Friday 28 September 2012

Developing your collaborative leadership skills - where to begin?



The one thing that binds all leaders together across the public sector is the challenge of managing rising demand with less money.
 
Whilst local government has ‘by and large’ met its efficiency saving targets to date (mostly through efficiency drives linked to ‘tough it out’ strategies) the reality is that continuing along this path will yield diminishing returns. 

Good news, bad news… 

I will give you the bad news first. According to Sir Bob Kerslake, speaking at a May 2012 conference of Directors of Adult Social Services, 70% of the planned cuts in public services are still to come. The good news is that collaboration can be one of the key ways of managing further cuts. 

So it is important, that with the pressure on funding intensifying, a new cadre of public sector ‘collaboration leaders’ emerges who can lead on partnerships, alliances, shared services and even the many mergers that will occur. 

You will recognise them in pioneering new ways of collaborative working developed to lead service improvement. A good illustration of this in practice is the Tri-Borough Partnership in London1. Writing in the Guardian the council leaders stated that: 

‘We are clear that the tri-borough project should not replicate old fashioned approaches to service delivery, effectively rationing services. Instead, we have adopted a commissioning model where the desired outcomes are agreed and then management seeks to find the best solution using a combination of private, public and third sector providers.’ 

The resignation of Cllr Barrow, leader of Westminster Council in March 2012, has not slowed the progress of the project either. Illustrating that the collaborative leadership has been able to build a sustainable cross-boundary relationship, in a sense leading beyond the authority of their organisation and sharing power, responsibility and accountability to make it work.

What are the academics saying?

The concept of collaborative leadership is not new. Academics have been researching this for many years and their findings are insightful. 

According to Chrislip and Larson (1994)2 ‘…..leaders are those who articulate a vision, inspire people to act, and focus on concrete problems and results.

[But]…collaboration needs a different kind of leadership; it needs leaders who can safeguard the process, facilitate interaction, and patiently deal with high levels of frustration. Collaboration works when…leaders …keep the process going.’

Linden (2003) identified four main qualities that distinguish effective collaborative leaders from those who weren’t effective:

1. They combine tremendous persistence, energy and resolve with a measured ego.
2. They are passionate about the desired outcome.
3. Collaborative leaders pull others rather than push them.
4. Collaborative leaders think systematically.

Other factors shaping the development of collaborative leaders is the recognition that old style leadership attributes, which work well within an organisational context, seem inadequate when addressing complex ‘wicked problems’ with high levels of ambiguity.

Austin3 (2000) predicted an ‘age of alliances’ seeing the notion of leadership widening to embrace collaborative skill sets. Brooks (2008) talked about a new type of ‘new public leadership’4 defined as:

‘A form of collective leadership in which public bodies and agencies collaborate in achieving a shared vision based on shared aims and values and distribute this through each organisation in a collegiate way which seeks to promote, influence and deliver improved public value as evidenced through sustained social, environmental and economic well-being within a complex and changing context’.

So what must you do well to become an effective collaborative leader?

Linden5 (2003) found that collaborative leaders are able to:

● Create excitement about the collaboration’s purpose
● Be effective at getting the right people around the table and keep them there
● Help them see common interests and benefits possible through joint effort
● Generate trust
● Help design a transparent, credible process
● Focus on the win-win to meet three way interests
● Make relationship building a priority for the group
● Ensure senior champions are in place
● Engage everyone in collaborative problem solving
● Celebrate small successes and share credit widely
● Provide confidence, hope, resilience

Yes a long list, but nevertheless a useful checklist for aspiring collaborative leaders.

Are you a spanner?

Linden’s view of collaboration leadership is supported by the research work of Pawlowski and Robey (2004) which evidences that three brokering practices are required to lead and facilitate any successful cross-boundary activity: connecting, grafting and dealing6.

They see the collaborative leader as a broker who first connects people by communicating and reinterpreting the expectations of partners until they are acceptable to all.
 
Then they graft their personal leadership expectations onto the partners’ expectations to avoid potential conflicts and extend the knowledge across boundaries.

Finally, the leader, as broker, facilitates ongoing interaction and ensures continual dealing between the partners.

But where do I start now, I hear you ask?

