A proposed approach to the reduction of running costs in the local government authority

Section 1: Aims and Objectives of the Project

Aims of the Local Government Authority:

• To obtain significant reductions in the running costs by taking advantage of options such as either offshoring or outsourcing some of its operations or retaining the current staff and reducing the running costs by enabling staff to work from home.

Goals and Objectives of Consultancy Projects:
To provide effective guidance to the chosen local government authority on how to reduce running costs and minimise costs. Based on this objective, the present consultancy project explores the following:

• To establish what options can be adopted and developed to meet the needs of the identified local authority and to critically evaluate the type, requirements and use of this approach.
• To provide a detailed explanation of the various risk factors that may arise when defining and implementing the proposed option. There should be evidence based support regarding the identification of risks and the development of strategies to reduce these risks.
• To highlight the information requirements and the necessary infrastructure and to outline the security factors (if any) for the chosen option.
• To develop a project plan and demonstrate the tasks that are necessary to develop and implement the business process, control mechanisms and information systems in meeting the aims of the local government authority.

Critical Evaluation of Selected Approaches
To be able to reduce running costs, the selected local government authority must follow one of the approaches mentioned below:

• It must offshore or outsource certain operations which would lead to staff redundancies.
• Current staff members are retained but running costs are minimised by developing the concept of “working from home”.

Outsourcing
By outsourcing, the selected local government authority will gain various benefits such as:

• Cost Savings

In general, when a specific business operation is outsourced, there are significant cost savings. In relation to the company under study, these savings include costs involved in employee compensation and office space expenditure (Overby, 2007). In addition, the costs related to the manufacturing setup or the work space can potentially be eliminated and the resources can be freed up to be used elsewhere (Gareiss, 2002).

• Focussing Attention on the Core Business

Outsourcing allows the selected government authority (or any private firm) to focus on its expertise and core business (Engardio et al., 2006). However, when such organisations move beyond their expertise, there is the possible danger that they will attempt to incorporate various business functions and processes that are irrelevant and non-knowledgeable (Gareiss, 2002). But, focussing upon a specific operation is not advisable as it can result in the loss of attention to core business activities. An example of this strategy is that of a grocery shop that decides to include video rentals as part of its operations. A high focus on this strategy could result in creating a potential loss to its core business; the grocery (Overby, 2007).

• Enhanced Customer Satisfaction and Quality

Outsourcing can help the organisation to offer resources that are needed for training, recruiting and facility inspections and this may ultimately help the company to reduce its running costs (Engardio et al., 2006). Delivering high quality service eventually promotes customer attraction and satisfaction (Overby, 2007; Gareiss, 2002).

• Operational Efficiency

Outsourcing can help the government authority gain exposure to specialised systems which can aid in improving efficiency and thereby allow quicker turnover and better quality (Gareiss, 2002).

In spite of the benefits mentioned above, the concept of outsourcing may expose the current government authority to various risks and other legal issues. Though outsourcing recognises a measurable process to report qualitative service, there is the chance of poorer quality of service (Rothman, 2003). The critical problems concerned with the opinions of employees or other individuals need to be managed with care, sensitivity and grace (Rothman, 2003). Organised labour working in government firms is very opposed to outsourcing and there may be the possibility of employees enhancing their living standards and working environments (Lewin, Couto, 2007). The layoff of employees is another significant limitation of the present study on the local government authority (Norwood, 2006). Effective and appropriate management can help the authority to manage the individuals in an appropriate way and may minimise the negative impact upon other professionals. The issues governing social security and legal compliance must be addressed. The operations that are outsourced should be effectively managed to ensure system security and legal compliance (Babu, 2005). On the whole, it can be ascertained that if certain key principles are followed, outsourcing can ensure that the authority significantly reduces its running costs in the most cost-effective way.

The following sections provide us with a clear idea about the other approach: that of working from home.

Maintaining Existing Staff and Developing a Strategy of Working from Home
The concept of maintaining existing staff and utilising the home as a work base presents the following benefits for the selected government organisation:

The selected strategy can assist in ensuring an improved employee retention rate, providing a wider pool for the applicants, enhancing staff motivation and decreasing stress and sickness levels (Tom, 2007). This approach may help in reducing office space and the concomitant costs, and improving productivity as staff will have fewer interruptions. Additionally, working from home will encourage employees to develop an efficient work – life balance and the potential for direct improvement in wellbeing, health and quality of life (Mc Garry 2009). Nevertheless, to successfully achieve decreased running costs, the strategy of working from home needs to be effectively managed and controlled (Buckis 2007).

