Cuts in public expenditure combined with the protection of front line services is again at the top of the government agenda. Its an issue taxing the minds of senior civil servants in all parts of the public sector, be they in health, local government, central government departments, or any publicly funded body. We have come across health bodies looking to reduce management costs by 30% in some specific areas. central government departments are wondering what they can address. We know of some bodies afraid to make changes until after the election and the new Government has sets its direction.
We have been here before. Many times. How to get value for money in the public sector, has been a topic of continued attention for the past 10 years. A topic that has frustrated many top executives, whilst others have succeeded. Given the current climate, I wanted to tell you of a salutary tale from our experiences. Its an unusual client story for us. Most of our clients are using our approach five plus years after we have worked with them. This client isn't (yet). It is a story of a failure to implement. Instead, five years later, the people in that organisation we touched, influenced and convinced were still trying to deliver what we set out to deliver five years ago...
A salutary story of failed public sector change
Back in 2005, we had a public sector client, (it was a city council) right where they asked us to get them. They had silos they wanted to break down. They wanted the departments to work more closely to deliver services to their population. They wanted to get away from eight different ways of planning to a common approach that helps the departments share and own objectives together, and helped senior managers see the overall picture. The audit commission had said they needed to improve their performance management approach across the organisation. We were asked to provide a modern balanced scorecard based strategic planning and performance management approach that would support and address these issues. We were to design the approach, train their staff and help their staff to adopt and integrate the approach into their way of working.
Making progress, breaking down cultural barriers
Within a few months we (the client and Excitant) were making progress. They were moving from a variety of planning approaches, to adopting a common approach. They were using the approach in individual departments. They were starting to talk to each across department boundaries to share thinking and ideas.
We have been here before
We had also explicitly tackled the cultural issues: the fundamental blocks of thinking and behaviour that stopped the organisation from changing and been effective. We did a presentation to the management team that focused on just this aspect. Afterwards the first question was from the Chief Executive, but not to me. It was to his management team. He asked,
"So where is our change management programme then? Wasn't it supposed to address these issues?"
Their change management programme should have been addressing these cultural issues, but it had fallen by the wayside. From the far more limited remit (and budget) we had, we were uncovering, exposing and tackling the fundamental beliefs and behaviours amongst the council's staff, that stopped the changes happening. We believe that addressing the cultural behaviours and beliefs is the only way to achieve change in any sustainable way . The greatest process in the world will crash and burn if it fails to address the cultural aspects, underlying beliefs and behaviours.
However, there is only so much you can achieve from the outside. It requires the inside to want to change. It requires the senior management, individually and collectively, to recognise the behaviours, and the source of the behaviours, are in themselves. They need to realise they need to change as well, not just tell others to change, and to explicitly act and behave to support these new behaviours. New behaviours and cultural; norms need explicit signals of permission and time for people to learn that the change is due.This is true in a public sector culture as in any organisational culture.
At least we were making progress. You turn a tanker slowly. The ideas, principles and approach of joined up thinking was starting to permeate the planning sections and the minds of some key directors. They were asking how partners could explicitly help with delivery. Bear in mind this is four years before Local Area Agreements and Local Strategic Partnerships were introduced. Yet we were using the same principles. We were giving them the chance to be ahead of the game in delivering public sector services more effectively . Some were using the approach to demonstrate how savings could be made and services fundamentally improved. Previously there was little link between the capability of the organisation and its performance. Plans were been developed that explained, explicitly, how improving the capability of the departments and the organisation, underpinned its long term performance and delivery of services.
The deeper, embedded behaviour
Then came along Gershon. The Gershon review demanded cuts across the public sector. The client was ideally placed to respond, intelligently. But they turned away. The Finance department's response to Gershon was to ask each Director of Services to find 10% cuts in their department. Not finding savings across the organisation, but in their department. Effectively they asked the Directors to think and act in silos again.
