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