Monitoring and analysing the work of employees is a noteworthy managerial challenge. Some of the limitations of encouraging employees to work from home are: assessing the suitability of the employee for the job, the difficulty in maintaining team spirit, costs involved in training and offering suitable equipment, upgrading skills and controlling staff members, and the enhanced telecommunication requirements. It must be kept in mind that a tendency towards working from home may not signify that the workers need to do all their work at home (Wright, 2008). Dividing the time equally between the home and workplace can be the best solution. Though work from home can offer a wide range of benefits for employers and business organisations, it must be managed in an effective manner to be successful (Mc Garry 2009).

Controlling and analysing the staff’s performance and determining the effectiveness and efficacy may present a challenge to the organisation under study (Davis, 2008). Providing training to develop skills related to the job, information technology (IT) and personal management (such as time-management) can result in developing problems and can hinder the staff from learning specific skills that are needed. Finally, for the individuals who are working alone from home, a feeling of isolation may be considered to be one of the factors that leads to failure in implementing this strategy (Tom, 2007). Consequently, it is very important to place formal systems within the working environments of staff. Implementing the following suggestions can help the current local government authority to reduce its running costs (Wright, 2008):

• Organising two-way feedback sessions with regard to work and its associated issues (McGarry, 2009).
• Scheduling frequent visits to the workplace (McGarry, 2009).
• Including employees in varied social activities and maintaining a highly effective follow- up in the staff’s workplaces (McGarry, 2009).
• Offering assistance in areas that have been identified as being difficult for the staff and overcoming the above mentioned limitations can help the authority to retain the existing staff and, at the same time, significantly reduce its running costs (McGarry, 2009).

On the other hand, if the employees’ job involves working from home from the start, it is highly advisable to carry out the induction sessions at their respective premises (Wright, 2008). This would enable home workers to be productive and focussed and they will be provided with an opportunity to develop a clear and concise idea about the firm and the people they are working for (Buckis, 2007).

While the implications, benefits and limitations of the two above mentioned approaches (outsourcing and working from home) have been discussed, perhaps the combination of the two strategies may be the most effective way to help the government authority under study to minimise the running costs and to achieve success at each and every stage (Davies, 2008).

Responsibilities Placed on Local Government Authority
Implementing the approach of outsourcing or working from home (or a combination of both) in the local government authority under study may impose responsibilities from the perspective of talent management, human resource management, quality management, personal relations management and communication management (Weiner et al., 2001). However, these responsibilities are not expected to be carried out exclusively by the organisation; they will be provided with assistance from each of the individual teams that gained relevant expertise within the perspectives depicted above (like the concept of shared accountabilities) (Tom, 2007). Though the responsibilities of the local government authority may be shared by the personal management team, the company must be expected to demonstrate its unswerving dedication towards the completion of the project (Davies, 2008).

The subsequent sections help in providing a detailed understanding of various identified tasks with respect to each team.

Human Resource Management

Resource Planning:
To achieve success in reducing its running costs, the organisation must allocate required resources and human capital so that a shortage of staff members may not exert a significant effect on project delivery (Weiner et al., 2001). Thus, the organisation and its relevant management teams must be responsible for developing an effective and efficient human resource plan (Weiner et al., 2001).

Maintaining and Establishing Project Team:
The management of the current local government authority must develop close working relationships with the project management team (Weiner et al., 2001). Recruiting new staff members with input from older members of staff, retaining the existing staff and promoting the concept of working from home to achieve higher contentment and inspiration levels, providing training and organising induction programmes for the staff members can help the firm to be highly competent in working with the project management team (Weiner et al., 2001). Apart from the above mentioned criteria, the combination approach may enable the project management team to establish efficient group directions, develop effective communication channels, revaluate and monitor the individual performance. Combining the two approaches will reduce ineffective management practices such as conflicts, lack of communication and management support and various others (Weiner et al., 2001). Reducing the running costs of the current government authority requires an effective combination of various principles governing project management and the organisation must take in to account these perspectives before implementing any specific approach.

