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Mining – Consolidated Case Study

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The following is a consolidated overview of the various mining industry projects involving eProcesses Consulting since 2006 in iron ore and gold mines in North America, South America, and Africa. 

The project began with an analysis of the historic financial and operational data and the core processes. The analysis yielded best demonstrated performance, effective capacity, and average performance for each process and functional area. The analysis revealed performance gaps and a list of recommended projects.

Goal alignment assessed the extent to which executive level goals and objectives aligned with each level lower in the organization. A list of projects emerged as necessary for attaining the combined goals and objectives of the organization. Project management facilitated the achievement of each of the organization’s goals for the fiscal year.

Engineers and supervisors received training in Six Sigma, Lean, and Kaizen tools and techniques. The projects they did concurrent with the training added to the skill set of the individuals and contributed to the organization’s operational and financial improvement and goal attainment. The training prepared the organization to sustain a culture of continuous process improvement.

The improvement areas included increased equipment availability, increased yield per blast and blasts per shift, faster lab turnaround, better processing yield and capacity, and increased equipment and people utilization.

The project team worked with client management and IT staff to develop and implement a balanced scorecard management dashboard. The dashboard provides management with a view of operational performance by department, by shift, by area, by equipment type, and by individual piece of equipment. The dashboard home page includes a graphic representation of overall organizational performance by department or functional area using a single relevant or consolidated metric. Each view of the dashboard has drill down capability by month, week, day, or shift. Each metric has time series and pictorial views.

Mining and natural resources companies generally have tremendous improvement potential due to the scale and scope of most mining operations.

Insurance Office Clerical Operations

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With the president of the client organization the primary contact person, a four-year series of engagements developed and implemented a new strategy for organizing and operating the clerical functions and improve white-collar productivity of a 23-location insurance company. 

Overview of the Client

The client was a non-General Fund, quasi-governmental state agency that serves as the provider of last resort of workers’ compensation coverage for employers within the state. Although it is a state agency, the client competes freely with and is required to conform to all the regulation of conduct of other insurance companies. It insures approximately one-half of the eligible employers and between 20% and 40% of the eligible workers in the state. 

The client  is intended to serve a “regulatory” function solely by demonstrating superior performance in state’s workers’ compensation insurance marketplace. 

The client can be thought of as an insurance company with both “home office” departments/functions and field offices that provide the vast majority of the direct contact between the client and both its insured policyholders and the injured workers of those policyholders. 

Included within the scope of the Office Services project were all clerical activities in the field offices. These activities included:  mail services; computer operations; personnel functions; policy coverage verifica­tion; word processing; filing; data entry and check processing; and bill paying. These activities are vital to the functioning of the field offices. With the exception of personnel, the performance of each of these activities by a support or clerical person is intended to allow the technical or profes­sional staff to devote the majority of their work day to more highly-skilled job duties. 

Project Overview

The project’s charter was to deter­mine the “best way” for the clerical activi­ties of the field offices to be per­formed including who should perform them, at which point they should be performed, how personnel should be or­ganized, and the staffing required to perform these activities.  Included in the scope were the operations of the 23 field offices and associated legal operations. After 15 months, this charter was expanded to include the claims adjusting activities also. The objective was to enhance the ability of client personnel to deliver timely benefits to injured workers and keep costs to employers as low as possible rather than simply improving clerical processes. 

Activities were iden­tified as to the flow of work, the reasons for the work, the frequency of the work and the time required to perform the work. Supervisory and hourly personnel provided written and oral suggestions for improving the processing of work. Focus Groups evaluated the suggestions and designed work flow recommenda­tions to eliminate unnecessary and/or redundant work. The need to have staff dedicated to routing work between processing steps was reduced. Staff was effectively allowed more productive time. Work is organized around measurable units of work having defined start and stop points rather than around collec­tions of tasks. This facilitates the manage­ment of the work process rather than of individual activi­ties, reduces distances between work points and therefore backlog accumulation points, and increases control over and account­ability for the status of the work. 

