Postal Productivity and Labour Flexibility An Employee-Centric Approach Adrian King PiP-Geneva 2015
10 Core Arguments 1. Post face a continuing productivity challenge in the light of market trends. Productivity growth is a wider European issue 2. Postal productivity has been driven by common best practices.the incremental gains of this wave will reduce over time. 3. Post require new forms of flexibility (service, cost, labour) to create sustainable stakeholder & shareholder value 4. A core part of the next performance wave will be labour flexibility. The design of this flexibility will be critical 5. Sustainable performance needs purposeful aligned and engaged workforce. 6. Two main flexibility models- employer centric and employee centric 7. Posts have a tradition of high quality employment. Human capital is a major asset. 8. A move to semi-casualised work will be complex to implement and difficult to sustain 9. Sustainability will come through creatively using employee-centric flexibility ideas in job design. 10. This will be challenging and needs goodwill and openness from both management and unions defined in a road map * See Slide 17 for Details
Productivity and Performance : Shaping the Next Wave Technology and Process Clusters and Productivity Growth Transformation Wave 1995 Mechanisation Automation Consolidation Standardisation TQM Information Visibility Liberalisation Commercialisation Governance Outsourcing Measurement Management Culture Todays Challenges Next Productivity Wave : Information and Flexibility Current Technology Optimising with IT Connected Delivery People Future Technology Flat Sequencing Multi -sorters Packet Automation Flow consolidation Optimal Network Production forecasting Dynamic planning Dynamic production control Big data Customer Self Service Telematics Dynamic Routing Connected worker Consolidation Connected Customer Connected Things Employee Flexibility Alignment Engagement Management Culture Robotics 3D Printing Sensors Augmented Reality 1995 Time 2015 2025 Challenges 1995 Challenges 2015 Rising volumes Poor Quality Costs and Profitability Poor work process Manual Information and Control Government Structures Commercial Culture Speed of Change Falling volumes Growing packets International e-com Receiver Interaction Green supply Solutions not products Cost and profitability Agility and Culture Optimisation balance See Slide 11 for Details
Labour Market Flexibility and Productivity Design Considerations Labour flexibility will be a key to continuous incremental productivity growth however design is critical for success Wealth of evidence that a strong psychological contract drives engagement. Engagement drives performance - efficiency, quality financial return labour stability attendance and accident Engagement Performance and Productivity Flexibility Customers and Markets Balancing stakeholder flexibility :Customer, Employee Employer Flexibility Balancing Types of Flexibility, Numerical Organisational, Pay, Functional More demanding consumers, willing to switch brand Expectation tailored to needs, cheaper or more convenient Changing composition Expectations Work Life balance Regulation Labour Market Trends and Issues Psychological Contract and Sustainability Employee want purposefulness and recognition Communication and alignment Job design neglected area Mutual expectations between the organisation and employee See Slide 12-16 for Details
The Challenge In the light of market conditions the traditional labour model has to change; the challenge is to develop a workable balance of employee and employer flexibility. This needs to be built in the light of labour market trends, organisational history and stakeholder expectations. Volume & Structure of Demand Postal Business Imperatives Next Wave Technologies & Process Customer Requirement Competition Service Flexibili ity Cost Efficiency and Productivity Growth Employer Centric Labour Flexibility Employee Centric Meet Targets Financial Legal Stakeholder Expectations Engagement for Performance Workforce Demographic Market Environment Current Contracts
Employment Models: Tools for Flexibility Posts should consider more employee centric flexibility models to win support for an agile labour environment. Recognises importance of the employment deal for sustainability. Balances work-life ambitions Competitiveness through engagement Based on transactional relationships. Risks of required flexibility are transferred to worker Competitiveness through lowest short cost
Core Periphery : A Model for Balanced Employee Centric Flexibility Can meet commercial drivers but requires flexibility from core workers and if balance is to far to the right then significant quality and churn cost will undermine benefits Core Intermediary Peripheral Peripheral Features Full Time Part Time Secure Conditions Clear Conditions Career Path Committed Relation Training Defined Hours/Task Fixed Short Term Basic Contract Limited Commitment Intermediar y Core Flexibility Variable Task Weekly Hours Limited Overtime Pay -Performance Short Hours Extend for Peak and Cover Variable Task No Guarantees Limited Expectations Labour Pool Traditional full time worker Preference for part time Outsourced contractors Starter jobs Students
Labour Flexibility : Future Model Directions and Implications Sustainable productivity and employee commitm ment Current Contracts Employee Centric Core Periphery Casualization Builds productivity gains through purposefulness commitment and engagement Requires understanding of common aims trust and creativity in job design and stakeholder relations Sustainable Simple model can drive short terms cost saving if it can be aligned to labour pools Requires high compliance management Risks labour market change, static productivity quality issues labour turnover Complex migration route Increasing Flexibility
THANK YOU The presentation today is based on two on-going Strategia Group research projects on the future of the Postal Sector 1. Job Design Labour and Flexibility Work being carried out by Strategia and The Work Foundation : Initial Findings have been published in The Productivity Imperative Towards a 21st Century Model of Postal Service Delivery ( Bevan King and Toime) 2. The Next Performance and Productivity Wave Research and concept development on defining the key elements of future productivity with Heimo Thomas( Former Operations Director DPG) Elmar Toime (Former CEO NZP) and Mierbach Consulting Engineers White Paper to be published December 2015 For More Information Please Contact Adrian King Adrian.King@strategiagroup.net +447796308618 Adrian King Heimo Thomas Elmar Toime
