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PECO Energy Redesigns HR 

HRFOCUS / MARCH 1997

By the end of 1995, five of PECO Energy Co.'s six business units had restructured in response to deregulation of the electrical power industry, mandating the public utility to compete in a new open market. HR, alone, remained unchanged, though it was clear that HR had to find better, more costeffective ways of aligning itself with these reengineered divisions.

Research conducted by PECO's "core team". 20 people assigned to benchmark HR divisions of other companies. revealed that HR operated under a system that did not compliment an unregulated environment.

PECO, which provides electricity to 1.5 million customers and natural gas to more than 385,000 customers in southeastern Pennsylvania, had an HR department that was overstaffed and bogged down conducting transactions. Employees were dependent on human resources staff for services they could easily perform themselves with updated technology; the grievance process, requiring that supervisors seek HR's permission to sanction employees, was outmoded; and it was glaringly apparent that PECO's hiring processes needed streamlining.

HIGH IMPACT

It was clear that any redesign would impact all 7,200 PECO employees. Resistance was anticipated, especially in PECO's "culture of entitlement," where employees could easily balk at the idea of fundamental change.

Involvement of the entire employee population in HR's restructuring, therefore, was critical. they were HR's "customers," and they would have more insight into what changes were needed and the solutions required than any consultant.

The HR department envisioned a lowkey approach that would allow it to tap into its own experience, minds and hearts to recreate HR. an insight leading them to explore the largegroup interactive methodology pioneered by Paul Tolchinsky and Sylvia James of Dannemiller Tyson Associates, an Ann Arbor, Mich., consulting firm known for its expertise in facilitating change in large companies. It is an approach that engages 200 to 2,200 employees at a time, from every level, function and perspective, in the pooling of information, exchange of ideas and discussion about actions so that barriers to organizational effectiveness are lifted.

The decision to use the largegroup methodology was based on events conducted at Bank of America in California as part of its reengineering effort. Tolchinsky invited several PECO staffers to observe and participate on the logistics team.

Seeing Bank of America employees engage in organizational redesign. expressing their honest thoughts, feelings and opinions in an open forum. convinced the PECO team that the largegroup methodology would work for PECO, a message that was carried "home" to CEO Corbin McNeil, senior managers and division leaders.

FOURPHASE APPROACH

The first of four meetings. visioning, process design, organizational design, and implementation/planning. was launched in February 1996.

Rotating groups of 200 employees were present at each meeting representing every level and perspective of PECO Energy. So that all 7,200 employees could be involved in the shaping of HR's redesign, people who did not attend contributed their ideas via videotape, newsletter, memos and faxes.

Honest dialogue about problems, solutions and dissatisfactions was encouraged among participants who sat in "MaxMix" groups of eight people at round tables, each table representing a microcosm of the company. In all, nearly 800 employees were involved in the final decision to redesign HR's mission, vision, process and organization structure.

The human resources department was redefined around processes, transforming its transactional orientation to a unit of strategic senior consultants who coach and guide, but do not manage.

The new vision, that all employees are accountable for themselves, is what now makes everyone responsible for the successful operation of PECO. Initially, HR comprised about 230 people. or one HR staff person per 35 employees. In the process of scaling back, PECO is aiming for one HR person per 8590 people.

HR's transactional mode will be replaced by a computerized call center, which will provide 80 percent of the information normally required by employees, such as benefits updates, retirement plan information and policy guidelines, freeing HR staff to function strategically and consultively. Whether the call center will be outsourced or handled within the company will be determined this spring.

Overall, HR's innovative structure will grow out of new roles assumed by employees, managers and professionals:

There will be "big HR," whereby HR staff will function at higher levels in consultative and strategic capacities, and "little HR". in which all employees can gain access to their files via their computer or an 800 number.

When this happens at the end of this year, HR's faster, more efficient processes will result in more costeffective management and greater flexibility in policy development and hiring and promotion practices.

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WILLIAM KASCHUB is vice president of human resources at PECO Energy Co. in Philadelphia. Reprint #7871