May 2013

Architecture For Operational Excellence

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Background Information

Established in 2001, the Rural Payments Agency (RPA) encourages a thriving farming and food sector and helps ensure strong rural economies. An executive agency of the Department for Environment, Food and Rural Affairs (Defra), it is the accredited paying agency for all Common Agricultural Policy (CAP) schemes in England, paying farmers and traders over £2 billion each year. It also operates cattle-tracing services across the whole of Great Britain.

The CAP – the European Union’s farming support programme – is Europe’s single largest common policy. It represents a significant proportion of the EU budget expenditure – 40% of the total budget of 1,034 billion between 2007-2013.

To meet EU requirements, RPA manages more than 40 schemes. Administering such a wide range of schemes means that the Agency holds and manages information on more than two million land

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parcels and 120,000 customers. It records thirteen million cattle movements every year and carries out over 23,000 inspections.

From its inception, RPA faced many years of significant social and political criticism for payment delays to UK farmers for one of its schemes. Media critics along with governmental and agricultural organisations called for the Agency to address considerable gaps in its controls, financial processes and to rebuild and/or significantly strengthen the agency’s IT infrastructure.

Sustained criticism of RPA’s leadership capability led the Agency to be seen as a risk to Defra which, in turn, led to multiple reviews of Agency operations and third-party audits. The results: £680 million paid by RPA in unforeseen operating costs and European Union fines.

RPA recognised that Agency-wide organisational changes in its systems and processes were needed in order to improve performance and restore its reputation.

Overall Programme Context – RPA’s Challenges

When Chief Executive Mark Grimshaw arrived, the Agency was executively understaffed, lacked both organisational structure and the structure to process change effectively, and its departments’ geographical isolation encouraged an unhelpful level of intellectual separation.

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The RPA ‘ARC’ – Organisational Chart

These factors contributed to siloed activity within both departments and locations. With Agency departments operating as independent businesses, there was no way to achieve the operational excellence Grimshaw sought.

In order to create the right structure and operating environment for excellence, the new Chief Executive approached Group Partners.

By leveraging SVT™ – a process that Grimshaw had used in prior government work – RPA’s senior management together with Group Partners created a framework and roadmap for change. Working collaboratively over a period of time, they created a vision and began to shape a process by which the Agency would function as needed and importantly ensured that the transformation they were designing was attainable and sustainable.

The frameworks created using SVT™, Grimshaw believed, could visually articulate the foundation of future success. Furthermore, he felt that the information captured within the framework would provide a complete picture of where the Agency stood. This was vitally important in terms of creating the RPA ‘Arc’ successfully, an organisational structure in which all the components – departments, roles, and even end goals – are tightly linked to one another.

It was critical to demonstrate that one area would not succeed by itself. To succeed, all areas must be successful, building on their inherent interdependencies.

“The problems of RPA couldn’t be isolated to one area of the organisation. It wasn’t just an IT infrastructure problem or departmental people issue, it was Agency wide. I knew I had to address the entire organisational structure.”

“In order to understand the full scope of the problem and take into account its context, I felt that Group Partners’ Structured Visual Thinking™ (SVT™) approach was the only way to showcase the entire picture and get to our desired outcome in a frictionless way.”– Mark Grimshaw,

RPA’s Chief Executive

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Over the course of three days together the Agency’s Leadership Team shared their insights and perspectives for the future vision for the agency. In those sessions, all information on how things operated – the mechanisms, the processes, the dynamics, the causes and their effects – were debated and visually articulated and mapped.

The current reality was properly put into context and, from this a blueprint for change and transformation emerged.

“It crystallised what we needed to do in order to achieve success.”

“I realised how big RPA’s problems were; the criticism and reputation issues stemming from the lack of leadership were clear. I could see the decision-making process was a mess and that people were making decisions based on personal preferences, not as a collective department or group.”

“The plan we were putting together called into order the required architecture to tackle the challenge. In working as a group, our collective thinking and strategising was helping us solve these problems. I knew what we were creating in the session would quickly have a large impact on what we were working to achieve.”– John Carter, RPA’s Performance Director

To start the process, RPA and Group Partners asked the keystone question:

“What is the strategic framework for positioning RPA for operational excellence, increased performance and achieving its goals in the next 3, 5 and 10 years?”

