Key Elements of Change Management

I’m often asked about my experience of change management but it’s such an integral part of what I do that I tend to fail to recognise it as a distinct part of my work!  Following a recent conversation I thought about my experiences of project where I had introduced new services, revised existing services and helped others to implement change.  Here, I draw together the key elements of managing change.

The following may be seen as the basic building blocks to be used when developing new services and restructuring existing services:

Business case
Having a robust business case will be essential if you are to get buy-in from your Board, staff and political stakeholders. Generally, people are resistant to change so your business case will have to be convincing and it should anticipate the arguments for maintaining the status quo and alternative options.

• What are you wanting to achieve?
• What are the options available to you?
• What benefits do you want to achieve?
• What are the dis-benefits likely to be (remembering the rule of unintended consequences).
• What are the risks involved?
• What is the time scale for implementation?
• What are the costs involved; does it stack up financially?
• Have you taken into account historic trends and future forecasts?
• What are the costs of change?
• What will be the payback period?
• How will you measure qualitative improvements and how will you place a value on them?
• How does the proposed change sit with your funders and the regulator?

Performance measurement
Measuring existing performance, before change is implemented, will provide you with a baseline against which you can benchmark future performance and ensure that the benefits are achieved and demonstrable. Benchmarking against other organisations may also be a part of your business case, although true innovation comes from solutions that stand alone and have no direct comparison.

• Measure what is important to the success of the organisation.
• Measure the cost of resources, including personnel but also facilities, infrastructure and overheads.
• Measure the elements that your customers value.
• Decide on the method of evaluating qualitative performance, include key stakeholders in deciding the criteria so that you have buy-in before the measuring starts.
• Compare yourself with respected peers and competitors.

Communication
Communication, and poor communication, can be the make or break of succesful change management. There is no one way to communicate; each organisation, each team within an organisation and each individual within each team will have a preferred and, for them, practical means of communicating. Things to consider include:

• Clear project plans that summarise the process to be gone through.
• Decide on communication tools and techniques.
• Plan appropriate timing of communication events.
• Have clearly defined roles and responsibilities.
• Workstreams that enable individuals to participate and contribute.
• Identity, standpoint and information needs of the various parties involved, both within the implementation project and external stakeholders.

Delivery
Implementation needs to be carefully managed to ensure that the sequence of events is properly ordered. At a high level you will need a project plan but implementation can be achieved through a number of interlinked elements:

• A strategic plan.
• Team plans.
• Cross team workstream plans.
• Individual team member action plans.
• Staff training plans.
• A method of capturing and analysing issues and risks that arise or become apparent throughout the process.
• A process to monitor implementation and ensure suitable progress.
• A means of measuring the success of implementation at each stage.

Post implementation review
Following implementation and after a period of bedding in it is helpful to undertake a review of the process and the outcome of the change. In some instances an ongoing review may be a part of the negotiated introduction of change agreed with staff or customers. You need to check for unintended consequences and address these quickly and sensitively.

This can only be a brief introduction to the elements of change management. If you’d like to talk about how we can help you through your organisation’s change please get in touch.

Tendering for contracts in the public sector

I have been doing some work recently, putting together tender bids, for a client, mainly in restricted procedures and so completing PQQs in the first instance.  These have been for contracts with local authorities and housing associations.  I have been struck by just how different the approaches can be, and I have reflected on conversations with associates who have told me that they don’t bid for work through tenders because it’s just too much work – I can understand what they say.

I was tempted to write a very comprehensive 10 page response for each answer but didn’t have the time!

For tenders in this area there are usually a series of mandatory questions and discretionary questions all about the standing of the company and any breaches of health and safety, bankruptcy, convictions and so on.  Then we get to the company accounts.  Now the company I have been doing work for uses the option within the Companies Act for smaller companies not to have their accounts audited.  It seems that many procurement professionals are unaware of this provision and the tick boxes don’t allow for it; so we are left having to tick the box saying that we can provide cashflow accounts for the last year, or that we don’t have audited accounts and have to offer an explanation – I’m not sure how that fits in with the tender evaluation model.

