Boosting HR Performance in The Public Sector

Building productive public sector workplaces
December 2010
RT FOUR PART FOUR PART FOUR PART FOUR PAR
BOOSTING HR
PERFORMANCE IN
THE PUBLIC SECTOR
CONTENTS
CONTENTS
Introduction
Overview
HRs role in leading public service transformation
Change management and organisational development
12
Workforce planning and talent development
23
Building HR effectiveness
26
Conclusions
41
References
43
Boosting HR performance in the public sector
INTRODUCTION
Public service reform is one of the main items on the

Governments political agenda as it tries to reduce the fiscal
deficit. The scale of change set out by the Comprehensive
Spending Review is unprecedented, both in terms of
cuts to budgets and jobs but also in proposed reforms to
public service delivery. Against this backdrop, maintaining
employee morale and engagement to ensure they continue
to deliver quality service, as well as buy in to and drive new
ways of working, will be critical to whether reform succeeds
or fails.
This can only be achieved through effective leadership and
people management, careful change management and
organisational development.
HR in the public sector has been seen by successive
governments as a cost to be managed or a way of making
redundancies and not as a strategic function crucial to lasting
public service transformation.
It is no coincidence that attempts by previous administrations
to create a step-change in the quality of public service
delivery have failed. This government cannot afford to make
the same mistakes.
The Governments proposals to improve the autonomy and
empowerment of front-line service workers will fail if frontline managers are not equipped with the leadership skills
to support these behaviours. The success of the Big Society
through the creation of new employee- or community-led
co-operatives, mutuals, academies or free schools to deliver
public services will depend on enhanced management
capability.
Radical plans to improve co-ordination and collaboration
between local public service providers to deliver more costeffective services will founder unless managers have the
ability to manage across organisational boundaries.
In the same way, the Governments plan to transfer health

service commissioning powers from primary care trusts to GP
consortiums in the face of 45% cuts to management will hinge
on whether GPs are equipped with the leadership and people
management skills that will be so important to their new roles.
How these changes are managed and the extent to which
people feel they are consulted and have a voice will also
be fundamental to whether they understand and buy in to
new ways of working. It is HRs role to ensure these critical
people management issues that lie at the heart of major
change programmes are addressed. HR needs to provide the
organisational development strategies to support the business
needs of transforming public services. If policy-makers dismiss
HR as a transactional function that has no real role in engaging
with or influencing the Governments reform agenda, they
will find that their goals are frustrated and that in four years
another governments attempt to transform public services has
failed to achieve the ambitions it set.
This paper highlights the core role of HR in engaging with
and implementing the Governments public service reform
agenda. It also provides a series of case study vignettes on
how HR leaders in some public service organisations are
taking the initiative in driving this change.
Of course, HR itself has to be up to the job and this paper
also sets out some of the issues that public sector HR leaders
are tackling to drive up the capability of their functions.
In publishing this paper, the CIPDs and the PPMAs purpose is
to provide a helicopter view of some of the shared challenges
facing public sector HR leaders, CEOs and policy-makers
in transforming front-line public service delivery against a
background of austerity. In future papers we will explore in
more detail some of the critical issues that are flagged here
in order to share emerging thinking and practice and support
efforts to deliver lower-cost and higher-quality public services.
OVERVIEW
Octobers long-awaited Comprehensive Spending Review

(CSR) clarified the scale of the challenge public services
employers face in delivering service improvements in the face
of swingeing cuts to funding and jobs. Overall funding to
local government will reduce by 26% in real terms by 2014
15, excluding schools, fire and police. The NHS budget
will rise by 0.1% a year in real terms until 201415, rising
from 104 billion to 114.4 billion. But the Department
for Health will still have to make 20 billion in efficiency
savings to fund an ageing population and costlier treatments.
Other departments, with the exception of the Department
of Foreign and International Development, will experience
large reductions in their budgets over the next four years
with average departmental real expenditure falling by 19%,
according to the Institute for Fiscal Studies.
CIPD Chief Economist John Philpott estimates that the scale
of the cuts, which total 81 billion over four years, will mean
that public sector job losses will reach 725,000 by 201516.
The CSR has added greater urgency to the public service
reform agenda already under way, because only an increase
in efficiency and productivity and a radical review of what
the public sector does can offset the scale of the proposed
budget cuts across the public sector. Though there are some
differences in approach between Westminster and the
devolved governments in Scotland and Wales, the overall
thrust of reform is consistent across the UK.
At the same time as continuing to deliver valuable and in
some cases essential services, public services employers will
have to:
s collaborate more effectively, with each other and with
the third and private sectors, to prevent overlap and
duplication and deliver more cost-effective services
s identify more efficient ways of working and innovate
s identify potential costs savings through greater use of
shared services and outsourcing
s focus more effectively on meeting the changing needs of
the public through enhanced front-line autonomy
s negotiate new/local terms and conditions of employment
s manage and communicate change effectively, involving
the workforce through effective consultation to ensure
employee/union buy-in.
The reform agenda provides both an opportunity and a

challenge for HR. HR can build and establish its reputation
as a key strategic management function if it is at the heart
of managing change, helping to facilitate service delivery
redesign and building the necessary leadership and people
management skills for sustained service transformation to
happen. However, if HR is preoccupied by its traditional
activities such as making redundancies, pay, HR policy
compliance, TUPE transfers and hand-holding for line
managers, it will be left behind and its reputation as a mainly
transactional function will be reinforced.
What is striking about the Governments public service
reform agenda as a whole is that it is one that depends on
a step-change in the quality of leadership and management
across the public sector if it is to succeed. For example,
proposals to support the Governments Big Society concept
by delivering public services through community- or
employee-led co-operatives, academies and free schools will
only improve on what went before if the quality of people
management is upgraded. The CIPD report Improving People
Management finds that, despite pockets of excellence, the
overall quality of leadership and people management across
the public sector needs to improve to boost quality and
productivity levels. Simply transplanting existing public sector
management capability into new models of service delivery
will not transform service delivery. John Lewis succeeds not
just because it is based on a co-operative model but because
of the high quality of its people management.
Another key theme is the importance of local authorities and
other local public services working much more collaboratively
in partnership to identify new ways to deliver services that
meet peoples needs, improve outcomes and deliver better
value for money. The Government looks set to build on
the progress of the Total Place initiative with the creation
of place-based budgets to create opportunities to pool
presently silo-based budgets to reduce overheads and
ensure resources are used most effectively. This place-based
approach to public services will require local authority leaders
and managers who understand how to manage across
organisational boundaries and are able to create positive
working relationships with different parts of the public sector,
including the police and the NHS.
NHS leaders, besides having to respond to implications of

the place-based initiative, will also have to adapt to the
challenges set out by the Coalition Governments White
Paper Equity and Excellence: Liberating the NHS. These
include the abolition of primary care trusts and the shift
of their service commissioning role to newly formed GP
consortia. These changes are being accompanied by a
demand for a 45% reduction in management costs. Again,
it is how change is managed and how well people adapt
to their new roles that will decide how well this radical
reorganisation works in practice. GPs will have to be
equipped with the necessary leadership skills, to take charge
of service commissioning, as well as the people management
skills, to work closely and productively with other key
stakeholders, including hospital doctors, in what could be
quite a fraught change process.
Just as important for the NHS as the creation of the
new GP consortia to commission services is a renewed
commitment by the Government to the quality, innovation,
productivity and prevention (QIPP) work streams as a means
of driving health service improvement. QIPP is essentially a
development of lean working and involves using employee
and patient insight to continually improve front-line services.
Research into effective lean operating consistently concludes
that enhanced supervisory skills are a prerequisite for success.
Front-line managers involved in lean systems need to develop
their consultation skills and have a participative approach
to management that embraces new ideas and supports
collaborative problem-solving.
Large parts of central government are also having to
adapt as lean operating principles are adopted across a
number of departments, raising similar question marks over
whether existing leadership and management development
programmes are adequate. In addition, central government is
adapting to become a single employer, which will have major
implications for HR capability and headcount.
The public sector as a whole faces renewed pressure to
consider using shared services or outsourcing to deliver HR
services more cost-effectively. This again places additional
emphasis on the need for public service front-line managers
to become better at managing people because HR will no
longer have the same resources to hand-hold managers on
things such as managing conflict, stress and absence, and
performance management generally.
Parts of the public sector will have to renegotiate (potentially

both nationally and locally) changes to established terms and
conditions of employment to facilitate greater efficiency and
provide more bespoke local service delivery.
How this change agenda is communicated and managed will
decide the extent to which employees and unions buy in to
new ways of working and changes to pay and pensions. HR
will need to ensure that effective internal communication
provides a clear narrative on why change is needed, as well
as providing opportunities for meaningful consultation on
proposals and options for change.
The scale of the challenge being laid down by government
to the public services may on the face of it seem quite
daunting. However, it is a transformation agenda that plays
to HRs strengths if it chooses to use them. In many ways
the success of the Governments ambition for sustained and
lasting improvement to front-line service delivery depends on
the involvement of HR at a strategic level because without
this, change risks being piecemeal and the key people
management components that lie at the heart of engaging
employees and bringing strategies, visions and values to life
on the front line will be missing.
The Government itself also needs to understand its own
role in providing leadership and supporting the change
process if it wants to achieve its political objectives. The Big
Society is a compelling vision for many and there is general
political consensus about the importance of improving local
public service delivery through front-line staff empowered
to respond with agility to the changing needs of the people
they serve. However, if this public service transformation is to
happen, the Government also needs to show it understands
the dynamics, psychology and enablers of change and
organisational performance. Effective and sustained change
will only happen in organisations where senior leaders show
a sustained commitment to building staff engagement
to ensure there is buy-in to change and new ways of
working. The Government-commissioned MacLeod review
of employee engagement identified the key elements of
leadership and people management that need to be in place
to support an engaged workforce:
s Senior leaders and managers set out a clear
organisational purpose through a clear narrative that
everybody in the organisation can understand and
support.
s Managers at all levels have the people management skills

to empower and engage people.
s Employees have a clear voice and feel their views are
respected and matter.
s There is a sense of integrity underpinned by behaviour
throughout the organisation that is consistent with its
stated values.
The employee engagement agenda provides an effective
framework for public service transformation. The
Government needs to embed these foundations for change
across the public sector by leading by example and ensuring
that public sector leaders at all levels have the necessary
capability and are given the time to deliver.
HRS ROLE IN LEADING PUBLIC SERVICE TRANSFORMATION
The CIPDs Next Generation HR research project exploring the

changing nature of HR and some of the best and emerging
HR practice highlights the importance of HR leaders being
able to understand the business agenda in a deep way. This
then enables them to help the business see how critical
objectives can only truly be delivered if the people and
cultural issues are fully factored in.
For the public sector, it is the Governments reform
programme that is leading the business agenda.
Consequently, only HR leaders that have a real understanding
of the public service reform priorities and issues are fully
equipped to be able to act as a strategic business partner in
the change process.
Speaking shortly after the election of the Coalition
Government in May 2010, David Cameron outlined his
vision of putting the Big Society at the heart of public sector
reform. He said:
We know instinctively that the state is often too
inhuman, monolithic and clumsy to tackle our deepest
social problems. We know that the best ideas come from
the ground up, not the top down. We know that when
you give people and communities more power over their
lives, more power to come together and work together
to make life better great things happen.
One way the Government is planning to do this is through
supporting mutuals, co-operatives, charities and social
enterprises and giving them greater involvement in the
running of public services.
Place-based public services

The Government is also looking to build on the potential
of the Total Place initiative, which was launched by the
Labour Government in 2009 as a key recommendation of
the Operational Efficiency Programme. The initiative is based
on the principle of putting the citizen at the heart of service
design. It can be described as a fundamentally different
approach to public service reform that puts local authorities
and their partners at the forefront of a drive to redesign
service delivery based on what people actually want and

need. This approach involves local government, the NHS,
police and other public bodies, as well as voluntary and
private sector organisations, collaborating to offer customerfocused public services. Under the new government, the
Total Place ethos is being delivered by a number of means,
including the National Placed-Based Productivity Programme
run by Local Government Improvement and Development
(LGID).
Stephen Moir, Corporate Director for Strategy and
Democracy at Cambridgeshire County Council, which has
been piloting its own version of Total Place, believes HR is
ideally placed to lead the agenda.
Moir, who is also National Adviser: Organisational
Development and Transformation for LGID on the National
Placed-Based Productivity Programme, said:
The Place-Based Productivity Programme is centred
around things like organisational design, organisational
development, culture change, building new
arrangements around performance management
frameworks and creating the leadership climate for
empowered front-line service. So its absolutely the space
skilled HR professionals can and should be playing in.
Moir believes that the place-based service agenda has wide
workforce implications if local authorities role is expanded to
become a service commissioner and enabler. For example, what
are the implications in terms of the models of employment that
are in place and how to get best use of the direct, contingent
and complementary workforces within an area.
CASE STUDY
Cambridgeshire County Council is one of the local authorities
that has been taking a lead on the place-based agenda.
Stephen Moir, Corporate Director for Strategy and
Democracy at Cambridgeshire County Council, said the
people function is taking the lead in providing co-ordination
and support for the whole Total Place programme across the
county.
Moir believes there is a real need for technical HR expertise
and input on issues such as front-line supervision and
management, as well as with terms and conditions of
employment, appraisal and performance management.
Under the Making Cambridgeshire Count initiative, the
county council is working with all the key local public
agencies, including the five district councils, the police,
the fire authority and the primary care trust, on eight
pilot projects.
This includes the Places Project, which is focusing on
how services to high-demand families in two particular
locations can be improved through improved coordination and collaboration between the police, fire,
health and social services.
We are testing what were going to do differently and using
CIPD research emphasises the importance of line managers

having an awareness of all the potential problems of
managing across organisational boundaries. These
managers occupy prominent positions in all organisations,
but in networks they may also have responsibility for
managing workers employed by other organisations.
They must be recognised as crucially important in the
interpretation and implementation of human resource
management. In the cross-boundary context, this becomes
critical if there is to be any likelihood of achieving
the knowledge of front-line workers to actually inform and

lead that. Essentially this is about how we can make better
use of integrating front-line resources within a place and
how we can free up front-line workers to be much more
empowered and innovative, said Moir.
This is illustrated well by another of Cambridgeshires placebased initiatives, which is focused on improving services to
the countys large gypsy and traveller community.
We brought together the key professionals involved in
supporting the gypsy and traveller community and did
some process mapping. Six pages of flipchart later the
professionals that have designed these same processes
and systems were absolutely horrified at how long and
difficult it is for a member of the gypsy and traveller
community to access just one council service. It was a
wake-up call that we needed to redesign the services
around the needs of the community. There is a risk that
otherwise we build in unnecessary steps and bureaucracy
for our own needs as professionals and employers rather
than for the best outcome.
Moir believes that the place-based approach to local
public services will only work where managers are
equipped with the necessary skills. Managers will need
to be much more skilled and comfortable at managing
uncertainty and change. For me a place-based approach
is more about leadership and change management than
consistency in operations. This requires careful selection

techniques that are capable of identifying people who are
good at managing in ambiguous situations, clear induction
programmes in the art of working across boundaries, clear
training on how to deal with systems other than ones own
and performance management regimes that recognise and
reward their contribution to achieving a successful network.
Source: Managing People in Networked Organisations
(CIPD 2004)
Managing across organisational boundaries

