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A number of systems thinkers suggest all projects seeking to improve services and costs through economies of scale the efficient management of business processes and doomed to failure and inherently wrong-headed. Their message is economies of scale are “a myth” – based on plausible theories which have little or no supporting empirical evidence.

Even amongst those engaged in providing such services, there is often acceptance that delivering “world-class” service can be extremely stretching and remains out of reach for many service providers and their clients.

While suggesting there is “no benefit” in scaling up services is an over-simplification, the systems thinkers’ criticisms are more fundamental.

In addition to the issues of service and organisational design which are explored below, the “command and control” management culture and inappropriate use of targets and measurement are also highlighted as major issues.

Taken as a whole, systems thinkers claim shared services solutions deliver no real benefit and will highlight a number of failed projects to support that view. There are so many cases where shared services or outsourcing projects are ill-conceived, poorly managed and badly delivered, the task of finding failures is all too easy.

However, there are areas where running bigger operations provides clear advantages but there are problems and challenges inherent in scale too. Taken as a whole the drivers of success and failure require far more careful attention than simply concentrating on scale. Too many projects seem to start with a poor appreciation of the challenges and an over-optimistic belief in suggestions benefits will be easily delivered and it is useful to understand both the benefits and drawbacks of scale before deciding whether shared services are worth pursuing.

Attractor has reviewed and summarised the positive benefits and the pitfalls below, attempting to draw attention to the issues that matter most.

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In an effort to save costs, Kensington and Chelsea, Hammersmith and Fulham and Westminster Councils made proposals in the latter part of 2010 to share services in a “Tri-Borough” solution.

They plan to deliver savings in management and “overheads” for the direct services provided to the public. The proposals, referred to by some as a ”Super Council”  have been described as radical and are considered by some to poase too many challenges for local political accountability.

The proposals anticipate £34.6m each year  (27% from Children’s Services and 29% from Adult Social Care) assuming it will be possible to deliver a 50% reduction in management numbers and overhead costs by 2015 though the complex challenges are recognised to require a higher skill base and more senior staff to deliver the strategy.

The proposals are being cosidered by the Councils during February 2011 and the blogsite ConservativeHome comments on both the plan and criticisms from Labour opponents despite similar plans being developed by Lambeth, Southwark and Lewisham Councils.

The Tri-Borough Councils expect to deliver shared management teams for Children’s Services and Adult Social Care, as well as to share a number of senior posts including Chief Executives and Director-level posts. Integrated services for delivering support to schools and managing specialist services are planned. They also expect to have shared corporate back offices (HR, Finance, Property, IT, Legal and Administration run either through external contracts or by single provider councils.

The proposals aim to retain local decision-making and accountability with each council raising its own funds and setting spending priorities and able to set its own policy for how services are delivered. It is anticipated the Councils will share innovation in service delivery and adopt common specifications where compatible with policy objectives and give best value to taxpayers.

So how radical are these plans and are they likely to be effective? Read the rest of this entry →

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 →

The UK’s coalition government has made few changes to government departments – but the underlying “machinery of government” is under scrutiny.

According to reports in Personnel Today, the government is planning a cross-government HR framework – aiming to “eradicate duplication” and “simplify HR functions”.

The new Efficiency and Reform Group is looking at the creation of  “a single coherent HR policy” to be used by all Whitehall departments by March 2012. The Cabinet Office is considering a simpler approach to Civil Service pay, terms and conditions.

By focusing savings and streamlining efforts on back-office functions, the aim is to protect front-line services. Francis Maude is quoted saying - 

“Good government can cost less. It won’t do just to carry on as before. By joining forces and concentrating our efforts where the money actually gets spent, we can make sure the maximum amount gets taken out of government overheads, not front-line services.”

That sounds good though in reality the vast majority funds “actually gets spent”  delivering programmes and services rather than in the back office. There are potential savings to be made by the adoption of shared services and outsourcing for back-office solutions – though savings are by no means guaranteed. Even assuming savings are delivered, the financial benefit is likely to be small compared to the overall financial challenge facing the government. Read the rest of this entry →

Attractor can now offer a cost effective, independent, web-enabled, benchmarking service to NHS clients.

Using this new toolkit, and growing a dependable evidence-base, NHS Trusts can make robust decisions about the actions needed to improve service quality and value for money. Read the rest of this entry →

The government is apparently considering a major privatisation initiative for back office functions including IT, human resources and estates management.

Presumably this would involve sale to new “facilities management” companies

Alongside the sale of the Dartford River Crossing, the Tote and Channel Tunnel this would raise funds to pay off Government debt.

It seems the government would create special companies to take over back-office functions. Presumably these would be floated on the stock market, delivering “windfall capital”.

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The HR Director of an NHS Acute Trust contacted Attractor because significant underpayments and overpayments were being experienced by employees. While business leads recognised intervention was required, the underlying problems were not well understood. Read the rest of this entry →