29th October 2010
Hannah Jameson discusses the IPA's latest report on the role of the workforce in future outsourcing
2010 marks the 30 year anniversary of the introduction of Compulsory Competitive Tendering – the initiative that triggered mass outsourcing in public services. Since then the scope and scale of outsourcing has rapidly increased. It now accounts for a fifth of UK government expenditure and employs thousands of staff across the country in almost every public service. The CSR this month will put further pressure on the public sector to find ways to reconfigure services to make their money go further. In many cases this will lead to more outsourcing, as managers look to draw on the experience of the private and third sector to deliver efficiencies. But will the drive to reduce public spending threaten the quality of the services delivered by outsourcing?
Just over a year ago IPA, the Centre for Public Service Partnerships and UNISON came together with a large group of private contractors and representatives from the third sector. Outsourcing has its critics, particularly among the public sector unions, but it became apparent that there was a shared agenda between contractors, unions and the workforce; no one wants to see a race to the bottom, where companies compete on labour costs, driving down standards, terms and conditions. The question raised at that meeting was, what was the relationship between good workforce practices and the quality of public services?
IPA were commissioned to undertake the research needed to answer that question. We wrote six case studies exploring a range of practice in outsourcing. Across services and sectors, we looked for places where employees and their representatives were involved, engaged, and fairly rewarded; where good workforce practices and terms and conditions were matched by good service performance.
Contract managers we spoke to saw a close link between a well trained workforce who were fairly treated and well managed, and the quality of their services. In particular, companies like Serco have recognised that engaging the workforce is vital to delivering the customer service that their clients and their users increasingly expect. Serco’s own research shows correlations between customer satisfaction and staff engagement.
From soft facilities management in NHS trusts, to adult social care delivered by third sector providers, consistent themes emerged. Those providers that treated their workforce fairly and engaged and involved them and their representatives were often better able to implement change effectively, meeting service user and purchaser needs. Good relationships with unions helped build trust between employer and employees, which was particularly important at the point at which new employers took over a contract. The studies showed trade union and workforce representatives actively involved in change and modernisation, creating responsive and efficient services.
But we also used case studies of services that had gone wrong to help further understand the workforce and service outcome link. In both of these cases the contractors had been unable to deliver the costs of the service within the contract price. This had led to deteriorating terms and conditions and the emergence of a two-tier workforce. The breakdown of the relationship between the workforce and the employer only exacerbated the situation. In the end, industrial action in one case, and a serious incident in the other, led to contracts not being renewed or being lost.
In the face of further outsourcing, commissioners and contractors face a choice; to pursue price over value, or to learn the lessons from the last 30 years and recognise that quality public services require good workforce practices. Drawing on the findings, our report sets out seven best practice principles against which procurement procedures could be designed and outsourcing delivered in today’s public services market. At the heart of these principles is an acknowledgement of the importance of the workforce in achieving high quality public services. Over the coming year we hope these principles will help strengthen the common ground between all those working to deliver excellence in public services.
Hannah Jameson
IPA Research Manager
You can download a copy of the report
here, or visit the publications section of our website.
