Programme for continuous improvement

INTERNAL Programme for continuous improvement Document owner: Jan Christian Sandberg Written by: Lucie Aunan Date created 06.10.2008 Date 13.10.2010 Approved by: Steering Group of the Programme for Continuous Improvement

u Page: 2 of 32 Contents Programme for continuous improvement... 1... 1 1 The programme's background and challenges... 4 2 Strategic objectives... 6 2.1 The programme's strategic goals... 6 2.2 The programme's contribution to realising the strategies... 7 3 Change strategy/programme implementation... 9 3.1 Continuous improvement by work process... 9 3.2 Working methodology... 9 3.3 Every project undergoes three phases... 10 3.4 Phase 1 - Streamlining work processes... 12 3.5 Phase 2 Management focus... 12 3.6 Phase 3 - Continuous improvement... 13 3.7 Relationship with other projects and line activities... 15 4 Business case... 16 4.1 Effect goals... 16 4.2 Making achievement of gains more probable... 17 4.3 Cost elements in the programme... 19 4.4 Overall profitability analysis... 20 5 Gains strategy... 21 5.1 Estimating gains... 21 5.2 Creating the gains... 21 5.3 Gains plans... 21 5.4 Distribution of gains... 22 5.5 Following up on the gains plan... 23 6 Assumptions... 24 6.1 Assumptions for the programme... 24 6.2 Limitations... 24 6.3 Success criteria... 25 7 Programme control and organisation... 26 7.1 Programme organisation... 26 7.2 Arenas and interested parties... 27 7.3 Programme reporting... 27 8 Communications strategy... 29 9 Quality control strategy... 30 10 Uncertainty analysis... 31

u Page: 4 of 32 1 The programme's background and challenges Programme name Client Programme's proposed total budget ceiling Department responsible for the programme Programme owner Programme manager Programme address Programme for Continuous Improvement (CI) Portfolio committee The budget ceiling and ambition level for the programme are determined annually Innovation and development. Dep. Mgr. Jan Christian Sandberg Lucie Aunan Programme duration 2008-2015 Main objective Directorate of Taxes, Helsfyr The programme shall contribute to the ability of the Norwegian Tax Administration to adapt to users' expectations and changes in external conditions. This requires that the programme shall, in collaboration with the line, incorporate smart and effective work processes that ensure high productivity, good quality and equal treatment in the day-to-day work of each region and right across the regions. The programme shall help the regions to create a culture in which managers involve employees, get to grips with challenges and opportunities and implement the necessary measures so that the Tax Administration's processes and their results are continuously improved. The Tax Administration must prepare itself for a situation in which the complexity and volume of tasks to be resolved is increasing, while access to resources is decreasing. This means that work must be performed in a way that is smarter and more effective than at present. There has been a great focus on and investment in IT solutions and major reorganisation processes for many years, without a sufficient focus on how this can change the way in which we work. The agency recognises that there has not been sufficient focus on harvesting the efficiency gains of the great investment. The hypothesis therefore is that there is a potential for streamlining and reducing case processing times by working systematically on developing the work processes in the regions while increasing the focus on the management of change so as to ensure that there are constant improvements in the way in which we work.

u Page: 5 of 32 The strategies state that the Tax Administration shall act in a predictable manner and be perceived as one agency in its meetings with users. Expectations that the Tax Administration shall be perceived as one agency have become greater now that 100 tax assessment offices and 20 county tax offices have been gathered into five regions through ROS. The organisation into five regions helps to facilitate the work being performed in amore standardised way, but it has proved difficult to achieve equal treatment of the same issues and to follow the routines and the guidelines in practice. The technical requirements as to how the work is to be performed are often extensive and difficult to find a way through, and they do not give clear enough guidelines of what shall be prioritised when resolving the tasks of a hectic working day. The Tax Administration therefore has potential for improvement with regard to delivering consistent quality and meeting the requirements of society and the needs of users in a predictable manner. Efficiency, quality and good service are important for users of the agency's services. Good service is based on our being able to keep what we promise and to be predictable. However the variations in responses, case processing times and control levels are currently too great for us to be perceived as predictable and consistent. Other organisations have seen very good effects in terms of efficiency, quality and service by working on continuous improvement. Continuous improvement is a philosophy in which the objective is to create value for the user by streamlining and simplifying the present processes. Continuous improvement contributes to a consistent belief within the organisation that everything can be improved. Continuous improvement uses a set of principle, techniques and tools to eliminate activities that do not contribute to value creation by simplifying processes, creating flow and establishing a culture for this. Through continuous improvement, the work of improvement shall be integrated into day-to-day production and constantly contribute to step-by-step improvements, so that the need for major and comprehensive change is reduced. One of the goals is to get managers and employees in the agency to lift their gaze and think about day-to-day development and improvement. There is a great focus on results in the agency and short-term results become the daily focus. If improvements in results are really to be achieved, it is necessary to incorporate a culture that focuses on how we can improve. This involves sufficient openness to come forward with suggestions about what could be done differently, openness for letting errors come to the surface so that we can learn from them and structures to implement change and follow up on results improvements. Continuous improvement gives the groups the opportunity to come to the fore and take control over streamlining, instead of always finding they are behind the increasing requirements. Work on continuous improvement requires focus, acute competence and good cooperation between different environments, in both the Directorate of Taxes and the regions. The work of introducing continuous improvement is therefore organised as a programme that focuses on reviewing all work processes that provide services to the users.

