The UK government’s Competing for Quality initiative, also known as market testing, was designed to enhance efficiency by bringing private sector methodologies into the public sector. It put many government departments under the microscope to find out whether their services should be put out to tender or not. Tendering many of these government operations gave the private sector the chance to compete. The process has so far resulted in around $1m of business being awarded to either in-house or external teams. Even more is on the way, with the government estimating around UKP800m being tendered over the next 18 months.
Perceptions
Operations still to be opened up to the market in this period are to be found within the Ministry of Defence, the Departments of Social Security, Transport, Health, Customs and Excise, Environment and National Heritage, and the Lord Chancellor’s Department to name a few. One data processing service that is being put out to tender is that within the Department of Employment. One person instrumental in this was Mike Allen, director of the information systems branch of the department. Allen decided that having put together the market testing requirements he would then do the decent thing and lead the in-house bid. Right at the start and from then on, private sector methodologies played an important part in the in-house package. Allen got in two consultancies to research and explain how the private sector worked; PA Consulting assisted the initial market testing process for the department, while Ernst & Young was bought in to help the in-house team specifically. A good side of the market testing initiative is the government’s recognition that in-house bids will need assistance; it consequently allows them to take on external consultancy, costing it as part of the overall market testing bill. Getting private sector advice was all very well, but to implement it Allen had to alter the perceptions of his staff. We were working towards a commercial-like performance, he said. There used to be a danger of the operation becoming technology-focused, and we wanted to be customer-focused. If we didn’t, the private sector might win. The first problem he had was in making staff and middle management understand that the change was going to happen. Predictably, as staff were told about it, morale sank like a lead balloon. Personnel that realise controls are to be tightened are understandably rarely happy. Meanwhile, by no means all of middle management was susceptible to change.
By Danny Bradbury
According to Allen, the managers that could look ahead far enough to want to change were in the minority. There is little difference between this scenario and situations requiring change in the private sector, as often, private sector businesses with extensive layers of middle-level management can be slow to adapt to changing market influences. In the public sector, though, this problem is possibly more apparent, as there is usually little urgent requirement for change there. One of the things that the firm decided early on was the importance of conforming to private sector standards and values. The consultancies that it was bidding against – Hoskyns Group Plc, Sema Group Plc and Electronic Data Systems Corp – all had ISO 9001 certification, and so the in-house team struggled to get the British BS5750 equivalent. This qualification was imperative, according to Allen, because his competitors possessed it. Conversely, his competitors think it necessary because of the pressure they’re receiving to show it from public sector customers. Initially, the half of the department’s operation was due to be tested in sections over three years. Allen, whose team had access to early drafts of the market-testing white paper, decided to aim for BS5750 accreditation a year before the initiative was launched. The whole department should have it by April 1994, according to him. Allen acknowledges the staff problems in putting together an in-house bid, which by its very nature requires the department to tighten its belt, and he was s
o worried about this to start with that he altered the way in which the department was tested. Initially, half of the operations were to be tested in sections over three years so that the procedure could be broken down into substantial, easily specified parts, but Allen and his team decided that this would be too divisive for the staff, and made plans instead to test the whole operation. Unfortunately the bid, which called for a flatter organisational structure in compliance with the general 1990s business model, sees a reduction in staff – this is the ugly side of the market-testing process. Allen tried to tie in staff reductions with attrition as much as possible, and in doing so believes that he has changed the essential structure of the organisation.
Inspire
Instead of a Kafka-like bureaucracy in which a person’s importance depends on hierarchical position, he hopes that this structure will inspire people to be self-motivated. To this end, he encouraged many employees to work on secondments, to understand how other sections of the organisation work – at least, this is the plan. Assuming that Allen’s team wins the bid and the state department stays a state-run department, the future could hold some pleasant surprises. Departments of State are not presently supposed to make a profit, but he foresees a possible internal market created by the market testing initiative. The department has had to widen its skill base considerably to become more competitive and has effectively become a self-guided business consultancy in the process. The in-house team has already won a job constructing an accounting system for the Employment Service, which while making no profit still helps to cement its stability and status within an environment which will put it to the test on a regular basis. Perhaps finally the state is leaving its withered old image behind, embracing a compromise that will please as many people as it is possible to please.
