Innovation as a contemporary issue

Current examples of how innovation is being promoted in the planning and delivery of public services include,

• the NESTA Innovation Lab;
• the OECD Observatory of Public Sector Innovation; and
• the European Commission.

Innovation vs invention

The first thing to note about innovation is that it is not about experiments and people in white coats. The easiest way to think about innovation is about applying existing ideas or products in a new setting. That is what makes innovation different to invention-which is the creation of new ideas or products.

In this sense there is a long history of innovation in public services (although it may not always have been labelled as such). For example, where one local authority uses an example of good practice from another local authority that would be an example of innovation.

Innovation as a ‘good thing’

But is innovation a good thing in public services? Well yes, sometimes it can be. When people refer to innovation there is an implicit assumption that it is linked to some improvement – and so it should be. What it is not is doing everything you did before but with fewer staff and resources. There are many other words for that sort of thing.

In this regard it is unfortunate that the word innovation is becoming ambushed within some circles, along with other approaches such as lean public services, by those with alternative motives. Therefore it is important to understand exactly what innovation is and how it may help deliver better public services.

At the same time innovation may not be a ‘good thing’ and does not necessarily deliver better public services. Taking into account that innovation can be easiest understood as the implementation of an existing idea or product in a new setting we must ask, is it always appropriate for a public service to experiment with a new approach? Inevitably this will often involve some investment and success cannot be guaranteed. Do we (the public) want more risk-taking in the planning and delivery of public services? And are we willing to accept failure as a ‘learning experience’ when things go wrong?

Implementation of innovation

Ultimately, as with all change activity an innovation must be implemented properly and sensitively. Those who are charged with implementing the innovation (public service workers) must be engaged and should feel a degree of ownership of the change. The public must be willing to support more risk-taking and scope for mistakes in the delivery of public services. Finally it is important that the public recognise and support the improvement that will come from the innovation. Otherwise what’s the point!

The final point to note about innovation is that those companies who are particularly well known for it, say Dyson, Google, WL Gore, all invest heavily in it, are committed to innovation in the long-run and give their employees the autonomy to make changes where they see fit. For example, at W.L. Gore employees are given 30 minutes per week for ‘dabble time’ - time to do their own projects outwith their day to day duties. In other words innovation may lead to cost savings, or it may generate new revenue streams, but it is certainly not something that can happen on the cheap or during an away day. Nor is it something that can ever be the responsibility of a single person or “innovation centre”. Where it works well it is a common thread through everything the organisation does – from recruitment of staff to delivery of the business. It must be an integral part of the organisational culture.

Conclusion

There are lots of examples from across the private, public and Third sectors where innovation has delivered real improvement in the delivery of services. This does not need to be a particularly large project to count as innovation and nor does innovation necessarily require huge investment. However, those organisations that are known for innovation tend to invest in innovation, encourage their staff to experiment (and learn from mistakes) and they all take long-term view of innovation. One of the complexities of public service organisations is the nature of being accountable to the public. Unless your ‘public’ are bought into the idea of innovation there are always going to be huge risks involved. What’s more, if you have an organisational culture where “computer says no” is the automatic default or where budget cuts are the primary agenda item then you will need to change your culture or your financial situation first before thinking about whether innovation is for you.

First of all, what is Lean Management? This is actually a rather difficult question as terms such as continuous flow manufacture; stockless production; lean manufacturing; Lean thinking; Toyota production system and systems thinking have all become associated to a greater or lesser extent with ‘Lean Management’. However, for me, this short advert for Honda (a key proponent of lean management) encapsulates the essence of lean management:

• there is no waste;
• every part of the process has a purpose;
• everything happens in a fluid sequence;
• everything happens ‘just-in-time’;
• everything ‘adds value’ to the process.

First of all I think there is a lot to be said for a Lean Management way of thinking. Within public services perhaps the key text in this area is John Seddon’s Systems Thinking in the Public Sector. Now, there are probably some who would automatically switch off at the very mention of Lean Management. It could be dismissed as ‘just another management fad’. But actually there is something to it and it is worth considering the positive aspects of Lean.

In my view, Lean is predominately about creating a learning organisation with empowered and autonomous workers. This is encapsulated in Mr Ohno, the Toyota executive who has been credited with the development of lean management, refused to have any of the lean management approach written down as then it would become crystallised and difficult to change – and would then stifle innovation. For Mr Ohno it was important that lean management continuously change and development. Consequently one should always be wary of any text or consultant who claims to be prescribing a lean approach (NB: that’s not to say that some books or consultants may have interesting things to say on the subject).

Nonetheless, there are some basic principles which can help with understanding a lean management way of thinking. The main focus of lean is on finding efficiencies in production through the elimination of all waste. Importantly the definition of waste is very broad in this area and has nothing to do with bins or recycling. Waste, in a lean management perspective, is any activity that does not directly contribute to satisfying customer needs. That is a quite radical way of thinking. Take a moment to consider the tasks you perform in an average week and ask yourself how many directly contribute to the satisfaction of your ‘customers’?

This is a useful way of thinking. So, for example, how is attendance at any one particular meeting going to directly enhance your customer’s satisfaction? Also, how does your organisation reward attendance at meetings vs delivery at the front line? However, this line of thinking when applied indiscriminately can be completely inappropriate; for example, empty hospital beds could be viewed as waste under this approach. Overall though there are undoubtedly many things that all businesses and organisations do that do not directly serve the needs of customers. As such this is a valuable mind-set to have.