Well according to Lord Michael Bichard7, a good starting point for current leaders is to stop talking about public services and start talking about services provided for the public good8

Shifting your focus from improving your institution to improving the services provided for the public good will open the possibilities of collaborative working with others to deliver that goal.

Once this rubicund has been crossed, you will be on the path to develop your collaborative leadership skills.
----------------------------------------------------------------------------------------
1 See Tri-Borough Proposals Report: Bold ideas for
challenging times. (2011)
2 Chrislip, D & Larson, C (1994) How citizens and civic
leadership can make a difference. P42
3 Austin, J (2000) Principles of partnership. p44
4 Brookes (2008) The public leadership challenge. ESRC
research report. P1

5 Linden, R (2003) The discipline of collaboration. Linden
describes the three way interests as needs of the
partners, the needs of product or service and the needs
of the relationship between the partners R-L. et al. (2012) Collaborative Knowing: The adaptive nature of cross-boundary spanning. p466
7 Sir Michael was former Director of the Institute of
Government and Chair of the Design Council

8 Lord Bichard writing in the Local Government
Chronicle 31/05/12

Tuesday 12 June 2012

2012 - a ‘tipping point’ for public sector shared service activity?

There is a rumour going around that 2012 is a ‘tipping point’ for public sector shared service activity to accelerate in a big way.

Some support can be found in the sudden growth in Blue Light shared service activity across the UK, the creation by the minister, Carl Sergeant, in Wales of six collaboration sub-regions and the publication of the HEFCE Collaborations, Alliances and Mergers report.

The English Local Government Association map also illustrates that 219 councils are currently engaged in 143 various partnerships, from assets- to-waste and evidences that over 80 of them are up and running, and have made cashable savings of almost £100m to date. So whilst the track record in shared services show they are difficult to do, emerging numbers of councils are beginning to land, cash-based efficiency gains.

Another example to support the rumour is that in the FE and HE sector, in 2011 over £16m in partnership seed-corn grants were released into collaboration projects by the HEFCE, the Association of Colleges, 157 Group and LSIS across 2011.

And, this was before the announcement by the Chancellor in his Autumn statement that the Government will introduce a VAT exemption for shared services, between organisations in Further and Higher Education and charities. The inability for these sectors to reclaim VAT on partnership activity has been a major stumbling block. Now there is nothing to hold them back. Lemming-like they will be racing to find partners on the e-harmony shared service website, registering as a “bubbly, blond learning partner” or under “wealthy university seeks love and fun”.

In addition, there now exists a cohort of professional shared service practitioners who will be able to slap their qualifications on the interview panel’s desk, crush all competition, and win their next job as over 40 shared service practitioners have now either completed or set out on the postgraduate certificate in shared services at Canterbury Christ Church University.

So what of new things in 2012? Well in terms of partnership projects, there is new software emerging that will do away with excel spreadsheets and post-it note process activity. The software takes about five days to fire-up with all the variables that effect a service. Then you can feed it all kinds of staffing, process and financial scenarios and it will spit out options in minutes, as opposed to the weeks or months and huge expense of traditional options evaluations.

Then there is collaborative innovation. Where 2+2=5. The delivery of services in a way we currently cannot imagine. The smashing of silos and formation of least expected alliances. For example in Staffordshire, 1,000 of the County’s staff are being TUPE’d into the NHS to deliver a single, £153m health and social care service. Also look at University of Plymouth and Plymouth Council’s development of a shared ICT service. Tipping point or not, ‘…the times they are changing’.

Thursday 17 May 2012

Is your ball stuck in the shared services scrum?

My colleague Dominic was teaching our programme for the Welsh LGA in Cardiff recently. So no surprises that he chose a rugby metaphor for the politics of shared services. 

A current problem in public shared services is similar to a game of rugby in which the ball is stuck eternally in the scrum between the leadership of the partnering organisations. In fact it is a scrum which frequently collapses, and therefore rarely does the ball come out so that a try can be scored by the rest of the team. In shared service teaching and research circles we call it the “4 by 24 Rule”.

The rule is: It takes about four months to prepare a compelling shared service business plan, but another 24 months for the business plan to either turn into a delivery plan or be shelved.
So what are the key issues academics evidence as the cause of this problem?  
  • The most recurrent reason that the scrum collapses so frequently is because of a lack of trust and shared vision between the leadership in the partners. No matter how good the business case, or the project team; no matter how much development money you have in the kitty, if there is a lack of trust and shared vision between the partners, a shared service project will repeatedly stumble or collapse.

