enhance our recently standardised processes. Again, the business objective here was to look to reduce our costs whilst maintaining our high service standards. 3. Maturity Building on these achievements the attention then moved to our leaders. We reviewed the focus of our in house improvement mangers to become change facilitators, training and guiding our leaders to help them deliver change. The business objective here was to increase our improvement capability and capacity and to provide the platform for the next stage… 4. Business as Usual Finally we looked to achieve the most difficult step – performing improvements on a day-to-day basis as business as usual. Building on the lessons learned on our improvement journey we selected the best bits from various methodologies to design our own unique approach, designed by HR Services for HR Services. The objective here was to create a mind-set in every employee in HR Services that improvement is a way of life and everything we do should be achieved with improvement in mind. Improvement Methodologies Initiation: 2003-05 Starting our journey, we initially hired an external Master Black Belt and a team of Black Belts in Six Sigma helping us deliver our main centralisation projects. We also engaged IBM to train 15 high potential individuals as Black Belts to marry technical capability with knowledge of the business. We also introduced 5s – to provide the foundation for on-going improvement, and coupled this with our desire to achieve the ISO 9001 accreditation. In terms of business benefit this activity was successful, leading to a reduction in headcount of circa 1350 FTE. However, we did learn a few things that helped us plan for the next leg of our journey: External Black Belts will leave It’s important to select the right people and the right training and give people the scope and time to deliver Leadership commitment and active sponsorship is essential Introduction of 5s is fundamental to the success of any continuous improvement initiative Growth: 2005-09 Building on what we had learned over the last two years we then looked to grow our improvement capability. We rebranded from Process Improvement to Continuous Improvement to help position the need for the activity to be maintained. As 5s was such a success, we decided to focus on Lean elements and introduced Value Stream Mapping to fully understand and quantify our processes. Two more waves of 30 internal Black Belts were trained, and we worked with Catalyst Consulting to design a bespoke approach for HR Services. We also worked with Catalyst to develop our own in house Black Belt accreditation programme to give our trainees something tangible to aim for. Underpinning this was the decision to treat Continuous Improvement as a Service Stream in its own right – the trainees were managed centrally and when they had completed their training, were seconded to specific teams to drive improvement on a day-to-day basis. To help our improvement managers understand the data in their processes we used Minitab software to help with analysis and to promote a data driven approach to improvement. Again, headcount reduction was our primary objective; this part of the journey led to an overall reduction of circa 250 FTE. Lessons learned during this period were: Lean wins hearts and minds Senior leadership commitment is still essential Project governance is essential Maturity: 2009-11 This leg of the journey involved a radical shake up of how we approached improvement. All of our trainee Black Belts were seconded to the PSP Programme, a business driven project tasked with the implementation of a new SAP HR system. Improvement was still seen as vital so a HRS wide training programme for our leaders was designed and delivered. Team Leaders were trained in using and analysing data, middle managers were reminded of the importance to set their team leaders improvement related objectives, and the senior management were given training on how to positively promote an improvement culture in their service areas. We also introduced the Customer Perception Satisfaction Index (CPSI) – a measure to understand what our customers really think about HR Services. Based on the Net Promoter Score and measured on a quarterly basis, we proactively contact employees who have used HR Services over the period and ask them the ‘killer question’ "Was the service you received better / worse / the same as you expected?" Initially the target was a NPS of 44; however we have since raised the target to 50. Achieving the target triggers a bonus payment of £250 for each HR Services employee. Feedback from the exercise is collated and analysed by each service area to initiate improvement activity. We still continued to maintain our ISO accreditation, something which helped us to understand the lessons learned during this period. Even after 8 years, 5s and ISO are still vital and underpin the HR Services approach to improvement. Business As Usual: 2011-present 2011 was a busy year for HR Services. We were subject to a business-led restructure, our new SAP HR system was ready to be deployed, and our Pensions team implemented a fundamental change to the way people received their pension benefits. All this meant 75% of our processes were affected over a 6-month period! Building on what we knew, we designed an entirely bespoke improvement methodology – the Service Improvement Review (SIR). The SIR is a combination of 5s, lean and certain elements of ISO and was designed to be delivered in three stages; Baseline, Maintain and Improve. These standards apply to every team in HR Services, and teams are assessed on a 6 monthly basis to ensure adherence. Following the assessment teams are given a score out of 100. The initial target was for teams to score 80, with actions being assigned to teams that fell below the required standard. "Baseline" was concerned with teams understanding and documenting their new processes and maintaining them to our SharePoint document library. [eventpdf] Once teams