Cash Flow

When “people” flow became a bigger issue than cash for the Office of the Comptroller of the Currency, it looked to outsourcing as a way to improve its employee relocation program.

by Andy Teng

Next time you condemn the U.S. federal government as a lumbering, inefficient, and out-of-date monolith incapable of reform, consider striking up a conversation with Laura Biggs and Beth Elliott.

Biggs, a relocation specialist with the Office of the Comptroller of the Currency (OCC), and her boss Beth Elliott, director of employment policy and services, will quickly enlighten you: Conventional wisdom about the federal government is often inaccurate, even when it comes to the biggest agencies. That’s because, like many private-sector employers, the OCC is leveraging some pretty progressive management tools to help better employee services, including outsourcing an end-to-end relocation solution that improves both back-office efficiency and customer experience. And by implementing lean, Six Sigma methodology to identify value streams, the OCC is demonstrating that bureaucrats are every bit as interested in cutting costs as their private-sector counterparts.

“We need to continually shift our resources to meet our mission in a timely and efficient matter while still being considerate of our employees’ needs,” Biggs told HRO Today. “Lean Six Sigma is quite a popular methodology within the government, and at least one branch of the U.S. Department of Defense is working on it.”

You don’t usually hear “Six Sigma” and “federal government” uttered in the same sentence, but at the OCC, things are different. In fact, this self-funded office within the U.S. Treasury Department exhibits some unique traits, including a willingness to give priority to improving operational efficiencies. In fact, Six Sigma was an initiative that it started two years ago, and according to Elliott and Biggs, its adoption has already produced nearly $1 million in savings.
And one of the key findings of the program was the outsourcing of just about all relocation services, which significantly reduced the amount of invoice-processing work for Biggs’ department and allowed the office to shift more bodies to other value-added services. By expanding its outsourcing relationship with Prudential Relocation to a comprehensive contract—which went into effect in January of this year on a one-year contract with four optional one-year renewals—HR at the OCC was able to shift into a more strategic role.

“We’ve benefited 10-fold,” said Biggs, whose organization employs about 3,000. “We’ve come up with a new service delivery model. Employees have online access 24/7. All have their own accounts that are secure. My job is less about answering the phone and more about being creative and innovative with policy. It’s nice not to be the fireman constantly putting out the fire.”

Like the private sector five or seven years ago, the public sector is starting to take on HRO in an organized way. As successful stories such as OCC’s relocation outsourcing deal are retold throughout the federal government, some observers say they believe it will spur other agencies to consider broader HRO engagements. However, outsourcing retains a stigma in government, even though many agencies and bureaus today selectively outsource HR services. Whether HRO will ever reach the same level of market penetration in government as it has achieved on the commercial side remains to be seen.

The Banking Gatekeeper
Biggs and Elliott might not be so busy putting out fires these days, but their colleagues certainly are. That’s because as one of the ombudsmen for the banking industry, the OCC is responsible for chartering, regulating, and supervising all national banks. It also supervises the federal branches and agencies of foreign banks. With the financial services market in meltdown mode, crippled by the subprime mortgage fiasco, you can be sure that the OCC is taking a closer look at all of the banks it is charged with regulating.

You might not be familiar with the Comptroller—John Dugan, the 29th person to head up the office since it was established in 1863, was appointed by President Bush in 2005—but just about anyone with a bank account is affected by him, because Dugan is also the director of the Federal Deposit Insurance Corporation (FDIC).

Although it’s a bureau of the Treasury Department—typically regarded as conservative and conventional—the OCC is also uniquely progressive on many fronts. First, it receives no congressional appropriations; instead, its funding comes strictly from user fees. As a result, the office enjoys more discretion to use funding for cost-cutting initiatives. Moreover, it is under pressure to maintain a high level of service, having been rated as the fourth best government office to work for according to employee surveys. (No. 1 was the Office of the Inspector General within the Treasury, followed by the Environment and Natural Resources Division of the Department of Justice and the San Francisco office of the Environmental Protection Agency.)

Biggs noted that during these turbulent times, the workload at the OCC has ratcheted up, which means that the office must also labor harder to attract and retain talent. So as it recruits in the market, often competing directly for talent with the same institutions that it regulates, being able to offer an attractive relocation package is an important perk.

But as anyone familiar with the public sector knows, you don’t go into government work to get rich; far from it. Public servants value the satisfaction of the service over the financial reward. That also means government employers must work harder to keep employee satisfaction high.

To ensure it has adequate talent in the right places—the OCC has four offices around the country and one overseas in London—it relocates as many as 200
workers a year, most of whom are bank examiners. While the number of transfers isn’t especially high, the bureau has struggled in the past because of inadequate internal resources to manage them, Elliott lamented. Because HR operated a different system from the finance department—like a number of other federal agencies, the OCC outsources HR services to the National Finance Center (NFC), a payroll/HR services provider operated by the U.S.

Department of Agriculture—W-2 forms were compiled externally, and the process was error-prone because of the high level of manual attention it required.
“Finance did expense processing and W-2s, and we had a systems and technology issue. We had a relocation management system that didn’t interface with our financial systems,” Elliott pointed out.

This pain point was high on the bureau’s list of priorities. In fact, as it initiated its Six Sigma efforts, OCC leaders decided that overhauling the relocation process would be one of the first projects it needed to address based on the information it collected. With data supporting its suspicions, the OCC went to market and decided to expand its relationship with Prudential.