It is workers at the front line of operations who are best placed to identify areas of waste and so the Toyota approach to lean management was to empower workers to identify areas of waste and to take responsibility for the inspection and quality control of their own work. A key argument being that failure, in the form of defective goods, represents a form of waste. Therefore a lean approach requires a commitment to ‘zero defects’.

In the public services John Seddon argues for the abolition of the Audit Commission, stating,

People’s work should not be inspected; people should be their own inspector.

Seddon (2008: 63-64).

However, this seems like a rather unrealistic goal within public services, even where the current UK Government may be working towards abolishing the Audit Commission there will always be a need for auditing and scrutiny of public services – hence the development of a new auditing regime. This is due to the demand (what John Seddon would describe as ‘failure demand’ for accountability in public services when things go wrong). This is heightened by the extent to which public services are often dealing with life-or-death situations with highly vulnerable groups. As the case of Mid-Staffordshire NHS Trust shows, where failure does occur in public services it is important that lessons are learned and there is some accountability for the mistakes that have happened.

At this point it would be wrong to conclude that Lean is something that can only work within a manufacturing setting. As this article from the Harvard Business Review illustrates there is some relevance to the service sector. However, public services, which have their own distinct challenges, have particular characteristics that make a lean approach more difficult to achieve.

To some extent a lean management way of thinking is important in public services today. Public services are increasingly expected to be responsive to ‘customer’ needs and continuous improvement (and efficiency savings) have become an accepted part of how we plan and deliver our public services. However,  we are still accountable to the public and therefore good governance mechanisms are key. To an extent, when things go wrong in public services, we (the public) tend to fall back on bureaucracy – what policies and procedures were in place?; how was the service audited and inspected?; where does accountability lie?

There are in fact some positive aspects of bureaucracy which are important not to forget. As the former Cabinet Secretary, Sir Gus O’Donnell, has put it,

In this country you can renew your car tax if you can prove you own the vehicle, it is roadworthy and it is insured. In other parts of the world all it takes is knowing which palms to grease. Bureaucratic systems are colour-blind, gender-neutral and they don’t care what you sound like. That brings fairness in a way more discretionary systems can never match.

Sir Gus O’Donnell, ‘There is no shame in being a bureaucrat’, Financial Times, 2013.

Finally, what I have found in speaking to those who have experienced the ‘implementation’ of lean management in public services is that there is a fairly piecemeal approach. Those aspects that are seen to deliver cost savings are pushed through with some gusto whilst aspects of empowering and developing staff (where investment may be required) are quietly forgotten. Yet the successful delivery of a lean management approach is totally dependent on a committed and empowered workforce. It is, in many respects (as highlighted by John Seddon) the very opposite of a traditional command and control form of management. So as soon as someone tells you to implement lean management – and dictates how it is to be done – you should consider what they are actually meaning.

There is lots more I could say on this topic but I was trying to keep this short so I’ll leave it for now. If you have any further questions please use the comments box below.

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Ministers vs Civil Servants: Time for more FOI?

The West Coast Rail franchise fiasco raises again the question of accountability when things go badly wrong in public service delivery.  In central government the debate is about whether Ministers or civil servants should carry the can, and in the case of the cancelled contract with First Group Ministers were quick to blame their officials for alleged errors in the calculations.  Meanwhile, Opposition politicians are keen to ensure that Ministers do not pass the buck, while the Chair of the Westminster Public Accounts Committee (PAC), the Margaret Hodge MP, appeared to conclude before hearing any evidence that the civil service was definitely at fault. Writing in the Times on 9 October 2012, she also called for civil servants to be accountable to Parliament, and for Committees to be able to summon civil servants to explain their actions. 

Mrs Hodge has been on something of a campaign to hold individual civil servants to account ever since her appointment as Chair of the PAC in July 2010, and has previously complained about obfuscation by officials and lack of frankness in evidence given to her Committee.  However, to extend to a range of officials the longstanding Westminster convention that Permanent Secretaries, may – as Accounting Officers – be called before the PAC to account for, mainly, financial management, and to make all civil servants answerable to Parliament, would be a major constitutional change unlikely to find favour among Ministers or officials.  In the UK the position is that civil servants answer to Ministers and that Ministers are accountable to Parliament, subject to the convention noted above.

On the face of it, there could be advantages in terms of accountability, and transparency, if the net of Accounting Officers (or “Accountable Officers” as in Scotland) were widened.  It may be fair to argue that Ministers should not be expected to delve into, far less understand, the minutiae of major procurements like the rail franchise, which rely on multiple complex assumptions, calculations, and financial assessments reliant on the work of Departmental economists, legal advisers, Treasury  wonks, and well paid private sector consultants.  But, it might also be contended that Permanent Secretaries, with large, complex organisations to manage, should likewise not be expected to know every fine detail of Departmental business – though the PAC has never been sympathetic to that proposition.

