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Delivering Back Office Cuts

November 3, 2010 in Corporate Services, Public Services, Shared Services and Outsourcing

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On the back of the Comprehensive Spending Review (CSR), government departments are challenged to make significant savings to their back office functions. The government has set an expectation of a 34% reduction in administrative costs across government with a savaing of £5.9bn per year.

The CSR plans for Department for Education, Ministry of Justice, Foreign Office, the Home Office, Cabinet Office and Department for Culture, Media and Sport have all set ambitious targets for administrative savings by 2014-15.

  • 33% savings at Ministry of Justice expects in back office and administration including through increased use of shared corporate services across the department.
  • 24% savings at the Foreign and Commonwealth Office including standardisation and streamline back office functions
  • 35% savings at the Cabinet Office including rationalisation of back office services

External commentators have commented that these targets will be hard to meet, Deloitte suggesting cutting costs by 20% was “extremely hard” and delivering more that 25% for private or public sector, would be “exceedingly difficult”.

It is clear the public sector will have to identify and implement new ways of working to deliver back office functions such as finance, human resources and IT services with substantially less resources. Read the rest of this entry →

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Sharing Reaches Front-Line Services

October 28, 2010 in Corporate Services, Leading and Managing Results, Public Services, Shared Services and Outsourcing

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At a time when public services are under pressure to save money, its not surprising more local authorities are considering the potential benefits of creating shared service solutions.

Members of Scotland’s Clyde Valley Community Planning Partnership (CVCPP) – West Dunbartonshire, East Dunbartonshire, Inverclyde, East Renfrewshire, Renfrewshire, Glasgow, North Lanarkshire and South Lanarkshire – are working together on a programme.

Similarly, the London boroughs of Westminster, Hammersmith and Fulham, and Kensington and Chelsea propose merging many of their front-line services. The three councils’ will receive a feasibility report on the possible merger in February 2011.

Statements reported in the press about the CVCPP scheme suggest the programme is looking at savings of arond 20% and the London boroughs have talked about savings of £100m though these both seem likely to be the kind of generalised modelling and targets discussed in the early stages of most shared services projects rather than a carefully worked-up figure using real data on proposed solutions.

In principle, the potential savings from shared front-line services ought to be significantly larger than shared back-office – simply because of the proportion of organisational expenditure in those areas (back-office functions typically costing a small percentage of  total revenue) but the delivery of savings is no more certain.

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Navigating Public Service Reform

October 24, 2010 in Corporate Services, Leading and Managing Results

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With the Coalition Government revealing the outcomes of it’s Comprehensive Spending Review, the scale and pace of reorganisations across the public sector are becoming apparent.

The range and scale of reform envisaged in the CSR is immensely challenging and doubts are being expressed in mainstream media and new media alike. The balance of opinion suggests delivery will be all but impossible and failure in the attempt will have serious negative consequences.

There is no denying the ambition of the programme and the need for dramatic change is emphasised by the government’s statement that it is commencing “a radical programme of public service reform … [which] will change the way services are delivered by redistributing power away from central government and enabling sustainable, long term improvements in services.”

While spending in front line services such as health and schools are somewhat insulated from the financial pressures, the administrative budgets of central government departments are to see reductions of 34%. Taking anticipated changes in Council Tax into account, local government will see reductions of around 15% over the next four years with police and fire services experiencing reductions of 14% and 13% respectively.

That degree of saving will be spectacularly challenging and it’s clear the programme require more fundamental change than slicing small amounts of activity from many small programmes and budgets.

How should work proceed? Read the rest of this entry →

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Is Benchmarking Destructive?

October 18, 2010 in Corporate Services, Leading and Managing Results

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Photo: Darrren Hester, Flickr

An article in Consulting Magazine recently suggested benchmarking was a practice which was destructive because it distracts attention from the need to build upon core competences.

Paul Leinwand and Cesare Mainardi, co-authors of the recent Harvard Business Review article “The Coherence Premium,” suggest companies should be paying attention to their own distinct capabilities.

Organisation become profitable through maximising the benefit they derive from those competences them by matching them to market opportunities.