Some of the same challenges inherent in implementing the
place-based productivity agenda are also being faced by HR
practitioners working in the health service as they consider
the implications of the government White Paper Equity and
Excellence: Liberating the NHS. These include the abolition of
primary care trusts, with their service-commissioning powers
being handed over to GP consortia, at the same time as a
45% reduction in management costs. Kevin Croft, Workforce
Transformation Director for NHS North West London, believes
it is essential for HR leaders to own the wider workforce
and organisational development agenda if real service
transformation is to be achieved.
NEXT GENERATION HR
Where HR is grounded in the business and delivering
the fundamentals well, it is able to engage in higher
value-adding organisation development (OD) and talentrelated activities that speak to the critical challenges
faced by that organisation. Where HR is taking this on
to the next step by offering either insight or challenge
to leaders as a matter of course, they are helping to
educate a class of business leaders who are also able to
see business as an applied HR discipline.
Source: Time for change Towards a next generation for HR
The people management challenges facing NHS North West

London as it moves from PCT to GP service-commissioning are
wide ranging.
This includes raising GPs awareness and understanding

about commissioning and the broader healthcare system and
understanding the interdependencies between making one
decision about a local service and how that affects another
service that they might not be thinking about at the same time.
People management skills will also be crucial. GPs will have to
make decisions about training and development of doctors
to facilitate services, which can also have significant service
implications in terms of how resources are used.
Croft said that another key area for leadership and
management concerns the relationship between GPs and
clinicians who are working in hospitals. GP commissioning will
fundamentally change the relationship from one where hospital
doctors, because of their specialist knowledge, often have a
higher status in the NHS, to one where GPs have more power
because they have got the money. He added:
This is why people management skills are so important
being able to manage difficult conversations and say to
hospital doctors actually we dont want that sort of service
for our people, we want you to do something different. You
may have been doing it for the last 20 years but we think its
not right and it doesnt work. You cant create these new
ways of working without there being uncomfortable change,
conflict and uncertainty and unless GPs are equipped with
the people management skills to have these conversations
and take people with them, whats outlined in plans and
strategies and things wont happen.
The move to GP-led commissioning is just one stream of public
service reform affecting the health service where HR needs to be
taking a lead.
Implementing lean working in the public sector

Croft said that, because of the way it is structured, NHS North
West London is having to reduce management costs by 67%,
rather than the 45% set by the Government. To save the
required management costs, the first step was to merge the
management teams of the eight PCTs it covers into three cluster
management teams. These management teams will continue
to commission services as an interim arrangement until the GP
consortia are able to take over.
Croft, who is also president of the Healthcare People
Management Association, is working with NHS North West
Londons clinical director to support the development of these
GP consortia. He said that there is a huge leadership and
development job to equip GPs with the skills to lead these new
commissioning groups.
8
The Governments White Paper also re-emphasised the

Coalition Governments commitment to the Quality,
Innovation, Productivity and Prevention (QIPP) initiative. QIPP is
based on lean working principles and involves using employee
and patient insight to reduce waste and continually improve
front-line services.
In August 2009, NHS Chief Executive Sir David Nicholson, in a
letter to all NHS chief executives, highlighted the importance of
every NHS leader and NHS trust in engaging and driving forward
the QIPP agenda. In particular he emphasised the need for highquality leadership and management skills. Sustainable health
systems are created when clinical leaders are empowered to bring
about transformational change supported by managers who back
good ideas, remove blockages to progress and provide support.
QUALITY, INNOVATION,
PRODUCTIVITY AND
PREVENTION
There are 12 QIPP workstreams:
sSafe care
sRight care
sLong-term conditions
sUrgent care
sEnd of life care
sBack office efficiency and optimal management
sProcurement
sClinical support
sProductive care incorporating:
o the Productive Ward
o the Productive Mental Health Ward
o the Productive Community Service
o and Productive Operating Theatre
sMedicines use and procurement
sPrimary care contracting and primary case commissioning
sTechnology and digital vision
Alice Williams, Senior Associate, NHS Institute for Innovation
and Improvement, who helps support the roll out of the
Productive care stream, said it is about delivering evidencebased approaches to improve quality and efficiency that are
underpinned by lean principles. It involves front-line staff
being empowered to take ownership of improvements
in their operating theatres and community teams using
measurement skills and improvement cycles to look at how
processes can be changed to minimise wasted or duplicated
activity. The productive ward series relies on leadership being
devolved and shared decision-making within clinical teams
to help improve patient care on a day-to-day basis. One
example of how this approach made a tangible difference is
a reduction in the time clinical staff on wards spend handing
over between shifts from one-and-a-half hours to just 25
minutes. The Productive ward initiative has also resulted in
some ward staff reducing the time they spend travelling
between wards or to drug or stock stores by 10% after
reviewing the location of wards and stock facilities. Williams
said that because productive ward empowers and involves
staff it helps improve morale and job satisfaction and reduce
absence levels. Implementing the productive care streams
has delivered sustained improvements in direct patient
facing time, staff satisfaction and reduced levels of agency
staffing.
Dean Royles, Director of NHS Employers, said the QIPP agenda is

critical to helping the NHS achieve a 20 billion cost saving over
the course of the next four years if the service is to respond to a
typical 3% a year increase in demand for resources.
There is a prevailing view that improving quality costs
money but the principle behind QIPP is that you can
improve quality and efficiency at the same time. So if you
can improve the quality in patient care to such an extent
that the outcome is better and they dont need to be
readmitted, you would also save money.
Royles said QIPP is not just about improving service design and
process; it is also about ensuring that there is the right skills mix
on staffing to maximise value for money on the front line.
He believes that HR needs to be involved in supporting the
effective implementation of QIPP if it is to be sustainable. He
explained:
Service improvement is most often a professional-led
issue. For example, it is often the nurse director and the
senior nursing that will drive through change and own
it and bring in HR and finance support where needed.
However, problems can arise when the individuals that
are passionate about the service improvement and have
driven the change process leave. If HR is fully involved
in the service improvement process from the outset it
can ensure that there is an enduring platform within the
organisation to take you forward into the future.
HR involvement can also ensure that management
development activities support QIPP implementation.
Croft believes that particular parts of the QIPP initiative, such as
productive care, will hinge on people management capability.
If you read the literature around things like lean, Six
Sigma Business Excellence, all of these business reengineering type initiatives, theyve all stumbled on the
same issue, which is the culture and the people changes
that dont make them sustainable. It is the leadership, the
management, the participative styles, the engagement of
the front line that makes them sustainable and its where
the continuous improvement comes from because people
have to wake up every day and look for ways that they
could improve on what they did yesterday. Without the
right sort of management and employee engagement
these sorts of initiatives cant flourish.
Croft said that NHS North West London is working with the
NHS Institute for Innovation and Improvement on just this issue.
We are exploring how we can deliver this sort of golden
triangle; being able to deliver quality, productivity and staff
engagement at the same time. The QIPP agenda is a major
opportunity for people management professionals. If HR
people are just focusing on their recruitment processes,
their disciplinary and grievance cases and their sickness
absence figures, they will miss the HR opportunity of
QIPP, which is about leadership, culture change, employee
engagement, training and development around tools and
techniques and team development.
Croft strongly believes that where HR leaders engage in this
wider organisational development agenda they will also
reduce things such as absence, stress and conflict, providing
both HR and managers at all levels with more time to focus
on adding value.
It is not just the NHS where lean working is being introduced.
Parts of central government have also been rolling out lean
working since 2008, including the Department for Work and
Pensions (DWP), HM Revenue & Customs (HMRC) and the
Ministry of Defence (MoD).
Martyn Craske, Lean Programme Manager for the DWP, said
lean was being implemented across the DWP following initial
pilots in 2007, which had provided evidence on the efficiencies
and improvements to customer service that could be made.
One of the challenges is to embed lean so that it becomes
self-sustaining in different parts of the DWP, such as Job
Centre Plus and the Pensions, Disability and Carers service
without the need of a central lean programme to drive it.
Craske believes that HR has a critical role to play in this by
helping to ensure that leaders and managers are equipped
with the key leadership and management skills needed to
embed and sustain Lean and also to design HR policies that
complement and support lean ways of working. For example,
in performance management, reward and recognition and
training, development and talent management.
He said that while lean has realised very significant
efficiencies already, its full potential could only be realised
where this was supported effectively by senior, middle and
front-line managers with the necessary capability.
10
One of the issues for us was the basic skill set of our frontline managers that perhaps we had taken for granted. Some
managers were not able to hold the morning meetings and
talk to their teams using the information boards, which is
part of the continuous improvement process.
Craske said some front and middle managers also struggled
with things such as sharing ideas, listening and encouraging
other people to come up with the answers.
Senior leaders also need to embrace lean principles through
how they manage to help create a culture in which lean can
flourish.
Where managers particularly middle managers truly
get Lean, great things can happen.
Pat Davies, Senior Change Business Partner for Jobcentre Plus
and a lean champion for HR, said the civil service as a whole
is now looking to integrate lean working into management
development programmes across government so it becomes
part and parcel of how we do business.
Recommendations for public sector employers:

s review their management development programmes to
ensure they are equipping managers at all levels with the
skills needed to sustain new ways of working, such as
lean and managing across organisational boundaries
s ensure that HR policies in the areas of reward,
performance management, learning and development
and talent management are revised to support sustained
behaviour change in implementing new ways of working.
Recommendations for government:

s recognise that if it wants to deliver service transformation,
a step-change in the quality of people management
across the public sector is needed simply putting
decision-making closer to the front-line wont improve
the quality of autonomy and decision-making by front
line staff
s initiate a review of people management capability
development across the public sector in recognition of the
implications of its public service reform agenda for public
sector leaders and managers.
CASE STUDY
Since 2007 Jobcentre Plus has undertaken a journey towards
establishing itself as a lean organisation. Lean is both a set
of behaviours and a set of techniques and by using this way
of working, lean reduces waste, engages staff and improves
efficiency. Jobcentre Plus decided that it would embark on
its lean journey by engaging its people through creating lean
capability and the introduction of development centres. The
cumulative impact of this ensures that everyone in Jobcentre
Plus adopts lean ways of working and that national processes
have the lean tools and techniques applied to them to
eliminate waste and enhance the customer experience.
Additionally, a network of lean champions from all parts of
Jobcentre Plus has been set up to share good lean practice
and resolve common issues.
changed by lean, said Sue Venton, Head of Continuous

Improvement in Jobcentre Plus.
In many instances this has happened through the
introduction of layered information centres an information
centre is a lean tool that enables visible tracking and
reporting of current performance and allows teams to
manage information daily, resulting in effective planning
and resourcing. There are also ten-minute meetings around
the information centres and this enables team members to
celebrate success, raise a concern or put forward an idea.
Venton added: Jobcentre Plus has introduced an ideas
process whereby staff can raise ideas either for local
implementation or those which may have national replicable
potential. This activity ensures that another of leans key
characteristics staff empowerment is realised.
Creating lean capability

Tim Carter, Head of Design and Change Management
Division in Jobcentre Plus, said:
Already Jobcentre Plus has achieved well over 100 lean
experts and 1,000 lean practitioners. This level of lean
knowledge and expertise is being used to spread lean
capability throughout Jobcentre Plus by removing waste
from processes both locally and nationally, improving
customer service and the staff working environment.
This activity is supported by a lean deployment framework,
which sets out, amongst other things, a lean learning
sequencing for senior leaders through to front-line staff,
as well as lean working benchmark figures against which
progress is measured.
Engaging its people

Jobcentre Plus already has well over 20,000 staff who are
applying lean and around 60,000 whose work has been
Lean requires enhanced levels of people management if it is

to be sustained and reach its potential.
There are new roles for both operators and managers.
Supervisors in empowered, high-performing organisations
find themselves in new roles, which include coaching
and developing teams and individuals, clarifying business
expectations and responsibilities, managing the interface
Development centres
A network of national lean development centres has
been established across Jobcentre Plus, each focusing on
a specified customer journey, to provide lean expertise
and operational input into improving the design of
existing processes and supporting the design of new ones.
Development centres are operationally managed to ensure
front-line engagement and are supported by a management
board that is chaired by a senior operational manager. Tim
added: The ideas and concerns which are the drivers for
the development centres come from staff from all levels and
usually as a result of their information centre meetings.
The way forward