A broad range of fact-finding and forecasting techniques were used including, but not limited to:  Focus Groups within individu­al dis­trict offices; significant interaction with Home Office and staff functions and with all field office departments; comprehensive reviews of past studies and efforts; interviews with insurance industry experts outside the client organization; and data collection and survey techniques, including flow charting, statistical sampling, and application of work simplification, task analysis, methods and systems review. This methodology reflected a zero-based analysis of the basic claims products and processes. 

This resulted in the development of “The Model Office” and the “Claims Adjustment Team.” These two processing models represent significant change in organization­al structure. Claims Adjusting and Support functions are integrated into natural work units. Supervisory span of control was altered. Reporting relationships were modified. Wherever possible, proximity was improved. Premium-based staffing was replaced by staffing based on measurable work. The result was improved productivity, teamwork, sense of belonging and purpose, and customer service. Organizing into teams has improved the visibility of the numerous processes. This visibility facilitates continuous improvement. It is expected that this new organization will provide not only current improved benefit delivery but also better, more clearly defined employee career paths and increased responsiveness to future challenges. 

Process oriented, activity based measurement focuses management attention on those elements that are directly within their control. The new organization structure and the increased productive time improved the ability of the field offices to effectively meet the needs expressed in its Mission Statement. 

Management’s focus was altered to deal with effective overall benefit delivery rather than an orientation toward individual function within the benefit delivery system. The added benefit to this reorganization is improved communication with policyhold­ers/employers, with injured workers, and with co-participants in the benefit delivery system. 

A next step was an on-going assessment of and reaction to actual and anticipated changes in the client’s environment as they affect claims products and processes. This next phase marked the beginning of an on-going, comprehensive look at the foreseeable future and at the ever-changing Claims environment. An immediate goal of this new phase was the state-wide implementation of the recommenda­tions. 

Implementation of The Model Office began after a six-month development phase and continued across the state. The Claims Adjustment Team concept began a test phase fifteen months later with a final evaluation presented to the client’s executive committee 18 months later. 

Project Results

Initial results included: 

1.         Prior to implementation of The Model Office, the time from receipt of a medical bill for payment until the payment of the average medical bill in most offices was in a range of from 40 to 60 days. In those offices which implemented The Model Office, the average time to payment dropped to within a range of from 14 to 21 days. In those offices that implemented the Claims Adjustment Teams, the time to payment was 7 days or less. In one office, the typical medical bill was paid on the day it was received.

2.         Prior to implementation of The Model Office, lost or misplaced claims files were commonplace. After The Model Office was implemented, lost or misplaced claims files became rare. In those offices that piloted or implemented Claims Adjustment, no lost files were reported after implementation.

3.         In The Model Office and (even more) in the Claims Adjustment Team offices, the sense of teamwork cooperation improved among affected office staff.

4.         The acceptance of The Model Office as a basis for determining clerical staffing increased district management and senior management sense of control over the proper level of clerical staffing. Because the project coincided with unprecedented growth in new claims filed, it was not possible to evaluate actual staffing impact. However, during the initial roll-out of the Model, ten of the 23 field offices were found to have excess staff when compared to the Model. This excess staffing totaled 21.3 Full-Time Equivalents representing annualized labor costs of $536,760.

Under the Claims Adjustment Team concept, narrowly-defined clerical job classifications are to be eliminated. Few positions will be dedicated solely to clerical activities. Teams of technical, semi-professional, and professional claims staff, rather than individu­als, will be assigned to caseloads. One technical team member will do all word processing, data entry/processing, filing, and other previously-clerical tasks. Routine claims adjusting activities will be completed by trained claims adjusters. More difficult, less routine decisions will be left to the most experienced adjusters within each team who will have ultimate responsibility and accountability for the progress of the team’s caseload through the adjusting process. 

The benefits to the Claims Adjustment Team concept were: 

  • an increase in overall caseload per staff person (with a related decrease in claims expense per adjusted case);
  • improved control over case activities and more timely benefit delivery (with the potential for reducing claims losses per adjusted case); and
  • better-defined career paths and an improved sense of responsibility for case outcome on the part of all claims-related staff. 

Pre-pilot estimates suggested that a net increase in claims caseloads would reduce required staffing by 282 non-supervisory positions with a total annualized personnel cost of $6.5 to $7.5 million and 28 to 35 supervisory positions with a total annualized personnel cost of between $980,000 and $1.4 million. (It should be noted that these savings are based on the actual versus recommended caseloads and spans of control at the mid-point of the project. It had previously been generally accepted that caseloads throughout the state were too high rather than too low.)