u Page: 6 of 32 2 Strategic objectives The expectations for the Tax Administration's quality and user-friendliness are based on our being measured against the best. The quality is to meet the requirements of society and the needs of users in a predictable manner. This requires that o o we improve and streamline our services and our way of working so that the level of service becomes more consistent across all service areas and regions we have common quality standards based on laws, rules and methods that are brief, accessible and easy for the individual employee to understand 2.1 The programme's strategic goals The programme shall contribute to the ability of the Norwegian Tax Administration to adapt to users' expectations and changes in external conditions. This requires that the programme shall, in collaboration with the line, incorporate smart and effective work processes that ensure high productivity, good quality and equal treatment in the day-to-day work of each region and right across the regions. The programme shall help the regions to create a culture in which managers involve employees, get to grips with challenges and opportunities and implement the necessary measures so that the Tax Administration's processes and their results are continuously improved. The programme's objectives can be illustrated as follows: Goal Effects Streamline work processes Increased productivity Much shorter case processing times Consistent and predictable quality Equal answers to equivalent issues Fewer faults and deviations from agreed quality Management of continuous improvement Employee-driven improvement Increased ability to achieve results Increased ability å to involve employees Increased ability to perform improvement measures Increased job satisfaction among employees Organisation that learns from each other across units and regions The programme shall help the agency to achieve its goal of increasing productivity by 20%, but we wish to have a balanced focus on the aims so as to strive towards all the goals at the same time.

u Page: 7 of 32 Efficient work processes mean that we shall work smarter - not necessarily harder. This requires us to focus on using more time on tasks that create value for taxpayers and less time on all the other tasks that do not create value for the taxpayer or society. The only way to measure whether we are working smarter and more efficiently is to measure productivity in the form of the number of tasks per employee (full time equivalent) as an overall average. Otherwise results improvements seen in isolation could be an expression of a change in priorities or redistribution of resources. Making the work more efficient shall be done in parallel with ensuring that it has the right quality. In this context, the right quality is defined as execution of the task at the agreed level of quality so as to achieve consistent and predictable quality in the service. This involves defining clear quality requirements, ensuring that these are followed and reducing variation and errors. A common understanding and development of work processes with clear quality requirements will help to ensure a perception of one, predictable and consistent agency. Continuous improvement is a management philosophy in which one succeeds in integrating small improvements into day-to-day production. Managers must have a full overview of production, make clear the goals and direction of improvement work and guide and develop employees so that they can contribute to achieving the goals. Continuous improvement involves employee-driven change. The employees who perform a task every day know best how it could be improved, but this demands a culture in which people have ambitions and belief that improvement is possible. This also demands that we have the ability to learn from each other's improvement measures within the region and across all regions. 2.2 The programme's contribution to realising the strategies The continuous improvement programme is a strategic initiative that contributes to a great extent to realising the strategies.

u Page: 8 of 32 Quality culture Programme the most important tool for realising the strategy Streamline work processes by reducing non-value-creating work Equal treatment and predictability by establishing joint quality requirements and reducing variation Exchange of best practice right across regions Openness The programme works actively on openness within the regions through letting faults come to the surface so as to learn from them being v open about issues so as to get help being open to new ideas and ways of resolving tasks Competence environment Support the strategy by: Develop managers into driving forces for improvement work Develop culture of continuous improvement Increase the ability to learn from each other right across regions and between groups in a region User-friendly public sector A vital element of the strategy is an effective public sector. The strategy is supported by: streamlining work processes with a focus on predictability and value for the user reducing variation in service execution and waiting time for the user The defining strategy is supported more indirectly in that the quality of work processes is improved and internal realisation increases.

