Making partnerships work for all involved

Blog by Bridget Taylor , Director of Strategy and Engagement, BT Local and Devolved Government

As the seasons change and autumn approaches, most councils begin the annual round of budget setting where options for reducing services are weighed against each other and officers and members have to grapple with achieving what is often the least worst outcome. Having been part of that annual process for many years and knowing the size of the reductions that will be required again this year, I am struck by the different approach that is taken to managing costs in the private sector and how this creates a real tension in operating partnerships.

The key differentiator is the amount of time spent managing costs. For the private sector this is critical to driving profit and shareholder value so there is a relentless focus on looking at this and targeting managers to make the money work for the business without compromising customer satisfaction. For the public sector the focus is much more on setting a budget to deliver a level of service that is not always specified and reviewing spend against that aiming not to go over budget. When you apply these different approaches to partnership arrangements, it can create dissonance between the partners as the consequences of each system play out.

We rightly spend a lot of time focusing on contractual and performance indicators when forming private/public partnerships. I wonder if a little more time spent on understanding and learning from our respective approaches to managing finance might build better outcomes for the taxpayer and shareholder.

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This entry was posted in Proposition 1: Times are changing and tagged , , . Bookmark the permalink.

2 Responses to Making partnerships work for all involved

  1. How to make public-private partnerships work for all parties is an important question, but not a new one. In recent years there has been a lot said about moving away from tightly defined specifications towards “outcomes based commissioning” but is this really working in terms of driving genuine innovation and improvement?

    There are a number of challenges to making outcomes based commissioning work in practice. First, outcomes are often difficult to quantify and only apparent over time. It can be difficult to identify outcomes that can a) be achieved within the lifetime of a contractual relationship and b) be sufficiently measured to prove to Members that the relationship really is delivering value for money.

    The other trap that councils can fall into is assuming that their private sector partners are as committed to these long term goals as they are. Speaking at the SOLACE East of England Branch Seminar last Friday, Max Wide, Director of Strategic Development for Local Government at BT, commented, “Some councils have relied unduly on the language and spirit of partnerships, believing erroneously that contractors would pursue shared goals without incentives to do so”. Perhaps this is why outcomes based commissioning is more often used when procuring services from the voluntary and community sector than when commissioning from the private sector.

    Moreover, specifying outcomes doesn’t automatically lead to innovation and creativity. This very much depends on the nature of the ongoing relationship. To foster innovation there is need for more co-creative conversations with a focus on problem solving. To this end, both camps need to overcome negative stereotypes and presuppositions about the other and embark on a relationship of mutual trust and openness, accepting that sometimes the truth hurts but it’s in our long term interest. There is no doubt that creating such a relationship is easier said than done and I invite those who have embarked on this journey to share their experiences of what it takes to build partnerships that work for all involved.

  2. Paul Sellick says:

    Paul Sellick Director of Public Services at Steria. As an outsourcing provider I’m often being asked where we can deliver value to local authorities and how we can make things easier for them. In the current climate one area which is really resonating is around delivering flexibility and certainty and we have developed some new and innovative commercial approaches for our long term relationships to enable authorities to worry less about the future and focus on improving service today.
    Authorities are operating in an environment of considerable change and uncertainty and whilst its important that they are able to undertake change today, the challenge is how they cater for future changes, particularly when it isn’t particularly clear what their impact will be.
    When moving to outsourcing, the challenge is for authorities to find a model that works for them, delivers the promised benefits and enables them to do things differently. From Steria’s own experience in the public sector, one of the important elements for an outsourcing partner is to bring new technology enabled approaches and innovative ways of delivering services.
    In today’s changing environment authorities need to consider more flexible commercial agreements which flex as need changes in light of any restructuring or future government initiatives. This will ensure they are not spending money on services that are no longer need in a few years’ time. Unit-based or transactional pricing essentially means that authorities pay for what services are used, and over time the cost savings and efficiency being delivered at the start of the contract can continue in line with any new business and service needs, three, five or more years into the future.
    Budgetary pressures and difficult economic circumstances mean that authorities need to seek new ways to deliver business transformation. Unit-based pricing discussed above, shared services and a broader outsourcing model: all three options offer local authorities a means to move ahead with long-term strategies for efficiency and cost savings. With the right outsourcing partner offering flexibility and new thinking, it is possible to change now and not worry about what the future holds.

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