Redefining Reward at London Borough of Barking & Dagenham

A New Deal?

Martin RaysonHead of HR & Organisational

Development

CSR – Impact on LBBD

• 28% cuts in grants over 4 years (av 7.1% per yr)• Y1 16%, Y2 11%, Y 3 1%, Y4 7%• Overall right figures in MTFS• Need to re-phase savings + limited reserves• Continued expenditure restraint• Maximise external funding resources• Full cost recovery on all chargeable services• Terms and conditions review

Community Challenges

• The Borough has one of the fastest growing populations in London. The decision to restrict Housing Benefit may increase still further the number of people relocating.

• Approximately 30% of the Borough’s population is aged between 0-19 and the proportion on under-fives is significant, putting a lot of pressure on school places

• Approximately 16% of the Borough’s population is aged 60+, which is one of the highest in London

• There are significant health inequalities and evidence of comparatively poor health amongst the elderly population

• LBBD owns its own stock and the condition of that housing stock is causing concern

• The increase in population is largely from BME groups and this is changing rapidly the traditional cultural mix. The conditions which encouraged the rise of the BNP have not gone away.

A Different, Modern Organisation

• There is no growth for services, just managing with financial constraint (for at least 5 years)

• Behaviour change through role modelling

• Investment in change processes (Transformation Board)

• Investment in people changes (People Board)

• Relentless chasing of VFM

• Resources to those areas that matter most to our residents

• Commissioning that makes a difference (and is cheap!!)

• Certainty where certainty is possible

• Sound, efficient processes

• Good quality management information

• Technology driven

LBBD Cost Reduction Strategy

TargetOperatingModel

Reviewing income streams

Joint Venture

Compliance culture

Whole Council Transformation

Financial planning and monitoring

Eliminating Waste

Policy Led Budgeting

Customers accessing services more easily, more cheaply

Maximising all income–grants, fees and charges, better collection rates

Improved and cheaper transferred services. Better and cheaper procurement, expert help to transform the rest of the organisation with rates half market price. Knowledge transfer

Effective processes, people complying with processes, right first time processing

Review and transformation of all services not in JV:• Is it a priority (do we need the service at all)• How do we do it with less resource• How do we make it efficient and effective

Improved, effective budget management, cost control, manager development, systems and control checking

Ask our staff, members and public where they think waste is, publishing details of spend over £500, stop spending on “luxury goods”

Prioritising resources to those areas members say are most important and taking resources away from areas of less importance

Overall Transformation Programme

Vision

Priorities

Policy House

Policy Led Budgeting

Shape

One B&D Model

Joint Venture

Service Transformation

Programme

Style

Values & Employer Brand

People Strategy

EVP/New DealManagement Development

Talent ManagementPerformance Management

People Management Policies

Underpinned by Communication

– Let’s Talk Engagement

Survey

Policy House

Priorities•Better together•Better Home•Better Health•Better Future

Delivered by:A well run organisation that will be leaner, more efficient with lower support costs and lower costs of assets, exploiting opportunities for sharing costs, minimizing waste and maximising external funding, with a well managed, motivated workforce. A respected organization with a good reputation for “doing business” understanding it’ customers and citizens, providing a responsive service and community leadership”

The Target Operating Model

Support

Services

Strategy, engagement and commissioning

Support Services

Children’s Services

Funding

Customer Interface

Citizens

HR & OD

Finance Trans.

Procure-ment

Web

Phone

F2F

MailCore services

ICT

FM

Property

Customer

enquiries Core services

Core services

Core services

Policy, Partners and place shapingCulture transformation fully supported

Technology used to modernise ways

of working

A customer focussed culture

A single or shared view of the customer

Use of Customer Data to target

services

Delivery by lower cost channels & improved satisfaction

Services accessible to

all customers

Making our services

cheaper and easier to use

Overheads reduced by

50%Services

redesigned to reduce cost

Improved procurement and

contract management

People Challenges

• Downsizing• Reduce the cost of employing people – greater productivity (e.g.

absence management) + terms and conditions• Sustaining engagement, motivation, discretionary effort• Delivery of People Strategy =

1. Style/culture change to support transformation and the implementation of the target operating model2. The right people, with the right skills in the right places, with the right kinds of management and leadership, motivated to perform well

Draft Employer Brand

An organisation which encourages innovation and risk taking, where talent is developed and nurtured and people are treated fairly and with respect.