Developing The Framework For Large-Scale Organisational Change

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Module C, Future Vision – Development Framework

Module A, Current Reality – Development Framework

Another challenge thrown up by the framework was the poor state of relationships with the Agency’s customers.

At the end of the session, RPA had identified 70 initiatives within the framework that it would need to address if it was to achieve organisational change; 25 of those initiatives the Executive Team collectively voted to reclassify under larger initiatives and then consolidate into six themes.

“The lack of focus on our customers was one of the biggest pain points identified within the framework. I started to understand what I had inherited, what I had to work with, and how I could develop better activities for efficiency and connection. I realised we had to put customers at the heart of everything we do so they would see us as a partner and not just a transactional entity.” – Justin Chamberlain, RPA’s Customer Director

“This helped us prioritise and determine how to address what each of us were directly responsible for.”

“Sequencing across other people’s areas showed us how our operations could not be isolated. The process helped bring down silos in a structured, obtainable way.”– Ann Marie Miller, RPA’s Finance, Assurance and Commercial Director

At the end of this stage the team was aligned around a set of shared goals that clarified the problems it was trying to solve. It has also established a strong understanding of its strengths and weaknesses. From this, it was able to fast track to deeper thinking and so detail the development of its long-term strategy.

To help with this, the framework was broken down into its discrete modules that were then used as tools to support the team to move onto next steps.

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It took nearly four months to lay the foundation for people and the roles, processes and structures that they would be required to follow to deliver future success to the agency.

As soon as the team’s capability to tackle large-scale change was in place and roles were clearly defined in the Agency’s Strategic Improvement Plan, it was time to execute their vision.

“The right people with the right skills was critical.” – Mark Grimshaw, RPA’s Chief Executive

“The Arc and Leadership Model underpinned by strict governance is absolutely the right model for the organisation. It needed to be put back on its feet and have projects land right the first time, results that can be seen in programme successes.” – Nicola Bettesworth, RPA’s HR Director

How We Designed The Agency For Change

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But executing the five-year plan was no small effort.

Within the first 100 Days, RPA realised that the Strategic Improvement Plan (comprised of 45 separate projects, 21 of which were public commitments) would require an additional £30 million in funding over that already allocated.

It was important to develop the business case to justify the additional investment, outlining how the activities would tackle the wide range of legacy problems that were driving inefficiency and costing huge sums in EU penalties. The Executive Team challenged itself with developing a credible and understandable business case and engaged widely with colleagues at Defra to ensure they understood why the additional funding was needed and what it would deliver.

“The genesis of the five-year plan came from the foundation laid with Group Partners and the six core principles found within it.” – Mark Grimshaw, RPA’s Chief Executive

“The fact that we achieved what we set out to in the first 100 days inspired the team, built faith internally and also gave us massive credibility” – John Carter, RPA’s Performance Director “Sometimes going against the grain and radical thinking is required for large-scale change.” – Mark Grimshaw, RPA’s Chief Executive

Getting Everyone On The Same Page – The First 100 Days

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Solid Results Indicate Future Success

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The RPA Roadmap

Since creating the framework and roadmap for organisational change and starting to implement the Agency’s five-year transformation plan, including regulating the ways in which programme activity is executed, RPA has seen a number of concrete successes:

1 Success in making timely payments for the Single Payment Scheme is judged for the months of December and March. For each month, targets exist for both the percentage of customers paid and the percentage of the total fund paid (in £s).

Before 2011, RPA focused on the less complex, smaller value claims in order to meet its December targets. The new approach involved allocating the more complex claims to senior caseworkers and resulted in these higher value claims being paid earlier.

As a result, the percentage of customers paid in December increased significantly. By the end of December 2011, 88% of customers had been paid, compared to 86% in each of the previous two years, and in 2012 the end of December figure had reached 93%. This improvement in performance carried through to March with 99% of claims having been paid by the end of March 2013, compared to 95% in 2010.

This focus on more complex claims delivered even greater improvements in the percentage of the fund paid. In December 2009, 78% of the fund was paid out and this reduced to 74% in 2010. However, this increased to 82% in 2011 and to 88% in December 2012. This meant £224m more was paid to the farming sector in one month that would have been the case without the shift in focus.

