Nics Voluntary Exit Scheme

NICS VOLUNTARY EXIT SCHEME

POST PROJECT EVALUATION REPORT

Authorship

This document was prepared by Debbie Sherlock, NICS Voluntary Exit Scheme Project Manager.

Approvals

This document requires the following approvals:

Name / Title / Date of Approval / Version
Colin Lewis / Director, CHR. Project SRO / 03 January 2017 / Final version
Mark Goodfellow / Head of Resourcing Division, CHR / 30 December 2016 / Final Draft

This document has also been made available online at: www.dfpni.gov.uk/nics_voluntary_exit_scheme

NICS VOLUNTARY EXIT SCHEME

POST PROJECT EVALUATION REPORT - EXECUTIVE SUMMARY

The NICS launched a voluntary exit scheme on 2 March 2015 with the objective of reducing the size of the NICS paybill by around £26m in the 2015/16 financial year and delivering ongoing annual savings in the region of £94m thereafter. This level of savings was to be achieved through a reduction of around 2,550 posts (in full time equivalent terms), which would equate to around 3,200 people. The Scheme was designed to maximise paybill savings while minimising costs and protecting business continuity.

The requirement to deliver this level of savings was not a workforce planning exercise. It was a response to the Northern Ireland Executive’s budget for 2015/16, which resulted in reductions to budget allocations for almost all NICS Departments. That position and the assessment of the level of reductions Departments would require to their paybill in order to remain within their budget allocations led to the conclusion that a corporate, NICS-wide staff early exit scheme would be necessary to reduce the NICS headcount, which could not be achieved through natural wastage alone in the timescale required. The Scheme would be in addition to other strategic personnel interventions already in place, primarily an embargo on recruitment and substantive promotion.

Exits took place on a phased basis between September 2015 and May 2016. Departments reduced slightly the number of exits they required as the Scheme progresssed and in total, 2,996 individuals exited under the Scheme (2,363 in FTE terms). This has resulted in an estimated £24m in paybill savings in the 2015/16 period and £87m annually thereafter. The cost of compensation paid to those leaving the NICS early was around £90.4m; this means that ‘payback’ will be achieved in just over 12 months.

While the impact of the loss of almost 3,000 staff in a relatively short period of time should not be understimated, the design of the Scheme contributed to minimising disruption to service by the phased approach to exits as well as by the decision to select applicants on a Departmental basis to fulfil each department’s requirements in terms of the size of reductions required, and the grade/disciplne composition of that reduction, required to achieve the necessary Departmental savings.

The Scheme achieved its objectives and did so in time and within budget.

NICS VOLUNTARY EXIT SCHEME

POST PROJECT EVALUATION REPORT

1. Introduction

1.1 Post project evaluation (PPE) is an important stage in the overall management of a project, the primary purpose of which is to:

• Assess and measure the impact and outcomes of a project against its objectives and anticipated benefits to determine whether these have been realised and to identify omissions and gaps which may need to be addressed.

• Draw out lessons learned (both positive and negative) which can be applied to future projects to enhance outcomes, reduce costs and ensure best value for money.

1.2 This post-project evaluation report will consider the following key areas and describe lessons learned in terms of what went well and what could have gone better in relation to:

• Measurement of project outcomes against business case objectives;

• Scheme initiation and development;

• Scheme launch and management;

• Project governance and control;

• Risk management;

• Communication; and

• Stakeholder engagement.

1.3 This report will also identify any remaining actions or follow-up requirements arising from the operation of the Scheme and overall management of the project.

1. Setting the Context

2.1 The Northern Ireland Executive agreed a Draft Budget for 2015/16 on 30th October 2014, with the Final Budget agreed on 15th January 2015. This resulted in reductions to budget allocations for almost all NICS Departments. In early October 2014, and in light of the anticipated impact of the Budget, Corporate HR (a Directorate of the Department of Finance and Personnel, now known as the Department of Finance, responsible for HR-related policies which apply across all NICS Departments), asked Departments to assess the impact of a range of personnel interventions, including the potential use of a voluntary early exit scheme, with the aim of reducing the NICS paybill and thus assisting Departments to manage their budgets in 2015/16 and beyond and to ensure spending remains within the budget allocated by the Chancellor of the Exchequer and HM Treasury, in keeping with the relevant legislation and managing public money principles.

2.2 Departments subsequently confirmed that they would need urgently to reduce their numbers by around 2,550 full time equivalent posts in the 2015/16 financial year to meet their budget requirements. That assessment led to the conclusion that a corporate, NICS-wide early exit scheme would be necessary to reduce the NICS headcount, given the scale and speed of the reduction required, which could not be achieved through natural wastage alone in the timescale required.[1] This would be in addition to other strategic personnel interventions implemented in November 2014, primarily an embargo on recruitment and substantive promotion.

