Outsourcing and its implications for voluntary sector independence and employment

Professor Ian Cunningham

Department of HRM

University of Strathclyde

Scottish Universities Insight Institute

Financing the Future: Achieving Sustainable Growth in Credit Unions

Managing Transformation: Balancing Growthand Community Involvement

Collins Building, University of Strathclyde, 28th August, 2015

• Implications of ‘de-statization’ where states devolve tasks to actors including non-profits.

• States attempt to transform the identities, capacities, rights and interests of actors within… networks including non-profits to aid policy implementation (Jessop, 2003).

Focus of studies

• Focus on social care providers

• How (and why) have state – voluntary sector outsourcing relationships been changing over the past decade, including during the current era of public sector financial austerity?

• In what ways have voluntary organisations sought to adapt to the changes taking place by becoming a professionally staffed organisation, while retaining their ethos and mission? and

• What has been the impact of these changes on the terms and conditions of employment of those working in voluntary organisations?

Aims of the Study

• New Public Management

• Best value

• Full-cost recovery

• Retendering

• Austerity

• Personalisation

Context

• Phase one (2002) - Interviews in 24 voluntary organisations. Human resource (HR) staff (22 cases) or operational managers responsible for personnel issues (2 cases). Managers responsible for negotiations with local authorities were additionally undertaken (11 cases).

• Phase two 2008/09 - Interviews within 18 of the original 24 organisations. HR respondents (17 cases) or managers with that responsibility (one case). Managers who were responsible for negotiating with local authorities (10 cases).

• Phase 3 2011 – 14 – Interviews in several organisations with HR respondents.

Method

• Variation in dependency on funding bodies and consequently their capability in resisting unfavourable demands from them.

• Voluntary sector – state relations not characterised by dichotomy of ‘partnership’ versus ‘control and subordination’,

• They exist along a continuum encompassing varying combinations of ‘arms-length’ and obligational elements.

• To sustain independence Voluntary sector providers could utilise – Long-established inter-personal relationships– Niche services– Diverse funding.– Type 3 organisation most able to sustain mission and independence

Inter-organisational relations – Phase 1

Table 2: Variability in vulnerability to NPM cost pressures

Organisation Type Pattern of resource dependency Ability to enhance their market/funding positions

Type 1 –Ten respondents Highly transactional relations – Reliant on one or two funding bodies; Narrow geographic region; Operating in adult services; Small to medium-sized organisations; One year contracts, renewal not guaranteed; few inflationary uplifts on income; subsidizing contracts from reserves.

Struggle to make use of any of identified strategy.

Type 2 – Ten respondents Variable relations with funders; Greater diversity in funding sources across 32 local authorities; Larger providers in adult services or variety of service users. Inflationary increases from some funders.

Able to deploy one or two.

Type 3 – Four respondents

Variable relations with funders, but identified as niche providers on APLs by some local authorities. Close personal contacts with boundary spanning agents. Partnerships in designing & establishing newServices; healthy financial reserves.

Ability to make use of all of strategies.

• Phase two - Capacity among voluntary organisations to influence had • markedly declined

– Tougher financial and competitive climate.– Greater competition– Austerity reinforced tendency towards targets more ‘arms-length’, cost-based contracting. – Boundaries between organisations exhibiting varying degrees of obligational and ‘arms-

length’ relations were becoming eroded.

 

• Mutuality tended to become subverted to meet the paramount objective of cost savings.

• Approved Providers Lists (APL) processes, previously designed to regulate quality standards and human resource policies and processes, now exert downward cost pressures.

• Partnership’ dismantled through replacing close personal ties between voluntary organisation boundary spanners and purchaser personnel with more distant links with experts in finance and procurement.

• Local authority actions were of a similar nature across 32 authorities.

Changes to inter-organisational relations – A shift in ‘negotiated order’

• ‘Mission drift’ – missing the most vulnerable or those that are ‘preventable’

• Moving to ‘generic care’ agencies becoming similar in terms of services and workforce skills based on funder ability to pay.

• Forced to bid for services to retain legitimacy• Running down of campaigning and advocacy services• Fear of protesting against local government policies

Impact on Vision and Mission

Professionalisation of HRM function and the Workforce

Positive changes• Formalisation of HR

procedures and practices.• Professionalisation of

recruitment function etc.• Procedural security for

employees.• HR function becomes more

business focused.• Skills acquisition among the

workforce comes under statutory force.

Negative changes• Increase in targets and

bureaucracy, performance management.

• Not all HR functions benefit from change

• Changes to nature of work stripping out emotional content.

• SVQ accreditation leading to poaching of staff.

• Training first to suffer during austerity.

Table 4: Changes to Terms and Conditions – Phase 2 Moved away from public sector conditions

by phase 1Retained public sector conditions in phase 1 but change in phase 2

Organisations 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Changes to Pay

and conditions –

moving from

local authority

scales

√ √ √ √ √ √ √ √ A A √ √ √ √ A A √ √

Organisational

Type

Type 1 Type 2 Type 3

√ = Made changeA = Anticipating change

Impact on Terms and Conditions of Employment

• Multiple tiers of pension entitlement

• Non-payment for travel and other expenses

• Undermining of supervision and appraisal

• Changes to sickness benefits.

• Increased casualization of the workforce in the name of ‘flexibility’.– Zero hour contracts– Split shifts– Temporary contracts

Other Changes to terms and conditions

• Move towards price-based, short-term ‘arms-length’

contracting that is not easily challenged by ‘soft’ government prescription, particularly in a period of significant financial stringency.

• Much international and domestic evidence points more generally to how the competitive dynamics involved in the outsourcing of public services commonly leads to:

– Loss of independence and ‘mission drift’– Changes to how services are delivered– Downward pressure on workers’ terms and conditions, while ensuring some procedural

integrity over HR policies and accreditation of the workforce

• Elements of independence sustained by:– Diverse funding– Niche services– Inter-personal relations with funding bodies– Sustaining identity with other social movement groups *

•

Conclusions to studies

• Introducing private sector concepts such as ‘the customer’

• ‘Dual authority’ of management, and customers over services

• Implications for competitive environment and financial stability

• Employment Relations implications

New Developments – Personalisation of Social Care

Questions