Investment specialists buy into process improvement - RailPen case study

Some might think a former engineer ill-suited to the world of management consultancy. But Darren Whitman’s time in engineering stood him in good stead when he walked into a pension investments company and started talking about process improvement. “The tested tools and techniques that the manufacturing industry has been using for 15 years to create lean processes are every bit as valid in the world of finance,” he argues.“It’s a consultant’s graveyard,” warned one RailPen employee when WCI's Darren Whitman began analysing how the company could re-engineer its business processes to deliver real efficiency improvements.

“You’ll never get them to do anything differently.” Darren was not deterred. “I thought it would be hard work, but I knew that if we went in there with common sense ideas and rational thinking, people would be on our side.”RailPen Investments is a subsidiary of The Railway Pension Trustees Company which, after the privatisation of British Rail in 1994, became responsible for the pension schemes of 350,000 past and present railway employees.

The remit of RailPen is to manage the investment accounts and to support the trustees and pensions committees.“Historically, RailPen’s employees had focused on ensuring all investments were completely safe and achieved the industry benchmark returns,” says Darren. “But in the new era of privatisation, they knew they had to do far more if they were to satisfy their increasingly demanding customers and stand up against some tough competition.”RailPen’s work environment had grown more complex in recent years: from monitoring one large pension fund in the days of British Rail, it had now to get to grips with over 100 different schemes. “RailPen had been concentrating its efforts on setting up procedures to control the growing number of new pension schemes, and hadn’t taken the opportunity to step back and look at the efficiency and effectiveness of the way it worked,” explains Darren.

With his engineering background, he set about showing how the tried and tested tools which have transformed manufacturing processes can have just the same impact in a pensions company. The start point was a comprehensive ‘health check’ in which all 25 employees were interviewed in order to build up a picture of how they spent their time. It revealed a number of weaknesses.“People weren’t clear what they should be delivering to their customers, there were no real measurement mechanisms in place, processes weren’t properly defined and documented, and the distinct roles of RailPen and Pensions Management - a fellow subsidiary, responsible for pensions administration - were unclear.” Out of the health check came two discrete improvement projects, each owned by a RailPen director.

One project focused on identifying and eliminating non-value added activities. “A lot of the waste uncovered - such as the reconciling, checking and rechecking of papers - was seen as just a natural part of the job,” says Darren. The challenge was to persuade the RailPen employees that a lot of what they did wasn’t adding value to their customers, a task which became easier once it emerged that most of the frustration in their jobs came from the activities they shouldn’t be doing. “Re-engineering-out the hassle was a big motivation.

Another turning point came when one long-serving doubter announced to the team ‘this is common sense and it’s what we should have been doing a long time ago’. His new-found enthusiasm rubbed off on his colleagues.”The second project looked at meeting customer expectations by eradicating long turnaround times and late delivery of information. Success here, as in other areas of the project, involved working very closely with RailPen employees drawn from across the business. “The best approach is always openness and honesty: if consultants are thought to be following a hidden agenda, they won’t succeed in winning trust,” says Darren.

The beauty of the RailPen project, he argues, wasn’t the technical solution, but the rigour and structure of the approach which enabled many of the staff to be involved. “They made decisions and took ownership for the success and completion of the project.

As one team member said, ‘we now know what we have to achieve, and we’re ready to go and do it by ourselves’.”The secret, he says, was putting people at ease by transferring expertise and by listening to them. The early scepticism he encountered - most doubted the business was serious about change - didn’t disappear overnight, but before very long it was overtaken by a groundswell of enthusiasm and energy.

As RailPen chief executive Peter Murray observes: “The most positive thing about the whole project is that all my people are comfortable with the approach and want to implement their own proposals. That level of motivation and ownership counts for a great deal.”