had reached 80, the bar was raised to 90. Achievement of this was tied in with our HR Services-wide objectives, forming part of the year’s bonus targets. During the "Maintain" phase, teams focused on their in-process measures and applyied the principles of corrective and preventative action religiously, where targets were missed. Every team in HR Services achieved this, a fact that is reflected in our performance and ISO Recertification, where all minor non-conformities were discharged, giving us a "clean bill of health" across all areas. As we move into 2013/14 our focus turns to Improve. Our approach to VSMs has been completely redesigned to also include measures on utilisation and the quantification of waste experienced on a day-to-day basis. The information collected in the VSMs will then provide the improvement opportunities for the coming year – for example, in the initial stages gathering this data our Pay Services team have identified over 100 potential improvement opportunities! Complexity of Change The main resistance has been convincing our people that delivering change is a "business as usual" activity and not something we turn to when we face a problem. Coupled with our ever decreasing headcount the improvement community has had to find the balance between recognising that people do have a ‘day job’ whilst also ensuring that improvement is consistently delivered. Our change management approach to this is based on one that has been tried and tested since HR Services was established 10 years ago: Clear vision and direction Senior management commitment Effective team work and communication Recognition We have already discussed our Improvement approach. The support and visible positivity towards this by the Director of HR Services, and all the senior leaders has been fantastic. All improvement communication is delivered on a face-to-face basis, giving our improvement community the chance to explain on an individual basis what it really means for teams. The Service Improvement Reviews (SIR) and associated Team Action Plans provide focused feedback to drive continuous improvement. The SIRs have been incredibly well received. Due to the structured100 point scoring system, as opposed to the ambiguity and lack of granularity associated with 5s scoring, teams are now able to fully understand where they are and what they need to do to achieve the required standard. This has led to an increase in engagement, which is reflected by every team in HR Services reaching the required score of 90 in line with the required date. The setting of an HR Service-wide bonus linked improvement objective for every employee has certainly helped as well. Benefits Achieved/Hard Improvements The main aim for our improvement activity was initially to reduce headcount. At the start of our journey HR Services employed over 3000 people – now we operate with less than 640. The graph below shows HR Services headcount since 2003: As well as focussing on headcount, we also record customer satisfaction via our CPSI initiative. The graph below shows HR Services performance over the last 3 years against this measure: As part of our relationship with BSi they provide benchmark data against other "professional services" as part of the three year recertification process. The graph below shows the average number of weaknesses highlighted by BSi per day of their assessments. A weakness can be defined as a major or minor non-conformity against the standard being raised. Coupled with that fact, we now have zero non-conformities outstanding against any of our teams. This is a clear indication that we are doing the right things. As for any unexpected bonuses; as we’ve become more data savvy in HR Services we’ve been able to focus on providing our customers with a more proactive offering. Indeed both our Pay and Contact Centre team are about to go live with specific proactive services teams whose main objective will be to analyse data and then work with our customers to work collaboratively to deliver an improved service Differentiators To understand what makes us different, here’s the opening statement from the Director of HR Services in our 2010/11 Business Plan: "Change remains at the heart of what we do – through ‘evolution not revolution’." Dermot Toberty 2010 The key part, here, is the ‘evolution not revolution" comment. It’s taken HR Services 10 years to get where we are today. We’ve invested time and effort in all the popular improvement methodologies – Lean, Six Sigma, ISO, 5s, VSMs, etc. We’ve taken the time to review our lessons learned along the way, and have finally developed an improvement method that is perfect for HR Service – the Service Improvement Review, which combines the best improvement elements that we’ve picked up over the years, producing something "By HR Services, for HR Services." The change in approach, in terms of our improvement resource, is also a contributory factor in our success. Tasking our improvement managers to facilitate change instead of delivering change has had a positive effect on the way improvement is viewed outside of the improvement community, moving away from the sense that teams are subject to change, and towards them being responsible for driving change. This focus of the responsibility for change being shared by each and every one of our 637 employees, combined with our completely unique approach to HR Services, are the reasons I believe our approach is excellent and ultimately successful. Enter for an Award Don't be shy: register for one of our regional Excellence Awards here. The next Awards take place in Singapore in September, at Shared Services & Outsourcing Week Asia. We are still taking applications. It's as easy as 1-2-3, so don't delay, apply today.

Award Winner 2013: Royal Mail delivers Excellence In Improvement & Innovation

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Award Winner 2013: Royal Mail delivers Excellence In Improvement & Innovation

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