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STRATEGIC BUSINESS REVIEW

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  • 1. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position STRATEGIC BUSINESS REVIEW Current Assessment Analysis Report – Baseline Position Version 1.0 November 2006 1
  • 2. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Contents 1. BACKGROUND 3 2. PURPOSE OF REPORT 3 3. APPROACH TO ASSESSMENT OF CURRENT POSITION 4 4. KEY FINDINGS – CORPORATE (AGENCY) LEVEL 9 5. KEY FINDINGS – DISABILITY & CARERS / INCAPACITY BENEFIT BRANCH 11 6. KEY FINDINGS – PENSION SERVICE 12 7. KEY FINDINGS – JOBS & BENEFITS / SOCIAL SECURITY OFFICES 13 8. CONCLUSIONS 17 Version 1.0 November 2006 2
  • 3. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 1. Background 1.1 At the end of 2005 ministerial approval was given for the Agency to conduct a review of its services. 1.2 The Strategic Business Review (SBR) Project is taking forward the review in three key phases: • to determine the baseline position and assess the extent to which the Agency is ‘fit for purpose’ at corporate and disaggregated level; • determine future changes, planned and proposed, and their potential individual and cumulative impact on the baseline position; and • if necessary develop a list of options for future service delivery models, resulting from assessment and analysis of the current and future positions. 2. Purpose of Report 2.1 This report, the second in a series of four, summarises the key findings from a self assessment exercise undertaken by the Agency as part of the first stage of the SBR. A ‘fit for purpose’ assessment tool was developed to enable rigorous evaluation against key business criteria. Details of this tool and the approach taken are provided in Section 3. The findings of the self-assessment are presented in Sections 4 to 7, and conclusions are detailed in Section 8. 2.2 This report should be read in conjunction with the report - Overview of the Baseline Position (Section 1A), which provides information on the current operating context for the Agency and the key issues impacting upon service delivery across Operations, Finance, HR and ICT. Version 1.0 November 2006 3
  • 4. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 3. Approach to Assessment of Current Position 3.1 The aim of this stage of the SBR was to assess the extent to which the Agency is currently ‘fit for purpose’, defined as having: The ability and capacity to deliver core business in a manner which is effective, efficient and has the capacity to absorb change. Assessment Matrix 3.2 In order to make this judgement an assessment tool was developed based on a recognised model for measuring & assessing organisational performance. The tool assesses current performance against 4 key criteria: • Business Performance; • Financial Performance; • Risk Management; and • Agility. 3.3 Under each criterion a series of indicators was derived from existing corporate and business unit performance targets supplemented by other ‘fit for purpose’ measures. Six versions of the scoring matrix were developed with indicators tailored as appropriate – one for the corporate (i.e. Agency) level and five at a disaggregated level (i.e. business unit / office) covering Disability and Carers Service, Incapacity Benefit Branch, Pension Credit, Retirement Pension and Jobs and Benefits. Published and internally validated Agency management information was collated where available to support the assessment process. Weightings were applied to each indicator to reflect their relative importance and availability of supporting data. Figure 1 summarises the indicators developed and the data used in each case to support assessment. Copies of the assessment matrices are provided in Appendix 1. Version 1.0 November 2006 4
  • 5. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Figure 1 – Assessment Matrix – Summary of Indicators & Supporting Data THEMES / INDICATORS DEFINITION & SUPPORTING DATA WEIGHTING Business Performance Extent to which the Agency has met its key operational targets for the accurate and timely processing of benefits and reduction of fraud and error Financial Accuracy • Performance against Financial Accuracy targets for main benefits 5 • Performance against benchmark targets for Caseload Accuracy and Decision Making Clearance Times • Performance against key Clearance Time targets for main benefits (Fresh Claims and CoCs) 4 Head of Work • Actual levels of stock compared with acceptable stock levels for main benefits 4 Customer Fraud & Error • Performance against Fraud and Error Targets for 2005-06 5 (Corporate level only) Financial Performance Extent to which the Agency has operated the necessary financial controls and governance, and used its resources appropriately to deliver services as efficiently as possible. Financial Management • Performance against Agency Resource and Capital Budgets 4 • Performance against Agency headcount reduction target Delivering Efficiency • Efficiency index based on unit costs for business delivery 4 Corp. • Staff costs per £1 benefit paid 3 Bus. Unit Table continued overleaf Version 1.0 November 2006 5
  • 6. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Figure 1 – Assessment Matrix – Summary of Indicators & Supporting Data Contd. Risk Management Extent to which the Agency has sound systems of internal control and can ensure that its core business can be provided effectively at all times in all business units Audit and assurance • District level assurance rating provided by Internal Audit 4 Continuity and Security of • Capacity for the business / business unit to provide continuous service and the ability to manage the risk 5 Service of staff shortages (e.g. annual leave, sick leave, alternative working patterns) Resilience due to Size • Size of office 5 (Jobs & Benefits only) Business Continuity • Judgement as to the robustness of business continuity plans to protect core business 3 Planning Agility Extent to which the Agency has the ability and competence to implement future change activities while continuing to improve business performance Capacity for Change • Experience of implementing change 4 • Existing Change drivers: (legislative / new strategies / new initiatives) Flexibility and • Extent to which structures can be modified and resources redeployed to meet business demands 3 Responsiveness Capability • Extent to which the Agency has staff at all grades with appropriate skills, competence & experience to 3 deliver its core business Version 1.0 November 2006 6
