Leadership in the public sector: make it effective in rapid change

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With government structures changing, along with digitisation and other challenges, investment in leadership matters more than ever, explains Paul Kirby, KPMG’s global head of government.

I think the giant light bulb moment in the United Kingdom at the moment is realising that, instead of changing structures all the time — centralising, decentralising, ring-fencing money, performance management, and all if you like, the bureaucratic means of change in the public sector — people have realised that if you have got the right leaders in place, then actually everything else falls into place. Because they will have to do huge things and move heaven and earth to make change happen.

But firstly, they are willing and secondly, they are able. And if you don’t have the right leaders in place, then actually the whole thing is impossible. For example, at the moment in the UK there is a massive decentralisation of power, out of the national federal level, whether that is down to the local level in schools and hospitals and police forces, or it is to local government, moving power out into the private sector, or it is devolving it to certain geographies. There is no point trying to do that if on the receiving end of decentralisation, you don’t have people who are capable of coping with that and leading the change and making it happen.

Or if we looking at the digital revolution, you have got to have people who understand that, get it and go with the right level of ambition but also manage the risks going forward. We can’t spend our way out of trouble anymore, as money is tight that means people are tight, we have got fewer people. So you have really got to manage the money, manage the people and the resources at a different level to before. I think everyone has realised that there is a giant light bulb moment, that it all comes down to leadership.

And therefore in the UK at the moment across all sectors — and this is in the private sector too as well as the public — there is a realisation that if you don’t have a step change in investment and the leadership, then actually we are not going to be able to cope with what’s ahead of us. And we are not going to be able to take advantage of all the new opportunities. So if I gave you an example, the National Health Service in the UK is 1.5 million people. And it has had no end of change and no end of reform but actually the current government has realised that in order to get it to what it wants — which is to be firstly customer centric, see it through the eyes of the patients and their families, and to give them what they want.

Secondly, take advantage of all the new technology in health. Thirdly, to be able to deal with decentralised power. Four, the money isn’t increasing anymore, so they have got to live within a very tight budget. And huge new pressures coming at them with an ageing population, new medical inventions and so on, this leadership has got to be able to do the job differently.

So the government has invested in a huge leadership academy and KPMG is very proud to be part of helping make that happen but along with some of the best universities in the world. That can be Harvard University in the States is playing a big role, as well as some of our leading UK universities as well as online technology companies, the best people from the gaming industry are involved in making this happen. And we actually managed to get our best private sector companies to join in, bring their skills and their programs into help the NHS.

But fundamentally, the whole program is being designed by patients. Everything is designed by patients. All the experiences that people go through are based on real life case studies, whether you are the most senior managers or the front line managers, it is all designed around how to make it better for them and how to give them what they need and what they want in the future. This is a real culture shift. The investment is quite intense.

If you are going into a digital world, the way you deliver this needs to be digital. Instead of it being traditional leadership approach, it is 70-80% online. People live on a virtual campus, they can do their program on their phone, they do it in their iPads, they do it on the train going to work. They do come together for 20% of their time and when they come together, the first thing they learn as a leadership group is that your group either passes or fails. You can’t pass as individual, you have to get everyone else through.

The second thing that they learn is that the people coming in to see you in a moment are a real family whose mother recently died through a clinical accident, and you will be assessed on whether you can persuade them that this wouldn’t happen on your watch. If they say you fail, you fail. You’ve got to learn political skills.

It’s no point if politicians are giving you the power, you have got to be able to solve the politics. So in your second session, you will be dealing with a former national minister. And when you come up with your plan for how to change the local area and how to reorganise the services, that person will decide on whether you can get that past the politicians. Because you have got the power but if they oppose you on the ground, it won’t be happening. They will be organising against you. You then have got to find new ways to work in partnership with local agencies. There is no point in just being a good health provider.

Because if actually you are trying to solve a problem, for example, the problems in the accident and emergency department of the hospital, those problems come because mental health isn’t working or the police are not cracking down on violence. The system failure arrives at your door. You have got to be able to work with those people and you will be put into situations where you will role-playing the head of police, you will be the head of human services in the local authority. At some point, you will be behaving as the super-hero clinical professor, you will be the finance director. You’ve got to be able to see it through the eyes of all of those people and come up with solutions that work. It is really investing in a modern view of leadership.

I think it is well worth looking at what is going on in this National Health Leadership Program because in the UK, everyone is now looking at, do we do this with a Digital Academy? Is this how we should run the Defence Department with a Defence Academy? And now we have got the policy people looking at a Policy Academy. Everyone is thinking about if I can customise a program with real investment and use new technology rapidly in six months, creating programs for 25,000 people, like they have in health with the kind of world-class accreditation through Harvard and other programs. If they can do that, why can’t they do that in the public sector?

