Royal Mail cuts HR spend by GBP57m in two years

Royal Mail has slashed its human resources spend by GBP57m in two years as part of a massive organisational overhaul, leading HR magazine Personnel Today reveals today.

In an exclusive interview, Royal Mail group HR director Tony McCarthy and Kevin Green, director of People and Organisational Development, said that the HR budget has been cut from GBP173m at the start of 2003 to GBP116m.

Personnel Today

As part of the overhaul, the HR team has fallen from 3,700 to 2,400, which incorporated 1,400 job cuts and 100 new appointments. The HR to employee ratio has improved from 1:75 to 1:130.

Other savings have been driven by removing duplication and process improvements in areas such as sickness absence and training.

Former BAE Systems HR director McCarthy, who joined Royal Mail in January 2003, said he was brought in by chairman Allan Leighton to “change the HR culture and get it sorted out”.

He quickly realised the scale of the challenge. “The size of the department didn’t make any sense and HR was not aligned to the business,” he told Personnel Today. “The vast number of senior HR people were accountants. This did not mean they were not able people, but it meant top quality processes were not in place”.

McCarthy and his new HR team put together a three-point plan to remove inefficiencies: Putting HR ‘business partners’ into each area; pulling out people doing repeatable tasks and creating a central shared service; and bringing in experts into the head office HR team to focus on strategy.

Experts said the HR transformation reflected similar initiatives that other large organisations have gone through and are going through. Making the HR departments more strategic and closer to the business is a challenges facing many UK organisations, in both the public and private sectors.