• Encouraging people to be innovative, we accept we sometimes fail and we learn when things go wrong and celebrate where they go right

• Giving opportunities to people to maximise their potential• Building a healthy, resilient and diverse organisation• Focusing on efficiency, capacity and performance to maximise

productivity• Providing inspiring leadership and effective management to build

employee engagement and motivation• Being flexible in the way we employ staff and the way that they work

to meet customer needs

The Old Deal

• Paternalistic approach• Competitive salaries• Directly employed workforce• Job security• Good pension arrangements• Some flexibility in working arrangements

Existing Reward Arrangements

• Pay and conditions are generous, notable for grade drift in order to retain critical skills and specialists

• Employees are reasonably happy with their pay and conditions

• Wide range of benefits- some part of terms and conditions, some salary sacrifice

• There is no overarching strategy • No staff feedback on the value and importance of the

benefits• Difficult for LBBD to defend its current investment in

employee benefits

Challenges Around Reward

• A fixed paybill with inflationary pressures built in through contractual progression and RPI increases;

• Reward for service as opposed to performance;• Pay awards and levels that are out of step with other

sectors;• Single status treating staff as an homogenous whole

rather than centering on function and demographic need;• Reward not being linked to talent management;• Generous pension and compensation provisions;• Reward as an administrative encumbrance rather than

as a strategic management tool;• Does it reflect the kind of organisation we need to

become

Building The New Deal - Objectives

• Reduce the cost of employing staff, thereby contributing to the necessary budget savings in 2011/12 and beyond;

• Develop a Total Reward package that is fit for purpose for a modern local authority;

• Motivate people who will be crucial to sustaining a modern Council;• Deliver greater flexibility in our approach to reward and simplify our

arrangements, thereby also reducing costs;• Enhance productivity;• Reflect our values and ensure fairness and consistency across the

Council; • The need to reduce costs;• Sustaining engagement and protecting discretionary effort;• Being fair and equitable;• Ensuring we are able to recruit and retain good people;• Focussing on getting more for what people are paid as their basic pay;• Ensuring people understand the full value of the reward package.

Total Rewards Approach

Relational Rewards

Total Reward

Employee Benefits

Total Remuneration

Contingent Pay

Total Cash

Basic Pay

Cash

Building the New Deal - Next Steps

• Positioning the Deal

• Basic pay/contingent pay

• Terms & Conditions

• Employee benefits

• Relational Rewards

Employer Brand Workshops – Best Things About LBBD

• Location

• Public service ethos

• Career advancement

• Good total package

Employer Brand Workshops – Things To Improve

• Policies and procedures • Communication and engagement • Training and development • Leadership • Performance management• Psychological contract• Systems and support

Building The New Deal – Changes to Terms and Conditions

• Looking at the length of the working day and week• Review of the application of overtime • Reduction in overtime rates• Review of other enhancements• Greater control over application of special leave• Tightening of the sick-pay rules • Changes to the criteria for Essential Car User Allowance• Changes to mileage rates• Change in redundancy calculator• Freeze on senior staff pay rates• Increments paid on achievement of objectives set through

appraisal.

Building the New Deal – The Positives

– Sustaining investment in learning and development – Introducing a “Total Rewards” approach– Introducing a bi-weekly payroll for those who wish to be paid at

more frequent intervals– Protecting current levels of Annual Leave– Enabling as far as possible for people to work flexibly – Supporting staff through this period of uncertainty, – Taking actions to build a greater sense of partnership with staff– Giving reassurance that our policies and procedures will be fairly

and consistently applied– Manage down further the use of agency staff – Limit the number of job losses or the externalisation of jobs– Continued commitment to creating entry-level jobs within LBBD

Benefits Within Total Reward

• Making more of the overall investment in reward - Total Reward Statements

• Salary sacrifice

• Flexible benefits

• Voluntary benefits

Next Steps

• Potential further work on Employer Value Proposition (as part of brand work)

• Assessment of potential of benefits review• Focus on engagement as part of relational benefits• New Deal? – not sure!