Carter said: Work is now ongoing to produce a Jobcentre
Plus lean sustainability framework with a view to rolling it out
nationally from April 2011. This will further help senior leaders
within the organisation to sustain and embed the lean culture
within Jobcentre Plus so that it becomes business as usual.
between teams and their environment, allocating resources

among teams and ensuring that continuous improvements
are occurring. All of this represents a span of responsibility
beyond that of the traditional supervisor.
Source: Juran Institutes Six Sigma: Breakthrough and beyond
(p202)
11
CHANGE MANAGEMENT AND ORGANISATIONAL DEVELOPMENT
The public sector reform agenda, highlighted by some of the

policy drivers above, is one of continuous change management
and increasingly puts the onus on public sector employers to
develop their own organisational development capacities. Crude
cost-cutting simply wont work but will have highly damaging
results unless the focus is on designing new arrangements for
delivering public services. This will mean that staff at all levels
will need to learn new skills and behaviours. Sustainable change
in service delivery will need to be accompanied by a change in
culture if staff are to adjust successfully to new processes and
ways of working.
CASE STUDY
The Royal Bournemouth and Christchurch Hospitals
NHS Foundation Trust has put staff involvement and
engagement at the heart of its approach to change
management as it looks to improve service delivery and
value for money.
The trust, which employs more than 4,500 staff working
on two sites in Bournemouth and Christchurch, is on
a drive to improve efficiency and productivity against a
backdrop of trying to make 30 million of operational
savings over the next three years.
One of the drivers of change has been the trusts chief
executive Tony Spotswood, who is also the national lead
on the NHSs quality, improvement, productivity and
performance (QIPP) programme on back-office efficiency
and optimal management.
The trusts HR director, Karen Allman, said a wide-ranging
transformation programme under the heading Protecting
our future is looking at all areas of service delivery to try to
identify process improvements. This has included a focus
on service line reporting a way of analysing operational
processes across an organisation to identify possible
efficiencies in the delivery of clinical services.
12
Sustainable change takes time to implement. Employers need to

be aware of promising more than they can deliver if they are to
avoid staff becoming frustrated and disillusioned. CIPD research
has shown that change has a negative impact on employee
attitudes and employees generally believe that change is badly
managed. This poses a significant challenge to public sector
leaders to reconcile the conflicting demands on them and chart
a course that will command the support and enthusiasm of
staff. The focus needs to shift from meeting short-term targets
to long-term outcomes.
The trust is also using diagnostic analysis to understand

how it makes best use of all its key resources, for example
its radiological equipment. Radiology has been redesigned
to maximise both efficiency and job quality.
One work stream is looking at how to improve the
medical and clinical pathways to ensure that consultants
time is used as effectively as possible.
Other work streams are focusing on how to improve
administration and clerical efficiency, and how patients and
staff access relevant health records.
Allman believes it is crucial for HR to be at the heart of
organisational change if it is to be lasting and to ensure
that staff understand and buy in to new ways of working.
HR invests a lot of time and effort in communicating and
consulting with employees and unions over change. There
are a wide range of methods used to communicate with
staff, including a core brief, which goes out once a month
and is delivered by managers. There is also a bi-monthly staff
newsletter Buzzword and a monthly Ask the Exec session
where the chief executive and directors attend a Q&A session
with different groups of staff. In addition, there is a weekly
email from the chief executives office. Staff can also access
all the communications on the intranet.
The CIPDs new tool Approaches to Change: Building capability

and confidence suggests practitioners clarify the rather vague
concept of organisational change by thinking about it in terms
of two things: rate of change and scope of change.
Rate of change
The rate of change can be continuous for example,
increasing motivation, engagement in the workforce or
addressing the ongoing need to become more efficient and
effective. Or the rate of change can be intermittent a project
that addresses a current major problem or opportunity such as
solving a quality issue or introducing a new product line.
Scope of change
The scope of change can be organisation-wide or business
unit or team change that is radical and transformational
involving new knowledge or technologies and processes. This
might include at organisational level, a major restructuring
and reshaping that dismantles an organisations structure and
culture, for example from the traditional topdown, hierarchical
structure to a collaborative structure with self-directing teams.
Alternatively, the scope can be about increments or adaptations
to existing knowledge, processes and technologies at
organisation-wide, business unit or team level.
In many cases there will be overlaps between these different
types of change. In one of the case studies for the CIPDs
change management tool, the HR manager at AkzoNobel
commented:
What weve noticed is that a radical change is followed
by a period of continuous change that builds on the
radical. We are currently looking at ways to make
incremental, continuous change for the organisation.
For example, every time someone leaves we ask if its
necessary to fill the role. Can work be done differently?
Can someone be developed into the role?
Public sector employers are faced with a similar challenge,

with the change needed a combination of both continuous
and radical change in order to transform all parts of
the organisation, as well as intermittent change to
incrementally make adaptations across the organisation to
improve service delivery.
How this degree of change is managed will decide the extent
to which efficiencies and improvements to organisational
effectiveness are made. Research by Said Business School for the
CIPD suggests that a majority of reorganisations fail to deliver
significant improvements in performance. About a third of
reorganisations fail to generate any improvements in financial
and competitive success measures.
Leadership is also of course central to effective change.
According to the CIPD Approaches to Change tool, leaders must
be able to make a powerful and persuasive case for change and
then act as a role model and help drive change.
Central to sustainable change is also creating a situation
where people feel they can contribute positively to the change
and can have some involvement in the process. The CIPDs
Approaches to Change tool highlights the importance of
involving employees affected by change on an ongoing basis
and emphasises the need to ensure people are fully aware of
the case for change and understand it. It also cites the value of
ensuring peoples psychological and emotional responses are
considered and addressed as change progresses.
Finally, change programmes need to be monitored closely to
ensure they remain on track or identify where they need to be
fine-tuned. Often the nature of change means that what is
originally planned has to adapt to external or internal pressures
or developments.
13
CASE STUDY
Jobcentre Plus (JCP) has created the role of HR change
business partner to ensure that the people management
aspects of all cross-organisation projects are fully considered.
Pat Davies, Senior HR Change Business Partner for
Jobcentre Plus, said her role ensures that issues such as
workforce planning, employee relations, learning and
development and TUPE are fully considered when change
is being implemented.
She ensures that HR milestones are factored into project
management plans and that the people management
issues are included in the risk register.
One project she is working on is helping to support the
development of JCPs personal advisers to enable them to
provide a more personalised service for customers who
find it more difficult to get back to work. The project
is closely aligned with the Governments wider welfare
reform agenda.
It is about treating everyone as an individual. Really
listening to people and finding out what are the individual
It is clear from our research that many HR departments in the

public sector have gone well beyond their traditional comfort
zone and are leading the drive for greater effectiveness and
efficiency across their organisations. Building on their experience
of managing relations with internal stakeholders, they are
engaging with clients and suppliers and making change happen.
HR departments are also the natural home for the whole process
of managing change and authorities are making increasingly
effective use of their in-house OD skills. Transforming the
HR function has been the springboard in many instances for
transforming the organisation.
Essex County Council and Kingston Borough Council are good
examples of local authorities where HR is helping to bend
and shape broader organisational change (see case studies on
pages 15 and 16).
HR is also central to the debate about whether long-term
efficiencies can best be sought through greater use of shared
services such as HR between different councils or whether a
more effective solution is to be found through outsourcing.
14
barriers that prevent them from getting a job. Are people

receiving the support and training they need and how can
we work together to ensure that they do?
In order to deliver cost-effective training for JCP personal
advisers, the organisation is developing an endorsed
learning offer.
NVQs can be expensive and we cannot afford them
for everyone. As an alternative we are working with
an awarding body to endorse our own personal
adviser learning. This will be supported by a personal
adviser online learning centre to provide ongoing
support. What we want to do is to have the awarding
body endorse the PA learning centre and our own
internal learning against their standards and then use
the line managers role as coaches and in providing
quality assurance to sign off competence.
This approach enables us to develop our advisers to
provide a more bespoke and personalised service
for customers and at the same time develop the
coaching and performance management skills of
our managers.
We found examples of both. However, it is evident from our

discussions that neither offers a panacea or a one size fits all
solution to the need to make radical cost savings within support
functions. We explore these issues in more detail under the
heading Building HR effectiveness.

s Develop organisational development and change management
skills to help senior managers respond to pressures for
dramatic improvements in efficiency and effectiveness.
s Consider how to help lead a radical transformation of the
model for delivering customer services in partnership with
external organisations.
s Consider carefully the pros and cons when choosing
between sharing back-office services between different
public employers and outsourcing to a commercial supplier.
A wide range of factors will need to be taken into account,
including the extent to which there are genuine economies
of scale to be made from sharing services between different
organisations (see Building HR effectiveness).
s Ensure legal and employee relations issues are considered

carefully in moving to new models of service delivery
applying a purchaser/supplier model to local government
may mean transferring large numbers of employees
across organisational boundaries and setting up new
CASE STUDY
Essex County Council is a large employer: in addition to
its 10,000 employees, the HR function provides support
to schools employing a further 30,000. The council wants
to be at the leading edge of HR practice, anticipating
and supporting broader organisation change. To meet
a perceived capability gap in the local authority sector,
they have recruited HR talent from outside, including
the financial services sector, as well as developing their
in-house talent, to build internal consultancy skills and
support OD and change management activity.
Faced with the need to make major financial savings,
the council has embarked on a radical process of service
transformation. This means a new target operating
model and the authority becoming almost purely a
commissioning, rather than delivery, organisation. The HR
function was asked to lead the transformation process
for the whole organisation, giving a powerful signal to
the organisation that people matter. This was within a
shrinking envelope as posts were taken out of the HR
function: Essex now has a ratio of slightly more than one
HR person to every 100 employees .
The new operating model has meant that service clients in
the area of employment and inclusion are now customers
of a trading company that operates in practice as a
separate commercial entity. Some 750 council employees
have been shifted across into the company. The trade
unions were impressed by the way in which this major
TUPE transfer was handled. Converting library services
into a trading company is currently under discussion.
Essex is working collaboratively with other public sector
providers and voluntary services to deliver service reform.
This involves working with a number of agencies to put
trading bodies. This is likely to have longer-term

implications for employees terms and conditions, and
in the short term represents a significant management
challenge in ensuring that legal and employee relations
issues are dealt with.
together customer contact channels that are currently

managed by different bodies as far as possible into a
new combined front end, with the aim of producing
savings of 300 million over five years. One example is
the partnership agenda with the local mental health trust.
Some 200 staff are currently seconded to the trust but
there are issues with remote management; to resolve
them Essex is intending to transfer the staff involved into
the trust. There are also further opportunities to integrate
services with local primary healthcare trusts or with GPs in
a new commissioning role.
Other examples of the HR contribution to producing
significant financial savings include the use of higher
OD and change management skills to reconfigure the
management overhead, saving some 19 million. There
is a targeted further saving of 20 million to be got from
new ways of working, looking at business processes,
technology and releasing office space. There is a drive
to keep costs down by negotiating tighter prices with
suppliers, getting the costs of temporary workers under
closer control and planning future staffing needs so as to
make better use of internal staff. Adopting best practice
on employee engagement from the commercial sector
has produced an extraordinary turnaround in engagement
levels, which have risen to more than 70% in challenging
times.
Essex has placed all of its HR transactional activities into a
shared service unit. Back-office functions including HR are
being joined up and shared across the organisation and
the council is open to suggestions for partnership with
other local authorities that may wish to use these shared
services. It is not, however, obvious that there are major
advantages of scale to be gained by joining up back-office
services with other organisations and outside providers
might in many cases offer a more cost-effective solution.
15
CASE STUDY
In 2009, Kingston Borough Council (KBC) embarked on
a four-year plan, One Council, One Kingston. Some 14
million of savings are required, to be achieved by doing
less but better. The aim is to plan, conceive and deliver
services as a single council, in combination with partners.
The approach has been designed to deliver our vision
and make peoples experience of our services as easy and
positive as possible by acting as one council. Essentially
this means looking at service delivery from the customers
perspective and eliminating unnecessary duplication
adopting one way of doing things, and doing things once.
Projects within the One Council programme include:
s Customer first looking at all staff who have
customer contact with the aim of minimising
unnecessary staff contacts, dealing with queries
straight away and exploiting use of the Internet, for
example for paying and booking online. A separate
project will increase investment in ICT and reduce
staff over the period of the programme.
s Community hubs bringing together local clusters
of services that could be provided by the council,
health, voluntary organisations and other partners.
s Commissioning aims at right sourcing rather
than outsourcing, and getting best value from
procurement.
s Organisational dynamic recognises that getting
structures right is not enough. Human Resources
Manager Marie Gadsden says the key is making the
organisation culture work, getting the right people
in place and getting the right behaviours. Staff
workshops have identified the characteristics of a
gold medal winning OD function, to be achieved
by 2012.
16
There are 7 million of savings needed to be achieved in

the current year and some 200 staff jobs are on the line.
Despite the financial situation, staff attitudes have not been
badly affected and there is an active programme of staff
engagement. Change champions have been appointed
and younger staff are being asked for their ideas.
The Programme Management Office project is the
transformation team. This includes external partners such as
the CEO of Kingston PCT. However, the NHS has different
finance, structures and governance and there is no prospect
of a full-blooded merger. KBC is talking to adjacent councils
Sutton and Merton about possibly linking HR/payroll
systems with a joint partner, and other functional areas may
also be included in the discussion. Many questions currently
remain to be answered, including whether establishing
closer links will save money, but Marie is confident that
over time we can do it.
Leadership and management are a major focus of attention.
A Strategic Leadership project aims to improve the way
the top team operates. A One Council Manager project is
looking at what a manager is at Kingston. A leadership and
management framework has been developed and training is
in hand. The aim is to get more consistency in defining who
line managers are, reducing their number and limiting the
title to those with significant spans of control.
HR is heavily involved in all the projects: there is an HR
business partner on every project team. KBC is now using
business partners successfully, not just in HR but also in, for
example, finance. HR business partners at Kingston could be
seen as organic mechanics, with a flexible remit to improve
organisation structures and behaviour. Business process
reviews are being undertaken with an external consultant,
using customer surveys to map processes and eliminate
overlapping activities between departments.
Managing the employment relationship

If HR is to play its part in steering the public sector through
the tough months and years ahead and in managing and
implementing change, it will need to focus closely on the
effectiveness of employee communication and engagement
and see it as a key lever in winning support for change. The
public sector reform agenda will mean large parts of the
public sector workforce will have to adapt to very different
ways of working, as well as to significant changes in how
they are rewarded.
Trade unions understand that successful communications
start from the creation of a persuasive narrative about what
is going on. Private sector employers have been catching
up fast, and public sector employers who fail to follow suit
will risk losing the game. The involvement of the senior
management team in creating and sustaining a narrative on
the case for change is vital.
Employers in the public sector have particular problems to
deal with due to the political context. Messages about public
sector jobs, pay and pensions will be seen in the context of
the need to make cuts in public spending, and are in any
case likely to be targeted more at the general public than
at public sector employees. But employers need to take
responsibility for getting messages to their own workforce,
emphasising themes such as the need for comparability
between the private and public sectors, and the risk of
damaging the recovery if borrowing is not brought down.
Public sector employers need to build a new psychological
contract emphasising the wider value and benefits in
working for the public services that still exist despite the
pressures being placed on the sector.
Key themes from a recent CIPD report, Harnessing the Power
of Employee Communication, include:
s the need to create a shared sense of purpose
s senior leaders need to own the message
s line managers need to give consistent support.
HR needs to work with other functions, including internal
communications, to see that messages are delivered
effectively. They also need to work with the senior
management team on developing the message, since it has
to be their message that is being delivered. A wide range
of media are available to reinforce the message but at least as
much effort needs to be put into getting the message right

and ensuring that it will resonate with staff as into techniques
for putting it across to employees. Meaningful consultation
with employees can also be crucial to securing their buy-in. This
means genuinely giving employees an opportunity to input their
views and have those views considered before decisions are
made. A cosmetic consultation exercise will alienate staff and
damage trust in senior management.
In creating a new psychological contract, HR needs to emphasise
the critical role of mutual trust and respect if communication is to
be effective. Messages that get across have to be believable, and
this underlines the importance of authenticity (see box).
From employee engagement to organisation

authenticity
The great work that many organisations are doing to
create engaged employees is being taken to the next level
based on two linked propositions.
The first is that trust needs to be deepened to
unprecedented levels and this will create a much deeper
level of emotional loyalty. The creation of talk-straight,
transparent and dialogue-centred cultures is being given
real priority. The building of adult cultures, leaving behind
the paternalism of the past, is seen as a driver of shortterm effectiveness and long-term loyalty.
This is about helping people develop trust in what the
organisation stands for as well as a day-to-day experience
that reinforces this in numerous ways. It appears that
this ability to truly tell it as it is, without fear, enables
organisations to go beyond the rhetoric of espoused
values to learning how to live them in the heat of battle.
Source: Time for Change Towards a Next Generation
for HR (CIPD 2010).
Top management has a key role in setting a culture in which

