CEB(01)3rd
CEB01 / 18 to 29
Present:
Others attending
CEB01/18
CEB01/19
GRO
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In Strictest Confidence
CONSIGNIA EXECUTIVE BOARD
1 May 2001
John Roberts (Chairman)
Marisa Cassoni
Jerry Cope
Richard Dykes
Malcolm Kitchener
Stuart Sweetman
Alan Williams
Kevin Williams
Jonathan Evans (Secretary)
Nicky Jayson (Notes)
Gillian Wilmot, Managing Director, Business and
Consumer Markets for CEB01/19, lan Bull, Head of
Regulation, Business and Consumer Markets for
CEB01/22, David Smith, Automation Director, Post Office
Network for CEB01/23.
MINUTES OF PREVIOUS MEETINGS
CEB(01)1* and CEB(01)2nd
The Executive Board approved the minutes of the
meetings of 27 March and 3 April 2001.
STATUS REPORT CEB(01)08
The Executive Board noted the paper and noted further:
Performance of the rail network: The PR plan was in
hand and would be launched between 7 and 26 June.
BCM performance: Gillian Wilmot made a short
presentation on current market conditions, the risks
currently faced by BCM, and how these were being
handled. Excluding one-off effects, e.g. the impact of the
census, the task for the unit in 2001/02 was to generate a
further £170m revenue from additional volume compared
with the previous year. Actions were in hand to deliver
much of this, but there remained an uncovered risk of
some £50m. If the proposal to hold back £15m of
promotional spend was carried out, this would threaten
income by a further £45 million. This analysis would be
used as an input to the subsequent discussion on
budgets for 2001/02.
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CEBO01/20
Customer Goal
Employee Goal
Shareholder Goal
ACTION:
Marisa Cassoni
ACTION:
Marisa Cassoni
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Marisa Cassoni
CEBO01/21
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CORPORATE SCORECARD CEB(01)09
The Board discussed the Corporate Scorecard and
Marisa Cassoni’s accompanying presentation.
Only 6 out of 12 Business units had achieved their
Customer satisfaction full year target;
March Quality of Service results were again below full-
year target for all reported products. Only outward and
Inward E2E J+3 achieved the full year target;
9 out of 15 Business Units had achieved their Employee
Commitment full year target, and only 3 out of 6 Business
Units had achieved their Leadership full year target. It
was recognised that measuring results in terms of
numbers of units achieving or failing target gave a
distorted view of overall performance, as the larger units,
e.g. Service Delivery, were amongst those that had
failed;
the provisional full-year post-tax profit outturn was
£168m, against the target of £260m before exceptional
and ringfenced items. The monthly results for March had
broadly followed the pattern anticipated the previous
month. There were still some potential adjustments to
make to the outturn figure before the final result could be
declared, but these were in the range of £-3million to
£+5million. On top of this there remained the possibility
of an impairment of Parcelforce assets, but it was
expected that it would be possible to demonstrate to the
auditors that the remaining unimpaired assets continued
to have value, and that therefore an impairment would
not be necessary. However, the possibility of impairment
would need to be explained to the Consignia Board, with
a range of possible financial outcomes;
an analysis of expenditure over recent years showed
some disturbing trends. It was agreed to focus some
further analysis on 3 or 4 cost areas where the year on
year trends appeared to be most out of line and in need
of remedial action;
the Board commented again that the scorecard did not
provide sufficient information on recovery plans where
red traffic lights were shown. In future the Group Finance
Director was asked to ensure that Group MDs had
provided commentary from their own unit reviews before
issuing the scorecard.
CONSIGNIA 2001-2002 BUDGET CEB(01)13
Marisa Cassoni presented details of the Consignia 2001-
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ACTION:
Marisa Cassoni
ACTION:
Marisa Cassoni
ACTION:
Marisa Cassoni
ACTION:
Richard Dykes
ACTION
The Secretary
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2002 Budget, detailing the Business Units where sign off
had been achieved and the associated risks for each
cluster of units.
The Executive Board agreed that
the budget process needed to be tightened to ensure that
sufficient business controls were in place and that budget
variances could be properly managed;
2001-2002 budgets needed to be signed off as soon as
possible. GMDs should ensure that Units had
calendarised their budgets by 18 May, and to say quickly
if this could not be achieved. Although speed was
important, it was crucial that budgets were calculated
correctly. All outstanding issues including cuts and
opportunities identified in the “star chamber” process
needed to be resolved to the same timescale. Marisa
Cassoni would provide guidance to GMDs and units to
assist with this;
it was recognised that there were two approaches to
handling identified opportunities: either to hard code them
into unit budgets, or to allocate accountability for delivery
to individuals outside unit budgets. For the latter
category, an additional page would be inserted into the
Corporate Scorecard to enable the tracking of the
delivery of these opportunities, to enable any reallocation
of resource once opportunities were realised;
the annex to the 2000/01 scorecard, showing progress
against the key corporate strategies, would be ceased in
this form from period 1 of 2001/02. However a quarterly
report would still be made in the scorecard of progress
made with the major IT projects currently being monitored
in the scorecard;
the £15m of opportunity in BCM, for deferring advertising
spend, would be held back until June, when a view would
be taken in the light of overall business finances about
delaying this spend any further. Richard Dykes would
agree with Gillian Wilmot the best estimate of the impact
on profit of this possible deferral, and report back to
Marisa Cassoni;
there were 400 employees on the transitional database at
the end of March 2001, and this was increasing further to
unacceptable levels in the wake of rationalisation
programmes in Transaction Services and Customer
Management in particular. The Secretary would update
the Executive Board in June on the latest position,
including the status of discussions with the Unions about
changes to provisions for redundancy.