u Page: 9 of 32 3 Change strategy/programme implementation 3.1 Continuous improvement by work process The programme is responsible for introducing continuous improvement as a form of management and work for the entire agency. In practice, projects will be established that focus on one group of related work processes or one service in the agency at a time. Focus shall primarily be on basic production in the regions and work processes in SKD and SITS. The programme will have four to six projects in parallel. The main focus of each project will be on one or a group of related work processes that lead to a delivery. Work processes and services will also hang together in a value chain. Each project shall ensure that the improvements are appropriate in a value chain perspective and contribute to clarifying interfaces and improvement needs in the value chain. The programme's governing body assesses every six months whether the programme and line respectively have the capacity to implement new projects in priority service areas or whether there is still a need to focus on completing projects that have already been commenced. Which service areas are to be prioritised are decided by the steering group and its management meetings. The programme is expected to continue until 2015 in order to have the opportunity to introduce continuous improvement throughout the agency. The programme schedule will always show the planned sequence of implementation, but decisions are taken about four to six months before start-up in each area. With effect from the second half of 2010, the programme has had the objective that each project shall be completed within a12 month period, i.e. each phase is implemented in about five months with summer and Christmas between for each of the core processes in the regions. An assessment will be made whether a shorter implementation period is possible for projects in SKD and SITS, because these work processes involve fewer employees and there are fewer geographical locations performing the tasks. Over and above in service areas, it may also be relevant to initiate projects on work processes connected with planning, governance and follow-up or similar internal projects in the regions. An ongoing assessment will be made of whether projects are to be initiated that focus on interaction between service areas/function areas in the value chain. 3.2 Working methodology All the programme projects shall use common concepts and methods for their work so as to ensure a common approach and recognisability for the regions. A separate function has been created under the programme with responsibility for developing methodology and training and guiding the projects and regions in its application.

u Page: 10 of 32 The programme is inspired by LEAN philosophy and methodology for continuous improvement. Implementing measures and changing the way in which tasks are resolved demands will, planning and close follow-up from management. Without management, the expected results improvements will not be achieved. The projects will therefore test out measurement parameters that are important for managers to be able to control day-to-day production and ensure that resources and competence are being used in the right place. It is necessary to establish a culture that ensures that continuous improvement becomes a permanent form of work with high ambitions for improvement and structures that enable people to put the improvement work into practice and follow up on it. The programme projects will therefore work in three dimensions with somewhat different weighting in each phase: Process The Tax Administration s core processes shall be continuously developed to become simpler, smarter and more customer-friendly Management with a focus on continuous improvement of processes and development of employees Management Culture Culture (attitude and values) of continuous improvement is gradually developed through managers and employees commitment and involvement 3.3 Every project undergoes three phases Every project undergoes three phases, the first two of which last up to five months - phase three shall "last for ever" and the projects shall enable the line to take over its responsibilities in both the regions and the directorate.

u Page: 11 of 32 Process improvement Management of continuous improvement Culture of continuous improvement Streamline and standardise work processes Clarify quality requirements Collaboration between all regions Test measures in one region Initiate improvement measures in all regions Train managers at levels 3 and 4 Sessions right across regions to improve equal treatment Continuous employee improvement locally Coordination of improvements Exchange of best practice right across regions In certain areas with a smaller scope, an assessment will be made of whether it is possible to establish projects that implement phases one and two at the same time.

u Page: 12 of 32 3.4 Phase 1 - Streamlining work processes Phase one is largely project-driven and focuses on a consistent and total review of the work processes to establish clear quality requirements and eliminate waste, i.e. issues relating to result achievement, case processing times and service to the user. The common improvement measures that the project group arrives at shall be tested out in one or two groups in the regions (pilot) to evaluate and provide a reliable estimate of effect. Representatives of all regions are included in the project group. Requirements for projects in phase one o Create a common understanding of the work processes and challenges, internally within the region, across functional areas and between regions o Description of work processes including interfaces with other surfaces and functional areas o Identify measures that shall improve efficiency, quality and case processing times. The aim is to find measures that together have the potential to increase productivity by 20%. The measures shall be assessed on the basis of what is effective for the whole value chain, not just the individual service. o Define minimum quality requirements for each stage of the work process o Estimate the anticipated effect of common measures o Plan the implementation of phase two o Anchor the work to managers and employees in the relevant functional areas in each region The project's deliveries from phase one shall be sent to the regions and the trade unions for consultation. Common process descriptions shall be documented in the quality portal. 3.5 Phase 2 Management focus Phase two is about implementing the common improvement measures that have been found, described and tested in phase one and training managers to pursue continuous improvement as part of day-to-day production. Management development with the focus on management of continuous improvement is implemented for managers at levels three and four of the relevant service area as an integral part of project sessions. Between sessions, tasks are performed in the line, for which they receive support from a process adviser who knows the necessary methods and tools. The sessions are used to share experience between all and to ensure identical introduction of process improvements, as well as to establish common tools for controlling production from day to day. The managers are also trained in how to look for potential for improvement every day, involving employees in problem solving and following up closely, so that small improvements are constantly implemented. The main content of the management development is: Continuous improvement as a philosophy and the use of various tools What is continuous improvement? Production management with measurement parameters at group level