Guess what - they did. In effect the directors retreated into their silos to find savings. Occasionally one Director would pop their head out of the silo mentality and suggest that if they and another department cooperated so they could save money in both. But if this ever required a 1% increase in one department to save 5% in another department, you can imagine what reaction there was. Power would have been eroded within the "Losing" department. (Bear in mind prestige is often related to department size and budgets). The culture of cuts and reduced budgets on a department by department basis destroyed all the work we had done building up the integrated thinking.
Frankly this organisation was not committed to change. It wasn't prepared to be tough on the way it behaved.
What happened next?
Ultimately the cuts did not happen effectively. They cut some money, but probably not as much as they might have. Did services suffer or did they improve. Hard to tell. The council continued to have a poor best value score, though it did rise a level in the year we worked with them.
Four years later, the then Chief Executive and many of the directors from that time have changed. In the end, the new Chief Executive resorted to a fundamental structural change involving a large team of management consultants to completely re-organise the council. A programme that has taken over a year to conceive (I'll let you estimate the sums in terms of consultancy fees) and will take another two or three years to bed in.
The irony is that the structural change, and re-organisation, has moved people in roles that they are unfamiliar with, has create a new set of boundaries (are they any better than the last set?), and made many boundaries artificial by separating commissioners (thinking strategy) from providers (delivering services). Meanwhile they are still trying to tackle the cross cultural ownership and responsibility. Except this time with a more complex, commissioner/provider or strategy/operational, boundary to fight over as well. (Those in the NHS and in PCTs will recognise the artificial boundary that this creates and the problems associated with this pseudo-market mechanism.)
The salutary lesson
In a different engagement in the public sector we used exactly the same fundamental approach and techniques for a Modern Public Sector Balanced Scorecard (with some refinements), but we started with engagement by the Chief Executive. She saw the problem as one that started in the management team meeting and permeated through the organisation. We were able to show her how to fix the problem there and then how to permeate the modern balanced scorecard solution through the organisation. We were able to closely with the executive team. The Chief Executive, and her team, became the strongest advocate of the joined up thinking approach. As the management team started to behave in a joined up way, inside and outside their management meetings, then the organisation would follow.
As a result, without any structural changes we created mechanisms (strategy maps and shared balanced scorecard objectives), of joined up thinking and working. The strategic plan was organised around six outcomes for the community. It also took only two, painless, weeks to produce that year, as opposed to the nine painful weeks the year before. The Governance structure of political committees was adjusted to align with the six outcomes which dramatically simplified the governance. Directors were made jointly responsible for outcomes and objectives, whist retaining responsibility for delivery in their departments. New, joined-up teams were created across departmental boundaries. Many of the people in these teams had never met before - even though the shared outcomes for the community.
In terms of change in behaviour the effect was extremely powerful. As one Director put it,
"I can't think of another project where there has been such sign-up to the approach from every directorate. We have not embedded things in the same way before as we have with this balanced scorecard project.".
A senior manager said,
"With our strategy maps, we all carry a piece of the strategy in our pockets. I can ask anyone about their part of the strategy and we simply discuss each other\'s strategy map"
Finally, as the Chief Executive wrote:,
"I am writing to thank you for the tremendous contribution you made over the last few months helping us design and introduce our balanced scorecard performance management system.
Your energy, stamina and commitment were critical to the project succeeding within its extremely aggressive timescales, and the extent to which you have achieved buy-in from teams across the Council is a testament to your skills in engaging people and marshalling internal resources to lead the development processes.
I am particularly pleased that so far, and significantly because of the way you sequenced the design activities, we have managed to make the scorecard a strategy alignment tool, and avoid degrading it to simply another way of capturing performance indicators.
I know we have a lot of work to do to upgrade the content and make sure that senior managers focus on strategy, resource, process and service alignment, but I am confident that we have given ourselves the best possible starting position to achieve this."
Gillian Beasley, Chief Executive, Peterborough City Council
So what next? What is your lesson to take away?
You can continue to look at case studies or for the modern balanced scorecard techniques we used in the various articles. Specific
Local Government Strategy & Performance Management experience and case studies
But if you really want to address the fundamentals, then have an exploratory discussions with us.
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