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.
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
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!