u Page: 13 of 32 Managing resources so as to create balance in the processes Problem solving to reduce waste and resolve issues Selected general management topics connected with continuous improvement Competence development/review The role of the manager in continuous improvement The manager as culture builder The manager as relationship builder The coaching manager Handling resistance Learning organisations - culture for continuous improvement In phase two the gains are generated and a gains plan shall be devised that obliges every region to implement the measures in a way that creates planned gains and controls the application of the gains in the desired direction. Requirements for projects in phase two o Implement selected measures identified in phase one o Develop and train managers in the management of continuous improvement and relevant tools o Support managers in the introduction of continuous improvement as a form of management and work o Devise and assist in the endorsement of a plan for how the gains potential is to be created in each service area and when the gains shall be realised o Secure endorsement of the work in relevant functional areas in each region 3.6 Phase 3 - Continuous improvement Phase three is about incorporating continuous improvement as a permanent form of management and work. The will require a culture that is marked by openness, curiosity and the will to learn from each other. Continuous improvement is based on many of the same principles as a learning organisation. In phase three, line management takes over full responsibility for continuous improvement and realising the gains from the work. The objective is that the organisation itself drives continuous improvement: identifies problems and opportunities, devises actions, implements actions and measures their effects. In phase three, responsibility for follow-up will be integrated into the dialogues between the directorate and the regions. Results and gains are followed up in the control dialogue and the dissemination of best practice, as well as ensuring that the exchange of experience about working methods in the regions is followed up in service and technical dialogues. The programme will include an offer of assistance to managers who have problems putting CI into practice and where there is insufficient guidance from the process advisers. This offer is limited to the first six months. Requirements for programme activities in phase three o Ensure the transfer of competence to roles in the various dialogues that shall follow up to ensure that this is incorporated into management form and culture.

u Page: 14 of 32 o o o o Run the process adviser network and ensure that process advisers exchange experience and can support line management's ongoing work on continuous improvement. Management development and method resource pool that can assist the regions if needed Contribute to the establishment of arenas for the exchange of best practice between the regions Help ensure that the line can follow up to ensure that planned gains are realised

u Page: 15 of 32 3.7 Relationship with other projects and line activities 3.7.1 The control dialogue The control dialogue between the directorate and the regions will be a key coordination point for the programme. Follow-up of results will provide important indicators of whether continuous improvement is being incorporated into the relevant technical area in a way that ensures results improvement. The gains plans for each service will be followed up on in the control dialogue. 3.7.2 The service dialogue Further administration and continuous improvement of the work processes linked to every single service will be performed in the service dialogue. Service owners and service developers will be key to the exchange of experience and the development of best practice internally within the regions and across regions after the project has been transferred to the line. Service owners and service developers are therefore key resources in all projects connected with the services. The service coordinators in each region should help to ensure that all measures that are proposed in the projects or regionally are effective from a value chain perspective, so as to avoid suboptimisation. This can be done by means of regular meetings with all service developers in the regions to discuss ongoing projects. 3.7.3 The technical dialogue Streamlining measures that are proposed will often need legal or other technical clearance before they can be implemented. There may be proposals to change or clarify legal or other technical requirements so as to ensure sufficient quality. Coordination with the technical dialogue is necessary so as to ensure unified technical requirements and to follow up on their fulfilment.