Amber Tucker, the senior vice president of government services at Prudential, credited OCC’s methodical approach for taking on the relocation program transformation. By adopting a disciplined Six Sigma approach, she said, it could better document problem areas while definitively measuring outcomes.
“One of the things we like a lot about working with the OCC is their willingness and desire to manage by data and not use anecdotal evidence. We know when they are successful and when they are not successful,” said Tucker, a former OCC employee who ran its relocation program.

Biggs explained that to remain competitive and efficient, the OCC expends significant amounts of effort to ensure that it is competitive in the marketplace. “We do go about our business much the same way in determining service levels as the private sector. We are constantly benchmarking ourselves against the private as well as public sector. Our policy is comparable with other relocation policies in the private sector,” she said.

When it became apparent that its expense management bottleneck needed immediate attention, the bureau decided that a fully outsourced solution was needed. Previously, Prudential only handled household goods moves, home sale assistance, and destination service as part of the contract, but after a competitive bid process, the bureau decided to award all mobility services to the incumbent, which is now responsible for expense management, employee counseling, and a new management system that allows manager and employee around-the-clock online access. These key additions to the contract helped Biggs to significantly streamline the process and improve customer service.

In particular, expense management became pain-free because Prudential was charged with reimbursing all the transferees and paying relocation vendors. In the past, it took Biggs countless hours to process these payments, but now she receives only two invoices each month from Prudential, accompanied by all the support documentation needed by the OCC.

“My colleagues in finance are dancing a jig right now. We went from 1,600 expense claims from employees and another 1,200 or so invoices from relocation management companies to one invoice twice a month that comes from the contractor (Prudential) with all the back-up details that I need. It’s remarkable. That process—I can’t even begin to measure how much [efficiency gains] it has accrued, but I can assure you that we will start soon,” Biggs said.

More importantly, she said, employee experience has improved dramatically for several reasons. Because the bureau previously outsourced about half of its relocation program, employees needed to contact Prudential on some issues and Biggs for others. Now, all questions are handled by the provider.

Furthermore, the new system offers employees anytime access to check their accounts, track moves, and get support for other services. This has been especially important for college recruits, who are accustomed to web self-service. For older employees who prefer call-in support, Prudential offers a hotline.

Complementing the outsourced services was the adoption of preloaded credit cards. According to Biggs, the OCC had trouble with reimbursing college recruits, who traditionally had no money upon graduation. Asking them to undertake the cost of relocating such as household moves and rental deposits imposed a significant burden, especially because the bureau is prohibited by law from advancing incoming employees money until they start their jobs. In this instance, Biggs pointed out, public sector entities are under more strict regulation than private-sector counterparts.

“When we were looking for solutions for this problem, I did talk with our competitors in the banking industry. They would say, ‘We just cut them a check.’ We couldn’t do that,” she recalled.

A workaround allowed the OCC to hand out preloaded Visa cards that new assignees could use for a variety of move-related expenses. Because the law permitted them to be distributed to incoming employees, the cards became an instant hit. “It’s a moderate amount of money, but it gets them started,” Biggs noted.

Although it’s a small triumph, adopting the cards also demonstrated the difficulties that public-sector employers face when competing with the private sector, and that innovative solutions are sometimes required to compensate for rigid guidelines within the government. And this need for innovative solutions isn’t limited to internal processes; even outsourced service providers sometimes must adapt to unique government mandates. In Prudential’s case, because the OCC relies on the National Finance Center for payroll, it was asked to produce W-2 forms for OCC employees, a service no other client demands.

Tucker said it took Prudential some time to get the system in place; in fact, not until after the new contract went into effect. She said that because producing W-2 forms is not a core service it provides, Prudential was opening itself up to greater exposure, especially because the payroll data comes from a third party (the NFC). “The other thing is it creates some duplicate work for us, so there is opportunity for error,” she added.

Nevertheless, it was a solution developed specifically for the OCC, and that’s the value outsourcing can sometimes offer to a buyer—flexibility to develop answers to nagging problems and access to capital-intensive tools that buyers couldn’t otherwise develop on their own. It’s an especially important consideration for government agencies because they have much less discretion with their budgets.

Expert Advice
Another value is the consultative support full-service providers offer. For instance, in this slumping real estate market, the OCC is relying on the wisdom of its provider, drawing on it for current best practices, market data, and other information to help the organization remain competitive. As Biggs explained, Prudential can offer insights into measures its private-sector clients are adopting to help transferees sell their homes more quickly. This has led the OCC to alter its policy to offer incentives to employees to appropriately price their homes. Also, Biggs said data sharing among the clients enable the group to benchmark their performance.

Elliott and Biggs noted that so far they are pleased with the expanded outsourcing engagement, but they also acknowledged that it’s too early in the contract to assess its impact in full. One thing is clear: the bureau has been able to dedicate more of its staff to strategic functions, allowing the OCC to work on bettering customer satisfaction.

For Biggs, not having to process thousands of invoices and expense reports has significantly freed up her time as well. More importantly, the new system offers her the ability to generate reports anytime at her desktop instead of waiting for vendors to submit them once a month. “I get a better snapshot of what’s going on, so I can be proactive and not reactive,” she added.

As the OCC’s experience becomes a beachhead in the federal government for outsourced relocation services, many industry participants are keeping a close eye on its success. If the bureau can maintain a high degree of success—that is, impose tight controls on costs, improve operational efficiency, and keep customers satisfied—then it may inspire more confidence among peers to turn to outsourcing as an efficient enabler. And that would certainly change how many people would perceive the federal government.

Posted May 10, 2008 in Engaged Workforce

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