Talent Management
Talent Management requires a complex collection of all the Human Relation processes that ultimately deliver fundamental benefits to any organisation (Gary & Larson, 2008). In understanding the role of Talent Management in implementing the approach, it is very important to analyse the concept. Talent Management must be developed together with the policies and practices of Human Relation to enhance an organisation’s image and employer branding (Kaufmann & Clark 1999). Anecdotally, Talent Management can be considered to be important in assessing performance management, providing incentive compensation and acquiring talent. The current organisation must develop Human Relations processes and technologies to reach its ultimate aim of reducing running costs. The future of Talent Management is embodied in solutions designed from the ground up to provide business-centric functionality on a unified Talent Management platform (Gary & Larson, 2008). Though it may seem intuitive, it is worthwhile to articulate the fundamental significance of successful Talent Management practices and perspectives.

The Talent Management team for the current local government authority should carefully monitor and appraise the performance of staff members and must motivate them by offering rewards and benefits. This would indirectly benefit the organisation as it would encourage the staff to work or perform better (Weiner et al., 2008). In addition, this appraisal significantly minimises the cost of recruiting the new staff (as the old staff perform to the best of their ability) and thereby promotes a reduction in running costs. Thus, it can be understood that focussing on talent is very important for any organisation to build a high-performance work place and thereby contribute high management diversity (Brunetto & Farr-Wharton, 2003).

Communication Management
The proposed approach also entails a significant responsibility relating to communication for the local government authority. The organisation should communicate its vision, values, plans, mission, goals and objectives of the project to its staff members. It needs to develop measures to ensure the success of the proposed approach (Brunetto & Farr-Wharton, 2003). Apart from communicating the project objectives, the organisation must also communicate its successes quality issues, team work, improvement measures and organisational values to the new outsourced staff that has been recruited as well as to the current staff and to those who have chosen to work from home (Brunetto & Farr-Wharton 2003).

On the other hand, the project management team should critically evaluate the information and analyse the risks and the potential effects of the proposed strategy to develop and implement a useful approach (Lighter, Fair, 2004). Further, the project management team of the organisation must recognise the possible threats and challenges to the proposed project and should communicate effectively to its team members (Darley, 2002). Studies indicate that, to deliver the project outcomes, the local government authorities must participate in effective communication and information exchange that leads to mutual understanding and working towards reaching the project aims and objectives (Darley, 2002). The management team should ensure that the tasks of reporting and structuring of business relationships are established and that there is dependability in the process of information distribution within the environment of local government and project management (Wanless, 2002).

The project management team must assist the organisation to develop effective communication systems in order to distribute the information at a faster pace to all its individual team members (Wanless, 2002). Therefore, the present approach creates an additional responsibility on the local government authority and it should promote accountability in establishing performance reporting systems as an effective tool to access the needed information (Wanless, 2002; Darley, 2002).

Quality Management
The management of the local government authority should work with the project management team and together they should identify quality standards and measures. Both the management teams should work in a close relationship to ensure the appropriate service delivery in meeting the preferential needs of customers (Brunetto & Farr-Wharton, 2003). The management teams must identify the potential areas for improvement and should identify and develop strategies for complexities that may emerge out for the proposed approach under study. To ensure effective and consistent service delivery to all its customers, the management of the current local government authority must develop a system that controls, reviews and monitors its various operations (Wanless, 2002; Darley, 2002).

Defining the Process of Organisational Change
The process of implementing the proposed approach (that is, a combination of principles from outsourcing and working from home) necessitates that the selected government authority begin to adapt to the practices of outsourcing and home work. The organisational changes may appear to be challenging and may demand significant resources (Cameron & Green, 2004). In managing the suggested approach, the individuals in the organisation must understand its culture, values and beliefs and should demonstrate a strong commitment to adjusting to the project management practices instead of visualising them as a normal activity developed to promote organisational benefits (Pool, 2000).

It must be borne in mind that the ultimate success of the project will be based on an explicit belief in the approach of the individual team members. The management team concerned should strive to achieve such objectives (Pool, 2000). The employees of the outsourcing team should work in liaison with the project management team and should make an effort to achieve the objectives of the project. To achieve this, it is very important to undertake a bi-lateral communication process (involved in receiving and offering feedback) with the outsourcing and other teams. The management must target on training and providing induction to the staff members (outsourcing and those working from home) and their subordinates (Cameron, Green 2004).