There are, nevertheless, downsides. One is that individual civil servants are constitutionally indivisible from their Ministers (and vice versa, though it seems Minsters no longer see things that way) and cannot publicly disagree with their political masters.  Even Permanent Secretaries are restricted in what they can say, within the confines of their Accounting Officer responsibilities. Another downside would be the temptation for some Committee members to grandstand and pursue cheap headlines, and there is a question mark over whether enough of them have the skills and competences for forensic examination. Committee questioning of James Murdoch of News International over phone hacking by the News of the World justifies such doubt.

However, despite civil service reforms over the past 25 years, the issue of accountability remains unresolved.  The gold standard insight into how knotty the problem is remains the famous BBC interview in the 1990s by Jeremy Paxman of the then Home Secretary, Michael Howard MP, over the respective roles of the latter and of the Chief Executive of HM Prison Service in the dismissal of the Governor of Parkhurst prison.

Whatever the doubts, the Scottish Parliament has since 1999 been able to call a range of civil servants before its Committees.  As in Westminster, Accountable Officers – the Permanent Secretary, Agency and Quango chiefs and other top brass – may be required to appear before the Scottish Parliament’s own PAC (Public Audit Committee), but they and other officials may also be called to explain legislation and policies to a variety of other Committees. For the most part these are polite encounters, with sensitivity shown to what civil servants are allowed to divulge, though on occasion former Ministers serving on Committees seem to have succumbed to the temptation to settle scores with officials dating back to when they were previously in office.

Whatever the position in Scotland, blaming officials for setbacks risks becoming the norm in Westminster. Civil servants have even been blamed for what went wrong in the 2012 Budget, so the odds on being scapegoated if you are unfortunate enough to work for the Coalition seem to be shortening.  Perhaps the time has come to reconsider the sacred “no go” area in Freedom of Information (FOI) and start bringing advice to Ministers into the public domain. This is of course anathema to most senior civil servants and to the Whitehall mandarinate, whose objections are that extending FOI to advice to Ministers would undermine the trust between Ministers and officials, and constrain the latter’s willingness to “speak truth to power”.

These are important considerations, but they reflect a view of the relationship between Ministers and civil servants more in tune with the middle of the 20^th Century than the second decade of the 21^st. Mutual trust between Ministers and civil servants has been ebbing away in Whitehall for years, with the result that Ministers nowadays mostly prefer the enthusiastic advice of ambitious special advisers, some fresh from university political activism, to that of experienced officials.

By the same token “speaking truth to power” is regarded as obstructionism and has been withering away since the Thatcher years when not “being one of us” was distinctly career limiting. In fact, opening up advice to public view may revive the practice – and raise the game of officials and Ministers alike. If the public were to know who advised what to whom, and who decided what, there would be no hiding place for anyone – which is precisely why Ministers would not like it any more than the mandarins. But accountability would be sharpened, and that would presumably be welcomed by everyone else, including Mrs Hodge.

Eddie Frizzell

October 2012

This post comes from Professor Eddie Frizzell, Visiting Professor in Public Service Management at Queen Margaret University, Edinburgh.

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Public Sector Bonuses – gone forever?

Bonuses for public servants are a hot issue – so hot that they appear to have fallen out of favour not only with the Scottish Government, but also at UK level where the Coalition Government has ordered a review, and clamped down on the senior civil service bonus “pot”.  Are public sector bonuses destined for the bin and is there any prospect of informed debate about the pros and cons?

As Will Hutton notes in his Review of Fair Pay in the Public Sector published last year, part of the reason for this is that “public sector managers have been caught up in the backlash to the remarkable growth of the earnings of the top 1 per cent over the last thirty or forty years and in particular in the last ten. Bank bail-outs with scarcely checked bonuses have dramatised these concerns…[but]…only one pound of every hundred pounds earned by the top one per cent of earners is earned by public sector employees.”^[1]

The Scottish Government’s public sector pay policy for senior appointments in 2012-13, which applies to Chief Executives of Non-Departmental Public Bodies (quangos in media-speak) and Public Corporations as well as NHS Scotland top managers, specifically suspends “access to non-consolidated pay” in 2012-13, ie bonuses for exceptional performance in 2011-12. The pay policy for other staff in public bodies and for the Scottish Government’s own civil servants similarly suspends all access to non-consolidated pay, either as bonuses or as pay for staff on their range maximum.^[2]

This may be a reasonable enough response to austerity and is consistent with the general freeze on public sector pay, but “the policy expectation…that any bonus arrangement in a Chief Executive’s contract will be removed when an appropriate opportunity arises (on new appointment or following a review)”^[3] goes further and suggests a more fundamental rejection of the bonus concept.

Would the end of bonuses for public servants in Scotland cause problems in terms of employee motivation and performance?  The answer to this is by no means clear. Bonuses for public servants arrived with performance-related pay in the civil service reform agenda in the 1980s and 1990s, before spreading out to some, but by no means all, other parts of the public sector. They became part of the “New Public Management”, inspired by the proposition that public services could be made more efficient by adopting commercial practices and disciplines, and by importing private sector managers to run them.

