The client has three principal lines of business — Health Care, Financial and Retirement Services and International Insurance — and each was almost completely decentralized and autonomous. Certain infrastructure functions were centralized into what is called the Corporate Center. These units collectively had annual spending of approximately $850 million. Management wanted to cut upwards of $30 million from this annual cost base, but previous attempts had failed. The client's newly appointed Vice Chairman initiated a Corporate Center Review Program and LoBue was chosen to lead the effort.
INFORMATION MANAGEMENT AND TECHNOLOGY
- Help Desk representatives idle time was reduced by enabling single sign on access, by revising password reset parameters and reducing the frequency of software upgrades. Supervisory spans of control were increased to levels consistent with global best practice and staffing models developed to determine recommended staffing levels.
- The Quality Assurance function was redesigned to better address high risk and critical initiatives during the development life cycle, driving improvements both within IT and out to the business units.
- Mainframe installation and customization units were consolidated to eliminate duplicative efforts, optimize job scheduling and reduce functional overlaps.
- Centralized project management and a redesigned management process were recommended, creating substantial reductions in manpower.
BUSINESS SHARED SERVICES
- Hospitality and Travel were streamlined through a reduction in manual and administrative tasks. Both adopted operations to improve their bottom lines while enhancing service.
- Purchasing process changes reduced FTEs, expedited deliveries and leveraged technology and vendors.
- The Corporate Secretary function was merged into the office of the General Counsel. Previously the Corporate Secretary also supported individual shareholders; a responsibility shifted to Investor Relations.
- Legal and Controllers both housed Tax units that provided internal counsel and strategy. These units were combined to unify strategy, eliminate duplicative research, and maximize synergies. In addition to FTE savings, the combined unit offers a consistent tax strategy and fewer contact points for users.
HUMAN RESOURCES AND CORPORATE COMMUNICATIONS
- Vendor Management of Advertising Media, Executive Search, Outplacement and Temporary Firms was initiated to reduce the total number to a more manageable level and leverage the client’s buying power.
- Staff Optimization in a centralized HR service center identified significant FTE savings.
- Benefit costs were reduced by a revision in the 401K Vesting Schedule to market terms, yielding significant savings while not impacting current plan participants.
- The large volume of Communications pieces distributed throughout the organization were consolidated, eliminated or electronically communicated for "essential" messaging.
FINANCE, ADMINISTRATION AND INVESTMENT MANAGEMENT
- Controllers renegotiated a 10% reduction in the fees charged by the external auditors. Functions within Controllers were redesigned, centralizing some services and strengthening Treasury processing.
- Internal Audit was redesigned, and professional auditor staffing models provided FTE and expense savings.
- Internal Investment Management downsizing was accommodated through the use of strategic outsourcing, combining back office functions and redesigning portfolio management in expectation of declining volumes.
The client benefits from this engagement were a streamlined centralized infrastructure using modern Management Information Systems to effectively manage for results. By the end of the program a $100 million annual expense savings was achieved besting the $30 million target by over 300%. The lines of business all increased profitability as a result of the reduced corporate overhead.