u Page: 16 of 32 4 Business case 4.1 Effect goals The following requirements for effects are set for the line affected by the projects in the programme. The programme shall help the line to achieve these goals. It is expected that considerable effects will be achieved within the first six months of phase three. Effect goal Increased productivity Improvement o work processes is measured by increased productivity - accomplishing the same with fewer resources or producing more with the same resources. Considerably reduced case processing time Case processing time also includes time spend waiting to get the right information. Equal treatment of identical cases Employees find that there are clear quality standards The agency's ability to fulfil quality standards increases Fewer faults and deviation from agreed quality There is no standardised way of measuring quality or faults and non-conformance right across the services. Increased involvement of employees Leads to commitment and more responsibility for the total result Measured by Number of cases per per employee (full time equivalent) on average Case processing times for each service CI indicator study - score on: We have established clear quality requirements for our work processes In our unit we treat all cases in a standardised and identical way Spot checks/internal audit Quality indicators are decided by service. Should reflect number of faults number of cases that are redone after complaints variation/departure from routines CI indicator study - score on questions: I feel that I am involved in improvement work I feel that we take a joint and total responsibility for delivering what is expected of us Increased job satisfaction among employees Increased job satisfaction among employees is achieved through increased involvement in the improvement of their Employee surveys

u Page: 17 of 32 own workplace and of results Increased implementation of improvement measures Organisation that learns from each other right across units and regions Cross-region learning can be measured through the exchange of best practice and the number of meetings to exchange experience Average number of improvement measures carried out per employee per service area Number of published best practice items Together, the above effects will lead to an increased ability to achieve results in the form of number requirements, case processing times and degree of service. These effects are measured through control parameters and results achievements in general. 4.2 Making achievement of gains more probable Experience from other organisations that have worked systematically on continuous improvement/lean indicate that the potential for improvement is considerable - seldom less that 30% improvement in productivity. It is anticipated that there is also considerable potential in the Tax Administration. We shall achieve the effects by focusing on: Efficient and smart processes with the focus on value for the customer Line management driving goal and results management, as well as involving and guiding employees Arenas and methodology for continuous improvement being incorporated into the line A culture for continuous improvement in which all are involved in identifying challenges and opportunities, devising measures and fully testing them Measuring performance in the processes and the effect of measures Targeted competence development Reviews of how resources are used in the work processes indicate that typically only 20 to 30% of time is spent on value-creating work, from the point of view of the user/taxpayer. There is therefore great potential for finding and reducing nonvalue-creating activities. Approach for continuous improvement Focus on removing/reducing the activities that do not create value for customers Value creating = that which changes the delivery 60-70% (slø sing) 20-30% (verdi - skapende) 10-20% (pålagt slø sing) Traditional approach Focus on streamlining the activities that create value for customers 10-20% (p å lagte oppgaver)

u Page: 18 of 32 The projects in the programme work at finding measures to reduce waste and train the organisation to maintain continuous improvement so as to find further improvement measures for themselves. The projects also work at building quality into the work processes by: Ensuring that faults come to the surface where they can be seen Reducing the number of faults and variations Making it easy to do things right Revealing faults as early in the process as possible

u Page: 19 of 32 4.3 Cost elements in the programme The costs of introducing continuous improvement will differ from service to service because of the complexity of the tasks and the number of employees and managers involved. Programme management, financial management, endorsement, information, method development, management development, training in tools and working on gains are common functions in the programme. Altogether there are about 5.5 fulltime equivalents distributed across all projects. Resource use phase 1 Resource use phase 2 Service owner 50% Method resources and progress responsibility 100% Participants from the regions, 6-8 persons at 50% (400%) Service owner 50% Method resource 100% Section managers and group managers (application - recipients) participation in sessions plus extra work. (5 x 2 days + 0.5 days a week x 18 weeks) If we assume that an average project affects 300 employees in total and 20 managers in 5 regions. These gives a resource input of 1,900 days in phase 2, which can be rounded off to 8.5 full-time equivalents. SUM: 5.5 FTEs for 4-5 months, i.e. 2-3 FTEs SUM: Just over 10 FTEs for 4-5 months, i.e. about 5 FTEs In addition to this are the process advisers, who are assumed to use 50% per region per project on average, i.e. 2.5 FTEs on a national basis. Resource input per project is on average 3 FTEs + 5 FTEs = 8 FTEs. In addition to this is the project's share of central programme resources, which is a little under 1.5 FTEs plus process advisers in the regions at 2.5 FTEs. Total 12 FTEs.