Performance related pay, unconstrained by the limitations of public sector pay scales, and the availability of bonuses, were seen by Ministers of the day as necessary to recruit such managers. They were also key tools in the kit of “reforms” needed to make all public servants work harder and focus on results; but there are a number of still unresolved problems with this in the public sector. First, “performance” needs to be assessed in relation to a relatively small number of well-defined measures and targets which may not reflect the complexity of the work, and are often difficult to determine without the financial and shareholder value-related metrics available to the private sector.  Second, individual achievement may partly depend on the performance of others, in other organisations, pursuing other priorities. Third, performance assessment needs rigorous individual performance appraisal by managers who in the public service frequently have neither the appetite nor aptitude for the difficult conversations with staff that implies.  Fourth, in the absence of such rigour, performance-related pay drives up the wage bill as well as future pension costs.

The classic response by Governments to the last problem is to restrict the amount of “consolidated” (ie pensionable) performance pay, and to put more emphasis on non-consolidated one-off bonuses. In the civil service this approach has been accompanied by central control over the proportion of the overall paybill which can be devoted to the bonus element.  The consequence tends to be consolidated pay increases in which the difference between the reward for exceptional as opposed to acceptable performance is marginal, and bonuses whose modest size is more likely to promote cynicism than enhance motivation. As Hutton notes in his review, in the UK public sector non-consolidated bonuses are parsimonious compared with other OECD countries.

There are therefore probably few public servants who would shed tears over the disappearance of non-consolidated bonuses, if they were to be replaced by reward arrangements that offered the opportunity to improve pensionable pay. This is however not likely to happen, as one-off bonuses help Governments to bear down on future pension costs – always part of the rationale, and even more important now than previously.  Indeed the pressure to keep the public sector pension “burden” of the future under control implies more, not less, emphasis on bonuses as a reward, with a larger proportion of individuals’ remuneration in the form of one-off non-pensionable payments.

It would be premature therefore to conclude that performance pay and bonuses in the public sector are destined for the dustbin of history. Hutton considers that there are compelling reasons why performance pay for senior staff should not be abandoned, on the grounds that there should be differentiation in financial rewards for the good and poor performer. However, he also considers that there is a much stronger case for linking pay to performance at the senior levels of public organisations, as opposed to the rest of the workforce, a view with which many public sector managers and staff would probably agree.

They may be less inclined to agree with his suggestion that performance pay systems might be reconfigured to include an element of base pay which was “at risk”, to be “earned back” through good performance, though his advocacy of team based incentives, and a sharing of rewards from productivity gains, would receive some support. Not that the latter suggestion is new: thirteen years ago the then Labour Government committed to “looking for new ways of rewarding organisation performance and success-sharing, for example …. by linking pay, bonuses or other rewards to the achievement of performance or efficiency improvements”.^[4]

No doubt the long search will be resumed at some point. But two important underlying questions remain unanswered:  first, are public servants really motivated by money? And second, if so, is there any prospect of any system of performance pay for public servants being well enough funded to make it a real motivator  and – in that event – of its being acceptable to the public? The answer to the first is that it is highly doubtful, and to the second, a resounding “no” on both counts.  So perhaps the controversy over bonuses is less a hot issue than just so much hot air.

These issues are quite important to recognise for all managers given the continuing rise of the service sector across the world. In fact services account for 62.9% of global GDP. 

The key characteristics of services are intangible, heterogeneous, inseparable, and perishable as defined by Zeithaml, Parasuraman and Berry 1990 (although some, notably Lovelock and Gummesson, 2004, have questioned this classification).

Intangibility

Services are largely intangible. They are about having an experience. Of course there are some physical characteristics associated with most services, such as the quality of chairs in a fine dining restaurant, but what makes services unique from goods is the extent to which perceptions of service quality are impacted by environmental factors and customer-provider interactions. These intangible factors are very difficult to control or manage.

Take, for example, a business offering guided bus tours of the Scottish highlands. There are a number of physical features of this service such as the comfort of the seats on the bus. But ultimately much of the service experience will be influenced by factors entirely outside of the control of the business – weather, the interaction with staff, the behaviour of other customers on the bus (to name but a few). These intangible factors make service interactions very unpredictable and difficult to control.

Creative Commons license: by Pedro Szekely

Perishability

The fact that services are intangible also means that they are not easily stored for future use. So if there is excess capacity this cannot be stored to be sold at another time. In other words, services are perishable.

Take, for example, a street performer. If they do not attract a significant audience for their performance that equates to lost income. They cannot get that time back. Hence the pressure within many services to get ‘bums on seats’. Consequently, pricing is key – particularly with services that have high fixed costs and a fixed capacity such as with cinemas, restaurants and bus tour companies.

Creative Commons license: by Trey Ratcliff

Inseparability of production and consumption

Most services are produced at the same time as they are consumed. So the street performance will be consumed at the same time as it is ‘produced’. This means that quality control is much more difficult than with goods. It also places significant pressure of service staff to always ’perform’ at a consistent level. This requirement of service workers to perform is best described by the Hochschild (1983) concept of emotional labour. Numerous studies have shown that the strain of constantly having to perform can lead to stress-related illnesses. This blogpost by Flip Chart Fairy Tales highlights a number of other reasons why people in service occupations tend to have more sickness absence that in other occupations.

As an example of the inseparability of production and consumption take transplant surgery. The medical staff must perform consistently under the most extreme pressure with every single patient. Mistakes can cost lives and, unlike with manufacturing, are often not easily rectified. Yet quality inspection and control can only happen at the same time that the ‘customer’ is receiving the service. Furthermore the speed of service delivery is critical. Under these circumstances it is truly impressive what our health workers do on a daily basis. Hence those who use a service, such as the NHS are likely to be more satisfied with the service than those who do not as outlined in this Ipsos Mori report.

