Public Administration CommitteeWritten evidence submitted by Active Operations Management International LLP (AOMi) (CSR 20)

Executive Summary

1. Summary of our evidence to the PASC

Based on our experience as a global leader in the improvement of performance in service operations, we point up a particular domain where there is a crucial gap in the current capability of the UK Civil Service which is not addressed by the Civil Service Reform Plan;

We bring evidence that, in the case of one of the largest Departments of State, this gap is already being filled and overcome by existing civil servants who have—in partnership with a private sector specialist provider—introduced new methods, skills and a toolset that together have enabled them to deliver improved productivity and better service outcomes for citizens;

The example of this experience—that delivered double digit productivity gains across a national network of around 8,000 staff in one of the main delivery Departments—demonstrates that the scale of the presenting opportunity, if this gain was to be replicated across the delivery of transactional services in UK government, would be very significant;

In addition, if there were to be a focus on upgrading capability and practices in managing service operations it would provide powerful support for other elements of the Civil Service Reform Plan.

About AOMi

2. This submission is provided to the Public Administration Select Committee’s inquiry into the future of the Civil Service by Active Operations Management International LLP, a world leader in the improvement of performance in service operations. We provide specialist services to a range of client organisations in the public and private sectors. Our clients include Barclays Group plc, Capita plc, Citibank, and the Inland Revenue of New Zealand, and our approach has been adopted in more than 35 countries across the world. In recognition of our achievements AOMi received the Queens Award for Enterprise in 2011.

3. Our business is providing specialist help and support to service organisations and our success is based on helping them to improve the day-to-day performance of their business operations. We believe that we understand—better than many—why it is that some organisations succeed and continue to improve in delivering services, and why others do not.

Does the Government’s Civil Service Reform Plan reflect the right approach to the Civil Service?

4. We have noted that, far from being (in the stereotype) a cadre of Whitehall-based policy advisors, in fact “the civil service” comprises a number of different organisations that—predominantly—provide services to citizens. Indeed, The Civil Service Reform Plan highlights the role of civil servants in Operational delivery, and points out that productivity in day-to-day operations needs to be improved significantly.

5. The Reform Plan suggests that this improvement will be achieved by the main delivery departments:

introducing new delivery models;

implementing digital services; and

introducing much broader/deeper shared services.

6. However, the risk with this prescription is that it takes no account of what is, perhaps, the most important root cause of low productivity in government services to citizens.

7. In our view what is missing is a shared view about what is needed to create a mature capability in managing service operations. Such a capability is a demanding, technical discipline (akin to Project and Programme Management, but much less mature) that encompasses forecasting, planning, and controlling the delivery of services. It is a combination of knowledge and skills, routine methods and practices, and toolsets which together combine to enable motivated managers to deliver high performance services. Such a capability would:

Be forward-looking—so that Team Leaders and Managers will be able to anticipate the areas where there will be imbalances in workloads v. resources and take steps to address them;

Be based on actual data about work activities that will be sufficiently detailed to be powerful, but not so comprehensive that data collection and validation becomes a disproportionate burden on staff time;

Establish a “common language” for managing service operations such that everyone involved will be able to share information about their relative position on topics such as future expected workloads, service levels achieved, shortfalls in resources, teams’ productivity levels, etc.;

Create a climate that encourages managers to collaborate systematically (as a matter of pre-defined routine) in taking decisions about how to resolve competing business priorities because they share understanding at a level of detail about the current state of “the business”.

8. This omission seems all the more critical since seven out of ten civil servants are employed in the delivery of operational services.

9. We believe that the Civil Service Reform Plan should include actions to articulate and prescribe the standards, methods, skills and tools that government organisations engaged in delivery of transactional services would be expected to adopt. Senior civil servants would then be expected to review practices and develop improvement plans in the context of their existing whole-system continuous improvement approaches.

10. While attention to best practice in day-to-day operational management may be less glamorous than other initiatives, our experience—in both the private and the public sectors—is that it delivers substantial benefits and should not be ignored. And, among the initiatives that will deliver an improvement in productivity an investment in day-to-day operational management capability will not require such a significant cash investment but will deliver results more rapidly than most.

