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Had some really interesting discussions with senior HR practitioners this week – all touching on the shape, design and delivery of corporate services in the NHS.  Talking about the challenges facing NHS corporate functions, in particular we talked about HR Services and how senior teams should be considering areas for review and redesign using stronger evidence of efficiency and effectiveness.

We agreed NHS organisations needed help to understand their contribution, effectiveness, costs and efficiency. With better information available about those services, CEO’s could talk to their Directors about areas and ways to find better, more effective and affordable solutions to universal and ongoing organisational challenges.

Photo: kevindooley, Flickr

Over a period of years supporting public sector organisations’ support improvement action in corporate teams, especially with HR, Finance and Payroll, one of the most common topics of discussion with Directors and senior managers has been the proper place for payroll functions.

Some years ago, during a conversation with one (American) Chief Executive working in an NHS Trust that was experiencing problems with payroll services, this experienced leader expressed amazement that NHS organisations used outsourced payroll suppliers when ensuring staff were accurately and properly paid was “the most important responsibility of every employer.

Clearly he did not share the view of payroll as a low-value service, an assumption which might underpin the fact that, in UK public services, outsourcing payroll to a specialist provider is relatively commonplace.

Outsourced Solutions

Historically, payroll services have been the most likely corporate service for public bodies to buy-in from another organisation. Seen as non-core function, any in-house service would be viewed as wasting valuable time and money.

In the past, the challenge of legislative compliance combined with high volumes of relatively simple data driving most payroll processes (e.g. absence records, overtime worked, shift payments due) has made outsourcing the payroll function an attractive option.

This approach sees payroll as a”commoditized service” – a simple function which can and should be organised and delivered in the cheapest manner possible with the essential outcomes being payment accuracy and legal compliance.

During a time of austerity and cuts in public services, it seems more fashionable than ever before to outsource such services, having them delivered by a specialist payroll or multi-faceted corporate shared services provider. From 2007 onwards, public services have been seeking cost reductions in support functions by moving these services out to shared services organisations. The expectation for these projects is a combination of simplification, standardisation, automation and economies of scale will reduce costs while maintaining or improving standards. There should be no surprise there are both strong proponents and opponents of these projects, but everyone agrees delivering the benefits is pretty challenging.

For a shared services project to succeed in delivering savings while protecting quality, some fundamental changes are required, with significant review and redesign of functional roles and the business processes they are responsible for. With the trend for considering outsourcing a wider range of  administrative functions, the potential to buy in a combination of “HR and Payroll” or “Accounts and Payroll” is becoming increasingly common. In such cases the perspective of the client organisation about these support functions can be an important driver for the suitability of a particular solution. Read the rest of this entry →

Drawn into a conversation on LinkedIN last week about the “proper place” for the payroll team. Many people were sure that dealing with the pay, tax and accounting means there is no better place than in Finance – one even suggesting only Finance could be trusted to make accurate calculations.

Others were certain that the people-facing nature of payroll, the need for customer service plus the links to employment contracts pushed the function closer to Human Resources.

A few people identified the “HR input -Finance output” business that payroll delivered and talked about effective separation of duties to meet audit control requirements. This is definitely on the radar as a subject of a future article.

What do you think?

Working with public sector organisations, you will often hear (from corporate functions) that front-line managers cant operate self-sufficiently and need a lot of hands-on support from the corporate teams in finance, HR, procurement etc.

Does this reflect a clear and robust understanding of managers’ capacity and an organisational need for particular ways of working and higher levels of resource …. or simply excuses for maintaining out-moded models of operating?

Wouldn’t it be better for these teams to relinquish day-to-day control of the operational management of staffing an other issues, “letting go” while encouraging and supporting their managers to operate independently?

Public services may have a higher level of investment in professional education and training than private companies might expect and this might be a justification for higher resource levels in HR. Of course, many public services organisations have a high proportion of “professional practitioners”, creating a management layer naturally more interested in their professional responsibilities (i.e. patient care, social work, children’s education, catching criminals) than in managing staff and especially dealing with HR procedures.

