Mad Management: Change management systems for real productivity improvement

elderly care
elderly care

Last week I concluded my column with a footnote on social care. The question I posed for Sheffield Council was: “Why, given these local business successful organisations as models, did Sheffield Council adopt the worst form of management and, in doing so, utterly fail our most vulnerable people?” The answer is that it is the adoption of a fad: outsourcing.

What persuaded the council that a private company with no real presence in the community could design a better service model than those executives who actually live in the city and confront the challenges every day? Sheffield’s director of adult services, Phil Holmes, in post now for only 18 months, reported at a recent council meeting that Sheffield’s social care is not only producing poorer results than the national average: it is worse than comparable cities and, on many indicators, the worst in Yorkshire. This candid report is a brave and responsible act, and is to be commended.

Our biggest weaknesses is that our politicians are pitiful negotiators

He said that Sheffield’s dreadful performance is neither a direct result of the budget nor a reflection of the commitment of staff. “Instead it reflects an operational model and commissioning approach that has been outdated and bureaucratic centralised systems that have not been fit for purpose.” In other words, the management system was wrong. It clearly did not start with the user’s needs in mind, but with an inappropriate method.

Why write about this in a business column? Because, as Andy Haldane, the chief economist at the Bank of England said, our loss of productivity is the fault of management, and because, as John Ruskin said: “There is no wealth but life”. The most successful economies, local and national, must surely also raise the general quality of life. The very least we can expect of our municipality is that their executives choose the right business model for caring for the most vulnerable – and take responsibility for making it work. Outsourcing key services is wrong, for the council AND the providers.

Today there are nearly 100 private social care providers who are handing back the contracts because they are such loss makers.

Today’s column comes out a day after the beginning of what Bloomberg calls the UK’s two-year divorce process, ie Brexit. Already the UK team has made it sound very much like a win/lose negotiation. The term Hard Brexit indicates the UK negotiators intend being tough. But it is hard to be tough when you are the weaker party, and the UK position is very weak.

In the first place the government does not really have much of a mandate, as only 32 per cent of the voting population voted to leave. On the business side it will become even less of a mandate as the “market” begins the talent and asset drain. Forbes magazine writes that EU members and their principal cities are already setting out to attract British-based international companies to set up or expand their presence in order to access the EU continent.

At the macro-economic level we are departing the region with largest GDP in the world, according to the United Nations, and are relying on the USA to become a major trading partner, a country that has a president who, amongst other things, has promised to put up trade barriers whenever he feels that an exporter might hinder the USA “becoming great again”.

Projections of the UK’s ranking as a powerful economy has it dropping to either 8th or 10th by 2020. This will make the USA even less interested.

Our biggest weakness, however, is our politicians are pitiable negotiators.

We are in this mess because Cameron went to negotiate with the European Community in 2015 about UK terms. His key demand, for national governments to be granted the power to restrict benefits for EU migrants, was also the most contentious and opposed proposal – and mean-spirited.

Instead of fixing the problem in the UK, he scapegoated Europe and has been discredited ever since. His bargaining chip? A Brexit vote. Childish posturing. The result is chaos, very costly chaos.

Now, our council leader, John Mothersole, said in last week’s edition, it is up to us. I agree, but not with his strategy, which is to utilise our strengths. We first need to fix our weaknesses. I will suggest there are eight, of which the first two are: The council has to run much more effectively, making every pound count in service delivery. This requires that the councillors construct a new business model as the director of adults services, Phil Holmes, so rightly said.

An example of good leadership is Joseph Chamberlain, who transformed Birmingham in a few years into the most admired city in the world by applying his business acumen and Unitarian values to running the council.

The second is to grow the local economy quickly – in the right way, one that Ruskin would endorse, beginning with setting a goal that every employee, public and private sector, is paid a living wage.

Again Chamberlain is the model. As a businessmen he increased labour costs by reducing working hours, and productivity increased.

The much maligned Henry Ford did even better when he doubled his employees’ wages and increased his profitability. He did, however, get sued by his major shareholders.

More next week.