Hot Topic: Collaborative working
Collaborative Working
In response to the economic downturn and reduced public sector budgets over the past three years, there has been an increasing focus in the public and third sectors on the benefits of more collaboration between agencies, in pursuit of greater efficiency and effectiveness.
An early wave of enthusiasm for merger and other forms of collaboration generated a lot of activity in the way of information, guidance and some research on the practical experience of organisations who chose the merger route. More recently the merger debate appears to have receded, as organisations both in the public and voluntary sectors recognise the costs, complexities and inherent difficulties of the process.
While some public authorities and voluntary sector commentators continue to advocate the benefits of merger, most organisations considering a collaborative approach are looking to lighter touch solutions involving less structural upheaval. Where merger is being considered by an organisation, it is with discretion, and lengthy behind-the-scenes pre-merger feasibility discussions often lead to a rejection of the option.
Third Sector’s most recent ‘state of the sector’ survey confirms the trend away from merger but continued interest in partnership. In response to a question about considering partnerships with other organisations more than before: 69% said yes; whereas in response to questions about considering or actually deciding on merger, answers were 70% no and 92% no, respectively. (Issue 10 Jan 2012, p. 9)
The Institute for Voluntary Action Research suggests that there are varying levels of collaborative activity, with differing impact on organisational boundaries:
• Networks, assemblies and fora have a low impact on organisational boundaries
• Consortium tendering, Joint ventures (including joint service delivery and joint campaigning ); sharing 'back office' functions, and co-location have a medium impact
• Group structures, acquisitions / absorption and equal mergers have higher impact
Collaborations and mergers may offer many potential benefits, including efficiency savings through reduced duplication, as well as pooling of resources and expertise. However, they are not without risk, and legal advice should be sought where appropriate to minimise future problems.
While some providers may actively seek to join collaborative ventures, others may feel pressure from commissioning authorities who are looking to reduce the number of organisations from which they purchase services.
Issues to consider when thinking about collaboration and mergers include:
• What is the rationale behind the collaboration?
• Are there shared vision, values and common purpose?
• How will the proposed collaboration ultimately benefit the users of the service?
• Are the timescales realistic?
• Is there a clear plan for leadership, development and quality?
• What are the potential risks and rewards?
• How will you resolve potential problems with partners?
Below are some key messages regarding the challenges of merger, along with some resources directed at the voluntary sector.
Key messages
Collaborations require careful planning, resourcing and leadership, and, to be successful, must ultimately lead to a better service or outcome than would be possible without the collaboration.
• Competition makes collaboration challenging
Voluntary sector organisations operate in a highly competitive market place. Putting pressure on organisations to co-locate or share ‘back office’ functions with those with whom they are competing for contracts, is likely to be problematic in the long term.
• Shared vision is vitally important
Research shows that collaboration and mergers work best where organisations have developed a strong, shared vision for future development. Developing such a vision, and ensuring the collaboration has the leadership capacity and capability to take this forward takes both significant time and resources.
• Full impact assessment should be undertaken by all parties
Any form of collaboration or merger may have significant implications for staffing, service design, finances, funding and contractual arrangements. Rushing into a collaboration without proper preparation is likely to be costly in the long run.
• Service design should be led by desired outcomes for the user of the service, not by convenience for the commissioner
The principle goal of a merger should be to provide better and more efficient services. Few mergers will succeed on these grounds where the motive for merger is exclusively financial savings. Two of the greatest risks in a merger are the failure to successfully manage staff engagement and the danger of stakeholder confusion. Strong lines of communication and leadership are vital to ensure staff support the changes and users participate in changes to service design.
• Workforce Implications should not be underestimated
Aligning the different terms and conditions of two organisations can be hugely challenging. Where TUPE regulations apply, harmonising of terms and conditions and staff redundancies are governed by strict rules that protect existing rights. The impact on pension arrangements must be carefully considered because merger may crystallise significant pension liability.
Shared Services within Local Authorities
Shared services have been cited as a potential route to cost savings and performance improvements for councils, and as such are being explored by almost every council in the UK.
In Scotland, several local authorities are involved in Shared Services - please see list below - and more information about the work they are doing can be found on The Improvement Service (IS) website.
• Ayrshire
• Clyde Valley
• Edinburgh, Lothians, Borders & Fife
• Forth Valley
• Orkney
• North-east Scotland
• North of Scotland Local Authorities (NoSLA)
External Links/Resources
SCVO Resources:
SCVO - Merger and Collaboration pages
SCVO and Burness solicitors: Developing Consortia - Forming a consortium for the delivery of public services - 2008
NCVO Resources:
NCVO - Developing Consortia to deliver contracts – August 2011
Advice and support on Collaborative Working
Compete or Collaborate? A strategic choice
What collaborative working involves
Collaborative Working Unit - Merger, a model of collaborative working
Charity Commission resources:
Charity commission report on consortia - June 2011
Strength in numbers report – Nov 2010 – small charities collaborate (below £250,000)
General Guidance on Working with other charities – November 2009
Collaborative Working and Mergers – November 2009
Miscellaneous Resources:
Locality: Collaborating for Commissioning – 2011
Institute for Voluntary Action Research - Getting ready for collaboration: Learning from experience – June 2010
iSE (Initiative for Social Entrepreneurs) Workbook on Clusters – practical toolkit
New Philanthropy Capital (NPC) - What place for mergers between charities? – June 2009
Tendering For Care - The 12 golden rules for tendering as a consortium – Tendering for Care 2008
Office of the Third Sector - Working in a consortium – December 2008