u Page: 20 of 32 4.4 Overall profitability analysis On average, input per project is 12 full-time equivalents including the regions' input. In addition to this there are travel and meeting costs averaging NOK 500,000 to 600,000 per project. The potential gain in the form of cost reductions is a 10-20% productivity increase, in addition to other types of gain. We assume that part of the productivity increase will be reused to increase the level of control or quality in the same area, and therefore estimate a further 10%. The potential gain per project would thus be 30 full time equivalents a year. It is difficult to estimate the potential of individual projects in advance, but there are grounds for assuming more than earnings on the investments during the first year. There will also be gains linked to consistent quality and equal treatment, as well as an increased ability to implement improvements. It should be possible to reach the potential gain six months after implementing phase two, but achievement of gains depends on the will and ability to achieve the results and reapply the resources liberated.

u Page: 21 of 32 5 Gains strategy Realising gains demands a deliberate and controlled process. In order for the potential for gains to be created, there must be guidelines for how the gains should be applied parallel to the potential being created. If the gains created are not applied to new tasks, they will disappear, because every group manager and employee will do the tasks they believe to be most important. There should be an expressed objective for what gains management expects to achieve and what they shall be used for. Areas with the greatest potential for gains are run as projects in the programme. Areas with little potential are not in the programme's target group. 5.1 Estimating gains All projects in the programme shall devise measurement parameters and estimates of gains during the course of the first phase. The requirements for the projects are that they shall find measures that have a combined potential to increase productivity by at least 20%, reduce case processing time considerably and devise quality requirements. The effects of each individual measure that the project identifies shall be estimated in relation to potential achievement of gains. Several of the measures shall be tested to provide a probable estimate of effect. Zero point measurements shall be devised as part of phase one, parallel with the estimation of gains. 5.2 Creating the gains Gains are created in the regions by implementing the measures that the projects have arrived at in phase one and introducing continuous improvement as a form of management and work. It is the line's responsibility to implement measures in such a way as to create gains, but through its project activities the programme will enable the line to create these. Gains owners shall be identified before starting phase two. It is important to consistently guide the gains over to the desired purpose. 5.3 Gains plans The gains plan is a tool that the regions can use in follow-up to ensure that measures are being implemented in a way that creates the planned effects and that the gains are being applied as desired. The plan shall provide an overview of when the potential gain is created and thus enable a prediction of when and how it can be used. The gains plan should have a balanced focus on - productivity - quality - Results achievement (improvements in case processing times and numbers)

u Page: 22 of 32 - arrears - management and employee involvement In phase two, the manager in each region responsible for the results of service implementation shall devise a gains plan that clarifies what the potential for gains in the region is, based on the gains estimates from phase one, when the gains are created and how the productivity gains shall be consistently reapplied. The gains plan for each region is owned by the line and approved by the department director and regional director after a joint discussion of the plans in the steering group management meeting. Criteria will be devised for when a plan is good enough to be formally approved and be included in the results agreements. The steering group management meeting will discuss each region's plans for realising gains, so as to be able to compare the regions' potential for achieving gains and provide guidelines for the application of gains overall. The gains plan must include timings for when the gains are created (with the implementation of measures). The plan must be laid out from when long-term orders for which the directorate or SITS is responsible will be delivered. The gains plan could usefully include measures that come from other projects or own-initiative measures that are implemented. The regions department wishes to follow up on the gains as a whole, so as to create a total and consistent focus on realising gains. All gains must also be assessed in a total perspective in respect of the value chain, so as to avoid suboptimisation. 5.4 Distribution of gains In order to realise the productivity gains from continuous improvement, an expressed gains policy is required that creates both pressure and encouragement for top management to focus on the gains. It is the responsibility of the Tax Administration's top management to provide guidelines for how the gains should be applied. If no guidelines are given in the form of how the quantity of tasks shall increase or the number of hours used on a task shall be reduced, the potential gains that have been created by the improvement measures will evaporate as each employee applies the newly-available time to what he or she thinks is important.

u Page: 23 of 32 Increasing Productivity = Number of tasks Number of FTEs Productivity can only be increased by increasing the number of tasks or reducing the use of resources on the tasks Decreasing The programme recommends that the units that create the gains should keep a predetermined proportion of them to implement improvements in their own service area. The gains that are realised by productivity improvements can be used to: - handle more tasks in the technical area - reduce resources needed to process tasks or transfer resources to other service areas - increase quality or control level of the service in question - be applied to alternative tasks within the services - development work etc. 5.5 Following up on the gains plan One overall objective is that initially planned gains shall be achieved within six months of phase two being concluded. The programme follows up on how gains are realised in relation to the gains plan for the first six months of phase three, to reveal whether the work is proceeding as it should. The purpose is to be able to implement further measures to create the potential if it is found not to be going to plan. The line must be given responsibility through involvement. The gains plan shall be followed up along the line in phase three, i.e. along the line within the region and in the control dialogue. It could be beneficial to eventually include the gains plans in results agreements. The gains plan can and should be updated with new measures that have been developed in the service or technical dialogue and that shall be common to all. Guidelines for such updating should be given in the control dialogue. Specific follow-up: The gains plan should be followed up monthly by the section manager with group managers The gains plan should be followed up quarterly in the region's line by the departmental/regional director The gains plan should be followed up quarterly by the programme in order to assess further measures under the programme's direction

