Delivering local government transformation: time for a new approach?

Local and, increasingly, devolved government is no stranger to the ongoing need for transformation. In an environment where the demand for public services and the amount of funding available continue to diverge, much has been done in recent years to develop new structures and delivery models designed to deliver more for less.

Whether in-house or outsourced, these new approaches have not been without their challenges. Transforming services can be a complex task, and no-one has a monopoly on wisdom. So its vital that the sector collectively builds its understanding of best practice, drawing on evidence of what works wherever tangible results have been achieved.

As part of this, it will be important to look not only within the sector, but also to draw more widely on the experience of other parts of the public sector also undergoing their own significant transformation in a similarly challenging environment.

In the Defence sector Serco has recently supported the delivery of a whole enterprise transformation programme for the Ministry of Defences Defence Business Services (DBS) organisation, utilising a management insertion model approach.

The model involved Serco providing a number of key leadership roles, (CEO, COO, CIO, CPO and Transformation Director), as well as access to wider expertise within Serco to support specific elements of the project and partnering with other suppliers when appropriate.

A key benefit of this approach was that because Sercos management talent were fully embedded into DBS, DBS staff felt part of the transformation, rather than feeling that the changes were being done to them. This was reinforced through a comprehensive People Strategy to build support for the programme, which led to a 19% increase in employee engagement, ending the fourth year at three percentage points higher than the MOD average.

Not only did we form part of a single joint management team (with the Civil servants), but we also put further skin the game by providing two guarantees to the MOD a savings guarantee and a clawback guarantee underwriting the MODs investment in transformation. This meant that if the benefits delivered from a specific transformation business case did not have a return equal to the investment, MOD would be able to clawback their investment from Serco, leaving the MOD with no financial risk.

In the end, this was not required, since the programme successfully delivered well in excess of its targeted savings, delivering in excess of 90m over four years, enabling the MOD to make significant investments in the organisations future. In a letter to Rupert Soames on 17th October 2016, Rt Hon Michael Fallon stated (Secretary of State for Defense) said

I agree that the DBS management insertion contract has been a success. As you say, it is clear that in excess of 90 million gross savings to operating costs have been achieved over the contract term. The DBS Organisation has been transformed significantly and is now performing well compared to other government and private sector benchmarks. Along with the delivery of savings and transformational change, one of the most telling indicators of success has been the improvement in DBS staff engagement over the period of the contract.

This approach offers an interesting third way between in-house delivery and a traditional large scale-outsourcing model, reducing the risks that are sometimes perceived in terms of loss of flexibility, control and staff morale. At its best, it helps to create a true partnership, breaking down the barriers between in house and external team members, and ensuring everyone is aligned behind a shared goal in which they have a meaningful stake.

The complexity, breadth and depth of issues facing local government are well documented and too complex for any single model to address. It is clear that there is no silver bullet to delivering transformation, and the easy work, if there ever really was any, has already been done.

What we need now are to consider new approaches, drawing on the best ideas and capability from across the public and private sectors. In that context, the management insertion model offers some interesting food for thought.

Gareth Moss
Local Government Market Director
Serco Local and Regional Government
Gareth.moss@serco.com
07718 004308