Delivering efficiency in public services requires organisations to work together. However, re-design and fresh thinking is needed to put the customer and collaborative working at the heart of public services.

Putting the customer at the heart of public service delivery

August 2011

How did we get here

With the expansion of public expenditure since 2000, public sector organisations have grown their administrative infrastructures significantly. Despite the current efficiency drive, and an increasing recognition that the customer is at the heart of highly inter-dependent public services, collaboration between organisations is still not seen as a top priority. Major overlaps and duplication occur in management structures, service provision (e.g. central government administered healthcare and local government social care), support

services such as HR, Finance, IT, Legal, revenue collection and benefits distribution; and in a surplus of property holdings across the public sector. The Political Dimension

The political landscape provides an opportunity to re-think the old party divisions on this issue. Conventionally, parties of the right, perceiving the role of the state as something which should be minimised to allow the individual great autonomy, equate improving efficiency with lower public costs, and hence a lower tax burden.

This is particularly resonant in the United Kingdom in 2011 with the coalition Government’s philosophy of ‘more for less’, coupled with the intention to delegate funding (and hence the decision on service priorities) into established (i.e. commissioner led Practices) and re-defined community groups (Local Enterprise Partnerships).

By convention the left, however, seeks to ensure duplication of efforts across Government Departments is minimised to enable the funds channelled into the public sector to achieve the greatest social benefit.

focusNew service delivery models are needed to address duplication in management structures, service provision and property holdings

Such was the driver behind the previous government’s ‘Total Place’ study which, in part, has now been re-branded as ‘community based budgeting’.

Greater Efficiency is Good

So everyone agrees that greater efficiency in the delivery of public services is a good thing. Furthermore, collaboration is one of the vehicles by which efficiency can improve.

Adam Smith’s famous proclamation that ‘in competition, individual ambition serves the common good’ is now almost universally derided; the ‘game theorists’ (think John Nash, ‘A Beautiful Mind’) have proven that acting cooperatively serves the best interests of a group in a competitive situation. Yet human beings display a seemingly astonishing reluctance to work in harmony with each other even if there is a more efficient outcome for all.

This convention was perhaps best captured in the ‘The Prisoner’s Dilemma’ by the RAND Corporation (1950):

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full ten-year sentence. If both remain silent, both prisoners are sentenced to only six months in jail for a minor charge. If each betrays the other, each receives a five-year sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

Well if they don’t know and trust each other, we are told, it is pretty obvious how they’ll act. They’ll both betray each other. So it would appear that on a grand scale, systems need to be implemented to coerce coordinated outcomes to obtain the best outcome.

Collaboration

Scepticism about our propensity to collaborate appears validated by history. Indeed all the ancient bureaucracies (Rome, China, the Ottoman Empire) wrangled with coordination, especially in the military. It is universally acknowledged that failure of agency coordination was a major reason for the failings of the 1960s Great Society Programmes.

However, in the UK, the Victorians demonstrated that collaboration works. Multifunctional local bodies were set up to overcome the health problems in inner city slums exacerbated by separate bodies for waste, water, education and health.

The root of the problem lies with those whose vested interests are in maintaining operational silos and protecting the status quo. Coordination will always be resisted if only because of the existing vested interests captured in the career structures, power centres and cultures of essentially hierarchical organisations. Coordination across disciplines can undermine these power bases so, whilst often parties will verbally agree to work together, in practice the reality does not match the rhetoric. This is clearly the case when collaboration of public sector services are sought at a community level where blockages to progress are often a result of incompatible political doctrine, officer protectionism and cultural tradition.

Advantages and disadvantages can be summarised as follows.

Advantages include:

• The best process previously used by any of the component services can be identified and adopted throughout any newly formed shared services

• Greater service expertise is accumulated in the top tiers of a shared service arrangement, which can enable the better utilisation of scarce expertise across the participating organisations

• Staffing pyramids can be flattened by giving mid- and top-level managers areas of responsibility which more fully align with their abilities and capacity

• The accommodation, IT and support services used by shared staff can be rationalised.

Disadvantages include:

• The potential cost and reduction in service performance to internal customers caused by the need to change standards and methods to secure harmonisation with others

• A perceived loss by some internal customers of their client discretion and influence over the services

• The different priorities of participants, and the differing extents to which they are willing to fund the different services

• The risk of political disputes between elected members of different bodies, and personality clashes between officers.

