7.Senior Management Restructure

District Executive – 9th July 2009

7.Senior Management Restructure

Executive Portfolio Holder: / Councillor Tim Carroll, Strategy and Policy
Lead Officer: / Philip Dolan, Chief Executive
Contact Details: / or (01935) 462101

1.0 Purpose of this Report

1.1 This report sets out proposals for a new senior management structure and some associated changes to specific teams. Such changes will produce savings in the region of £365,000 during the 2010/11 financial year in comparison with current costs.

2.0 Recommendations

2.1 Recommendations for District Executive approval/notation only :

(1) That the 4th tier management structure at Appendix C (i) to (viii) be approved.

(2)That members note that any new appointments or redundancies will be actioned in accordance with both employment law and council policy.

(3)That under the job evaluation process 100 points are assigned, over and above the existing scheme, to those officers occupying the statutory positions of Chief Finance Officer and Monitoring Officer as set out in paragraph 8.3 and this adjustment be made from July 2009.

2.2 Recommendations for Full Council approval/notation :

1)That the senior management structure as set out at Appendix C be approved.

2)That a new grade 14, as set out in paragraphs 8.1 and 8.2, is added to the council’s pay and grading spine as from July 2009.

3)That an anticipated annual cost savings of £365,000 from April 2010 be noted, along with projected costs from the Re-structure Fund unlikely to exceed £906,000. The notional payback period therefore not exceeding 2½ years.

4)That the Chief Executive be instructed to bring in the new arrangements as soon possible and, in conjunction with the Head of Finance, determine the most appropriate method of financing any early retirement costs that fall to the council.

5)That an information report be brought to Full Council, once the exercise is concluded, to update members on the final savings and costing figures.

3.0 Background

3.1 During 2005 members approved the current senior management structure. The structure approved was primarily designed to facilitate delivery of the corporate plan that had been adopted earlier that same year. That structure saved the council over £250,000 compared to the previous one. By any measure, that senior structure has played its part in the ‘significant progress’ (Audit Commission: Annual Audit and Inspection Letter dated March 2009) experienced at South Somerset District Council in the last few years.

3.2 From a position of being only ‘Fair’ in 2004, with below average performance across the authority and numerous weaknesses evident at the corporate and strategic level, the council is, in 2009, recognised as ‘Good’ (under the now redundant CPA system) with strong strategic management, clear corporate and service strengths, recognition as the 2nd fastest improving council in the country and performance levels which show more top quartile returns than ever before. The council’s Use of Resources score is the best district score in the entire South West region.

3.3 The double recognition of South Somerset District Council, by the Local Government Chronicle as one of the top 6 most improved councils in the UK and the Municipal Journal as one of the top 6 best achieving councils in the UK, was very much the ‘icing on the cake’ of achievement in 2009.

3.4 However this council has never been one to live ‘on past glories’ and therefore continuous improvement is crucial if the council is to meet and exceed the expectations of its residents. To that end Members will recall that early in 2009 a new Corporate Plan was approved and, with the focus of a new Corporate Plan, a new Sustainable Communities Strategy to deliver and the continuing need for the council to drive out efficiency savings at all levels, it is appropriate for Members to consider the recommendations contained within this report.

4.0 Current Situation

4.1 The structure approved by members in 2005 is reproduced at Appendix A. Since that time, a number of posts have become vacant for a variety of reasons and, prudently, the council has ‘captured’ these vacancies and banked savings. Of course such action has been opportunistic by nature and therefore can over time produce a structure that is not sustainable in the long term.

4.2 In addition to the above, recognition is made of the fact that the council has embarked on a ‘lean thinking’ journey that will, progressively, drive out waste and duplication, seeking further efficiencies at every level and within every team at the council. Joined up services via Pioneer Somerset or some other route will become much more the norm rather than the exception. With such a concerted efficiency drive it is unthinkable that senior management would not be exposed to a similar ‘efficiency test’.

4.3 To that end, this report proposes a reduction at the very senior level – Chief Executive and Directors – from five posts to three, as well as a reduction in associated administrative support. At the next level the entire Head of Service tier of eighteen posts (based on the original 2005 structure chart) is deleted and replaced by a tier of six Assistant Directors. Furthermore, for the first time in many years, the council will be able to fully recognise its fourth tier. This will consist of 29 readily identified managers. Most of these posts already exist or, if newly created, would be filled by staff transferring from posts that would be closed down.

