It’s happening all around – we’re all being asked to tighten our belts, and the public sector in particular is having to rein in spends hard over the next few years if the UK economy is to meet its deficit reduction targets. Times are a-changing – and if we don’t react quickly, we’re all going to feel the pain for much longer.
But is there anything actually ‘new’ in this? From a personal experience, I’ve worked in different sectors, including private, public (both central and local government) and charities. The consistent theme in all the organisations has been the need to change – and the driver has invariably been increasing profit or efficiency i.e. to improve the bottom-line.
Going back around 30 years, I was employed in the defence industry. The particular organisation I worked in operated in a ‘cost plus’ environment – income was secure, but profit levels were marginal. This however began to change in the mid-eighties, when both the corporate and customer requirements to push for a more risk and reward approach towards contracting came into play: for a potentially higher profit return, the customer wanted certainty and value for money over prices, delivery quality and timescales. This was alongside overall government programme budget cuts – so we’ve been here before!
This meant a big change in the culture of the organisation. One of the overriding requirements was to look at the total business position – so not only tackling the specific government funding issue, but viewing this in the overall context and direction of the business: could it develop markets elsewhere, what was its cost structure, were the skills of the staff appropriate to meet future needs? I led on many presentations to staff, explaining to them the reason for change, the potential benefits in terms of job security and re-investment into the business from profits generated. The process meant a focus on defined corporate and personal performance targets, a new and challenging project management approach. Yet it worked: it took a few years, but eventually the company increased profits markedly, and it created a far more adaptable workforce meeting a broad client base – including the government-related customers’ initial desire for price and delivery assurance.
I then transferred into a public sector agency in the late-nineties. The organisation was providing research related services, again largely to government clients. The position however was the same: a decline in funding, the need to widen its customer base and reduce its costs, particularly challenging after the agency had invested substantially in expensive facilities and infrastructure. The culture challenge was greater in the public sector: a civil service mentality where the word ‘profit’ was frowned upon, with an emphasis on impartiality, independence and quality.
Getting staff on board, dealing with their concerns and nervousness was paramount. I was also implementing new business systems and policies, so it was a time of great change. Ongoing communication was key, and it was important to leverage support of senior management: this needed to be consistent, if the change was to be effective and to convey the corporate desire to move things forward. Having a plan, sticking to it, identifying ‘quick wins’, all helped in providing a focused, positive outcome. Substantial gains of 20% on operating costs were achieved, without detriment to sustainable frontline services, where quality and output were just as demanding. Income grew consistently, and broadened: a real success in a tough market.
The latest experience has been within local government. If anything, the culture shift requirement is even greater, but there is a real drive to implement, either through shared service outsourcing and/or collaborative working across authorities. Similarly, as a trustee of a charity, it is having to face real funding cuts at a time of raised expectation and demographic pressures to deliver more for less. However, I believe the approach I’ve taken is still valid: if you wish to transform ways of operating, you really do have to sell the message, to challenge, be prepared to think outside the box and not be distracted from your ultimate goal of value for money delivery.
Lessons: the main thing for me is having belief in what you’re trying to achieve. Remain positive, and try not to be deflected. Plan, be realistic and don’t overpromise. And I cannot stress enough the importance of staff engagement in this process: there’s often real concern about change, and the handling and communication of people issues, whether good news or bad, has to be dealt with professionally and as transparently as possible – people need to be on board, to provide real long-term ownership and commitment if the benefits are to be sustained into the future.
Richard Shaw FCMA CGMA MCIPS
18 January 2012
Richard Shaw has been a Finance/Corporate Resources director for 15 years. Responsibilities have included estates and facilities, contracts and procurement, HR and nationally recognised award-winning business systems’ implementations. Full compliance with statutory and corporate reporting, both strategic and operational, along with project and risk management controls, have underpinned the consistent, successful delivery of this portfolio at unit and consolidated reporting levels.
Richard has also worked across a number of sectors including: defence, nuclear and aerospace engineering and R&D; and welfare. Public sector roles have been within both central and local government, covering food, health and environmental sciences; and outsourced shared services. He is also a charity trustee, and has several years’ experience within the education sector as school governor.