 Source Seminar Intelligent Cost-Cutting February 2009 Eilish Henry

PricewaterhouseCoopers LLP Employee Engagement: the key to sustainable efficiency gains Sharing the distilled learning, not just from what we did well, but also, and perhaps even more important, what we did badly – including employee engagement! February 2009 Slide 2

PricewaterhouseCoopers LLP February 2009 Slide 3 HMRC – some context HMRC – created in April merger of IR and C&E 100k people in more than 800 sites with 200+ supporting IT systems Major public sector reviews (Gershon & Lyons) Gershon – find efficiency savings for HMRC of 12,500! Processing function (“back office” with 30,000 people - find savings of 8,500!) IT Programmes would not deliver within the timescale and A Key Departmental Target – Deliver a better customer experience!

PricewaterhouseCoopers LLP February 2009 Slide 4 The challenge – how to do more work to a higher standard with fewer people?

PricewaterhouseCoopers LLP February 2009 Slide 5 The Solution? - PaceSetter Lean – taking the non-value added work out of our processes Supported by Leadership and Operational Management interventions Benchmarking against other organisations and learning from them – “Go and See” And then later… Re-configuring Processing using Migration of work and people

PricewaterhouseCoopers LLP February 2009 Slide 6 This was not about “slash and burn” The aim was not to simply cut a fixed % across the whole of the business but rather to carefully target the cuts at those areas that did not add value!

PricewaterhouseCoopers LLP February 2009 Slide 7 The changes were both tangible and intangible Tangible Fewer staff Fewer sites Larger sites New desk layout – team-working Hot-desking Visual Management Daily performance conversations Intangible Increased confidence amongst team members - a “can-do” attitude More ownership of problems and Willingness to use their knowledge of the business processes and To engage in problem-solving More effective team working Increased focus on the customer Greater level of risk-taking

PricewaterhouseCoopers LLP February 2009 Slide 8 Examples of tangible changes – Visual Management Team Performance Board – Tracking only a handful of KPIs - the focus of the team’s daily performance conversation with their team leader. What went well and why? Learning from this? What didn’t go well and why? Learning from this? Position for graphic or image Communications Hub - key messages about performance and also wider organisational concerns. Shared learning. Feedback from customers.

PricewaterhouseCoopers LLP February 2009 Slide 9 Where we did a bad job: People felt de-motivated and insecure, unwilling to get behind the changes People with options voted with their feet We lost skilled, experienced and motivated staff and Retained less experienced, less skilled and de-motivated staff (refer to results of staff surveys and also Radnor Report) Where we did a good job: People felt informed, energised and were willing to get involved with the changes and also to Acquire new skills and enhance existing skills. We retained more of our skilled, experienced and motivated staff and Restructuring and re-organisation was achieved without adverse impact on the customer “People learn what they want to learn”. Boyatzis

PricewaterhouseCoopers LLP February 2009 Slide 10 Enhanced Employee Skills Effective team working Lean tools & techniques Problem Solving Challenging constructively Enhanced technical skills Customer Focus All of column 1 + Coaching & Mentoring Visual Management Challenging appropriately: non-attendance & under-performance All of columns 1 & 2 + Detailed knowledge & application of lean tools Facilitation skills Team members Team Leaders “Expert” support

PricewaterhouseCoopers LLP February 2009 Slide 11 Effective Team Working Small teams & groups are natural forms of social organization Neural capability & evolutionary development of the brain equip humans to function in small groups But Simply being in a team or small group does not necessarily produce an effective team People change through and with others Effective coaching and mentoring are essential ingredients for change

PricewaterhouseCoopers LLP February 2009 Slide 12 Finally Never underestimate the capacity people have to resist change Especially true in public sector organisations Many people need compelling reasons to change – the “burning platform”

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