The Co-operative Financial Services

Background

As part of its drive to create a sustainable customer focused business, The Co-operative Financial Services (CFS) took the strategic decision to outsource its life and savings administration operation, the second largest UK financial services outsourcing project of its kind. CFS realised that outsourcing would deliver the necessary cost benefits of economies of scale to enable major investment into operational and IT transformation. Besides lower service running costs and moving from a fixed cost base, CFS was looking for a solution which would deliver an initial step-change and then continuous improvements in customer service. In addition, the new business infrastructure would need to deliver new products to the market quickly and to be ‘future proofed’ against increasing regulatory requirements. In selecting Capita, CFS saw a partner with the experience and track record to acheive the required results.


Transferring the operation

From an operational perspective, CFS worked with Capita on a ‘blank page’ approach to identifying, developing and implementing meaningful service level agreements (SLAs) and key performance indicators (KPIs) into the transferring business. A new and innovative contractual framework for service delivery was agreed by the partnership which would reward over-performance as well as penalising under-performance on SLAs.

With over 800 in-scope staff, Capita and CFS worked together in engaging with the unions early to ensure they had time to consult with their members. A joint staff consultation process was developed which allowed both parties to fully explore and resolve any HR issues co-operatively. The resultant approach was described by the unions as a ‘text book approach,’ delivering a truly people-orientated solution. Within one month of transfer, 65% of colleagues felt part of the Capita team.

Unusually for an outsourced contract, we moved the 800 strong TUPE population out of the CFS buildings into a new office environment. It was key that that the staff, who had previously been dispersed across CFS, in different buildings and in different teams, were brought together to operate as one business. This major relocation project required real technological innovation, including a new call centre solution providing full and secure remote access to CFS’ legacy systems. This was achieved through the introduction of VMWare technology, something we had never done before for this type of business, and to maximise security, firewalls were installed at both ends as well as data encryption.

Transforming the business - the journey so far

With the outsourced business in a new site operating as a new team, we turned our attentions to transforming the operations. As a starting point, in order to standardise activities and enable better and comparative reporting, best practice control frameworks were implemented across the business for TCF, quality, complaints and breaches. We also identified the critical and relevant management information reporting needed  to ensure we had the right information to effectively manage performance against the SLAs.

Secondly, we had to win the hearts and minds of the people delivering the service. A scorecard was created reflecting the needs of all stakeholders (colleagues, customers, client and Capita) and continues to be published to staff every month so they instantly see the how the business is performing against key targets. We also introduced a bonus incentive scheme based on performance and this scheme as well as employee’s personal objectives link back to the scorecard so staff can see how they contribute to the goals of the business.

The impact of the hearts and minds workstream was fairly immediate. Staff attrition has reduced by 46% in the first year. The result is that the likelihood of a customer calling the contact centre and speaking to an adviser with more than 12 months service, one of our key TCF measures, has increased from under 60% to over 90%. The activity of the training team has refocused from running endless staff inductions to further training and improving the skills of existing staff. We have also strengthened the leadership within the business by rationalising the organisational structure, clarifying roles and responsibilities and providing coaching for the managers.

The transformation journey also involves various LEAN waste-reduction measures. Capita has taken steps to actively redeploy resources and management to operational hot spots. We have revised contact centre resource scheduling and trained all contact centre staff in call handling. We have also re-engineered key business processes and implemented customer-focused end–to-end case management.

To date LEAN measures have already delivered:

• Over 80% of calls consistently answered within 20 seconds.
• 6% call quality improvement through better call-handling techniques.
• 12% call volume reduction through improved first response.
• 50% increase in productivity.

We are now focussing on continuous improvement and the SLAs have been adjusted to reflect this.

Delivering results through innovation

A key factor in the ongoing success of the partnership is the innovative SLA regime. By rewarding as well as penalising, it incentivised Capita to outperform against targets. A ‘ratchet’ system is also incorporated within the SLA framework to ensure that CFS benefit from continuous service improvements. Each year for the first three years the service levels are raised so the previous year’s average target becomes the next’s minimum.

The results of the SLA regime speak for themselves:

• In the six periods before service commencement date an average of 60% of expected service levels were achieved.
• In the half year immediately following service commencement, an average of 94% of expected service levels were achieved.
• In the second half year following service commencement, an average of 98% of expected service levels were achieved.
• Over 65% of the SLAs are already hitting their  three-year targets.
• The ratchet mechanism is expected to drive the average minimum service level up to 60% of three year target.

Conclusion

CFS is already seeing significant results as evidenced in both the SLA reporting and the results of customer satisfaction surveys, which have improved quarter on quarter since service start. The transformation process has also laid the foundations for continual enhancement of service delivery. Going forward, Capita will introduce common IT platforms to enable CFS to get new products to market quickly, whilst efficiently embracing any changes in regulatory control