The outsourcing team needs to carry out its activities in the working environment and the management must play an effective role in rewarding and praising the members of staff based on their performance. Here the principles of Talent Management depicted above are worth considering (Pool, 2000).

Risk Response Development and Risk Control
In initialising the proposed approach for the suggested local government authority, the process of risk response development involves all the steps from the identification of potential risks to the reviewing and developing of strategies (Longman & Mullins, 2004). A detailed presentation of the various steps involved in risk response development together with its control is presented below (Gary & Larson, 2008):

• Clearly identifying the risks and taking specific measures to prevent them, (Gary & Larson, 2008).
• Analysing the individual risks with regard to the probability of incidence and prevalence as well as in accordance with the profound impact of the risk to the organisation under study (Gary & Larson, 2008).
• Defining and establishing suitable measures that are completely dependent on prioritising suggested approaches like understanding the tolerance levels of risks involved, risk acceptance or rejection and various others (Gary & Larson, 2008).
• Devising an action plan based on the risks identified and suggesting measures to alleviate, transfer, reduce or live with the risk itself (Gary & Larson, 2008).
• Implementing suitable actions to manage the risk, like redefining shared accountabilities, communication channels, project management perspectives, talent management and quality management principles (Longman & Mullins, 2004).
• Developing a system that plays a crucial role in evaluating, scrutinising and reconsidering the initiatives of risk management (Gary & Larson, 2008).
• Executing the proposed plan on risk response development.
• Designing and developing a system that assesses the occurrence of risk together with its impact (Gary & Larson, 2008).
• Devising new risk control strategies and approaches in a well-structured and timely manner if the risks suggested earlier appear to be ineffective (Gary & Larson, 2008).

A risk map analysis for the recommended approach will help to clearly understand the concept.
Risk Map Analysis or SWOT Analysis:

STRENGTHS:

• The bank is well capitalized and this has enabled it to perform relatively well against other banks in recent economic events.
• Government support ensures adequate ratings.
• The bank has a strong presence in emerging markets, putting it in a good position to take advantage of future growth in those economies.
• The bank’s global presence in Europe, Asia and South America helps to spread risk and offers significant economies of scale.
• Strategic management guides a business so that it can compete and grow in its market.
• Right strategy for the right products.
• Superior customer service vs. competitors.
• High degree of customer satisfaction.
• Lower response time with efficient and effective service.
• Innovations in products and services give it a major strength in attracting customers.
• Convenience (online banking, mobile banking, large retail branch availability).
• Brand recognition.
• Strong internet banking presence.
• Flexible organisational structure.
• Highly skilled workforce.
• Valuable contributor to GDP over a period of 15 years.

WEAKNESSESS:

• The current economic situation has led to increased risks, potentially compromising the activity levels in investment in smaller private organizations.
• Our branding emphasises our global presence. The implication of homogenization and lack of personalization may be seen negatively by some customers.
• The company has lost the ability to compete head-to-head in an environment where it lacks a size advantage.
• The iPhone application is poor.

OPPORTUNITIES:

• Expansion in international markets.
• Further consolidation in the banking industry.
• Unified trade body to lead finance sector programme change.
• Active and aggressive targeting of corporate and private clients and institutions that attract such clients. Encourage a shift in focus from mass affluent to HNW business.
• ‘Morphing’ of banking and CSP propositions to create a bigger market share for all.
• Co-ordinating business relationships across the IoM finance sector to increase revenue, thus investing in the ecosystem.

THREATS:

• Legal Regulations.
• Public sector. The corporation is riddled with excess manpower, poor management and weak financial base which has to be restructured and strengthened.
• Fiscal deficits have traditionally been high and need to be gradually narrowed down.
• ESD significantly impacts business levels, affecting the Savings Banks in particular.
• Anti-offshore regulations in foreign target markets restrict the development of products and new markets.
• Downsizing and reduction in banking operations in favour of rival jurisdictions.
• Outsourcing to cheaper jurisdictions.
• Subsequent impact on the rest of the finance sector ecosystem.