Some organisations ask a few very pertinent questions – the work I have been doing has been to do with cleaning contracts and so questions on health and safety assessments, training and management seem fair enough, as do questions on lone working and managing remote workers.  I’m a little less clear on why policies on bribery and corruption, data security and business continuity are relevant to cleaning contractors – well I do see how they might be relevant but they do seem a little over the top, especially when asked to the exclusion of more relevant questions.  One PQQ wanted to know all about compliance with Arboriculture & Forestry Advisory Group guides (it was in a rural setting but the guides cover things like maintaining chainsaws, agricultural equipments and tree climbing operations!) but did not ask about equality and diversity at all.

Another PQQ asked 18 very pertinent questions that examined a whole variety of areas such as training, management, performance monitoring, managing TUPE transfers, avoiding cross contamination, dealing with customer complaints and a host of other subjects.  What they didn’t do was limit the length of each answer (and this is quite common); this leaves bidders feeling it necessary to write chapter and verse on each question so as to ‘outdo’ the competition.  I know that a concise answer should be given, but I also know that others will write comprehensive answers.  What I don’t know is whether the evaluation panel will be looking for succinct answers or those that show breadth of knowledge.  On this PQQ I contacted the organisation inviting the bids and asked whether there was a preferred length of response – perhaps a few hundred words, or a few sides of A4 – I was told that as the PQQ did not specify a length there was no limit – I was tempted to write a very comprehensive 10 page response for each answer but didn’t have the time!

I think that the use of comprehensive PQQs and ITT questions will preclude many of the smaller businesses who are able offer a fine service but don’t have the resources to respond

There are a host of different policies asked for in PQQs.  Whilst every organisation should address issues such as health and safety, data security, avoiding bribery and corruption, equality and diversity and so on and so on these are not always recorded in a tome of policies and procedures – smaller companies don’t have the time to draft, refine and review.  Larger companies need to set such things in stone because there is a vast dispersed workforce and uniformity is required.  When it comes to bidding, they have a definite advantage in being able to deliver highly polished policies.  And, as my client bids for more tenders so will he have!  But it does put off potential bidders, who are able to deliver excellent services but don’t have the written policies behind them.

Another issue is on-line applications.  It seems that there are a variety of on-line procurement websites.  Some regions have got together and operate collectively – for example www.supplyingthesouthwest.org.uk is an excellent site – but others have their own dedicated sites.  Some send notifications when tenders with key words that you have selected come up but others do not.  A large unitary authority on-line site I came across doesn’t – when I asked about the release date for a deferred contract I was told I would need to check the site periodically because there was no notification system – as if I have nothing else to do!  This was a site operated by an external service provider whose strapline is ‘supply management excellence’; I’ll be the judge of that!

In my own main area of work, social housing consultancy, I have long given up trying to register on such on-line sites.  A while back my hard copy promotional literature to one local authority was returned with a polite note saying that they did not receive unsolicited promotional material and I would have to register with their third party managed on-line register of potential suppliers.  I contacted the company and was told that there would be a fee of several hundred pounds a year, this was based on my organisation size.  I then started to fill out the registration form only to find that there was no category of supplier that was remotely anything like I was offering.  I went back to the local authority to explain but was told I HAD to register on-line…I gave up!

So what do I draw from this rant?  Well I think that the use of comprehensive PQQs and ITT questions will preclude many of the smaller businesses who are able offer a fine service but don’t have the resources to respond.  I think that there would be benefit in having agreement on more of the policies to be required to be in place.  I think that there would be benefit in having a smaller number of on-line procurement sites with greater uniformity in how they work and I think someone needs to take a lead.  unfortunately I think nothing will change.

Affordable Rents and local authority Tenancy Strategies – Chicken and Egg?