2.3 The Northern Ireland Executive approved the terms of the NICS Voluntary Exit Scheme (‘the Scheme’) in February 2015 and the Scheme was launched on 2 March 2015. The Executive determined that the Scheme had to be developed against the guiding principles of least cost (up front compensation payments) and maximum payback (resultant wage savings) in order to optimise value for money whilst as far as possible maintaining business continuity. In developing the terms of the Scheme, the need to attract sufficient uptake was also taken into consideration. A series of options were assessed through a business case and a preferred option identified, which the Executive agreed.

2.4 It is important to note that the Scheme was designed to provide a readjustment of the workforce to enable Departments to operate within the budgets available and was both time and financially sensitive. It was not a strategic repositioning of resources to take account of current or future needs of the NICS in terms of staff levels or skills mix. Had this project been a strategic workforce planning exercise, a very different approach would have been required.

1. Project Objectives

3.1 Based on the figures provided by Departments in relation to the reductions required (2,550 in full time equivalent terms), the Scheme business case estimated that around £26m of pay bill savings could be achieved in 2015/16, with ongoing paybill savings in the region of £94m. The business case further estimated that the cost of compensation payments would range between £97m and £135m. Given the voluntary nature of the Scheme, it was difficult to assess upfront the potential costs or savings to be delivered; however, costs were modelled by NISRA based on a range of assumptions to provide the range of potential costs. Pay bill savings were calculated based on the potential savings to be realised from basic salary, allowances and employers National Insurance and pensions’ contributions in the 2015/16 period and on an annual basis. The savings from future pay awards, decreased overheads etc were not factored in.

3.2 The business case identified a number of risks and uncertainties around the Scheme and the estimates available, including the potential uptake from eligible staff of the opportunity to apply and offers to leave, the associated profile of those choosing to avail of offers, the availability of funding and the disruption to business delivery; each potential option was assessed with these risks in mind.

3.3 It was recognised that exiting 2,550 staff (which would equate to around 3,000 individuals) over a six month period could be potentially detrimental to service delivery, particularly in those business areas delivering front line public services. Several measures were therefore adopted either within the Scheme design or through associated actions in order to protect business continuity. Within the scope of the Scheme itself, a limited amount of flexibility was available to Departments in terms of eligibility for the Scheme, numbers to be released by grade and discipline and the timing of staff to be released, with four tranches initially planned between the end of September 2016 and March 2016; subsequently, a small fifth tranche of exits was also utilised by some Departments, meaning all exits were complete by 31 May 2016.

1. Key Elements of the Scheme, Development and Delivery

Key Elements

4.1 The Scheme was developed in line with the Civil Service Compensation Scheme (NI) rules. Applicants selected would be offered compensation equivalent to one month’s salary for each year of service, up to a maximum of 21 months’ salary for leaving the NICS early. Compensation was based on length of reckonable service and salary (including permanent pensionable allowances) in payment on the last day of service. There was an element of ‘tapering’ of compensation for those approaching normal pension age (based on their particular Pension scheme provisions), which meant the number of months’ salary might be reduced, with those over normal pension age receiving a maximum of six months’ salary in compensation. The Scheme also offered a ‘deemed minimum’ salary, based on the maximum of the Executive Officer II pay scale, to those earning below that level, which provided an element of protection for applicants at the lower grades who chose to leave.

4.2 Given the unprecedented nature of the challenge, there was no prior indication or way of predicting how many of the c. 26,900 or so eligible staff would apply for the Scheme, or ultimately how many would accept offers of early exit. It was therefore necessary to develop an objective method of selection that would satisfy the three criteria set by the NI Executive in approving the Scheme – least cost, maximum paybill saving and protection of business continuity.

4.3 In terms of protecting business continuity, a number of measures were built into the Scheme. The key measures are set out below.

4.4 The Scheme was designed around a number of phased exits. These took place over five ‘tranches’ at the end of September 2015, November 2015, January 2016, March 2016 and May 2016. The plan initially had been for four tranches of exits; however over the course of the Scheme some Departments chose to utilise a small fifth tranche to achieve their paybill savings.

4.5 Civil Service Pensions (CSP) are responsible for payments made under the Civil Service Compensation Scheme (NI) rules. Phasing of exits allowed CSP time to prepare early exit quotes for those receiving an offer to leave (setting out the compensation due to the individual should they accept the offer of early exit as well as any pensions-related entitlements or information) and also process compensation payments to those who accepted their offer of early exit and left the NICS. CSP also arranged to have in place any pensions-related payments that might arise as a result of an applicant leaving the NICS. Equally as important, phasing of exits also reduced the impact of exits on Departments and on specific business areas and allowed an element of planning, as those leaving were known to Departments at least three months in advance.

