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While inheriting and accepting many features of the outgoing government’s strategy on productivity and efficiency, the Coalition Government has, at times, seemed less than enthusiastic about the delivery of corporate functions through shared service centres.

In the context of many reports of failing shared services projects in the public sector, it would have been astonishing if the government had not wanted to assure itself about these projects before setting out a strategy for the future.

In July 2011 the government published short paper setting out it’s views. Government Shared Services : A Strategic Vision summarises its findings and conclusions.

The government has set out an approach to consolidate back office “transactional services” in HR, Finance, Payroll and Procurement between and across Central Government organisations and Arms Length Bodies (ALBs).

It suggests the existing shared services operations, while not delivering optimum results, have already delivered savings (£13m per annum at the Home Office, £20m at Ministry of Justice and £35m per annum at Department for Work and Pensions) through moving back office transactions to shared service centres. It is relatively common for shared services projects to encounter difficulty in establishing a baseline position on service quality and costs and there are no details provided on how these figures have been derived.

The government’s new vision consists of -

• A Central Government oversight function to lead a new governance structure to accredit independent Shared Services Centres (ISSCs),
• A small equitable market (maybe 2 providers) of accredited ISSCs will be available for Government Departments and their ALBs to choose between,
• ISSCs will operate independently from customer organisations, delivering “outcome based services” using standardised simplified processes against established performance benchmarks.
• ISSCs can adopt different business models (i.e. public, mutual, private), leverage capability and financial investment needed to deliver services and can operate virtually or from integrated delivery centres.
• Departments can make a case to continue to use their own “standalone” corporate services if they can match ISSC performance using the agreed benchmarks.
• If a department can show better performance than ISSCs, they may be able to begin offering services to others but a Department may be compelled to become a customer of an ISSC, or at least meet the same standards, if they are falling shot of performance standards.

The Cabinet Office Efficiency and Reform Group Shared Services team will be working on a migration plan and a strategic outline business case for November 2011. Overall, the paper does seem to set out a pragmatic approach to the challenge, recognising that one-size might not fit all and providing some flexibility for the larger organisations to continue providing in-house services.

In relation to the shared services delivery model, the government has suggested it will learn five important lessons from the experience of early shared services adoption in government -

• Independence is important to incentivise a better quality of services at a lower cost.
• Delivery of shared services is not a core Government skill and bringing in operational and commercial expertise is vital to improving current capability.
• On-boarding to a bespoke service can be expensive and issues on charging between public organisations can act as a barrier, e.g. smaller organisations need an affordable solution.
• Shared Services comprises a range of key components that influence cost and require standardisation – infrastructure, IT platform, ERP solution, business change, business processes.
• Strong governance is essential and efficiency gains are proportional to the level of mandation in the use of shared services.

While these lessons look fine (if not very new), does this strategy make sense in its broader context?

Read the rest of this entry →

In 2011, public sector cuts are a universal phenomenon and it seems the anticipated reductions in NHS staffing levels would result in an overall reduction from 1,432,000 to somewhere around 1,380,000 by 2015. As the Telegraph’s David Hughes point out, a reduction of 50,000 jobs does sound high, but is a relatively small proportion (3.5%) of the NHS workforce and will be managed over a number of years.

The Telegraph article needs one, small, correction. At this new, lower staffing level would become the world’s fourth largest employer behind Wal-Mart, the Chines Army and Indian State Railways – having been temporarily ahead of the Indian Army for around a decade.

David Hughes is correct in suggesting it would be possible to manage the anticipated scale of moves through “natural wastage”. Managing the required change in this way sounds good in principle but is only possible if the cuts happen to be in the same places as people moving on.

Experience suggests real life is rarely that simple and there are, now, thousands of people at risk of redundancy – a position that might and that position is likely to remain constant for about 2 years.

When reading the Telegraph article, it is interesting to contrast its “matter of fact”  tone with the more alarmist one in another article in the Telegraph just a year earlier when similar challenges were being considered by a government of a different political persuasion – though it’s fair to reflect the article discussed the possibility of a 10% reduction in staffing.

Organisations facing these pressures will need to be far more proactive in delivering the changes needed.

Photo: Siddhu 2020, Flickr

The well-respected Flip Chart Fairy Tales website has recently covered some important themes relating to the challenge of improving efficiency and productivity in the public sector. Rick points out the differences between manufacturing and service sectors and the lessons of systems thinking. The track record of UK industry in productivity improvement has, indeed, been gradual rather than dramatic and public services have to move far faster.

