The Post Office Scandal

hello, I’m James.

Jimmy: 0:04

Hi, I’m Jimmy.

James: 0:05

Welcome to A Job Done Well,

Jimmy: 0:08

the podcast about the world of work and how to improve the daily grind

James: 0:13

Good morning, how are you doing?

Jimmy: 0:15

I’m good. I’m good. How you been this week, James?

James: 0:17

Ah, very exciting, the law of the households.

Jimmy: 0:19

go on.

James: 0:19

just bought a potting shed. You’ve

Jimmy: 0:21

bought a what? A

James: 0:22

potting shed. We’re having our garden redone. There was a time in life when the most exciting thing would have been to buy an Aston Martin. That’s long gone. I’m into potting sheds at the moment. You

Jimmy: 0:31

moment. You are definitely a man of a certain

James: 0:34

And

Jimmy: 0:34

age when you are getting excited about I don’t even know what a potting shed

James: 0:38

Well, yeah, well you come round and look at it, mate, and you will want one too. Anyway, how about you?

Jimmy: 0:42

the thing, I’m almost getting excited about seeing your potting shed now. I’ve

James: 0:46

into,

Jimmy: 0:46

into the trap.

James: 0:47

to hear about my potting sheds. Let’s move on. How about you? Oh,

Jimmy: 0:53

Oh, thanks for asking James. We are actually recording this on transfer deadline day and the only thing that’s bothering me is if Nottingham Forest buy a keeper today. That’s the only thing I want to see. By the time this goes out, people will know whether I’m happy or sad.

James: 1:07

buy a keeper, does that mean they don’t have a keeper and they can’t play with one?

Jimmy: 1:10

No, they’ve got a keeper who’s as much use as a chocolate teapot.

James: 1:15

big hole.

Jimmy: 1:17

Definitely.

James: 1:17

Anyway, there goes my footballing knowledge. What are we going to talk about today?

Jimmy: 1:22

Today we’re talking about the post office scandal that’s been in The news over the last couple of months, in fact over the last couple of decades, the reason why we’re talking about this is it is a real opportunity to learn. It is one of the worst miscarriages of justice and human tragedies that resulted from how the post office operated and behaved over a 20 year period. today we’re going to challenge ourselves and yourselves about how many of these things could happen where you work. Yeah,

James: 1:51

we’ll give our perspective, our infinite wisdom on two things. How does this sort of thing happen? And then also, you know, how do you So, what’s our operational perspective on how the post office could resolve their compensation issues? Now, before we go any further, a very quick caveat. There are a whole host of legal, moral, and topic specific issues associated with this, which we only have limited knowledge. Our knowledge in truth stretches to A. Reading the really great book The Great Post Office Scandal And also watching the ITV documentary. But, you should see them if you’ve not looked at

Jimmy: 2:34

Yeah, definitely recommend both the uh, Post Office Adversity and Misdebates, and the book by Nick Wallace.. Anyhow, what gives us the right to comment, because as James says we’re not legal. Or subject matter experts on this, but we do have expertise in aspects of this case, performance management, targets, procurement, outsourcing, running compensation schemes, dealing with vulnerable customers, dealing with technology, IT systems and their implementation exec behaviors, so that’s why we’re going to focus today on giving a perspective on this from that operational experience that we’ve

James: 3:14

So before we dive into that, I think it’s probably worth us giving a quick explainer. So what exactly is the issue, Jimmy, and how did they get to

Jimmy: 3:22

worth us giving a quick explainer. So what exactly is the issue, Jimmy, and how did it come about? Now this