What would it look like if the civil service was able to build a capability in managing service operations?

11. We can present here evidence from a recent project where AOMi partnered with one of the main delivery Departments to implement a new approach to planning and controlling the delivery of services in one Division. This Division is responsible for processing a number of the Department’s core services. It has a national network of offices and employs around 8,000 staff.

12. While this Department had previously had some success with classic re-engineering/LEAN approaches, this project focussed on the managers’ day-to-day operational management skills, and on the practices and behaviours that support them.

13. The benefits that the Department derived from the implementation of this new approach were in two distinct categories:

Benefits from improvements in control. These are the benefits that flow from the organisation’s ability to look ahead and make explicit choices about business priorities and the best use of available resources. For example, in response to an unexpected surge in demand for one of the service lines the Division was able—without resorting to recruitment—to increase the resource assigned to deliver this service by more than 50% because of the new approach to planning and controlling capacity.

Gains from improved productivity. The organisation’s ability to do more with less can be measured and quantified in a number of different ways. The Division was able to achieve a significant gain in capacity—equivalent to 10% in only 9 months. For the Department this gain in capacity was equivalent to more than 370 FTEs, or a saving of £6.7m in employment costs. And, the improvement is continuing so that in many offices the total gain is now more than 20%.

14. The Division implemented three important changes:

National direction and collaboration. It shifted the emphasis of management away from geographic units towards a “product focus”. Where previously, each office or geographic region had their performance measured and collated in “league tables” Managers were now required to plan in collaboration and share capacity and workloads across multiple offices; and decisions can be taken nationally about prioritising different areas of business in response to the changing demands on the network of offices.

Real accountability and engagement. It switched from centrally directed planning and control to a position where local managers were supported from the centre, but held to account for performance against plans that they had created. Previously, there was a specialist team that would generate plans for all the offices, but now Managers are expected to set their own plans based on realistic targets, and to track their own progress in delivering improvements in operational performance week-by-week and month-on-month.

Consistent, professional practices. It introduced rigorous standards for management practices for planning and controlling throughput across all the offices in the network. Previously, each office/team used to work out their own ways of planning and managing work (lots of different spreadsheets!). Now everyone has a consistent operations management approach used locally and nationally for planning and controlling the work of all the staff across the Division, and everyone uses the same processes, skills and tools to plan and manage the delivery of service to customers—so it’s very easy for Managers who move between teams to become very effective rapidly.

What would be the benefits of extending this approach to other parts of the civil service?

15. One of the lessons that can be taken from the experience of this Department is that the standards, methods, skills and tools involved in applying best practice from the private sector are independent of the nature of the work and therefore applicable to a very wide range of government services—particularly to those high labour cost transactional services which are core to government operations and difficult to contract or deliver outside the state sector.

16. Another lesson is that in this area the civil service can become as good as private sector service providers. We know, from our wide experience with clients in Banking Services, in Insurance, and in Business Process Outsourcing that the benefits that the Department delivered were in line with the benefits we would see in a typical implementation in the private sector.

17. At the same time, and in contrast to other approaches that either require significant technology investment (such as Digital), or will require long lead times to introduce (such as Delivery models) this approach can be implemented rapidly, using in-house trained civil servants. The national implementation described above was completed in less than 12 months, using a team made up by approximately 50% civil servants.

18. Bearing in mind the broad scope of the Civil Service Reform Plan, we can point to a number of the directions for change that would be powerfully supported by the investment in upgrading capability and practices in managing service operations. These include:

More support and recognition for skills in operational delivery.

Managing performance and reward, by providing more clarity in what is expected and better data on service performance in operations.

New Management Information system, based on a cross-government approach using a common language and a shared set of standards.

Improving the employment offer for staff, by improving management competence, and by enabling flexible working.

Strengthening the role of the Operational Delivery profession, and supporting the move towards portable professional qualifications for operational managers and staff.

January 2013

Prepared 5th September 2013