In the 2005 / 06 financial year VT Education and Skills (VTE&S) consisted of three divisions - Careers Group, Plus Training and 4S with a combined turnover of approx. £80 million and over 2,000 staff.
The market was rapidly changing and there was a large amount of pressure on both VT E&S margins and the ability to retain the existing level of turnover. VT reacted to this by capturing a large share of the vocational training market by acquiring two significant vocational training businesses, HCTC and Touchstone Training.
The challenge for 2006 was therefore to move the overall business to be able to compete against a large number of smaller providers alongside the challenge of reductions in funding in a number of our main market areas and the integration of three businesses.
We also faced the issue of the pressure on our ability to retain the Careers Group contracts due to a change in the funding streams resulting in a large number of contracts being ‘in-sourced’.
An analysis of the business unsurprisingly highlighted that 75% of the cost was due to people and property. The ability to adjust our cost base had traditionally proved to be difficult in that our UK wide work force needed to access our systems via the 149 offices. Of particular concern was VT Training which had 79 offices which were used largely as administration centres.
A team was therefore set up to initially look at the VT Training portfolio with the objective to understand how we could reduce the huge cost of our premises (approx. £10 million per annum) and improve the ability to flex the cost to support any changes in turnover and the overall facilities required (up or down).
There were two main issues which were culture / attitudes to office based working and ICT connectivity. By jointly working with the VT Group central IT function we established a number of solutions which addressed the lack of mobile connectivity to the Group intranet and centralised the administration which largely removed the reliance on office based working. This also improved productivity (with more time in front of customers) and reduced mileage costs however changing the culture was more difficult which was addressed over an extended period and supported by much improved facilities and ways of working .
The move to central administration and improved connectivity allowed delivery staff to be largely independent of the office. This enabled offices to be organised regionally together with a number of addition administration and training facilities which resulted in an initial reduction of 49 offices over a 3 month period.
Offices were selected on the basis of location, suitability and one of our key objectives was to improve the corporate image / office environment. To achieve this there was a substantial reinvestment in office upgrades and connectivity.
One of the core requirements which contributed to the success of the project was a communication plan which covered all the staff within the company. This included substantial marketing of the reasons, what it means to individuals, Q&A sessions and regular updates through hand-outs, pre-printed brochures, email and face to face meetings at various offices across the UK.
Following the success of the project the same principles were then applied to the remaining E&S property portfolio. This resulted in a reduction from 149 offices in Jan 2006 to 59 by the end of 2008 with moves out of 118 premises and an addition of 28 new facilities, a reduction of 90.
The initial rationalisation of the VT Training offices and the centralisation of the administration significantly reduced the premises lease and running costs and in addition it had the effect of large reductions in the number of administration staff needed. There were on average 2 administrators per office resulting in a reduction of over100 staff.
A further benefit was the reduction in mileage due to the removal of the practice of regular visits the offices. Staff would now travel from client to client enabling less miles to be travelled and more visits per head.
By FY 2007 / 08 year end a reduction in costs of over £6million per annum was achieved with further savings of £1,048,514 in FY 2008 / 09 and £1,556,134 in 2009 / 10.
There has been significant investment to improve the quality of the premises which includes the resources e.g. meeting rooms / presentation equipment and the corporate image.
Whilst this was not our initial aim our carbon footprint has also reduced dramatically Our records show that the average usage of each office is 10,000 KWH of electricity and 2,000 KWH of gas per annum – this equates to a reduction of approx. 522 Tonnes of CO2 emissions per annum.