18 months to turn around a flagging culture: JTI shows how it's done



Mattijs Backx
08/27/2013

JTI.jpg

Roger Matthey, Global BSC HR Lead, Japan Tobacco International, accepts the joint winning award for Excellence in Culture Creation from judge George Connell


JTI's Business Services Centre manages to turn around a flagging culture in just 18 months – and wins SSON's 2013 Excellence In Culture Creation Award to boot

The Geneva, Switzerland, headquartered SSO was set up in 2002, and consists of 350 full time staff. Other centres are based in the UK, Russia, and Malaysia. The SSO services 25,000 employees in 57 countries. As a result of the culture improvement, plans are underway to expand the services to more markets & factories.

Services provided


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Centralised Service

Offering

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Is this process

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Fully Automated?

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Accounts Payable

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OCR & Workflow

Accounts Receivable

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Customer Billing

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Fixed Assets

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General Accounting (G/L, I/Co. Inventory)

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Payroll

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Tax Services

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Travel Expense

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Treasury

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Strategy

Japan Tobacco International (JTI) took the decision to form a Business Service Centre (BSC) as part of the SAP implementation in 2002. During and after the implementation, there were no formal SLAs, KPIs or standardised process documentations. The new and retained organisation had no formal, defined role, and the BSC organisation had no global leadership, governance or process control.

As a result, after the implementation, there were significant failures. This resulted in lower customer satisfaction scores and high staff turnover. The strategic focus of the first few years, therefore, was to simply get the basics right, and establish a proof of concept for the BSC.

The initial stages of development, proof of concept, and consolidation of basic business processes, happened between the period 2003-09. This was carried out independently, with each of the three business units being self-managed and having no global alignment. Staff turnover was still high and customer satisfaction still relatively low during this time.

An initial review of the culture in the Manchester centre, conducted in 2009, showed that staff were not fully engaged at work, had a general lack of respect for the leadership of the organisation, and were not aligned, even at a local level. They certainly had no engagement with their global colleagues. The review also revealed that they were unaware of any global strategy, and did not understand how they fit into the overall scheme of finance provision within JTI.

In terms of culture, they were at the lowest ebb of a negative curve.

Thus, in 2009, the decision was made to address the issue of global culture within the BSC and create a more globally aligned organisation that was both customer centric and perceived to be a high-value asset to JTI. The cultural change programme was limited to the BSC but, after the event, is now being used as a benchmark for other business units within JTI.

The benefits of the cultural change were designed to be multi-layered. First, staff morale and satisfaction would improve. It would be a better place to work. Next, staff engagement would improve by focusing on improving teamwork and collaboration at both local and global levels. This, in turn, would improve efficiency. Finally, there would be streamlined operating processes and aligned KPIs. All of which would improve customer satisfaction.

Change Methodology

The culture was changed by creating a simple business process. First, a proper analysis of the situation was made by reviewing a number of key metrics focussed on team performance and customer satisfaction. This analysis then allowed for a proper strategic framework to be designed that addressed key issues in a timely and effective way. This strategy was communicated to all members of the BSC through a variety of forums. The strategy was implemented by using a considered resource roadmap that made sure appropriate support and focus was provided to the initiative at all times. Finally, the strategy underwent a full review every 6 months, by the global management team, to ensure alignment and involvement in the design and creation of next steps and interventions.

The initial timeframe given for the process was 18 months after the strategy launch. Thus, a recognised metric to measure impact was required, to demonstrate significant improvement.