It is that same professional context that can also create additional challenges when managing staffing problems that are more tricky to handle (see article Too Hard to Sack). In that context, we all recognise the temptation to procrastinate when there is something unpleasant to do and public sector managers can always justify focussing on public service outcomes first rather than having uncomfortable conversations. It’s possible this forms part of the context of a high-touch approach from HR teams.

Recently, we looked at the issue of HR ratios and explored whether it was possible to arrive at a magic “right number” using some kind of formula. Having decided this was almost certainly over-simplistic, we considered the kind of support and service models that HR might need to provide for managers. The Cranfield Study we referred to there showed organisational sector had a high correlation with the size of the HR function. Presumably this reflects the fact there will be many common features shared by organisations working in the same industry -

• similar workforce profiles with common working patterns etc.
• managers and staff with shared experiences and comparable skill sets,
• the same kinds of performance, conduct and other issues which require HR support.

It seems likely however these factors don’t reflect the whole picture. Read the rest of this entry →

In the current climate, perhaps it is unsurprising NHS organisations are looking for clear financial justifications for making any investments in projects which will take some time to complete and deliver benefits. When resources are tight and a number of core corporate functions are being subject to scrutiny and pressure, people are not sure there is a financial justification for starting any new work.

Having had the Electronic Staff Record (ESR) in place since 2008 (at the latest), many NHS organisations have deployed self service tools in some shape though few appear to be making full use of all it’s key features.

Too many NHS Trusts have been “piloting” ESR Self Service for a long time, with only a small number of people across the organisation using some of the tools available. This pattern suggests NHS organisations have commenced deployment without a clear strategy or vision about how they want to change the way they work.

Like many large projects, it can be all too easy to fall into the trap of focusing on the technology rather than the desired business change.

Undoubtedly, self service tools face special barriers in a healthcare environment. Not everyone has routine access to a computer and the NHS workforce has been relatively late in adapting to new computing technologies generally. With effective planning however, these challenges can be appropriately addressed and overcome.

In part though, the lack of progress on ESR Self Service reflects an innately conservative approach of corporate teams to the introduction of new technology – possibly not an issue special to the NHS. To the extent that self service encourages devolution of control and decision-making away from corporate centres, it is quite natural for those teams to express concern about risks and potential loss of control.

The combination of hesitant corporate teams, competing priorities, financial pressures and institutional constraints has the potential to make many NHS organisations seem increasingly archaic to “modern” managers from forward-looking healthcare and private industry and a new generation of employees now joining clinical teams from universities – who are familiar with the features of modern self-service technologies including sites like Amazon, Lastminute.com, iTunes and Facebook.

Like many organisations then, the NHS has been relatively slow to implement self service tools in the workplace. It is all to common to hear the business benefits of ESR Self Service have yet to be fully understood or, more importantly, realised in practice. How can this be successfully approached? Read the rest of this entry →

The House of Commons Fees Office has been drawn into another expenses news item, though this one relates to the fraudulent actions of an official in the payment office. Andrew Gibson, a Resources Budget Officer created fake expense claims to pay off gambling debts.

The crooked official submitted false invoices for secretarial services against the names of Tam Dalyell, Linda Perham and Matthew Green, MPs who were retiring or otherwise leaving their constituencies following the General Election of 2005.

During that year, Gibson made three payments totalling £5,875 into the bank account of his friend Toni Pomfret, both of whom had worked with the post office.

The discrepancies with the payments came to light as a result of the general investigation into MP’s expenses. Mr Dalyell alerted the police when a claim he did not recall submitting was examined . Gibson and Pomfret’s fingerprints were detected on the claim forms.

Having both pleaded guilty, Gibson was jailed for nine months and Pomfret for six months.