Creative Commons license: by Army Medicine

Heterogeneity

The intangibility and the fact that production and consumption take place at the same time means that the service provided may be slightly different every time. This has significant advantages in terms of customisation and innovation. But it is also costly and can lead to dissatisfaction if a minimum service level is not met.

So a service experience, like a rock concert, may be different every time. Take for example Bruce Springstein’s recent Hyde Park gig where he sung the song, Take Em As They Come, especially for one of his fans in the crowd. The flexibility of many services allows for this sort of innovation and customisation. However, this may be experienced by different people in different ways – even at the same time. The need for some control is also highlighted by the fact that the same Hyde Park gig ran over time to such an extent the organisers were forced to turn off the speakers in order to comply with the terms of their licence.

Nonetheless, the more a service is standardised (which improves efficiency) the less personalisation can be achieved (potentially affecting effectiveness). Imagine if a barber gave every customer the same hair cut. It might be very cheap and efficient but would almost certainly affect customer satisfaction. Given the increasing focus on efficiency over effectiveness it is perhaps not surprising that public attitudes towards the NHS are falling.

Creative Commons license: by Christian Holmér

Conclusion

These factors, when taken together, mean that services are very difficult to manage. When you include the publicness of public services, as well as the complex problems many such services have to deal with, it is perhaps not surprising that they are not always perfectly efficient. Indeed it has been pointed out on this excellent set of posts by Flip Chart Fairy Tales (Part 1; Part 2) just how difficult efficiency gains are in service industries. 

This is not to say that we shouldn’t even try to create efficiencies – but it might help to start with realistic expectations.

References:

Hochschild, A. (1983) The Managed Heart: Commercialization of Human Feeling. California: University of California Press.

Lovelock, C. and Gummesson, E. (2004) “Whither services marketing?”, Journal of Services Research, Vol. 7 No.1, pp.20-41.

Zeithaml, V.A., Parasuraman, A. and  Berry, L.L. (1990) Delivering Quality Service. New York: Free Press.

Susan Boyle receives honorary degree from Queen Margaret University Edinburgh

This was publicised across the world (see The Jamaica Observer and The Washington Post) and generated a lot of interest in the graduation. What was particularly interesting was seeing paparazzi upon rubbish bins struggling to get a photograph of Susan. Most unusual!

Paparazzi taking photos of Susan Boyle at graduation

After receiving her honorary degree Susan graciously left to attend other prior engagements. This enabled the focus for the rest of the day to be firmly on the graduating undergraduate and postgraduate students of 2012.

I find it particularly special to see students whom I have taught or supervised successfully complete their studies. Among those graduating were the following MBA students.

L-R, Gwenmarie Ewing; Ian Elliott; Giovana Polla

L-R, Ian Elliott; Ros Standish

Among the topics researched from a public services perspective were the following:

Ros Standish, MBA (Healthcare Management), with distinction:

“Change management in acute care: perspectives from therapists’ in non-management roles.”

Abstract:

Previous research into the continuing professional development (CPD) of allied health staff professionals (AHP’s) in Scotland identified change management as a topic which AHP disciplines sought to learn more about. The knowledge and understanding of change management by therapists in non-management roles has not been widely researched, with many former studies focussed on allied health staff in management roles. This research dissertation aimed to investigate the thoughts and knowledge of physiotherapists and occupational therapists on the topic of change management, to understand how they perceive change management relates to their current roles and to identify any future training needs. Using a phenomenological approach, 13 individual semi-structured interviews were conducted and a selection of job descriptions of posts in acute care were reviewed. Two understandings of change management were reported by participants and similarities in change management training needs were noted between clinicians who had similar roles, across different bandings.    

 Amanda Forte, Executive Masters in Public Services Management:

“Organisational change management in a Middle Eastern Culture”

Abstract:

The purpose of this dissertation is to examine how the perceptions of ‘change agents’ in a Middle Eastern organisation impact on the implementation of organizational changes.  The research undertaken consisted of interviews with ‘change agents’ in one particular organisation which had been the subject of various changes since its establishment.  Interviews were conducted at a time when a new change initiative was being initiated with a defined purpose and goal. 

Interviews examined how the main ‘change agents’ perceived the need for change and how they managed this within their own areas.  The research also examined whether there were specific issues which were experienced, within the context of the Middle East, by ‘change agents’ applying western concepts of the management of change.

The research concluded that, the perceptions of the ‘change agents’ did have a significant impact on the management and implementation of change strategies.  The research shows that ‘change agents’ agreement to the need for change is important, but the articulation of the scope and depth of the change to be led by individuals is of equal importance.  Similarly the authority of those leading change must be clearly defined and understood as any ambiguity in the perception of subordinates will impact on their willingness to initiate or implement any changes across the organisation.

New public services programme

An increasing number of students from the public services area are showing an interest in issues of leading and managing change. This is hardly surprising as ‘change’ is increasingly being perceived by politicians as a panacea. Yet the implementation of change is incredibly difficult due to the  human side of ‘transformation’; the nature of organisational culture; and the nature of public services.