James: 3:44

this new computer system, or new at the time, computer system was a system called Horizon, Horizon was developed and written by a company called Fujitsu. And at the time it was the biggest non military IT system in Europe. To give you some idea of the scale of it, 67, 000 people were trained how to use it. And those people were paying out benefits of 56 billion pounds a year to over 28 million. million customers across the And the upshot of this was that there were numerous transaction errors. And because there were numerous transaction errors, the subpostmasters became liable for tens of thousands of pounds, which the post office said that they were owed, and the post office took those subpostmasters to court, and a number of them went to jail and lost their livelihoods. And the sub Postmasters who got embroiled in the situation Suffered damage to their reputation, their finances, their health, and in some tragic cases, they lost

Jimmy: 4:44

both Fujitsu and the post office denied that there were issues with the system that were causing the shortfalls. When throughout they, absolutely knew there were issues. this happened and, and it ended up in all sorts of court cases, the government who oversee the post office, the post office themselves, and ultimately the justice system have been slow to put the issue right, even though it was quite clear that there has been huge detriment to the sub postmasters

James: 5:17

Initially there was really limited interest in the story. However, due to the tenacity of the sub postmasters, some journalists, the odd MP the case actually reached the high courts,

Jimmy: 5:29

It’s unclear of the entire impact that’s happened and how it will be put right. And if anyone will be held accountable and it is the subject of a public inquiry currently.

James: 5:39

short explainer. I suppose my first question then, Jimmy, is how do you think this sort of thing happens?

Jimmy: 5:46

There’s an interesting point James about. The overall purpose of the organization. We talk about this a lot in our episodes. What’s the post office really there for? And you know, what are the consequences of the uh, purpose that you set? And in this instance a lot of the issues were created by the post office’s drive for, for profitability. they bought in a new chief executive called Paula Venels, whose goal was to take the post office from decades of losing money to break even, that’s what the government had brought her in specifically to

James: 6:27

specifically to do. And

Jimmy: 6:30

She did. And at the end of it, in 2019, despite this has started to rumble on, they she got a CBE.

James: 6:38

a CBE.

Jimmy: 6:39

second highest honor that you can get.

James: 6:41

So arguably she did exactly what she was told to do. And I think for me this is one of the real nubs of the issue. Because was that the right purpose? So what’s the purpose of, in society of the post office? Effectively what they do is they bring essential services to citizens. Be that cash, putting money on your electricity meter, posting a parcel. And that is the purpose. of the post office Now it would be great if the post office had been profitable after it provided those services, but their purpose was to provide the service. And I see that across so many different businesses. They’re so busy chasing the money that they lose sight of And I guess

Jimmy: 7:21

And I guess what, we talked about a lot is, trying to be successful at delivering your purpose in a cost effective way. They could have delivered the essential services, in the most cost effective way, which probably would have made them profitable. But they pursued, in a very single dimension, profit at the cost of everything

James: 7:43

how this can happen, I think really

Jimmy: 7:48

The second thing in terms of how this can happen, really looking at the relationships between Fujitsu and the post office, the post office would have had to go through a rigid process for contracting public sector procurement is notoriously bureaucratic. I’ve, I’ve experienced it. In the past as well. You have to ask for all sorts of information. You have to structure everything hugely. And the worry that I always had in this process is it takes the thought out of it. Because it’s so rigid. It stops people thinking. And what you do is you have to score the tenders. So when all these companies tendered for the Horizon contract. Massive contract, multi billion pound contract. Fujitsu, or the company that were doing it at the time came bottom, absolutely bottom of 8 out of the 11 criteria that they had set. got the contract. Yeah, because the one that they were topping was cost. They were the cheapest.

James: 8:58

So, as my boss would have said to me, you’re all cost and no values.

Jimmy: 9:02

The issue there is then, of the 11 criteria, they would have weighted them. And so you can imagine the weighting coming bottom on 8 and winning on cost. The weighting must be all towards cost. So when you’re contracting, being balanced about purchasing services is vital. And, finally I think Organizations get caught up in these bidding processes, They just want to win. And it doesn’t matter what you promise, How capable you are of delivering, You’ve just got to win the contract. Also, there’s a relationship that you have with third parties, and do you consider them to be suppliers to you, or are they partners of you? Yeah. And by that, I mean, how does the relationship work? The post office in Fujitsu, Got into massive commercial dispute. they were threatening to sue each other. They were trying to change payment structures. They were holding each other to ransom before they’ve even implemented this system.

