Transformation and the need for practicality

The results achieved is work undertaken for Wiltshire Council in restructuring its financial services are outlined below.

Wiltshire Council was created as a Unitary Authority in 2009, replacing the former Wiltshire County Council and Districts of Kennet, North Wiltshire, West Wiltshire and Salisbury. The new council quickly established a reputation for innovation and created a successful shared services operation for the majority of its transactional services including many financial operations.

In 2010 the council’s business plan identified the need to reduce back office costs by around 25% over four years. CIPFA was commissioned to work alongside the Council to analyse the financial service function, to identify areas where savings could be made and to provide a clear route map for transformational change.

The challenge faced by the council was large and complex. As a new authority it faced the need to integrate services from five individual organisations whilst maintaining standards and improving performance levels. The squeeze on public sector finance and the array of options for future service delivery including the expansion of shared services both within and outside the Council created the need for clear strategic advice and support in establishing a route map to transformation.

Outcomes agreed
The outcomes required from CIPFA’s input were agreed up front – an absolutely crucial component in any advisory work. CIPFA was asked to create a structural framework to achieve specific objectives including reducing costs, streamlining operations and meeting the needs of both customers and staff.

The new structure needed to be aspirational and forward looking and represent the specific needs of Wiltshire Council. The council were clear that it wanted a service that was appropriate – not a generic approach based on theoretical models.

CIPFA advisors spent a month on-site at Wiltshire Council and created a series of distinct workstreams to achieve the outcomes required. These workstreams focused on the structures, posts and budgets of the finance function and also looked at benchmarking and performance data. The aspirations of the Council and staff were set high on the agenda giving the exercise a positive outlook rather than one of cost cutting and service reduction.

Practical reality
A crucial factor underpinning the review was that it had to be grounded in practical reality. Timescales were such that the recommendations from the review were to be actioned immediately. It was therefore important that proposals were properly tested and that managers and staff were consulted throughout the review.

CIPFA’s two main advisors were both former finance directors with combined experience of over 50 years at the most senior level in local government finance.

The use of experienced advisors as opposed to a consultative approach meant that Council staff were comfortable with the methodology employed and the advisors could integrate immediately into the day to day operations of the finance function.

The key findings of the review were communicated to managers throughout the process. CIPFA does not work with the “big bang theory” that outcomes should be hidden until the final report is agreed. CIPFA has found that a more iterative approach that challenges and tests assumptions is a much more productive way of achieving transformational change.

Slash and burn
The review demonstrated a number of significant issues that the Council faced in achieving its aims. An initial factor was that the overall cost of the finance function was not shown to be excessive when benchmarked against similar sized organisations. The need to reduce costs therefore had to be handled carefully to preserve service levels and avoid a “slash and burn” process that undermined the good work that the council had undertaken in the run up to reorganisation and subsequent innovation such as the creation of its shared service function.

The review identified a number of key messages that informed the recommendations made. These included highlighting the imbalance between financial accounting and management accounting with a disproportionate number of staff dedicated to the production of management accounting information. The strategic finance function had a low profile within the organisation and was operating with substantial interim arrangements that hindered the move to a higher performing and more effective service.

The review also identified a significant imbalance in the management and senior practitioner levels within financial services. Significant numbers of posts designated ‘principal’ and ‘senior’ needed to be reduced and new specifications and processes introduced.

Shared services reassessed
The council’s shared services function had achieved significant savings since its inception but needed to be reassessed alongside the need for a stronger
corporate control of the finance function.

CIPFA’s review looked to strengthen corporate control but urged the council to continue its shared services journey and to expand the service when possible.

The outcomes of the review created a number of recommendations that would lead to a potential cost reduction in excess of the required 25 per cent over four years and would be deliverable in a 10 month timeframe. The recommendations included a reduction in management control from 1:3 to 1:5, professional development opportunities and more transparent and accountable systems and structures.

Wiltshire Council accepted the recommendations of the review and has been working to create a modern, affordable and high performing finance function.

CIPFA relished the opportunity to provide practical strategic advice that achieved transformational change for the Council.

For more information
More detail of CIPFA ’s transformation and advisory services can be found on its website or for further information contact Ian Frost on 01782 681285

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