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INTRODUCTIONPublic service reform is a key priority for the CoalitionGovernment as it attempts to cut public spending and reducethe deficit. At the heart of the Government’s reform agendais the desire to decentralise power and ‘ensure that publicservice providers are accountable to the people that usethem, rather than to centralised bureaucracies’ (Open PublicServices, Cabinet Office 2012). The Government wants tooversee a transformation in public services so that serviceproviders work collaboratively to deliver integrated services,and communities and individuals do more for themselves andon their own behalf.However, local service organisations tasked with responding tothis agenda also face an unprecedented people managementchallenge in engaging employees and maintaining theirmotivation against a backdrop of pay freezes, pension reformand job cuts. In meeting this challenge, they also have to dealwith the fallout from frequent political and media criticism ofthe public sector, which portrays the workforce as part of theproblem rather than part of the solution.This report explores the views of chief executives and HRdirectors in a range of local service organisations to gaugehow public service leaders are striving to re-engineer the waypublic services are delivered. What is clear is that this cannotbe achieved without significant behaviour change on the partof managers at all levels and employees on the front line.The research is a follow-up to the CIPD report Boosting HRPerformance in the Public Sector (2010), which exploredthe key role of HR and people management in transformingthe delivery of public services and ‘doing more for less’.That report was focused on what HR needs to do to raiseits game in terms of increasing HR capability and supportingfront-line service delivery improvements. This report buildson the insights from the first report and explores the criticalrelationships between the chief executive and the HRdirector, and between organisational leadership, employeeengagement and service delivery transformation. We havealso explored the wider political context, both at a nationaland a local level, to try to gauge the extent this influencesorganisational leadership.The questions we asked are based on the four key enablersof engagement as identified by the MacLeod report,Engaging for Success: Enhancing performance throughemployee engagement: Organisational purpose – do senior leaders and managers setout a clear organisational purpose through a narrative thatpeople in the organisation can understand and buy into? Integrity – to what extent is there a sense of integrityunderpinned by behaviour throughout an organisation thatis consistent with its stated values? Engaging managers – do managers at all levels have the peoplemanagement skills to win employees’ ‘hearts and minds’? Voice – do employees believe they can feed their viewsand ideas upwards to senior managers and feel that theiropinions are respected?From our interviews it is clear that these issues are very muchoccupying the chief executives and HR directors we spoketo. There is widespread belief that public services can only bemore responsive to the needs of service users if employeeson the front line are trusted to innovate and empowered toact with more autonomy. This requires a fundamental culturechange away from traditional command and control modelsof leadership to one in which leadership is distributed acrossorganisations. Understanding what is required is only partof the jigsaw because establishing how this change will beachieved is an even bigger challenge. This report shines a lighton the people management strategies and activities that publicsector leaders in a number of local service organisations areemploying to try to make the culture change required a reality.Employers across the public sector are striving to respondto the same twin challenges of austerity and servicetransformation. We hope that the research findings willhave resonance in the different parts of the public sectorand stimulate further debate about the facets and means ofcontinuing public sector transformation in the second decadeof the twenty-first century.The current research is based on a series of interviewswith the chief executive and HR director (or equivalent) inorganisations responsible for locally delivered public services:ten local authorities, two police forces and one fire authority.We adopted ‘employee engagement’ as the frameworkfor the interviews. This recognises that the extent to whichpublic sector employees are involved in service transformationactivities and engaged with new ways of working will decidewhether sustainable change is achievable.4Leading culture change: employee engagement and public service transformation