5.0 Efficiency Savings

5.1 The council has recently embarked on a lean thinking programme, which is already producing financial gains to the council. During the 2009/10 financial year, the lean thinking process will be used in Planning, Customer First and Housing teams.

5.2 At various staff meetings at which lean has been discussed, it has been emphasised that the drive for greater and greater efficiencies will be a constant feature of how this council works for a considerable time to come. It is recognised that council taxpayers demand it, businesses demand it and members and officers demand it. It is appropriate that, in view of the amounts involved, savings from a streamlined senior management structure ought to figure earlier rather than later in this process.

6.0 Further Posts to be removed

6.1 The reduction from 4 to 2 posts at the director level will be facilitated by:

a)Accepting up to two voluntary redundancy requests, or

b)In the event that no voluntary redundancy requests are received then by a competitive member interview in accordance with council policy.

6.2 Of the entire Head of Service tier of 18 posts, individuals in 2 of these posts will transfer via the ‘prior claim’ process to the new Assistant Director positions, 2 have already been vacated and subsequently deleted while 4 are vacant and awaiting deletion. Of the final 10 posts, it is expected that the other 4 new assistant directors will be appointed from among those postholders, via the ‘prior claim’ route or competitive interview and in any event in harmony with council policy, and the remaining 6 postholders will subsequently be slotted into the appropriate new manager positions.

6.3 The 29 Service manager posts listed at Appendix B will therefore be a combination of existing post holders who will see no change, newly appointed individuals from the current Head of Service tier – who are doing substantially the same job – and some enlarged roles for existing staff. The organisation will derive substantial benefits from having a clearly defined 4th tier of managers and will look to retain that level of clarity.

7.0 Corporate Themes and Structure

7.1 By removing the Head of Service tier a clearer and tighter focus is given to the four external corporate themes of the council. Members will know these to be:

Safe, strong communities
Economic vitality
The environment
Health and well-being

7.2 The structure reflects the placing of Assistant Directors at the heart of each of these four corporate themes. This is in harmony with the council’s continuing drive to gradually reduce silo working and develop a workforce mindset that is focused on outcomes for communities rather than simply service outputs. Services relevant to those themes have, as far as practicable, been grouped together.

7.3 The two Strategic Directors effectively then take two themes apiece. One focuses on the place shaping and performance aspect through communities and the economy, while the other focuses on services that matter to individuals via the environment and health and well-being themes.

7.4 Two Assistant Directors cover aspects of corporate services that impact on the fifth corporate theme (well managed, cost effective services). The post holders will also hold two of the three statutory appointments required within a district council (the chief executive holding the other such appointment). These corporate services are within the remit of the Chief Executive (as Strategic Director of Corporate Services).

7.5 The above is set out at Appendix C.

8.0 Grade 14

8.1 The two current statutory appointment holders mentioned above (being the Heads of Legal and Financial Services) are in the top grade of the council’s pay and grading structure (grade 13) and, therefore, to facilitate any possible further progress, in keeping with increased responsibilities, it is recommended a new grade 14 is introduced, with this grade replacing grade 13 as the benchmark grade at the senior level in the new structure as from the beginning of July 2009.

8.2 The spinal points in grade 14, prior to any 2009 pay award, have been calculated to be:

Spinal point 73 - £67,983
Spinal point 74 - £69,263
Spinal point 75 - £70,543
Spinal point 76 - £71,823
Spinal point 77 - £73,103

8.3 The job evaluation system used by this council is a good one, however it is true that recognition is not made in the scheme of the specific legal and corporate nature of the duties associated with the statutory appointments of Chief Finance Officer and Monitoring Officer. In many local authorities the employees with such a statutory duty sit outside the job evaluation framework, however, this is not the case at this council. Therefore to address this anomaly it is recommended that 100 job evaluation points be awarded to each of the two posts at the council that discharge these statutory duties in addition to any points assigned through the normal evaluation process. It is recommended that this award be from the beginning of July 2009.

9.0 Union Position

9.1 The proposals outlined within this paper have been discussed at length with representatives of both GMB and Unison. Union representatives were given copies of this report back in early June 2009. The unions recognise the need for this council, in keeping with many other councils nationally, to make financial savings and believe it to be correct that staff at all levels of the organisation are subject to efficiency considerations. The unions have had full involvement in the formulation of all council policies and are therefore fully supportive of adherence to those policies at all times.

