HR strategy: In search of a new direction at Croydon Council – HR in practice

The business

Croydon Council provides services, such as education, waste management, leisure and planning, to local residents and businesses. With a workforce of 10,500, including schools staff, it is the largest employer in the borough.

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The challenge

As recently as three years ago, the council had no organisation-wide HR strategy. Each of the eight council departments had its own personnel and training team, delivering transactional HR services, such as recruitment, benefits and payroll. There was no strategic overview of the workforce and no consistent approach to delivering HR services.

The council was paying out £282m a year on staffing and salaries with no idea of the return on that investment and no way of measuring it. Add to this scenario low productivity and high staff turnover – at a massive 22% – and it is easy to see why a radical shake-up was needed.

Enter Pam Parkes, an HR specialist who has worked in some of London’s most challenging boroughs, including Southwark, Lambeth and Hackney. She was brought into Croydon Council as HR and organisational development director in July 2004.

“HR wasn’t well regarded by staff, managers or by corporate management and was struggling to manage the basics, such as recruitment and learning and development,” says Parkes. “We needed to raise our profile – and our credibility.”

There were also considerable cultural challenges to overcome, as a very traditional culture in Croydon was holding back HR service improvement. “The culture was hierarchical and the HR teams had their own ways of doing things that were entrenched in service delivery. After a few months in the job, I came across the phrase ‘the Croydon way’ – that was people’s way of saying that they didn’t want to change. But it was clear that radical cultural and organisational change was needed.”

The solution: consolidation

Parkes decided to consolidate the eight personnel divisions into one strategic HR function. The idea was to create a consultancy model, more common in the private sector, in which HR treats business managers as customers with agreed service level agreements and performance is measured.

Robust performance measurement was the lynchpin of Croydon’s approach to human capital management (HCM) and the council drew on best practice models from Valuentis and Mercer. The new approach would also mean developing new processes for HR tasks and exploring alternative delivery models, including shared services with other councils.

Parkes felt that the council had reached a critical point, which was leaving it exposed both operationally and financially, but first she had to sell the transformation to the corporate management team.

“Croydon was falling behind in recruiting social care, revenues and benefits, and planning staff,” she says. “There was a lack of investment in learning and development and the council couldn’t afford the HR staffing structure. I outlined all the pain points that the organisation needed to get past – if it didn’t, it would implode. It had to take the risk and go with the transformation.”

Senior management backed the change and Parkes set about the reorganisation, reducing the number of full-time HR employees from 125 to 92, employing new staff from the private and voluntary sectors and creating five new teams: health and safety HR policy HR consultancy a business unit and organisational development.

The creation of the business and organisational development units mark the biggest change, as they have such a strong emphasis on measuring performance.

The business unit’s role is to manage performance, forecasting, marketing and business development of HR services – “providing a constant challenge to how we operate and the value we offer,” says Parkes – while organisational development takes a more holistic approach to learning and development, evaluating skills and knowledge relative to the council’s goals and creating action plans around this.

A new HR information system has been implemented to provide better workforce reporting, while surveys and focus groups are used to measure employee engagement. All major HR contracts have been reassessed and changed where necessary over the past three years, including a new shared service arrangement with four other councils for recruitment advertising. And council departments and HR have new performance agreements, outlining mutual responsibilities and expected service levels, which marks a significant departure from ‘the Croydon way’.

Finally, the council’s new approach to human capital management is now integrated into its corporate strategy, with direct links into financial reporting and monthly management reporting, and ongoing benchmarking against both private and public-sector organisations.

Outcomes

As a result of the new structure – and the widespread changes it has brought – Croydon Council was rated the “most improved council” in 2007 in the national Human Capital Best Value Indicators – rising from 68th place in 2006 to sixth place in 2007. Croydon was also joint winner of the HCM award at the Public Sector People Managers Association conference and was praised for linking people measurement to outcomes and for improving its performance.

There have also been substantial improvements on the ground. Sickness levels among staff have fallen from 12.5 days in 2005 to seven days in 2007, giving Croydon the lowest sickness absence rate of all 32 London boroughs, and new partnership and shared-services arrangements for recruitment, advertising, HR systems and payroll services have yielded efficiency savings of more than £1.5m.

But for Parkes, the most significant benefit of the new model is that it has allowed the council to bring more capacity to organisational development. “By rationalising and refocusing the HR service, we have put new management development and induction programmes in place and created a new leadership academy. We have been able to develop the things that usually get pushed aside when the HR function is trying to keep its head above water.”

As far as Parkes is concerned, it is in this more strategic role that the future of HR lies.

“Transactional HR is still our bread and butter. But our competitive edge as a council is about how we are using our workforce and how our workforce feel about us as an employer. That’s why we have invested in organisational development and internal communications.”

Not everyone is convinced about the benefits of the transformation, however, and the battle to win hearts and minds continues. Many staff were sceptical about the change and some were looking for the new model to fail from the outset. But, if nothing else, the project has certainly raised the profile of HR within the council.

“Now they know we bite – and we didn’t before,” observes Parkes.

Although the council has made considerable headway in changing behaviours and processes, cultural change is a longer game, says Parkes.

“Cultural change takes much longer than changing a payroll system. It can take years to see any visible effects. We’ve convinced people to use new systems and adopt new behaviours, but whether they have really signed up to the change is a different matter. Only time will tell,” she concludes.

If I could do it again.

“I wouldn’t change a thing,” says Parkes. “I’m not being arrogant, but if you are going to go for a big bang change, you have to be brave and have no regrets. I truly believe that our approach is what the council needed at the time. It was on the brink of failing on a number of fronts and we needed radical change… The only thing I might have done differently is to look after myself better during the transformation. Because of the amount of energy it required to keep my focus and vision, that sometimes got missed.”

Employee perspective

“Since the reorganisation, HR has become much more strategic and aligned to corporate goals and what the council is trying to achieve, rather than handholding and firefighting. There’s also a deep level of expertise that we simply didn’t have before. This is vital as we seek to tap in to – and utilise – the full range of our employees’ skills.

“People management has also become much more integrated across the organisation with a critical mass of strategic thinking about people issues. I sense much more confidence from managers in tackling difficult HR issues than before, because they know they have a broad framework of quality support.”

Aiden McManus, divisional director, planning and transportation, Croydon Council

Six steps for effective measurement

  1. Be clear on why any measurement is taking place, how it will be used and how the chosen approach will and won’t address this (including any constraints).
  2. Use a robust measurement framework to avoid the risk of wasted effort or discredited findings.
  3. Measuring people management doesn’t require expensive investment in IT: identify what your current systems can produce and how this can be supplemented.
  4. External benchmarking doesn’t provide much actionable insight: focus on comparing variations within the organisation (for example, by business unit or directorate) to gain insight.
  5. Measuring at one point in time will give insight, but repeating the exercise at regular intervals (’embedded practice’) will provide valuable trends data and predictability.
  6. Don’t underestimate the importance of educating HR and managers about why the data is useful and how it can help them.

Source: Valuentis




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