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Radical responses to municipal budget cuts

of 28% in the UK

Andy Holder

public sector consultant

A Christmas card response

Dramatic cuts made by the Comprehensive Spending Review 2010

Reducing the public sector generally and local government specifically by 28% between 2011 and 2014

Differential for different authorities ( grant down by 4 -17% in 2011/12) meaning some immediate cuts of staff up to 5,000 in our biggest municipalities e.g. Birmingham

Local Government Association taking cuts of over 30% and early on – e.g. Local Government Improvement and Development part of the group cutting about half its staff

‘Necessity is the mother of invention’

We have to innovate because of: Starvation of resources Pressure for different policies and approaches

What has been the response?

For over a year we knew it was coming (irrespective of the Government in power) and municipalities began preparing by doing two things:

1. Looking at the radical range of options necessary

2. Developing leadership style to handle the complexity and range of change

I want to speak about both

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A. The radical range of

options necessary

What options for change are available?( green levels 1 to 3 will only give 15-20%, more is needed of blue levels 4, 5)

5 ‘Total’ place working New solutions through putting all partner and community budgets, people and assets into one ‘place based’ pot

4 Alternative service provision / prioritisation

Alternative providers and community/users self managed. Failing these reducing services

3 Organisation wide transformation

Integrating structures and cultures towards the customer - ‘standardise’, commissioning and outsourcing

2 Focused service improvements

Streamlining systems and processes to focused outcomes

1 Quick wins Budgets, staff numbers, stopping non-essentials, keeping posts vacant

Acknowledgement : Adapted from PWC work

Level 1: Quick wins

These are savings which typically the organisation can absorb as part of it yearly business planning:

Annual efficiency pressures of 2 or 3 %pa Leaving vacancies when staff leave Cutting ‘extras’ – travel, food and drink, expenses,

Christmas parties!

Level 2: Focused service improvements

These focus on how specific services are delivered:

Clarifying and simplifying what should be delivered – agree priorities and outcomes

Using business process re-engineering – ‘end-to-end’ process reviews which deal with:

* actual versus possible timescales* duplication - less people involved* faster - right first time responses* one person responsible end to end* agree with staff how it could be

reshaped how it could be* doing it!

Level 3: Organisational wide transformation

This focuses upon ways in which the whole organisation can work as ‘one’ and with a different culture:

Integrating the customer responses – in one place or system and dealing with simple questions by less skilled staff

Integrating commissioning/procurement:*using the skilled central staff to better focus

requirements*reduce those involved ( but protecting the

skills for defining the services needed)* widening and using more competitive

markets

Level 4a: Options for service delivery

Options for service delivery

Mutuals Social

enterprise

Partnership with private

company

Internal delivery

unit

Contract to private

company

Joint delivery vehicles

Social Enterprises – trust or community run organisations

A wide variety of types of community owned and run organisations

Examples;

1. A range of trusts set up to operate ex-municipal leisure and sport facilities – to protect the asset and run services

2. Community groups taking over the running of village shops, post offices and pubs! – which would have closed

Mutuals – Employee ‘owned’ organisations

Co- ownership by the employees who hold the service and assets for future generations – relying on strong employee involvement to get superior performance

Examples

1. Central Surrey Health – since 2005, 770 co-owners have provided community nursing and therapy services in homes and hospitals

2. Government encouraged 12 pilots with mentors from established mutuals (e.g. John Lewis Partnership) in health, adult care, children’s services and education

Joint delivery vehicles – partnership organisations

Shared services across public bodies, with third sector organisations and the private sector

Examples1. Shared ICT, financial, administrative and other

back office services – many examples2. Specialist services e.g. library, educational, social

service and engineering expertise – increasing numbers

3. Jointly owned delivery vehicles to pool public, charity and private monies – something difficult in our system

Level 4: Alternative provision ( or not)

Reduce or stop service

User self managed service

Part or wholly run by others: public or private

Municipal services

Lowering cost of service

Level 5: ‘Total’ place working

This level focuses on the area or ‘place’ and seeks to: pool all the resources ( people, assets/buildings and

money) use resources more efficiently ( avoiding duplication and

multiple agencies with one person) and to more focused service outcomes

engage the community and customer more –idea of the big society and the community doing more for itself

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B. Leadership styles for the complexity and range of

change

What leader’s need to do

For municipal leaders, both politicians and managers, things couldn’t be more challenging:

it demands you ‘get on the balcony’ to see what is the whole picture and what is happening

it requires you spot and tackle the critical issues ( Heifetz calls the ‘adaptive challenge) and not get diverted by every emerging demand.

it needs you to lead the whole agenda – what is changing ( the ‘change job’) and what must be sustained ( the ‘day job’)

It needs integrated leadership by political and managerial leaders

Thinking through cuts and complexity

simple

complicated

chaotic

complex

+Services:

Commissioning & enabling delivery

Leadership domains in complexity

REFLECT

UNORDERED ORDERED

ACT

COMPLICATED

Multiple causes and effects, therefore many answers

Use experts to develop new ideas

COMPLEX

Cause and effect/ unclear known solutions

CHAOTIC

Clear causes and effects, available known solutions

Use existing knowledge and people e.g BPR

SIMPLECause and effect impossible to determine

Use action – command and control to bring in some order and

then work out what is needed

Source: D.J.Snowden & M.E.Boone; A Leader’s Framework for Decision Making, HBR, Nov 2007

Leading Innovation

Simple OrderBest Practice

Complicated OrderGood PracticeComplex Un-order

Emergent practice

Chaotic Un-orderNovel practice

SenseCategoris

eRespond

SenseSenseAnalysAnalys

eeResponRespon

dd

ProbeProbeSenseSense

RespondRespond

ActSense

Respond

Example of complexity mapping: Inspection Agency

Complex

Self assessment/ regulation

Savings beyond 30%

Inspecting/ savings on child minding networks

Peer reviews

Impact of inspection difficult to determine

Annual judgements on LA children’s services

Complicated

Organisational change up to the planned 30% put forward

Cross cutting v silo working

Lack of clarity about personal futures

Chaotic

Ways forward on LA children’s

services

Simple

‘Early years’ savings

A way through complex problems:Safe-to-fail experiments

Experiment 1 Experiment 2 Experiment 3

4. Assess & adapt

2. Set out outcomes, project plan, success and failure tests

3. Testing period

Fail/recover

Success/amplify

Possible/reshape

Exit

1. Generate ideas - diversity and dissent

Strategic safe-to-fail experiments

Local First

Community Budgets

StrategicPartnering +

Savings Health and Social Care

Emerging ‘One Kingston’ themes

Organisational

Transition

Regular assessment for success/failure and adaptive response

Qualities of an Adaptive Organisation

Elephants in the room are named – there capacity for courageous conversations

Responsibility for the organisation’s future is shared

Independent judgement is expected Leadership capacity is developed Reflection and continuous learning is

institutionalised

Adaptive leadership qualities

Get on the balcony Identify the adaptive challenges Regulate distress Maintain disciplined attention Give the work back to the people Protect the voices of leadership from below Look after themselves