Housing Associations, now known as Private Registered Providers, or Registered Providers, or RPs – you know, the old RSLs – that wish to develop new homes in the future have been required to include in their bids to the Homes and Communities Agency (HCA) their funding models, which include the adoption of ‘Affordable Rents’.  These are rents that have been announced as ‘up to 80% of market rent’ and which will relate to tenancies for limited periods, no less than two years.

No doubt when properties offered on higher rents with less security stand empty the government will declare that they have solved the need for affordable/Affordable housing.

Having put in their bids the RPs are now faced with developing their policies to implement the new tenancy formats.  The TSA says in its Decision Statement Number 5 ‘Revision to the Tenancy Standard: Affordable Rent’ (para 11)  that RPs will want to discuss their approach with their local authority partners.  These should prove to be interesting conversations for several reasons.

Local authorities are preparing themselves for the up-coming Localism Bill which, at para 131, includes an obligation on local authorities to develop a ‘Tenancy Strategy’ that shall set out the matters that RPs are to have regard to in formulating policies relating to:

(a) the kinds of tenancies they grant,

(b) the circumstances in which they will grant a tenancy of a particular kind,

(c) where they grant tenancies for a term certain, the lengths of the terms, and

(d) the circumstances in which they will grant a further tenancy on the coming to an end of an existing tenancy.

They’ll be required to have this in place within 12 months of the passsing of the Localism Bill.  Given that RPs will have adopted their policies in readiness for the implementation of Affordable Rents, and given that their new development proposals are financially predicated upon the policies they adopt, local authorities will be in a very difficult position to influence the RPs’ policies if they don’t take their opportunities now.

A second point is that with even LSVT organisations now spreading their wings, and with the formation of group structures that take RP developers into the league of regional providers, there will be queues of RP representatives lining up to see their list of local authority contacts.

The RPs will have made their funding bids based on a model of Affordable Rents that underpin their development programmes and so it will be difficult, even now, to see how local authorities can be influential.

Many may have assumed that Affordable Rents will be applied to new build deveopments only, however the Affordable Rent model can be equally applied to relet properties and it is believed that a significant number of bidders may have included conversion of social rents to Affordable Rents.  This could provide some interesting comparisons.  For example two properties in the same street may be offered with property ‘A’ being lower rent and with long term security of tenure, and property ‘B’ being more expensive and with a limited tenancy period.  Surely RPs won’t do that?  From what I hear RPs are taking the view that their Affordable Rents policies are commercially sensitive prior to publication and so it seems quite possible that this very situation could arise if different RPs have properties in the same areas.

I think it is for RPs to sort this out for themselves.

Whilst we have long talked about the need for more affordable housing we should make it clear that we mean affordable housing not Affordable Rents.  There seems to be a very real danger that existing properties converted to Affordable Rent properties will become the new ‘hard to let’ properties of the future.  No doubt when properties offered on higher rents with less security stand empty the government will declare that they have solved the need for Affordable housing.

What should be done to avoid the potential problems?  Well a common agreement about how Affordable Rents will be applied to existing properties would be a good start.  This won’t be easy though, as most RPs now operate across a wide number of local authority areas which will have their own demands and their own policital view on how the needs should be met.

Of course, the HCA might come forward to assist: although Affordable Rents were put forward as being up to 80%, and although the TSA’s Decision Instrument (detailed earlier) says:  “We do not intend to prescribe the tenancy which providers should offer..” (para 11), and goes on to confirm “PRPs are independent social landlords and it is for them to decide how to manage their stock within the constraints of the regulatory framework.” (also para 11) it was reported in Inside Housing (24.06.2011 page 4) that the HCA has told Cambridge Council that it must charge tenants of new homes 80% of market rents.  So perhaps the HCA will direct RPs on their Affordable Rents policies for the common good – I don’t think so.  I think it is for RPs to sort this out for themselves.

Is this the way to develop housing policy?

On 7th April Grant Shapps announced Tenant Cashback; there was the press release with footnotes saying that three housing associations thought it was a good idea and they would be happy to pilot the proposed scheme.

The media got exited, Mr Shapps was interviewed and largely repeats the press release and commentators give their views.

