Courting capability, part 2: the business of government

By on 04/07/2018
Bringing business into the machinery of government: non-exec directors from the private sector can help improve departments’ strategic management (Image courtesy: Number 10/Flickr).

There are many ways to bring private sector skills into government beyond the mainstream routes of recruitment and secondment. James Johns explores how countries have injected business expertise into departmental boards and established fellowships to draw in digital and technical talent

Civil services around the world know that they need more specialist, professional skills in particular fields of leadership and delivery. They have no problem in producing generalist leaders who know intimately how the civil service operates, or policymakers able to balance in that awkward space between the worlds of national politics and public service management. But many central government organisations struggle to recruit and retain top-rank skills in areas such as digital, commercial management and transformation.

In the last part of this feature, I considered the use of special advisers, appointed ministers, the civil service professions, and business secondments in bringing in those external perspectives and specialist skills. Now let’s look at a couple of additional – and well-regarded – approaches: fellowship programmes, and the use of advisory boards.

Re-treading the boards

Sir Ian Cheshire – the UK government’s lead non-executive director.

Under the 2010-15 UK coalition government, changes were made to the ways in which non-executive directors (NEDs) were used to add capability to departmental boards. Though departments have made use of NEDs for many years, a change in the Ministerial Code made in 2010 set a new direction – specifying that they should be “largely drawn from the commercial private sector”. Other contemporaneous changes included increasing the minimum number of NEDs to four, and specifying that they be appointed by the secretary of state rather than the permanent secretary.

The reforms have been broadly well liked by both civil servants and ministers, and 80 NEDs currently support the 20 principal departments of state; others assist with the work of regional and local public bodies. Amongst their number are some of the most experienced chief executives and senior managers from the UK’s leading businesses.

NEDs across central departments are increasingly acting in a coordinated way under the leadership of a designated lead NED (currently Sir Ian Cheshire, a retail executive). Within the overall remit of departmental boards, their responsibilities are explicitly related to the operation of their allocated department, rather than matters of policy, and are increasingly focussed on five themes. These are talent management (including contributing to performance reviews and determining remuneration for the most senior civil servants); assisting with the development and implementation of Single Departmental Plans; providing strategic oversight and review of a department’s arm’s length bodies; independent advice and challenge on deliverability of Major Projects; and helping departments implement risk management as a means of supporting delivery.

How’s it working?

A study into the effectiveness of the NED system by the Constitution Unit at University College London, published in January 2017, reported that “non-executives are high calibre, committed people, whose expertise is greatly valued by the civil service”.

Certainly, some senior officials feel that NEDs can play a valuable role in trying to push over-ambitious ministers towards a more realistic assessment of what departments can achieve. As outgoing Department of Work and Pensions permanent secretary Sir Robert Devereux told Global Governmetn Forum earlier this year: “Pretty much each of them, within about a month of arriving, said to the then-secretary of state: ‘We’ve never tried to do this much change at once. So if you want our advice, make the programme smaller’.” As Devereux acknowledged, though, their influence is limited: in response to their NEDs’ advice, he recalled, “each secretary of state smiles and says: ‘Well that’s fine, but I’m afraid we’re on it already’.”

Interestingly, the Constitution Unit report also indicated that NEDs feel that they add most value outside of the formal board meetings, when acting in more of a consultative capacity to their departments. Whilst the system has been described by prime minister Theresa May as “an overall success”, UCL’s report suggests that there is some frustration amongst the incumbent directors that they could be much more effective if the system only allowed.

Nevertheless, the shift to appointing NEDS from a commercial background and a sharper focus on their role since 2010 has clearly been an effective and cheap way of harnessing the enthusiastic support of the most talented business leaders for the UK’s public services. In 2016, the new Department for International Trade reportedly had 180 applications for the role of its lead NED.  NEDs are usually paid a standard honorarium of £15,000 a year (US$20,000), notionally for 30 days work – though UCL’s report suggested that a third of NEDS have waived their entitlement to this fee, and the average number of days worked is closer to 45.

The Swedish experience

Other governments have made similar efforts to create structures which allow business leaders to provide their advice directly to ministers. In 2015 the Government of Sweden appointed a National Innovation Council to “contribute to the government’s work to advance Sweden as a country of innovation and to strengthen Sweden’s competitiveness”.

Swedish prime minister Stefan Löfven chairs his government’s National Innovation Council, whose quarterly meetings last between four and six hours.

