Norwich Union is part of Aviva, the world’s seventh largest insurer and the biggest in the United Kingdom. Formed by the merger of several large insurance companies in the late ’90s, Aviva has premium income and investment sales of more than $50 billion and some 60,000 staff. About half of these staff members work in the United Kingdom, scene of much of the large-scale merger and acquisition activity that formed Aviva. When five major insurance companies came together to form Norwich Union, each brought its own systems, infrastructure and procedures.
“Each company not only had its own IT infrastructure,” explained Gary Cannon, people development manager at Norwich Union Life and Pensions, “they also had their own cultures, ways of dealing with staff and processes.”
The result was that while the newly formed company had a good handle on the inventory of its physical assets, it had no centralized way of judging the extent of its human capital. “On the IT side this was particularly important, as we needed to consolidate our IT systems and have the right personnel to support them,” said Cannon. There was also the normal pressure following merger and acquisition to reduce head count in duplicate roles and pass a critical eye over the employment of contractors.
“We wanted a method to describe the skills of all IT staff, both internal and contracted,” said Cannon. “Rather than use a system from one of the merged companies, we decided to go with SFIA, the Skills Framework for the Information Age. This had two advantages. Firstly, it came from outside the merged organizations so no one party had a vested interest in it. Secondly, it was a national standard used by the (British) Army, National Health Service and other major employers. By using it, we would be able to benefit from other people’s experience and make meaningful comparisons with them.”
Over a period of several months, IT staff assessed their skills against SFIA and had their self-assessments confirmed by their managers or by other competent staff. Because SFIA describes IT skills in general terms, the project team had to add another layer of vendor-specific information to the framework.
The reduction in contractor hires followed two models, Cannon explained. “In the beginning, it was fairly crude,” he said. “Contractors were seen as a cost that had to be reduced.” This led to managers wielding a blunt axe. Cannon added, “For example, it might be decided to lose 12 C++ contractors and retrain 12 COBOL programmer staff to take their place, because they were generally insufficiently engaged.”
To decide which workers to retrain, Norwich Union used data from two sources. First, the resource scheduling system showed which employees were either frequently unallocated or found it difficult to get allocated. After these individuals were identified, the skills management system allowed their skills to be checked, and the most appropriate individuals for retraining were selected. Using this approach, Norwich Union both reduced expensive contractor overhead and gave existing employees valuable new skills.
Now that Norwich Union is more accustomed to dealing with skills in this way, the company has developed a second, more sophisticated, longer-term approach to skills and contractor hires. The key to this is forecasting “skills hot spots”—areas where a future shortfall of skills is predicted. “For example, you might predict a need for 50 people with a certain skill set for the rollout of a system in the future,” Cannon explained. “Using skills management, we can see whether we have those people available and what the knock-on effects will be if we have to remove them from their current posts. If the area of expertise is strategic, you can consider training people up for it, but if it’s just going to be short-term, you might choose to engage contractors to help you over the short term resourcing ‘hump.’ That’s contracting out for the right reasons.”
This approach has been very successful in reducing contracting spending, but Cannon is reluctant to take all the credit. “Although it’s managed out of the resource management team, it’s vital that other parts of the organization are involved,” he said. “Indeed, without their involvement, it wouldn’t work. The point of having a common language for skills is that the various departments in HR, the learning and development team and line managers can all benefit from it by rigorously applying the performance management processes.”
So just how much did Norwich Union save by adopting this approach? As you would expect from a financial organization, the company has a good idea of its costs, but is also a little reluctant to mention any precise figures. “Let me put it this way,” said Cannon. “Let’s say you managed to achieve a 5 percent saving on your own firm’s staff budget. You can do the arithmetic, but let me just say that Norwich Union has more than justified the effort it’s put into this.”