BACKGROUNDWhat is the transformation challenge?In one sense, the challenge facing all local serviceorganisations is essentially the same: to do ‘more with less’.The latest and most urgent version of the challenge was setby the Government’s Comprehensive Spending Review inOctober 2010, which cut 83 billion from public spendingover the next four years and required local authorities toreduce current spending by 27%.At the heart of the public service transformation agenda isthe desire to decentralise and deliver bespoke, integratedlocal services that meet the needs of service users whileincreasing efficiency.Prime Minister David Cameron, in a speech on public servicereform in 2011, articulated the Government’s vision ofdelivering service reform: ‘Services that are more local, moreaccountable and more personal where people are the drivers,not passengers, which call on every part of society – fromchurches to charities, businesses to community organisations– to come in and make a difference. It really is a completechange in the way our public services are run. From top–downbureaucracy to bottom–up innovation. From closed marketsto open systems. From big government to big society.’The ‘transformation’ agenda represents the sum of all of these– and other – challenges that local authority police and fireservices face. While elected members are in many instancesproviding the catalyst for change and have overall responsibilityfor meeting the challenges, it is the CEO and other seniormanagers to whom elected members look for advice andsupport, and for continued improvements in service delivery.What is the nature of the challengefacing Leeds City Council?In recent years the council’s financial situation has got worseeach year and this is expected to continue for the next two, orpossibly four, years. The longer-term management challengegets harder, in terms of both money and new policies set bycentral government. However, the council’s response assumesthat these policies can and will be delivered.The economic and political climate dictates that the councilmust continue to do ‘more with less’. It needs to do thingsdifferently, including a radical rethink on service delivery. Leedshas been a traditional authority and kept most of its servicesin-house, but this is changing. It’s not clear what the councilwill actually be doing in four or five years’ time.The recession has focused many councils’ minds on the localeconomic development agenda. In our interviews, CEOs focusedlargely on the internal and structural challenges facing them inorder to live within tightened budgets. However, several alsomade clear their preoccupation with not only delivering servicesbut addressing the wider economic challenges facing their area.‘We need 1,000 more jobs a year in York, even beforerebalancing between the public and private sectors, just tomeet the needs of a growing city. Economic prosperity isvery much at the front of my mind and the highest priorityfor the council. This is not a position that we’ve adopted inresponse to the current government’s economic measures:we’ve been working to support the city economy as ourtraditional employment sectors restructure for the last10 or 15 years. But austerity means that facing up to thechallenge on a daily basis is now inescapable.’CEO, City of York CouncilOne major challenge is coping with growingdemographics in learning disabilities, older care andchildren’s social care. And on top of that we have gotthe first of the new generation of nuclear reactorscoming into Somerset, which is the biggest civilengineering project in Western Europe.CEO, Somerset County CouncilAchieving financial savingsLocal authorities are required to make unprecedentedlevels of financial savings. The scope of the further cutsthat will be required of them in future years remains, ofcourse, unknown at this stage. The Government’s 2010Childcare services and adult social care are in the framefor significant changes in service delivery. Implementationtimescales will need to take into account the aspiration toestablish a social enterprise and the fact that significantTUPE transfers will be needed to support a personaliseddelivery model.The council is pursuing a ‘lean’ agenda. It has beenlooking at issues of bureaucracy for some years: businessprocesses are under constant review, with major exercisesundertaken probably once a year. Organisation structurestend to lose relevance over time and need to be reviewedto make them more customer-focused. HR DirectorLorraine Hallam says: ‘The process will never end: it’s likepainting the Forth Bridge.’Leading culture change: employee engagement and public service transformation5

Spending Review set out deep cuts to the grants that centralgovernment provides to local governments in England forthe four years 2011 12 to 2014 15. For example, fundingto local government from the Department for Communitiesand Local Government (DCLG) was planned to be cut by27.4% in real terms over this period. What is remarkable isthe extent to which councils have so far been able to achievethe necessary savings without cutting more deeply intofront-line services.For example, Kent County Council’s strategy plan, ‘Bold stepsfor Kent’, makes clear the council’s intention to make use ofthe new financial flexibility on offer from central governmentin order to achieve greater financial independence. It says:‘The new government has moved to cut the apronstrings, but we want to go further. Our ambition is forKent to become the first financially self-sufficient countyin the country. We want to work with our partnersacross local government to develop an innovativeproposal to government whereby we would keep whatwe earn and use Kent money to solve Kent problems.’In some cases, councils have ‘front-loaded’ the cuts withthe aim of reducing the pain and limiting the scale of cutsrequired in the longer term.‘We’ll finish making the cuts we need two years earlybecause we went deep and early. We could havechosen to make equal savings each year over the budgetperiod but instead we took the bold and imaginativedecision to make bigger savings in years one and two.This means that savings will accumulate over the lateryears and the total savings required are reduced.