Financial Services Internet Portal

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Problem: Transition from brick-and-mortar to Internet model with need to clarify organizational mission, define and implement processes satisfaction.

Solution: Assisted in the selection of CRM (Clarify) and Telephony hardware and software (Interactive Intelligence) to create a web enabled contact center.  This Webcenter included webchat, VoIP, multimedia and skills based routing. eProcesses created all process flows, workflows, and included the creation of all software training (leader lead as well as CBT) for Clarify and Interactive Intelligence.

We introduced a management system which included 7 components, consisting of Expert Behavior Models, Barrier Removal, Continuous Improvement Meetings and other effective management practices.

Results: Fully-functional customer contact center implemented on time for site launch.  Shortly after site launch, client decided to modify its business model to become an Application Services Provider rather than a B2C financial services site.

Expert Behavior Models and Competency Management

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Competency Management defines and facilitates the management of the “way” work is to be done.  It touches multiple organizational elements within a company or other entity.  These range from operational units to training to human resources and hiring to essentially anywhere that people do or support the work of the entity.
 
A good Competency Management system captures the details of work based on how “the best” people do their jobs.  When optimally used, it becomes the “system” for increasing skills and know how among all people and positions included within its scope.  In some organizations it can become the key to a big “pay off” from sometimes major investments in training.

The Purpose of Competency Management

The purpose of a Competency Management system is to maximize organizational performance.  It defines the methods and techniques of top performers and provides a vehicle to systematically communicate and develop “Best Practices.”  It helps to focus training on its greatest opportunities either based on gaps uncovered in the development of the system or through the use of the system.  It also helps to focus supervisory attention to those areas needing that attention.

The Method of Competency Management

The development of a Competency Management system starts with the official core processes for the areas within the included scope of the system.  For each process, the next step is to identify all key activities within that core process.  These key activities should be the focus of attention with respect to that process.  The non-key activities must also be identified buy, as non-key activities, their impact and the opportunity for performance improvement is less significant.
 
Experts for each process and activity must be identified based on their performance (measurable results, not feelings) and on management input.  Each identified expert needs to be interviewed with respect to what they consider to be the keys to their performance success.  Then, each “expert” needs to be observed, a minimum of ten observations, for the detail of how they do their work and because most people do not necessarily remember even critical detail.

The focus should be on key opportunities for performance improvement. 

First, the focus should be on the identification of the core processes, activities and key competencies.  The best practices will follow from this initial focus.

Experts for specific core competencies not always top people in measurable performance, but the top people in measurable performance should be a starting point.  Focus groups of experts will help drive expert model development.

Never select experts with poor performance numbers; they simply will not have credibility with their peers and with management.  However, if there is an opportunity to learn from anybody, even those who are not top performers, take that opportunity and have the top performer-experts validate the proposed “best practice.”
 
Expert Models

The Expert Model is the key element of a Competency Management system.  An Expert Model provides a comprehensive guide, by position, of what that position does (processes and activities), how the best performers do it, and what tools are available to improve one’s performance.

Structurally, a basic Expert Model is a matrix consisting of the following columns:

  • Process
  • Activity
  • Best Practice
  • Resources

In some cases, a Description column may be helpful to those not intimately involved in the process in understanding exactly what the process and activity include.  An additional column or heading category can be added to provide a further level of organization to the Expert Model.  Categories for Expert Model in a sales environment, for example, would include:

  • Selling Skills
  • Product Knowledge
  • Technical Knowledge
  • Activity Levels/productivity

Competency Evaluation Matrix
 
The Competency Evaluation Matrix (CEM) is the second key element of a Competency Management system.  A CEM provides an organized approach to assessing each employee’s capability with respect to each process and activity.  As a reference, the Expert Model then provides a guide to the employee as to what is meant, how the best performers do it, and what tools are available to improve one’s performance.

