Think for a moment

Rational behavior requires theory.

Reactive behavior requires only reflex action.

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The costs are in the gaps

Arguing for an end to back offices and target driven approaches, John Seddon outlines theories that could permanently alter management approaches.

When I was a young man the term ‘back office’ did not exist. Today it is in common parlance; it is considered axiomatic that back offices are a feature of efficiency; Whitehall extols their virtue; they are springing up all around us. Where did the idea come from? What problem was it designed to solve? Does it solve that problem? Answers to these questions will cause concern to those who have jumped on the back office bandwagon.

It began in 1978. Richard Chase, writing in the Harvard Business Review, lamented the failure of service organisations to be as technocratic as manufacturers. His view – and a view still widely shared amongst managers of services – was that the job of management is to optimise the use of resources – get people working all day – and in services that can be difficult because the customer comes in and ‘interrupts’ the workers.

Chase proposed that we design services to have front offices, where customers are seen or spoken to over the phone, which then send the customers’ requirements to back offices where now, because the activity has been ‘de-coupled’ from the customer, efficiency can be pursued, resource can be optimised, labour can be sweated.

Housing benefits was the first back-office design mandated in local authorities. About eight years ago the Department for Work and Pensions (DWP) sent local authorities a three-box set of manuals which promulgated a front-office/back-office design with associated activity targets. The design created backlogs in back offices all over the country and the DWP ‘help team’ recommended that local authorities buy back-log busting services from the private sector. I labelled them the ‘no help’ team, for that didn’t help; it was the wrong answer, adding cost to cost.

As Mark Radford – a housing benefits leader in Swale Borough Council – observed at the time, the problem was not in the back office, it began in the front office. By worrying about seeing people quickly, individual claims became fragmented.

Studying the service also revealed that back-office people took a different view of the claimant than the front-office people; a checklist took over from face-to-face understanding.

Radford was one of the first public-sector managers to learn the error of working to reduce transaction costs, for the true cost of any service is end-to-end: the total number of transactions it takes for someone to receive a service could be as many as ten transactions. In short, he discovered that complying with DWP guidance only served to create failure demand: demand caused by a failure to do something or do something right for the customer.

To compound the error, the Audit Commission then bullied housing benefits managers to share their back offices. A problem shared is, in this case, a problem exacerbated.

To further compound the error, we see back offices being outsourced to the private sector, locking in high costs for the long term. Birmingham City Council has, thankfully, woken up to the truth that they are paying their outsource provider, Capita, millions every year for Capita to service failure demand. That’s the good news. The bad news is they don’t know the causes.

And these are they: the separation of front and back-offices, the standardisation and specialisation of work, the management of activity and, in general, the obsession with sweating the labour. Add to this the fact that back-office services outsourced to the private sector are contracted on the basis of transaction volumes and you can see that we have monumental train crashes in the making. South West One, the outsourced back-office deal between Somerset, Taunton Dean and IBM, which is now too expensive to get out of, according to the leader in Somerset, is merely a harbinger.

If you look at business cases put forward for back offices and sharing or outsourcing the same, you see promises of two types of savings: less-of-a-common-resource (i.e. fewer managers, buildings and so on) and lower costs through cheaper transactions.

The first is true, but marginal, and often happens early in the life of a venture, giving encouragement to the notion that it was a good idea; but the second is the big promise and false. Chase was wrong. It is a foolish manager who thinks it is their job to sweat the labour, who believes that costs are in transactions, who believes it is their job is to manage costs. It is the wise manager who learns to manage value, not cost.

No back office, no targets, no activity management, but instead a thorough understanding of citizen demand and staff with the wherewithal to deal with it.

You can buy John Seddon’s book of case studies - Delivering Public Services That Work Volume 2 - from Triarchy Press.

From Localgov.co.uk

http://m.localgov.co.uk/Article/Default.aspx?id=108344

What is Good?