Most excitingly, and huge boost to morale in the public sector, we now have the UK’s leading global companies lining up trying to learn from the National Health Service about what they can do in their brewing business, their telco business, their retail business, their banking business, because the best practice is actually happening in the public sector. What a boost to everybody’s morale but the speed of doing it, using new technology, customising it to what you want, getting the best universities to give you what you want (not what they want to give you), this is really exciting.

I think this bet on leadership is a big bet and if we don’t get it right, the rest of it really, sadly is likely to be a missed opportunity. So I would commend it as the thing to spend your dollars on going ahead. Grasp the other things but spend your money on this. And if you don’t, I don’t think you will win.

Read more: UK Open Public Services White Paper

Contestability frameworks to improve public service delivery

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KMPG’s Global Head of Government Paul Kirby offers his thoughts on giving the public choice, making markets, ensuring fairness and accountability.

I think the key thing is to get the overall framework right. Rather than rushing off to look at each individual services one by one, think about the framework. Perhaps take a principled approach. Perhaps think of four or five principles out of the UK experience …


Firstly, choice. Who are you actually giving choice to? Who is going to make the decision about the right provider and the right service? Are you going to give that choice to individuals? Are you trying to push it down to parents? Or choosing the school? Is it to patients choosing their public hospital or their general practitioner? Or is it something that you are trying to give to a neighbourhood?

Are you giving a local area choice over what happens with it highway services or the way that it is policed, so that they have got more discretion? Or is it something where actually the state government or the federal government needs to decide for itself and it can’t pass those decisions down and decentralise them to individuals or to places?

Making markets

So having decided who you are giving the choice to (whether it is to individuals, whether it is local areas, or whether it is being held by the government itself to decide on who to it services from and what it wants — whether it is state government or federal), it is really then about how do you open up the supply?

And when you open it up, to think: “How do I get the market that I want?” So a huge amount of effort in the United Kingdom is currently going into making markets. So if I gave an example in probation service, the Justice Department has decided it wants to open that market up. It’s 100% public sector provided at the moment but it has spent two years making a market. So it has gone out there, it has found providers who have done similar things in the UK or found international providers and encouraged them in. It has been meeting investors who can get behind those businesses. It has been talking to NGOs about how they can collaborate with the private sector, come together in consortia, and it has been taking the 20,000 public sector staff and encouraging them to move into either their own businesses or to partner up with the new entrants into the market.

So I think, knowing that you have to make the market, not just take the market that is out there, is really important. So it is about getting choice right, it is about opening up the market, making it, not running a private versus public type competition, I think in taking it forward.


There is also recognising that when you bring in more contestability, people will always say: “What about fairness? Won’t the poor do badly out of this? Won’t the private sector just want to take profits at the expense of the poor?” It is recognising that there are those risks and not avoiding them and thinking how do we design into this the right incentives in a contestable world whereby the needs of the poorest or most vulnerable are helped.

For example, in the UK at the moment, a lot of work is going into the tariff system, for example, for the welfare-to-work programs or getting people back from mental health, back into work or back into wider society. To actually put the right price on the work. So the hardest-to-reach groups, the most challenged groups attract the most money.

That is true in schools too. So although we have a standard formula for how much money schools get when they attract a pupil (if they don’t attract any pupils, they don’t get any money) — they get a premium if they attract disadvantaged children. So I think it is not brushing that issue under the carpet. It is about addressing that head on, recognising the risk and pricing for that so that you are advantaging the disadvantaged thorough the way you go about the system.


And the final principle I think to get right in this, is accountability. That as you bring in contestability, you need to have more accountability. Whether that is for example, setting up new inspectorates. So we have strong inspectorates in the UK, in education, in health provision, in criminal justice, we have strong inspectorates around immigration services and probation.

Independent organisations who speak without fear or favour about what they find. Put all of that into the public domain in accessible ways. Use star ratings and other things to tell the public what is good and that works, that makes a big difference. Or whether it is about using transparency to put real time performance data out there so that the public can see for themselves what’s good. Whether that is leagues tables in public services or whether it is putting out there internal staff satisfaction surveys, so everyone can see how happy the people working in every single public sector body.

It is about putting transparency out there in the hands of users and making that a force for good and accountability. But then it is also about individual accountability for staff. Whether that is performance review or things that we have now got like surgeon ratings, so you can see every doctor and how well they do in their clinical outcomes and also see the satisfaction of patients with them. The Department of Health has put that in place nationally already. It is all about putting information out there and having the right bodies or consumer pressure or regulatory pressure to hold people to account.

So I think with contestability you have to think about it in quite a systemic way. So just to recap, that is about giving choice to the right people and making sure that they are well positioned to use that choice: individuals, local areas or government. Then it is about opening up markets and doing that very deliberately and working hard to have more competition, more supply and slightly brigading people together in the best forms.

Then it is about protecting fairness and making sure that the most disadvantaged are helped. Finally it is about making sure that there is lot of information and lots of accountability out there, putting pressure on providers but also empowering those who have the choice to keep making the best decisions.

Read more: UK Open Public Services White Paper