Through wind, and sleet and the Internet

How Canada Post transformed its organization using technology to stay competitive in the new millennium

Back in 1999, as people from around the world made preparations to ring in the new millennium in grand style, Canada Post was nervous. Not because of fear over the dreaded Y2K meltdown, but because of a realization it had to revolutionize the way it did business in order to remain competitive.

And a few cosmetic changes wouldn’t cut it — the company needed a major overhaul to ensure customers and employees remained happy.

With that in mind, the company began the process of transforming how it conducts business. On the customer side, it meant creating the epost division and providing Internet mail delivery. On the internal side, it included changing how HR operated, according to Constance Hudak, general manager of business transformation at Canada Post Corporation.

In 1999 Canada Post was using a home-grown HR technology system in combination with a PeopleSoft product.

“The two in combination lacked a great deal,” said Hudak. There were several key legacy applications operating independently and because of that the information wasn’t always accurate from one system to the next.

And it was only accessible by a handful of HR professionals. Line managers had no instant access to basic information on their employees. If a manager needed to know how many vacation days a particular employee was entitled to, she usually had to pick up the phone or navigate a very unfriendly, unreliable patchwork of systems.

“These kinds of things did result in many calls to HR and people trying to go into the legacy system, looking at information that was slightly out of sync from one system to another,” said Hudak.

But what a difference four years makes.

Now Canada Post is on the cutting edge of HR technology following a massive SAP implementation. There are virtually no customizations in the SAP software, a major feat for a company that employs 70,000 workers spread across every province and territory in the country.

Keeping the customizations out

One of the things that made Canada Post’s implementation so successful was its willingness to change how it thought of itself and how it conducted business.

Jamie Esler, general manager of time measurement and pay for Canada Post Corporation, said the first step was dispelling the notion that it was a unique company.

“We had a culture, as many large organizations do, that said we’re unique,” said Esler. “We always have had a history of saying we’re unique and justifying that as the reason why we do what we do.”

So Canada Post stopped telling itself that it was different and started questioning why it was behaving differently than other organizations. Canada Post looked at SAP as a “compendium of best practices” and started questioning why it was doing things that SAP’s software didn’t support in its vanilla state.

“Everybody pays people, everybody manages benefits a certain way, everybody structures their organization a certain way,” said Hudak. “So if we couldn’t do it within the bounds of the limitations that the software offered us, then we were probably more different than we needed to be.”

Esler said the company turned the tables on itself and challenged everything it was doing that didn’t match what SAP offered.

“And what we found was, in the end, there were very few instances where our justifications were real,” said Esler.

To ensure the SAP software was customized as little as possible, Canada Post had an executive committee that oversaw the entire SAP transformation. If any department — HR, finance or otherwise — wanted to deviate from the standard it had to build a business case and a rationale for doing so.

“When we made modifications to SAP, the few that we made were all accomplished through an end-user exit. We didn’t touch the core software,” said Hudak. “We wanted to make sure everything would be upgrade protected.”

The few modifications allowed were things required by law or that were requirements of a collective agreement with a union.

“I can say that they’re so minimal and they relate uniquely to our collective agreement, that we have an uncustomized product and it is 100 per cent upgrade protected,” said Hudak.

Instant information at everyone’s fingertips

One of the most useful features of the new system is self service, for both employees and managers. Through self service Canada Post has been able to decentralize its HR data collection and maintenance, putting information at the fingertips of every employee.

Managers can now access everything about the organization on their computers, including:

•who reports to them;

•how much employees are being paid;

•what leave days employees have; and

•what benefits they are entitled to.

“All of that is at your desk as a people manager, so we’ve effectively made people managers that much more accountable by giving them the information with which to exercise their managerial responsibility,” said Hudak.

With employee self service, every employee across the country can logon and do simple things including:

•changing an address;

•changing banking information;

•viewing benefits entitlement; and

•viewing vacation time.

“That allows employees themselves to ensure the quality of that data,” said Esler. “Whereas in the old legacy environment there was mountains of inaccurate data, today the employee is checking regularly to make sure that what is in the system representing him is correct information.”

Canada Post employees can access self service through their computers at work, if they have one. But a majority of its employees — including letter carriers — don’t have an office so they have to connect to the system through their home Internet connection.

Reverse outsourcing

Canada Post outsourced its payroll function years ago. As it made preparations for the SAP implementation, it made the assumption that arrangement would simply be continued.

Esler said Canada Post dealt with a major outsourcing company that ran the gross to net for every payroll, produced all the statistics on individuals, sent out pay stubs, did the pay distribution and ran T4s.

“We went into this thinking that was exactly what we were going to do, that we were going to continue to outsource and keep SAP payroll only for the benefits and the integration to timekeeping,” said Esler.

