False economies: the risks for councils who cut services without thinking

Efficiency need not be achieved at the expense of services to users, argues Rob Griffiths. To overcome the seven sins of cost-cutting he offers seven remedies in the form of virtues

Nowhere is the challenge of improving outcomes for service users within financial limits greater than in adult social care and children’s services: the areas that represent the largest share of councils’ budgets and the most complex.

It is all too easy for councils to err from the path of management righteousness by committing “deadly sins” that can undermine good intentions and the benefits provided to clients.

These sins are avoidable by treating financial efficiency and customer service as integrated activities. This article sets out to identify the seven most common sins and show how successful councils maintain their virtue.

1 Ignoring the views of service users
Whose views should determine the efficiencies: service user or service provider? It should be an easy question to answer but too often councils focus on financial savings.
Empathy: Effective councils listen to service users. They use research with users to make informed decisions about savings within an established framework that demonstrates a clear understanding of what users value. During one consultancy, a council considered raising its social services Fair Access to Care Services eligibility threshold to cut 90 per cent of
low level and 10 per cent of medium care packages. This failed to recognise the increased rate of loss of independence that wiped out the savings.

2 Salami slicing
A council usually requires departments to make cuts but also gives them the opportunity to bid for service improvements. But this leads to a piecemeal approach rather than a strategic one resulting in a lack of focus on overall strategy or understanding users’ needs.
Fairness: A more effective approach is to rethink resource allocation and identify areas for investment. Disciplined councils identify and invest only in those services and functions that create direct (or even indirect value) to users.

3 Compromising on sensitive issues
Service users may have strong attachments to particular services that may need closing or replacing, and feel uncertain about new initiatives. Communities may feel ownership of familiar institutions and campaign aggressively to resist change. Elected members can find the choices they make difficult, especially in an election year.
Courage: Effective councils have a strong vision of excellence and leadership with the courage and strength to keep on the agreed path, even when this becomes difficult.

In another consultancy, officers put forward a plan to close a day centre that was not offering the types of service required to support more dependent people in the community, replacing it with a mix of services. One councillor successfully led a campaign that resulted in the proposals being rejected because deferring was easier than explaining the rationale for the changes.

4 Drifting under budgetary pressure
Councils can have a dislocation between service and financial planning. The effect is a corporate plan that is not aligned to the medium term financial plan and there is often a lack of buy-in at the departmental level. The local strategic partnership that develops the community strategy frequently uses a top-down process that fails to capture the voice of the user.
Firmness: Good government has a corporate plan that is grounded in sound understanding of users’ needs. Finding out what users want with transparent scrutiny for project and policy developments should be integral to everything.

5 Not seeing it through
Failure to implement policy decisions effectively is probably the most common problem. This can be due to many things such as a lack of management capacity, knowledge or skills to achieve the necessary efficiencies, or political will.
Determination: Councils need to ensure that they evaluate and select the best solution, supported by a transparent business case and a plan that considers people, processes and technology. Success depends on strong leadership, effective programme management and robust financial management to ensure that savings are made.

6 Losing sight of the outcomes
Managing social care performance is much more than managing a set of performance assessment framework indicators. Real performance is about delivering outcomes to service users. A particular weakness of councils can be a lack of understanding of the relationship between cost measures, activities, outputs and outcomes. The monitoring of key performance indicators can
become dissociated from service delivery; activity and cost data is frequently not reconciled and staff become bogged down in performance data, forgetting that it is not the ultimate goal.
Foresight: Effective performance management depends on helping people to deliver to the best of their abilities and a culture where senior managers are clear about what they are trying to achieve, understand the issues that staff face in meeting user needs, demonstrate their own commitment to performance and actively recognise it in others.

7 Rewarding the wrong things
Some local authorities reward senior managers according to the size of their empire rather than the explicit value they deliver to users. This provides little incentive for directors to make efficiency gains that involve streamlining resources and perpetuates an organisational culture that hampers efforts to drive value for money across all services.
Clarity: Councils need to define specific service and individual key performance indicators and align them to corporate key performance indicators, so that all activity focuses on delivering the authority’s strategically agreed objectives. The “tyranny of departmentalism” and empire building must be challenged at every opportunity.

Councils need to demonstrate that they:

● Fully understand user expectations and have optimised strategy and operations to meet them.
● Continuously identify and remove all waste and inefficiencies.
● Optimise the end-to-end delivery of their services and outcomes across internal and external boundaries through focused partnerships.
● Are relentless in designing the delivery of services around citizen choice and convenience.
● Reward staff and partners to challenge and remedy inefficiency or lack of customer focus.

A great opportunity exists in the next few years to align services around users’ needs, maximise the value of their partnerships and secure lasting efficiency gains. This will make it possible for councils to integrate their strategies for excellence with their programmes for efficiency and become a new breed of lean council.

ROB GRIFFITHS is head of social care consulting at RSM Robson Rhodes LLP. He is a registered social worker with experience of practice, management and senior management in local authority social services, the voluntary sector and also in housing. He now specialises in finance, strategy and efficiency reviews in adult and children’s services.

The author has provided questions about this article to guide discussion in teams. These can be viewed at www.communitycare.co.uk/prtl and individuals’ learning from the discussion can be registered on a free, password-protected
training log held on the site. This is a service from Community Care for all GSCC-registered professionals.

The pursuit of cost and efficiency savings, while a necessary fact of life for social services managers, can negatively affect services to users if not handled well. In this article I describe some of the pitfalls associated with savings reviews and how, by treating financial efficiency and customer service based on good professional practice as integrated, rather than
parallel, activities, these can be avoided.

This article appeared on Page 34 of the magazine (issue dated 28/9 – 4/10) under the headline Sins of the Cost Cutters

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