But if you try to find any details behind the proposals there aren’t any! The idea has been thrown into the arena for people to pull and push about, to put it to the test and to expend time, effort and money to see if it is a practical idea.

Surely there should be a responsibility on government to provide a little more detail

Of course nobody wants to say that tenant choice is a bad idea, and few want to offend the Minister, so most formal responses are prefixed with ‘We are very much in favour of tenant choice and welcome the proposal…but we need to look at what the difficulties may be’ or words to that effect (see the Chartered Institute of Housing and National Housing Federation responses).

Surely there should be a responsibility on government to provide a little more detail when making proposals and at least be able to demonstrate that the proposals have been evaluated to some degree before being announced.

There has been comment that tenants will be able to claim up to a thousand pounds a year for repairs that they do themselves, or commission themselves, but this was not in the press release (and I can find no other formal information about the proposals); the press release said that social landlords currently spend a thousand pounds a year in repairs per household – it didn’t say this was how much each household would be allowed. But even this figure has been disputed by Abi Davis, from the CIH who, speaking on BBC Radio 4′s You and Yours programme, said  the figure is more like five to six hundred pounds and HQN, who were reported on the Inside Housing website as saying that on average homes have three response repairs a year valued at one hundred pounds each.  I give this as just one example of how the nature of the announcement causes confusion and uncertainty that wastes time and money when it can least be afforded.

This isn’t a blog entry about the Tenant Cashback scheme itself, that will follow when I too have spent time and energy developing my own response to it, but this is about how responsible government should develop policy.

New trends in social housing?

As I read the social housing press I begin to feel that I’ve been here before.

Recently there was discussion of new measures to introduce rigour into the process prior to eviction; there was discussion about ensuring that tenants were actually seen before enforcing an eviction.  When I worked as a housing officer we were required to thoroughly research our arrears cases before serving notice, let alone enforce eviction!  I can recall being made to feel very inadequate because although I knew that a household had children I didn’t have their ages readily to hand when asking for agreement to serving a notice on a case of increasing arrears.

A recent question asked ‘can we ask tenants to pay their first week’s rent at signup?’ Again, it used to be required practice to have the first fortnight’s rent paid up front and only in exceptional cases to allow just one week’s rent to be paid. Certainly if the first week’s rent couldn’t be paid the keys wouldn’t be handed over.

I worry that many of the good practices of yesteryear have been forgotten and need to be re-learnt to tackle today’s housing management issues.

Parent Company Guarantees and Performance Bonds

When letting large contracts there is often the need to consider the client’s interests in case there are performance or liquidity problems with the appointed contractor.  Two commonly used tools to protect this interest are the Parent Company Guarantee (PCG) (or Parent Company Indemnity as it is sometimes known) and the Performance Bond (PB).  So what are the differences between the two and which is most appropriate in any given situation?

Lets look at the two options and then compare and contrast them.

Parent Company Guarantee

A PCG is an undertaking given by the parent company where the Contractor is a subsidiary of a larger company.  The parent company undertakes to guarantee the due and proper performance of the contract generally – this means that if the Contractor fails to perform the contract in any respect the parent company can be held responsible as well as the Contractor (its subsidiary).

If the subsidiary should cease trading the parent will indemnify the Client from all losses and damage resulting from the non-performance or improper performance of the Contractor’s obligations.

If the parent company and Contractor go into liquidation at the same time the Client can be left without any recourse to be compensated.

The PCG provides the Client with a second party to hold responsible if the Contractor should fail to perform its obligations.

Performance Bond

A PB is an insurance taken out by the Contractor, usually at the Client’s expense.  This introduces a third party who is external to both the Client and the Contractor.  The Bond assures the Client that if the Contractor should fail to perform the duties under the contract the Client may recover losses from the Bond provider (usually an insurance company or bank).  Bonds are usually limited in value and are typically for 10% of the contract value.