communications are credible and believed. This is about
openness and consistency and sorting out relationships across
the organisation, as well as top management visibility. Public
differences of opinion within the top team, or between different
layers of the management hierarchy, can damage the credibility
of the message.
17
Managing the relationship with trade unions is generally in

the hands of specialist employee relations staff. Any skills
gaps in this area may need to be addressed by coaching or
external training. Establishing successful partnership relations
with unions on both a local as well as a national level is likely
to become even more important. Public sector employers
are likely to receive encouragement from the Government
to push for greater local autonomy and renegotiate terms
and conditions of employment where necessary to cuts
costs and provide more bespoke local service delivery. The
Governments White Paper Equity and Excellence: Liberating
the NHS states that in future all healthcare employers will
have the right, as foundation trusts have now, to determine
pay for their own staff. Local government employers can
already negotiate pay at a local level if they have opted out
of national pay bargaining.
The CIPD (2010) policy paper Transforming Public Sector Pay
and Pensions concludes there needs to be a shift in emphasis
from pay structures to pay progression and from the value
assigned to a job and its pay to one that better recognises
the achievement of the person in that job, if service delivery
is to be improved.
CASE STUDY
Karen Allman, HR Director at the Royal Bournemouth and
Christchurch Hospitals NHS Foundation Trust, said that
traditionally the relationship with the unions has been a
positive one, with the trusts quarterly partnership forum
working well. This is supported by a monthly sub-group
meeting that is used to review and change policies.
She cited the recent example of the introduction of electronic
rostering for nursing staff. The Royal College of Nursing
representatives have helped support the change and sent
out guidance making it clear that some people might have
to compromise on some of their traditional informally agreed
working patterns.
The only example of a recent dispute was over plans by
the trust to retain its flexible working allowance, which
was a payment for people working anti-social hours. The
18
Dean Royles, Director of NHS Employers, agreed that healthcare

employers will increasingly have to start to make local
agreements with trade unions to manage employment costs
more effectively.
I think what you will increasingly see is employers
starting to work with local trade unions to identify a
consensus about ways that pay costs can be brought
down and productivity increased.
One area that many NHS employers are looking at is the
incremental pay increases that NHS workers receive each year
until they reach the top of their pay band, regardless of any
NHS-wide pay freeze.
There are examples of NHS trusts that have linked incremental
pay increases to levels of sickness or to whether individuals have
completed their mandatory training.
Stephen Moir, Corporate Director for Strategy and Democracy
at Cambridgeshire County Council, believes the scale of the
change will place a renewed emphasis on public sector HR
professionals being equipped with negotiating skills to help
manage the relationship with the unions and, wherever possible,
build partnership and consensus or manage any tensions.
trust wanted to retain the allowance because it was much

less bureaucratic than the national system under Agenda
for Change. Despite agreement with local officials,
national union representatives ultimately prevented the
allowance being retained. They saw it as the thin edge
of the wedge and thought we would start to think about
moving away from the national pay system, which we
had no intention of doing. However, Allman believes
that foundation trusts should have much more flexibility
to negotiate terms locally. She cites the example of the
annual pay increment NHS staff receive under Agenda
for Change, which means that regardless of the national
pay freeze, staff get an annual 2.5% to 3% pay increase
until they reach the top of their pay band. In addition, she
believes that there should be much greater flexibility over
what staff earn when they are off duty but on call in
case of emergency that takes into account their likelihood
to be called out.
Integral to the employment relationship is the extent to

which employees feel valued and engaged. Where public
sector employers focus on building the drivers of employee
engagement they will also support positive employee
relations.
The MacLeod review of employee engagement identified four
core drivers of engagement as:
s senior leaders and managers setting out a clear
organisational purpose through a narrative that
everybody in the organisation can understand and
support
s managers at all levels having the people management
skills to empower and engage people
s employees having a clear voice and feeling their views are
respected and matter
s a sense of integrity underpinned by behaviour throughout
the organisation that is consistent with its stated values.
likely to undermine employee well-being, motivation and

commitment, which will have a knock-on effect on the
quality of service delivery.
HM Revenue & Customs has analysed its employee survey
to establish the different levels of engagement in the
organisation and has segmented its workforce into five main
categories of engagement, recognising that a sophisticated
understanding of the drivers and obstacles of employee
engagement is key to developing a coherent employee
engagement strategy (see case study on page 21). In the
private sector, Tesco has pioneered a similar approach.
Crucial to employee engagement is fairness, trust and an
adult-to-adult relationship between employer and employee.
Peter Barnard, registrar at Grimsby Institute of Further and
Higher Education from 2001 to September 2010, thinks
employee engagement can only flourish in an environment
where performance is managed effectively and consistently
(see box).
This framework for engagement is also one that supports

effective change management and restructuring and can help
people feel they are agents of change, rather than victims of
change. A focus on supporting the key drivers of employee
engagement can also help maintain morale and ensure that
essential service delivery does not suffer during periods of
change and uncertainty.
Barnard said the institute places a lot of emphasis on

developing the capability of its managers at all levels across the
organisation to ensure performance is managed consistently.
It has tackled the issue of teacher and lecturer performance
through frequent observations for less experienced or
underperforming staff. He said:
The CIPDs 2010 HR Outlook survey shows that the

public sector was the only one not to include employee
engagement within its top three HR priorities for the
coming 12 months. The survey reveals that the focus for
respondents in the public sector is an understandable
one on process-oriented areas such as restructuring the
organisation and strategically planning the workforce.
However, at a time when the public sector is facing huge
pressure in terms of budget and headcount reduction, it is
important that employee engagement is also regarded as
a priority. Without such a focus the impact of pay freezes,
reductions in pension entitlement as well as job losses is
Over time weve become more and more prepared

to conduct observations at short notice. It used to
be you received about four or five months notice;
however, we now reserve the right to walk in, and do.
Managers can go in to the classroom at any time and
certainly for new staff we would expect managers to
be going in on a regular basis. Of course, no one likes
being observed and we put a lot of effort into getting
it right so people are more likely to see it as a positive
process which is about helping them improve and fulfil
their potential rather than as someone always peering
over their shoulder.
19
s Engage in honest, open and frequent dialogue with

employees about organisational change.
s Focus on identifying and supporting the drivers of employee
engagement across the workforce.
s Improve performance management capability of managers to
help employees reach their potential and deal with underperformance consistently where it occurs.
s Develop negotiating skills to help manage the relationship
with the trade unions and wherever possible build
partnership and consensus or manage any tensions.
s Promote and support the recommendations from the

MacLeod review of employee engagement across the public
sector as part of the drive to make efficiencies and improve
front-line effectiveness.
CASE STUDY
Grimsby Institute of Further and Higher Education has
reduced employee absence levels through a twin-track
approach of investing in the people management capability
of managers and also by taking a fairly prescriptive approach
to managing absence.
Since 2001 the institute has developed and implemented a
health and well-being strategy. The strategy is underpinned
by extensive communication with staff to ensure they have
clear expectations of what approach the institute adopts
which is a caring one, balanced with the business need for
people to be at work.
Peter Barnard, registrar at the institute between 2001 and
September 2010, said the college invests in the management
capability of its managers to ensure they can motivate,
develop and support their people; however, it also has a clear
HR policy framework that supports attendance.
Its our job as HR to equip managers through systems,
training, information, advice, and support so they do
the job they are actually paid to do, which is to manage
people. However, people working here also know that
we will actively manage absence. For example, we dont
pay people who go off sick while we are disciplining
them. This starts with the investigatory interview stage
and covers all subsequent stages, including if someone
goes off sick after receiving a penalty.
20
Before introducing the policy Barnard consulted with

managers about how the existing policy had been working,
as well as the unions. Although the sick pay policy was not
contractual, we did give three months notice of the change.
The unions made some useful comments about taking
account of disability issues, which we embedded.
The institute has won several significant national awards
for its work on health and well-being, including the Orange
National Business Awards for Health, Work & Well-being,
and a Business in the Community Big Tick award for its
holistic approach to managing absence. This includes a
proactive health and well-being team (HR, health and safety,
occupational health and a physiotherapist), which ensures
early intervention and support for staff.
In 2009, 46% of staff had 100% attendance, showing that
the investment in management capability and the health
and well-being of staff had brought about clear business
benefits, not least driving up the quality of the learners
experience since their lecturers and other staff are more
likely to be at work.
Sickness absence levels have reduced from 10,000 working
days lost (for 1,000 staff) in 2001 to 4,266 working days
lost (for 1,300 staff) in 2007, with absence levels since then
remaining constant at less than 3.5 days per employee per
year, compared with a national average for the education
sector of 6.2 days per employee per year according to the
CIPD 2010 Absence Management survey .
CASE STUDY
HM Revenue & Customs (HMRC) was formed in 2005,
following the merger of Inland Revenue and HM Customs
and Excise Departments. As part of a strategy to improve
its efficiency by 5% year on year to 2011, it has made
significant reductions in staff numbers and currently employs
the equivalent of 68,000 full-time people.
Employee engagement surveys have shown a continuing
need to motivate and engage HMRC staff. At the end of
2009, the department began developing an employee
engagement strategy and recognised the need to include
colleague segmentation to support the communication
and embedding of a wider customer-centred business
strategy. Focus groups and one-to-one interviews were
held with staff at different levels and almost 6,000 people,
in all grades and from a range of locations across the
UK, completed an online survey. Drawing on the survey
findings the results were used to establish what staff
attitudes and motivations really were and provide a deep
level of insight into the drivers of colleague engagement.
It emerged that initial assumptions that employee
engagement levels might be adequately reflected, by
aggregated scores on motivation or desire to stay in the
organisation, were incorrect. Measuring engagement by
peoples alignment with organisational objectives, or their
willingness to go the extra mile, failed to do justice to the
range of factors that influenced their behaviour. What was
needed was to look beyond the results for the workforce
as a whole and focus on the attitudes and motivation of
individual employees.
The research was undertaken jointly by the HR department
and behavioural, evidence and insight team in the individual
customer directorate with experience of working on the
HMRC customer segmentation. It demonstrated that
employees identified, not so much with HMRC, but with
their team or work group. Many were committed public
servants, enjoyed their work and took pride in what they did,
but others were angry and frustrated by the way their work
was organised.
There are many approaches to segmentation, but by basing
the segmentation on the core dimensions of passion
and engagement, researchers were able to segment the

workforce into five coherent, relevant and mutually exclusive
groups united in their attitudes:
s committed enthusiasts (high engagement/high
passion)
s frustrated enthusiasts
s dependable contributors
s quiet advocates
s disconnected (low engagement/low passion).
All of the segments have clear demographic characteristics
such as grade, location, directorate or length of service.
HMRC believe they are the only government department
that has so far adopted this segmentation approach to
explore employee engagement. Many departments use a
linear segmentation model but in the current challenging
climate it is not realistic to expect to drive people up the
segments from highly disengaged to highly engaged.
HMRCs model provides much more granularity.
The five colleague engagement segments developed by
HMRC are distinct, unique and mutually exclusive and
encourage managers/leaders to take a bespoke approach to
employee engagement.
The segment portraits, which have been developed, offer an
explanation of what gets each out of bed in the morning,
their differing motivations and how they feel about working
at HMRC.
The segments are portrayed objectively with a view to
highlighting key differences between the segments in
a positive manner as distinguished by their differing
motivations and behavioural drivers.
The results mean that the HR department can help line
managers to take a more tailored approach and focus their
efforts where they will be most effective. It may for example
be more useful to work with the one staff member in five
who is a frustrated enthusiast rather than with dependable
contributors since, although across the organisation as a
whole there are more of the latter, the former are more vocal
and likely to bring other staff with them. To get messages
(continued)
21
CASE STUDY (CONTINUED)

across to different members of their team, line managers
may need to use different language and be more
thoughtful about how to communicate. HR Director
Dorothy Brown says:
We wanted to know what got our people out of
bed in the morning, wanting to come to work.
The findings showed that, although many have
enthusiasm or passion for their work, in some cases
this is being overshadowed by negative feelings. Our
job now is to help managers channel this passion into
more productive attitudes and behaviour.
Another major plank in HMRCs developing employee
engagement strategy is its employer brand, work on which is
due to be completed shortly. Dorothy says:
Its a lot about reputation and how we position ourselves
as an employer not so much what we say in recruiting
but how we talk to our staff. The core of our employer
brand is our employment value or career proposition.
22
The employment value proposition, which has been

developed in consultation with staff, senior stakeholders and
trade unions, needs to fit with the organisations vision and
culture. Recognising the short- to medium-term challenge
presented by the Governments spending cuts, the brand has
to be meaningful and attractive to employees also for the
longer term. It underlines the breadth of job opportunities
available to the core of professionals working for HMRC on,
for example, enforcement and compliance, tax evasion and
specialist areas of taxation. The proposition also emphasises
the importance of straight-talking communication in the
HMRC culture.
The inherent quality and interest of jobs in HMRC is very
strong. Senior staff are aware of the external opportunities
open to them later in their career. However, the employment
proposition also needs to be meaningful for staff at lower
levels whose jobs may not be as exciting but who can
be offered targeted career development. As with other
government departments, there is relatively little staff
turnover in HMRC and the department has to find ways of
encouraging people to be resourceful in looking at career
opportunities, both inside and outside HMRC.
WORKFORCE PLANNING AND TALENT DEVELOPMENT
An integral component of effective change management is

planning for the future to ensure that the organisation has
the right people at the right time, with the right skills. For the
public sector, its a prerequisite for effective service delivery.
Against an environment of budget cuts, right cost is a
particularly important consideration as failure to plan can
lead to costly recruitment agency or temporary worker fees
or expensive use of employee overtime. Just as importantly,
inadequate workforce planning or talent management
will fail to address evolving and future skills needs, which
will decide if public sector employers can deliver service
improvements and new ways of working.
This section of the report considers these two related areas
workforce planning and talent management and draws on
findings from CIPD research with particular relevance to the
public sector.
Planning your workforce