u Page: 24 of 32 The gains plan is followed up in half-yearly results agreement meetings in the control dialogue

u Page: 25 of 32 6 Assumptions 6.1 Assumptions for the programme The regions Departmental directors must set goals and expectations for what shall be achieved with continuous improvement and follow up on them Managers in the regions must help to inform and to anchor the programme's activities Managers in the regions are responsible for involving the trade unions when measures are to be put into practice The regions must set resources aside to participate in all projects and ensure that the resources are freed from other tasks so that they can perform project tasks SKD The Tax Administration must establish a gains distribution policy that creates both pressure and encouragement in the work on gains The departments in SKD undertake to ensure priority measures/orders from the projects in the programme The region department must incorporate process information and a focus on gains as part of the control dialogue The programme owner shall ensure that the programme has sufficient finance and resources to implement the tasks 6.2 Limitations The programme projects shall propose, but not take responsibility for implementing, measures in the following areas: System changes - orders are sent to service owners Regulation changes - orders for investigations and any regulation clarifications are sent to the legal department Changes in technical aids in the form of methodology, guidelines, checklists etc. - ordered from the region department Proposed changes of control dialogue or of formal organisation are sent to regional control The programme projects shall prepare a sufficient basis for the change to be prioritised by estimating potential gain in the form of efficiency, resource utilisation and quality. Implementation of the changes is then passes on to the right level in the line organisation. The changes that are critical for a technical area to function optimally are followed up by the projects in the programme. Orders to the departments in SKD shall be handled by the steering group and progress followed up in steering group meetings.

u Page: 26 of 32 6.3 Success criteria The programme's success is measured on its conclusion by: The lines in the regions having improved key production processes and achieved the effect goals that were set Standardised quality requirements having been devised for the individual work processes in the programme The regions having incorporated and followed common work processes in the relevant technical areas The regions having created arenas and roles that are used to ensure continuous improvement Roles, responsibilities and interaction patterns having been established in the service dialogue to ensure coordinated continuous improvement work processes right across the regions

u Page: 27 of 32 7 Programme control and organisation 7.1 Programme organisation The programme is organised with a steering group, programme manager and project managers for the various projects included in the programme. The programme manager reports to the departmental director for innovation and development, who is the programme owner. Steering Styringsgruppe group Jan Jan Christian Christian Sandberg, Sandberg, programme programeier owner I&U I&D Øivind Øivind Strømme, Strømme, technical faglig eier, owner, RA RA Karl Karl Husabø, Husabø, regional regiondirektø director r Vest west Sven Sven Rune Rune Greni/Lars Greni/Lars Skimmeland, Skimmeland, RE RE Jan Jan Ove Ove Akerjordet Akerjordet SITS/Utv SITS/Utv.. Technical Fagråd : program: council prog. Steering Styringsledermøtet group management meeting Regional Regiondirektører directors Dept.dir. Programme Programleder manager Avd.dir fra from SKD SKD Lucie Lucie Aunan Aunan Concept Konsept and og metode method Øyvind Øyvind Roseth Roseth Management Lederutvikling development OU OU Programme Programstøtte: support : Liv Liv Birgitte Birgitte Flaate Flaate Gains: Gevinstansvarlig: Gunnar Sjøwall Gunnar Sj øwall Technical Fagråd council pr. prosjekt per project Project 1 Prosjekt 1 Project 2 Prosjekt 2 Project 3 Prosjekt 3 Project 4 Prosjekt 4

