Dr Martin Jones, Nottingham Business School Peter Murphy, Nottingham Business School

1. Public Administration CommitteeAnnual ConferenceEdinburgh, September 2013 Strategic Turnaround and sustained Corporate Recovery in Local Authorities Dr Martin Jones, Nottingham Business School Peter Murphy, Nottingham Business School

2. Objectives of the Research • Strategic turnaround and sustained recovery in English local government under the CPA assessment regime between 2002 and 2009. • This process despite being highly politically contentious (it changed the constitutional relationship between central and local government) was widely regarded as a success by key stakeholders academics and practitioners. • What little academic literature there is on the subject was undertaken during its early introduction – there is little long term or reflective literature • The objectives of the research are as follows: • Identify the themes and approaches to corporate turnaround emerging from literature in the public and private sectors • Through case studies of English local authorities, identify the approaches taken to strategic turnaround during CPA

3. Findings from Private Sector Literature Characteristics of Strategic Turnaround • Operating vs Strategic Turnaround (Hofer 1980) • Strategic Adjustment or Strategic Change? (Snow and Hambrick 1980) • Turnaround as a distinct phase of strategy Processes • Realignment (Filatotchev and Toms 2006) • Retrenchment followed by Recovery (Hofer 1980, Robins & Pearce 1992) • The role of change agents (Khandwalla 1983) Situational Factors • Luck and timing (Wren 2001) /Environmental factors - causes and constraints (Dess and Beard 1984) • Organisational size (Francis and Desai 2005, Landrum et al 2000) • Factors of decline can impact on recovery - severe and rapid erosion of resources (Pfeffer and Salanick 1978)

4. Local Government – Early Literature Causes of Poor Performance • Self-Regulating v Permanently Failing (Jas and Skeltcher 2005) • Cognition, Capability, Capacity (Turner and Whiteman 2005) • Stress Rigidity or Threat Rigidity (Straw 1981) • Situational Factors (Usually internal – (Turner and Whiteman (2005)) Responses • Replacement, Retrenchment, Renewal (Boyne 2004) • Twin Track Approach (Paton and Mordaunt 2004) • Avoid Reductionism (Paton and Mordaunt 2004)

5. Case Study AuthoritiesProgress Profiles North East Derbyshire Excellent Coventry Bury Erewash Northampton Performance Poor 1st CPA CPA +1 CPA +2 CPA +3 CPA +4 CPA +5 Time - Years

6. NE Derbyshire DC - Findings and Conclusions Permanently failing, inward looking culture developed as historical factors led to entrenched position with lack of cognition -poor performance was caused by internal rather than external factors. CPA was the trigger for change and intervention, turnaround was a distinct phase of long term strategy with interim change agents being used to accelerate turnaround. A relatively smooth recovery after a turbulent early period Limited capability and capacity was a cause of failure with realignment but not retrenchment being experienced in recovery and step change not merely adjustment - now potentially self regulating (But are they prepared for age of Austerity?) Although NEDC took a twin track approach – in effect a reductionist based operational turnaround with improved cognition preceded strategic changes which were developed iteratively

7. Coventry CC - Findings and Conclusions • Causes of poor performance were both internal and external but Coventry recognised its poor performance before the Audit Commission inspection. Before the announcement it had appointed a new Management Team (in this case a competent and experienced management team) and a new political leader. • After a very short time period, the Lead Official and new CEO could adopt a close collaborative strategy and relationship and Coventry’s recovery was triggered by previous service inspections and accelerated rather than triggered by CPA and intervention. • Coventry also adopted a simultaneous twin track approach to both strategic and operational turnaround while addressing its inward looking organisational culture. • It was almost the opposite of the entrenched position of NEDC - by January 2002, it had started to recover. 1st council (after the pilot authorities)visited by the AC and Intervention team in January 2002. • Time lags over financial and some other performance indicators meant that there were some early confused messages about recovery but once it became clear that the key services were also improving sustainably, a supportive rather than interventionist approach was adopted.

8. Bury MBC – Findings and Conclusions Self awareness (cognition) after poor peer assessment 1 year prior to the first CPA inspection resulting in the replacement of the CEO. There was also a new Leader of the Council around this time The new CEO in particular was credited with bringing cultural and structural change within the council explicitly using CPA as the trigger for change “they think you’re crap, do you think you’re crap?” Initially operationally focussed (service improvements) and lack of strategic planning held back the corporate assessment/CPA score Twin track approach was sequential as strategic planning became more embedded and accepted within the council Capability and capacity improved through working with others via LSP, PPPs etc and helped improve strategic planning processes Latent talent within the council was identified and came to the fore

9. Erewash BC - Findings and Conclusions Second DC case – long term corruption and poor organisational cultural with lack of cognition by both politicians and officials. A CGI and PIR were underway when referred to ODPM in February 2003 in advance of 2003 LG elections. The reported were published in April immediately prior to election purdah. Lead Official reported a short-term turnaround was feasible but only if a multi-agency strategy adopted – otherwise a very long recovery was inevitable. This was politically unacceptable to the government and also proved beyond the capacity and capability of central government, the LGA and the regulators. A contract to develop a sports park through the use of LSVT receipts was signed on the morning of elections without an appropriate project specification – exacerbating long term financial challenges. Council leadership changed at the election – but new conservative leadership was very weak as were officers. After some time a new externally sourced CEO and management team were appointed (The CEO was suspended and then resigned when the leadership prevaricated on changes). An interim and a week CEO later appointed. Capacity and capability were always a problem and the only possible way to proceed was through service based or operational recovery at first.

10. Northampton BC - Findings and Conclusions A very late case (which could have learnt from earlier cases) but historical factors led to denial and entrenched positions with a lack of cognition by both politicians and officials. After some time a new externally sourced CEO and management team were appointed (this proved inadequate to the task). Originally ODPM would not allow replacement of politicians – this case change the policy. Nevertheless a poor relationships between new CEO/new Management Team/Politicians/Lead Official persisted Despite a ‘strategic’ approach being adopted to recovery, poor inspection and audit reports, PIs and peer reviews persisted. False starts, unfulfilled ‘promises’ of improvement characterised early period so by CPA+2 external indicators were flashing red. New politicians, new CEO, new management team, new simultaneous twin track approach to strategic and operational intervention This case had the first co-ordinated networked intervention teams (CDRP and Culture and Leisure network) – precursor to CAA.

11. Summary • A variety of causes of poor performance • Internal and External • No single over-riding factor – each case different and complex…….. • ……..although initially poor leadership and cognition were common factors • The ‘triggers’ for turnaround differed • Threat of CPA in some cases • CPA and Intervention in others • Self-recognition or internal cognition • But some commonality in responses • Improvement in cognition and self-awareness (but timescales differed) • Change of leadership (Member and Officer) • Twin-track approaches eventually needed - operational and strategic • Turnaround was a distinct phase in organisational lifecycle • Collectively the lessons (AC Final Score para 4.15) were learnt but there were some false starts.

12. Post CPA Intervention - what has happened under the coalition government? • Sector led intervention in Local Government – Wellingborough (Northamptonshire) and Doncaster • Health – the MONITOR intervention model has many characteristics, tools and techniques developed under the Local Government model • In Fire and Rescue Services, a government consultation was published in September 2012 and their response to representations in May 2013 – this confirmed the previous model • In Police Authorities, HMIC intervention is still available and Police and Crime Commissioners and Police Panels have replaced Police Authorities BUT The evidential base is being dismantled as evidence based policy making gives way to policy based evidence making!

13. Questions? Contact details • martin.jones@ntu.ac.uk • peter.murphy@ntu.ac.uk