The CIPDs 2010 guide suggests the following definition of
workforce planning:
a core process of human resource management that is
shaped by the organisational strategy and ensures the
right number of people with the right skills in the right
place at the right time to deliver short- and long-term
organisation objectives.
A recent CIPD survey showed that eight in ten respondents
from the public sector described their organisation as
conducting workforce planning (against a 61% average
across all industries). And the CIPDs HR Outlook survey 2010
reveals that respondents from public sector organisations are
more likely than most to consider strategically planning the
workforce among their top three priorities for the next 12
months. This is encouraging given the importance of effective
use of people resource in a climate of reduced budgets.
However, there are opportunities for most organisations,
including those in the public sector to improve their
workforce planning efforts. The the House of Commons
Health Committees Workforce Planning Report (2007) noted
that workforce planning was a vitally important process, since
70% of NHS funding was spent on staffing costs. However,
it pointed out that there has been a disastrous failure of
workforce planning. Little if any thought has been given to
long-term or strategic planning. There were, and are, too few
people with the ability and skills to do the task.
Director of NHS Employers, Dean Royles, sees workforce

planning as crucially important to improving public service
delivery. He gives the example of the implications of the
move to degree-based entry for the nursing profession. He
said: What will that do to supply? What will it do to nurses
expectations? What different service or care will the patient
expect? These questions are extremely important. Royles
thinks one response to this is focusing on the skills mix in
terms of other healthcare staff who might be equipped to
takeover some aspects of nursing.
On a ward you might have a skill mix of 60% qualified
nursing and 40% unqualified nursing. What some
NHS employers have been doing over time is looking
at enhancing the skills of nursing support staff and
healthcare assistants who are at levels two and three
on the [Agenda for Change] pay band to deliver more
advanced care but which you dont need to be a
registered nurse to do.
Over time we can develop these band twos and threes
to make them band fours so healthcare employers can
provide the same level of service but with fewer qualified
nurses. This also means that your qualified nurses then
spend more of their time doing things that really add
value to the patient. In addition it can provide a career
path for more junior staff that could lead to nursing. In
doing this we can shift the skills mix involved in front-line
care so its leaner and more cost-effective but actually
provides a better service.
In the CIPDs research for the workforce planning guide this
difficulty in taking a long-term view and the capability issue
emerged as barriers across sectors. While a third of public
sector organisations say they plan more than five years ahead
(the highest proportion across sectors), there is a still an
opportunity to improve this focus.
Particular challenges highlighted in our guide on workforce
planning by participating public sector organisations included
the challenge of coping with reduced budgets (and in many
cases increased demand for services) and also the difficulties
inherent in operating in a political arena.
Both of these points came out of our research at the
University Hospitals of Morecambe Bay NHS Trust. Here
Roger Wilson, HR Director, points out:
23
One of the fascinating factors of the NHS is [the

tension between] infinite demands and finite resources.
Resources are also getting slimmer because of the
squeeze on the public purse. Demand for services is
going to go up, due to the ageing population.
Our commentary on the University Hospitals of Morecambe
Bay NHS Trust also lays out the challenge of matching changes
to services (as priorities alter and services restructure) with
the trusts workforce plan. As the deputy director of HR and
OD described: You align all the cogs, but then someone else
changes them and everything drops out of alignment again.
This point was reinforced by one of the HR business partners,
who points out:
Private sector organisations base workforce planning on
the business and on cost. The process is different in the
NHS. You dont have as much autonomy. You have to
provide a certain amount of services and you need to
manage the political arena.
We saw some very positive examples in our research of
how HR professionals were working with senior colleagues
in their organisation deal with these challenges and work
to put in place the capability required for the organisation
to deliver in both the short and longer term. The local
government organisations Cambridgeshire County Council
and Birmingham City Council featured in the guide both
had HR teams who were very conscious of the implications of
the move to focus more on commissioning and provision of
quality assurance in the future (and decreased emphasis on
direct provision of services) and were planning accordingly.
Ultimately, workforce plans must be robust enough to
manage the organisation in the short term while flexible
enough to cope with a range of future scenarios. A good
illustration of the first need is indicated below in this
comment from Graham Smith, Director of Human Resources
at Dorset Police. He outlines the challenges of day-to-day
planning to deliver a 24/7 emergency service:
we have got to make sure that we have got sufficient
people turning up for work every day in the right
locations and with the right skill sets to be able to
cover everything from patrol activity and work within
safer neighbourhood teams through to major crime
investigation and firearms support. The degree of
24
professionalism and specialisation involved in policing

today is significant and, given the resource limitations,
effective workforce planning is essential for the force.
However, this is only part of the picture and for the public
sector (as in the private sector) there is a danger there is too
much focus on operational and budgetary planning at the
expense of longer-term strategic planning. As Smith highlights:
Ultimately, HR is about ensuring the service is fit for
purpose tomorrow, not just capable of delivering on
todays operational need.
A workforce plan should not be seen as something that is
set in stone but as a means of promoting discussion and
debate about the future needs of the organisation. As the
head of personnel services at Dorset Police highlights:
Its not just a fancy document. Its now seen as a live
working document thats valuable to all of us. Now we
cant think what we would do without it.
Managing your talent

Related to strategically planning your workforce is the issue
of talent management a term that has come to the fore
in recent years. Before moving on to consider CIPD research
evidence relating to the public sector, its useful to consider
what we mean by this term.
The CIPDs factsheet on talent management proposes
the following working definitions of talent and talent
management:
Talent consists of those individuals who can make a
difference to organisational performance, either through
their immediate contribution or in the longer term by
demonstrating the highest levels of potential.
Talent management is the systematic attraction,
identification, development, engagement/retention and
deployment of those individuals who are of particular value
to an organisation, either in view of their high potential for
the future or because they are fulfilling business/operationcritical roles.
However, the CIPDs factsheet also points out that
organisations find greater value in formulating their own
meaning of what talent is than accepting universal or
prescribed definitions and there are considerable differences
in how talent is defined across different industries and
sectors. It also draws attention to the fact that more
organisations are also now broadening their definitions,
looking at the talents of all their staff and working on ways
to develop their strengths.
In view of the cuts, public sector organisations are now

expecting there is a danger that talent management
becomes a victim of budgetary pressures. Half of the
organisations surveyed in the CIPDs Resourcing and Talent
Planning (2010) survey say the recession is having a negative
impact on their resourcing budget for 2010. Unlike last year,
when the public sector was less affected, this year they were
equally likely to report cuts to resourcing. The survey also
finds that particularly large proportions of organisations in
the public sector are anticipating recruitment freezes (51%)
and reducing the number of recruits they hire (68%).
The CIPD firmly believes that there are positive measures that
organisations can take in response to the current challenges.
Talent management is more important, not less important,
during challenging times. We have seen some encouraging
signs from both our survey and case study research on talent
management. Although organisations may not be able to
recruit, there is a real opportunity to focus on developing and
retaining talent in-house. It is also vital to understand where
the business-critical talent is in your organisation, and ensure
that vital skills and knowledge are not lost if decisions about
redundancies are being made in haste.

s Consider the workforce development implications of an
increased move to commissioning services and decreased
emphasis on direct provision of services.
s Ensure workforce plans are robust enough to manage the
organisation in the short term while flexible enough to
cope with a range of future scenarios.
s Consider the skills mix of employees to identify
opportunities for more cost-effective deployment of staff
in the delivery of front-line services.
s Focus on developing future talent and capability as well
as the current talent of the organisation.

s Ensure the UK skills and qualification system is more
responsive to employer demand for skills to ensure there
is sufficient supply of the right people with the right skills
to meet changing public service delivery requirements.
There is an opportunity for the public sector to learn from

the experience of organisations who have been hit earlier by
a period of austerity caused by the recession. Our War on
Talent? and Fighting Back through Talent Innovation reports
(including research with HR people in both private and public
sector organisations) published in 2009 both draw attention
to the need for careful balance between a focus on shortterm organisational needs and longer-term perspectives.
It also points out that a sustainable approach to talent
management is required, which by its very nature should be
focused on developing the current but also the future talent
and capability of the organisation.
25
BUILDING HR EFFECTIVENESS
At a time when major challenges are facing public sector

organisations, the role and structure of HR are also under the
spotlight. At its essence, HR needs to consider how best it
organises and skills itself to deliver disproportionate value to the
organisation while at the same time releasing efficiency savings.
The CIPDs Next Generation HR research (2010) has recently
focused on the future role of HR. The purpose of that work
was to stimulate debate and provide examples of emerging
interesting practice, and in particular look at examples of how
HR can and does support not only short-term performance but
also drive sustainable performance over the longer term.
Too much of the debate on HR is driven by
conversations on structure and roles (and how
challenging it is to make the business partner model
work) against the current predominant HR models,
rather than asking the more fundamental questions
about how it needs to change in light of the new
demands on organisations. Time for change towards a
next generation for HR.
In the Next Generation HR UK research we identified how,
historically, HR was positioned very much as a service function
and its credibility and influence stemmed from delivering
excellent service to its internal customers. Many functions then
enhanced their influence and impact by becoming owners of
some of the key organisational processes a process-driven
function. This type of process-driven work could include
supporting the performance, talent and reward agendas. In
the future the CIPD sees a further evolution of HRs role into
one where, because of its unique position on the interface
between people, business and market, it can build on its
process role to become insight-driven.
However, in the research, what we also uncovered was
that the recession has meant a challenging time for many
HR teams and has generated a back to basics feel, where
retrenchment or even survival has dictated many agendas.
The CIPDs HR Outlook (November 2010) has identified that
HR professionals in the public sector have identified the top
organisational priority over the coming 12 months is managing
costs (89%), with their number two priority being to improve
processes (78%). For HR professionals in private sector services,
managing cost is also top priority (72%) but growing the
business closely follows as the second highest priority (70%).
26
And for the HR function itself the top two challenges facing
those respondents in the public sector over the next 12
months are managing change and cultural transformation
and restructuring the organisation. Interestingly, these dont
feature in the top two challenges for HR functions in the
private services sector which appear to be primarily focused
on employee engagement and improving performance
management and reward.
The challenge for HR to deliver these agendas for their public
services organisations needs to be set against the backdrop
of the pressures facing the HR functions themselves. Over
the last 12 months, 40% of respondents from public sector
services report their HR function has decreased in size and
some 56% expect their HR functions to decrease in size over
the next 12 months.
To add to the picture, the HR Outlook survey highlighted
some 79% of public sector services HR respondents agree
or strongly agree with the statement, HR to be perceived
negatively in times of cost reductions and redundancies. This
is the strongest level of agreement with this statement seen
across the sectors surveyed.
Structures
The main route to achieve the goal of a strategic, value-adding,
business-aligned and efficient HR function has for many
organisations, we believe, been through structural change.
The CIPDs HR Outlook survey shows cost reduction is
the top priority for all sectors when restructuring their HR
function (according to respondents whose organisations
had done so in the last two years), with the desire for HR to
be a strategic contributor falling to second place. Looking
at the public sector, the position is even stronger: the cost
reduction driver is more marked (some 47% reporting
this versus 39% in overall sample). The need to fit wider
organisational change models (31%) and the need for HR to
be a strategic contributor (32%) are the other top priorities
when restructuring.
The challenges involved in HR transformation are highlighted
by the anonymous case study opposite.
But HR transformation is not easy and what you see often is
that it is difficult to embed in an organisation where there is a
lot of resistance to change (which can include HR resistance),
CASE STUDY
In 2008 the chief executive of a large public sector
organisation set out a vision for his organisation. He felt
that although they were meeting standard definitions of
success, the focus there had been on targets and had led
to robotic ways of working and not necessarily delivering
what was best for the public.
The drivers of this vision were three-fold:
s to encourage an approach where front line officials
could actively use their own judgement
s this would in turn increase the confidence and
satisfaction of the public accessing their services
s it would also support the organisation in its drive for
efficiency and cost-cutting by using resources in the
most savvy way.
and where the much increased move to self-service and

business partners means many HR becomes less visible, as
these comments from inside a public sector organisation
undergoing a similar journey indicate:
s Theres unhappiness with people having to do what
they see as HR functions (which are really management
functions)... Take the prop away, people feeling quite angry.
s when we did rely on HR for things, we let them do it.
s (With HR transition) Happy to deal with it, appreciate
times are hard, could have been better prepared for it.
s Perception that at the moment (pre-business partners)
that HR is gone.
s HR is becoming more remote, we might lose some things
I miss having local contact: zipping upstairs, have a
sounding board will miss on more knotty HR issues.
s its all about cost saving.
s need to go through this really difficult bit (in terms of
the HR transition) middle managers need to see if work
for them boost morale, show the system works. Still
very, very early.
Internal changes were designed to support and mirror the

aims above as part of this change project.
The key one has been the review and fundamental
structural change of the financial and HR systems.
These were designed to:
s ensure greater operational efficiencies
s allow for more personal judgement to be exercised
in the way individuals lead and manage their teams:
Leaders being empowered to look after their staff in
the right way
s a move away from the traditionally highly paternalistic
approach to HR
s be aligned to and support the externally focusing
elements of the vision.
The CIPDs 2010 HR Outlook survey looked at what

challenges HR functions have faced when changing their
structure. For public sector respondents, their joint top
challenge was identified as resistance to change by HR
(together with difficultly in defining roles).
The survey identified that some 22% of respondents had
adopted the three-legged stool model (shared services,
centres of expertise and business partners) attributed to David
Ulrich. The most popular model, at 44%, identified by the
survey was a single HR team, with generalist, specialists and
admin people all together.
HR professionals working in the public sector were
significantly more likely than their counterparts to state their
HR function had adopted the three-legged model, however
this is perhaps not surprising given that public sector
organisations are typically larger than those in the private or
voluntary sectors. See Figure 1 on page 28.
27
Figure 1 (2010 HR Outlook survey)
All HR professionals
(n=2,266)
42
22
Large organisation
(n=1,571)
30
Medium organisation
(n=536)
Small organisation
(n=113)
11
35
15
64
47
111
4 2
14
2 3
15
25
The three-legged model (referred to as the Ulrich model) including business partners, specialists and shared services
A single HR team with generalists, specialists and administration together
A corporate HR strategy team with operational teams providing all HR services, aligned to business units
A corporate HR strategy team with operational teams providing all HR services, aligned by location
A set of specialist services provided centrally, with business unit HR teams providing the rest of HR services
A small central HR function with largely outsourced HR activity
Other
The three-legged stool model