A payroll administrator working for government departments was recently sentenced to two years in prison after defrauding the taxpayer of over £137k. The fraud had commenced in July 2005 with the Department of Health, on the payroll of the Mental Health Review Tribunals and continued until March 2008 after payroll had transferred to the Ministry of Justice, with the administrator keeping his job.

Based on the amount of money taken over the period, and the fact that expense payments would have been tax free the crooked scheme was providing the fraudster with the equivalent of income of around £74k per year.

The fraud involved a range of techniques including the creation of false receipts, payment to bank accounts the administrator had set up using false documents, alterations to the computer records for genuine recipients’ bank details and claims attributed to an employee who had died several years earlier.

The case was handled by the NHS Counter Fraud Service – which covers all kinds of fraud against the Department of Health and NHS.

In the video post at the Journal of Accountancy website, Joseph T Wells, a certified fraud examiner, has a clear and simple message

“People who beleive they will be caught commiting fraud are less likely to do it”

He highlights the key actions which organisations can take to deter and prevent fraud -

• clear communication to all employees about what constitutes fraud
• mechanisms for people to seek advice about possibly unethical practices
• access to a reporting hotline which allows anonymous reporting of concerns
• common sense internal controls (e.g. physical safeguards, separation of duties)
• an increased perception of detection through management and audit activity
• including regular fraud risk assessments

Image : Tychay, Flickr

Over the last decade, it’s become increasingly clear the transactional side of Human Resources and the Payroll service are two sides of the same coin.

The HR team helps managers source and deploy people into effective roles on the right employment terms. The Payroll team implement those terms accurately and in accordance with tax legislation.

Completing the cycle, the Payroll Team provide invaluable workforce and cost information which cab support strategy, planning and policy review.

Both teams help manage the workforce and support the reduction of associated risks while removing burdens from front line management, allowing them to focus on operations and team leadership.

In the article “The Other”, SystematicHR described the highly structured environment payroll inhabits and the contrast with the “flexibility” which managers and HR departments so highly value. Working with both teams regularly, Attractor recognises the description and accepts there are elements of truth in the common stereotypes.

There is something else which, until recently at least, distiguished the two departments.

In the UK, organisations have traditionally been happy to outsource payroll transactions to a commercial partner. They recognise the work needs technical skills but can be labour intensive. They consider it safer to pass risks to a specialist body who guarantees compliance and, hopefully, generates economies of scale.

Some perceive the reluctance of organisations to outsource HR as protectionism or empire-building by the management team. HR is often considered more central to business operations, making it less attractive to outsource. Fears often arise over “losing control” of key issues on staff appointments and difficult people management issues. With HR supporting action by senior and line managers, it isn’t possible to  transfer “compliance risk” in the same way. Read the rest of this entry →

Photo: Darren Hester, Flickr

NHS managers looking at our benchmarking solution have described how they will use it to plan and monitor local actions in response to the challenge of the NHS Quality, Innovation, Productivity and Prevention initiative (QIPP).

A Payroll Manager explained it would enable him to demonstrate how service plans would adjust the profile of the organisation changing high level and detailed performance data.

As well as providing an evidence-base for improvement planning, the tool would enable them to meet the recommendations of the Operational Efficiency Programme, collating relevant information and providing comparison data to inform their decisions.

The solution has been created specifically for NHS organisations (versions for other part of the public sector or on the drawing board). Back-office benchmarking is new for the NHS and, obviously, depends on having significant volumes of data from relevant organisations to provide comparative information.

While still at an early stage in its service lifecycle – only just moving from planning to delivery – the early signs are promising. Already, 60% of the NHS organisations which evaluated the service have subscribed while others are still considering their position. No organisation having reached this point has, yet, decided not to subscribe.

Attractor is now marketing the service widely for the firs time and expects sufficient sign-up from NHS organisations to provide subscribers with authoritative, persuasive and compelling evidence to support local decision-making. Read the rest of this entry →