It should be noted that there are two forms of PBs, the usual ‘adjudication bond’ where the Client has to prove the default of the Contractor, and a less common, and potentially problematic (for the Contractor) ‘on demand bond’. In an ‘on demand bond’ the client is not required to prove a default on the part of the Contractor, it is simply necessary to call in the bond.

Compare and Contrast

Firstly, a PB is a form of insurance and is provided by an external third party.  The fee for the bond is usually charged to the Client and is an immediate contributor to the cost of the contract.  A PCG is provided by the Contractor’s parent company and there is no corresponding charge to the Client unless the Contractor should choose to introduce an administration fee (but if he is alone in doing so it will of course affect his competitiveness).  In the case of a PB the Client needs to consider carefully whether the benefits of the Bond outweigh the costs involved.  This will be dependent on the level of cover, but also the nature of the works specified, an assessment of the Contractor and a number of other matters such as the Client’s appetite for risk!

The extent of the protection will differ between a PB and a PCG.  In the former, as has been said, the cover is limited in the bond agreement.  The level of cover may not be enough to cover the cost of delays due to appointing a replacement contractor and multiple problems can quickly exhaust the level of cover provided.  Often in projects there is more than just the costs to be considered, there is also reputation and goodwill.  A PCG will provide the Client with the same level of cover as if the Contractor himself was being held responsible.  Typically the Contractor will go into liquidation – at that stage the parent company will be responsible as though he were the original contractor (provided he hasn’t also gone into liquidation – and that is a real possibility).

This last point is particularly important.  If the parent company and Contractor go into liquidation at the same time the Client can be left without any recourse to be compensated.  It is for this reason that clients often seek both a PCG and a PB.  If there is no charge for a PCG and all bidders are required to provide a PB then the Client gets maximum cover for no additional cost.

The final difference is the period of liability under the two arrangements.  A PB will usually last throughout the contract period and for a limited time after practical completion as allowed in the contract; a PCG will place the parent company in the same position as the Contractor and this will usually mean that the parent company remains responsible for 12 years following practical completion.

Practical issues

During periods of business uncertainty the availability of bonds to smaller businesses may reduce (or the cost may increase to reflect uncertain times).  Clients should therefore think carefully about the need for bonds.

Some parent companies have a policy of not providing PCG and Clients need to consider how to handle such situations carefully.

As has been discussed above, ‘on demand’ PBs have a significant advantage to Clients and may be considered quite dangerous for Contractors.

If the Client makes it necessary for bidders for work to include a PCG, or a PB where there is no parent company, the playing field will not be level so far as costs are concerned.

Clients also need to consider that not all bidders will have parent companies and how they will safegurd the contract in these circumstances – here a PB may seem appropriate but consider how you balance this against those from whom you ask for a PCG.

Will s122 of the Housing and Regeration Act 2008 hinder resident involvement?

Following the passing of the Housing and Regeneration Act 2008 the old ‘Schedule 1′ restrictions on non-contractual payments to staff and board members were lifted, however S122 of the HRA 2008 introduced new restrictions on the ‘making of gifts, and the payment of dividends and bonuses by a non-profit registered provider’ to members (ie shareholders), or former members, of the registered provider; members of the family of members or former members, and a company that has a director in either of these two groups.

Some representative groups are considering the position with respect to tenant board members and their travelling and other out of pocket expenses but the impact could be far greater.

Seems reasonable – until you consider the position regarding tenants who are shareholders who may receive any non contractual payment in regards to their involvement with the registered provider; payments such as expenses, invitations to celebratory functions (such as a Christmas dinner, or summer barbeque) and other compensation payments that are not contractual.

This is not an area where there is any de-minimus or discretion. A payment that contravenes this prohibition may be reclaimed by the landlord and the regulator may instruct the landlord to make the recovery.

Many registered providers have encouraged their residents to take up a shareholding so as to improve accountability of the landlord and make residents feel more included.

The position is worsened by the fact that the prohibition affects both current and former members of the RP – so members cannot resign and get around the issue.

Some representative groups are considering the position with respect to tenant board members and their travelling and other out of pocket expenses but the impact could be far greater.