I am delighted to address this Public Services conference today. I would like to talk to you about Birmingham City Council’s journey of fundamental people management reform, its lean and innovative thinking and how, under my leadership and direction people management strategy is driving the charge for the localism revolution. This will be a story of how I have taken a local approach to some national issues
with in local government.
Let me start by telling you about Birmingham. We have a population of over one million with the fastest growing population of young people in any other UK city; attracting £7bn public sector inward investment. We are a culturally rich city. We are a diverse city with a rich history of different cultures which contributes to the varied tapestry of the city. Birmingham is a global city with a local heart.
My story dates back in 2004 when as the newly appointed Cabinet Member I inherited an approach to people management which was disjointed and not recognised within the council as adding value or supporting business needs. HR was a service which was transactional in nature and without any significant influence on strategic decision making. My first task was to change this practice and reposition HR. I, together with my HR Director, restructured the service creating a corporate department with business partners operating under the management of my HR Director. I also ensured that HR had a seat at the Executive and Corporate Management teams and could contribute to and influence the strategic outcomes for the Council.
Another part of my inherited service was that the business information around people management was totally inadequate, leading to excess agency usage, waste and tendency to recruit externally into line
management positions rather than promote internally.
Rather than attempt to improve the situation through minor adjustments here and there, I chose a somewhat more drastic approach: an entirely fresh start. This sounds easy in principle, but bear in mind that Birmingham City Council is the largest unitary council in Europe employing at the time around 60,000 employees, with an annual employment cost of £1.3bn. It was particularly ambitious, given the silo based and change resistant culture. Coupled with trade unions opposition it meant that historically any kind of change in the people management culture has previously been impossible to achieve.
As the Cabinet Member, I was undeterred by the scale of the challenge and resistance I faced, with my Human Resources team I launched the most extensive overhaul of people management in local government history.
I started by implementing Single Status legislation, which had not been tackled at all between 1997 and 2004 and with this I took the opportunity to radically redesign the remuneration strategy to inject a new performance management culture which had common standards across the Council. Automatic pay progression for the majority of the workforce now in Birmingham is a thing of the past.
I then set about creating new momentum in the way the Council managed people. My revolutionary transformation programme demanded excellence in the way the Council managed our workforce. I called this new radical movement Excellence in People Management or EPM as it latterly became known.
For my EPM programme I have always believed in a clear and simple vision which is: that people are at the very heart of the organisation. Through them they would build a Council which has people at all levels using their talents, creativity, energy and commitment in serving the public and improving services. I was determined to create excellence in people management practices; whereby each Directorate within the Council would be asked to look at the way it delivers services, to identify efficiencies and ways to improve productivity – which brings localism to the heart of decision making.
Whilst it is laudable to take such a challenge and move forward in a challenging and innovative way, I was also mindful to key area’s that needed to be considered. This included understanding the benefits that needed to be delivered to the citizens of Birmingham.
Having spent a significant period of time listening to local people and having understood their needs I felt compelled to respond. In doing so, I understood that services needed to be significantly re-invented to meet the requirements of modern life.
Under my leadership, nothing less than a fundamental revolution and sea change in the way we provide HR services was needed. I have placed the authority at the leading edge, driving organisational effectiveness, changing cultures and driving sustainable performance management. To achieve this has required new people management processes. It has involved fundamentally reforming the way we operate and has involved re-designing services; changing business processes; managing vacancies more effectively and not creating new posts unless essential for the business. The organisational redesigns has been critical; increasing workforce capacity, improving processes, stripping out waste, being clear of outcomes and reducing headcount has reduced the pay bill by £56m last year.
A rebalance has been achieved through my careful guidance of the HR function, and delivers a greater partnership between the Citizens of Birmingham and those who deliver the services to them.
My Single Status agreement has ensured that we now have a suitable remuneration structure in place that stripped out the outmoded old pay structure. This old system saw automatic progression regardless of
performance outcomes. We now have new terms and conditions which are fit for the new generation having pay linked to performance and the ability to move staff to services with greatest needs. This has created greater flexibility, capability and agility within the workforce to ensure that we are able to perform at our optimum. It has been important for the council to create an environment where staff are given the opportunity to realise their full potential and where excellent performance is recognised and rewarded. I have made this happen.
