What to do when public services fail

By David Donaldson

Thursday July 28, 2016

Although the typical response to a failing public service is to call for top people to be sacked and structural changes to be introduced, there’s a lot more to it than that.

“There is a risk that too much faith is placed in structural changes that might not prevent failure unless in combination with other efforts,” argues a new report from British civil service-focused think tank the Institute for Government.

Like the UK, Australia’s government and public purpose sectors are large, complex and changing quickly, making points of failure inescapable. But there are common predictors and remedies for organisational failure.

The institute drew some general conclusions from a series of UK case studies.

The ownership of failure need to be shared and responses to failure should be as much about the system as organisations and individuals, they argue. “In these case studies, collective responsibility frequently extended beyond the individual public service organisation in which failure was most acutely observed and incorporated a wider system, including the central government department, local government structures, the regulator and neighbouring services.”

Change takes time, so don’t expect things to be fixed immediately. Failure “has fluid boundaries — organisations are likely to dip in and out of failure before making a full recovery,” says the report. “In some instances, things will get worse before they get better.”

The adoption of new cultures and ways of working plays a big role in organisational turnaround. An open culture that allows for the reporting of problems is important. “A culture of transparency, where staff are actively encouraged to flag risks or concerns about standards of provision, both allows organisations to prevent further failure and encourages reflection when failure does occur,” they argue.

Eight ways to identify and fix failure

The report offers eight points about what can be learned from failure in the public sector:

  1. Peer-to-peer support provides opportunities for earlier intervention — but it needs a trigger. Across the institute’s case studies, they saw that central government tends to intervene in failing services only when it has evidence that there are very serious problems afoot. Peers — other schools, hospitals or sector-based organisations — on the other hand, can provide scope for earlier and more consensual forms of intervention. But while peer support can be very effective, it is usually voluntary, raising questions about whether the most troubled organisations — which often have only weak connections to other bodies — are likely to seek support from their peers. Establishing a greater role for peer review as a form of sector-led, non-statutory intervention may therefore be necessary.
  2. Interventions may not need to remain in place until the turnaround is complete. In the research IfG encountered two competing descriptions of when an intervention should end. In some cases, this was once service standards had returned to normal — this is typical in schools and hospitals. In others, interventions were brought to a close once the organisation had been deemed capable of returning itself to the required level of performance, even if standards themselves were not there yet. The first approach may rightly be appealing for the most serious and sensitive issues (such as where lives are at stake), but there is also a risk that, in waiting for standards to return to normal, a culture of incapacity or dependency might arise. Earlier or tapered exit from intervention should be an option in the right circumstances.
  3. Insularity is often a characteristic of failing organisations. Failing organisations are also insular organisations; they have weak networks and connections to their peers. Their insularity makes it harder to use comparison to judge when standards have slipped and harder to rectify any slippages by learning from others. There appeared to be two main ways of overcoming this insularity — first through the firm designation of failure, usually by a regulator, which shocks the organisation into action. The second was by finding mechanisms for reintroducing the perspectives of peers; in the local authority they looked at, the leader of a neighbouring council was invited to support the recovery effort.
  4. Responses to failure can be over-reliant on structural reforms.  Structural change is one of the most common responses to failure; high-profile scandals are often followed by conspicuous changes to corporate governance or mechanisms for accountability. But there is a risk that too much faith is placed in structural changes that might not prevent failure unless in combination with other efforts.
  5. Creating an open, no-blame culture helps to protect against future risk of failure. Although the impulse to blame someone when things go wrong is instinctive, the research suggested that environments where people feel unable to be honest about problems allow even more serious failings to incubate. The inquiry into Mid Staffordshire NHS Foundation Trust revealed that the early warning signs from front-line staff were not recognised because the culture was one of fear and secrecy. In the institute’s case studies, they saw that creating a culture that valued honest reporting of problems was critical to turnaround. In the hospital they looked at, creating a culture of transparency, where all staff felt able to report incidents, was one of the first changes made.
  6. There is scope for more sector-wide learning from failure. The people involved in the research said that they think that opportunities to learn from failure are currently limited. Where learning and sharing do occur, this tends to happen on a localised level and is led by proactive organisations rather than being routine. There is an opportunity to capture and more widely disseminate lessons on effective turnaround, as well as guidance on how organisations can mitigate the risk of future failure. There is arguably a case for enabling institutions that already broker support within particular sectors to create more routine opportunities for learning and sharing.
  7. Failure can (appear to) get worse before it gets better. The attribution of failure is traumatic for an organisation and more needs to be done to mitigate its detrimental effect on services — the financial costs accrued, deteriorating staff morale and the damage done to retention and recruitment. But the research also suggested that the label of failure can be a pivotal moment in breaking an organisation’s insularity, bringing problems into the open and galvanising it into action. In some cases what appears to be worsening performance after being designated as failing was in fact the beginnings of honest reporting. The ascription of failure often leads to a more rigorous examination of the issues underlying poor performance, in turn revealing the true extent of the problems being experienced.
  8. Turnarounds should set the foundation for long-term improvement, as well as dealing with immediate problems. Recovery from failure is only half the journey; all of the people that took part in the research aspired to convert their turnarounds into lasting improvement. But the method of intervention had an impact on the organisations’ ability to transition out of recovery and into enduring improvement. In some cases, organisations focus solely on achieving an ‘adequate’ rating — simply hiring new staff until ratings are dragged up — without focusing on the underlying reasons for underperformance. Those organisations that do achieve lasting improvement tended to have their eyes on the horizon even when tackling immediate problems — for instance building deeper internal capacity by tapering the exit of an intervention team, or ensuring peers were on hand to provide ongoing support outside periods of formal intervention. A focus on continuous improvement is often the difference between falling back into sub-standard provision and maintaining lasting positive change.

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