Does Austerity Drive Public Service Innovation? Evidence From Shared Senior Management Teams in Local Government


The paper presents the results of an in-depth analysis of shared senior management teams (SMTs) in English district councils.

Shared senior management teams report efficiency savings and greater flexibility. Picture: Rawpixel.com/Adobe Stock
Shared senior management teams report efficiency savings and greater flexibility. Picture: Rawpixel.com/Adobe Stock
  • Benedetta Bellò, James Downe, Rhys Andrews, Steve J. Martin
  • Cardiff University, Public Money & Management (February 2018)

Sharing senior management teams (SMTs) is a recent innovation and occurs when a team of senior managers oversee two or more public organizations. It often starts with a shared chief executive before moving on to sharing the whole senior management team. Shared SMTs are an attractive option for councils and other public organisations seeking to save money without the upheaval, controversy and transactions costs associated with full-blown mergers. They involve a high degree of organisational integration which reduces management costs and gains economies of scale without the loss of organisational identity and sovereignty.

In an era of “super head teachers”, blue light services integration and collaborative procurement, the experience of local government in sharing SMTs can, according to the authors, yield invaluable insights about the limits and potential of this type of innovation.

The paper presents the results of an in-depth analysis of shared SMTs in English district councils. Drawing on qualitative research, it identifies the main enablers and barriers to councils setting up these arrangements and offers an initial assessment of the types of impacts which they have produced.

A management innovation

Management innovation (MI) is defined as the introduction of a new structure, process, system, programme, or practice in an organisation or its units which “changes how managers do what they do” (Hamel, 2006). MIs can improve organisational efficiency and effectiveness, because they are typically aimed at enhancing the managerial capacity and ability to learn that is required to adapt successfully to (changes in) the organisational environment.

Within this context, shared SMTs have emerged as an example of a distinctively public sector MI. The paper explains that there are two key perspectives that help us understand the motivations behind councils’ adoption and implementation of shared SMTs. From a rational perspective, sharing a SMT may result in efficiency gains; and from an institutional perspective, it is perceived to enhance their legitimacy in the eyes of key stakeholders. The literature suggests that early adopters of a managerial innovation are more likely to seek efficiency gains, whereas later adopters seek legitimacy when adopting managerial innovations.

The study

The paper draws evidence from three sources: analysis of council reports, business plans, and minutes from meetings at which the decision to share SMTs were taken checked against reports from the Local Government Association (LGA) and local media; information collected from phone interviews with councils on the main characteristics of these arrangements (including when and why they were set up, the model of sharing that has been adopted, and the impacts to date); and interviews with 12 key organisations that have supported the introduction and implementation of shared SMTs in English local government.

Findings

The analysis identified 18 examples of shared chief executives and SMTs in English district councils, involving 37 councils. The majority of shared SMTs involved councils in the south of England led by Conservative administrations. Four spanned non-neighbouring councils and different counties. A number of cases of shared SMTs involved councils under different political control, one of which was for a decade.

While the research focused on district councils, it found examples of councils from different tiers working together (e.g. Essex County Council and Brentwood District Council) as well as cases from single-tier arrangements (e.g. the tri-borough arrangement in west London). The research shows that there is considerable variation in how councils organise their shared SMT. The size and structure of shared SMTs differs across the 18 cases. The number of directors varies from one to four, and the number of heads of service range from three to 17.

Motivation

The documentary analysis and interview data showed that one of the main reasons behind the decision to introduce a shared SMT was a response to austerity. Councils regarded shared SMTs as an opportunity to save money by reducing the number of senior managerial posts.

Another motivation for councils to share senior managers was the opportunity, through the integration of staff, to have access to a wider range of expertise (for both managers and politicians) and to become more resilient.

Government departments have encouraged councils to share senior managers to save money and suggested councils could also share chief executives and SMTs with other public authorities. The introduction of the Transformation Challenge Award (TCA) in 2014 (which ran until 2016) offered financial incentives aimed at supporting councils to transform their business processes and work with the wider public sector to improve services. Part of the funding was devoted specifically to supporting the sharing of chief executives and SMTs.

Enablers

One of the main enablers of shared SMTs was that councils entering into these arrangements saw themselves as similar or facing similar challenges. It is also important that the leaders get on well at a personal level and trust each other. They need to be willing to work together to introduce, implement and drive forward innovation and overcome fear of one council “taking over” another.

There are particular skills needed by politicians in both councils: the political leader has to be strong in the sense to be consistent across parties, there needs to be openness to new ways of working, and a clear shared vision of how to develop the partnership. Effective communication was particularly highlighted as important.

A final enabler was the government’s invitation to councils in two-tier areas to submit proposals for unitary status or to be pathfinders for new two-tier models (DCLG, 2006). Five out of the 18 shared management arrangements included in the research were in regions involved in bidding for pathfinder status. The time spent on developing new ways of working appeared to have benefits when considering shared management arrangements a few years later.

Barriers

The main barriers that can hinder the introduction of this kind of innovation are perceived to be problems caused by cultural differences between the councils and internal resistance among managers to change. It also highlights that politicians need to adapt to a new environment in which they have less day-to-day contact with senior officers.

A final barrier is the set-up costs of shared SMTs, especially where redundancies are involved. In South Hams and West Devon councils, for example, the decision to share the SMT was gradually implemented from 2007. Between 2011 and 2014, there was a cut in the number of staff on the SMT from 15 to five. While the costs of this restructuring have been recovered in less than three years, some councils struggle to find the resources needed to make the necessary upfront “investment”.

Future outlook

All participants in the research agreed that the main impact to date of shared SMTs had been to cut costs. However, the savings councils are making are relatively modest. The average saving has been around £300,000 per year.

Beyond the financial impacts, interviewees reported greater flexibility and resilience to face future challenges as benefits of having adopted shared SMTs but these impacts are often unquantifiable.

The future of shared SMTs is not easy to predict due to the fast-changing policy landscape with the addition of devolution deals, combined authorities and the prospect of new unitary authorities.

Expert view: We must be clear about what we mean by shared services

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