It is with this in mind that we have amended our programmes so that our new undergraduate suite has a module on leading change and our postgraduate public services governance course has a module on leading change in the public services.

This September we will be enrolling students onto our new public services governance course and our new MBA suite. These new programmes have taken a considerable amount of effort from all staff and have included feedback from former students and employers. To find out more about the new programmes click here.

Why do we expect banks to operate in a moral way for the public good? Since when was making a profit for shareholders not enough? Anyone who has ever worked in sales or marketing will know the emphasis that is placed on ’upselling’ – selling extra products or services to people that they don’t actually need. As Milton Friedman said,

…there is one and only one social responsibility of business – to use resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competitions, without deception or fraud.

(Friedman and Friedman, 1962, p. 133)

Of course, management thought has moved on somewhat since the 1960′s and I am not advocating a Friedman style of capitalism. It also cannot be ignored that action must be taken when businesses commit fraud or other illegal acts. But the question for me is what has led to such moral outrage?

And why is it, at a time when public services are being expected to operate more like businesses, politicians seem to be expecting businesses to act more like public services?

In 1986, the brilliant economist, Susan Strange highlighted the many flaws in the global financial system and in many ways predicted the financial crash of 2008. Strange also noted that it is governments and policy-makers, often misled by neo-liberal theory, who set the framework which enables such behaviours to take place. Anyone who has read either Casino Capitalism or the follow-up Mad Money would not be surprised at the behaviour of bankers at Barclays, RBS or any other bank. What is surprising is the extent to which politicians, who have allowed such behaviour to continue unchecked for so long, appear so shocked and outraged by the whole affair.

What seems to be going on here, at least in part, is that banks are becoming, in effect, a public service. In 1953 Paul Samuelson set out what he described as a collective consumption good. These are now refered to within economics as ‘public goods’ and consist of two characteristics: 1) Non-excludable; 2) Non-rivalry in use.

1) Non-excludable

According to the Collins English Dictionary a bank is,

an institution offering certain financial services, such as the safekeeping of money, conversion of domestic into and from foreign currencies, lending of money at interest, and acceptance of bills of exchange

It would be right to point out that access to banking services is a choice that consumers make. You are not compelled to have a bank account and banks are there to serve the interests of customers and shareholders. They do not serve a public purpose in the same way as national defence or national vaccination programmes. 

But today to be included in society increasingly you need a bank account. State pensions and benefits are paid into bank accounts, mortgages are paid from bank accounts, wages and salaries are paid into bank accounts. To stop someone having a bank account is increasingly to exclude them from society. Of course, it is possible to exclude people from having a bank account. And people may choose themselves not to have a bank account (what is known as the power of exit). As such banking services are not a pure public good. 

However, the importance of access to financial services was highlighted by the former UN Secretary-General, Kofi Annan, in launching the 2005 International Year of Microcredit when he said,

The stark reality is that most poor people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. The International Year of Microcredit offers a pivotal opportunity for the international community to engage in a shared commitment to meet this challenge.  Together, we can and must build inclusive financial sectors that help people improve their lives. 

What is more, is that the effects of a banking collapse, such as witnessed in 2008, are non-excludable. A banking failure does not just impact on shareholder and customers – it impacts on the entire economy. Banks are now such an important part of the economy, in a way they were never designed to be, that they are too big to fail.

2) Non-rivalry in use

Friedman, M. and R. Friedman (1962) Capitalism and Freedom (University of Chicago Press, Chicago).

Samuelson, P.A. (1953) ‘The Pure Theory of Public Expenditure’, The Review of Economics and Statistics, Vol. 36, No. 4, pp. 387-389.

One of my particular favourite posts on the blog was about the three publics. This highlights just one aspect of what it is that makes public services so complex and difficult to manage. What this blog post highlights is that private sector organisations deal with two publics – those who use their product / service and those who don’t but might in the future. However, public sector organisations have to serve the needs of three publics – users, potential future users, and non-users.

‘Private’ services

Take for example a builders. They will be responsible for ensuring that any building work is compliant with building regulations and as a business they must meet other statutory requirements. However, ultimately they are accountable to one public – their customers.

The builders might also offer free estimates for those who might use their service in the future. They might do some other targeted marketing such as putting flyers through doors. So they may engage with another public – those who may use their products / services in the future. But ultimately the builders only have to deal with one public – their customers.

‘Public’ services

In contrast, the public sector have to serve, and are accountable to, three publics. There are those who use the services, those who may use the service in the future, and those who will never use the service. Hence, the three publics. All three publics are important stakeholders and are not limited by voting patterns or payment of taxes. The public sector is there to serve everyone.

What does this mean for managers?

Well, one distinct feature of the public sector is that they cannot choose their customer in the same way that the private sector can.

For example, in the case of the builder, they have autonomy to choose their customer. They may, for example, provide an overly-inflated quote if they do not want or need the business. They may choose to work within a particular geographical area or indeed may choose not to do certain types of work or choose not to work for certain types of people.

This choice has significant benefits. It enables the private sector organisation to specialise in offering a particular type of good or service to a particular type of person. So, M&S will design their stores and select their products based on a very different rationale to say, Lidl. Both are very successful businesses but both are significantly enabled by this ability to discriminate. In particular the ability to discriminate helps to reduce costs by enabling the development of standardised systems which can help reduce errors and system failures.

