Wednesday, 16 February 2011

The Real Localism Agenda?

A series of unfortunate events? Possibly more revealing than unfortunate, but three things have recently caught my eye re Localism:
1. Nottingham City Council's refusal to comply with the directive to reveal all spending over £500 (apparently it's not mandatory but "measures will be taken" against authorities that do not do so!)
2. The code of practice on local authority publicity published last week, which seeks to restrain local government spending in this area
3. the latest proposal from Eric Pickles that all local authority salaries above £100,000 should be subject to a vote of full Council

None of this seems to me consistent with government's declared intention to "get out of the way" and give local authorities greater freedom address local priorities. The message seems to be that Localism applies provided:
• local authorities pursue broadly the kind of agenda that central government expects them to; and
• they don't do anything silly for which central government could get blamed

The first of these features should come as no surprise. Someone (can't remember who) once said "empowerment means everyone doing what I want to without my having to tell them". And even if Henry Ford never actually said that his customers could have their Model T's "any colour you like as long as it's black", then the point was still made. In this case the message seems to be that councils can have any colour they like as long as it's a shade of blue.

The second feature has always been with us, because the limited powers of local government mean that local elections are treated much more as a barometer of opinion on the present central government than a true expression of local wishes. (I plead guilty to this – my vote in one local election was a protest against the Iraq war, simply because I had no other way of democratically expressing that view.) If you doubt this, find out how many of the electorate do not know the political complexion of their local authority, still less who their local councillors are.

The worry is that this situation will be exacerbated if there is a hidden agenda that advocates Localism whilst at the same time constraining local authorities in an array of new and confusing ways. The single data list, which promises to define everything local authorities must report to central government, is still in draft form and looks ominously complex (see CLG website). Now I appreciate that some of this is inherited, but it still puzzles me to see that 'Fly Tipping' and 'Stray Dogs' must be reported "To protect the national interest, where local accountability is insufficient"!

I will be interested to see whether "Whatever Eric Pickles' latest idea is" makes it as a separate item on later drafts.

So what has this to do with managing performance, supposedly the theme of this blog? It's actually very relevant, because understanding the balance between local priorities and central government requirements has always been a critical part of managing performance in this arena. Many local government balanced scorecards do this explicitly, and have previously captured community priorities in the former category and CAA, NIS and other required indicators in the latter.

There was a lot wrong with the previous targets driven regime: top-down, top-heavy, bureaucratic and in many cases inappropriate. But at least the agenda was clear and the indicators themselves were transparent. The danger now is that we may be moving to a situation not just of moving goalposts, but where the goals themselves are hidden.

And if Localism is just empty rhetoric, what does that mean for Big Society?



Check my web site at for more information and ideas.

Thursday, 3 February 2011

Why Efficiency Doesn't Work!

Of course, the title is a misnomer in that efficiency can and does work. Or at least, it works in the sense that we can always find better ways of working, means of achieving better outcomes for the same or less resources. Design innovation, lean systems thinking and a host of other methods have been proved to yield significant results in terms of delivering more for less. And few things can be more important in the current economic climate than achieving these kinds of benefits.

All too often however, problems occur when translating ideas from the drawing board (or flip-charts and post-it notes) to the live environment. Redesigns that yield substantial efficiency gains on paper fail to translate into practical savings, and one of the major reasons for this is organisations' budgeting systems. It's a factor that most affects the public sector, because their need for financial control and accountability means that rigorous procedures are in place, and in short 'the accountant is king'.

The following diagram illustrates the problem graphically. Services organisations are traditionally structured on a functional basis, whilst it is well known that customers often cross the whole organisation experiencing each of the functions as they progress.

The lean service approach takes this customer perspective and redesigns the end to end process to minimise duplication waste and overlap. However, without a total restructure of the organisation, those same functional areas are still in place, and budgets remain allocated by these functions rather than by the process as a whole. The budget holders -those with the real power - can be viewed as sitting at the top of those functions and retain control of their part of the process rather contributing to the big picture.

The result is resistance to change, partly because the finance system has no means of attributing end to end cost savings between functionally based budgets, but also because of a natural reluctance by individual budget holders to relinquish any part of their empire - "You can't do that, I'd lose half of my staff". Just to prove that the problem applies to private organisations as well, check out the following cartoon exchange, between Dilbert and his spiky-haired boss.

Sadly some people don't find this funny because it's too close to the truth.

Budgets are the enemy of efficiency because organisations so often budget by function rather than by process. To be fair, some glimmers of hope have appeared in recent years where pooled budgets (for example between health and social care) have given commissioning organisations the opportunity to review service provision on a much wider basis and fund it accordingly. But sadly these examples are all too rare (and might even have to be re-learned when GP commissioning comes in). What we still see, despite everyone saying that the scale of public expenditure cuts demands new and innovative responses, is the same of approach of top-slicing budgets. "Our income has reduced by x%, so we'll take x% off everyone's budget". It's an approach being applied now for the same reasons it always has been - because no one can think of a better way to do it.

Sadly, I'm pessimistic about our prospects of most organisations achieving real change in this area. Their historically-based budgeting systems have become so sophisticated and ingrained over many years that changing them is about as easy as turning round and oil tanker. There is hope though, for those organisations that 'get it' and appreciate that real improvements are not achieved by compiling detailed reports, but by changing the way the organisation thinks. It's only by doing this that they can move to a position where outcomes - not people - own budgets and hence where efficiency really can work.

Check my web site at for more information and ideas.