4.6 The Scheme also required Departments to put forward a ‘profile of exits’, setting out the target number of exits to be achieved by grade, from Senior Civil Service levels down. Those profiles could be (and were in many cases) refined further by discipline (in the NICS, ‘discipline’ tends to mean professional or specialist groupings, for example lawyers, accountants, architects, ICT staff etc). This facility to profile grades for selection purposes gave a degree of control over those exiting under the Scheme and provided some protection to key business areas by limiting the numbers of staff for release, not as individuals, but as members of wider groupings.

4.7 The Scheme also allowed for a decision on whether selection would be carried out NICS-wide (i.e. grouping all applicants by grade/discipline and selecting according to the overall total numbers required, regardless of Department) or based on Departmental-selection (i.e. grouping applicants by Department and by grade/discipline with selections carried out for each Department) to be taken by Permanent Secretaries after the Scheme was closed to applicants and an assessment of the potential costs, savings and redeployment consequences was available. Following an assessment of both options, Permanent Secretaries decided to use Departmental selection, on the basis that, assuming a reasonable level of attrition, there would be little difference in the costs and savings of each option but the redeployment consequences (i.e. the potential need to move staff between posts to align with the required number of posts reductions and therefore paybill savings in each Department) of NICS-wide selection were much greater.

Development

4.8 Prior to the launch of the Scheme, Corporate HR engaged intensively with Departments through HR Directors to develop the terms of the Scheme. The terms were summarised in a Scheme Information Booklet (SIB) which was made available to staff at the launch of the Scheme. Trade Union Side was also consulted regarding the terms of the Scheme.

4.9 The Scheme business case was developed by Corporate HR drawing on input from NISRA statisticians to inform costings and from the Department’s Economist. The business case was also subject to endorsement by the Scheme’s Project Board, comprising senior staff from a range of professions, including finance, legal and HR before it was submitted for approval through DFP’s internal processes. The business case was finalised and the necessary DFP approvals obtained in January 2015, with a paper presented to the NI Executive at the end of January by the Minister for Finance and Personnel, setting out the proposed terms of the Scheme. The Scheme was approved by the Executive on 5 February, paving the way for its launch on 2 March. Officials briefed members of the Committee for Finance and Personnel on the same day and a media briefing was also facilitated.

Delivery

4.10 The Scheme was primarily delivered online using a bespoke application system (known as ‘Handson’) provided through Fujitsu. The user end allowed staff to apply for consideration for early exit under the Scheme, receive and store notifications, and receive, accept or reject offers, all online. Line managers also received notifications as appropriate, keeping them informed of the position in relation to their staff. The administrative end of the system allowed departments to oversee and administer changes to staff details, view application statuses and monitor the number of applications and acceptances (for their own staff only), with the same facility available to CHR staff on an NICS-wide basis. This provided real time instantaneous information on numbers and, through the use of a file extract facility, provided a tool which was key in maintaining a database of applications, from which management information was updated and extracted at key stages or as requested by senior managers.

4.11 Departmental HR staff issued hard copy documentation to staff who did not have online access and updated Handson as necessary. This online, real time facility was key to enabling CHR to report on the project’s progress in terms of numbers, savings and costs at any point throughout the life of the Scheme. It also enabled CHR to monitor acceptances compared with Departmental profile requirements and to make subsequent offers in later tranches to address attrition rates. CHR worked closely with DHR staff at all levels throughout the development and implementation of the Scheme to ensure information was kept up to date in terms both of applicant details and of Departmental requirements.

4.12 A range of information was available to staff before, during and after the launch of the Scheme, with regular updates issued, primarily from the Head of the Civil Service, at key stages. A dedicated Scheme webpage was developed, and updated on a regular basis, where staff and other interested parties could obtain information on the Scheme. The webpage contained links to the Scheme Information Booklet, frequently asked questions (which were updated as the Scheme progressed), links to pensions-related information and Scheme analysis information (e.g. number of applicants by Department; number of offers and acceptances by age, gender, grade etc). The webpage also included a ‘What’s New’ section to provide a quick update to staff upon accessing the site, and guidance on the scheme process, both in the standard User Guide format and a detailed user guidance for the online process.

4.13 Information was also made available from Civil Service Pensions (CSP) to assist staff in deciding whether to apply for the Scheme initially. Given the timescales involved and the number of eligible staff (26,900) it would not have been possible to issue every member of staff with a written quotation from CSP setting out their estimated compensation amounts. However, to allow staff to make an informed decision as to whether to apply to the Scheme or not, an online calculator was developed by CSP which allowed full time staff to enter their details and receive an estimate of the amount of compensation they might be entitled to if selected for early exit, which could be used in conjunction with other information and tools made available by CSP. Written quotes were provided to all part time staff providing the same information prior to the Scheme launch. In all cases, updated, written quotations were provided to those applicants in each tranche who were made an offer of early exit, in advance of their ten day acceptance period. Pensions-related benefits and information were also provided where applicable.