Local authorities should look to not-for-profits as allies, says Hay Group’s senior consultant
The future demands that local government changes, but the sector is still central to driving economic development and creating the conditions for a resilient, sustainable and prosperous local economy.
As local government commissions more services, the not-for-profit sector could be among councils’ most valuable allies.
Not-for-profits tick several critical boxes for commissioners, often keeping investment in the community, employing local people and steering business towards organisations that are seen to care about people. While they may not always be the cheapest option, not-for-profits should help councils to meet their targets in more sophisticated and visible ways.
But not-for-profits are very diverse, ranging from small organisations to national enterprises with thousands of staff. Partnerships with these organisations will require both sides to undertake a significant journey of change and think about whether they are structured in the right way to deliver their future priorities.
What local authorities need to think about
• Making sure they have the right leadership and commissioning skills to drive these changes for the benefit of the communities they serve. This will require work on how to change the existing internal delivery culture, to one which accepts and enables external market delivery. This may take time but will be necessary to deliver the services required.
• Developing a more in-depth understanding of different local providers and how to work in partnership with them. What are the unique strengths that local not-for-profits can offer that other organisations can’t? This could include shared values with the local authority or the way they recruit and develop their staff.
• Looking to recruit external talent with commercial skills and experience to drive market changes.
• Welcoming innovation and not being afraid of taking risks.
What not-for-profits need to think about
• Becoming more business focused and making internal processes more efficient to help them compete against or complement the private sector.
• Forming valuable partnerships or seeking to merge with private and not-for-profit sectors where the market requires.
• Learning how to charm and influence commissioners – and understanding where the power sits. Telling a compelling story about why they are the best people to provide services to communities.
• Developing strong leaders – who have the skills and the understanding of processes to make the required changes.
Both groups need to consider whether their organisational processes are attracting people with the right skills to cope with the changes. Some forward-thinking organisations are recruiting differently, taking on people with an understanding of commercial processes and how to take and manage risks.
These new ways of working may be uncomfortable for everyone at first, but having the right people driving the change will bring rewards in terms of better services for citizens and more resilient and prosperous communities.
Richard Muscat, senior consultant, Hay Group