    SOLACE reported in 2009 that the reason most shared services go wrong is when “expected outcomes are not clearly shared”. And, in CIPFA’s excellent Jan 2010 guidance note, Sharing the Gain, they state that “effective collaborative working is first and foremost a human and political challenge”. This explains why there are so many compelling shared service business cases, lounging un-used on the shelf in Chief Execs offices.
     
  • The second reason is that senior managers in the public sector are not equipped with the skills and knowledge necessary to solve the “collapsing scrum” problem. It’s certainly not solved by PRINCE2 which does not even have the words “partnership” or “trust” in its index. Nor will benchmarking, or business process reviews solve the problem.
In a year-long research study at Canterbury Christ Church University we identified the top 20 key shared service skills and pieces of knowledge, that someone like you needs if they are to be successful in developing a shared service and stopping the collapsing scrum problem. In order of importance, skills in PRINCE2, benchmarking and business process review come in 13th. The top three requisite skills or knowledge are:

1.       Building and sustaining strong trust across leaders’ relationships in multi-partner collaborations
2.       Creating a positive shared vision for a partnership that may be drawn from a range of partners of unequal size and authority
3.       Understanding how to support decision makers in creating policy for selecting appropriate in-house services to share

Learning these skills is a key part of the Post Graduate Certificate in Shared Service Architecture at Canterbury Christ Church University. Open to senior managers across the public sector the outcome of the certificate is a significant reduction in collapsing scrums, more shared service “tries” and a key qualification on an aspiring manager’s CV when the job cuts start to bite. Over 700 leaders and senior managers have been through the first module of the postgraduate certificate and over 40 of them have continued their studies and have graduated with the full certificate and become recognised as Shared Service Archtiects.

Monday 23 January 2012

An Instant End To VAT On FE/HE Shared Services?

Speaking at a meeting organized by the thinktank Politeia in central London on the 19th Jan 2012, David Willets the universities and science minister was reported as announcing the instant end to VAT on HE/FE shared services. The TES and others wrote that he told the meeting that the new rules would start immediately and that a new finance law was not needed.

However, HMRC are saying that his words have been misinterpreted and the FE/HE sector will need to wait until the 2012 Finance Bill provides the consent. The detail of how the exemption will work in the UK will be in HMRC guidance notes, the legislation will only deal with the basic rules of the exemption not how they will apply. We are left wondering how much “devil” will be in the detail.

If you want to know more about the background to the VAT exemption on shared services for HE/FE and other bodies then here is the story, part of which we teach on the Highway Code of Shared Services.

Let’s start at the beginning

When Chancellor George Osborne raised the VAT level to 20% in Jan 2011, there was an audible groan from across shared service practitioners working with VAT exempt partnerships in colleges and universities.

Suddenly the public sector shared service efficiency threshold moved - for FE colleges, universities, housing associations, the charitable sector and other organisations - from needing a 17.5% gain to a 20% gain, before any savings are made.

The problem for these organisations is that in a shared service partnership they may have to pay VAT on services they gain from the partnership, but unlike local authorities, their tax structure does not allow them to claim the VAT back.

Following an HMRC consultation on the subject in June 2011, the Chancellor announced in his November 2011 Autumn Statement, that, “Following consultation after Budget 2011, the Government will introduce a VAT exemption for services shared between VAT exempt bodies, including charities and universities”.

Whilst this is good news for shared service activities, it will potentially make outsourcing to the private sector more expensive - as VAT may still be payable on private sector related services. More on that later.

But is it the Chancellor, or the EU, who helped make the change?

The original June 2011 consultation document stated that, “The VAT Cost Sharing Exemption is a provision in European law that allows businesses and organisations making VAT exempt, and/or non-business supplies, to form groups to achieve cost savings and economies of scale. Once formed the groups are relieved of a VAT charge on their supplies if all the conditions of the exemption are met.”.