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CEB01/22
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CUSTOMER MEASURES CEB(01)12
The Board considered Richard Dykes’ paper, and the
accompanying presentation from lan Bull, on a generic
measurement framework to help Business Units manage
customer retention and hence profitability more
effectively.
The Board noted in discussion that:
further thought needed to be given to the pre- and post-
product attributes of service (eg billing) which added to
the cumulation of issues which determined overall
customer satisfaction;
there were some apparent overlaps in the proposed
measures - these should be re-examined to ensure that
there were not too many KPIs, and that the costs of
measurement were not disproportionate;
in the longer term, the aim should be to maximise
customer value rather than customer satisfaction, but
what was proposed was recognised as a step towards
this;
the measures needed not only to show Consignia’s
performance, but also to track performance against that
of competitors.
The Executive Board agreed:
in principle the need for such a framework, but
recognised that more work needed to be completed on
the detail of the measures;
that Kevin Williams would lead the continuing
development of the measurement framework, supported
by lan Bull. Early actions would include an assessment
of what was possible to achieve this year given the
provisions made for this work in budgets, and what
customer measures would be proposed to be ceased.
There was a need for the team to work closely with other
business units to ensure that efforts were not being
replicated several times over;
any changes to the measurement framework would be
finalised in time for incorporation into the Business
Planning process for next year’s unit plans.
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CEB01/23
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ERROR RECONCILIATION AND ACCOUNTING
CEB(01)10 AND HORIZON BEYOND 2005 CEB(01)11
The Board considered the two papers from Stuart
Sweetman, and the accompanying presentation by David
Smith, which gave an illustration of the fundamental
nature of the change to the operating process that would
be delivered by the Error Reconciliation and Accounting
Project (ERA). ERA needed to be viewed in conjunction
with options for the future of Horizon beyond 2005 which
included inter alia an approach to securing external
funding for ERA.
The Board noted in discussion that:
The need to fund the £140m of investment represented a
major challenge given the state of the finances of the
Post Office network and of Consignia;
it had been assumed that all benefits from ERA would be
retained and not passed on to clients as price reductions,
although client pressure would no doubt be exerted to
change this assumption;
Success of the ERA project would depend on client
cooperation in redesigning their own forms and
procedures. Most current clients were keen to be
involved, especially now that they were able to see
Horizon as a working reality;
the success of the Horizon installation programme had
helped increase confidence in ICL as a supplier.
However they were not necessarily the best future
supplier, but the recommendation was to continue with
them as the potential disruption to the PO Network from
starting a new procurement process to source a new
supplier now would be considerable, and require a
rewriting of the strategic plan. However it was
recognised that from a negotiating point of view it was
highly risky to give ICL a commitment for the future, and
more thought should be given to our negotiating stance;
it need not be assumed automatically that ICL’s funding
of the investment was the only option. It may be
preferable for the Business to seek external funds itself.
Clearly this strategy would need to be presented to
government with examples of other available financial
options;
the timing of the ERA programme would need careful
consideration, in order to avoid creating an
unmanageable peak of transformation programmes in the
Network; and to avoid risk to the migration to ACT which
was due to take place at the same time;
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In Strictest Confidence
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The Secretary
CEBO01/25
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ERA would cause at least 400 job reductions in
Chesterfield, and a plan for managing these - and the
associated negative PR - would be needed.
The Executive Board agreed that
while, inevitably, there were a large number of
unresolved issues about ERA and Horizon, their general
direction was right and the respective strategies should
be worked up further in the light of this discussion, and
would be taken to the July Consignia Board as a strategic
issue.
CORPORATE CLIENTS OVERVIEW AND SALES AND
CUSTOMER SUPPORT COMPETITOR AND MARKET
OVERVIEW CEB(01)14x
The Executive Board noted the report and agreed in
future to devote more time to the overviews, and that the
MDs of CC & S&CS would be asked periodically to
attend the Executive Board to discuss the paper and
current market conditions.
GROUP TREASURY ACCOUNTABILITY REPORT
CEB(01)15x
The Executive Board noted the report.
COMMUNICATIONS
A new approach to Customer Measures was being
considered;
more emphasis would be placed on the Corporate Clients
Overview and Sales and Customer Support Competitor
and Market Overview, and the MDs of these units would
be asked to periodically attend the Executive Board in
support of the paper.
RECOGNITION
Nothing on this occasion.
REVIEW OF MEETING
DATE OF NEXT MEETING
5 June 2001
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