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Oct 2, 2008 - Intelligent commissioning is needed for the third sector to prove its worth in providing services, says Jonathan Lewis. Effort and resources have ...
Comment Targets are killing trust

The public sector has been subverted by a new managerial class armed with performance targets and tools for cutting costs and whipping workers into shape. This “managerialist” ideology has brought in processes and behaviour from the private sector which, it was naively assumed, would deliver quality, efficiency and more customer-oriented services. To support this ideology, everything now had to be measured, monitored and reported. Public reporting would (it was assumed) sharpen accountability.  But while the bureaucracy of performance management grew, this barrage of managerialist initiatives has had, at best, a minimal impact. It may even have done harm. Managerialism has led to more combative and aggressive forms of workplace behaviour that have undermined informal, trust-based relationships.  Our research shows that morale, job satisfaction and trust in senior management among public sector workers are all at rock bottom. Persistent organisational change and the adoption of control-oriented performance management regimes have had a far worse effect on public sector workers’ sense of job insecurity, motivation and loyalty than on workers in the private sector. Aggressive performance surveillance has also had a negative impact on the health of public sector workers, particularly when targets have been  imposed rather than negotiated and are regarded by workers as unachievable. Staff feel bullied over their “inflexibility” to change; more disciplinary action has been taken against workers for their alleged non-performance against targets. Work has intensified: staff are expected to do more with less, do more for less and do more in less time. Terms and conditions have deteriorated. One result is increased job turnover. Performance management regimes have distorted behaviour as organisations have focused on hitting targets simply to comply.  Others have cynically played the figures. Within the police service, that pressure has encouraged officers to seek arrests for the most minor of offences just so they could be recorded against targets.  This is not a good use of police time nor does it foster cooperative relations between the police and the communities they serve.  The targets culture has been replicated across the public sector in the form of teaching to targets in schools and recruiting to targets in universities despite their long-term effect on quality.   Labour’s modernisation agenda was naïve and based on a totally inadequate understanding of how organisations work. You do not create a climate in which workers deliver

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Richard Allen

Private sector ways of working are undermining the public sector ethos, say Les Worrall and Kim Mather



It is not surprising that large swaths of the public sector are ‘pissed off’



high quality services by the top-down imposition of the faddish and insubstantial managerial ideologies that have characterised public sector management over the last decade. A fixation with performance targets has undermined morale, loyalty, motivation and job satisfaction across the public sector; it has distorted behaviour; and, while it may have delivered some efficiencies, it has created an increasingly alienated workforce.  It is not surprising, using Alistair Darling’s phraseology, that large swaths of the public sector are “pissed off” with a government that values and rewards compliance over the creation of a motivated public sector workforce that can respond sympathetically to local people, local needs and local priorities. Les Worrall is professor of strategic analysis and Kim Mather is a senior lecturer at the University of Wolverhampton

If it’s good enough for India Working together with the private sector to improve delivery of services is the way forward, says Brian Woodford For citizens, cost, as measured in taxes, is only one factor that affects their experience of government. Quality, time­ liness, access to and trust in the delivery of services are more important. Private suppliers will be judged along the same lines and appreciated for the value that they can bring.

for example, is roughly the same as that of the whole of the UK – but on a smaller scale the principles remain the same. Involving private partners earlier in the project, engaging on a broader remit, not only lowers cost but enhances the experience for the citizen. In the case of Andhra Pradesh Online, one of the outcomes has been the creation of a virtuous circle whereby the better visibility of citizen records is helping to design better government policies. And the companies registration system is enabling the growth of the Indian economy and encouraging entrepreneurship by easing the process for company registration. Brian Woodford is the director of Tata Consultancy Services Public Sector UK & Ireland

Good leadership should be built in New forms of working across traditional boundaries call for strong governance and communication, says Bill Cooper More than ever before, the government’s strategic objectives and policies rely upon programmes that span multiple departments, local government and the third sector. Cross-cutting programmes require a new form of governance covering policy, commissioning, delivery and review. And that will take coherent leadership: a single organisation must be identified to lead each programme. That leadership will develop a shared agenda, which once agreed needs to be consistently communicated with no tolerance for dissenting views. Not addressing disagreements will eventually derail programmes. For example, developing shared services without tackling standardisation will upset the original business case for efficiency savings. Governance should address affordability and deliverability. One practical difficulty for cross-cutting, joined-up programmes is that even where there may be a shared vision, sources of funding may diverge. For example, some parts of a programme may be funded on an annual basis while others are funded over several years. There are typically three stages to such programmes. The first is design of the programme itself including key processes, technology and the delivery model. The second stage is a pilot, followed finally by the full rollout and ­ongoing delivery. Governance is particularly required at the design stage. At this point, the team’s focus is naturally on agreeing a ­design of a programme. But equal attention needs to be given to long-term affordability and sustainability. ­Governance joins up design through to implementation across multiple partners to tackle key issues of cost,­