The authors produce an interesting analysis of the coherence with which organisations decide how to bring together the capabilities they need to “face the market” with the needs of their customers. They say -

“The engine of value creation is a system of three to six capabilities that together allow a company to compete in a differentiated way.”

Booz & Company have, apparently obtained further thoughts from the authors (who don’t refer at all to benchmarking in the report) and summarised their views that benchmarking is often evidence of the absence of strategy, distorts the true nature of competitive advantage, discourages differentiation and ties up valuable resources. That’s pretty damning!

So is benchmarking “destructive”? Read the rest of this entry →

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Does the Government Favour Shared Services?

October 13, 2010 in Public Services, Shared Services and Outsourcing

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With the Comprehensive Spending Review (CSR) nearing completion, most public sector organisations are expecting major reduction in the operating costs and many are waiting to see if they have a future. For those organisations with a certain future, the need to identify efficiencies, remodel services and deliver savings will be a driving force over the next few years.

Until recently, the government had been a supporter of shared service solutions which allowed public sector organisations to save costs in corporate and back office functions. Many of the UK’s  local authorities and NHS organisations have been continuing with shared services projects while commentators have been expressing doubts about their value.

The reputation of shared services is at best, mixed. Many private sector organisations are extolling their virtues and making strong claims for improvements in service quality and cost.

Often however, informed professionals in IT, Finance, HR and facilities regularly express doubts about their track record, not all of which can be attributed to a lack of imagination or a reactionary desire to defend the status quo.

But where does the government stand on the matter? Is the tide coming in or going out? Read the rest of this entry →

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No Plan for The Big Society?

October 11, 2010 in Leading and Managing Results, Public Services, Shared Services and Outsourcing

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In David Cameron’s keynote speech at the Conservative Party Conference, he talked about moving “from top down to bottom up” as a major element of the “Big Society spirit”. He talked about a shift in power reflected in the decentralisation of power into the hands of citizens, social enterprises, mutuals and cooperatives and small businesses.

Yet people are struggling to understand what the Big Society means. IPSOS MORI have suggested recent polling, commissioned by the Royal Society of the Arts in partnership with the Social Investment Business, reveals the following confused picture -

  • 55% of British adults polled had not heard of the Big Society policy,
  • 54%) think it is a good idea in principle but won’t work in practice,
  • Nearly 60% believe Big Society is an excuse for saving money while cutting back on public services,
  • 64% believe public services have tried to do too much and people should take more control of their own lives,
  • Almost as many think it is up to the government to be responsible for public services.

Most news coverage suggests voluntary groups and charities are likely to face cuts themselves, the effects of which, combined with losing other income, will prevent them stepping in to fill any gaps left by the withdrawal of public services. In the absence of a clear sense of direction, people cannot understand how they will get access to the help traditionally been provided by our familiar public services.

How realistic is it to talk about the Big Society becoming real? Read the rest of this entry →

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Harnessing Localism For Reformed Services

September 15, 2010 in Leading and Managing Results, Public Services

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With the Trade Union Congress (TUC) calling for coordinated industrial action to resist cuts by the “demolition government”,  the language used by Andrew Rawnsley in the Guardian begins to look less extreme.

Rawnsley compares the current situation to those implemented after the First World War. From 1921, the “Geddes Axe” saw major reductions in the armed forces, a 35% shrinking of the civil service plus controversial scrapping of education and housing reform which the Labour Party used to effect – forming it’s first government in 1924.

At present, budding signs of increased confidence and nascent recovery in the private sector are being completely overshadowed by fears over spending cuts.

Rawnsley reports the gradual realisation in government that global spending reductions of 25% will mean far more than trimming uneccesary fat through “efficiency savings”.

Reductions on this scale would require a scaling back of government activity which has real meaning and benefit. According to his sources, negotiations inside government, especially between the major spending departments and HM Treasury are very bitter.

The final report of the Commission on 2020 Public Services suggests public services must be more closely shaped around people with departmental silos removed and decision making and commissioning brought much closer to citizens and communities, with political institutions and accountability reshaped to support this. This is absolutely the right prescription for the future.