Scoring

Scoring should be kept as simple as possible.  The purpose of a scoring system is simply to help employees and supervisors and trainers focus their attention on the areas most in need.  While a five-point scale can be used, in most environments, a simple three-point scale should be used:

  • 3 (expert),
  • 2 (competent),
  • 1 (training needed)

Employees score themselves and supervisors score the employees separately.  After the scoring is completed, the supervisor meets with each employee one-on-one to review the scores for each item  During this meeting, the supervisor and employee should come to an agreement or consensus as to the an appropriate true score.
 
For each employee, the lowest scored areas should be the first target for training.  In aggregate, the lowest rated activities should be the subject of review and reengineering of the training practices associated with those activities.
 
However, a low aggregate score does not necessarily reflect training impact.  To maximize training impact, pre-select key competencies based on results and on “promise” associated with return on investment in organizational performance.

The other consideration with respect to training impact is to ensure that selected training priorities match identified organizational goals.
 
Personalized Training Plans
 
The outcome of the scoring is not simply a score for each employee.  The outcome should be the creation, after each “round” of scoring, of a specific training plan for each individual covered by the Competency Management system.  This plan should be derived from the identified needs of the individual.
 
Management and supervision must first prioritize the identified needs.  In many cases, there will simply be too many needs to address all of them simultaneously.  The priorities will generally be based on the likelihood of impact on organizational performance.  The primary reference for these prioritized training plans will be the “Resources” column of the Expert Model.  The purpose of that column is to point employees, supervision, and management to the resources that are known to be available to improve performance in that specific activity and process.
 
System Maintenance
 
Each Expert Model needs to be regularly upgraded.  Processes are dynamic.  Activities associated with processes are dynamic.  Best practices are dynamic.  Improvement resources are also dynamic.  The timeframe for upgrading will vary across operating environments.
 
Management and supervision must take all necessary steps to settle disagreements tactfully.  These disagreements can be related to scoring of individual employees.  These disagreements will also be related to the identification of best practices.
 
System Impact
 
The use of a Competency Management system should be translated into quality and productivity results and improvement efforts.  As the management of competency moves into the culture of the organization, measurable performance improvement should be seen.

An additional outcome that will be observed is a multi-dimensional, multi-faceted, individual, team and organization, plan for training.
 
The long-term impact will be directly related to the organization’s commitment to long-term use.  To the extent that it is possible, the organization’s Executive management should provide visibility to the Competency Management system and reinforce its use.

Other keys

When seeking to improve overall organizational competency, the focus should be on observable and measurable behaviors.  Behaviors that are otherwise will be difficult to manage.  The adage “you can’t manage what you can’t measure” applies.
 
As with any scoring or grading opportunity, all steps should be taken to avoid scoring inflation by pointing to results.  There should always be a correlation between competency and results.  People without measurable top results should generally not be scored as an “expert” with respect to competency.
 
Despite the increased focus on training, there should be no training for training sake.  The priority for training efforts should be those areas that are aligned with organizational goals.

Tactical Considerations
 
It is important to stress improving both personal and overall human resources development and performance improvement in the development and use of the Competency Management system.

For several reasons, it is important to pull the training department into the Competency Management development process early.  For one, there can be a tendency, in some environments, for the training department to take the outside development of a training-oriented tool as a criticism of their effectiveness.  Additionally, the more involved training is and the earlier they are involved the more ownership training will take of the new set of tools.  This ownership should not take away from the fact that, unlike some pure training programs, supervision and management are intimately involved in the use of the Competency Management system.  Supervision and management does the scoring (with the employees).  Supervision and management works with the employees to arrive at a consensus score.  Supervision and management prioritizes the elements of the individual employee training plans that result from the system.  But, training will be the focus for the development of new training programs for both new and continuing employees.

Expert Models should also be used in selection of employees and in training design.  The Expert Model will ultimately be viewed as a much more detailed view of the expectations of the employee than a job description has historically been.  It will, therefore, present a much clearer picture for the prospective employee than a job description.
 
Success Criteria

The two most significant success criteria are measurable performance improvement and noticeable improvement in competency.  Closing identified skill gaps will become a big driver of supervisor behavior but this is likely to be a gradual change.  A noticeable change in supervisor behavior is a good indicator of the integration of the Competency Management system into the organizational culture.

