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Process Redesign Case Study: Annual savings of over $1,200,000 achieved within three months

Division of a Fortune 100 Company, Dallas, TX

Project: Streamline payroll, people services, and customer service departments

Division is a PEO with approximately 15,000 employees at numerous locations throughout the United States.

A PEO is a company that provides the entire personnel function on an outsource basis to their clients.  The functions can include: payroll, benefits, workman’s compensation, and HR.  Initially the division was not profitable.  Management over the previous twelve months had made a number of changes with little improvement in profitability.  Initially the organization consisted of five departments reporting to an operations manager (a department that entered the payroll information and produced the payroll check, a department that packaged and shipped the checks, a workers compensation department, a personnel department, and a customer services department).

Preliminary discussions between TYNDALL Consulting Group with senior management and subsequent investigations indicated that the departments were not running as efficiently as expected.  A goal was set to improve efficiency and reduce costs.

The Business Process Redesign process was begun in late May.  Two groups of knowledge workers from the various departments accomplished the redesign phase in three periods of three days each.  Each period was spaced about two to three weeks apart.  A presentation to management was given at the end of each period.  Five phases were involved in the redesign:

                                                Activity Analysis


                                                Voice of the Customer

                                                Best Practices


These phases were completed by late June.  Many inefficiencies and bottlenecks were identified in the existing process, one of which was the transfer of information and products from one department to another.  We identified significant gains of over 40% with the proposed process improvements.  A key component of the Business Process Redesign process is that it was accomplished with the people directly responsible for doing the process.  When complete, the operations manager told the team members “You have come up with answers to problems that I have wrestled with for months.  With the redesigned process we now have a model for performance”.

The implementation was started in early July with a pilot program of two payroll teams handling half the existing volume.  Each team consisted of four members having responsibility from start to finish for the entire payroll process, which was refined with these two teams until the end of August.  Two additional teams were then formed taking over the remaining volume of work.  By this time the staffing level had fallen by 55%.  With the addition of two members to each team, the personnel function and customer services function were rolled into the teams.

By any measure this was a quick redesign and implementation.  Twelve months later the new team process has become the norm.  Productivity and quality levels have improved with costs staying at the new lower level.  The savings for the first year was $1,200,000.   

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