Driven by new performance criteria, the UK public sector is taking innovative new steps in how it manages its people. John Stokdyk looks at the pioneering work of Rotherham Metropolitan Borough Council's HR department.
For the past year or two, talent management has been discussed on many occasions on HR Zone, but primarily on a theoretical level.
In response to our article on building a business case for investing in talent management methods and systems, Phil Dourado argued last month that talent management meant identifying your talent and working with your people to release and develop that talent, so that they will want to stay with you. No doubt there are many other definitions available, but as the previous article noted, one of the big challenges HR managers face is to demonstrate what impact the theories can have when they are put into practice in the real world.
So far in the UK, the public sector has established itself as the proving ground for some of the more sophisticated approaches to HR management. Though it may be galling to admit it, some of the ham-fisted targets set out by the Labour government's 'Best Value' initiative may have contributed to the evolution of talent management in this country.
Since staff pay is the biggest cost for a public sector employer, poor HR performance represents a financial drain that can a significant impact on achieving Best Value targets.
Best Value set out performance criteria for local authorities that are rated annually in 'Comprehensive Performance Assessments' (CPAs). Being confronted with a damning set of performance indicators, however raw, may not be the ideal starting point for the holistic talent management approach promoted by the likes of Phil Dourado, but the CPA regime stimulated a wave of innovative responses.
One of the most remarkable turnarounds took place at Rotherham Metropolitan Borough Council (MBC), which transformed itself from one of the worst performing organisations into one that has achieved significant efficiencies and savings.
Rotherham HR pay and performance officer Ian Henderson says that the council takes a broad view of talent management, extending from the council's brand image and recruitment strategy through to pay and rewards, employee engagement, skills development and succession planning.
Ian Henderson, Rotherham HR pay and performance officer
The processes and systems his team devised to support this strategy show what can be achieved through a systematic analysis of key cost and performance indicators.
Rotherham's first CPA placed the council in the second lowest category - 1 Star (weak) - and was critical of several HR-related categories: leadership; management capacity; service delivery; and communication.
In response, the council set up Rotherham Connect, which brought together five HR departments and three payroll operations into a single shared-services unit.
"We had to alter the performance culture of the council," says Henderson. "We started assessing things and looking at how we could improve them."
Henderson was given responsibility fpr developing a common management information and reporting infrastructure to support the HR strategy overhaul. The CPA highlighted key issues such as high absence rates, but Henderson and his colleagues needed to identify other less obvious performance issues.
While dramatic improvements were needed, they would only happen if the HR and payroll unit had good employee data and measurements, he explains.
"To assess the issues in the round I needed up-to-date data on the workforce make-up, ethnicity, gender and disability. So we started developing our own bespoke measures and management reports."
Alongside this work, the council brought in a new HR strategy in 2003, supported by a workforce planning framework that included Investors in People accreditation in 2003. The framework also put new focus on employee engagement, an updated performance development review procedure and a dedicated management development programme.
To help monitor these areas, Henderson and his team devised reports combining hard data measures, such as sickness and turnover, with softer measures such as employee perceptions drawn from opinion surveys and focus groups.
One of the reasons Henderson landed the pivotal reporting role was that he had experience using the HR Analyser tool within the payroll department. The Analyser, now marketed and developed by COA, is designed to compile data from different systems into a single reporting environment.
Where the analysis had previously been limited to payroll payments and headcounts, Henderson pulled more detailed staffing information into the HR Analyser to investigate the characteristics relating to different performance issues.
Absence was the most obvious problem - and the one where improvements could make a big difference to the council's finances. Looking at statutory sick pay, Henderson found the biggest single cause of claims came from back and other musculoskeletal injuries among social services staff. Care workers frequently have to lift patients as part of their work, so the council enlisted the help of occupational health services company RehabWorks to provide education and physiotherapy for affected staff.
Ian Henderson, Rotherham HR pay and performance officer
Stress and childcare problems also came near the top of reasons for absence. To help its people cope with stress, Rotherham set up a helpline. It also introduced more flexible work policies to enable staff with children to do more work from home.
Being able to interrogate the demographic and departmental information alongside cost data made it possible to identify and address the priority issues, according to Rotherham MBC HR director Alan Swann. Without this analysis, he says, "We would not have been certain what the issues were and would have to go through a lot of agony to sort them out."
The reporting tools were not just used for one-off analysis, but have been incorporated into a more systematic benchmarking and HR management workflow process. The new HR performance measures are fed back to line managers along with comparative figures from both MBC and other local government organisations.
Henderson and his colleagues have also set up 'triggers' within the system that are activated when any of the indicators exceeds a specified limit. The trigger will issue an instruction for the responsible manager to follow up. When they complete this task, they record the action on HR & payroll reporting system.
On the key issue of absence, Rotherham MBC was able to reduce its annual average in 2003 of 13.8 days per full-time equivalent (FTE) down to 9.6 days per FTE in 2006/07, reducing its annual occupational sick pay cost by £1.8 million. According to Henderson's latest figures, the average is now down to 7.6 days per FTE.
Dealing with absenteeism problems may not qualify as cutting edge HR strategy, but it's hard to argue with the results. Similar analyses identified functional overlaps that were dealt with a reduction of 20 posts through natural wastage over a three year period. Analysis by age of staff in different positions across the organisation helped with succession planning, contributing to lower turnover and reduced recruitment.
"All of this has monetary value, which has amounted to an additional £3 million in efficiency savings," remarks Henderson.
The reporting methodology and COA analytical tools play a vital role in helping Rotherham to continue pushing for improvements.
"Often HR departments fail to demonstrate what they put on the bottom line," Henderson says. "General accounting systems aren't designed to understand people costs and performance. What we've got is a system that can give us that strategic insight, but leaves HR still in control of managing employees."
Based on its successes so far, Rotherham is working with three other councils in the region to review their approaches to talent management and identify any gaps.
Ultimately the council would like to operate a shared services HR facility for other authorities and, to this end, it recently set up a joint venture with BT to offer HR services.