Succession planning makes it easier to appoint good replacements for departing or retiring staff, so is crucial to maintaining service quality in times of rapid change. Identifying and developing the leaders of tomorrow are key to local authorities’ sustainability and future performance, and allow them to shape their future.
But talk to financial leaders and you’ll see it’s an area that has been neglected. Jonathan Bunt, former strategic director, finance and investment at the London Borough of Barking & Dagenham, feels that succession planning is generally not well done. “There is a big need to reduce resources, which leads to a ‘key person risk’ around an organisation. Not enough is being done to bring through staff when people move on.”
Here are some things to consider to get succession planning back on the agenda.
1. Recognise the risk of a smaller pool
Councils have smaller workforces than before, so the talent pool from which to draw your next leaders has also shrunk.
Peter Turner, director of finance at the London Borough of Bromley, says that makes succession planning “particularly important for more senior roles”. Ian Williams, group director, finance and corporate resources at the London Borough of Hackney, says that recruiting to substantive posts is difficult as “there is a lack of stellar candidates”.
Sean Nolan, director of local government and policing at CIPFA and a former treasurer at Buckinghamshire, East Sussex & Kent Police, says that local authorities used to be “engines of providing talent”.
A smaller workforce can mean more attention needs to be paid to the skills of existing staff, through rotation or training.
“As you reduce staff numbers, the ability to train and develop staff is limited,” says Turner. “Budget cuts and austerity measures mean it’s more realistic to recruit from the outside market.”
2. Train for high-level roles
Recruitment difficulties are particularly acute at the very top, says Nolan: “There is an awful lot of responsibility on treasurers, with a big jump from being a deputy.” Training for high-level roles could be one way to address this.
Several programmes already exist. Leadership academies have been “massively popular”, Nolan adds, including those for deputies becoming directors of finance. The Society of London Treasurers and the Society of County Treasurers run successor planning development courses for future deputies and finance directors.
CIPFA offers a postgraduate certificate in business partnering. Senior business development manager Daniel Cutts says such training is “upskilling and professionalising qualified staff”.
CIPFA’s self-diagnostic tool to compare public sector bodies’ financial governance can be used to show “where more development is needed”, Cutts says.
However, finding the time to release employees is difficult “while expecting staff to do their day jobs”, says Turner.
3. Use shadowing and rotation
Most authorities expose staff to a range of professional and service areas through rotation.
Williams recommends this. “As an organisation becomes smaller and more efficient, the use of rotation brings wider skills and broader experience in a variety of areas. If someone leaves, you have a pool of people to give you a safety net.”
This is particularly important given authorities’ smaller size. However, having fewer staff may make this difficult in itself.
Bunt says: “Ten years ago, a finance service might have had 100 people so there was scope for shadowing staff. Today, the same finance department might stand at 40-50.
“With shadowing, there is a risk in delegating responsibility. You can’t ask someone to undertake a commercial negotiation or enter into competitive dialogue. These are also long processes so it’s a big drain to have someone out of the office.”
Because delegation give rise to financial risks – in addition to local authority finance departments being naturally cautious – there is a reluctance to fully commit staff to shadowing colleagues.
4. Acquire ambition
Hiring people with ambition means a bigger future pool of potential leaders. As Williams says, councils do not “simply hire accountants but those aspiring to be the next borough treasurers”.
One way to do this is by hiring graduates, who are seen to be enthusiastic and highly motivated. A career path should be planned and ready for them when they start.
CIPFA’s graduate trainee scheme is publicised at 80-100 careers fairs a year, with the aims of engaging with students and discussing the prospects of a career in public finance with them, Cutts says.
The CIPFA scheme is popular with local authorities. Hackney takes on two graduate trainees a year and employs 8-10 at any one time, some in substantive posts. Bunt reports that, when he was at Barking & Dagenham, the council took on two graduates a year and employed four or five.
5. Provide opportunities
Increasingly flat structures mean there are fewer promotion prospects, Turner observes. “Where do graduates move up to?” he asks.
If a qualified graduate decides they will fare better elsewhere, this can represent a huge investment literally walking out of the door, particularly for small authorities.
However, staff may return when an opportunity presents itself. For example, Kathy Freeman returned to Barking & Dagenham to become director of finance.
“Kathy is an example of someone who started at Barking & Dagenham, moved on and came back,” says Bunt. Williams adds: “Nothing precludes people coming back.”
6. Consider going outside
Relying on attracting and developing internal talent is perhaps unrealistic given the diversity of finance function roles.
“With specialised roles, you might need to go to the open market or share services. For example we use Greenwich’s fraud team,” says Turner.
Changes to IR35 tax rules may push up day rates, so councils could consider other options, such as secondments.
Finally, Williams says: “You can’t build an organisation around individuals – you build teams that are flexible and adaptable to changing circumstances” – a sentiment that neatly sums up the future for local authorities.
1. Provide training specifically for high-level roles
2. Attract ambition
3. Rotate staff through different service and professional areas
1. Assume graduate trainees will stay – provide career paths
2. Rule out hiring from outside
3. Allow shadowing without assessing the financial risks that this may expose you to