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Organisation: AmeySector:InfrastructureTrack record
Overall winner of the 2011 CIPD People Management Awards
Amey is a high-growth company operating in a competitive and volatile environment. As an infrastructure business, it contributes to the upkeep of the UK’s road and rail network, as well as some of its large public buildings. Towards the end of the days of big government spending in the last decade, growth and contract winning took precedence over everything else for Amey, and management tiers and processes were allowed to stack up unchecked. By the onset of the recession in 2008-9, conditions added up to a “perfect storm”, according to CEO Mel Ewell, who joined the company as operations director in 2001, taking the top job in 2003. “Amey had arrived at a point where it really needed to push on in terms of operational efficiency, visibility down the line, accountability, responsibility,” he says. “We had got overweight as an organisation, no question. We probably hadn’t kept pace with best in class. And by 2009, by any measure, we weren’t as efficient or as effective as we could be, either operationally or in HR... It made for a pretty compelling argument for change.”One of Ewell’s first steps was to bring in a new group HR director with the capacity to overhaul both HR and the organisational structure as a whole. Valerie Hughes-D’Aeth, former group HR director at Xansa, was up for the challenge. “When I joined in 2009 the company was doing well – there were bids all over the place and we were winning business everywhere – but it was very fragmented,” she recalls. “There were five different divisions all doing their own thing. The MDs of the business units would report to a chief operating officer (COO) but weren’t part of the executive committee, so weren’t part of the discussions and debate. Employees recruited would literally say, ‘I want my job title to be X’, and that would be put into their contract, so we ended up with 4,000 job titles. In some areas, there were up to 15 management layers. I literally didn’t know how many recruits or temps we had at any one time, and all our systems were paper files scattered all around the country.” Her top priority was to get to grips with this situation.
Hughes-D’Aeth’s very first meeting with the HR directors of Amey’s five divisions revealed that they hadn’t got together previously, didn’t really know each other and so didn’t know what was going on. “I was quite shocked. I’d come from a different background and thought ‘Gosh, there’s a real journey to go on here’,” she says. Ewell puts this situation in the context of HR’s relatively recent beginnings in the company. “Back in the late 1990s, the HR processes inside the company were verging on non-existent,” he says. “Through 2000 to 2004 we brought it up to at least having a pulse. Between 2004 and 2009, we got it to a point where it was a people-orientated business. But, lift the lid, and the quality, depth and substance of much of what we launched wasn’t there.”An embryonic service centre was in operation, but “was literally a few administrative people together in one place, having to serve the five different divisions”, says Hughes-D’Aeth. “There was no sharing of processes or systems. It was so poorly regarded in the business that people would say it’s a black hole – questions would go in there and never come out.” The rest of HR was out in the field, working on contracts at the beck and call of managers. “It was old personnel officer style,” she continues. “Account managers would say ‘It’s working all right because someone does it all for me’ – so that was one of the big challenges.”Stephen Munro, business director of the local government division, describes HR at the time as being “very much embedded into each contract. There was lots of on-the-ground support and every manager had their own HR person – not just each division but each contract. And there might be 20 contracts in my division at any one time.”It was these embedded HR professionals, rather than line managers, who were dealing with most people management issues. Breaking managers’ reliance on HR while taking HR people away from the front-line roles and relationships that they enjoyed would prove tough. On top of that, systems and processes were in desperate need of an overhaul. Hughes-D’Aeth describes how, on her very first morning with the company, she found a pile of papers on her desk, which turned out to be forms she was supposed to approve. “I wasn’t used to paper forms anyway,” she says, “but these included promotions and salary increases that I was meant to sign off and agree. But, with no career framework and everybody using different job titles, I had no idea if a particular job title meant somebody was on £20,000 or £80,000.” Similarly, despite working in heavily unionised industries, the company kept no records of who was covered by which collective agreement.“Mel said to me when I joined: ‘You need to go and sort it out’,” recounts Hughes-D’Aeth.