Supporting Slides
Productivity Equation Postal Productivity has been rapidly increased over the last twenty years by alignment of nine core variable. In the next decade there will have to be increased emphasis on culture and labour flexibility. The challenge is defining the characteristics of flexibility and understanding the impact on performance and sustainability Flexibility to allow alignment of work flow and labour hours Labour Flexibility Regulation Address System and Databases Regulation aware of costs & alignment of product Standard work practices and rationalised network Standard Work Practices Postal Productivity Challenge Product Portfolio Alignment Technology fundamental for productivity growth Productivity culture through management training Front Line Management Delivery Network and Operations Sorting Centres Network and Operations Technology Enablers Network consolidation
Labour Flexibility - A Working Definition Successful flexibility will not arise by having an employer centric model. To be successful and sustainable there also need to be employee centric features which are about having sufficient autonomy that works for the individual, the customer and increases performance Flexibility Customer Employee Employer Responding to demand for customised services Balancing work and life at different times in the lifecycle Ability to drive productivity and reduce cost Numerical Flexibility Short term contracts part time, casuals, shift patterns, overtime Functional Flexibility Variablies task, multi skilled employees teams, engagement to process Organisational Flexibility Sub contracting, Franchising, link cost to pay and transfer risk Pay Flexibility Increase profit related elements, reduce pension commitment Employee Flexibility Flexible banked hours, work life balance, life cycle stage
Customer and Market More demanding consumers, willing to switch brand loyalty if an organisation can offer a product or service that is more tailored to our needs, cheaper or delivered at a more convenient time. General Trend to I want it now culture and Interactivity and connection Extend opening hours E-Commerce Delivery Features become part of merchant value propositions Segments of market moving to convenience rather than costs Receiver based pull logistics Time, place, information, control, value adds Potential to create more complex sorting and delivery windows All other sectors are having to respond to more continuous demand patterns Post and Logistics as connectors of supply and information chain will be highly exposed to these pressures
Employees :Psychological Contract, The Employment Deal and Productivity Productivity growth matters as it drives income, profitability and efficient resource allocation A constructive climate of employee relations as part of the workplace can create bundles of high- performance work practices which are known to differentiate high-productivity organisations High performance and is built on a number of principles and behaviours: Purposefulness - most people want meaning to their work. Financial compensation is necessary but not sufficient for building the good will of continuous productivity; Everyone has in their mind an employment deal or psychological contract which defines the 'the unwritten contract, the sum of the mutual expectations between the organisation and employee ; For employers, there is value in understanding the elements that makes up meaning for their workforce. It is not static - it changes for different communities and at different stages in a person s working life; To be sustainable, purpose needs to be understood and communicated and to encompass not only financial goal but customer and social value; Job design is a powerful but often neglected mechanism through which employers can both make the work more rewarding for the organisation and the employees.
Labour Market : Trends and Challenges Labour markets dynamics have become more subtle and complex over the last two decades. The management challenge is to understand, respond and shape these into sustainable business models. Ageing Non traditional pools Migrant flows Training & Retention Female participation Contracts Significant changes 60 % normal full time 20 % part time want full 80% better defined From Collective bargaining to statute Flexi-security Tax Credit changes Living Wage Demographics Regulation Work Practices Employee Expectations Bespoke contracts Work life balance More flexible Paid work and Identity Time sovereignty Intensification control and alienation Increased functional flexibility In team but not team
Psychological Contract, Engagement Performance and Productivity Strong evidence that engagement drives high performance outcomes and that aligned workers driver engagement 1 Strategic Narrative 2 People as Individuals Engagement Drives Performance Integrity through Alignment 3 Employee Voice 4 High engagement top 25% had higher shareholder return and 1% increase in engagement led to a 9% sales increase. (Kenexa and IMS) Financial Performance Units in the top 25% of engagement had 18% better productivity and a higher productivity growth trend ( Gallup 2006) Productivity People Turnover High engagement reduces turnover-31-40% higher turnover in lower engaged firms ( Gallup) Hakanen (2008) showed increased engagement important in translating resource into behaviour. BAE demonstrated that engagement had reduced production time by 25% Innovation Wellbeing Absence Companies with high engagement report average absence of 7 days compared to 14 days in low engagement USA research the top 5 business for employee engagement were the same top5 for customer satisfaction Customer Health and Safety Higher engagement 62% less accident that those in bottom quartile 54% disengaged negative impact on health and concentration- Gallup THE EVIDENCE Employee Engagement Task Force Nailing the evidence p Bruce Rayton University of Bath School of Management
A Road Map for Engaged Sustainable and Productive Labour Flexibility Audit Status Understand position and potential Understand labour utilisation Under utilisation and over time Resourcing Models Demand and Capacity management Product Portfolio Production Planning Dynamic rostering Contractual Forms Identify flexibility issues Understand cost implications Develop Employee-Centric Vision Core- Periphery flexibility Job design,fit to Process and Labour Pools Costs- Benefits Industrial Relations Build credible and sustainable road map of change