Managing the Transition


The shared services center was sited at the new Thomas Cook headquarters in Peterborough, 76.5 miles north of London. The plan for implementing it was aggressive (see Exhibit 6.5). In March 2002, five months after signing the contract, finance and payroll staff from distribution, as well as all IT staff from tour operations and distribution and some from airlines, were slated to transfer to Accenture. By November, SAP financial systems were to be implemented along with a new chart of accounts, and the finance staff from tour operations would be moved to the center. At the same time, the HR team was charged with harmonizing employment terms and conditions across the entire organization. The director of HR explained: ‘‘We had 86 different contracts and hundreds of different processes. The data was scattered everywhere. Even finding out where we were was tough.’’

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Exhibit 6.5: Transformation program release plan.

Thomas Cook’s senior team opted to hold off transferring HR administration until early 2003 to keep people-related processes intact during the other moves. The director recalled: ‘‘We were TUPEing[3] people across, we were dealing with the unions, and we were supporting the business through redundancies. We did not want HR going through a transition at the same time.’’

Time was of the essence, but implementation phasing was critical. Some steps could not be done simultaneously. For example, the center’s organizational model and cross-functional systems had to be put in place before the tour operations finance people and processes could be transitioned to the new corporate standard. In addition, the tour-operations staff had to apply for their jobs in the center, which required a preestablished organizational structure with clear job descriptions.

Of course, some employees chose to leave the company rather than commute or move to Peterborough. In order to guarantee a smooth transition, the Accenture team had to master the details of Thomas Cook’s financial processes so that the work could be transferred to Peterborough even if the employees were not. The uncertainty around exactly who would join the staff and who would not heightened the importance of broad and effective knowledge transfer. In some cases, employees’ redundancy payments were explicitly contingent on transferring their knowledge effectively. Ultimately, 2,300 employees left Thomas Cook, 400 joined Accenture, and Accenture hired additional workers to bring the center up to speed.

Since Thomas Cook was experiencing pay freezes during this period, it asked Accenture to adopt the same policies for a time. One executive remarked: ‘‘We couldn’t have people on the Accenture side getting jam while our retained staff got [only] butter. We agreed that we would coordinate our pay strategy, and when we lifted our freezes, Accenture would as well.’’ Despite the fact that the center staff worked alongside their Thomas Cook colleagues in Peterborough and under similar terms and conditions, separation was emotionally difficult. Both Thomas Cook and Accenture took explicit steps to smooth the way.

Accenture convened the affected employees to introduce them to the company. The general manager of the center took the time to meet each individual personally during the transition. Thomas Cook mounted an extensive internal communications program to keep all the workers informed and to solicit their cooperation. Frequent, straight-talking updates from Alan Stewart were distributed to all employees during 2001 and 2002, including those in the shared services center. And the senior leader- ship team kept their ears to the ground to gauge the sentiment.

Communicating effectively required a delicate balance. On one hand, the leadership team believed they could be successful only if they shared both the good and the bad news openly with the workers. At the same time, they did not want the media reporting that Thomas Cook was in trouble because of the potential negative impact on consumers’ perceptions. Yet the unions were actively using the pay cut issue to gain media attention and even got MPs involved. The HR director said: ‘‘We managed to gain the support of most of the workforce because people saw the huge transformation agenda and the savings measures we put in place; it wasn’t just about cutting their pay. Over 79 percent of the employees participated in the voluntary pay reduction.[4] The decision was taken by the business not to include those employees earning slightly above the minimum wage. Some of those individuals even came to us and asked why they couldn’t participate.’’ The company implemented cuts on a sliding scale from 15 percent down to 2 percent, with the most senior executives taking the largest percentage to show their leadership and commitment.

Trecroce shaped the unique measurement approach he developed to calculate Accenture’s bonus specifically to encourage the emphasis he wanted. The annual measurement schema had five interrelated elements: service levels, quality and standards, incremental improvement, cultural fit, and innovation (see Exhibit 6.6).

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Exhibit 6.6: Measurement approach.

But Accenture’s first biannual performance review was based solely on cultural fit. Service-level agreements were not established until November 2001, and financial penalties for any nonperformance were left out of the equation for the six-month transition period. Trecroce explained: ‘‘A smooth transition means no one drops the ball, and the work keeps getting processed. In reality it doesn’t work that way. You have to be patient. Accenture is inheriting people who need to be retrained. There’s a new organization, a new way of working, different rules. For example, they’re not processing their usual accounts payable; it’s accounts payable across the entire business. It is very challenging. If Accenture can get the people transferred over and make them feel wanted and get their heads around what the business needs, they’re doing a good job. For the transition period, their bonus was based on how their internal customers rated them. Now that the center is established, we’ll add the quantitative metrics in.’’

Thomas Cook and Accenture had a clear and consistent focus on part- nership from the outset of the cosourcing arrangement, but they hit a few bumps in the relationship anyway. ‘‘At the beginning,’’ one executive explained, ‘‘there was a lot of ‘them and us.’ From our point of view, we had done our TUPE; now it was Accenture’s job to make things totally different. When it wasn’t totally different from day one, we thought we needed to call them over and bang the table. We expected miracles. At the same time Accenture was learning. While they had project skills, that wasn’t the problem. It was the day-to-day running of the co-sourced center, which was not their core skill.’’ Over time, both sides learned the process of working together to make the joint operation successful. The executive continued: ‘‘We both had to learn not to act as different companies, but as a new company being formed together.’’

The Accenture team met unexpected difficulties coordinating effectively with the other outsourcing vendors working with Thomas Cook. During the complex and intense initiative to consolidate operations, replace financial systems, and implement HR self-service, Accenture had to work intimately with Syntel, the Indian company responsible for legacy systems maintenance; PinkRoccade, the desktop management company; and Fujitsu, the Web-hosting company. Despite the coordination costs, Trecroce insisted on a multivendor environment. ‘‘You always need to maintain an edge in your supply relationships,’’ he maintained.

[3]TUPE stands for Transfer of Undertaking (Protection of Employment). It is the UK law that ensures individuals retain their employment terms and conditions when their organization transfers them to another company.

[4]By law, any pay reduction must be voluntary. Thomas Cook proposed the percentage reductions it would ask employees to accept at each salary level, then suggested that individuals contact HR if they felt they could not.




Outsourcing for Radical Change(c) A Bold Approach to Enterprise Transformation
Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation
ISBN: 0814472184
EAN: 2147483647
Year: 2006
Pages: 135

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