Business partners
Many organisations have for some time tried to develop relationships with key business units. In the Ulrich model
this has been re-emphasised and (to a degree) redesigned. The tendency is to settle on the term business partner to
describe the business-facing role. These individuals (or at most small teams) are expected to work together with other
business leaders on strategic development, organisational design and change management.
Shared services
Administrative tasks form the core of shared services activities, often in conjunction with a call centre and intranet.
These tasks, previously performed locally by divisions or business units, are re-engineered, streamlined and centralised
so that the various business units pool resources and share in the service delivery solution. This has the potential
advantage of offering cost benefits through the economies of scale that such a model provides.
Centres of expertise
Centres of expertise with deep technical capability in such areas as resourcing, employee relations, reward and
training give professional support to business partners, often developing detailed policy for corporate HR and acting
as a reference point for shared services agents dealing with complex issues raised by clients.
28
To enable such a model to work, there is an increasing role

for e-HR. The practical benefits of automation would seem to
be significant. It eliminates routine and repetitive paperwork,
streamlines organisational processes and can enhance HR
reporting by tracking and compiling HR metrics on a variety of
tasks in real time, which should result in reduced turnaround
per transaction, reduced costs per transaction and reduced
number of inquiries to HR.
But the spread of e-HR and the extent of process improvement
is likely to be variable by sector (faster where technological
investment is commonplace), organisation size and financial
resources. A key limiting factor on how far and fast HR moves
to automate and use IT is how much is available to spend.
Without the proper investment, e-HR may fail to deliver
worthwhile savings for HR and quality improvements for
CASE STUDY
The MoD has moved to a shared service HR model over
recent years. Against the expectations of some who
thought they were being way too ambitious and despite
teething problems, they have succeeded despite the
scale of the shift. The MoD sees its shared service centre
as a seedbed for specialist HR, in that it aims to resolve
even quite complex issues, rather than passing them on
to a source of more specialist help. In the process, the
MoD has done a lot of work to strip out arcane and
contradictory HR processes to support an expert backoffice function. Their instinct is to develop shared services
further and consideration is being given to extend shared
services to include functions such as finance, not just
HR, and possibly provide back-office services to other
government departments.
To develop HR capability, the MoD is working closely with
the CIPD and adopting a CPD-based programme aligned
with the HR Profession Map. This will allow people to
achieve accreditation through external validation. The
MoD is heavily committed to a model of professional HR,
where people can show proof of their professionalism. HR
careers are shifting: the MoD will use the CIPD HR Map
to help people better identify their own development
needs and plan their careers, which may include moving
between different government departments. More
customers. Shortage of funds has driven a few organisations

towards either outsourcing or, in the public sector in particular,
pooling shared services with another organisation.
The Ulrich model has been adapted widely across central
government.The appeal of the model may have been
further enhanced by the fact that the HR function in most
departments has historically been expected to fulfil a largely
administrative role, so that developing shared services
and business partnering have appeared an obvious route
to modernising the function. In the MoDs case, this has
been accompanied by a determined effort to hand over
responsibility for people management to line managers.
experienced HR managers will be able to become

Chartered CIPD members through a tailored in-house
accreditation process, following one of the new routes to
entry to membership of their professional body. For the
CIPD, the relationship with the MoD is helping to pilot a
process that can be extended to other parts of Whitehall,
with mutual benefit.
The MoD will be required to make cuts following the
Strategic Defence Review, up to a similar level to that
expected of other departments. HR staff numbers have
been reduced significantly from 3,000 ten years ago to
1,200 in 2010 in parallel with implementation of the
Ulrich model. The MoD is looking to halve the number
again by the end of the current programme, moving from
an HR/all staff ratio of 1:53 to a targeted 1:100. The MoD
currently has some 500 business partners but expect to
end up with 100, including a small number of top-level
budget business partners who have a strategic role with
their management board in the seven business units.
The end result is that in total the MoD will have lost
80% of HR staff over the decade. The story is one of a
continuing programme of reform that was begun several
years ago: whatever the impact on the wider organisation,
spending cuts dont feel like a whole new ball game
for HR. The pace will be a bit faster, but for HR current
developments feel more like evolution than revolution.
29
The MoD case study illustrates a fact that applies much

more widely across the public sector radical as many of
the proposed spending reductions appear in terms of their
implications for staff numbers, employers have been moving
to make dramatic staffing reductions, including in backoffice functions such as HR, over a number of years. This is
something of a double whammy for HR since they have had
at the same time to drive major changes across the civil service
as a whole.
In one sense change across the civil service as a whole

is only just beginning. The Cabinet Office is leading a
change programme entitled Next Generation HR that may
conceivably end up with civil servants across Whitehall being
employed on common terms and conditions (at a time when
more local authorities are moving to take responsibility
for their pay and conditions, currently determined mainly
at national level). Programme Implementation Director
Susan Young has described this as possibly the biggest HR
transformation programme in the UK.
CASE STUDY
A new programme of HR collaboration at the civil service
has meant the function is ahead of the game now that
government departments are faced with potentially huge
budget cuts.
We are extremely glad we did do that and put ourselves

ahead of the game. Had we not done that thinking early
on, we would not have been in a position to respond to
the fiscal challenge in the way that we have.
Susan Young, until recently implementation director of

the Next Generation HR programme, which is seeking
to improve services, make efficiencies and standardise
HR across 100 different government departments
and agencies, has said it is possibly the biggest HR
transformation programme in the UK.
After its initial inception, the HR programme entered a

planning phase to understand the scope for changes and
savings before being fully implemented in April this year.
Civil service HR leaders met in June 2009 under

the chairmanship of Gill Rider, Director General of
Leadership and People Strategy, to have a strategic
conversation about what was coming in the future,
as the country was mid-recession and on the verge of
another general election.
From the figures we were seeing about the state of the
economy, we knew the salami-slice savings we had been
taking individually were not going to be enough to meet
the challenge that any new government would set us.
We identified a need to work together better across our
organisational boundaries. Doing things one hundred
times over in different departments and agencies was not
an efficient way of operating, or of leveraging our buying
power with external providers when procuring L&D.
30
Since then, purchasing an e-recruitment system for the whole

civil service which also standardised the process across
departments has already made a saving of 350,000.
The first civil-service-wide people survey was also
conducted, costing 35% less than individual organisation
surveys would have done.
A standard policy development framework has been
established to generate single, service-wide responses to
employment law changes, and a policy library has been
created to share best practice.
The programme does not have a stand-alone budget or
formal structure and operates on donated resources from
departmental HR colleagues.
A flexible workforce, consisting of up to 50 or 60 alternating
HR staff, is working on the project at any one time, from
various points and departments across the country.
The scale of aspiration visible in the Whitehall NGHR project

can hardly be exaggerated. The aim is for HR people to see
themselves increasingly as civil service professionals, rather
than belonging to individual departments.
There are currently believed to be some 2,000 HR policies
across Whitehall and it clearly makes sense that individual
departments should not have to develop and maintain
separate policies on, for example, staff absence.
With regards to HR outsourcing, some of the more commonly

cited drivers of outsourcing are detailed below. While these
stated drivers may be linked with various organisational
benefits, it is of course the case that there are also other
solutions that an HR function could adopt (for example
internal shared service centre) rather than outsourcing that
might deliver similar benefits. These alternative options are
considered more fully later.
The drivers behind outsourcing:

The intention is to make progress in stages so that the impact
of successive stages can be considered before commitment
is sought for an overall destination. Meanwhile three lead
departments DWP, Home Office and MoD are moving
to develop standardised policies and processes on behalf of
a number of smaller departments. Important issues along
the way will include consultation with the trade unions and
ensuring that any legal issues are addressed.
Philosophical reasons
Organisations that have a history of outsourcing other non-core
activities (for example, finance, IT) may simply decide that HR is
next in line for outsourcing. Similarly, sometimes an organisation
may decide to outsource all non-core (support) services in one
go, bundling HR, IT, finance, and so on, together.
Reducing cost
One important strand of HR transformation is the
development of OD capabilities among civil service staff.
Departments are unlikely to be able to afford to buy in
outside OD consultants as they have in the past. One option
might be to develop a shared service capability focused on
OD as an expert domain across Whitehall.
The big dilemma: outsourcing or shared services

In implementing the Ulrich model, one ongoing debate is
how best to deliver the shared services leg of the stool. Is this
done in-house, providing transactional HR services by some
form of call centre and/or ICT HR service solution? And if
so, do you share this service with other similar organisations
to deliver further efficiencies? Or do you outsource your
transactional HR activities to a third party provider?
However, there is no one model fits all solution. CIPD
research into outsourcing highlights both the advantages
and disadvantages of both outsourcing and shared services.
Below we consider some of the drivers for outsourcing.
This is the reported basis of most outsourcing business cases,

because cost and profit are the most easily understood and
measurable potential benefits. Outsourcing arrangements can
result in cost reductions because:
s The outsource provider can apply advanced and
continually updated IT systems to process data.
s The provider should have developed streamlined, simple,
proven processes.
s The provider can have the advantage of economies of scale
due to providing HR services for a number of employers.
s The provider can apply rigorous service management
practices and focus.
s Replacing fixed costs (for example investment in updated
IT, headcount) with variable costs, reducing working
capital tied up and improving commonly used reporting
ratios (for example turnover/headcount).
Reducing risk
Organisations may decide to outsource in order to reduce risk,
for example employment law.
Outsourcing
The potential drivers (and pitfalls) of outsourcing are wider
than just cost reduction. CIPD research back in 2004 identified,
for example, that the UK Government was clearly imposing
outsourcing of many functions as a means of delivering cost
savings (for example as a result of the Gershon review and
its focus on best value). Such wider drivers are likely to have
knock-on implications on any drivers for HR-specific outsourcing.
Increase effectiveness of HR delivery

Outsource providers generally claim to be able to carry out HR
processes more effectively than they can be done in-house.
For example, reduced recruitment timescales, due to process
efficiencies, mean that new staff, adding value and growth
to the organisation, can be brought on board faster. Similarly,
fewer payroll errors may arise.
31
Providing expertise not available internally
Outsourcing aspects of HR administration has the potential

to free up HR people to focus on strategy and business
partnering. This desired shift in focus is the underlying driver of
many outsourcing discussions and arrangements.
process efficiency, to provide similar services to other

organisations, with the outsource provider and original client
both benefiting commercially. Alternatively, some companies
have built internal shared service centres that could provide
services to external companies as independent profit centres.
It should be recognised that this focus on commercial
return is difficult to do without a starting point of a strongly
performing internal HR function, and even then will require
significant investments to transform HR services from an
internal to a market-facing focus.
To gain commercial return from HR resources
Improved metrics
A few major UK outsourcing deals have been commercial

(or joint) ventures where an organisation has outsourced
HR process delivery, together with a large proportion of
HR staff, to service their original needs but also, through
HR functions are under increasing pressures to prepare

meaningful people management metrics and they might think
that outsource providers are best placed to develop these
detailed metrics of HR processes that allow improved reporting.
For example, outsourcing compensation and benefits advice,

or outsourcing top-level recruitment but retaining more
general recruitment internally.
Moving HR up the value chain
CASE STUDY
Overview
With effect from 1 October, 2010 Cleveland Police
Authority entered into an outsourcing partnership with
Steria UK, covering its communications centre, criminal
justice and also back-office functions (including finance,
procurement, HR, payroll, learning and development).
The partnership has been agreed for an initial period of
ten years and will release some 50 million savings in this
time, with a guarantee of no compulsory redundancies
during that time for the 514 people that have been TUPE
transferred from the police authority to Steria UK. It was
also agreed that the partnership was to have no impact on
front-line police officers.
This is one of the first outsourcing arrangements of its kind
within the police service.
Background
Some two years ago Cleveland Police Authority decided to
consider outsourcing a number of its operations. Initially the
main area under consideration was ICT (information and
communication technologies), in anticipation of a possible
move to integrate ICT nationally within the police service.
As tenders were received from different bidders, a number
of them proposed widening the scope of the operations
to be outsourced and it was finally agreed that the scope
32
was to cover the communications centre, criminal justice

and also its back-office functions (including ICT, finance,
procurement, HR, payroll, learning and development).
Consultation with UNISON and the Police Federation
started at this time.
Agreeing the outsource provider and the deal

An important consideration for Cleveland Police when
agreeing the outsource provider was to ensure the
right cultural fit to enable a true partnership approach.
A practical example of this will be the management
of the control room. Steria will need to deliver against
key performance indicators (KPIs) (for example agreed
response times for 999 calls), yet recognise the need
to be mature enough to be flexible and agile to divert
resources to respond to incidents. The strength is in
the partnership.
Cleveland Police have committed to retain all outsourced
staff geographically within the Cleveland area.
As part of the agreement, Cleveland Police and Steria in
partnership need to also manage a planned release of the
police officers that are currently in non-front-line roles.
Initially, the police officers who work in the service areas
transferring will continue the non-front-line roles they are
undertaking (under the management of Steria) and as the
agreed term is completed they will then be redeployed back
into front-line policing roles.
The unions were initially very resistant, with the clear

position that you dont outsource the public sector.
However, they have recognised the reality (and the context,
for example, that in the Cleveland area Corus has recently
experienced large-scale redundancies), for example that a
ten-year guarantee of no compulsory redundancies is good
for both the employees and the local economy.
Staff engagement/buy-in
There have been mixed emotions from staff due to be
transferred, although it has been generally positive.
Cleveland Police had entered an outsourcing arrangement
about five years earlier involving the TUPE transfer of some
50 staff. Their experience was broadly positive.
Steria have identified a couple of quick wins that will

deliver immediate benefits to the employees and achieve
improved service delivery. These include increased levels of
manning of front desks and community callback tracking.
HRs role
HR has played a key part in the outsourcing planning and
implementation in terms of their role in communication
and engagement of all stakeholders, not least the union
negotiations.
Workforce planning
Expected benefits
Clever workforce planning has been and will continue to

be a key to managing the complex, unique police service
environment, which traditionally has meant a mix of police
and non-police filling non-front-line roles, with different
terms of service, pay structures and expectations regarding
career planning. HR has played a major part in managing
this. Leveraging this has also been a key consideration
for Steria in entering into the outsource partnership
and this work will need to continue, as the outsourcing
arrangement will effectively require a culture change within
the police force, whereby police officers will have to return
to front-line roles later in their career, which was not in a
number of cases part of their career plans and also when a
number of officers are possibly less fit to work in front-line
policing roles. This will require a new way of considering
fitness for roles through a process of risk assessment, and
identifying the strengths of those people and enabling best
use of their skills and abilities.
The main driver for outsourcing was to release financial

savings.
Outsourcing of HR
HR has been involved in managing the communication

and the engagement in the run-up to the transition. There
has been a lot of communication keeping staff informed,
even if theres nothing to tell them, which has been
received positively. Denise Curtis-Haigh, Head of HR for
Cleveland Police, believes that it has been easier for HR
to be leading this engagement, as the HR function is also
within the scope of the outsourcing deal (in other words,
were all in this together).
For the police officers, the main concern that has been
raised is for a seamless provision both in terms of service
to the police officers themselves and also to the public.
However, it is thought that there will also be possible

people-related benefits. For example, within Cleveland
Police, career development opportunities for police staff
have been somewhat limited as resources for training and
development have been prioritised in the main towards
front-line policing. In addition, career pathways were
limited. The transfer to Steria should realise a number of
benefits for TUPE-transferred staff within the wider Steria
organisation, with increased development and career
opportunities being much greater.
Increased operational efficiencies will be delivered,
particularly through the investment in and implementation
of an integrated Oracle system in spring 2011.
HR services (including learning and development) are one

of the back-office functions that have been outsourced.
Both administrative and also more strategic aspects of HR
(including business partners) have been outsourced. In fact,
there will only remain one person, Denise Curtis-Haigh,
Head of HR, within Cleveland Police.
Curtis-Haighs role will be to work with the senior team
within Cleveland Police, to identify HR and learning needs,
to develop the HR strategy that will support the delivery of
the Policing Plan and then to work with the outsourced HR
business partners to deliver this service. The introduction of
the Oracle IT systems next spring will introduce considerable
efficiency savings within HR activities.
(continued)
33
The overall reduction in size of the police force resulting

from the outsourcing arrangement (that is, there are 500+
fewer employees of Cleveland Police as those transferred
are now employees of Steria) should also result in a lower
workload for HR. she believes that this will free up capacity
(for HR) to do more policy and strategic work, in particular
in areas of organisational development and workforce
planning, which will help to enable the force to be fit for
the future during this period of significant change in the
public sector.
Key learnings
It is early days for this arrangement (it went live 1 October
2010, the day after my visit!) so as yet some of the practical
issues/challenges might not have surfaced, but what seem
to be key points in agreeing the deal and ensuring it is a
success include:
s To ensure a seamless service, the choice of
outsourcing provider is key. And this, for Cleveland
CASE STUDY
Overview
Somerset County Council entered into a partnership
agreement with IBM, Somerset and Avon Police Authority,
South West One and Taunton Deane Borough Council
in 2007. The four organisations formed a joint venture
company called South West One, 80% of which is owned
by IBM. The partnership covers an initial period of ten
years with a guarantee of no compulsory redundancies
during that time for the 660 people including 146 from
the HR department that have been seconded from
Somerset County Council to the joint venture company.
This is the first time a local authority has entered into a
partnership with a private sector company and a different
type of public service organisation.
Background
More than three years ago, a team comprising the chief
executive and HR director of Somerset County Council
34
Police Authority and Steria, has been in terms of

cultural fit and building a real partnership relationship
based on trust. If you have to get out the contract
to negotiate service delivery, the relationship has
probably failed.
The police force is unique in terms of its combination
of police and staff employees. This can be seen in
terms of the non-front-line roles that police officers
have frequently occupied, particularly at later stages of
their careers, the different pay structures that exist, and
different career opportunities. To make any outsourcing
arrangement work within a police service context (which
involves transferring only the non-police employees), the
dynamics of the workforce need to be fully understood
and careful workforce planning both for current needs
and future requirements needs to be undertaken. Not
to be underestimated are the resulting culture change
implications that such a change will require and these
need to be well thought through.
(Somerset CC), Richard Crouch, paid a visit to Suffolk

