27 January 2006
First it was in, then it was out, now it's 'in-sourced'. Croydon council believes it has found the best way to run its benefits service. Nathan Elvery explains
It is one of the age-old questions: keep a service in-house or outsource it? Combine this with the political importance of a major service such as benefits and the Audit Commission's efficiency challenge and you have one hell of a decision to make.
But there is another route: learn from both experiences and put the best of both into a new 'in-source' option. This was the decision the London Borough of Croydon made for its benefits service in April 2004, after it had been outsourced for ten years.
The result has been major improvements in performance indicators, increased customer take-up and awareness, a service rating rise from three to four and an 'excellent' Comprehensive Performance Assessment rating.
But to begin at the beginning. The benefits service used to be run in house, but became too expensive and inefficient. It was contracted out in 1994. This arrangement worked well initially, achieving the cost and performance gains needed.
However, it could not readily adapt to changing legislation, such as the verification framework. This required customers to do more to prove their identity and the council to prove it had checked this before making benefit payments.
Problems also arose in other areas of the contract, such as the collection of outstanding debt, where no incentive mechanism had been established, and investment in the education and training of staff. Over the years, performance slipped in main areas such as the turnaround time for new claims, and the service lost customer focus. Both these issues were recognised by the council's external auditor in the corporate element of the CPA.
This was a clear case of outsourcing a service and then not developing the partnership arrangements for the future, a mistake so often made in local government. Because of the specification, the ability to move the contract forward was inhibited by the culture that had been a decade in the making.
But taking the service back into the council was no easy option. This route always throws up problems, particularly the risk of service dislocation and worsening performance. Croydon's challenges included resources, staff training and development, performance management and changing the culture in the service.
The main problem was staff resources. Not only were there shortages and a high turnover, but the training was inadequate and the management structure prevented efficient working practices. So we had to solve each of these difficulties in turn.
First of all we recruited 41 extra staff to fill the already vacant positions. Then we turned our attention to keeping them. In the past, many staff would leave to join the agency market once they had completed their training. So we needed to change the work environment from top to bottom to make it more attractive.
One of the obstacles at the top was the 'team leader' management structure. Team leaders were responsible for work allocation and query resolution but never had enough time to plan effectively. This resulted in a culture of fire-fighting, rather than proactively meeting service needs, identifying improvements and assisting with strategic planning.
Moving away from 'team leaders' to 'managers' was more than a change in title – it was a fundamental change in approach. We had to provide management support and mentoring to staff and develop new roles for senior officers on each team.
Importantly, the council understood that there were serious gaps in the skills of the 80-odd returning staff and that achieving our vision would require a complete change in culture. Training had typically consisted of basic induction for new employees followed by updates on legislation. We made it the top priority, dedicating two full-time trainers to the division, backed up with external help where necessary. We developed a comprehensive training and development plan for all staff, including short, medium and long-term plans to boost skills.
The key to the new approach was to train managers in simple management techniques. A detailed training needs analysis gave the senior management team an objective and detailed view of the knowledge and capabilities of all officers. It also identified where there were skill gaps. Using these results, an individual training plan was drawn up for all members of staff, including back-office assessment and frontline officers.
Our commitment has been to provide a very different way of working. Staff have been trained to deliver the services traditionally found in the back office while being able to move into the council's contact centre and front-desk operation and provide services directly to the customer. Depending on work volumes, staff can move with ease between the back and the front office.
To strengthen management skills, we incorporated the benefits service into the council-wide management development programme and hired an external specialist to get the department up to speed. The training programme was so successful that last October the benefits service won the Institute of Revenues, Rating and Valuation Award for Excellence in Education, Training & Development. The awards panel cited the support being given to staff of all levels, with appraisal schemes and varied training programmes that addressed specific needs.
A clear functional structure was introduced, defining roles and detailed job descriptions for each member of staff. The council has recently had its Investors in People accreditation renewed and these values, including appraisals and development plans, dovetail with the culture and organisation of the service.
Individual responsibility at every level is critical. Through a 'service dashboard', a mechanism that manages the main targets of the division, a performance management culture is now embedded in the service. We recognise the importance of communication and, as a result, conduct weekly and fortnightly meetings at all levels. Senior managers, on a monthly basis, attend team meetings to field questions and advise of any up-and-coming changes. We promote an 'open door' policy that goes all the way to the top.
Staff objectives are set with communication in mind. For instance, everyone in assessments has their own Best Value Performance Indicator target. This translates to the team, to the department and to the corporate objective. This transparency in target-setting has been critical in communicating to staff the importance of their individual roles.
Croydon also took a thorough look at work processes, including use of technology. Changes here included focusing the workload on cases rather than documents and harnessing our mainframe information to identify performance trends and volume measures. This allows us to control, rather than report on, outcomes. It has led to significant improvements in key BVPIs, such as accuracy, and reduced manual intervention, making the whole process more proficient.
All these changes were done with full staff and union consultation. It took us under six months to review and re-evaluate all job descriptions and develop the more dynamic management structure. This just goes to show what can be achieved when you have the right like-minded people around the table.
We needed some external financial help to put these changes into practice – and successfully bid for £2.9m from the Department for Work and Pensions. The bids covered: management development centre training; training needs analysis and post result training; recruitment for ten trainee officers; funding for additional overpayment staff; improving communication with customers; migration of mainframe services; and finding a way to take our services to the customer rather than the other way around.
A year on, with a full complement of fully trained staff, transformed working practices, clear management structures, extensive training and appraisal and a culture of ownership and responsibility – and the results are clear. The time taken to process new claims has been cut by 42% and to process changes in circumstances by more than 31%. Call waiting times have been cut by more than 56%, outstanding documents by 85%, and telephone abandon rates by over 35%, all despite a 13% increase in the caseload.
The service has moved from bottom quartile performance to top quartile in just over a year. Perhaps just as important, my members' post bags are getting smaller. So think again when you are contemplating outsourcing, it might not be the answer.
Nathan Elvery is director of finance and resources at the London Borough of Croydon
The size of the service
Customers: 33,000 +
Staff: 120+
Yearly figures
Staff costs: £4m+
Housing benefit payments: £120m+
Council tax benefit payments: £22m+
Correspondence from customers: 130,000+
Personal visits: 10,000+
Telephone calls: 60,000+
Visitors to our Public Enquiry Counter: 26,000+
Transactions: 75,000+
PFjan2006