 

Sweden has been something of a success in this regard for a number of years. A surprising number of the internet’s most successful start-ups have emerged from country, including Spotify, Skype, and online games companies King and Mojang. Sweden is the second-most prolific tech hub in the world on a per-capita basis, after Silicon Valley, with 6.3 billion-dollar companies per million people.

The council consists of five ministers: the PM plus the ministers for finance, enterprise and innovation, education and research, and foreign affairs. Its ten advisors include digital entrepreneurs, academics, trade unionists and leaders from some of Sweden’s better-known traditional businesses, including Volvo and paper company Stora-Enso. In addition to the fact that it is chaired personally by the PM, another unusual feature of the council is that its quarterly meetings reportedly last between four and six hours; an unusually large investment of ministerial time.

Although notionally an advisory body, the direct involvement of ministers is intended to facilitate the conversion of the Council’s recommendations directly into government action; and the model has proved effective, for example in improving the provision of risk capital by the state. Its work on this topic led directly to the creation of a new, state-owned capital fund, Saminvest. (Global Government Forum recently explored the topic of how governments are increasingly taking a lead in the creation of other similar development banks.)

Hail Fellows

These approaches work well to bring private sector input into the highest ranks of government. But most such skills gaps are down towards the planning and delivery end – and here, fellowships can play a useful role.

For example, some countries have launched schemes to bring in digital professionals for a stint in public service. A good example is Code For America, a not-for-profit organisation founded in 2009 and described as “the technology world’s answer to the Peace Corps or Teach for America”.  CFA seeks to enlist technology and design professionals to work with US city governments to build digital applications and promote openness, participation, and efficiency in government.

The model, together with the well-publicised failure of the healthcare.gov website designed to serve President Obama’s health reforms, inspired the White House to launch the Presidential Innovation Fellows (PIF) programme in 2012. Drawing on President Carter’s programme of Presidential Management Fellows – which gave opportunities for exceptional graduates to hone their management skills through a two-year training and development programme – the PIF initiative aims to attract top innovators into government for a twelve month period, setting them to work tackling issues at the convergence of technology, policy, and process.

Since the programme’s launch, 112 fellows have been appointed and worked on projects for federal agencies across the US. The twice-yearly round of applications for new fellows are significantly over-subscribed, and focus on appointing candidates with demonstrable capabilities in creative problem solving, technology acumen, entrepreneurship and product management and iterative delivery; and in the design, development and deployment of solutions leveraging current and emergent technologies and best practices.

In 2014, the US government formed a new agency focussed on digital transformation: 18F, named after the streets in Washington where it’s headquartered, now provides an organisational home for the current and past fellows and provides a locus for their collaboration. Two years later President Obama signed a new executive order making the programme permanent, and it has successfully survived the transition into the Trump presidency. This seems to indicate that, as in most countries, the determination to find new ways of tackling the digital transformation of government has cross-party consensus. PIF alumni have gone on to hold a number of senior roles within the US federal government, including the US deputy chief technology officer.

French lessons

A similar initiative is now operating in France. Housed in the French government’s Open Data hub, Etalab, the Entrepreneurs d’Intérêt Général programme invites bids from government organisations seeking support to solve specific problems. It then recruits external candidates with prior experience of software development, data science, design and agile development with a demonstrable passion for digital transformation and public service to work on these challenges.

France’s secretary of state for digital, Mounir Mahjoubi, meets some of the participants in his government’s Entrepreneur d’Intérêt Général programme and their civil service mentors (Image courtesy: etalab/EIG).

The programme was launched by President Hollande in November 2016, and in its first cycle selected 11 entrepreneurs to work on nine pilot challenges. Its second cycle began at the beginning of this year, with 27 further candidates beginning a ten-month programme working on 13 challenges. In a nice piece of trans-Atlantic collaboration, one of the judges who helped select the successful candidates for this year’s programme was John-Paul Farmer: the former White House innovation lead credited as the brains behind the programme’s US peer.

The EIG programme requires that each entrepreneur is allocated a pair of mentors within the host government organisation – one of whom must be from the general management level – to maximise knowledge transfer into government when the assignment comes to an end. Participants consistently report that their stint in government has helped to develop both their technical skills and their appreciation of the challenges of public service, and the receiving organisations reflect that the presence of an EIG has helped them to “move boundaries” and renew their methods.

Getting a taste for public service

Looking across programmes such as these, a common theme emerges. Participants from business find the work of government is both interesting and rewarding, whilst recognising that it sometimes demands a different approach to operating in the private sector. As Sir Ian Cheshire has commented: “You can’t just show up, call everyone a muppet, and tell them what do to.”