However, although the exemption is mandatory, and is being used to reclaim VAT on shared services in other EU countries, HMRC reveals that, “There is currently no domestic legislation that allows exemption to be used by the UK taxpayers.”. So, HMRC issued the consultation document. But, they had not been idle prior to that.
  • June 2010: It was announced that existing discussions with ‘relevant sectors’ would continue and a promise of a consultation was given
  • Jan-Feb 2011: There were meetings with potential beneficiaries of the exemption
  • March 2011: There was an announcement in the budget that the process consultation would continue
The release of the consultation document offered the opportunity for groups to have their say and many did.

What is likely to happen?
HMRC have the ambition to implement the exemption so that it:
  • Will be used by a wide range of sectors
  • Reduces a VAT barrier to businesses collaborating with each other
  • Is straightforward to operate
  • Does not create opportunities for abuse or avoidance
  • To help you understand the implications of the impact on shared services they provide worked through examples in Annexe D: Diagrams illustrating the cost sharing group structure
PRACTITIONER UPDATE
What are the conditions that need to be met to qualify for exemption?
Based on the European legislation HMRC considers that there are five basic conditions that have to be met before the exemption can apply. These are:
  • There has to be a “cost sharing group (CSG)” supplying services to persons who are members of it
  • The members have to make exempt and/or non-business supplies
  • The services supplied by the CSG must be ‘directly necessary’ for the exercise of the members’ exempt or non-business activities
  • The services must be supplied at cost (‘exact reimbursement’)
  • Use of the exemption must not cause or be likely to cause distortion of competition
  • The members of a shared service must carry on an “activity which is exempt from VAT or in relation to which they are not a taxable person”.
Under current legislation these are:
  • Certain land supplies
  • Insurance
  • Postal services
  • Betting and gaming
  • Finance
  • Education
  • Health and welfare
  • Burial and cremation
  • Trades unions, professional and public interest bodies
  • Sport
  • Charity fund raising
  • Cultural services
Plus it can apply to a “charity or similar body carrying out non-business activities to meet its objectives”.
What does it all mean?
Firstly, there may well be many FE colleges and universities dusting down plans that were shelved because the VAT issue was the only barrier to moving forward in partnership.
There may be others who now have a bit of a problem because they were using the VAT issue to cover up the fact that, although engaged in talks, they really do not want to partner with others.

Secondly, there is probably a puzzled look on many private sector outsource companies as, unless it changes in 2012, the proposals do not address the VAT payable on outsourcing of services to private sector providers.
So this could potentially limit the use of outsourcing models to achieve cost efficiencies.
But, watch this space carefully as it may be addressed when the changes are made in 2012.

Finally, reducing the need to exceed the 20% VAT threshold before shared service savings kick in will be advantageous to colleges, universities and other sectors at a time of reduction in the central government budgets they receive. And therein lies the elephant in the room.
Estimates from HMRC are that this will cost the treasury up to £200m in lost income by the fifth year after implementation.
So maybe this is just a subtle way for the Chancellor to sow the seeds of an even more substantial cut in the budgets of the FE colleges and Universities in the 2012 budget.

Keep up to date with Shared Services by downloading Shared Service Architecture Magazine

Manny Gatt is Managing Director of Shared Service Architecture Ltd and lectures in Shared Services on the national Postgraduate Certificate in Shared Services at Canterbury Christ Church University. Click here for more details.

Tuesday 17 January 2012

Shared Service Mutuals Good news? Or just a guilt-free way of sacking your staff?

I was a bit startled by this throw away line from a colleague who is sceptical about the idea of employees leaving their public sector employer and setting up a co-operative to deliver the same service, for less money.
He views it as politicians ‘sugaring the pill’. “After all,” he said, “It’s a good way to get all that redundancy money re-invested in the public sector as start-up funding.”
What surprised me even more is that mutuals and cooperatives are already big business. There are almost 5,000 of them in the UK with a combined turnover of around £29bn a year, employing over 200,000 people. And, 75% of the public regard co-operatives as businesses that act ‘fairly’, compared to only 18% that see companies at large as ‘fair’. 

So where did the mutual initiative come from?

In mid 2010, Cabinet Office minister Frances Maude announced that 12 ‘public service spin-offs’ would pioneer the mutual initiative.
The ambition is that entrepreneurial public sector workers will join together, often across organisational boundaries and through shared services, to establish co-operatives or social enterprises.