James: 9:59

but this isn’t uncommon. I had a boss, I had a boss once and he said to me, I was managing a BPO contract. James, your job is just to keep your foot on their necks. Companies don’t complete, supplies chains do. So it’s all about how you work together. One of the critical things.

Jimmy: 10:16

And that’s the partnership piece is, if you view them as partners who are there to help you deliver on your purpose, to help you be successful, and you’re looking to use and leverage their capabilities. That’s completely different than putting your foot on their neck. Yeah.

James: 10:33

that, you know, there’s a quid pro quo though. Because one of the other things that became clear when you read the book is associated with the SLA. So there were some really punitive SLA’s on Fujitsu if things went wrong. And of course things went wrong because it was such a large program. But because the SLAs were so punitive, Fujitsu just never ponied up to the post office and told them about the problems. So there are a whole host of things which just went under the table and the post office never got to hear

Jimmy: 11:00

So then once you get past the supplier relationships, another thing that, clearly had gone wrong was around the delivery of the Horizon project itself. They had 360 requirements that they had asked Fujitsu for.

James: 11:16

build

Jimmy: 11:18

And then they had over 300 change requests go in. So these are formal changes, not just the informal, clarification stuff that normally happens. So you’re trying to build, one of the biggest IT systems in, in Europe. Yeah. And you keep changing and moving the goal posts.

James: 11:36

that never happens anywhere where we’ve worked

Jimmy: 11:38

before. Of course, I never change the goal

James: 11:40

So

Jimmy: 11:41

So you got that. Then Fujitsu’s capability, the developers they were using, the trainers they were using, etc. It’s a real question about their capability to do this. They had committed to the lowest cost, I can’t imagine they were paying top dollar for the best developers, would they? the support and the training, you’ve got to have the right level of capability. You said 67, 000 people had to be trained in this. You know, that is a massive undertaking. Where are you going to get that capability from? No.

James: 12:15

Exactly.

Jimmy: 12:17

So, the implementation of the change was really rocky, development was rocky, they had untold defects during testing, so stuff that’s going wrong. And when you’re delivering this size of project and it’s, it’s a mess, when it goes live, You don’t expect it to be plain sailing. You’ve got to be realistic about what then is going to happen. Well,

James: 12:51

All large programs have issues associated with them. So there’s just this sense of self delusion. I mean, obviously it was going

Jimmy: 12:59

no, and just put the belief that they could do this and they were going to get it right, and that when it went live, it was all going to be okay. And everything this system told them. It was almost like setting tablets of stone and it couldn’t possibly have issues or go wrong. That’s just, like you say, that’s completely delusional..

James: 13:22

Having read the book, that the IT solution itself was the root of all issue. I think there were a whole load of wider issues around that.

Jimmy: 13:31

around that. What wider things did you pick up then? Well,

James: 13:34

we talk about the system a lot, but the system that the IT was part of. So, the one for me, let me pick one couple out they talk about an audit

Jimmy: 13:46

look at

James: 13:46

if you audit something, you look at both sides of it and you investigate and you try to work out what’s going on. It became really clear that the audit wasn’t an audit at all, it was just an expectation that sub postmasters were wrong, computer was right, and you just had a witch hunt. So there was one for me another one, just unbelievable, so we talk about targets driving behavior, you give somebody a target, what sort of thing would you expect to see? But the one that got me was the post office had a bunch of investigators, these being ex policemen who go round, yeah? Look at post office where they thought there’d been fraudulent behaviour. They got a target to discover fraudulent behaviour. Well if they got a target to discover fraudulent behaviour, what are they gonna do? Find fraudulent behaviour. So just the whole thing was totally imbalanced.