Richard Allen

In India, the way the government and the private market interacts has undergone a shift in recent years. Instead of a traditional buyer-supplier relationship, the Ministry of Company Affairs and the states of Andhra Pradesh and Gujarat have built long-term, joint ventures. The results – lower costs, increased efficiency, and most importantly, better citizen experience and participation – are instructive. Andhra Pradesh, home to 75 million people, is one of India’s most populous states. It was facing a pressing need to cut costs and improve delivery and accessibility of services, but was finding it a challenge to overcome the expense due to decentralised delivery and the huge amount of paperwork associated with this. To increase citizen participation across a whole range of government services, from school admissions, passport and state pension applications, to land registration and utilities payments, the state worked with Tata Consultancy Services (TCS) to design, implement and commission the Citizen Services Portal. The portal places a wide range of services online, making kiosks available and eliminates digital exclusion for citizens with no online access at home – a huge hurdle in rural areas of India. Users can select content in relevant languages, including Telugu (the regional and official language), English, Hindi and Bengali. In the example of the Ministry of Company Affairs (the Indian equivalent of Companies House), this innovation developed more efficient systems for the processing and tracking of company registrations. Serving a population of more than 1 billion people, the ministry is responsible for the registration, monitoring and regulation of India’s 700,000 companies – 500,000 of which have been set up in the past 12-15 years. There are around 60m pages of company registration and accounts information in the Ministry’s files. And as the Indian economy grows, this number is rising. With just 1,250 employees to serve the whole country, the ministry was vastly overstretched. Relying on a paperbased filing system meant that delays were endemic. For example, during the peak filing season (October to December), completing a company’s registration took an average of 80 days. All activities had to be performed in person. With only one regional office in each state, company representatives often had to travel long distances to do business with the ministry. The solution involved digitising over 60m pages of company information, making documents easier to find and retrieve. More than 1,500 companies can now be registered every day, and turnaround time has been reduced from 80 days to less than a day. Compliance has been one of the greatest benefits of the scheme, as companies can file accurate returns on time and the digital signature enabled solution ensures validity of documents in a court of law. In the UK, the wide-ranging and ambitious transformational government programme requires a new engagement between government and the private market. In this context, viewing private companies as partners engaged in a long-term, incremental manner, can pave the way to certainty of delivery and outcomes. Such a commercial model has been shown, in the examples cited above, to demonstrate the value that broad engagement can bring to governments. The magnitude of the Indian schemes is extreme – the population of Gujarat,



Involving private partners earlier enhances the citizen’s experience



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Comment The proof is in the monitoring

timescales and outcomes across the entire programme. Had these lessons been applied to an initiative such as the single non-emergency number, could it have proved sustainable? The project appeared successful in its local ­pilots. But was the design blueprint and its long-term deployment and operation properly considered? Had the funding regime for the design and pilot addressed the key issue of long term affordability and the need to keep operational costs down, the programme could have been sustainable. In contrast, the Department for Work and Pensions’ Tell Us Once project, a service for citizens to make one contact to government at key life events such as a change of address or bereavement, appears to have a clear mandate to resolving difficult and contentious issues at the outset and has developed a standardised design blueprint that can be successfully rolled out. Can the government apply 21st century governance to other cross-cutting challenges such as reducing child obesity and alcohol harm reduction? Delivering through cooperation and collaborative networks is critical. Bill Cooper is a partner in Deloitte’s public sector practice

Effort and resources have to go into ensuring private sector contractors deliver, writes Iain Greenshields Richard Allen

Low cost does not mean good value Tenders are starting to reflect that there is more to procuring good services than bargain prices, says Nicola Linkleter Public bodies think they must focus on cost when procuring goods and services, assuming that way lies value for money. At the recent OGC.buyingsolutions Procurement Solutions Expo, we took this issue out to delegates asking how procurement decision makers go about getting value for money. More than 8 out of 10 (81%) of those asked maintained that lowest cost does not equal value for money. The bald proposition that low cost isn’t the same thing as good value isn’t that startling. But (given our sample) the entire sector now seems to have bought this message. Many public bodies are now looking at the entire process and achieving value rather than minimising cost. This is seen in the tender process. Procurement departments are already often involved in the primary stages of tendering, so having their focus on what the organisation needs to drive it forward rather than cost alone is vital. Naturally, budgets bring pressure to go for cheaper options. Cost cannot and must not be taken out of the equation altogether, but by ensuring procurement professionals are involved every step of the way, you can make certain cost is kept in perspective. Attitudes are beginning to change. The challenge is to transform that into action. Changing behaviour is always a long process, but one that needs to continue to happen if the public sector is to make its pennies stretch as far as possible. Nicola Linkleter is public sector director at Badenoch & Clark

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The public sector needs to be aware of how much effort is required to ensure contracts with private suppliers deliver  true benefits to themselves and  ultimately the citizen. Too few realise the pitfalls of such arrangements. Public sector bodies can underestimate the amount of effort required to get a contract right and make it work.  Proper monitoring of performance management is as essential a part of the process as negotiation of the contract itself. Often one team deals with the initial procurement and negotiation of a tender, but then hands over long-term management to a new team. Removing continuity makes it difficult to understand a lot of what was behind the contract terms and this can have a negative effect on an authority’s ability to manage the contract effectively. By retaining the same team throughout the contract negotiation and the operation, local authorities can better monitor what was promised at the outset. Under certain circumstances, authorities should consider self-monitoring by suppliers, particularly where the authority is not able to justify spending substantial funds on the monitoring process. With self-monitoring of smaller projects, local authorities can spend their time properly ­resourcing the management of their most valuable schemes. With stringent efficiency targets and greater transparency of spending at local level, it is essential that a clearly defined plan is in place to monitor contracts. Only then can local authorities be assured they are delivering value for money. Iain Greenshields is a partner in the projects team at ­Dickinson Dees LLP