County Council. Suffolk County Council had entered into a
partnership agreement with BT, which saw staff seconded
to the company in a brand new headquarters. Crouch said
of the visit, It was like a private sector companymodern
security systems, people dressed differently and looked
happierit was far more professional, upbeat and modern
than you would expect in any local government setting.
With this example in mind, Somerset CC sought a private
sector provider.
Agreeing the outsource provider and the deal

The most important consideration for Somerset County
Council when agreeing the outsource provider was to
improve quality, not to reduce cost. However, the council
did have cost savings in mind when selecting the provider,
having identified procurement and back-office functions
as areas where cost savings could be made. The contract
therefore covered all back-office services, including HR,
finance, property and ICT.
The tender process yielded several applications. However,

IBM was selected for two main reasons:
s the offer of a joint venture company in back-office services
s a commitment to wholesale council transformation.
Under the secondment arrangement, each member of staff
was seconded to the company from each respective public
sector organisation. The contract stated that secondees
should not be redeployed to a different geographic area.
Implementation
Crouch decided that those who were corporately
strategic would remain within the organisation, and those
who delivered strategy would join the company. Only four
out of 150 remained with Somerset CC. The decision was
based on the existing structure, which saw each HR group
manager act as advisers, for the directorate they were
representing and managers of their own teams. If they
did not move, new managers would have to be found. As
Croach says:
I dont think I ever did direct their work in a
management way, but I liaise with them and I still
make sure that what they do is in line with what they
should do so I still give them parameters in which
to work. But that is from a client basis rather than a
management basis, but to all intents and purposes, it
is pretty well the same thing.
Staff engagement/buy-in
One of the advantages of the secondment model is that
staff have remained loyal to the organisation. However,
staff are showing more loyalty towards the new company
the longer the contract goes on. As Croach states, there
is a psychological problem with our secondees in that
they are unsure who they work for because with the
secondment model they are still employees of the council
yet work for a separate organisation.
Expected benefits
The main driver for outsourcing was to improve quality
through service transformation under which staff would
be transferred from back-office functions to front-office
transformation roles. However, this has not happened
because other public sector bodies in the county or region
did not join the venture company, as IBM expected.
Together with the impact of the recession, the council

do not have enough money to pay IBM to transform the
council, as it originally expected. Somerset CC now have
to do it themselves.
What is more, Crouchs hopes that the private sector
model would change attitude to risk more quickly have
not been borne out. In fact, IBM could be said to be
more risk-averse than Somerset. In addition Somerset CC
are unable to reduce headcount due to the employment
guarantee. Crouch said that they may need to
renegotiate some parts of the contract to make it more
fit for purpose.
Actual benefits
However, moving to a shared service platform has
enhanced service delivery in important ways:
s There are procurement savings of 160 million over
ten years across all functions. The shared service
operations allows transactions to be made far more
effectively, including far better MIS than we would
have ever had before; and not just within HR, but
across service areas.
s It is interesting to note the degree to which the IT
department has improved: The IT department is much
better than it used to be.
HRs role
The only noticeable difference between the former and
current system is that HR is now working to a shared
service model, which involves working to the different
terms and conditions and grading schemes that exist
within each of the public service organisations (see public
policy recommendations section).
Outsourcing of HR
HR services (including learning and development and
health and safety) are one of the back-office functions
that have been outsourced into the joint venture
company. Both the administrative and more strategic
aspects of HR (including business partners) have been
outsourced. In fact, there only remains four people out of
the original team of 150.
(continued)
35
Despite this, Crouch says that his role has remained largely
unchanged:
As an HR director (HRD), you probably only spend
5 or 10% actually managing the service in terms of
employee management. Most HRDs are technical
specialists in their own right who serve as HR advisers
to the CEO and the board and with most of their
other time spent in enhancing the HR offering.
If anything, he believes that his responsibilities have
increased, not so much in the monitoring of the contract
as one might expect, but in directing the work of
seconded employees, due largely to the huge change
agenda impacting on local government and the need for
the client HR function to be appropriately responsive.
Crouchs role is to work with the senior client function
heads within the council, and specifically to support
performance monitoring among the functions, which he
says is a tougher role in many respects.
A commissioning role is tougher in terms of
monitoring contracts than it is to actually monitor the
employees who deliver the work.
In an effort to avoid excessive performance management,
Somerset CC inserted a clause into the contract
that penalised IBM if labour turnover went above a
certain level. As it turns out, labour turnover has been
at historically low levels due to the recession. IBMs
management style has been relatively hands-off. Their
objective is to transfer knowledge, not to overmanage
staff. The HR team is made up of the same managers;
the only difference is that there is now an IBM director of
operations, who has made a helpful contribution. So the
HR service that Richard is getting is very similar to the one
he got three years ago.
Political context
Somerset CC needs to make 1,500 losses over the next
two years as part of an expected budget cut of 2540%
over the next three years. Some 1,000 staff have already
expressed an interest in the voluntary redundancy
programme that the council is currently rolling out, with
200 employees already exited.
36
In addition, the council is currently:

- renegotiating contracts with suppliers
- considering redrafting the contract with IBM.
Changes to public policy framework

Outsourcing is Crouchs preferred model. However he
cites the Local Government Pensions Directive as being
particularly prohibitive for those councils that decide on
becoming an enabling organisation in that it forces those
private sector companies that take on TUPE staff to offer
the same pension arrangements. This places small local
companies at a particular disadvantage.
Crouch would also like to see a more joined-up approach
across the public sector with similar terms and conditions.
This would cut redundancy costs and help redeploy staff
to other public sector organisations more easily. So
often, employees seem to become redundant from the
organisation in which they work but not from the public
sector for whom they serve.
Key learnings
s Leadership is not as strong under the chosen
consultancy partnership model as the direct
management model. Other drawbacks include a slow
decision-making process and impatience with the
speed at which change is implemented.
s The partnership has been constrained by the
secondment arrangement and the terms of the
contract. Crouch would prefer a TUPE model that
focused on cost rather than quality if he had his time
again. However, his biggest recommendation is to
outsource rather than adopt a partnership.
s Dont put in place guarantees about employment.
Due to IBMs contractual obligation to guarantee
employment, the headcount can only decrease by
7% in any one year due to natural wastage. There is
therefore no scope to make savings from wage costs
under the current terms of the contract.
s He would also centralise operations in a shared service
arrangement. He would still have the good managers
acting as business links to the directorates they
represent. However, they would not have their own
offices and administrative teams.
Alternatives to outsourcing
One criticism of HR outsourcing is that it can be like picking
up spaghetti, for example, if complex processes already
exist, inefficiencies may simply be transferred out of the
organisation and result in poorer service standards overall.
Where HR is contracted to a private sector provider, the TUPE
regulations will apply and personnel costs will be transferred,
so limiting the level of efficiencies that can be achieved.
Outsourcing arrangements are often long term (five- to
ten-year contracts are not unusual) and it is important to
avoid being tied into unfavourable contractual arrangements.

HR outsourcing may not be suitable for some public sector
organisations. Cost reduction is not the only criteria and even
then outsourcing may not always provide a better solution
than other alternatives outlined in the box below.
Before concluding that outsourcing is always the appropriate
solution, it is worth considering the table below, which
identifies different options, including shared services.
Table 1 Potential HR issues (HR Outsourcing: the key decisions 2004)

Human resource issue
Possible underlying causes
Potential options
Need to cut costs of HR

administration
No leverage of IT solutions, no common data

sources
Process rationalisation (stop doing things, or

reduce quality)
Inefficient, unnecessary or non-standardised

processes
Internal process redesign
Poor economies of scale
Shared service centre, with or without

outsourcing
Processes completed at unnecessarily high

quality levels
Offshoring
Expensive resources being used for basic

processes
Outsourcing
Web-enabled HR system
High ratio of fixed to variable costs

Need to access specialist
HR knowledge
Existing knowledge is out of date
Use of consultancy services
Knowledge is too expensive to hire on a

permanent basis
Create internal centres of HR excellence
Knowledge exists in the organisation, but is

hard to access
Knowledge management solutions
Risks occur if a specialist is away/leaves

Need to move HR
accountabilities to line
management
Cultural change to line managers having

more responsibility for staff
Lack of HR resources to manage the
employee relationship
Interim management
Outsourcing
Job redesign
Change reward/performance structures for
managers
Internal advice lines for managers
Outsourcing
Shared services
Need to make HR more

strategic
Lack of clarity about what HR does

No board representation for HR
Revised delivery strategy for HR to enable the

function to focus on strategic issues
HR activities not reflecting organisations

needs
Board representation for HR
Administration tasks swamping HR, leaving

no time for strategy formulation
Greater investment in HR
Recruitment of strategic expertise

Outsourcing might support the above options
Shared services might also support these
options, with the exception of recruitment of
strategic expertise
37
Shared services
86% of internal shared services projects meet cost
savings goals, compared with 67% of outsourcing
projects [HR Magazine, July 2004, p80]
One of the more common alternatives to the outsourcing
model is shared services. Some local authorities are interested
in developing their own shared services and then seeking a
commercial return from sharing them with other (adjacent)
partners. However:
s There is widespread uncertainty about political direction,
including the relationship with outsourcing, and
understandable reluctance to be a frontrunner.
s Some local authorities are still looking to implement the
Ulrich model and feel that considering further radical
transformation of HR may be premature.
s HR directors have not necessarily got support from their
senior management for developing the HR function.
s Some local authorities are looking to identify a
commercial strategic partner to help them get started.
Other concerns are more fundamental. There is a question
about the business case for shared services across
local authority boundaries, whether applying to HR or
more widely. As a matter of principle, why should it be
significantly cheaper to deliver services from a single centre
if employment policies and conditions continue to diverge
between authorities? Sutton and Merton Councils have dealt
with this by transferring staff to Sutton, so that they are on
common terms and conditions, but other authorities have
been unwilling to face up to the legal and employee relations
issues involved. Some elected members may also be unwilling
to support sharing services between authorities, on the
grounds that this will weaken local accountability. However,
the Sutton and Merton shared service has demonstrated
that considerable savings can be achieved (500,000 to date
through integration of structures, delayering management,
joint procurement to achieve economies of scale and
business process re-engineering) while at the same time
achieving improved customer satisfaction measured
through improved performance indicators and customer
satisfaction.
Dean Shoesmith, Joint Head of Human Resources at the
boroughs of Sutton and Merton and also President of
the Public Sector People Managers Association, believes
38
that in many cases sharing HR services between public

service organisations is a better solution than outsourcing.
Outsourcing is an option but you have to factor in the
private sector profit margin and also client side manage
the third party provider, which all costs time and resource.
A recent Audit Commission report said just 2% of public
sector organisations shared services across the entire
country and there is no doubt there is huge scope for more
sharing of services, he said. Shoesmith led the move to
shared HR services between Sutton and Merton Councils
and said that, despite the challenges this entailed, it had
still delivered significant cost savings (see case study).
However, he said the move had presented significant
challenges, not least to stay the right side of the law. In
my view the Government needs to make key strategic
legislative changes. The options are, do you allow shared
services to grow organically or randomly, as happens now?
Do you prescriptively, through legislation, say that it must
happen, or do you try and strike a sensible middle ground
where you put in an enabling framework? The Government
has already done this for health and social care through
section 75 of the Health Act, but we need an equivalent
enabling legal framework for the rest of the public sector.
Shoesmith also believes that HR leaders need to drive the
agenda more strongly. I think there is also a certain amount
of tribalism and territorial behaviour because people think
that if we move to shared services I might have to share or
lose my job. However, when we are facing 81 billion of cuts
over four years, something has to give. I think this is where
people have to say this is what needs to be done and initiate
the change.
Shoesmiths view is that doing nothing is not an option,
describing the current economic environment post
Comprehensive Spending Review as creating a burning
platform of necessity.
CASE STUDY
Following the departure of the head of HR at Merton Council
in 2007, the chief executive of Merton Council, Ged Curran,
conducted an options review of how best to provide the HR
service going forward. The service had been highlighted in a
comprehensive assessment report by the Audit Commission
as in need of improvement. The assessment included
discussions with various internal and external stakeholders,
including the CEO of Sutton Council, with whom Curran
enjoyed a constructive relationship and who was interested
in exploring opportunities for strategic partnerships. Curran
was impressed by Suttons HR function, which continued
to receive high inspection ratings by the Audit Commission.
The two chief executives therefore decided to approach
Suttons head of HR, Dean Shoesmith, to ask whether he
would trial providing Merton with HR support while retaining
responsibility for Sutton. The two chief executives saw this as a
strategic opportunity that would help pave the way for further
partnerships to develop.
A year later, Shoesmith was permanently appointed to both
councils as head of HR and charged with responsibility for
looking to the various models of shared service delivery
that were set out by the 4ps consultancy. These included a
secondment programme, which would have seen Sutton staff
seconded to Merton Council. This was rejected due to the
complications that would be caused by TUPE, as under case
law a long-term secondment has the potential to be deemed a
TUPE transfer, rather than a secondment.
Insourcing was considered but rejected because there was no
existing shared HR services function within local government
that could do the job effectively. The outsourcing model was
also considered, but rejected because of concerns that there
would be a lack of flexibility over how services were delivered
and that the drive to make profit might also compromise
service delivery.
The decision was taken to go down the shared service path for
a number of reasons:
s It allows for further business process engineering
improvements.
s It is more responsive to deal with problems if they arise.
s It offers considerable savings.
s It offers more scope for further savings through joint
procurement.
s It ensures that the strategic elements of HR are