Stakeholder Issues
In implementing the combined approach, the government authority may encounter opposition from the stakeholders involved in developing the company. These include customers, employers, media, authority and civil society, business partners, owners and investors. All will have their opinions and perceptions.

Infrastructure and Information Requirements
The proposed approach for reducing the running costs for the local government authority requires information on outsourcing, strategies to enable working from home, together with their strengths and limitations. The evidence from the case studies must be analysed and its relevance to the present condition needs to be applied. Information with regard to the potential staff members, both existing and outsourced staff is needed to analyse and propose responsibilities. Since the company was given the option of outsourcing, no special infrastructure requirements are needed to reduce the running costs.

The selected local government authority must consider the strengths and limitations of the above-mentioned approaches, additional responsibilities imposed, organisational change and infrastructure requirements together with the resource allocation before choosing any approach that will aid in promoting significant reduction in running costs.

REFERENCES
Babu, M., 2005, Myth: All Outsourcing is Off-Shoring, [online], http://www.computerworld.com/s/article/105828/Myth_All_Outsourcing_Is_Offshoring ?taxonomyId=060&SKC=management-105828, Accessed on 08.06.2011.
Brunetto, Y., Farr-Wharton, R. 2003, The impact of government practice on the ability of project managers to manage, International Journal of Project Management, 21, 2, 143-153.
Buckis, C., 2007, Work from Home: Finding Freedom in your Spare room, London, Sue-Steven Publishers.
Cameron, E., & Green, M., 2004, Making sense of change management: a complete guide to the models, tools & techniques of organizational change, Kogan Page Publishers, London.
Davis, L., 2008, Work from Home 100 Success Secrets: A Practical Guide to Work From home, Jessica Kingsley Publishers, London.
Engardio, P., Arndt, M., Foust, D. 2006, The Future of Outsourcing, [online], http://www.businessweek.com/globalbiz/content/nov2006/gb20061108_738883.htm?chan=top+news_top+news+index_global+business, Accessed on 08.06.2011.
Gareiss, R. 2002, Analysing the Outsourcers, Information Week, [online], ftp://ftp.hp.com/pub/services/spotlight/info/info_week.pdf, Accessed on 08.06.2011.
Gary, C. & Larson, E. 2008, Project management: the managerial process, 4th Edition, The McGraw-Hill/Irwin series operations and decision sciences, London.
Kaufman, A. & Clark, E., 1999, Re-establishing performance improvement as a legitimate area of inquiry, activity and contribution: Rules of road, Performance improvement, 38, 9, 13-18.
Lewin, A.Y., Couto, V. 2007, 2006 Survey Report, Off shoring Research Network, [online], https://offshoring.fuqua.duke.edu/orn_report.pdf, Accessed on 08.06.2011.
Longman, A. & Mullins, J., 2004, Project management: key tool for implementing strategy. Journal of business strategy, 25, 5, 54-60.
McGarry, M., 2009, Train at Home: Work from Home, London, Jessica Kingsley Publishers,
Norwood, K., 2006, Off-Shoring: An Elusive Phenomenon. National Academy of Public Administration, London.
Overby, S. 2007, ABC: An Introduction to Outsourcing, [online], http://www.cio.com/article/40380/Outsourcing_Definition_and_Solutions, Accessed on 08.06.2011.
Pool, W., 2000, Organisational culture and its relationship between job tension in measuring outcomes among business executives, Journal of Management Development, 19, 1, 32-49.
Rothman, J. 2003, 11 Steps to Successful Outsourcing: A Contrarian’s View, http://www.computerworld.com/s/article/84847/11_Steps_to_Successful_Outsourcing._A_Contrarians view, Accessed on 08.06.2011.
Tom, S., 2007, Advantages and Disadvantages of Work from Homes, [online] http://www.tlmarketing.net/the-advantages-and-disadvantages-of-a-work-at-home-job/, Accessed on 08.06.2011.
Wanless, D. 2002, Public health a key factor in building a cost effective NHS, Health andHygiene, 23, 2, 5-7.
Weiner, K., Hughes, J., Stewart, K., Challis, D., and Darton, D., 2001, Care management and the care programme approach: Towards integration in old age mental health services, International Journal of Geriatric Psychiatry, 16, 266-272.

Wright, A., 2008, Making it Work from Home: A Practical Guide to Work from Home, London, Sustainable Publishing.