10.0 Key Areas

10.1 The proposals seek to increase capacity in some areas as well as better aligning functions in others. Appendix C (i) to C (viii) provides further clarity in this respect. So, for example, at 4th tier level there is a greater focus on partnerships and the third sector as both mechanisms for delivery and as areas needing greater support from the council.

Good spatial management flows from bringing all the appropriate disciplines and skills necessary together. This enables ‘big picture’ solutions to be more easily found. Anti-fraud work, data quality and community safety are all given greater prominence than previously.

10.2 ICT is split insofar as day to day infrastructure maintenance sits separate to developmental work in relation to GIS, web and communication enhancements. A greater focus is given to capacity at the area level as well as the desire to balance the needs of each area with greater corporate uniformity. The remit of finance is extended with revenues, benefits and procurement being recognised as better suited to working under the finance umbrella. The ICT/finance relationship is more formally cemented.

10.3 The links that already exist between legal and HR are recognised while tourism, along with heritage, moves formally within the economic development remit.

10.4 Nevertheless there will be reductions as the council finds more efficient ways of working in specific areas. There are reductions in procurement and in the tourism/heritage teams. Two director posts and two PA posts are cut from the establishment. There are changes at the senior level in the housing and welfare team. Further housing changes may result from the work of the lean team later this financial year.

10.5 In relation to staff referred to above, the council, in following current policies and practices, will seek to ensure they are redeployed into appropriate positions. In the event that this is not possible then the individuals would be made redundant with the council paying the required costs of that action.

10.6 The council remains committed to the concept of the redeployment of staff but recognises that in the current economic climate there are fewer vacant posts that can be considered for redeployment.

11.0 Career Progression and Capacity

11.1 This structure provides much needed clarity at the 4th tier. It similarly retains a clear career progression route for staff. In addition it seeks to address the key element of staff retention in a number of areas including legal, finance and spatial management.

11.2 It may be that members have some concerns with regard to capacity at the senior level. This would be understandable. It is without question that senior posts will have bigger roles and wider responsibilities. However the world is different from the one in 2005, with new skills in greater demand and some old ones less so. Managers who were new in post in 2005 have developed skills and experience and are now able to operate at a higher level – if given the chance. Whilst in a perfect world we may seek to hold on to all staff and all skills, the world we now occupy is very much about efficiency, value for money, bigger roles with wider remits and retention of the specific skills needed now and in the future, not simply the ones that have served us well in the past.

12.0 Proposed Timetable

12.1. It is recognised that, in seeking to secure appropriate levels of savings for the 2010/11 financial year, changes to the structure ought to be introduced as soon as practicable. Therefore it is recommended that the Chief Executive be authorised to proceed immediately on bringing in the new structure and associated changes as set out in the report (subject to both District Executive and Full Council approval for the recommendations at 2).

13.0 Financial Implications

13.1. The council has a Redundancy/Early Retirement Fund, which can fund around 50% of the assumed costs. Savings on salary costs, already budgeted for in 2009/10, will contribute 20% of severance costs. The remaining amount can be budgeted for via a three-year rather than one year payment to the county pension fund (estimated to be a maximum of £150,000 per annum in each of the three years).

14.0 Risk Assessment

14.1 It is recognised that a reduction in numbers at a senior level may impact on capacity at a strategic level. However it is also recognised that the organisation has invested heavily, in recent years, to develop the capacity of managers at both senior and middle management level. Therefore it is the Chief Executive’s opinion that this risk has been addressed.

14.2 Reductions in staff numbers elsewhere reflect either a reduced emphasis on the work area concerned or the recognition of new and more efficient ways of operating in those areas. In either case factors to mitigate risk have been introduced.

14.3 Similarly, in not agreeing to the proposals set out in the paper, the organisation increases the risk of failing to reduce costs sufficiently to bring in a required balanced budget for 2010/11. The savings set out in this paper equate, at this point, to around 20% of the total required to be found during 2009/10.

Risk Matrix

CP / CY
CpP
R
F

Likelihood

7.Senior Management Restructure

7.Senior Management Restructure

Risk Matrix

Key

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