retained. (However, some of the transactional elements
would be outsourced due to the prohibitive cost of
doing this in-house. Payroll and, to a lesser extent,
recruitment were outsourced already at Sutton.)
The two councils therefore decided to adopt the shared
services model, with Sutton appointed the lead (or host)
borough and with the two HR functions kept separate but
unified by one HR director.
Implementation
Shoesmith has adapted the Ulrich model by integrating a
fourth leg, which sees the learning, development and diversity
teams integrated to make savings in procurement in particular.
Customer satisfaction has increased and more ambitious
targets have been set and met due to the maintenance of
the HR business partner arrangement. Shoesmith cites lower
absence levels, a greater focus on strategic priorities and a
higher degree of innovation due to the sharing of knowledge
and ideas between departments as key benefits of the new
arrangement. Shoesmith also argues that the arrangements
allow him to use the strengths of each department. Mertons
CRB check system was well developed and Suttons HR
team knowledgeable therefore the combining of those
employees into an integrated team synthesised the best of
both. Shoesmith believes the timeframe for CRB checking
could be cut by five to six weeks during the course of 2011.
Costs have also been cut as staff resources have been shared
between the two departments. HR headcount has been
reduced by 16%, which has mainly come from managerial
delayering and avoiding duplication. Shoesmith said the move
to shared HR services has delivered 500,000 in savings to
date. He also estimates that further savings of 800,000 will
be made from 2010 against total shared budgets it will
produce a total of 28% budget savings.
A legal collaboration agreement and service level agreement
ensures that Sutton provides an equal HR service to both
councils. If Merton becomes unhappy with the service, it
will go to Mertons director of corporate services in the first
instance; and if that fails, escalation procedures allow for
matters to be raised with Mertons chief executive. The last
resort is the dispute resolutions procedure, with Local
(continued)
39
Government Employers acting as the final arbiter. To avoid

such a scenario, monthly meetings take place between project
board members. In addition, quarterly management board
meetings take place between the chief executives of the two
boroughs where service levels are reviewed.
However, the agreement was far from straightforward. Legal
advice was sought as to whether one local authority could
delegate its functions to another, following a challenge
from the private sector against a plan by London boroughs
to collaborate on insurance in an informal shared service
arrangement (the LAML judgment).

s Consider the various options for reducing HR cost and
improving HR service delivery to ensure that any decision
best suits the requirements of the individual organisation.
For some public sector employers HR shared services will
be the right solution, while for others outsourcing may be
more suitable.
s Recognise that simply changing HR structure will not
necessarily deliver the necessary benefits unless there is
also a focus on improving HR capability.
s Explore cost-effective ways to improve line management
capability a move to any form of shared service solution,
whether in-house or outsourced, will place an additional
responsibility for line managers to improve how they
manage people. HR will no longer have the resource
to handhold line managers. Reviewing existing people
management development programmes and exploring the
potential for greater use of mentoring and coaching could
deliver significant benefits. In addition, providing accessible
advice and support in the form of FAQs, online tools and
focused seminars run by and held for line managers on
challenging aspects of people management can also, over
time, build line manager capability and confidence.
40
Merton staff were subsequently TUPE-transferred to Sutton.

Risk has been minimised further by the clear but flexible
collaboration agreement. For instance, the contract states that
one party will be held harmless if something goes wrong,
that is, one cannot sue the other. The collaboration agreement
also provides a legal blueprint for further strategic shared
services to be formed across other service areas.
CONCLUSIONS
Transforming public services to improve quality against the

backdrop of 81 billion in cuts to public funding over the
next four years is a massive challenge for government, public
sector leaders and workers. It is a shared agenda that will
only succeed where there is clarity and alignment from top
to bottom on the changes needed to increase efficiency and
effectiveness and empower front-line service improvements.
This paper highlights the crucial role HR leaders in the public
sector have to play in helping to lead and embed sustainable
improvements to public service delivery.
HR must be able to show that it has a deep understanding
of the obstacles and drivers of the organisations strategic
objectives, which are tied to the Governments public
service reform agenda. Too often HRs role in delivering
government reform is seen as predominantly about cost
reduction and of course this remains crucial in light of the
required spending cuts set out by the CSR. However, HR also
has a critical job to do in building sustainable organisation
performance and supporting a step-change in front-line
service delivery.
It is uniquely positioned as a function to shine a light on
the processes and behaviours that lie at the heart of costeffective and high-quality front-line service delivery.
However, to do this HR leaders have to ensure that their
function has the right capacity, capability and structure to
continue to provide high-quality transactional HR services
and at the same time the insight to shape and guide overall
organisational strategy.
This paper suggests that some public sector employers are
already getting to grips with this broader public service
transformation agenda through leading and partnering with
CEOs and other key functions on change management, and
by increasingly investing in organisational development to
map the way forward.
As part of this, workforce planning, talent development,
employee relations and employee engagement are
emerging as the key issues that public sector employers
need to be addressing.
Progressive HR leaders in the public sector are at the same
time assessing their function to identify how it needs to
change to meet the increasingly sophisticated role it is
playing in supporting organisational performance.
In many cases this assessment will include a focus on HR

capability to ensure HR staff have the skills to support the
organisation, as well as on HR structure.
Some HR functions are already changing to provide
higher-quality business partnering and more cost-effective
transactional HR services through the use of shared HR
services or outsourcing. However, there is huge scope for
much higher uptake across the public services of shared HR
services and HR outsourcing. This will not happen unless HR
leaders grasp the nettle and initiate change. This is also an
area where government could help by providing an enabling
framework, similar to section 75 of the Health Act, to help
and encourage more employers to adopt shared HR services.
More broadly, the Government also has to show that it really
understands how complex change in large organisations
happens in practice. There will be no eureka moment
creating positive headlines in the short term. Real change
will take time and a commitment to supporting the levers
of employee engagement, which is what will ultimately
deliver sustained improvement. Policy-makers themselves
must show leadership and should be mindful of MacLeods
four core drivers of engagement organisational purpose,
integrity, engaging managers and employee voice. This
means understanding the role that leadership and people
management skills will play in delivering the necessary
changes. If policy-makers view people management as a
cost to be managed that distracts from front-line value, they
risk ignoring the very issues that will decide if their reform
agenda succeeds or fails.
Simply reorganising public service delivery by seeking to
improve the autonomy and empowerment of front-line
service workers through new lean processes will fail if senior,
middle and front-line managers are not equipped with the
necessary leadership skills.
The Big Society will remain as rhetoric if the creation of
new employee- or community-led co-operatives, mutuals,
academies or free schools to deliver public services does not go
hand in hand with a drive to enhance management capability.
The Government should be looking to review how managers
and leaders are developed across the public sector to ensure
that public money is invested effectively and the necessary
skills are delivered. In some places there may be scope to
actually make efficiencies in this area through public sector
employers sharing budgets to develop staff with similar
41
development needs. There is also scope to learn from the

best public and private sector employers that are already
developing their management capability through costeffective blended learning, including enhanced coaching
by other managers, workshops, webinars and online tools,
guidance and support.
However, there may be some areas where policy-makers
will have to invest in leadership and management capability
in order to save. Evidence suggests a strong link between
enhanced leadership and management capability, employee
engagement and improved and sustainable organisational
performance. Policy-makers should focus on what delivers
medium- and long-term value for public service users and not
just short-term cost reduction.

s Focus on boosting employee engagement as a strategic
priority.
s Review people management development programmes
to ensure managers at all levels are equipped with the
necessary skills to support employee engagement, new
ways of working and service delivery improvements.
s Develop organisational development capability.
s Develop HR capability in the key areas of managing the
employment relationship (including negotiation skills),
workforce planning and talent management.
s Review HR structure and consider the scope for HR shared
services and/or outsourcing
42

s Promote and support the uptake of recommendations
from the MacLeod review of employee engagement
across the public sector.
s Lead a review of how managers and leaders are
developed across the public sector to ensure public
money is invested effectively and delivers managers
equipped with the skills to lead and support public service
transformation.
s Provide an enabling legislative framework, similar to
section 75 of the Health Act, to encourage more public
sector employers to adopt shared HR services.
s Consider the people management implications for public
service delivery in the creation of new employee- or
community-led co-operatives or mutuals and other forms
of social enterprise.
s Ensure the UK skills and qualification system is more
responsive to public sector employers demand for skills
to ensure there is sufficient supply of talent to meet
changing public service delivery requirements.
REFERENCES
CHARTERED INSTITUTE OF PERSONNEL AND DEVELOPMENT.

(2010) Approaches to change: building capability and
confidence [online]. Tool. London: CIPD.
Available at: http://www.cipd.co.uk/subjects/corpstrtgy/
changemmt/_approaches-change-capability
[Accessed 7 December 2010]

(2010) Time for change: towards a next generation for HR
[online]. London: CIPD.
Available at:http://www.cipd.co.uk/research/_next-gen-hr/_
time_change_next_generation.htm

(2009) Fighting back through talent innovation: talent
management under threat in uncertain times [online]. Hot
topic. London: CIPD.
Available at: http://www.cipd.co.uk/subjects/recruitment/
general/_fighting_back_through_talent_innovation.htm
[Accessed 7 December 2010] Available at: http://www.cipd.
co.uk [Accessed 7 December 2010]

(2010) Transforming public sector pay and pensions [online].
London: CIPD.
Available at: http://www.cipd.co.uk/publicpolicy/_Buildingproductive-public-sector-workplaces-part-two-0610.htm

(2010) Improving people management [online]. [Accessed 7
December 2010]
(2010) Harnessing the power of employee communication
[online]. Research insight. London: CIPD.
Available at:http://www.cipd.co.uk/subjects/empreltns/
comconslt/_harnessing-power-employee-communication
(2010) HR Outlook: Autumn 2010 [online]. Survey. London: CIPD.
Available at:http://www.cipd.co.uk/research/_hr-outlook/
full-report.htm
(2010) Resourcing and talent planning: annual survey report
2010 [online]. Survey. London: CIPD.
Available at: http://www.cipd.co.uk/subjects/recruitmen/
general/_recruitment_10.htm
(2010) Talent management: an overview [online]. Factsheet.
London: CIPD.
Available at:http://www.cipd.co.uk/subjects/recruitmen/
general/talent-management.htm

(2009) The war on talent? Talent management under threat
in uncertain times [online]. Hot topic. London: CIPD.
Available at: http://www.cipd.co.uk/subjects/recruitmen/
general/_war-on-talent.htm
(2010) Workforce planning: right people, right time, right
skills [online]. Guide. London: CIPD.
Available at:
http://www.cipd.co.uk/subjects/corpstrtgy/general/_
workforce_planning [Accessed 7 December 2010]
DE FEO, J.A. and BARNARD, W.W. (2004) Juran Institutes
six sigma: breakthrough and beyond: quality performance
breakthrough methods. New York: McGraw Hill.
HOUSE OF COMMONS. Health Committee. (2007)
Workforce planning: fourth report of session 2006-07:
volume 1. HC 171-I. London: Stationery Office.
Available at: http://www.publications.parliament.uk/pa/
cm200607/cmselect/cmhealth/171/171i.pdf
MARCHINGTON, M., CARROLL, M. and GRIMSHAW, D.
(2009) Managing people in networked organisations.
London: Chartered Institute of Personnel and Development.
43
Public Sector People Managers Association
Chartered Institute of Personnel and Development

151 The Broadway London SW19 1JQ
Tel: 020 8612 6200 Fax: 020 8612 6201
Email: cipd@cipd.co.uk Website: cipd.co.uk
Incorporated by Royal Charter Registered charity no.1079797
Issued: December 2010 Reference: 5420 Chartered Institute of Personnel and Development 2010
The PPMA serves and represents the professional interests of members working across the
HR/OD professions within the Public Sector. The Association influences and contributes to
the development of public policy and legislation in this respect, constantly advocating the
need for higher standards of people management and development to further enhance
the delivery of public services.

Boosting HR Performance in The Public Sector

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Boosting HR Performance in The Public Sector

Enviado por

Direitos autorais:

Formatos disponíveis

Building productive public sector workplaces

RT FOUR PART FOUR PART FOUR PART FOUR PAR

HRs role in leading public service transformation

Change management and organisational development

Workforce planning and talent development

Boosting HR performance in the public sector

Public service reform is one of the main items on the

Boosting HR performance in the public sector

In the same way, the Governments plan to transfer health

Octobers long-awaited Comprehensive Spending Review

The reform agenda provides both an opportunity and a

Boosting HR performance in the public sector

NHS leaders, besides having to respond to implications of

Boosting HR performance in the public sector

Parts of the public sector will have to renegotiate (potentially

s Managers at all levels have the people management skills

Boosting HR performance in the public sector

HRS ROLE IN LEADING PUBLIC SERVICE TRANSFORMATION

The CIPDs Next Generation HR research project exploring the

Place-based public services

Boosting HR performance in the public sector

service delivery based on what people actually want and

CIPD research emphasises the importance of line managers

the knowledge of front-line workers to actually inform and

consistency in operations. This requires careful selection

Boosting HR performance in the public sector

Managing across organisational boundaries

The people management challenges facing NHS North West

This includes raising GPs awareness and understanding

Implementing lean working in the public sector

Boosting HR performance in the public sector

The Governments White Paper also re-emphasised the

Dean Royles, Director of NHS Employers, said the QIPP agenda is

Boosting HR performance in the public sector

Boosting HR performance in the public sector

Recommendations for public sector employers:

Recommendations for government:

changed by lean, said Sue Venton, Head of Continuous

Creating lean capability

Engaging its people

Lean requires enhanced levels of people management if it is

The way forward

between teams and their environment, allocating resources

Boosting HR performance in the public sector

CHANGE MANAGEMENT AND ORGANISATIONAL DEVELOPMENT

The public sector reform agenda, highlighted by some of the

Boosting HR performance in the public sector

Sustainable change takes time to implement. Employers need to

The trust is also using diagnostic analysis to understand

The CIPDs new tool Approaches to Change: Building capability

Public sector employers are faced with a similar challenge,

Boosting HR performance in the public sector

It is clear from our research that many HR departments in the

Boosting HR performance in the public sector

barriers that prevent them from getting a job. Are people

We found examples of both. However, it is evident from our

Recommendations for public sector employers:

s Ensure legal and employee relations issues are considered

trading bodies. This is likely to have longer-term

together customer contact channels that are currently

Boosting HR performance in the public sector

Boosting HR performance in the public sector

There are 7 million of savings needed to be achieved in