Posted by Lancing Farrell 1100 words
Image from Operations Management, 1998.
Some time ago I posted on high performance job design using four characteristics or spans; control, accountability, influence and support. At the time I linked the concept to the operations typology describing four characteristics of design of operations for high performance. This post picks up that discussion to look at the characteristics of demands that it is essential to understand if you want to design and manage your operations for high performance or excellence in local government.
A number of recent books on public sector management have discussed demands and how it is essential to understand them in public services because payment is not made at the time of service consumption and, therefore, price does not directly influence the amount and nature of demands placed on the system.
In his Vanguard Method John Seddon describes the importance of fulfilling purpose if failure demand is to be avoided. He also talks about understanding flow in relation to how work enters a system. Both of these ideas relate to demands. If purpose (i.e. the value sought by someone or their demand on the system) is not correctly understood the work system will not meet their need. They will come back.
Mark H. Moore includes operational capacity in his ‘strategic triangle’ concept linking decisions from the authorising environment to the public value provided. An organisation must have the operating capacity (or capability as Moore describes it in his earlier book Creating Public Value) to deliver on the political commitment to create particular public value. Continue reading
Posted by Lancing Farrell 1200 words
In 1978 Richard B. Chase published his paper Where does the customer fit into a service operation? John Seddon says this article began the separation of front and back office operations; something that he believes has created many problems in public sector service delivery today. Maybe he is right. But when you read the article, what Chase is advocating makes sense and I can’t help thinking that it isn’t necessarily a bad idea, rather it is an idea that has been used badly.
Chase is an operations manager. By 1978 he had already co-authored a popular operations management text. He starts his paper stating that a manager needs to understand the ‘operating characteristics that set one service system apart from another’ in order to make improvements. Continue reading
Posted by Colin Weatherby 950 words
In the previous post, I discussed economies of scale and the cost savings possible through shared services. This post continues the discussion, starting with the implications of front and back office separation.
The history of ‘back office’ and ‘front office’ separation is worth some discussion. According to Seddon, it began with an article by Richard Chase in the Harvard Business Review in 1978. In the article, Chase recommends separating the ‘high customer contact’ and ‘low customer contact’ elements of the service system because of the different operations involved. Low customer contact operations are more efficient and, as a result, have lower costs and it makes sense to isolate them from the disruptive effects of customer interactions if it can be done without sacrificing service effectiveness. However, service effectiveness is exactly what Seddon believes has been lost in many of the cases he cites. Continue reading
Posted by Colin Weatherby 620 words
The Victorian state government plan to cap municipal rates has revived discussion about shared services. Some leaders see shared services as a silver bullet to reduce costs. What potential do shared services have to help councils respond to rate capping?
The article Government shared service back in vogue notes that shared services are usually justified by business cases promising operational efficiencies and cost savings. However, the article cites numerous examples of shared services that have failed to deliver.
In 2011, the West Australian government disbanded its Office of Shared Services centre after an Economic Regulation Authority review found the project was over budget and unlikely to deliver promised savings of $57 million a year. Instead the project had cost $401 million and achieved minimal savings.
The Queensland Health payroll upgrade was developed under the auspices of a shared services group. Originally with a budget of $98 million, and due for completion in July 2008, the project was the subject of a royal commission last year and is expected to cost taxpayers $1.2 billion by 2020.
In The Whitehall Effect John Seddon documents examples of similar failures in the United Kingdom. The track record of failure suggests that there are significant risks associated with shared services. So why are they regularly on the public sector reform agenda? Continue reading