Whilst many schemes like those outlined above harness the efforts of outsiders for just a short time – a secondment, or a term as a NED – it will not be surprising to those who have dedicated their careers to public service that many choose to stay. Speaking at last December’s OECD conference on government innovation, Code For America’s Sarah Meyer stated: “When people are exposed to the mission of public service, they get inspired”.

Government organisations frequently beat themselves up about a lack of certain skills, blaming constraints on pay or lack of opportunities for advancement. But it was ever thus. For centuries, people have elected to work in government for other reasons; they have chosen a career which has resonance beyond the content of their paypacket.

There is no reason to assume that it should be any different the digital era. Whilst the innovations we have described all have a valuable role to play in bringing new talent into government, their most far-reaching and long-lived benefits may lie simply in exposing people from the private sector to the benefits and rewards of a career in public service.

About James Johns

James Johns is a consultant, strategist and digital policy advisor with more than 28 years' experience helping government organisations to make more effective use of technology. He began his career in the National Health Service and the IT services company Xansa, before spending fifteen years in a range of roles at Hewlett Packard. From 2007 to 2014 he was Director of Strategy for the firm's UK public sector business and more recently was HP's Director of Corporate Affairs for the UK & Ireland. James is a Visiting Senior Research Fellow in the Policy Institute at King's College London and an advisor to the World Economic Forum's National Digital Policy Network.

One Comment

  1. Jag Patel

    04/07/2018 at

    There is an urgent need for private sector skills, not only at the top, but at all levels of the hierarchy in the Civil Service.

    The government’s much heralded Industrial Strategy white paper finds that the skills and capabilities of those employed in the Private Sector need upgrading, if the UK is to realise its vision of a Global Britain and pay its way in the world, post-Brexit. But there is no recognition that people in the pay of the State – the other party to this Industrial Strategy, on whom its success is wholly dependent – are equally ill-equipped for their public sector roles. This lack of acknowledgment is not a surprise. The Industrial Strategy was, after all, written by people in the pay of the State!

    It would also explain why there is very little confidence in the ability of big government to fix market failures, use the instrument of regulation to curb anti-competitive behaviour, manage outsourced public service contracts or secure value for money for investments made in infrastructure.

    Indeed, the reputation of people in the pay of the State is further diminished by the fact that their ability to innovate, solve problems, learn from past mistakes and adapt to change, which is a distinctive characteristic of people in the Private Sector, has been erased in the Public Sector due to incessant conditioning of the mind from an early age. And, of course, people in the pay of the State are very good at talking a “big game” but they can’t “do it”.

    But, what is especially worrying about people in the pay of the State is that they haven’t got a clue about what it is that drives the behaviour of for-profit organisations in the free market – not least, because they have not spent a single day of their lives in the Private Sector – and yet they have been put in charge of spending taxpayers’ money to the tune of £268 billion to buy goods, services and labour from non-public sector organisations.

    Worse still, in specialised markets such as that in military equipment for the Armed Forces, the role of the regulatory authority and sponsoring agency has been combined in one department of state – the Ministry of Defence – which means that the independent scrutiny function, free from political interference, is non-existent.

    So, successful capture of a department of state by the Defence Industry amounts to taking control over both roles!

    In no other field of human endeavour are such ill-equipped people allowed to ply their trade as in defence procurement – which would explain why the Government has been getting appallingly poor value for money these last several decades.

    Additionally, the culture in Whitehall has always put greater emphasis upon people who master rules, regulations and processes instead of valuing smart working, execution and delivery. What’s more, civil servants have migrated over the years, in overwhelming numbers, to the Private Sector via the revolving door in pursuit of a second career and infected it with these traits. Which would probably explain why the Defence Industry has failed so miserably to deliver equipment to the Armed Forces that is fit for purpose, adequately sustained in-service and constitutes value for money through-life – bearing in mind that 99% of people who work in the Defence Industry right now, were previously in the pay of the State.

    Instead of doing the decent thing and educating people in the pay of the State about the ways of the Private Sector, defence contractors are busy exploiting their ignorance, for one purpose only – relieving them of taxpayers’ money – which has, in itself, left the public finances in pretty bad shape.

    It’s not so much a lack of skills in Whitehall that is the problem, but a surplus of people with the wrong skills. Some people say that they can be retrained to equip them with the necessary skills which will enable them to deal with today’s challenging public service tasks. But the undeniable truth is that these people are simply beyond repair!
    @JagPatel3

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