AOM Implementation Case Study: New Zealand Inland Revenue

AOM Implementation Case Study: New Zealand Inland Revenue

An essential arm of the public sector, Inland Revenue plays a critical role in improving the economic and social wellbeing of New Zealanders.

Inland Revenue collects 85% of the Crown’s revenue as well as collecting and disbursing social support programme payments and providing the government with policy advice.

With 5,500 staff operating in multiple sites and cities across the country, Inland Revenue states in its strategy document ‘IR for the Future’ that the organisation wants to be “a world-class organisation, recognised for service and excellence.

The challenge


customer service contacts


self-help service contacts


tax and social policy registrations received


returns received


payments received

The challenge was considerable. Inland Revenue is a very complex and diverse organisation which administers multiple tax types, collects and disburses child support payments, family assistance and paid parental leave. As an example in the 2013-2014 year, Inland Revenue processed or received:

  • 5.53 million customer service contacts
  • 26.1 million self-help service contacts
  • 689,000 tax and social policy registrations (excluding child support) received
  • 9.14 million returns received
  • 8.71 million payments received

“Since the Operations Management programme started in March 2011, we have produced capacity savings equivalent to $17.9 million ($3.2 million above target).”

Inland Revenue 2014 Annual report

As well as tax, Inland Revenue also deals with social policy administration. In the tax year ending March 2013:

  • Individuals – about 1.15 million filed annual tax returns
  • Employers  about 195,000 employers filed over 2.0 million employer monthly schedules with PAYE deductions for employees
  • Companies – over 380,000 company returns were filed
  • GST filers – 630,000 registered customers filled 3.0 million GST returns

In common with most branches of Government, Inland Revenue has had to undertake a greater workload on a reduced budget. As a consequence of these pressures, it undertook a major business change programme in order to ensure it was optimising its resources to achieve the best possible productivity and do something different about the way it capacity-planned and managed its workload.

The solution

In 2010, an external provider was sought to provide a best-practice solution. After a tender process, ActiveOps, its AOM (active operations management) methodology and Workware toolkit were selected to assist in overhauling the planning and management of frontline services provided by service delivery, with the aim of achieving greater efficiency and cost-effectiveness.

ActiveOps provide a holistic approach, which emphasises change management and methodology training, and focuses on sustainability, as well as providing a toolset of workforce optimisation software.


The programme commenced with a nine-month pilot in the student loans unit which delivered significant productivity gains and convinced Inland Revenue that further investment was justified. This led to an agreement that ActiveOps should implement its methodology and Workware toolkit across the rest of the Service Delivery department’s customer-facing areas in planned phases (excluding contact centres).

But before this took place, Inland Revenue adapted the ActiveOps solution to meet its own requirements and rebranded it ‘Operations Management’ (OM).

OM was implemented into the business units by turn. Each phase was led by ActiveOps coaches, training between 50 and 70 leaders in the methodology and tools over 16 weeks, across as many as 11 sites.


The benefits derived from the programme of Operations Management have been far-reaching, with all original targets exceeded.

The success of this approach has been realised in significant productivity gains among business units, Inland Revenue state in their 2014 Annual report that: “Since the Operations Management programme started in March 2011, we have produced capacity savings equivalent to $17.9 million ($3.2 million above target).” Business units have also seen positive impact on their ability to achieve the right quality of work inside the expected service level.

Inland Revenue is now at the point where it has approximately 3,000 staff who are managed using the methodology and more than 340 leaders actively using the processes and disciplines every day. This amounts to 54% of the organisation, with the methodology adapted to each different area. As the team members are accredited, no other organisation in the world has such a high percentage of staff AOM accredited.

Productivity gains within Service Delivery meant that the peak season of 2014, when very large numbers of taxpayers were filing returns or due refunds, was the most effectively managed peak season ever. Using Operations Management, the Service Delivery business units were able to plan their workforces and predict demand better, leading to an increased ability to meet workloads.

The use of Operations Management has also brought key insights into the running of Service Delivery, by revealing for example, that the most accurate volume forecasts and work plans are built by those closest to the work – not centralised planners.

This has allowed staff in planning areas to be redeployed to support longer-term planning of up to 18 months. Operational planning has instead become a frontline responsibility, with more accurate forecasts that are now within 2% of actual workload.

Leaders in all units have now replaced gut feel with visible information so they make fact-based decisions, understanding their impact on customers, weighing up the options and matching workforce requirements to accurate predictions of demand.

Frontline leaders across all units also now have a shared language and a common understanding and process, forming the basis for a culture of continuous improvement.

The innovative Professional Services solution is also functioning extremely well, putting the Investigations and Advice unit on more of a business footing. The unit’s work now has far greater transparency, enabling planning to be conducted more effectively – on a monthly basis for investigators and on a weekly basis for legal and technical professionals. Moving cases through the phases of an investigation more quickly and increasing the amount of core time available to complete case work.