Again, this improvement carried through to March, with 99% of fund value being paid by the end of March 2013, up from 94% in 2010.

2 In April 2010 RPA had 2,813 permanent employees. System and process improvements resulting in increased operational efficiency, coupled with higher personal performance across the Agency, means that RPA now delivers an improved service to its customers with 2,075 permanent employees. Reliance on contingent workers has also reduced significantly and, where they are used, it is as part of a flexible workforce approach with structured knowledge transfer into the Agency.

3 Since the introduction in 2011/12 of a new and comprehensive debt strategy the amount due to RPA because of overpayments to customers has fallen significantly, from £38 million to £11 million.

4 Customer perceptions of the Agency have also improved year on year. On a scale of 1 to 10, customer satisfaction was measured at 8.7 in 2013, up from 7.1 in 2011 and 7.5 in 2012. In the UK, a customer satisfaction rating of 8.7 puts the RPA on a level with many of the best performing companies in the private sector.

5 RPA has in addition become a high-performing government Agency in the eyes of both the EU and Defra. Since 2010, 21 public commitments and eight projects within the five-year plan have been delivered on time and either on or below budget. The remaining projects are on track to be completed this financial year (2013-14).

6 RPA has streamlined how new programmes and activities are initiated. There are now only two ways to initiate change within the organisation: new requirements go through an external relations gate and services go through an internal delivery gate. By effective monitoring of what needs to start in order to keep the improvement programme on track, the Executive Team can properly plan, monitor performance and analyse new programmes to ensure their success. 12

7 Design Governance has been critical to consistency in the reporting and documentation of processes and programmes and also provides for centrally located documentation of those processes through the Agency’s internal technology – Sharepoint. New information sharing tools ensure processes and guidance are captured consistently and held in one repository.

Working Smarter.

On taking over, Grimshaw realised the Agency’s key targets were flawed, leading to perverse operational behaviour where teams competed to do the easiest work. Grimshaw called on RPA people to realign and alter their views on complexity and focus on solving both short and long-term problems – the right ones – really well.

Everything that was done by any team had equal value, and volume of work gave way to quality of outcomes.

Throughout the process RPA’s Executive Team has learned key lessons:

1 All organisations need professional working standards, and rigorous customer service standards, that are upheld by their people. There must be minimum levels of acceptable performance. Codes of dress and conduct are a necessary component of an efficient, high performing working environment.

2 Published customer service standards set out expectations for both employees and customers. They are the mechanism driving the pursuit of greatness and are essential for defining how organisations treat the people they serve. Customers must be at the heart of all that a public sector organisation does.

“In all things there are easier and harder pieces of work. Doing all the easy work hits certain targets but means that others fall short – easier work usually equates to less value in the eyes of others within an organisation.” – Mark Grimshaw, RPA’s Chief Executive

The Lessons Of Major Transformation

Example:

A complex caseworker team was set up to

deal with the payments and schemes that took the longest to process

based upon their individual complexities.

It actually delivered yet more value to the

customers it served.

This success is illustrated clearly by

looking at the 500 highest value claims. By the end of March

2011 only 54% of these customers

had received their 2011 Single Payment

Scheme money. By allocating these

claims to specialist caseworkers, the

volume of customers who had received their

payment by the end of March 2012 had

increased to 88%.

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3 Collective consciousness is a positive organisational trait. In RPA, all department heads know what everyone else is doing. While they may not be directly responsible for someone else’s outcomes, they support one another, providing input into initiatives to help ensure the success of the wider Agency.

Having headline knowledge of all the Agency’s operations enables senior leaders to work smarter, not harder, and continually meet targets and goals.

4 Don’t forget where you came from. Once organisations begin to achieve and sustain change they tend to forget where they began and the painful processes required to get them to the ground they stand on now. It’s important to continually tell – and retell – the story of the Agency’s evolution.

5 Being accountable means not being reluctant about performance evaluation and statistics. To benchmark success you must track your progress, and data and systems for statistical and analytical information are imperative. In 2013 RPA will be publishing full performance statistics on their website.

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Group Partners109 Farringdon Road London EC1R 3BW

www.grouppartners.netwww.vizify.com/group-partners/links

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