Fans of Only Fools & Horses will remember Dell-Boy’s great line to the supermarket check-out girl, “Did you sue them?” When asked who, he replied “The Charm School!” And many of us will have found ourselves in circumstances when we would have loved to use the same sarcastic wit.

Good customer service is one of those things that is not always easy to define but, when we receive it, it is so apparent; and when we don’t receive it, it is just as tangible. So, why is it so hard to deliver?

One reason would be that it is measured by the recipient and, what works for one will not always work for another. As a result, the tendency is for many organisations to design out variance and to standardise customer experience, or service delivery. The consequence is that most people then receive acceptable service, without it ever being a great experience.

However, in the worst examples, customers get less than acceptable service because of this standardisation, and this is the premise upon which Systems Thinking builds a case to deliver improvements.

Another reason for the inability of organisations to deliver quality customer service is that they can lose sight of their purpose and, when this happens, those within the organisation lose their direction.

Just this week I dropped a colleague off at York Railway Station and, rather ironically, whilst waiting for the rush-hour traffic to permit my onward journey, I heard on the radio about a planned strike by the RMT in Scotland. As a result, rail passengers north of the border were likely to experience difficulty in travelling on two days in the week leading up to Christmas.

Now, as ever, it is extremely unlikely that we will be availed of the true facts about the dispute leading to the strike, so I would be a little foolish to pass too much judgement. It appears to be a dispute about a ticket inspector who challenged a passenger with an incorrect ticket and reduced the passenger to tears; Scotrail have now dismissed the inspector. On the face of it, a very difficult case to resolve, especially if the inspector was merely doing the job he was employed to do.

My point is that these strikes - which are still planned as I write – will, and I quote the RMT, “cause massive disruption”. Surely everyone working in that industry knows that the very purpose for their employment is the service of their customers? Planning a strike at this time of year pays scant regard to those whom they all serve and both management and unions, in my opinion, are all accountable for ensuring that those customers are served. Whatever your politics, I’m afraid that using this dispute as a reason to restrict the level of service to customers at this time is unacceptable.

Meanwhile, in the Benefits arena, I need not remind you that we have some huge and very difficult human challenges ahead of us! However, what I would urge everyone to remember is why we are here, and why we must deliver good quality service in the face of these challenges.

In a general despatch from the Institute of Human Development in 2006, they said: “Keep yourself strong through business and organisational interference and keep people focussed on the purpose of what they are doing. Purpose is the crowning responsibility of those of you who seek to be leaders in any field – purpose is the answer to the question ‘why’ and, therefore, the driving energy in organisational change and growth...Companies and organisations that do have a clear sense of purpose thrive more easily than those who don’t.”

So, for those of you with management responsibility, you need to communicate with your teams the clear, unambiguous purpose for your existence. And, if you think you have, do it again!  

Whilst it is going to be far from easy, it is often through adversity that people work their best. Everyone involved with the service has a duty to be professional and responsible about how to tackle the challenge that faces us.

That responsibility could be articulated as follows:

    Politicians…to make considered decisions about where their service is going without prevaricating to score political points;

    Senior Management…to convert that ‘strategy’ into workable ‘tactics’ and provide effective support to middle management;

    Middle Management…to disseminate that vision through effective operational communication and to support front-line staff to deliver;

    Service operatives…to remain professional, customer and outcome focused.

Many of us will face an uncertain future, but local authorities have a duty to place their residents at the heart of everything they do.

Simply answering the phone in a set number of rings, or meeting a customer within a set number of minutes, may no longer be the most effective way of measuring customer satisfaction. Most people are accepting of getting good quality service, even if it takes a little longer. The key is understanding what ‘good’ looks like!

Sean Langley FIRRV

Benefits & Revenues Consultant, and author of

The phat Controller (A Leadership Handbook)

ISBN: 978-1-4251-6241-2

Published by Trafford Publishing

Go to www.seanlangley.co.uk