When Luton Borough Council became a unitary authority in 1997, the organisation took on responsibility for statutory social and educational services. This meant an increase in the demand for agency and interim staff, and different ways of working. Following an assessment of the requirements of the newly acquired services and a review of the level of expenditure on temporary staffing, a number of areas emerged that needed addressing:
Risk management
Despite agencies being used to recruit temporary staff, not all had been vetted by the Council. The risk existed that the processes in some agencies did not meet required compliance standards.
Equality
There were issues around the differing employment terms and conditions for temporary staff.
Cost
The authority estimated that the cost of temporary staff was £10 million per annum, but that there was not full understanding of spending patterns which made it difficult to reduce costs. The Council found that it was using more than 150 recruitment agencies and that internal procedures for recruiting were lax. In many instances services neither declared nor recorded their expenditure on temporary staff. This did not represent value for money.
Action taken
Following research into the market, the Council decided that a managed service would be the most suitable arrangement as it did not have adequate capacity to undertake the necessary candidate management, HR and invoicing processes. It needed a supplier that could carry out the vetting of temporary staff and agencies, including compliance, audit of agencies and candidate review. As a result, the Council developed a specification for a bespoke temporary staff recruitment arrangement.
It was also important to the Council that the contractor could demonstrate independence from the agencies it dealt with. This was key to ensuring that proper processes were adhered to in terms of definition of service standards and agreement in pricing structures. The Council therefore opted for a neutral vendor approach.
With this, it wanted to achieve two objectives. On the one hand, it wanted to ensure that the many small local agencies that largely supplied care services were not disadvantaged by the new arrangement. On the other hand, it wanted to ensure that agencies were selected on the basis of quality, effectiveness or cost, rather than personal relationships. All agencies would have to meet service and compliance standards, while the Council would work with small local companies to ensure they had processes in place that could satisfy requirements.
Human Resources invited bids for a tender for a managed service, and decided upon an arrangement in which the supplier would take a share of any cashable savings made rather than charging a fixed fee, thus reducing the risk to the Council. In selecting a supplier, the Council looked for cultural fit between organisations so that it could have a hands-on role in partnership with the managed service provider. The chosen supplier was Carlisle Managed Solutions and the contract extended to all occupational groups within the Council, with the exception of supply teachers.
Implementation was phased, starting with the lower risk areas, and dealing with the higher risk areas, for example in social care, at a later stage once the concept was proven. The Chief Executive mandated that service departments could only recruit agency staff through this contract and that invoices from agencies that had not been brokered through Carlisle would not be paid. There has always been full compliance internally.
Initially, many managers within the Council were sceptical of the arrangement and felt uncomfortable at what they perceived to be a loss of control. HR carried out a number of road shows and workshops to brief managers fully about the proposals, and set up user satisfaction groups in order to deal with any ongoing concerns.
The contract went live in September 2003 and was fully implemented by July 2004.
Outcomes
The Council saw a number of tangible outcomes after introducing a neutral vendor approach to temporary recruitment. Spending on temporary staff reduced from £10 million in 1997 (if including domiciliary care support) to £4.8 million in 2006. The predicted cost for 2007 is £4.1 million. The unit cost for every category of staff has been reduced and annual direct savings of between £500,000 and £600,000 have been achieved. These stem primarily from changes in demand management and reduced invoicing. Indirect savings from using e-systems and the virtual elimination of invoicing arrangements have meant that one FTE post could be lost.
The number of recruitment agencies used has reduced from over 150 to between 30-40 agencies, of which 10 or less account for 80-90 per cent of all agency spending.
There are tangible differences in the way that the Council now procures temporary staff. The process is more systematic, and spending and savings are recorded. Invoices have been reduced from hundreds to one a month. Furthermore, the Council is now able to identify recruitment trends from the analysis of management information produced by the service provider: levels of usage for vacancy cover can be used to inform the recruitment process; long term sickness can be identified by managers and dealt with; and HR can prompt service managers when temporary staff have been in a post for long periods of time. There is also the potential for agency workers to move to permanent posts and 42 temporary colleagues were converted to permanent staff, after open recruitment in 2006/07.
Since the inception of the project, the Council has changed the mindset of service departments regarding the recruitment of temporary staff. This was largely due to a strong focus on demand management; for example, the Council developed the mantra ‘need not want’ that has worked well.
Learning
- A project of this nature requires strong promotion and leadership. The project had stagnated for some months but was given impetus by a new chief executive who wanted to focus on budget and cost efficiencies.
- The solution has to work for the locality (the Council and the local market); there is no one size fits all approach.
- The project can become a victim of its own success. Managers have found the Carlisle system so easy to use that they have reduced permanent recruitment thereby increasing the number of vacancies. In response, the HR team have changed recruitment procedures requiring heads of service to give authority to extend appointments after a certain amount of time. HR is also trying to manage expectations and demand so that agency staff are not used for any vacancy without looking for other ways to solve the problem.
- Whilst the management information produced is very helpful, so much is produced that the Council recognises the need to improve its capacity for meaningful analysis.
- The ongoing success of the project has been a result of careful planning in each of the project’s three phases: inception, tender and implementation. The actual contract is underpinned by two highly detailed service specifications, one general and one for care and related services. These govern both the relationship between the Council and Carlisle Managed Solutions and between Carlisle and the supplying agencies.