On the other hand public services are there to serve the entire public. No matter who ‘walks through the door’ they must be served and their needs addressed as best as is possible. This means public service providers need to be highly flexible and adaptable to different user needs. Any attempt to develop standardised systems in public service environments restricts street-level innovation, often does not work and leads to failure demand. See this excellent blog post by Flip Chart Fairy Tales.

Implications for training and development

The need to be flexible and inclusive is difficult and expensive. Imagine, for example, a restaurant that tried to offer both fine dining and budget fast food at the same time – chances are that it wouldn’t work and all three publics would be left unsatisfied. Attempting to meet the needs of all of the people all of the time demands a particular skill set from public service workers. And with increasing change in society comes increasing change in public expectations and so public service requirements. This is why I believe the recent Christie Commission on the Future Delivery of Public Services was right to point to the need for better and more training and development. What is perhaps more questionable is the desire for a “single cross public service development programme” (Christie, 2011: 39) when there is so much variance in development needs.

On a traditional MBA course you would undoubtedly learn about the efficiency savings that can be gained from standardisation and removing variation from your business systems. This mantra fails to take account of the three publics and the complexity of public services. Hence training and development for public service professionals must be context-driven in order to be relevant to their needs. Public service professionals should be involved in the design of such training and development. Most of all, public service providers should not shy away from investment in training and development at a time when service improvements are so sought after.

Queen Margaret University has recently developed the first ever Postgraduate Certificate in Public Services Governance. This is due to commence in September 2012. But what is Public Services Governance?

In later posts I want to look at the question of why public services rather than, say, public sector governance. But right now I am going to look at the question of governance.

Why governance and not administration or management? And what does this mean for the philosophy and content of our programme?

The purpose of this blogpost is to outline how our Public Services Governance programme differs from the more commonplace Masters in Public Administration (MPA) or Public Management courses.

Definitions of Public Governance

One of the challenges in developing a programme in Public Services Governance is that there are a number of differing definitions and even a number of different labels such as Public Governance / Responsive Governance / Network Governance / Public Services Governance. I’m not going to try to provide a comprehensive overview of Public Governance within this blogpost. There are many excellent academic texts, some of which are listed at the end of this post, that are worth reading for a more comprehensive understanding of the subject.

In terms of policy the term started to gain prominence in the 1990’s within a number of World Bank reports (1989; 1992; 1994). In this context the term was used to refer to the importance of good governance in international development. The World Bank defined the term as “the manner in which power is exercised in the management of a country’s economic and social resources for development” (World Bank, 1992). What is interesting here is that the term is not specific to government or the public sector but involves all those with a role to play in international development.

From Public Management to Public Governance

The term public management, or New Public Management (NPM), is now a familiar term across academia and the public services. This term came to prominence within academia and policy-circles in the 1980’s and 1990’s. This period saw the fall of the Berlin Wall, publication of Francis Fukuyama’s (1989) End of History thesis, and the rise of a neo-liberal consensus across many western States. It was within this context that New Public Management emerged as a set of management tools (largely borrowed from the private sector) to improve efficiencies. Typically this consisted of:

• emphasis on performance management
• more flexible and devolved financial management;
• more devolved personnel management with increasing use of performance-related pay and personalized contracts;
• more responsiveness to users and other customers in public services;
• greater decentralization of authority and responsibility from central to lower levels of government;
• greater recourse to the use of market-type mechanisms, such as internal markets, user charges, vouchers, franchising and contracting out;
• privatization of market-orientated public enterprises.

(OECD, 1993 as cited by Bovaird and Löffler, 2003: 17)

In education this led to the development of many public sector specific MBA’s (Masters in Business Administration) and MPA’s (Masters in Public Administration – though perhaps not so much in the UK.

Invariably these degree programmes consist of a number of generic management subjects such as human resource management and strategic management with some public sector examples tagged on. I certainly wouldn’t downplay the value of many of these degrees. But at Queen Margaret University we wanted to offer something distinctive which reflected the most recent debates in public service development and delivery[1].

Rationale for Public Services Governance programme

There are three key factors which have contributed to the design of our public services governance programme:

1. There is an increasing recognition within policy and academia that public services are particularly complex. I will be posting more on the nature of public services later. In the meantime see this excellent blogpost;
2. The prevalence of ‘wicked problems’ such as climate change, childhood obesity and population aging has led to the need for a notably different approach to the design and delivery of public services. Increasingly public sector organisations are working in collaboration (rather than in competition) with private and third sector organisations;
3. Increasingly academics and practitioners alike are questioning the limits of private sector management techniques to address these ‘wicked problems’.

Elke Löffler summed up the rationale for a distinct public governance programme when she stated,

‘public agencies no longer only have to be good at getting their internal management systems right – financial management, human resource management, ICT and performance management – but they also have to manage their most important external stakeholders as well’ (Löffler in Bovaird and Löffler, 2003: 163).

This is not to say that NPM is no longer relevant. I share Bovaird’s view that the realms of public management and public governance are separate but interconnected (2003: 11). Nonetheless, in line with Osborne (2010), I do think public governance is worthy of study in its own right. It was this belief that led to the development of our Postgraduate Certificate in Public Services Governance – the first ever postgraduate course with a focus on public governance[2].

