Regional electricity company-
Driving operational performance improvement

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The challenge

The network maintenance division of this regional electricity company was losing money and failing to deliver profit improvements promised to shareholders. Forecast losses of up to £40 million for 2002, an increasing number of customer complaints and the threat of penalties by the regulator meant rapid corrective action was needed.

Poor management of the 2200 field staff meant over 40% of work was carried out at premium overtime rates. A belief existed amongst project engineers that the field staff were shirking, starting late, leaving early and deliberately running into overtime. Theft of equipment from stores was also on the increase.

Approach

Led by three Corven interim managers, the turnaround of business performance was structured into three phases.

Phase One
The first six weeks focused on identifying the root causes of poor performance, setting the strategy for the following year and on quantifying, prioritising and launching ‘quick wins’. The initial challenge was to gain dependable management information (since current data was unreliable due to problems with a new SAP system), by developing a new cost model for the key business areas. This analysis demonstrated that low field staff utilisation was caused more by poor workflow management by project engineers at head quarters than by lazy field staff.

At the same time, Corven worked with the Managing Director to develop the strategy and key business objectives for the following year. With the vision of the business clear, a review of all ongoing internal projects led to 28 non-value adding initiatives being stopped and resources reallocated to quick win activities focused on improving the organisation’s top five performance measures.

Phase Two
Over the following eight weeks, Corven worked with a Change Team to improve field staff utilisation, to renegotiate civil contractor agreements, and to communicate the strategy to the organisation.

The initial focus was to deliver a new resource allocation tool that improved the flow of work from project engineers at head quarters to the field staff. Thirty Foremen were recruited from outside the utility sector, put through an intensive two-week training programme, and rolled out across the network, area by area. Their job was to monitor performance and to increase utilisation of staff by pulling work from head quarters.

During the same period, the Corven team ran a number of workshops to scope out the requirements for new civil contractor agreements. Corven facilitated a number of events to gain alignment with the Board on the strategy. A communications plan was launched and posters, leaflets and informal breakfast meetings between directors and field staff were introduced. By the end of the eight weeks a series of roadshows were launched to communicate the new strategy and business objectives to the whole organisation.

Phase Three
With the utilisation of field staff dramatically improved, the focus now moved to driving productivity and skills transfer. After building an improved working relationship with the unions, field staff were encouraged to develop a broader range of skills and agreed to be transferred to different locations to get a better skill balance across the network. Overtime was stopped except for emergencies and the use of contractors was eliminated for several classes of work. New standard hours for jobs were introduced and monitored by Foremen for all activities.

Results

From a loss of £33 million in 2001, the business created a profit of £10.8 million the following year. Utilisation of staff across the network increased to almost 100%, with productivity doubling to 61% and overtime spend dropping by 85%. Overall spend on civil contractors fell by 27%.

Improvements in morale across the workforce were measured in the Employee Opinion Survey and the entire change programme gained increased credibility from blue-collar workers to shareholders.