Having consolidated Single Status I then created a new contract for all employees in Birmingham, called the Birmingham Contract. It provides a framework for employees to move with the organisation’s direction to align to the needs of local services in a flexible and fast way. Every member of staff has received a change in their terms and conditions to enable true flexibility and new working practices to be undertaken. This again is another example of balancing relationships, in short common sense, a modern up to date approach.
The EPM transformation programme has put in place tools, expertise and support which has enabled the Council to develop its people management competency and capacity. The key to our success has been to ensure that the ownership of people management outcomes was driven by our managers and workforce.
It was through their level of commitment and compliance with this transformation programme which determined the degree of success which has been achieved. To realise this has required firm leadership, both at a political level under my leadership and with support from my cabinet colleagues and at a senior management level.
Together, we have put in place the processes to achieve sustainable performance improvement; we have enabled the Council to have people resources at an optimum level; we have provided a comprehensive people management toolkit for managers to use at their desktop using the latest technology and developing a new IT HR system; we have enhanced the role of managers in people management; and we contribute to the council’s long term financial strategy.
I’m now going to tell you a little bit more now about how we structured this ambitious EPM programme. I will start by telling you how I led a totally rebuilt and redesigned the HR information system to ensure a complete integration of payroll and HR information. The Council needed a totally new operating system which enables managers and employees to be able to ‘self serve’ on all people management matters – such as booking leave, controlling absence, undertaking performance development reviews, processing payroll and expenses – every single transaction you can possibly think of we wanted to automate the process and reduce organisational wastage.
So we adopted lean management thinking and totally redesigned within two years the way people management was undertaken in Birmingham. We pushed our IT experts to the limits of what could be done and in return have a new system which is known as People Solutions and was designed around Google principles. It enables managers and employees to access everything they need from a people management perspective. It has eliminated a considerable amount of waste and enabled us to be clear sighted in the performance measures and to be able to monitor organisational effectiveness at a click of a button.
What this has done for Birmingham is enable managers to become more effective in delivering value for money to the citizens of Birmingham and the local agenda and needs. Thus delivering effective services to
the citizens of Birmingham by directing staff efforts to where it matters the most.
Of particular significance to EPM, as I have briefly alluded to earlier, was to redesign the Council’s appraisal system known as Performance Development Reviews – PDR for short. The framework now allows for the management of employees performance, both from objective setting and also the management of behaviours, which had not existed before. This is managed across all individuals and roles with in the council. Birmingham through this activity now has a performance based pay system which rewards people who achieve the organisational objectives via their personal objectives. I was also clear that the process must identify the skills and knowledge needed to achieve these and planning how they will be obtained through our talent programme and blended learning facilities.
The outcomes we now enjoy are:
- Consistency of management approach to performance;
- Staff having clarity of what they are expected to achieve and how they are performing against target outcomes;
- Consistency in behavioural standards;
- An enhanced management approach to optimum staff utilisation;
- Consistent approach to staff development;
- Effective control of the pay bill and eliminating incremental drift; and
- Performance linked to organisational objectives and priorities.
Again a clear common sense approach, coupled with all of this, the final part of my story focuses on how we have developed a new organisation effectiveness model which is delivered by our strategic HR unit – Workforce Intelligence and Planning. This unit has embedded business and people management strategy into the every day lives of our managers.
Providing a predictive and forecasting centre, which assess the present and future workforce and service needs in a way which injects a new capacity into the organisations business framework. The Council has an intelligence hub which is a confederation of leading business thinkers across the public and private sector and brings innovation and challenge into the organisation. In building for change, we have key internal HR specialists who have organisational re-design capabilities that adopt lean systems thinking into practical reality.
As a result of this unique service the Council has benefited from strategic challenge, innovation and different way of thinking in times of great challenge. The service has started to help some other Local authorities and could be extended further to help with the challenge and help others take a common sense approach. Making Localism work.
Through EPM we will achieve £185m by 2016. We have already seen £56m removed from the workforce costs, coupled with stopping around £6m in pay drift through previous automatic progression. We have reduced the headcount by some 4,500 over the last two years; now have all of our staff using PDRs and have a new streamlined way for managers and staff to access the best people management advice through our self service facilities.
Whilst we look to the future with a challenging year ahead of savings I believe that we are now in the best possible position to drive through the innovations and a closeness to the local community which will build a new Council with a real local heart and provides the best value and quality public services ever experienced in local government.