Jimmy: 14:36

Yeah, and, and at one of the inquiries recently, they were saying that the investigators weren’t trained in how to use the system. And they weren’t trained as investigators, they were still prosecuting people on the back of their say so. And

James: 14:54

And I think that links to another part. with the system, which was just a total imbalance of power. The sub postmasters had, well, part of the legal argument was they had unfair contracts. But, the sub postmasters didn’t really have any way to push back on the post office at all. The bit that got me, and this really just was unbelievable had a A federation, effectively a union. Now you’d think that the union was there to help them. Transpires that the union was funded by the post office. So, just, they had nowhere to run. Just dreadful.

Jimmy: 15:32

think there’s an interesting point about the contracts because the contracts were very punitive. And they forced the postmasters to be liable for any shortfalls and pay back the money. Employer contracts or business to business contracts, commercial contracts. I believe that you’ve got to get a balance they’ve got to work for both parties. They shouldn’t be punitive to one person. It’s an agreement. And if you can’t get mutually beneficial agreements You’re in a hiding tin to nothing in terms of how people will behave around them. So

James: 16:05

So there are a number of the wider system issues that surrounded the IT system. What else would you pick on as being an issue?

Jimmy: 16:12

issue? Well the big overriding thing is the culture in the post office. The lying and deceit that happened throughout was pretty systemic. they would tell all the sub postmasters that complained that there was a problem with their Horizon system. They would tell them they were the only one having this issue. When actually it was clearly impacting hundreds. And they got, they got to dancing on the head of a pin. when they brought in some independent people to look at this they were looking for systemic issues. Systemic as in impacting every terminal, which there weren’t. But it’s the issues that are impacting some of the people, some of the time, that can be the hardest to, to find. But they’re almost saying, if it doesn’t impact everything, it doesn’t exist. What was systemic is that everyone involved in this lied. Another, good example of how they, One of the big arguments ongoing is there wasn’t the ability to dial in remotely to the system. And this was one of the things they said. So that’s why any errors had to be on the side of Postmaster because no one else could touch it without their say so. And actually, like any IT system, Fujitsu could dial in and could change records. Having back doors like that is what you build in these functions. And at one point the CEO said to her team that she needed to be able to say that you can’t dial in. And so immediately everyone’s under pressure to figure out how they support that line.

James: 17:57

get that whole sort of good news culture building up, where people aren’t prepared to tell the truth to power. Because they’re just scared. The thing that shocked me is you’ve got this huge scandal going on. And there was only one whistleblower. So throughout the post office people must have known. Throughout Fujitsu people must have known. And only one person was prepared to stick his hand up and say, No, no, this isn’t right. I mean, just absolutely shocking.

Jimmy: 18:27

The ego of senior people who would happily lie and deceive and make out that they, they know best. They didn’t want to listen to the people at the sharp end. The sub postmasters about what was happening, they weren’t open to learning about the system or what was going on. It’s just, we know best, this is the situation, and that’s it. Everyone had to toe the party line. And

James: 18:52

and there’s another one which I bet you haven’t seen in your organization, the whole blind faith in the system. The system will solve all our problems, and the system’s always right. And there was that little Britain thing, wasn’t there, you know, computer says no.

Jimmy: 19:05

Yeah. And the thing is, systems are developed and programmed by people. And people make mistakes. And so therefore, systems can also make mistakes.

James: 19:22

willful blindness or lack of curiosity, but it must have been really obvious that sub postmasters committing fraud, the trend must have just gone through the roof. And you can imagine all these people slapping each other on the back saying, Oh, look how much fraud we found.

Jimmy: 19:38

found. Well,

James: 19:38

Well, how many of them sat back and said, Well, hang on, is this really true?

