A problem shared - or multiplied?
The move towards Total Place-style solutions and the need to deliver significant cost savings is prompting local authorities and other public sector organisations to consider shared chief executives and joint management. Sarah Lamont examines the advantages – and challenges – of such arrangements.
In December 2009 the Department for Communities and Local Government announced a new task force to look urgently at efficiency savings for local government. Led by the Mayor of Lewisham, Sir Steve Bullock, and the leader of Manchester City Council, Sir Richard Leese, the task force identified ten steps councils should consider taking when looking to improve the effectiveness or efficiency of their organisation.
One of these was to streamline local authority management and explore the benefits of shared chief executives.
There is already considerable pressure on councils to make value-for-money efficiencies, whilst simultaneously protecting frontline services. That pressure can only increase as the coalition Government seeks to reduce public spending, and so reduce the funding which it provides to local authorities.
The Welsh Assembly Government has taken powers to direct local authorities in Wales to enter shared services arrangements. In England, the DCLG is being urged to take similar direction powers, and the sharing of chief executives and management teams is being advocated as an “easy win”, in turn opening the door to wider shared service arrangements.
Existing arrangements and their experiences
There are currently ten formalised joint chief executive / management arrangements in place and it has been predicted that if 40% of all district councils followed suit, the three-year savings of such arrangements could reach £10m. Upon establishing a joint chief executive, many authorities have chosen then to move towards a joint senior management team across two authorities with shared service units. DCLG figures suggest for the same percentage of district councils sharing on this scale, annual savings could be as high as £54m.
It has been found that the deeper the management integration, the greater the opportunities to establish and deliver opportunities for shared working across two councils and so consequently the pace of shared service development has been quicker once a joint management team has been established.
The various councils who have gone, or are in the process of going, through this process have identified several significant benefits of adopting a joint management structure:
- financial savings from reductions in the size of management teams
- greater opportunities for efficiencies from share services
- savings from joint procurement
- a higher profile for the councils, which in some cases can represent combined populations of nearly 250,000 people, and
- the combined teams can be formed from the best individuals from both councils.
Another positive outcome of the development of shared services has been the influence it has had on the councils’ stakeholders. There have been examples of organisations such as police command units, local UNISON branches, local strategic partnerships and business representatives altering their management arrangements to mirror the lead from a joint working council. This move, whilst unpredicted, goes a long way to exemplify how beneficial this system can be for organisations.
As expected, the most realisable savings to date, from both a joint management team and the integration of shared services, are predominantly from staff reductions. The benefits of these measures are threefold: staff are brought together from the different authorities allowing for expertise and experience to be fully utilised, the reduction in senior staff brings with it an obvious cost saving, and larger producer units find it easier to offer the salaries and career opportunities to recruit and retain good staff.
Challenges of joint management arrangements
Shared service arrangements have proved fragile. While there are some long-standing and successful examples of shared services, notably those which arose from the demise of the metropolitan county councils, there are more examples of shared services arrangements which have failed because of political, priority and financial differences between the participating authorities, or the ambitions of politicians to be in control of their own authorities. Even where shared service arrangements allow for participating authorities to buy different service levels and manner of service delivery, shared services require a degree of commitment and compromise on the part of each of the participating authorities.
The shared chief executive role
Life as a senior officer in a local authority can be precarious at the best of times. Comparisons between the life expectancy of a local authority chief executive and of a Premiership football manager are not entirely misplaced. Double the risks by working for two local authorities, add in the fragility of shared service arrangements, and you can understand why not every local authority chief executive is volunteering for such a combined role.
Despite suggestions that Cabinet government has made the role of a local authority chief executive redundant, the reality is that every local authority needs someone to support its political leadership in identifying the obligations and pressures upon that authority and the strategic options available, as well as ensuring that the officer team is delivering, in partnership with a wide variety of local agencies and public bodies.
If the job were simply managerial, acting for two authorities might be a question of going through the same process twice. But chief executives currently undertaking this position have spoken of how they are facing a very different role as a joint chief executive of a joint management arrangement, as compared to their previous single-authority positions.
The primary difference cited has been how the role is much more strategic: they have found it necessary to step away from some of the day-to-day details that they had previously been involved in. It is important to recognise that the two councils remain distinct legal entities with their own political structures: they choose to have a shared joint officer management team which individually advises them both separately.
The change in role for chief executives has had a natural implication for senior managers who are now expected to step up to new challenges and take on increased responsibility. This in turn has had a knock-on effect on a large number of management staff, who have recognised their changing roles and responsibilities following integration.
The common issue experienced by heads of service is the competing claims on their time, exemplified by the pressure to be seen to be giving the highest priority to the requirements of each participating authority, to maintain service standards and delivery whilst concurrently managing integration. For this reason corporate support has been cited as vital for achieving successful, managed integration.
Key factors to ensure successful integration
Councils have differed in their approach to setting up an integrated workforce. The majority of authorities have sought the advantages of a single employment and management structure, by TUPE-transferring the relevant staff to a single ”lead authority”, which then delivers the service for each participating authority. However, some authorities have retained staff employed within each authority but sought to integrate management and to enable staff to work for each of the participating authorities by making them available to the other authorities under s.113 of the Local Government Act 1972.
The chief executives in place to date have pointed to a checklist of key factors which need to be present to ensure that two councils can successfully share a management team:
- ensure no large cultural differences
- there must be similarity in the areas covered by the councils
- the communities need to have some similarities
- both authorities must trust the chief executive
- there needs to be clear and well understood governance, and
- politicians must be able to trust and work with each other.
Cultural issues
Culture is something that councils must tackle as a priority. Cultural differences between councils can be seen in their championed values and their systems and processes. These differences should not be ignored but should be addressed by putting in place a process to develop shared organisational priorities, where differences can be understood and explored.
Whilst it is important that various processes are standardised, this cannot be done immediately and instead should be done following a careful, measured process where staff are listened to and worked with. Because this coalescence of culture is so important, it will be interesting to watch how the limited number of local authority / NHS shared managements arrangements survive.
At worst, cultural issues can act as barriers to the acceptance of integration amongst councils and their members. Critically, neither authority must be allowed to feel that it is being railroaded or taken over by the other, a view most keenly felt where the new joint chief executive is recruited from one of the participating authorities rather than from outside, so that an authority has 'lost' their own chief executive. The key weapons in tackling this issue are openness and communication at all levels, maintained throughout the whole process.
It is precisely these differences of priority and culture between individual authorities that make forced shared services arrangements so difficult. Unless everyone really wants the arrangements to succeed and is prepared to accept the compromises necessary for this end, such arrangements are unlikely to prove very durable. Commercial analogies of greater economies arising from corporate mergers and acquisitions, which are used by advocates to suggest that massive savings are available from shared services in local government, are based on assumptions that all parties are buying a standard service to a common specification. That is simply not the case in local government.
Despite the prevalence of national terms and conditions of employment, there are significant differences between authorities and this has been a major problem area faced by councils seeking integration. It is for this reason, and the reality that staff will be coming together on potentially different terms and conditions, that harmonisation should be a priority, despite the potential challenge that it may bring about.
Sarah Lamont is a partner in the employment team at Bevan Brittan. She can be contacted on 0870 194 8943 or via This email address is being protected from spambots. You need JavaScript enabled to view it..