It should be noted that measurable improvement in competency levels should not simply be based on the scoring by the supervisors.  There should be some independent verification by the training staff and a corresponding improvement in organizational performance to assure that the measurable “improvement” is not simply a relaxation of the scoring standards.
 
Summary

The concept and use of Expert Models and a Competency Management system is relatively new, dating to the 1990’s.  It provides a systematic method for capturing the work that needs to be done and the best practices associated with that work.  It also provides a ready reference to the resources an employee or supervisor or trainer might consider when seeking to improve performance in a specific activity or process area.
 
It’s primary purpose, however, is to drive improvement in organizational performance through helping employees take more responsibility for their own training and development and through helping supervisors and managers also take more responsibility for the training and development of the members of their teams.  The format of the Competency Management system helps reduce the temptation to provide training for the sake of training and helps focus all training efforts on performance improvement.

Insurance Cash Flow Management and Improvement

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With the president of the client organization the primary contact person, an 8-month engagement reviewed the work processes associated with generating and managing the client’s cash flow. 

Overview of the Client

The client was a non-General Fund, quasi-governmental agency which serves as the provider of last resort of workers’ compensation coverage for employers within the state. Although a state agency, the client competed freely with and conformed with all the regulation of conduct of other insurance companies. It insures approximately one-half of the eligible employers and between one-fourth and one-fifth of the eligible workers in the state. 

Included within the scope of the Cash Flow project were five Home Office departments and the 24 field offices. The Home Office departments included:  Insurance Services, Credit and Collections, Data Processing, Fiscal Services, and Underwriting/Marketing. These departments perform such functions as premium determination, premium billing, payroll report processing, payment processing, and cash management. At the time of the engagement,  the client had 1,660 staff, supervisory, and management personnel assigned to functions or departments associated with cash flow (of 7,174 total non-Executive staffing). 

The specific areas of study were: 

  • Applica­tion and initial premium processing in the districts, including sales and underwrit­ing.
  • Premium and payroll report processes in the Credit & Collec­tions and Insurance Services.
  • Payroll audit processes in the districts.
  • Payroll audit processes in Insurance Services.
  • Policy cancella­tion and collection activi­ties, districts, and Home Office. 

Project Overview

The project’s charter was to thoroughly review current processes to develop a comprehensive flow chart of cash flow activities; identify all related activities, including time requirements and annual frequency; evaluate all pending improvement efforts related to cash flow; and analyze potential untapped opportunities which could either reduce costs associated with administering the cash flow or improve the cash flow itself. 

The primary tools used in this project were flow-charting, interviewing, and observation. Activities were iden­tified as to the flow of work, the reasons for the work, the frequency of the work and the time required to perform the work. 

Project Results

Deliverables consisted of both tangible products and actions recommended to improve cash flow or its associated cost. 

A flow chart consisting of over seven hundred separate activities was presented to management as a tool for evaluating future improvement opportunities. This flow chart began with activities prior to underwriting and issuing a policy and concluded with collecting and investing premium payments, cancelling policies for non-payment, issuing of dividends, and collecting delinquent accounts. 

During the project the flow chart was used to identify fifteen specific recommendations with aggregate savings of $4,765,303. These recommendations included: 

  • automating the collection of payroll data (essentially through electronic data interchange);
  • increasing the number of scanable documents (rather than documents requiring keying of data);
  • eliminating special handling through enhanced automa­tion;
  • eliminat­ing the need for the client’s personnel to rely on paper documents by electroni­cally transferring data which could be transfer electron­i­cally to user software;
  • replacing manual sorting with computer sorting of output;
  • electron­ically linking numerous inter-related sets of databases;
  • reengin­eering specific processes;
  • basing staffing on measur­able work volumes;
  • shortening the lead time for evaluation of process improve­ment recommenda­tions;
  • pursuing direct deposits to claimants bank accounts; and
  • working in cooperation with others in the state’s workers’ compen­sation industry to combine payroll reporting for workers’ compensa­tion insurance purposes with payroll reporting for payroll tax purpos­es. 

In addition, the complete automation of those processes which are already semi-automated would allow the client to reduce its total staffing by approximately 4% (its cash flow-related staffing by 17.5%) representing a savings of over $8 million annually.