Good Governance and Civil Service Reform

Written evidence submitted by CIPD (GG 03)

Background

1 The CIPD’s primary purpose is to improve the standard of people management and development across the economy and help our individual members do a better job for themselves and their organisations. The Public Policy Team at the CIPD promotes an agenda for productive workplaces to boost economic performance and improve the quality of working life.

2 As Europe’s leading professional body for those involved in the management and development of people, we are ideally placed to contribute to the development of public policy across the spectrum of workplace and employment issues.

3 We are able to draw on the experience and knowledge of our 135,000 members and our wide range of research to provide a pragmatic stance on public policy that is based on solid evidence and the real world.

4 Our membership base is wide, with 60% of our members working in private sector services and manufacturing, 33% working in the public sector and 7% in the not-for-profit sector. In addition, 76% of the FTSE 100 companies have CIPD members at director level.

Question 1: What is meant by the term ‘post-bureaucratic age’ and what are its implications for good governance, for Whitehall departments and for the wider civil service?

5 The most useful definition is that intended by those who use the term. In a Guardian article in May 2009, David Cameron said:

The argument that has applied for well over a century – that in every area of life we need people at the centre to make sense of the world for us and make decisions on our behalf – simply falls down…. This is what we mean by the Post-Bureaucratic Age…sceptical about big state power; committed to social responsibility and non-state collective action. The effects of this redistribution of power will be felt throughout our politics, with people in control of the things that matter to them, a country where the political system is open and trustworthy, and power redistributed from the political elite to the man and woman in the street.

6 On this analysis, the state neither needs nor is able to exercise authority in the same way as in the past. People have the information they need to make their own decisions and are less willing to be told what to do. Nevertheless, as long as taxpayers fund and deliver public services – and whether delivered directly or at arms’ length – the Government has to accept ultimate responsibility for the service provided. So ministers will continue to need some machinery for allocating resources, monitoring what is happening on the ground and responding to queries from MPs – the basis on which the ‘Whitehall model’ was built. It seems wholly unrealistic to contemplate a ‘withering away’ of the state.

7 However, the ‘post-bureaucratic’ model does have implications for departments – both for the way in which they are managed and for their relationships with local authorities and other public bodies. These include the following:

· A post-bureaucratic Whitehall must plainly display greater skills in managing people and managing change. This is implicit in the move away from a ‘bureaucratic’ state based on the application of rules, towards greater local autonomy and responsiveness. CIPD research into the public sector underlines the need for significant further investment in leadership and people management skills (see the Building Productive Public Sector Workplaces series). Although most civil servants identify strongly with their work, they do not often believe it is well managed. This will in turn require greater professionalisation of the HR function across Whitehall (see Question 5).

· There are strong arguments for distancing delivery of public services as far as possible from the political process by, for example, placing responsibility in the hands of non-departmental bodies and other agencies that can be judged by results. An effective management process, including clarity of purpose and the ability to maintain focus on that purpose, cannot be achieved in an organisation that is subject to frequent political intervention. This was the thinking that underlay the creation of ‘Next Steps’ agencies in the 1980s and succeeded in producing significant improvements in the quality of management and service delivery.

· The post-bureaucratic model implies that ideas should not be handed down from above but come from the front - line experience of those in closest touch with service users. This is the basis of the ‘ systems ’ approach that borrows from ‘ lean ’ thinking and focuses on reviewing processes to eliminate duplication and waste. Moves to engage front-line staff more directly in the reform process will contribute significantly to increasing their engagement with their work and releasing the kind of ‘ discretionary behaviour ’ that high - performing organisations require.

Question 2: Can the traditional ‘Whitehall’ model of civil service governance and accountability continue to function effectively in the post-bureaucratic age?

8 The system of Whitehall governance is currently undergoing continuing change. The increasing influence of departmental boards, the development of the capability review process and the injection of private sector experience should all tend to enhance the accountability of the civil service. To the extent that responsibility for the efficient delivery of specific services is devolved to local level, m inisters might expect local authorities and agencies to answer to service users. But m inisters must clearly continue to take overall responsibility for the outcomes of the political process, and answer to Parliament on wider issues relating to delivery of public services.

9 A principal role of government departments has historically been to offer advice to m inisters on policy: a major strength is departments’ ability to build on experience and give objective, evidence-based advice. One major gap in the standard policy process , however , is the absence of systematic arrangements for evaluating the quality of that advice and the outcomes of decisions made. Some form of routinely undertaken post-implementation review could contribute significantly to improving the accountability of all aspects of the policy-making process. Better and more open communication between m inisters, political advisers and officials would also help to improve the quality of decisions.

10 A major purpose of the governance system is to improve the management of risk. However , effective risk management is also dependent on having an org a nisational culture based on a shared understanding of the nature of key risks and a willingness to discuss how they can be best avoided.

11 In the end it is the culture of an organisation that influences behaviour, and it is behaviour that determines outcomes. Departmental boards can take strategic decisions but will be much less directly involved in implementing them. This reinforces the need for effective leadership and management at all levels of the organisation.

Question 3: In what ways do civil service departments need to adapt to a post-bureaucratic age, and in particular to the current Coalition Government’s decentralisation agenda?

12 The implications of a ‘post-bureaucratic age’ for civil service departments will depend largely on decisions made by ministers about how their responsibility for ensuring a properly functioning and responsive system for delivering public services should be discharged. Any assumption that the third sector will take on responsibility for delivering particular services must depend on some combination of public funding and individuals’ willingness to donate voluntary time and energy. In practice, any such shift is bound to take a very considerable length of time.