Eight out of 10 said that lowest cost doesn’t equal value for money



The future is bright for the third sector Intelligent commissioning is needed for the third sector to prove its worth in providing services, says Jonathan Lewis Give us the evidence that proves the third sector provides public services in “distinctive ways”, the Commons public administration committee said. The sector’s distinctiveness is going to come from intelligent commissioning. We agree: we are in a unique position

Social enterprises are on the march With increasing focus on firms’ social responsibility, there’s a real chance to influence the market, says Kim Stoddart The third sector minister Phil Hope insists that social enterprises are “setting the ethical standards for others to follow.” But is it realistic to expect that a business model which values positive social change as much as, if not more than, financial gain could ever hope to influence the behaviour of the traditional business sector, where profit rules supreme? It depends how this influence manifests itself and in which sectors of the business community. The first thing to clarify is that an increasing number of social enterprises

are profit making, generating an income from trading; it’s just that they take a “more than profit approach”, where a percentage of profits are used to a social or environmental purpose. While no blue chip organisation with shareholders would willingly sacrifice its bottom line, it is worth considering that there is one thing which may just be more powerful than shareholder pressure and that’s consumer pressure. A recent Ipsos Mori omnibus survey into corporate responsibility trends showed that a high degree of social responsibility is an important or very important factor when making a purchasing decision for 85% of British adults. Similarly, over two-thirds (68%) felt that industry and commerce do not pay enough attention to their social responsibilities, in contrast to only 30% of the business leaders surveyed. It is my opinion that this cultural shift will gain even greater momentum as the next generation – or Generation Y as they have been dubbed – reach maturity and full purchasing power. This is not to mention their views towards the social activities of potential employers. Food for thought! While a more socially conscious approach may involve some investment, it is a wise move to make because it will generate a competitive advantage that if managed correctly could make this a more viable option for even the most profit-hungry shareholder. There may be a middle road in which the corporate world can adopt some of the principles of social enterprise without damaging their financial success. This could be seen as simply an extension of existing corporate responsibility programmes. Rather than expecting businesses to extensively change their own operating structures, one route would be to develop a clear policy through which socially driven firms are given priority consideration as suppliers. Having an ethical investment policy is another way that traditional organisations can support the endeavours of the social sector. A growing number of investment funds are springing up to fund such enterprises, which are in a position to fulfil their loan obligations thanks to their income generating model. So, what impact is this movement having on the small and medium-sized business community, which is such a mainstay of our economy? It is at this level where the greatest impact is currently being felt. Previously the options to anyone wishing to start their own business were fairly limited, and many were simply unaware that other routes existed. This is changing and more entrepreneurs are considering one of the many social enterprise models for their new company. More education is certainly needed around the true characteristics of a social enterprise but I believe that the influence exerted by this sector over traditional business will continue to increase, and that firms should ignore this trend at their peril. Kim Stoddart is founder of ethical media relations company Blue Rocket (bluerocketgroup.com)

Richard Allen

to see that when commissioners forge strong links with third sector organisations, the result is innovative service delivery. Especially when commissioners understand the needs of service users and put these at the heart of their strategic planning. An example is Bridge, which provides support for drug and substance users in Bradford. Bridge has contracts with the Bradford and Airedale teaching primary care trust, whose commissioners even attend internal Bridge meetings to voice their opinions. The lead commissioner, Ian Wallace, says “our close partnership with Bridge allows us to offer service users a greater choice of treatment options. The close ties we have forged with Bridge means that they have the flexibility to respond to changes in service needs.” Futurebuilders also invested in Cross Hertfordshire Community Counselling which advises young people on pregnancy, alcohol and drug abuse and mental health. David Evans of Hertfordshire county council says that open, constructive and respectful relationships have been key to the project’s success. Another example of intelligent commissioning is Salford PCT who were approached by another recipient of Futurebuilders’ investment, the Brain and Spinal Injury Centre, to discuss contracting. Its chief executive, Wendy Edge, says “there were some doubts about [our] governance. But instead of simply turning its back the PCT funded a pilot project involving six local providers, with an emphasis on evidence gathering and outcome measurement, to help inform its future commissioning policy.” Futurebuilders is committed to helping as many third sector organisations as possible win contracts to deliver public services. In the past three months alone, our investees have been successful in winning more than 44 public sector contracts valued at over £7.7m. This shows that third sector commissioning and public service delivery can work. We are certain that with the right financial support and intelligent commissioning, the third sector can and will continue to provide public services in innovative, ­“distinctive” ways. Jonathan Lewis is chief executive of Futurebuilders England



An increasing number of social enterprises are profit making



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