Programme Aim and Contents

Within our programme the key aim is to enable learners to:

• Build on their professional experience by engaging critically with, and reflecting on, themes and issues in public services governance in order to better deliver public service outcomes

Modules are focused on themes and issues within public services governance – rather than focusing on managerial functions. Modules include:

• Public Services Governance: Themes and Issues
• Engendering Policy and Practice
• Internal Communications
• Leading Change in Public Services
• Managing Customer Complaints
• Public Finance

More to follow on these modules in later blog posts. In the meantime you can read about the rationale for inclusion of Engendering Policy and Practice.

Some Useful References:

Bovaird, T. and Löffler, E. (eds) (2003) Public Management and Governance. Routledge: London.

Fukuyama, F. (1989) ‘End of History?’, National Interest, No 16, pp. 3–18.

Osborne, S. (ed) (2010) The New Public Governance. Routledge: London.

Pierre, J. and Peters, B.G. (2000) Governance, Politics and the State. MacMillan Press: Hampshire.

Rhodes, R.A.W. (1997) Understanding Governance. Open University Press: Buckingham.

Stoker, G. (2004) Transforming Local Governance. Palgrave: Hampshire.

World Bank (1989) Sub-Saharan Africa: From Crisis to Sustainable Development. World Bank: Washington, DC.

World Bank (1992) Governance and Development. World Bank: Washington, DC.

World Bank (1994) Governance: The World Bank Experience. World Bank: Washington, DC.

The importance of gender equality might seem obvious to some people. But during the redevelopment of our postgraduate course some of the questions that were raised included: why is there a module on engendering policy and practice? Would this be relevant to international students? Why is gender inequality more important than other inequalities? Isn’t this a very niche topic for a public services programme?

1. Why focus on gender equalities?

This is a very good question. There are nine protected characteristics (including age, religion and belief, and sexual orientation) noted in the Equality Act 2010. Given that there are nine protected characteristics why focus on one?

Well, it is certainly not to suggest that some equalities are more important than others. Rather, this module is seen as a useful starting point for exploring some issues that are common across many inequalities. It does cover, for example, the broader scope of the Equalities Act 2010 and includes practical guidance on how to conduct an equality impact assessment.

2. Isn’t this a very niche topic for a programme in public services governance?

Engendering policy and practice is a generic issue – common to all those who work in the development and delivery of public services. In no way is this a less important issue than say, decision making or collaborative working. In fact issues of equality and gender often cut across these other important issues. As such there is a robust academic and practical case for having the engendering policy and practice module as an elective in equal footing with other elective modules within this programme.

For example, the Civil Service Code, which was placed on a statutory footing as part of the Constitutional Reform and Governance Act 2010, states that the values of the Civil Service include impartiality which includes the responsibility that all civil servants: “carry out your responsibilities in a way that is fair, just and equitable and reflects the Civil Service commitment to equality and diversity“. In the UK Section 149 of the Equality Act 2010 sets out the public sector duty to eliminate discrimination, advance equality of opportunity and foster good relations. There are also legal duties listed with the Equality Act 2010 (Specific Duties) Regulations 2011.

3. Gender equality may not be a subject of relevance to international students.

Gender equality has long been a key goal for international bodies such as the UN and EU. The UN Convention on the Elimination of all forms of Discrimination Against Women (CEDAW) set out this expectation in 1979. The Millennium Development Goals, agreed by all 193 UN member states, includes the commitment to promote gender equality and empower women. More recently the EU Article 13 Equal Treatment Directive (2008) makes it clear that all governments and government agencies, including non-public sector organisations who deliver public services within the EU27, have a duty to uphold and promote equalities. Finally, the World Bank World Development Report (2012) focused on the issue of gender equality and development; highlighting continued gender inequalities and the need for governments internationally to address this through appropriate domestic policy as well as through international development.

4. Finally, why is there a module on engendering policy and practice?

Even if there was not such a robust de lire case setting out the responsibility to promote equalities through all public service activities there would be a de facto case for the inclusion of ‘engendering policy and practice’ in this programme at Queen Margaret University. That is, that promoting equalities and social justice is a common thread in all our activities. As stipulated in Our Values, we will uphold certain values such as ‘social responsibility towards all of the communities we serve, demonstrating respect, care, social justice, equality and fairness’. Our university was founded by Christian Guthrie Wright and Louisa Stevenson in 1875 with the principal goals of promoting educational opportunities and career prospects for women, as well as improving the health and wellbeing of the working classes.

Consequently our new postgraduate programme includes a module on ‘Engendering Policy and Practice’ alongside modules such as ‘Internal Communications’; ‘Leading Change in Public Services’ and ‘Managing Customer Complaints’. More on these modules to come in later blogposts.

For more on the links between gender and inequality a useful starting point is Carol Craig’s excellent book, The Tears that Made the Clyde.

The Postgraduate Certificate in Public Services Governance is a one year programme that has been developed to support those who are currently charged with delivering public services.

Modules on the programme include:

• Public Services Governance: Themes and Issues (Core)
• Public Finance
• Leading Change in Public Services
• Managing Customer Complaints
• Engendering Policy and Practice
• Internal Communication

As programme leader for this course I will be blogging about some of the programme content and related subject matter. The course is due to commence in September 2012. For more information, or to apply, click here.