What constitutes true ‘shared services’ is typically where they are delivered in one of three operating models:

• Decentralised – where each department, organisation, or agency manages its own support accommodation, IT and support services (e.g. distributed customer contact)

• Centralised – where components of these services have been consolidated into one existing department (Invoice Payment)

Putting the customer first is the strategic rationale for overcoming public service organisations’ habitual reluctance to work in harmony

• Shared Services – where services are consolidated into a stand-alone organisational entity to deliver those services efficiently (Corporate Landlord).

Whilst there are some superficial similarities between these models, the prime objectives of each are different.

The key features of a shared service are:

• The consolidation of defined services into a stand-alone organisational activity to deliver its services efficiently

• The re-design, standardisation and optimisation of end-to-end processes around best practices

• Commitment to the principle of continuous review and improvement

• A mechanism is in place that clearly defines the respective responsibilities of both customer and service provider, via service level agreements, key performance indicators and an effective service management framework

• The operation is seeking to deliver value-adding services at a low cost.

Putting the Customer First

The strategic rationale for collaboration between public services is to provide the best service to the customer. Efficiency is a vital and very welcome by product. Customers do not want to interact with multiple state bureaucracies to access services.

This simple fact, together with an increasing recognition of the interconnected nature of many of society’s problems, has pushed the issue of coordination of service delivery forward, and the mechanisms by which that can be achieved, to the fore.

Modern academics fondly label today’s societal problems as ‘wicked’, a buzzword which was coined by Churchman in 1967, with ‘wickedness’ being characterised by interdependencies across multiple disciplines and an emphasis on management rather than solution.

Healthcare is a classic wicked problem. Poor health is a consequence of many variables: fixed, social and economic, environmental, lifestyle and service access. Jarrold (Editorial preface to ‘Implementing Holistic Government’, 1999, the Policy Press) flags these as being driven by a myriad of factors.To influence health a massive coordinated attack on poor health, considering all the variables, will have the greatest effect. To do this, coordination on the ground, bringing together all the stakeholder and policy makers, is necessary.

So (quoting Mulligen, ‘Joined up Government’, Bogdanor, Oxford University Press 2005), ‘how does one cajole and encourage an often huge flotilla of agencies, departments, units and professions to point in broadly the same direction so as not to undermine each other’s work?’

In today’s world the answer may be found by considering that duplication is not only sub-optimal but also expensive: cost reduction is now the driver of the current push to remove duplication of service and many firms are developing solutions to assist Government with this problem. Equally, there continues to exist a customer expectation that public services are both responsive and offer clear ‘value for money’ irrespective of who has responsibility for their delivery. It is a reasonable expectation that this should start at the ‘first point’ of contact where

the customer can easily navigate his way easily towards requesting the support or information he needs. Additionally, that there is a natural progression to an outcome that is delivered in a manner that achieves a reasonable level of satisfaction, and is affordable.

The Shire Case Study

It’s useful to set the above context with a case study, which although a hypothetical location, is indicative of municipal siloing in most democratic states, and in turn, how it can be overcome.

‘The Shire’ is a large county in England with a population of just under two million people. It is a significant centre for commerce and infrastructure. As per most ‘Shires’ in England (as distinct from the other countries of the UK whose governance models differ from the English to a greater or lesser degree), governance is ‘two tier’. A county council is responsible for services such as education, waste management and strategic planning. Several district councils operate at a more ‘local’ level and are responsible for services such as housing, waste collection and local planning. This is not a universal model. In some counties, such as Cornwall, unitary authorities provide all services.

Within ‘The Shire’, the County Council co-exists with a large number of District Councils and two Unitary Councils. Public sector operations are complex and multi-faceted. The total government expenditure is over £10 bn a year.

For such a large scale operation deployed across different geographies it is unsurprising that service delivery duplication was occurring, particularly with transactionally (and largely generic) based support activities.