For around four months, central government departments have been wrapped up with introspective review, working in existing silos to determine where savings can be made. There is real danger that “silo thinking” will prevent government from finding solutions which might actually deliver what they want and need. Read the rest of this entry →

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Performance Pay in the Public Sector

September 1, 2010 in Leading and Managing Results, Pay and Reward, Public Services

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Photo: Material Boy, Flickr

The Chartered Institute of Personnel and Development (CIPD) has recommended wider use of performance-related pay in the public sector while Personnel Today’s “Austerity Panel” has rejected this as a technique for improving productivity.

Yet when the government has used performance-related pay and bonuses as an incentive for public sector workers, it has faced criticism. Writers at the Tax Payers Alliance appear to consider public sector workers unworthy of reward for performance!

Personnel Today quoted Graham White, HR Director of Westminster Council and Roger Seifert, Professor of Industrial Relations and HR management at Wolverhampton Business School as contradicting the CIPD’s suggestions – highlighting the difficulties and distorting impact of performance pay.

So what evidence is there on successful use of performance pay in the public sector? Read the rest of this entry →

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Decentralisation : A Compelling Vision?

August 11, 2010 in Leading and Managing Results, Public Services

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Despite what many people think, employees in public service generally work hard for the benefit of their clients. People at many levels (not just doctors, nurses and teachers) are really dedicated to providing service and improving lives and society.

Dedication and working hard may not be the same as doing the right thing or working “smart”. Many problems are obvious to anyone working inside or alongside the public sector.

As Craig Dearden Phillips has suggested, it’s difficult to reject many criticisms of public sector delivery and it seems fair to give the Coalition Government some time and a little latitude to get things right.

The aims of this Coalition, to be a radical, reforming government are more “political” than “economic” and, in that sense, criticism from the left seems wholly accurate. At present the UK has no universal consensus …. just a “political deal” which makes rapid change possible.

Even those who could support radical reform might criticise using “the financial crisis” as a screen for action going further to rein back the state than most people would have supported – had politicians been open about their plans. The arguement is made, however, things changed during the election making more radical action necessary.

The “Big Society” sounds fine (like motherhood and apple pie) and there is a more thought-through arguement for localism and decentralisation which Liberal Democrats have campaigned for over many years. But, while looking to reform public service delivery, the government is facing strong criticsm directed on how it is taking things forward -

  • Polly Toynbee, perhaps unsurprisingly, views the whole programme as “a big fat lie” with disastrous consequences to follow,
  • The coalition attempt at crowdsourcing ended with no changes to government departments’ policy,
  • Research by the National Council for Voluntary Organisations (NCVO) highlights the serious challenges facing charities, indicating there are dangers in relying on them to pick up responsibilities from government,
  • The Centre for Social Justice criticises the Treasury for failing to identify the benefits to society that public expenditure is seeking to achieve, suggesting Ministers are “flying blind” with confused guidance about objectives and how to choose between options. 

So is it just delivery that is flawed? Having agreed a programme of decentralisation, have the Conservatives and Liberal Democrats done enough to turn it into a compelling vision? Read the rest of this entry →

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Delivering Productivity in the NHS

August 9, 2010 in Leading and Managing Results, Public Services, Workforce Management

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When the coalition government came to power it was given credit for the protection it offered to health services by ringfencing NHS budgets. The Coalition Government has come under pressure to reverse its pledge to ring-fence health spending in order to protect other services but as yet has not backed down.

It was also assumed, from the Conservative Party manifesto, the NHS would experience a period of stability. Even with known financial pressures, it was anticipated the same level of difficult choices facing other public services would not be required in healthcare organisations.

The publication of the NHS White Paper turned all this on it’s head.  With many national health agencies and the regional infrastructure being dismantled, plus the commissioning arrangements being fundamaentally re-drawn, the NHS is now anticipating the most turbulent period in living memory.

It should come as no surprise the NHS is under pressure to be more productive – after more than a decade of significant investment in both facilities and staff.

But delivering this improvement will be hard at a time when the NHS is being asked to plan savings totalling £20bn to be able to live within its means, the entire structure of the health service is being shuffled.

So what progress is being made? Read the rest of this entry →

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