CIMA where business + finance meet
Cutting costs by 20% while upping customer satisfaction to 79% ‘The focus of the CIMA programme on the areas of management accounting, analysis and understanding the business were beneficial to the role I was doing over that period. I certainly credit some of our success to CIMA’s focus in those areas.’
Paul Stapleton ESB Group Treasurer, Electricity Supply Board Achieving significant business savings is difficult in most circumstances. Cutting a cost base from €250m to €200m over five years is remarkable by any measure. ESB Networks, part of Irish utility Electricity Supply Board (ESB), achieved savings of this order over a five-year cost cutting programme. Paul Stapleton was financial controller at ESB Networks at the time and lead a strong and focused finance team, many of whom are CIMA members. Driven by a regulatory price control, the initiative started with an assessment of costs and their drivers across ESB Networks. Using management accountancy techniques, Stapleton and his finance team adapted the costing model already used at ESB to categorise labour costs in a more detailed way than previously. With finance people embedded within the business the finance team were able to talk to line managers and gain an understanding of the kind of work being carried out, its costs and constraints. Next came the task of implementing the changes. Stapleton and his management colleagues established a performance improvement programme, identifying ten areas where cost was out of line or a step change in performance was needed. ‘There was improvement needed in every area and we captured that in a general way through the annual budget process: we year-on-year
ratcheted down the amount allocated to each area,’ he explains. Achieving traction with the programme meant changing people’s behaviour. Analysis showed that ESB was at times shouldering costs for faults caused by third parties – builders or developers damaging cables, for instance. Here the onus would be on ESB technicians on the frontline to identify the cause of the fault, but technicians would find the paperwork onerous. ‘Technical staff want to be doing technical things. They do not want to be doing administrative processes. So we made the administration much easier and centralised some of the work.’ Working with colleagues in HR and line managers, they also introduced a performance-related reward programme, with a bonus linked directly to delivering targets, which helped to communicate their importance across the business. Improvements in delivery and processes helped to increase customer satisfaction, which rose 2% year‑on‑year, as well as cost efficiency at ESB’s call centre. ‘By improving our own processes we were able to significantly reduce the volume of calls coming in.’
CIMA value: ESB Cutting costs from €250m to €200m over a five-year period Reducing the number of faults per annum by 75% T. +44 (0)20 8849 2251 E. cima.contact@cimaglobal.com www.cimaglobal.com