SocialÊandEconomic

Poverty

Employment

SocialÊExclusion

Environment

AirÊQuality

Housing

WaterÊQuality

SocialÊEnvironment

Lifestyle

Diet

PhysicalÊActivity

Smoking

Alcohol

Behavioural

DrugÊRelated

Fixed

Genes

Gender

Ageing

AccessÊtoÊServices

Education

Provision

SocialÊServices

Transport

Leisure

The interconnected nature of society’s problems has pushed the issue of coordination forward

Jarrold’s Implementing Holistic Government

Please contact the authors: David Ashmore (david.ashmore@leighfisher.com) and Chris Wilson (chris.wilson@leighfisher.com)

LeighFisher is a global management consultancy with deep expertise in transportation,government and infrastructure services. Our goal is to be the strategic business partner of investors, operators and government leaders and help them navigate and overcome the most challenging issues they face.

Whilst some shared service initiatives existed, there was a core difficulty around identifying and persuading parties to work together on a more wide-based and comprehensive ‘shared service’ basis to achieve better economies of scale and ensure better value for public money.

Facilitated analysis of the situation by participating public sector bodies showed that there were indeed duplications most notably in procurement, the revenues and benefits service, legal and HR and building control. By bringing the parties together, and concentrating on the largest areas of expenditure, whilst allowing one party to take a leading role as a ‘hub’ for a service it was possible to remove duplication and identify savings of up to 20%. The real win for all parties is to develop a common customer access strategy which transforms the customer’s experience and reduces the cost base - a combination with the power to delight voters.

Not Just an English Problem

Of course whilst our case study is English, citizens of any nation can seek solace in the fact that it is highly likely their own country has grappled with this issue. Jeffrey (‘Farewell the third level?’ The German Lander and the European Policy Process, Regional and Federal Studies, 1996) cites the struggle of the German Lände in coordinating inter-territorial activity, Michel (‘Government or governance? The case of the local French political system, West European Politics, 1998) laments the need to coerce innovation in inter-territorial

collaboration in France, and according to Zimring and Hawkins (The search for rational drug control, Cambridge University Press, 1992) the US felt the need to appoint ‘Tsars’ to bring about coordination between public bodies, in fields as diverse as crime, drug abuse and civil defence. Indeed Perri stated that in 2005 only three European States – Italy, Finland and the Netherlands – had explicit national policy commitments for integrated service provision centres through several conduits: buildings open to the public, call centres, websites, mobile telecoms or digital television, and of these three only Italy has mandated integration as a statutory duty (Perri 6 (2005) Joined up Government in the West Beyond Britain, in Bogdanor (2005)).

Inspired Leadership

What is clear through all of this though is the need for strategic customer focused leadership. If we return to the UK, and the health sector, the story of Dr Angela Lennox as told by Wilkinson and Appelbee (‘Implementing Holistic Government’, The Policy Press, 1999) makes for inspiring reading. At the end of the 1980s Dr Lennox began work as a general practitioner in one of the UK’s most deprived inner city areas. Vast sections of the community were living on welfare benefits, 60% of the families were single parent, and there was a 60% per annum turnover in local schools. She faced many of the problems typical of an inner city health practice – hostility, abuse towards staff, and missed appointments.

Coordination and cooperation makes sense to those of all political colouring

She was tempted to leave but instead attacked the problem in a coordinated manner. She broadened her remit beyond healthcare and became involved in employment, housing and education. There was hostility but the result of these endeavours was the establishment of a local centre which not only tackled health but gave patients links to housing offices, schools and technical colleges and residents associations. Ironically Dr Lennox states that once the problems were being tackled in a coordinated manner and the correct systems were in place ‘the solutions came from the local community.’

Pulling Together

Coordination and cooperation make sense to those of all political colouring. Whilst social benefit drove the work of Dr Lennox, a need to obtain a high level of public services from a shrinking budget brought the different branches of the civil service together in ‘The Shire’. The result was the same. Better outcomes for all.

These are difficult times. Individual economies, whilst buoyant in pockets, are faltering in many countries. In these circumstances, regardless of political leanings, it is imperative that we streamline public services to get better value and it is better to take control of this process and coordinate efforts, often rallying against vested interests, than to let somebody else control your destiny. But hard times can bring about a spirit of cooperation. Perhaps the old adage is true – people do pull together in times of adversity.

TotalÊSpending

CountyCouncil

BoroughandÊDistrictCouncils

NationalHealthService

DepartmentÊforWorksÊandPensions

FireService

Police UnitaryCouncils

The Shire Case Study

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