Money down the drain!

Can you spot the problem here? The team on the job left the site after a job well done!

Is this good work? Time, money and effort go into resurfacing a road that creates more work for another team to fix the failure. There is not one, but six drains like this!

Time pressure, unit costing and specification all got in the way of a job done right first time. I assume that the road has been not yet been inspected. This is another function that is better built into the role of those doing the work.

Do councils really have money to pour down the drain?

A change of leadership thinking is required, but are they up for it?

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Sheep dipping or feathering nests?

A friend of mine called Jane mentioned to me that HR have finally got their programme of courses out for the year, not bad it’s only August. Now she has the task of trying to link the results of her learning and development reviews to the courses on offer. I know that there is usually a bit of a rush on to book places on the courses as the dates are fixed for the year.  Jane admitted that if she was being honest back in February when she was doing her reviews she had no real idea of the development needs of her team because she had not finalised the business plans that had started being written back in November of last year.  Surely, it would make more sense to concentrate learning and development effort based upon the demands placed upon employees by the customer? In that way training monies would be spent at the right time on the right support.  Not on a standard set of events determined remotely by someone in HR months before they are offered.

Anyway back to the story… The Policy team had messed about with the dates for publication in previous years; leaving Jane and her colleagues in the dark about requirements and timescales. This year she told me that she had tried to get ahead and start the conversations with her team and start pulling plans together. Since last year Jane has had to enter all the plans in to an on line system. So, quite rightly she thought that her action was doing the right thing, until Policy decided that yet again they needed to change the format of the plans to make it easier for them to produce the corporate plan for the organisation. I could see by the expression that Jane gave me that she was fuming! Quite rightly so in my view. All of the work that she had already done was in the wrong format, and according to them (Policy) she had to re- enter the information in their new format. Jane admitted that she tried to ignore this requirement for a while, as her plans were already in the system.  Ironically, she said she never used the online system apart from having to enter her performance data once a month. Like most of us, Jane acknowledged that she fudged the numbers to make them look ok, and had not been caught out so far because ‘no one really looks that closely at the data’.

In the end Jane’s name came up on the naughty girls/boys list, and she got a stern email from the Chief Executive’s Office telling her to get her finger out and get her plans in the right format.  Brilliant! You cannot beat a bit of extrinsic motivation to kill morale.

Anyway, Jane decided that she could avoid the issue no longer, took the ‘bull by the horns’ and copy and pasted the detail from one part of the system to the other. A waste of time and effort! I was chatting to another friend the other day and he was telling that a similar thing happens in the organisation in which he works.

What is going on in the world? Can organisations really afford to waste resources messing about changing templates and entering plans into corporate systems? Reality proves that plans get compromised after month one and become a work of fiction as people fudge the system to show progress again objectives that have been rendered worthless in view of changing priorities. The problem is that the new priorities do not replace the last set, they get added to them.  All this planning and monitoring is little more than a smoke screen. We all know that the real work gets done off plan and often by getting around the system to make it happen in a timely fashion.

If leaders took time to understood the true purpose of their organisation in customer terms, and then designed and managed the work around that purpose they would soon learn that all this corporate business planning and performance reporting added no really value to the bottom line. In really it has the reverse impact. Money down the drain!

However, such action takes guts and determination; and too few seem prepared to do what it takes. Sad really!  Leaders are happy to feather their own nest at the expense of others. Not really leadership at all is it!

Data data all around, but not a bit that’s useful

It’s that busy time of the year for people in finance in local government –  ‘close down’.

A magical time when every last ounce of energy goes into the exercise.

There is a target date to meet and everything must add up, balance and be filed for inspection by the dreaded external auditor.making efficiencies

Life and death for accountants: like watching paint dry for everyone else.

During ‘close down’ it’s very difficult to get any useful information out of accountancy, as they are ‘too busy’.

So whilst the business goes on spending millions of pound a week managers run blind on what’s actually happening with cost, until they get an update at the end of the quarter. That’s when the fun starts again.

One persons view of a budget and spend profile is different to another. As the manager of the budget you often have limited say in what get reported to the many meetings that purport to scrutinize the detail only to nod it through.

It’s claimed that only the accountants really understand what the figures mean. In practice I wonder if even that it true.

The slight of hand that goes on to churn money in the system means that it’s difficult for anyone to know what the true picture is. By the time it gets reported, and audited the game has moved on.

Every year as a manager you do you best to manage and profile your spend to get value for money.

Now let’s not get started on VFM that will come up in a later blog.

A while ago in quarter two I was told that I was going to over spend by the end of the year by £2M (I was naturally quite worried) at the end of the following quarter I was going to underspend by £550K (now I was even more worried, did anyone know what was really going on?)

You could not make it up. What are you supposed to do!

Experience says keep your own information, so most of us keep our own spreadsheets just in case. They obviously sit outside of the main financial system, possibly even on memory sticks, but don’t tell IT as its against the policy to stick anything dodgy into your USB port.

At least having your own records gives you something to argue with when the accountant tries to manage your codes and your budget for you, and gets you in to hot water.

Ironically the latest accountancy system was introduced to remove the need for all those spreadsheets, but I am really glad that I secretly kept mine. It’s duplication of effort, but you cannot be too careful.

Another thing that bugs me is that fact that you are accountable for the budget and its spend, but the accountants mysteriously have secret powers to enter the system and move numbers around, seemingly at will, to balance things out for that all important financial report.

Overspends of course remain the managers problem.

This can be hugely frustrating when the overspend is cause by a cock up in accountancy when a Zero or the comma in the wrong place. Opps sorry these things happen!

Can you give me an explanation of the reasons for the overspend, and what you intend to do about it for the Management Team report. Oh and by the way the Director of Finance needs it by tonight.

The irony is that the budget is pored over and used as some amazing tool that informs our decision making.

In truth it’s a lagging measure, historical information regurgitated at various meetings to show everyone that we are in balance for the year against the agreed allocation of spend.

This whole exercise is an arbitrary judgement made largely on the basis of rolling forward previous years spent plus or minus a percentage.

It has little relationship to community or customer need, and gives us little if any information about true end to end operational cost of the services being delivered.

Why?  Because budgets are apportioned to hierarchical structures and further subdivided into functions and cost centres causing the system to sub optimise.

In practice this means that individuals manage the money that they have been allocated and spend it on the part of the organisation for which they have responsibility.

Simple really.

The issue is that each of us looks after our bit and has little, if any, focus upon the impact this has upon the customers that we are all here to serve. This in fact drives massive inefficiency and therefore cost into delivering essential services.

The result is that the organisation runs very inefficiently, but few people realise that this is the case because they are focused on their bit. The drive for efficiency only compounds the problem faced by many organisations.

Salami slicing or prioritisation of spend via a lottery causes individuals to act in a territorial way to protect spend in their area. It’s human nature.

The true cost of the system is in the flow – how things actually move around the organisation, not in unit cost.

Only by studying the organisation as a system can you begin to understand where and how to act to improve service and reduce operating cost.