u Page: 28 of 32 7.2 Arenas and interested parties The steering group Steering group management meeting ELG Joint meeting Trade unions A technical council for every project The steering group follows up on the programme's progress in the projects and sub-projects and makes decisions within the framework adopted by the portfolio committee. Continuous improvement is a permanent item at steering group management meetings to ensure that the programme's activities are well anchored in the line. The steering group management meeting shall prioritise service areas that shall be included in the programme and set goals and ambitions for what the line shall achieve through continuous improvement. The meeting shall ensure the necessary priority and focus in the regions and ensure coordination with other line activities. Disagreement in technical councils about approval of deliveries shall be escalated to the steering group management meeting. Quarterly reporting of movement towards strategic goals and gains achieved. Employee representatives at a central level will be involved in the programme in line with the provisions of the collective agreement through joint meetings. The programme manager briefs the joint meeting. Codetermination with regard to measures shall be implemented within each region. Every project in the programme has a technical council to quality-assure technical deliveries from the projects and to coordinate with other technical activities. Meetings with the departmental directors in the functional areas of the regions Anchors the relevant projects' work in the line. Secures good follow up of the projects, both in the programme and in the regions, and discuses successes and challenges. Quarterly meetings. 7.3 Programme reporting 7.3.1 Status reports The projects in the programme report monthly to the programme manager on the status of progress, deliveries, risks and resources. The programme manager prepares a joint status report for all the projects for the portfolio management

u Page: 29 of 32 function, based on the reports from the project managers. Financial management and report are done at programme level. 7.3.2 Reporting on gains achieved The programme's movement towards strategic goals and realisation of gains is reported quarterly to ELG in line with adopted principles for programme management.

u Page: 30 of 32 8 Communications strategy Adequate information and good anchorage of the programme and project activities represent a major challenge. The regions are large, in terms of number of persons, geographical spread and technical diversity. Ensuring that every level receives adequate information is therefore an ongoing challenge. Continuous improvement is a tool for achieving improvements in relation to defined objectives. This requires a management that is unanimous and clear about what improvements are desired, and communicates this often in all types of management fora and to the employees. The Tax Administration's top management therefore have a responsibility to clarify why we are working on continuous improvement and what we wish to achieve, as well as why it is important for the realisation of the Tax Administration's strategies. Consciousness of the strategic goals and their significance for the individual must be kept alive within the organisation. This demands an involving and continuous dialogue with the opportunity to influence. The managers in the regions have an independent responsibility to make the goals for improvement clear. This also means admitting where there issues to address today. It is often a common understanding of which issues must be faced that creates the conditions for change. We propose Use of joint management meetings to ensure the units receive identical information The line organisation's management meetings discuss and provide feedback The programme is responsible for ensuring a common understanding of what continuous improvement is and sufficient information about issues, measures, progress and status. The programme will have its own communications plan that makes roles and responsibilities clear to the regions. The plan shall indicate important interested parties, what there should be information about and the projects' responsibility for external information.

u Page: 31 of 32 9 Quality control strategy A common methodology has been devised based on LEAN; during the first projects, this has been adapted for the Tax Administration. The methodology covers the approach in every phase, session plans, templates and tools that each project shall use. There are also method resources linked to the programme to assist each individual project and quality-assure the projects' methodical approach. A technical council is also established for each project, to quality-assure technical content and approve all measures from each project. The technical council will consist of relevant line functions with technical responsibility for the service in question. All dialogues should be represented in the technical council. The deliveries from phase one will be send out to all regions for consultation after phase one. One major challenge will be compliance with established work processes, quality requirements, routine descriptions and common measures. Internal control in each region shall ensure that measures, quality requirements and routines decided on for the relevant area are followed in practice. The programme will also include collaboration with internal auditing to perform audits in phase three to review compliance in practice.

u Page: 32 of 32 10 Uncertainty analysis For probability and consequence assessments, a scale of 1 to 9 is used, where 1 to 3 is low, 4 to 6 is moderate and 7 to 9 is highest probability or risk. ID Risk element Consequence description P C 1 Poor anchorage of the work in phase one in all regions 2 Unclear goals and requirements for improvement from the line 3 Insufficient anchorage and obligation in the line to ensure focus on introduction of measures and introduction of continuous improvement 4 Work on continuous improvement dies out when the line takes over responsibility because pressure is not kept up 5 Improvement measures ordered from SKD/SITS have insufficient priority 6 Not enough "carrots" for the units creating the gains 7 Insufficient focus on interaction and assessment of effects of measures throughout the value chain Managers and employees do not understand the background and intention of the measures, so that the introduction lacks force and progress Unable to set up clear goals for gains and lack of adequate focus in implementation Desired effects not achieved Continuous improvement does not become a permanent work form for the agency It takes a long time for proposed improvement measures to be delivered and the regions lose progress and motivation in the improvement work Difficult to keep up motivation to look for internal improvement measures Improvement measures could lead to suboptimisation of the individual service Probability Highøy Medium Low Low Medium High Consequence

u Page: 33 of 33