Target operating model
Amey Transport Infrastructure (Amey TI) provides infrastructure services to Public Highways, Rail and Power Generation customers. It has revenues of £900m and 3,600 employees in geographically dispersed locations throughout the length and breadth of the UK. Collinson Grant was engaged to develop the target operating model (TOM) that defines the organisation and its underlying principles, the structural configuration (what capability and where) and the people and related resource requirements. The outcome was a business aligned to customer need and clarity of the total cost base of the organisation.
The programme of work was split into three phases:
Phase 1: to review the current organisation structure, the ‘as-is’, accountabilities, spans and layers of control, to establish the baseline and the extent of change, to identify any anomalies and secure some quick wins and to develop and agree a plan of action for the ‘to-be’.
This phase identified the major organisational differences between the two divisions of Rail and Highways and their similarities that had previously not been acknowledged. Once the TOM requirements were identified and agreed at the top, we saw a broad opportunity from non-value add activity and inevitable organisational growth of approximately £7m.
The Executive’s understanding of the problem was good, however the business systems and data were not as close to reality. We knew that managers would be able to ‘game’ discussions and prepared the Executive for the attrition we would enter in Phase 2.
Phase 2: to develop the organisational ‘blueprint’ with defined functional authorities and accountabilities, and review the variance from the actual, and define specific opportunities to simplify the organisation, tighten accountabilities, review the RACI and target related cost savings.
The final organisational blueprint and principles were agreed and tested with directors and managers to ensure their buy in to the future changes. This provided certainty that operational capability was maintained, and that the organisational design was resilient and could support the future business strategy. These are not easy discussions, but there must be a decision and ownership must be recorded. The work involved much detailed analysis of sectors, customers, functions and individual contracts and projects.
The future organisation had fewer layers, but importantly a significant number of people had moved up the organisational layers with shorter chains of command. During this phase the HR data was cleansed to provide Amey TI with a more accurate view of its organisation and a firm base on which to manage the proposed changes and control the future organisation.
Phase 3: to develop the plan for implementation and tracking the benefits.
A detailed plan was developed to ensure that the headcount savings were achieved, and the benefits correlated to the savings target. During this phase Collinson Grant provided HR support to calculate individual costs and benefits, and the redundancy options. We also provided legal advice. During the assignment it became evident that previous reorganisation exercises had damaged the managerial controls.
The plan was achieved by directors and managers during 2021. The results exceeded the £7m opportunity, with the TOM and organisational principles providing a firm base on which to manage the future organisation.
Outsource arrangements are under increasing scrutiny over the value and service they provide. This is further complicated by the numerous variations of client’s interpretation and different contracts that are obscured by the generic term ‘outsourcing’. Collinson Grant worked closely with the Executive sponsors to understand the nuances and build an enduring structure. Removing unnecessary interfaces and roles is important to a business’s health and resilience.
Peter Anderson, Managing Director AMEY TI added: “Collinson Grant came in and worked alongside my Exec team to review the current organisational structure then, after gaining a detailed understanding of the operational requirements of each contract, devised jointly with our teams revised operational and functional Blueprints for us to reshape the spans and layers. This led to achievable savings over a 12-month period such that costs of restructure were funded in year and targeted annualised savings achieved to support our strategic business plan. We can now grow our business knowing that our operational and support function structures are optimised and therefore any additional overhead spending is tightly controlled against our agreed Blueprint.”