But the more Canada Post looked at SAP and what it was doing with the system, the less having a completely outsourced payroll solution made sense.

“We realized we were building fairly complex interfaces to pay, and back and forth between ourselves and the outsourcer, and so we started to challenge that,” said Esler.

A decision was made to bring payroll calculations in-house, but an outsourcer is still used for basic pay distribution and funds transfer to third parties for payroll deduction.

Hudak said the decision to stop outsourcing payroll was a relatively easy one, considering everything the SAP system was doing.

“If you’ve got within SAP the base salary information, all the time keeping and exception hours, overtime and the vacation information, if you’ve got all the benefits allocation and the benefits deduction already calculated, why would you then stop and build a custom non-supported interface to transmit all of that data to the payroll provider?” said Hudak. “Why not just continue using the software you have and use the calculation engine in there? What’s payroll other than straight math once you’ve got the key ingredients?”

Employee reaction to the change

For the most part employees at Canada Post were receptive to the changes, said Esler. When it came to adapting to the new HR technology, he said there were no surprises in how staff reacted.

“It was certainly what we expected,” he said. “We identified some early adapters in the payroll department. We selected those people early on in the project and they became subject-matter experts, or specialists, as we introduced this change across the country.”

Canada Post embarked on an extensive training program as it rolled the program out across the country, all the way down to the front-line staff.

“We would say that they’ve accepted the change really well at this stage,” said Esler. “There was a concern at the time that this might add to their workload, and I think what they’ve realized at this stage is that its replaced their workload and it’s a more effective use of their time.”

Hudak said most managers were quick to buy into the idea that the new software was not simply unloading work off the HR department and onto their shoulders.

“Bear in mind that we have a huge mail operation to run,” she said. “So a majority of our supervisors have responsibilities that don’t involve HR.”

Supervisors have to approve things like vacation time, overtime and absences on the shift they are responsible for. Pre-SAP the supervisors had to do this work on systems that didn’t talk very well to each other.

“Now we have given them one screen that was instantaneous,” said Hudak. “So the majority of our workforce that manages people, we gave them a much slicker comprehensive tool and they accepted it as such.”

A perfect example of this is how letter carrier supervisors keep track of time, said Esler. In the old environment, the supervisors carried around a clipboard for timekeeping purposes, attendance and ensuring a route gets covered. It took about two hours of their time everyday to stay on top of this paper-based routine.

“What we’ve been able to do with the new environment is create a handheld digital device that does all the work for them,” said Esler.

That device does all the complicated calculations instantly and is far less prone to errors than the paper-based system that relied on handwritten notes and repeated phone calls to other offices.

Opening new career doors for HR staff

One of the things Esler is excited about with the new technology is how it has freed up the HR department and, in doing so, created a number of new career paths for HR professionals at Canada Post.

In the past, the role of HR at Canada Post was pretty much restricted to a transactional one.

“The HR practitioners could be characterized as being traditional HR practitioners without necessarily a full kit bag of analytical skills, nor the tools to have brought out those skills,” he said. “Well now we have an environment where we’ve created new career streams for HR practitioners.”

HR professionals are picking up new skill sets at Canada Post by going through programs like Six Sigma and Lean Manufacturing that teach analytical techniques.

“They’re both being applied today in our HR environment and it’s adding to the discipline and it’s providing, in fact, alternate career paths for HR practitioners who are oriented towards this,” said Esler.

Time to reap the rewards

The best is yet to come for Canada Post. That’s because now that the new technology is firmly entrenched, the company is just beginning to tap into the potential of the data now being collected.

“We’ve stabilized the systems and now we have to leverage those systems,” said Esler. “We have so much more information, so much better quality information, and we now have to look at the best opportunities there are to enhance the use of that.”

Hudak said Canada Post is now poised to start reaping the benefits of the massive investment of time, energy and money that went into the transformation.

“It’s basically mining information,” she said. “We have much more and better information on absences, on link of absences to accidents and health, that what we have to do now is say ‘how do we manage better with everything that we have.’ You start leveraging your investment now.”

The vendor’s point of view

Susan Cook, an Ottawa-based account executive with SAP, said most firms try to do what Canada Post has done in terms of keeping customizations to a minimum.

“Typically clients strive for as little (customization) as possible because SAP spent a great deal of time researching and understanding best business practices and incorporating that into the software,” said Cook.

Implementation times vary widely from one organization to the next, but Cook said Canada Post was “very aggressive” in terms of its timelines.

“They were going through some rather radical business transformations, so they had buy in from all levels within Canada Post and employees were trained and encouraged to follow suit,” she said. “They were having some business challenges with the Internet and less people using postal services, so they needed to respond quickly and I think they’re a fabulous example, and certainly held in high esteem among our customers, as an organization that basically turned its business around in a very short time.”

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