The strategy that evolved had 6 main steps. These were:

  1. Provide clarity of vision/mission: at the start of the process the BSC had no central mission or vision and therefore had no clear sense of direction or focus. The starting point was to establish one and involve as many people as possible in the process.
  2. Create a shared set of values/performance criteria: again, there was no central operating ethos or performance goals for the BSC. These had to be created, so that staff could understand what they needed to do to make the strategy a reality. The added challenge as that this had to work across 3 continents and 4 countries, so the overall cultural dynamic was a lot more diverse.
  3. Involve staff in development process/integration of strategy: from the outset, it was decided to make the cultural change process one that involved every level of the organisation. This would model the collaborative, team based culture that was the ultimate destination of the team, and it would maximize the engagement and motivation of staff with the process.
  4. Embed into everyday work practices: once the focus of the development process was created, the key tenants of it had to be embedded within the normal daily routines of staff members in order for it to be ‘lived’ at a habitual level.
  5. Provide development and training where necessary: resource and support were provided to allow for an integrated development schedule to be established that focused on creating both awareness and understanding of the cultural change process and, additionally, guidance on how to make it work at every level of the BSC.
  6. Review and continually evolve strategy in line with vision and mission: regular review sessions were staged with the global management team to review the affects of the strategy and plot the next steps of the development. Additionally, regular feedback was provided by all team members so that successes and challenges could be acknowledged in a timely fashion.


A specialist advisory consultant, Dr. Jon Baber, was used by the BSC. He is a specialist consultant in internal branding but he played an advisory role only. The main responsibility for change was lay with internal BSC staff, to promote the longevity of the change process. Thus, the cultural change initiative was ultimately a shared process between the global management team, team leaders and BSC associates.

A Customer Satisfaction Survey was designed, and conducted on an annual basis. Feedback from this was used to inform and drive strategy. Additionally, Customer Connect days were staged to promote the BSC strategy and gather feedback from key customers as to how improvements needed to be made to raise the level of service delivered to them.

Internal branding was promoted through a mission and vision that provided a sense of identity, focus and purpose to the BSC. This was clearly linked to the wider JTI vision and values. The mission was "to allow the business to focus on the business" and this gave the global team a clear definition of why they were employed by JTI. This also acted as the central focus for all consequent business decisions. The vision was "to be a world class business partner." This provided the team with the operating aspiration in terms of performance. Finally, a clear set of 6 values or World Class Principles were created to give structure to the business plan and evaluation criteria (KPIs). All of these elements were created by the global management team with feedback and involvement from all staff members. The impact of this was to provide immediate understanding and alignment to the strategy for both the BSC team and our customers. It also made the evolution of a simple but focussed business strategy easier.

Within the cultural change programme, there was a clear understanding that the initiative would only succeed if there were absolute alignment and engagement from every member of the BSC team. Therefore a coordinated development strategy was created that approached the challenge from three different directions. The first was a leadership development program called the "Active Leader Programme." It was designed for all team leaders and above to assist them in understanding the focus and approach needed to make a more team-oriented BSC culture a reality. It was a three-day program that all team leads underwent. This was supported by team development sessions designed for "intact" teams within the BSC. Thus, the teams reviewed their current operating style in conjunction with their team leads and collectively designed an action plan focusing on how they wanted to develop as a collective. Finally, a BSC Ambassador concept was designed that allowed team members from all levels to be trained as facilitators and deliver interactive events within the BSCs to communicate the BSC strategy and gather feedback from all BSC members. This feedback was then used by the global management team to help evolve the developmental strategy for the BSC.

Complexity of Change

Initially, there were different reactions to the proposed change process. In Manchester, staff were very cynical about the process and did not believe that the management team would deliver on its promises. In St. Petersburg, staff needed to fully understand the requirements and link these to their daily routine. They needed detail about what was going to happen and how it would affect them. In Kuala Lumpur, staff were keen but had an obvious lack of both skills and knowledge on how to proceed. Thus, the change process needed to be global in nature but localised where necessary to address these challenges.

In total 350 employees were affected across four locations, countries and time zones – Kuala Lumpur, St Petersburg, Manchester and at Geneva Headquarters.