Mr. Maude is quoted as saying, ‘I know across the country there are literally thousands of frontline employees who can see how things can be done better, but at the moment, with the existing constraints, they just can’t get it done...This is a Big Society approach, decentralising power so people can deal with the issues that concern them. We must not be afraid to do things differently if we are to provide better services for less money.’

Among the 12 ‘pathfinders’ are a social enterprise to be formed by NHS employees in Leicester, which will provide joined-up services for homeless people, and a shared service cooperative in Swindon that will bring together community health and adult social services.
All the pilots are supported by expert mentors, including staff from the John Lewis Partnership and consultancies KPMG and PricewaterhouseCoopers.

Give the work to mutuals, but don’t tell the EU procurement police!

In November 2010, Local Partnerships, Co-operatives UK and the Employee Ownership Association came together in partnership to provide a signposting service for staff in the public sector interested in setting up a social or mutual enterprise. Their website is at www.mutuals.org.uk and you can call them on 020 7296 6705.

In addition Cabinet Office announced a fund of £10m ‘to help the best fledgling mutuals reach investment readiness’ and new provisions were announced giving 'Rights to Provide' (called ‘Right to Request’ in the NHS) across public services so that employers will be expected to accept suitable proposals from front line staff who want to take over and run their services as mutual organisations.
If you have been on our Highway Code of Shared Services seminar then you are probably asking the same question I did. Can you just hand a service to a mutual, wholly owned by the ex-employees, or do they have to tender like anyone else?

If you are asking that question, then TPP Law, who specialise in the development of public sector mutuals, agree with you. They believe that, “A mutual seeking to contract with a local authority as an outsourced supplier, service provider or works contractor will be treated in the same way as any other tenderer, and a mutual should expect award of a contract only if its bid is the most competitive bid. The [EU] Directives may also apply when a mutual body is being established with a view to providing services to a public authority.”

So we will be keeping a close eye on that and update you with more details in our Highway Code of Shared Services update available through our website at www.sharedservicearchitects.co.uk .
If you bank with the Nationwide, then you are part of a mutual. Then there are the Co-Op stores across the country. In public sector terms there are plenty of examples too.

The Young Foundation cites one in their Innovation and Value report. “In South London, Lambeth [Council] has embraced the John Lewis retail model, an employee owned partnership where employees have a stake in the company’s success. Lambeth proposes to adopt the model to “try to involve the users in providing [services] at lower costs”. In practice this includes asset transfer and may see residents receiving council tax rebates in exchange for taking part.”.

Whilst that may not be an inter-organisational shared service, there is possibly plenty in that vision to enthuse staff and residents to develop the service and share in its benefits.

Do mutuals perform better than the private sector?

Ed Mayo, Secretary General of Co-operatives UK, believes so. “The core idea of forming public sector mutuals is that you can get better results by giving freedom and ownership to staff.  Our analysis backs this up, but also suggests the need for a more co-operative culture right across public services”. Prof. Denis Mongon also sites a study that suggests mutual/co-operatives have outperformed FTSE All-Share Companies by an average of 10% per year. 

Technically it feels like there is no reason why they shouldn’t work. They will be businesses, like any other business, in which the ownership rests with the members. Michael Gove has recently held up John Lewis is held up as the success story of that style of structure.
In addition it is a key strategy of successful leaders to give empowerment, shared responsibility and a sense of ownership of outcomes to their staff.
So I don’t agree with my cynical colleague, that this is a guilt-free way of sacking public sector staff. A mutual option is one that should be considered in the shared service vehicle mix.
If their creation is explored properly, using the experienced, expert advice on offer, and it is agreed by the potential staff owners that it is the right vehicle, then a mutual could be an exciting way forward for all those involved.

However let’s not forget that the success of the shared service does not lie in choice of vehicle. That is only a legal and practical detail.
The success will only ever lie in excellent leadership and effective management. In business, that is all that counts.
So the staff really need to choose their leaders wisely, if they are not to lose their invested redundancy payments in their co-owned venture.

Manny Gatt is Managing Director of Shared Service Architecture Ltd and lectures in Shared Services on the national Postgraduate Certificate in Shared Services at Canterbury Christ Church University. Click here for more details.