Managing transformation

  • Maintaining services in a tough financial climate is a challenge
  • Transformation, and the move from supplier to commissioner, offers a way forward
  • Better scenario planning and strategic risk management are essential

When historians come to write about the time we are living through now, there is a good chance that they might describe it as an “Age of Insecurity”.

A storm of risks is gathering, to present local authorities with the most challenging operating environment since the immediate post-WWII years, according to Zurich Municipal.

The world seems a distinctly risky environment to operate in right now – just as local authorities are struggling to find the money to fund resilience.

Service delivery

But local authorities have no choice but to press on, and most leaders are now adapting to the climate of austerity, and starting to take a more strategic, longer-term approach to efficient service and outcome delivery.

Many are evolving from service providers into service commissioners. While this certainly adds new layers of complexity and risk, councils still retain the same objectives: the need to deliver vital services for local residents, and stay at the heart of the communities they serve.

“My experience across various organisations has taught me that in tough times the most fruitful course of action can be to treasure stepping back from the immediate challenges that we face to invest time thinking about the medium to long term,” says Rob Whiteman, Chief Executive, Chartered Institute of Public Finance and Accountancy (CIPFA).

Delivery of these objectives depends on a solid organisational structure, and it’s no surprise that research by Zurich Municipal found that financial risk and the demands of maintaining a strong, positive workforce are where leaders see challenges ahead.

“Public services, and local government in particular, are discovering that while the ‘diet and exercise’ of austerity have in many ways been good for us, producing leaner and more efficient organisations, this will ultimately not be enough to make us fit for the extensive challenges we face,” says Whiteman.

“The risk landscape has never been more complex and varied, and new risks are emerging to challenge the most sophisticated transformational planning and implementation.”

It’s certainly hard to do this successfully. Cuts have left many councils struggling to implement the final stage of central government’s 2010 spending review. According to research by Zurich Municipal, 79% of councils expect a tipping point in 2015/16-2016-17.

Managing risk

In February 2014, the Local Government Association (LGA) made a submission to HM Treasury, stating that they believed achieving financial sustainability is the greatest challenge facing local public services. To be sustainable, more cuts will be essential. And these won’t be popular.

To deliver core services, councils may have to stop providing other services that local people care about, including road maintenance, libraries, leisure services, arts centres and museums and youth clubs, as well as non-critical care services.

All of which makes effective strategic risk management even more crucial.

You need to make sure that you understand your appetite for risk, and have the skills to be as resilient as possible to sustain your obligations through these difficult times.

The key is to look ahead now and plan for the worst. That way, when historians come to look back, they’ll be writing about your successes.