The main office, FRB of Boston, is housed in a 1970s building located on a six-acre site in downtown Boston. Every day the bank processes four million checks and a trillion dollars in electronic funds through a two-shift operation. The FRB of Boston has 1,500 employees and, as space needs have changed over the years, the 1.2-million sf facility also serves as a commercial office building to 1,000 tenants.

A Large Ship Takes Time to Redirect

About 10 years ago, the FRB of Boston began to assess areas where it could function better and be more responsive. At the time, facilities operations had 165 staff working three shifts, seven days a week. Using Tradeline’s Mission-based Headcount Analysis the bank found that it was losing $2.2 million to overstaffing costs.

“That was our change trigger,” says Colby Rottler, assistant vice president of FRB of Boston and chair of the facilities work group for all FRB facilities nationwide. “Our change champion was my boss who said ‘We can do this, or they’ll bring in someone who will do it for us.’”

The overstaffing costs fall under the labor target, which, because it is a human element that involves previously formed beliefs about how things should be and are done, may be the most difficult element to change in any business culture. The other targets are taxes, which are paid by the government; utilities, which sometimes fall under labor; depreciation, which is running the building; and materials such as new security equipment.

“We are a large ship,” says Rottler. “It takes time to change people and processes. That became one of our missions as we looked for areas of change.”

Business Mission and Institutional Culture

In order for a culture to be changed, its mission must first be identified. Even if the mission is unchanged, an organization almost a century old is going to have antiquated processes. A wealth of experience can be tapped for insights from many senior employees who have been with the organization for 30 to 40 years. However this also means that new policies can be met with a great deal of resistance, which calls for tact in instituting new policies, while still maintaining a bottom line.

One area ripe for change was shift operations.

“Our overtime costs were out of control,” Rottler says.

Enticing many older employees with early retirement helped to trim down the size of the staff. Then the schedules of workers from a certain level down were restructured to four ten-hour days, Wednesday through Sunday. Saturday, a busy bank day, became a normal workday avoiding overtime pay.

“The earlier retirement program was an opportunity to have a major reduction in staff that we didn’t have to replace,” says Rottler. “The schedule restructuring was more difficult, but it is working in our organization and I can show that in my budget.”

Previously, FRB of Boston paid $250,000 per year for in-office furniture moves. Now, staff is taught to do these small moves, reducing outside contracts and making people more efficient.

Rottler is also responsible for property management which includes mail, receiving, retention of records, vehicles, and other services. No one has a specific job title and staff are used wherever they are needed.

Incentive Program

Workers have a newly found sense of ownership that has been instilled in part by the delegation of decisions that were once made strictly by management. This also lessens the workload for management.

FRB rewards perfect attendance, which is important because when running lean any absence often means calling someone else in and paying that person overtime. “About 40 percent of my staff has perfect attendance,” says Rottler. “I feel pretty good about that.”

Rottler conducts frequent employee reviews and tries to consistently keep the lines of communication among workers open. “As a manager,” he says, “I work with staff to identify incentive opportunities and encourage the staff to complete the work.”

FRB has incentive awards that can be up to 10 percent of salary for special challenging projects such as developing maintenance procedures and solving technical problems. “We reward good workers,” says Rottler.

Results

On a $15-million budget, FRB of Boston cut its labor costs by 60 percent and its overtime costs by 75 percent, equaling savings of $5.5 million. The bank cut its cost per rentable square feet from $17.10 to $12.60. With competitive purchasing of utilities, FRB of Boston avoided $800,000 in costs in 2006.

Housekeeping costs are 17 percent below BOMA standards because the work has been internalized through 29 employees. They prepared a bid that cost FRB less than an outside contractor, yet remains lucrative for them. Each housekeeping staff member cleans 49,000 sf per night.

Today, the Mission-based Headcount Analysis shows the bank “on the line,” meaning it has the right number of facilities staff to service its employees; it is neither understaffed nor overstaffed. While this is desirable, the bank will continue to focus on efficiency and probably grow leaner.

In the future, as paper checks disappear the FRB will be ready for further advanced technological processing with increasingly fewer employees. Facilities staff will be required to understand facilities better, manage outside contractors, manage expectations, and understand how thing are done. Better real-time knowledge of facility operations will be essential.

“The change process is challenging and difficult, but it makes the organization better,” says Rottler. “It makes us more responsible and gives us credibility.”

By Michael Fegel

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ISSN: 1096-4894