‘CEO, Cornwall CouncilSome local councils such as Somerset County Council haveengaged in substantial organisation redesign to ensure thathow the council is structured supports a move towardsgreater service-commissioning and the development of morecustomer-centric services (see case study on page 41).In addition, many councils have engaged enthusiastically withthe shared service agenda, with HR one of the many functionsdirectly affected.Responding to the localism agenda‘We have shared staff doing personnel and payroll plushealth and safety with Malvern. Their staff have beenTUPE’d across to Wychavon but are still on their existingterms and conditions. We engaged on joint procurementof an integrated HR and payroll system and this wasa stepping stone to the staff transfer. I report to twoseparate senior management teams.’Personnel Director, Wychavon District CouncilLocal service organisations are also exploring how to benefitfrom their new powers under the Localism Act, which LocalCommunities Secretary Eric Pickles heralded as ‘marking aground-breaking shift in power to councils and communities,overturning decades of central government control andstarting a new era of people power’.How Wychavon District Councilachieved a 25% cut in spendingto Wychavon on their existing terms and conditions. Otherefficiencies have been achieved through:Wychavon faced having to make a reduction in overall budgetsof 25% over the first two years. It had earlier sought residents’views on potential service changes and cuts. Followingconsultation with managers, staff and members, and in orderto minimise the impact on services and staff, it adopted a fivepoint plan to make savings in the following areas: 12345efficiencies and joint working ( 537,000)increase income from our assets ( 130,000)management and staff savings ( 600,000)increase income from our services ( 510,000)service reductions ( 174,000).Wychavon have achieved efficiencies through sharingpersonnel and payroll services, including health and safetystaff, with Malvern. Malvern staff have been TUPE’d across6outsourcingbusiness improvement (‘better not busier’)better procurementoptimising the use of assetsenergy reduction.MD Jack Hegarty says:We had to make a 25% cut in spending over two yearsbut we did it in one. We didn’t want it hanging over stafffor two years. We’ve reduced the numbers on the seniormanagement team from nine to five, plus we’ve taken outmiddle managers. We need to turn capital into revenue:we built a Waitrose supermarket that produces a return of7.5%, and a new hospital.Leading culture change: employee engagement and public service transformation

Sutton Council in south London, besides having a jointhead of HR with the neighbouring borough of Merton, isalready sharing a number of services with neighbouringauthorities, including on some environmental services, ICTand recruitment. (See case study on page 31.) Niall Bolger,Sutton Council’s chief executive, believes that greatercollaboration and an emphasis on building partnerships iscrucial to improving both the efficiency and effectiveness ofpublic services.Growing demand for servicesDespite their success to date in keeping their financial headsabove water, local authorities also expressed concerns aboutthe increasing costs associated with caring for an ageingpopulation and the recession. For example, there was aperception that there was little evidence of political will toimplement the Dilnot recommendations, which could providethe basis for a more durable financial settlement in this area.The chief executive of Somerset County Council, SheilaWheeler, believes the Government needs to work with localauthorities to find ways to fund the spiralling costs associatedwith caring for the elderly:‘It is okay to say, ‘not the Dilnot review, that’s tooexpensive’, but there is no plan B and so politicians andofficers at a local level are going to have to front thedisenchantment of local populations as more and moreof our resource goes on a smaller percentage of thepopulation and the universal services that are belovedby everyone and are seen to be what most people seeas what we are there for gets squeezed or eradicated.’CEO, Somerset County Council (see case study onpage 41)The same issue is flagged by the chief executive of Cityof York Council, who also highlighted the need for moreintegrated working between professionals involved in thedelivery of social care.‘Pressures on our social care budgets mean that agreater proportion of our resources are required toprevent vulnerable individuals from falling through oursafety nets. There is a risk that social care demands willtake up so much of our resource that it underminesour ability to do a lot of other things. We are workinghard to integrate health and social care, and supportfor individuals at a community and street level. To dothis, we will be moving beyond professional boundaries,which can act as a barrier between staff groups.’CEO, City of York CouncilThe ongoing economic downturn is also increasing demandson local services. The chief fire officer at Derbyshire fireservice, Sean Frayne, highlighted that cost-cutting bybusinesses and homeowners on fire safety had increased thenumber of accidental deaths caused by fire.Some CEOs have inherited local authorities with particularlysevere problems, not only in terms of financial constraints butalso in terms of underperforming services. Cornwall Councilhad to cope with these problems at the same time as bringingtogether staff into a single unitary authority. CEO Lavery says:‘Three and a half years ago, Cornwall Council wasa basket-case. All services including fire, children’s,housing and adult social care were graded badly andfailing; payroll and elections were also in trouble. Wehad to meet a number of major challenges all at once.’Leading culture change: employee engagement and public service transformation7