It seems, though, examples of public sector inefficiency are not hard to identify. In September 2010, an anonymously penned article in the the Guardian echoed the feedback from public servants working across the UK, describing a number of examples of waste in public services -

• poor recruitment and appointment decisions,
• poor management handling of lazy and inept staff,
• poor specification, deployment and use of contractors,
• waste, bad design and poor delivery of major IT projects,
• poor economy in travel and expense practice.

While, perhaps, indicative of a culture that values neither productivity nor efficiency, addressing all these issues would be insufficient to tackle the level of savings envisaged by the Coalition Government’s austerity measures.

In other respects however, the observer focuses on a far more important issue -

“… teams tend to blindly follow out-of-date procedures while others create new measures and protocols for the sake of it – and no one stops to question the need for so many reinventions of the wheel. Much of my present role has come about because of the need to redo work that was never completed to a remotely adequate standard.

The same thing happens whenever “efficiency savings” are called for: another big review gets under way, the same problems are discussed, committees are created … and then everyone carries on as before. Instead of waiting like martyrs for the axe to fall, the civil service could act. It could forget about further costly top-down examinations of recurring problems and instead ask everyone to take it upon themselves to do something about wastage.”

While this diagnosis may seem over-simple, it reveals an important truth. It is often within the outdated and ineffective working practices – which have accumulated over many years – that most of the inefficiencies remain deeply locked. To make effective change here, far more radical solutions are required and, in some places, shared services are seen as the answer. However, this response to inefficiency can be worse than the original problem. Read the rest of this entry →

Photo: bcmom, Flickr

At the end of 2010, Attractor commented on early reports of proposals to introduce a freeze on incremental pay progression for NHS employees in return for a guarantee of no compulory redundancies. Details of the offer for a “National Enabling Framework on Pay” were well covered in the the Guardian and the NHS Employers site provides access to many documents which describe the detail, context and background for the offer.

In his regular blog, Gerry Bolger comments on the fact many of the leaders who have publicly supported the offer are earning more than the Prime Minister, highlighting the cost of the senior managers in relation to clinical teams.

While many will agree, the comparison with the Prime Minister’s pay follows an avenue laid by the Conservative Party in their bashing of public sector organisations throughout 2010. In fact the comparison is not particularly valid and Attractor has made earlier comments on this matter.

An organisation facing greater than average financial constraints and where QIPP efforts are slow in materialising will face stronger pressures to agree a pay freeze than one where there is a successful and positive programme of reform and service reorganisation. Where there is a sound case for significant reorganisation, agreeing such a deal might tie the hands of management and prevent sensible reform – and result in more people losing out than necessary.

Looking at the offer in details – there seem to be more challenges and problems than there are signficant benefits for employees. Read the rest of this entry →

Since the publication of the Smarter Government report in November 2009, which released the results of benchmarking work for the back office functions within central government, interested observers having been waiting for the NHS to complete it’s own review. This work has been completed and with the publication of the QIPP Back Office Efficiency and Management Optimisation Report has been published along with the conclusions on how the NHS should take matters forward.

As well as following on from the Smarter Government review, this work follows themes already established by HM Treasury’s Operational Efficiency Review, published in July 2009 which outlined the potential benefits of efforts to improve back-office efficiency. HM Treasury concluded it would be sensible to deliver improvements through shared back-office functions and larger scale procurement.

The QIPP report reveals the NHS spends £2.8bn on back office functions and suggests it would be possible to make savings of around £616m (around 22% of current spend) by standardising and streamlining services through scaled solutions.

This seems a more credible target than the common over-optimistic claims (30-50%) which fail to take into account the proportions of current work that cannot or will not be effectively shared.

A potential saving of this magnitude is certainly worth exploring in more detail but taking into account £2.8bn represents only 2.6% of NHS operating expenditure, it’s vital to keep a sense of perspective about the scale of benefits. Delivering all the potential savings identified would deliver 0.6% savings overall and only 3.1% of the £20bn savings target established for the NHS by 2013. The financial pressures facing the NHS will not be addressed by streamlining the back office! thie require more substantial work on core clinical services.