Key initiativesWhen choosing the first thing to tackle, Hughes-D’Aeth certainly didn’t pick the easy option. Despite being the newbie on the executive board, it was the executive structure she had in her sights. It quickly became clear that the structure needed a shake-up. “The COO had been with the company for 20 years and it was difficult, but we needed to remove that role,” she says. “We moved from five to four divisions, put the MD of each business unit onto the executive and moved others, such as procurement, down a level.” The process of cutting 4,000 job titles down to 450 was the next priority, and “became an enormous communications effort”, says Ewell. “There was awareness in the company that we had huge disparities in roles, responsibilities and spans of control. People do get attached to their job titles, but they also look over the fence and say ‘Hold on a minute, why am I managing 17 people and he’s managing four?’ So we explained the disparities, we explained the issues, we had a whole series of meetings that people could attend and feed into. It was a bottom-up review.”A career framework was drawn up with the help of the new executive team, who kept in regular communication with employees. Placing all roles within 20 job families and creating a career path framework was a major exercise that took about a year to complete. There was an appeal process for people who were unhappy with their new job titles or levels and, while some employees used this, the number of appeals was not large. “We didn’t change anybody’s salary, but certainly the pecking order in some areas changed, and that is emotional,” Hughes-D’Aeth says. On the other hand, she points out that it helps individuals to pursue their own career paths if they can read job descriptions online and see what it takes to get to the next level, or the one above that. Munro, who worked on the new job roles and titles in his area of the business, believes that generally people accepted there was a need for change. But they still needed to be brought on board, and Munro thinks the key to the success of the change process lay in constant communication and employee input. “Getting as many people as possible involved in shaping it and understanding the drivers was what made it work,” he says.As a result of creating the new job families and delayering management, the business was able to reduce headcount by 370, mainly through voluntary redundancies, and achieve savings of £15 million. All areas of the business now have a maximum of seven management layers, while around 1,200 people managers were identified and communicated with regularly for the first time. Importantly, they also received training through an academy programme, which brings all people managers together twice a year for interactive management skills sessions. Running alongside all this change was the restructuring of HR. “The HR community itself wsa a big barrier,” says Hughes-D’Aeth. “Suddenly I come along and say I don’t think this is the most efficient way to run things – we don’t need a whole army of people in each division hand-holding the managers. And at administrative level, they liked the fact that they were out in the field working with the managers, building good relationships. They were not comfortable giving more strategic input, and didn’t really know what that meant. That was a real challenge – nobody had worked in an Ulrich model.”Hughes-D’Aeth reduced the number of people working in the function from 165 to 125 and introduced HR business partners, while bringing the rest of the function back to the centre with an administrative service centre and specialist learning and development, employee relations and internal communications teams. “We took out a whole layer of HR managers,” she says. “Most of them were redeployed elsewhere, but some of them successfully applied for the new HR business partner position and have been developed through ongoing training. They report to the four HRDs of the business units.” She admits that the process of getting to this point was painful: “Those that joined the service centre at the time hated what they were going through, but if you ask them now they will say it was the right thing to do. The business is much more appreciative now of the support they get.” The service centre previously known as “the black hole” now has strict turnaround times for queries: 70 per cent of calls have to be turned around immediately, 90 per cent in 24 hours, and the remainder in a maximum of three days. Once the new organisation and HR structure were in place, achievements came through thick and fast: employee and management self-service was introduced, real-time employee data became available to senior managers on a “dashboard” system, a 40 per cent saving was made on legal fees by developing internal expertise, and temporary labour was outsourced, saving £1.2 million a year. In addition, employee paper files were painstakingly scanned, one by one, until a fully digital database was built up. “Five years ago, I would have been scrambling around in boxes trying to find the right paperwork,” says Ewell. “That focus on HR as a completely integrated approach to managing a company is fundamental. In 2008 or 2009, that was an aspiration – today, it’s real.”Learning pointsYou don’t ever do a project like this and step back and say ‘That was perfect’,” admits Ewell. “As with most projects, what you underestimate in terms of cost and complexity is the IT infrastructure.” He gives the example of how hugely complex it was to standardise the temp labour system and try to get customers, contracts and supply chain all on to a single platform.For Hughes-D’Aeth, the key learning point was that not enough time was spent on bringing the new executive team together. “I think we all assumed they’d work together well, and then last summer we realised they weren’t working as collaboratively as they should be, so we did some interventions and they are working much better together now – but I’ve learnt that we should have done something earlier to embed the new structure.”In terms of understanding what made the overall process go so well, the key word is “communication”. As Munro says: “We made sure people were communicated with. We let people work on it, rather than just dictating from above. It resulted in a lot of people feeling that they were involved in their own destiny.” That, combined with an established management and development structure, is Hughes-D’Aeth’s proudest achievement: “The academy programme gets us to the next level,” she says. “It gives us the platform to grow. Managers were the most important thing I could focus on as an HR director.”HR, in turn, has become vital to achieving CEO Mel Ewell’s plans for the future of the business. “We have a strategic vision over the next four to five years that we are going to more than double the workforce,” he says. “Quite frankly, if I hadn’t brought Valerie in when I did, this company would not be capable of doubling the workforce – we’d do that and fall over.”