At a recent ‘Shared Services 2.0’ New Zealand’s virtual event, we heard from Matthew Needham, CFO Strategy, Finance and Policy, Kāinga Ora – Homes and Communities on Kainga Ora’s Adoption of PwC’s Perform Methodology Approach
Trying to be more efficient
The goal of any business, particularly a large-scale operation, is to be as efficient as possible, delivering the best possible services whilst expending the least number of resources, thereby maximising profit. For large institutions with long histories, changing behaviours and becoming more efficient is often particularly difficult. But not impossible.
Matthew Needham, the CFO responsible for Strategy, Finance and Policy at Kāinga Ora – Homes and Communities, an agency that works in partnership with the Ministry of Housing, says that they are “New Zealand’s largest residential landlord.” Currently, they have “around 186,000 people living in our properties, which is around 4% of the New Zealand population.” There is an average occupancy rate of “over 98%,” whilst the agency is also “New Zealand’s largest residential developer with over $30 billion worth of assets.” There are currently about 11,000 properties in planning, with around a quarter of those already in the construction phase all over the country. In other words, by any measure, it is “a substantial operation.”
However, like every organisation of significant size, there are constant roadblocks. The finance team, in particular, they are constantly involved in “firefighting, managing our backlogs, solving problems, and coaching our people to be more efficient, though there’s never enough time to actually develop our people.” The goal of course is to be more efficient and to “make better decisions to drive better results,” but this is often hindered and difficult. The finance shared service centre was set up to provide those efficiencies, but given how busy they are, it hasn’t quite worked. So for years they “looked at ways of becoming more efficient and at different methodologies” to create that efficiency, until they finally “settled on the PwC Perform methodology.”
Using PwC’s Perform methodology
The Perform approach is described as “a people-focussed management system that drives new behaviours and improves performance.” It is a specific program that covers eleven individual elements over a twelve week program. It borrows from Lean, Agile and other modes of thinking, and it all comes together to “provide managers and teams with the capabilities, methodology and tools to deliver a step change in operational effectiveness and efficiency.” But it is achieved through a “people-centred approach, not a technology approach per se.” Essentially, it is about getting the most out of people “but in a different way.”
The program runs for twelve weeks so that new elements can be introduced incrementally. But before the program even begins, “skills are benchmarked and assessed,” and anyone with lower skills has the chance to improve them. “One of the things we uncovered was that we actually had people sitting next to one another and doing the same job, but in a completely different way. One might be doing things in a very manual way and the other person does them using automation.” So simply benchmarking these differences and getting people talking and sharing “made significant improvements.”
The next part of the process involved “logic training,” and was about “setting the vision for what we’re trying to do and making sure everybody was really clear about that.” It was about trying to figure out “what we want to achieve, and then working backwards to understand how to get there.” It was not only about creating an overall vision, but a vision for each team and each function.
”It was about breaking down the vision to measurable goals, and then these goals are what people actually work on within their daily activityMatthew NeedhamCFO Strategy, Finance and Policy, Kāinga Ora - Homes and Communities
Across the finance team, this first resulted in the establishment of “daily huddles, where the whole team gets together for no more than 10 to 15 minutes each morning.” This is an opportunity to talk about successes, events within the team like birthdays or upcoming leave, and plans for the day. It is chaired by a different member of the team each day so apart from other things, “it grows people’s capability in terms of confidence and enthusiasm and creates a shared responsibility for achieving the goals.”
One of the complaints amongst the team before Perform was implemented was that they were too busy doing their daily tasks and didn’t have time to “solve some longstanding problems.” But setting aside a quarter of an hour each morning and an hour a week for a “weekly problem-solving session” with the whole team actually “saved us something like 180 hours across the team.” This came about because rather than arranging meetings to try to solve problems or put them aside, “a dedicated time in people’s diaries meant we could solve them all at once in one place.” Small successes led to greater confidence and “once people have some success, they’re more willing to try other things.”
For Kāinga Ora, after just twelve weeks, there were noticeable and measurable successes and outcomes. “Our capacity increased by about 31%, which is the equivalent of 10 extra people, simply through the adoption of consistent operating rhythms.” This meant that there was extra capacity within the team “to take on additional work.” Most team members also developed “new skills” so the “capability of people within the team increased by 20%.”
From an operations perspective, “we could suddenly pay our suppliers a lot quicker, which we’d wanted to do for ages.” This meant that “our invoice processing queue time decreased by 27%.” As a result of all of that, “our overall productivity increased by 45%, reflecting that more time was now being spent on value-added activities and much less time on reworking.” And finally, “though we were already a highly engaged team before we started, our engagement increased by 5%, and even PwC was really surprised with that.”
These results are “an exciting thing for us to see.” The finance team is now celebrating its successes, both internally and externally. They have won a recent award and are now implementing the methodology across other teams in order to try to replicate the same efficiencies across the whole organisation. This change has really been about “achieving more with the same number of people, and creating greater efficiencies.”