Jimmy: 19:42

true? Exactly, and if you looked at the four years before Horizon was put in and compared it to the four years after, it was multiples higher, and like you say, because of the way they were targeted, they’d be high fiving, you know, isn’t this great? I remember when we worked together in a particular insurer, and they were getting very excited about all this business they were writing on a, a classic car scheme. Everyone was celebrating it, and then at some point, somebody realized that in order to write the amount of premium, they would have had to had to insure every classic car in the country, which obviously they weren’t, and a lot of it was fraudulent. But we just want to, we just want to hear that we’re doing well, we don’t want to hear that anything’s going wrong, we don’t want to hear that the system’s not performing well, that the implementation isn’t going well, it’s just, it’s just prevalent, isn’t it?

James: 20:34

which relates to, another thing going on. Which is just this blind loyalty to the employer. And people who worked for the post office for 20, 30 years just were not prepared to stand back and say, No, the post office must be wrong. I suppose that’s just another downside of tenure. I mean, I’ve seen that as well. People denying fervently that there was an issue. We found an opportunity, I think. There was probably about five million pound fraud loss in one company. And we looked at this. Oh, there’s an opportunity. I then spent two years arguing the toss because people didn’t want to hear it. Whereas what we could have done was have a go, tested it and seen if it was there or not. Just unbelievable.

Jimmy: 21:14

And we’ve talked about this before and it was one of the things that in my opinion, made you hugely valuable, but also incredibly unpopular at times. People believe that analysis that you do should just tell them how great they are rather than how you can improve and be even better than you are, they don’t want to hear it, they don’t it.

James: 21:33

And I think there is an underlying point there as well. So you’ve got this sense of we are just superior to everybody else. I mean, at one point. And in the book they actually hint at racism, which is fairly shocking but also there’s just this general sense that we work for the post office and the sub postmasters who are independent, it’s almost like a franchise, they’re just not as good as us, so therefore they must be wrong and we must be right. And that whole sort of stereotyping and delusion are unbelievable. So where does that take us overall, I think? It’s just this whole the biggest thing, the old quote, culture eats strategy for breakfast. But if ever there was an example of that, this is

Jimmy: 22:16

because I think if you look at it, James, the um,

James: 22:18

look

Jimmy: 22:19

things that we touched on around the I T system or the wider system that they were working in, the supplier relationships, the process, the technology, all those things, you can fix all of those or you can live with. Infections in them. If you have the right open, curious, honest culture. If you had that. Be able to deal with some of the other imperfections, but you need the right culture and you need the right leadership and here you had a toxic culture and a fundamentally dishonest leadership and that exacerbated the problems you had with everything else as well. Yeah,

James: 22:58

Yeah, I’m reminded of I’m going to go all Japanese on you. I can’t help myself. Let’s process guys. We need to go Japanese every now and again. But there’s a guy called Taiichi Ohno. He was some big wiggy Toyota, but he once very wisely said, no problem is the biggest problem at all. You know, if you can’t see you’ve got issues, you’re not prepared to admit to it. You’re doomed. So there you go,, what would you do next? and how would you help the sub postmasters, and how would you resolve the issue?

Jimmy: 23:25

I think in these situations, in my experience, people want a couple of things. They want redress, so, you know, a lot of these people lost their, lost fortunes, they lost their houses, they were made bankrupt, they went to jail. So they want redress, and they want it fairly and quickly. So you want to be able to get on with your life, put this all behind you. I think the other thing that people often want is, is accountability. They want, they want to feel that somebody has been And, and at the moment, you know, to be honest, there’s a public inquiry. It would seem that, we, are failing on both. a lot of the sub postmasters still haven’t been fairly compensated for what happened to them. And, only recently Paula Vennell says is she going to hand back her CBE? You know, wow.