Furthermore, establishing shared services will take time, investment and significant effort. Shared services projects starting now would be unlikely to yield savings within the timescale of the current national savings programme. This does not mean they are not worth pursuing …. just that they need approaching with realistic expectations and appropriate objectives. Organisations that enter into such project with unrealistic expectations are most likely to fail.

There are important messages and key issues identified in the report that are worthy of more exploration. What can we learn from it? Read the rest of this entry →

At the Efficiency and Reform conference held on 25th November 2010 at the Barbican in London, Attractor led a Masterclass for public sector managers. The discussion considered how to respond to the twin challenges of financial constraints arising from the recent Comprehensive Spending Review plus increasing localism within the Coalition Government’s Big Society agenda.

It was recognised there were inherent challenges of localism, including stresses arising from local political action and the potential for increasing variation and a “postcode lottery” in service provision. There were also complications, legal, financial and contractual in withdrawing from existing public services and “spinning out” services into new mutual or social enterprise organisations.

It is vital to recognise successful change programmes addressed change “in-depth”, tackling technology, processes and people, paying attention to all the technical issues, while also addressing issues in business process design (task value and sequencing) while working to engage people to build understanding and attitudes of people.

But how can this be done? Read the rest of this entry →

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 →

Image : jinho.jung, Flickr

When organisations refer to their “shared services” projects, they are not all talking about identical solutions. Different experiences and variations in savings will reflect the nature of changes being made and the approach to implementation.

For some organisations, implementing shared services brings together a number of activities which were managed within local business units – creating a single, centralised solution.

Instead of each business unit controlling its own local service, they all share a single internal service delivered from a central location.

For other organisations shared services involves seeking to buy-in services from another corporate body – perhaps a parent organisation, a similar neighbour or a commercial partner. In this case, challenges of reorganising services and delivering service levels are multiplied by issues of finding the right partners, procurement and contracts.

In some very ambitous cases, organisations might be seeking to both centralise and buy-in services in one swift act which makes projects especially challenging. In all cases the service outcomes will be judged on the basis of how they work for customers and how much they cost. These judgements will be determined by how they set up their business and approach investment and improvement action. Read the rest of this entry →

Photo: Laffy4k, Flickr

Attractor was invited to join an HR Workforce Forum event at the start of July 2010, discussing the workforce and HR implications from the Total Place programme.

The forum event, hosted by Bevan Brittan, was attended by participants with in-depth experience of the Total Place programme and others working at the heart of public sector change management.

The forum heard details about the New Local Government Network (NLGN) Report “Greater than the sum of its parts”.

Lessons for HR and messages being given to government about “the storm” ahead, were examined.

“The problem” of course can be defined in many ways – waste, funding restrictions, failure to deliver benefits, inefficiency, unfairness, “postcode lottery” – and its unlikely any programme can address all of these together. It’s possible some of them are inextricably linked, the big, “fair” programme being wasteful and the small “efficient” project leading to uneven outcomes.

The Total Place pilot programme aimed to change public services so they improve the lives of local residents and deliver better value. It was hoped the pilots would deliver early savings to validate the work and develop learning about how more effective cross-agency working can function. The work involves three strands of activity -

• ‘counting’ – identifying how public money is spent to achieve objectives
• ‘culture’ -  looking at how existing cultures and ways of working help or hinder the delivery of outcomes
• ‘customer needs’ – gaining practical insight into their needs, wants, expectations, behaviours and experiences

The challenge for HR functions in supporting service redesign, innovation and change management while also working to streamline and slim down their own functions was explored in some detail at the forum event.

Personnel Today have also published an article about Total Place and what it means for HR. In Stepping up to the mark, Roger Britton, at Worcester County Council talks about -

“the need to prepared to think in terms of a single public service workforce which is operating across organisations, the boundaries between which have become invisible.”

Tackling the “culture” within the existing empires poses a huge challenge which, if left unaddressed – allows silo mentalities to predominate and borders to remain defended. Mature and confident leadership, effective Organisation Development and Human Resources teams will be needed to drive these initiatives locally.

The Workforce Forum discussed the benefits and the legal and employment challenges of creating and staffing “New Economic Vehicles”, joint ventures and social enterprises which can remove barriers and allow partner organisations to focus efforts on delivering services and efficiencies together.

The NLGN report concludes billions of pounds could be saved by delivering joined-up service provision but warns that a lack of coherence and over-centralisation could derail the programme and prevent benefits being realised. Read the rest of this entry →