The BSC change plan was cascaded via a BSC strategic document. However, creating a culture was difficult. There was a clear need for change but some resistance to actually doing it. This varied from location to location. A lot of this was due to cultural conditioning. People were used to operating in a non-thinking, silo-based way after years of ingrained behaviour and a focus on task completion rather than developing behaviours. Also, due to the problems associated with the early development of the BSC, the whole organisation was very risk averse and suspicious of any change process. It was necessary to shift this mindset to a more positive and engaged one across the organisation.

The leadership challenges were:

Perseverance: the ability to stick to the "script" and maintain focus and belief when competing demands and resistance potentially undermined the process.

Creating a compelling vision: the ability to craft both a mission and vision for the organisation that aligned, motivated, and engaged all staff members. Also, the ability to articulate to both staff and customers so that the focus and direction of the BSC was clearly understood by all.

Creating a clear and simple strategy: the ability to break down a complex, development structure into one that was easily understood and, therefore, actionable by staff members. Also, the ability to communicate this across national cultures and diverse languages.

Maintaining credibility and trust in the process: making sure that when promises were made, they were acted upon. There were no hollow promises; everything that was agreed was actioned, no matter how challenging.

Benefits Achieved/Hard Improvements

In order to measure the effectiveness of the BSC, a number of metrics were used to give a balanced view of progress. These were as follows:

High Performing Team results: The BSC was assessed using a High Performing Team (HPT) survey. This assessment tool was originally devised in the British military, and measures team performance and culture against 20 criteria. This survey, completed by BSC staff, showed an overall increase in performance from 59% in 2009 to 74% in 2012. The 15% increase in team performance demonstrates a positive impact of the whole cultural change initiative. It also coincided with other positive scoring in the metrics including:

External Staff turnover: turnover in 2007 was 26%; in 2011 it was 8%.

This data is also supported by anecdotal feedback from BSC customers who attended the BSC Connect Days during that period, when they talked to and engaged with members of the BSC team. Additionally, regular visits and informal interviews with BSC staff by global management reveals that this data is supported by staff feedback that the BSC is a much better place to work as a result of the initiative.

The BSC is now recognised and used as a talent pool for the wider finance community in JTI. In 2011 there were 39 staff promotions, 7 secondments and 13 permanent placements to the wider JTI finance community meaning that internal turnover is almost at parity with staff leaving JTI.

Furthermore, the change in culture is contributing to an increased focus on process improvements; the BSC organisation is expecting to gain 15-20% headcount and cost efficiencies in the coming years with a portion already realised.

Finally, as well as exporting talent to the wider finance community, the BSC is now recognised as a more positive career and development choice for established staff within JTI finance.

Differentiators

The main factor that has been apparent throughout the process is that the change was driven for the staff by the staff. The leadership team has facilitated the process but has not dominated it. Thus, the process has a greater sense of longevity within the team, which will survive changes in staff or senior managers.

The initiative has also over-achieved in terms of expectations. Within 18 months of instigation, results have been dramatic in terms of team performance, customer expectations and functional output. The BSC is now being used by members of JTI senior management as an example of how to operate within JTI. That is a long way removed from its reputation at the start of the process.

The initiative has also secured a foundation for even greater growth: there is a significant chance that even more work from the JTI finance function will be sent to the BSC because of its track record of performance and output. It’s seen as an entity that can deliver. The foundational work that has occurred as a result of the cultural change program means that such growth is being planned from a rock-solid foundation. Thus, expansion is not just a dream, but also a distinct possibility.

The key differentiator for this initiative was the holistic approach: it was not top down driven, but is a shining example of shared leadership, with success driven by different people at different levels of the organisation. It addressed cultural change using a multi-channel, multi-agency approach and worked with a long-term performance goal in mind. The change was designed to encourage capability, understanding and engagement. This meant a significant level of investment and commitment, but has driven significant results in a short space of time.

This culture change initiative is already being used as a model for development within JTI. Other members of the JTI finance community are using the template of the BSC change process for their own teams and are using the BSC as the benchmark for their process. This is a dramatic turn-around for the team, which only 18 monthspreviously was suffering from the hangover of its inception, launch and early failings.

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