13 In practical terms, moving towards the ‘big society’ will in the short term mean transferring more power and responsibility from Whitehall to local government. This will presumably reduce the number of civil servants required, but at the expense of an increase in the number of staff employed by local government, or contracted to deliver local services. Local autonomy is not in itself a recipe for reducing numbers of public servants but could indeed have the reverse effect by removing some economies of scale.

Question 4: What should the aim of civil service reform be at a time of significant change and reducing administrative budgets?

14 Efficiency savings alone will not produce economies of the order required by the current fiscal crisis. The need for departments to produce substantial savings inevitably means that they will be under pressure to achieve economies by removing managers who have no direct responsibility for delivering front-line services. However, this should not be allowed to distract attention from the need for better management if reforms are to be effective.

15 Whether or not Whitehall needs fewer managers, the evidence suggests it certainly needs better managers. Improving the quality of people management and leadership across Whitehall should be a key aim of reform as it will not only deliver ‘more for less’ but ‘better for less’. Proposals for reform should consider an analysis of what is wrong with the status quo. CIPD research over a number of years suggests the following key areas of weakness across central government:

· political context means senior leadership focus is upwards, not downwards

· poor line management, including specifically poor performance management

· low levels of staff engagement

· weak change management capability.

The implications of these findings are high people costs, associated with poor absence, conflict and performance management. We recommend that the Government reviews how Whitehall managers are developed to ensure that resources are being used effectively and that managers are equipped to manage change and support public service transformation.

Question 5: How can such reform be realised and sustained?

16 The search for better management of the civil service goes back to the Fulton report of 1968 and beyond. Although much has changed in the intervening years, several of the Fulton committee’s recommendations remain relevant today, including the need to improve management skills, increase contact between civil servants and the rest of the community and improve people management processes.

17 Here are some possible ways that the standards of civil service leadership and management can be raised in practice. These are all areas that should be routinely monitored by management boards and through capability reviews:

· By further professionalisation of the HR function – the people management agenda should have a higher profile in public sector management. HR departments should place more emphasis on strategic issues, including change management and OD. Leadership development should also have a higher priority. The CIPD is working with major government departments to professionalise the function through raising its professional capability and identifying the behaviours that are critical to performance. We seek to support HR practitioners by helping them build a capability framework that takes full account of both current and future needs.

· By building up change management, including organisation development (OD), skills in Whitehall – historically departments have tended to rely heavily on outside support in this area (at cost). Other parts of the public sector appear to have invested more heavily in internal OD skills, and Whitehall needs to catch up.

· By including in the performance appraisal of all civil servants a judgement of their people management skills, and giving performance in this area more weight in relation to decisions about suitability for promotion – line managers should be trained to practise a ‘coaching’ style. There is a clear negative relationship between the adoption of effective management practices and the amount of stress experienced by employees.

Question 6: Is it possible to establish a set of key principles of good governance?

18 Not in any absolute sense. The revised Turnbull Code on corporate governance issued in October 2005 did not attempt such a list but focused on the processes of internal control and the way in which risks are managed. The selection of items for inclusion will depend on what are identified as key risks and these are likely to vary between one organisation and another and over time.

19 The list of key principles in the call for evidence is an unsatisfactory mix of inputs, outputs and cultural elements. It is curious that ‘citizens’ experience of public services’ is relegated to the bottom of the list, whereas most people would consider it fundamental to a judgement about an organisation’s effectiveness.

Question 7: Are those set out in the call for evidence the right elements for such principles? Can there be fewer or should others be included?

20 The outstanding omission from the list is any specific reference to the quality of leadership and people management, which must be central to corporate governance. Similarly there is no reference to employee engagement; to the mutual trust needed between ministers, senior managers and other staff; or to the clarity with which the core purpose of the organisation is communicated to staff.

21 The Cabinet Office has recently begun to conduct surveys of levels of employee engagement across the civil service, out of recognition that high employee engagement will drive performance. Management boards should pay more attention to these measures of engagement to gauge departments’ overall state of health and fitness for purpose.

22 It is notable, however, that none of the questions included in the Cabinet Office survey focuses explicitly on trust in senior management, or on the credibility of senior management messages, both of which feature in national surveys of employee attitudes undertaken by the CIPD and others. This omission should be remedied.

23 The Turnbull Code includes the following among the questions that boards of directors are encouraged to consider when assessing the effectiveness of the risk categories: ‘Does senior management demonstrate … the necessary commitment to … fostering a climate of a trust within the company?’ The reference in the list to ‘transparency and openness’ is helpful but does not go far enough. CIPD research shows that levels of trust in senior management among employees in central government have historically been very low in comparison both with the private sector and with other parts of the public sector and this is likely to be a serious obstacle to effective reform and delivery of reform.

24 A shared sense of purpose is essential to any effective organisation. Experience across both private and public sectors suggests that an in-house organisation development (OD) capability can be instrumental in helping to build and maintain such a shared sense of purpose. As mentioned above, this is something that other areas of the public sector have already recognised.

Question 9: How could they be made useful for the measurement and assessment of good governance?

25 The findings of employee surveys can be used to measure levels of commitment and enthusiasm across Whitehall, which research evidence suggests will correlate strongly with levels of business performance. The MacLeod report on employee engagement includes extensive case study evidence supporting a close link between employee engagement and business performance.

26 The questions in the ‘engagement’ section of the Cabinet Office questionnaire referring to pride in the organisation, advocacy, attachment and inspiration are clear and useful. The questions about leadership and senior management could usefully be supplemented by an additional question along the lines of the following: ‘I trust the senior managers in my organisation.’

Conclusions

27 The combination of poor line management capability and low levels of trust make fertile ground for resistance to change. The focus of civil service reform needs to be on lifting levels of leadership and management. Relying on governance systems to identify areas of weakness is not enough: achieving effective delegation, reducing costs and restructuring services will all require improving management skills.

January 2011