James: 24:19

Yeah. Absolutely. Wow. She,

Jimmy: 24:20

she, had 5 million pounds over the time that she was with the post office. There was one year that the board of the post office said because of this scandal they would take a hit on their bonuses. So they took a hit on their bonuses and they found other ways of making up compensation. So this cost her the princely sum of 800 pounds that year. if you go back to that point about, compensation and redress, there are a few things that I think you should think about when you’re, designing systems to get people paid, whether it’s claims, compensation, remediation, think there are some key things on there, James, that you should consider.

James: 25:02

and so let me go straight in with the thrilling process stuff. But first of all, let’s get really clear what the principles are for compensating people. And if those agreed and written down, once you’ve got that then it’s just a simple question of designing the process from a customer perspective. So do it for the majority of customers and then manage the exceptions rather than trying to design a process for everybody. And once you’ve got it up and running, test it and learn. from it. Don’t try and get perfection because you won’t much better to get something up and running and then see if it works and hits those principles that you’ve agreed.

Jimmy: 25:38

and I think you know, just make sure you’ve got the right capability to be able to deliver this to people. It is more complicated than you think and you need to use experts in the right way. And make sure you’re communicating clearly so you can manage people’s expectations about what’s going to happen. And also galvanise the action from everyone that you need the support of. And I think the other thing to consider is you do need some help once you have dealt with this. There will be people that are suffering, PTSD, they need counselling, they need help. But also, when you’re paying people large lumps of compensation, they may be big sums of money they’ve not had before in that all at once. You need to get them the right financial advice, because there will be people who will still Kick people while they’re down and try and scam them out of their compensation.

James: 26:27

kick people while they’re down and

Jimmy: 26:31

So, I guess I really hope that the situation gets resolved in ways that help the people impacted by this really move on with their lives. Yeah,

James: 26:39

resolved in the ways that help the people impacted by this. But, personally, you might just have been following orders, but it isn’t a defense. On a personal level, are you happy with the

Jimmy: 27:01

the thing apart from formal accountability, which may or may not happen, there’ll be literally thousands of people involved in this scandal at the post office in Fujitsu who will have to live with the consequence of their actions,

James: 27:17

to

Jimmy: 27:18

have it on their conscience. One of the things I’d pull out is, it is really important for organization to learn lessons when things go wrong. I’d, to be honest, I’ve seen some organizations take that seriously others Tick boxes and say we’re going to do a lesson to learn that exercise and others.

James: 27:38

And

Jimmy: 27:39

And the others just don’t want to, don’t want to learn. They just want to move on with life and forget about these things. I think we’ve highlighted today some potential reasons why this sort of thing could have happened. Let’s not go through everything, but summarize your thoughts on

James: 27:59

Are you really clear what you’re trying to do for your customers? Cause if you start chasing the money, bad things will happen sooner or later, The second thing, that really underpins that is this whole question about culture. Is your organisation open, honest and willing to learn? And then the third thing, which is interesting. Yeah, I think you’re, you’re right, James, and, and overall, with all of these things happening,

Jimmy: 28:37

I think you’re, you’re right, James, and, and overall, with all of these things happening, it may have been kind of a perfect storm, but I’ve seen, some of these issues, happen in every organisation I’ve worked in. Right. not novel stuff? And so people who are listening to this, I I’d challenge you to have a think about what of these issues that we’ve highlighted are happening in your organisation What’s their impact on people in your organization? What are you going to do about

James: 29:15

I if you haven’t got it, go out and buy the book. I got the audio book and I’ve been swearing in the car for for the 17 hours of the book. It’s just unbelievable. Fantastic

Jimmy: 29:27

Watch the TV show. Absolutely amazing. Hopefully, you’ve enjoyed today’s episode and our take on how the post office scandal could have happened.

James: 29:39

and I hope everything gets resolved

Jimmy: 29:41

gets resolved for

James: 29:43

impacted. for your time.

Jimmy: 29:45

Alright. sir.

James: 29:46

Cheers now.

Jimmy: 29:48

If you’d like to find out more about how James and I can help your business, then have a look at our website at ajobdonewell.Com.