Transformation and Cost reduction
Our client is regional nuclear energy company. The business includes two reactor installations supported by a head office and staff of some 2,500.
The new CEO was concerned that the electricity generating costs of the business were amongst the highest in the UK. This meant the company was at a disadvantage when supplying the grid and would also affect any future potential merger opportunities.
The client asked us to see how to reduce the cost base and make them more efficient/effective.
Key Project Activities
We conducted an in depth business review including industry benchmarking, expert interviews, top team appraisals, operational process review, staff survey and focus group workshops on the issues.
The ambition for the business was summarised by the new CEO during an interview…. “if we are going to compete we need to produce 1200 megawatts of electricity with 1800 employees…..and this seems like a step too far from where I am sitting…”
And the main issue was summarised by one of the directors when he said…”here is the organisation chart for the 200 plus managers…….afraid I don’t have an organisation chart for the remaining 1,000 engineers…they are in several unions…and we don’t have much control over them…”
We reviewed the results of the business review with the executive team. We then facilitated a number of workshops with the executive team to jointly develop what eventually turned out to be a revised business model. The key elements were:
- Revised mission, vision and values to focus on the 1812 theme – 1200 megawatts of electricity with 1800 employees
- Strategy and plan to support the mission
- Process simplification to be based on effective/efficient delivery (as opposed to internal legacy process/systems)
- Outsource non-core activities to save costs
- Invest in systems to improve efficiency and effectiveness
- Re-organised – eliminating the legacy functional structure
- Multi- tasking and elimination of restrictive practices (including union negotiated settlements)
- Elimination of non-value add activities (handled via early retirement and redundancies)
- Celebrating effective/efficient delivery of service
- Reward and recognition based on productivity
And a change programme was developed and implemented to deliver the above. The change programme consisted of the following teams and brief:
- Operational effectiveness/efficiency – how to do more with less?
- Structure – how to organise for efficient/effective support to the business?
- Culture – how to create the winning team?
The key benefits were: