You can forgive Richard Crouch, head of HR and organisational development at Somerset County Council, a knowing smile when it comes to debate about the latest vogue for HR shared-services.
While others in local government and the wider public sector are digesting reduced funding settlements from Whitehall and looking to make big savings through the use of shared services, Crouch and his council are ahead of the game.
Somerset, Taunton Deane Borough Council and Avon and Somerset Police joined forces with technology giant IBM in October 2007 to form Southwest One, a joint-venture company delivering a range of services, including HR. “This project has put Somerset Council on the national stage,” Crouch says.
The £400m 10-year deal has not been without its controversies, however. Public sector union Unison took the council to an employment tribunal over a lack of consultation (it lost), concerns have been raised in Parliament by the local MP, and there have been accusations of excessive secrecy over the contract.
Crouch understands why the deal has created such a furore. “When you work in public services and are putting together a contract with a private sector supplier, there are these tensions with transparency. Even though we wanted to share information with Unison and other stakeholders, it wasn’t allowed to happen. If you don’t give out information, people think you’ve got something to hide,” he says.
More than 1,000 council staff have been seconded to the new company, all with guaranteed employment for 10 years on the same terms and conditions. About 150 HR staff also moved across, leaving just Crouch, three years into his role, and two colleagues at the local authority.
“HR colleagues nationally laugh at me and ask what I’m doing, managing just two people,” he says. “What has changed is I now scrutinise and challenge people who were once part of my team; I wear a client hat as well as being a shareholder.”
So why did Somerset council choose a joint-venture approach rather than an outsourcing arrangement? Crouch says a trip to Suffolk council with his chief executive to see its joint-venture project with BT in action nailed the decision.
“The first thing that struck us was the way people operated in the building; the way staff conversed, dressed – it felt like a multinational company, not local government,” he explains. “All of the old bureaucracy was wiped out but what was still important to staff was delivering services for local and vulnerable people.”
Selling the need for change to the rest of his organisation wasn’t difficult, according to Crouch. The need for efficiency savings meant budgets were being sliced every year, leading to real frustrations among staff.
Employees could also see the job security benefits of the deal on the table; guaranteed employment, secondment, same terms, better career prospects. “We have invested in staff because Southwest One is a joint-venture company, so it’s in our interests to do so,” Crouch says.
Like any major transformation project there have been teething problems, notably with introducing an SAP-based IT system. But 21 months in, Crouch believes real progress is being made.
“If you’re going to jump into bed with a partner like IBM, you have to realise they speak a different language, work differently, think differently, act differently,” he says. “It’s too easy to forget the reason why you brought in a partner in the first place. If they’re no different to you, there’s no point. But the relationship works because you think about the bigger picture.”
Despite the eulogy, so far no other council or public sector body has signed up to Southwest One. But it’s just a matter of time, according to Crouch, as the sector looks for new ways of pooling resources and delivering services.
Southwest One in numbers
- 80%: IBM’s share of joint-venture
- 10: Number of years guaranteed employment for secondees
- 150: Number of HR staff from Somerset council that have moved
- £400m: Total savings for three public sector partners
If I could do it again…
“The secondment model helped us from a business perspective,” says Crouch. “With TUPE what normally happens is you get a load of disaffected staff thrown out of their organisation with the other one forced to pick them up. However, from an HR perspective, you would not touch secondment with a barge pole because of its complexities.”
He adds: “I would have wanted IBM to engage a bit more with staff – sometimes you want more than presentations. To have engaged more on a one-to-one basis would have been helpful.
“Better engagement with the unions [would have been beneficial]; some elements of the private sector haven’t had to do that before.”