1 LEADERSHIP – CREATING ASTRATEGIC NARRATIVELEADERSHIP provides a strong strategic narrative which has widespread ownershipand commitment from managers and employees at all levels. The narrative is a clearlyexpressed story about what the purpose of an organisation is, why it has the broad visionit has, and how an individual contributes to that purpose. Employees have a clear line ofsight between their job and the narrative, and understand where their work fits in. Theseaims and values are reflected in a strong, transparent and explicit organisational cultureand way of working. (Engaging for success, MacLeod and Clarke 2009)This section explores how the chief executives and HR leadersinterviewed have looked to develop a strong underpinningorganisational purpose and strategic narrative which all staffunderstand and buy into.Local authorities are seeking to offer a narrative that willoffer staff a positive vision for the future. Among the manyimportant responsibilities of CEOs in leading their staff,that of creating a convincing strategic narrative comeshigh on the list for most of those to whom we spoke. Theyrecognise that many of the characteristics of the traditionalpsychological contract in local government – includingjob security and a final salary pension scheme – haveeither disappeared or are in the process of disappearing.Looking forward, local authorities anticipate continuingausterity and the loss of many familiar landmarks in theshape of organisation and services. They have embarkedon implementing central government policies in relationto commissioning and localism, but the speed of changeand the ultimate destination remain unclear. CEOs and HRdirectors are therefore increasingly focusing on offeringemployees employability and skills development as their sideof a new employee value proposition, or implicit deal. Theyare also building on the public service ethos that many staffstill display and that puts customer service at the heart of theemployment relationship.The chief executive at Leeds City Council believes that in lightof job cuts, pay freezes and pension reform, the idea of publicservice has become even more important to attempts to builda core purpose and narrative that resonates with those thatwork in the sector:‘Why did I want to take this job on? It was because ofthe scale of the challenge. The council is a massive playerin the city – it employs 30,000 people, has a budget of 800 million and assets of 4 billion. Michael Heseltinesays that the job (CEO of a local authority) is ‘betterthan being a permanent secretary’. I love the north ofEngland. I believe in the public sector.’8‘I would like to take the best from what our staff do andcreate something better. I want a focused public sectorcapable of reacting quickly and galvanising organisations[on a strategic level]. Linking the public service ethos andvalues to a greater purpose is massively powerful.’CEO, Leeds City CouncilArticulating the visionAll councils publish regular reports and plans setting outtheir targets and budgets, and many publish strategies fordeveloping their workforce. But CEOs are making big effortsto ensure that staff are clear about what is happening andwhy, both by issuing regular updates on progress and byputting across messages in a way that makes sense to staff.They recognise that communications have to motivate staff inoften very difficult circumstances, where familiar assumptionshave been undermined and change is endemic. People needto understand the strategic context, the dynamic forcesaffecting council activities and how their council’s strategytakes all of this into account. Most if not all councils focusmessages on the services provided to customers, drawingon the traditional public service ethos which continues tomotivate many of their staff. But a number of councils arealso looking to develop their support for local economicdevelopment and this is influencing the way they want staffto behave. There is a new emphasis in some councils onworking across boundaries with other local organisations,including employers and voluntary bodies:‘Our new CEO has a different vision from his predecessorand wants to change the culture so as to be moreoutward-focused. He is pushing to develop partnershipsbetween the council and the voluntary and privatesectors. He is looking to develop more collaborative waysof working across the city.’HR Director, Leeds City CouncilThis economic focus links with the localism agenda. Localism isnot just about making savings: it’s also about producing morejoined-up services. In Kingston, for example, ‘One Council’is about bringing services together inside the council, andLeading culture change: employee engagement and public service transformation

‘One Kingston’ is about co-ordinating services with othersoutside the council so as to allow greater flexibility in theuse of resources. For example, resident

4 Leading culture change: employee engagement and public service transformation Leading culture change: employee engagement and public service transformation INTRODUCTION Public service reform is a key priority for the Coalition Government as it attempts to cut public spending and reduce the deficit.File Size: 1MBPage Count: 51