This article, which appeared under the name of myself and Veredus colleague Evelyn Dougherty, was first published in the MJ
As we travel around the country visiting a diverse range of local authorities it is clear that “commercialism” is on the rise. We are often asked about the practicalities and pitfalls of recruiting people with commercial backgrounds. Cross-sector expertise can make a huge difference to authorities, but fundamental questions need to be asked before the recruitment begins, not when the candidates are in front of a panel, and especially not when the shiny private sector implant has failed to live up to expectations.
Start by understanding why is commercialism important to you? We think there are (broadly) four reasons why authorities want to be more commercial – (1) to generate profit to offset the effect of cuts (2) to change the culture of the organisation in good ways (3) to support becoming a “commissioning council” and lastly (4) to be better able to understand and support business in your place
In terms of generating profit start by checking that everyone is really aligned with this – some authorities are even nervous about the word and use convoluted phrases like “net revenues” or just “income” because the P-word has corrosively negative connotations in the culture. If this is you then your issues may go deeper than simply the absence of a commercial director type, and it is hard to imagine the whole organisation getting behind an initiative to take on other service providers and win. Which brings us to another taboo subject – the notion of competition. A lot of people really like the collaborative nature of public services and it can be deep in an organisation’s psyche, but if you are going to enter a traded service marketplace, say, then you need to compete and win – there is no prize for second place, only wasted bidding costs. This also has an impact on what you need to pay to get people – there is no point in recruiting someone to lead your profit generation if they simply get ticks in the person specification boxes but aren’t actually good enough to lead a win. Moreover you will need to commit council tax-payers money to marketing and business development at a time when you are almost certainly making headline-worthy cuts elsewhere. We think there is huge potential for authorities to become more commercial, but that aspiration needs to be more than one person deep.
The issue of cultural change is one that we hear quite a lot. There are many admirable features of good commercial organisations – responsiveness to changing customer needs, quick decision-making, innovation – that many people, often especially elected members, contrast negatively with what they sometimes see in local authorities. This one needs challenging, thoughtfully. Public and private organisations exist in a completely different context – local authorities are regulated as monopoly providers of important publicly-funded services – they are hugely scrutinized and accountable, with very high requirements for consultation and with measured, transparent decision making. There is no “private sector pixie dust” that can completely overcome this. So the cultural aims are good ones, but realize that achieving them will require fundamental rethinking of the organisation, up to and including Overview and Scrutiny. Councils that wish to be commercial have an interesting choice about whether to try to create the commercialism from within, or to place it in some kind of arms length body. It would appear that the arms length route seems to be working better in terms of achieving the commercial objectives, and cultural change within the arms-length folk, but that doesn’t necessarily translate into culture change in the core.
Commercialism is undoubtedly important to commissioning councils. This is most obviously true on the provider side – the parts of the organisation which are asked to behave as providers, and in many cases to compete and grow their business elsewhere. However it is also important that the commissioner side is commercially strategic as there may not be well-developed markets for some of the services they wish to commission, so markets may need to be created. Really smart commissioning will not only lead to service improvement but it can boost the prosperity of the place as a whole, which brings us on to the fourth benefit of commercialism.
Empathising with the needs of local business will be a useful side-effect of greater commercialism. We often find that well-intentioned council officers don’t seem to understand the impact on small businesses of cashflow – we have seen big procurements split into small lot sizes in the hope that this will attract small local business – but the duration of the procurement and transition phases have such high up-front cost requirements against an uncertain return that no entrepreneur could risk it, and they might not be able to afford it even if they knew they were going to win.
Once you are clear about the nature of commercialism in your authority and what you are seeking to achieve the recruitment will become much easier. In our experience there are many well qualified folk in the private sector who would actively enjoy working in the public sector (though there are also an annoying number of people who think it’ll be an easy life). Recognise that you may need to find ways of being creative about salary, or finding other benefits that someone may value – many commercial folk live out of a suitcase so there is a huge family benefit in a council role. Review your recruitment processes, especially early on in the cycle. The private sector recruits differently. One council had a standard application form which was a huge turn-off for private sector candidates, it confirmed all of their worst fears about penpushing bureaucracy. We ran the initial process on a “letter and CV” basis and did the standard form only at the shortlist stage when we could explain the reasons for it. Above all think about the induction and integration of people into the council. Help them to succeed by pointing them at people who have made a successful transition.