  • 7. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Approach to Scoring 3.4 The matrix was used to assess the current ‘fit for purpose’ position of the Agency as a whole and that of the business units that are tasked with delivering core operations; namely: • Disability and Carers Service (D&CS) / Incapacity Benefit Branch (IBB); • Pension Service (RP and PC) • Jobs and Benefits (JBO) / Social Security Offices (SSO). 3.5 Members of the AMB and Assistant Directors attended an assessment workshop over two days to score the Agency against the indicators at a corporate and business unit level. A subsequent independent workshop with the Agency’s District Management Team ensured that local perspectives on the current position in each office were taken into account. A similar approach and process was adopted with the operational management teams for Pensions Service and Disability and Carers Service. Final scores were moderated by the Senior Responsible Owner for the SBR and the relevant Operational Grade 6. In each case scoring was based on a combination of management data and professional judgement and despite the numbers and grades of those involved there was a high level of convergence. 3.6 Each indicator was scored using the following ten-point scale, with the minimum acceptable score being 5 in each case: • 9-10 Exceptionally Fit for Purpose • 7-8 Good Fit for Purpose • 5-6 Fit for Purpose • 3-4 Poor Fit for Purpose • 0-2 Extremely Poor Fit for Purpose. Method of Analysis 3.7 The final agreed scores were collated and the weights applied to produce a set of weighted scores for each indicator and criteria across the relevant business areas. The weighted scores were compared to the weighted minimum score and the difference (positive or negative) was calculated in percentage terms. Version 1.0 November 2006 7
  • 8. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 3.8 For example an office scoring 7 on an indicator with a weight of 5, results in a weighted score of 35. The minimum acceptable score for this indicator is 5 or a weighted score of 25. The percentage difference between the scores is 40%. Therefore on this measure this office is 40% above the minimum standard. 3.9 The difference between the standard and the score indicates whether the Agency or a specific business unit is currently fit for purpose in terms of this indicator and thus the likely capacity to absorb change without impact on performance. 3.10 A positive difference of 21% or more on any measure (i.e. a score of 7 or above) indicates that the Agency/business unit is currently well or exceptionally fit for purpose on this measure. It is also likely that a certain amount of change can be absorbed without significant impact on the fit for purpose status against this measure. 3.11 A difference of 0-20% (i.e. a score of 5 to 6) indicates that the while the Agency/business unit is currently fit for purpose it is only just meeting or just above the minimum standard. This suggests more limited capacity to absorb change without a negative impact on the current fit for purpose status. Scores in this range are coloured amber in the summaries in Appendix 2-4. 3.12 A score below the minimum standard (i.e. a score of 4 or below) indicates that the Agency/business unit is not currently meeting the acceptable standard. In this case there is no capacity to absorb future change without further negative impact on the current fit for purpose status. Scores in this range are coloured red in the summaries in Appendix 2-4. Version 1.0 November 2006 8
  • 9. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 4. Key Findings – Corporate (Agency) Level 4.1 The self-assessment finds that overall the Agency is exceptionally fit for purpose. Of a possible total of 480 points the Agency scored 425 – 77% above the minimum acceptable standard of 240. Figure 2 shows the difference between the minimum required and the actual score for each of the four assessment areas. There was a positive difference of between 68% (for Agility) and 90% (for Financial Performance). Figure 2 – Difference from Baseline (%) Summary at Corporate Level 100 90 80 70 60 50 40 30 20 10 0 Business Financial Risks Agility Performance Performance 4.2 For Financial Performance the minimum acceptable score was exceeded by at least 80% for each indicator, reflecting the Agency’s success in meeting its headcount reduction target and key corporate financial targets. 4.3 In terms of Business Performance the minimum acceptable score was exceeded for all of the indicators by at least 60% reflecting the overall achievement of operational targets. 4.4 Scores in the Risks category suggest no significant issues at a corporate level as regards ensuring service continuity and security. The scores for the Business Continuity Planning and Continuity and Security of Service indicators both exceeded the minimum by 100%. The score for Audit & Assurance exceeded the minimum standard by 40% suggesting good fit for purpose. This relatively lower score reflects the scale of losses through fraud and error that the Agency is currently taking steps to address. 4.5 Finally under the Agility category, the total score was 68% above the acceptable standard. Against Capacity for Change and Capability the baseline was exceeded by 80% reflecting the Agency’s breadth of Version 1.0 November 2006 9
  • 10. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position experience in implementing change to date. The score against Flexibility and Responsiveness was exceeded by a lesser amount (40%) reflecting the challenges the Agency has faced previously in attempting to modify its structures and deploy its staff to meet business demands. 4.6 At a corporate level the assessment demonstrates that the Agency is extremely fit for purpose at the current time. Against the four key criteria identified key findings were as follows: • Business Performance – 74% above the standard reflecting the Agency’s strong performance against key operational targets; • Financial Performance - 90% above the standard illustrating the Agency’s success in driving forward efficiency measures and maintaining appropriate financial controls and governance; • Risks – 80% above the minimum standard reflecting that at a corporate level the Agency has sound systems of internal control and the capacity to provide continuous service; and • Agility – 68% above the minimum standard indicating the strength of the Agency overall to implement change while retaining focus on business performance. 4.7 Overall Agency performance is currently well in excess of the minimum standard indicating that is has significant capacity to manage and absorb change. 4.8 Full details of the scores against each indicator at corporate level are provided in Appendix 2. Version 1.0 November 2006 10
  • 11. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 5. Key Findings – Disability & Carers / Incapacity Benefit Branch 5.1 Scores for Disability and Carers Service (D&CS) and Incapacity Benefit Branch (IBB) were well above the minimum standard suggesting these services are currently fit for purpose overall. Of a total available score of 420, D&CS scored 326 (55% above the minimum) and IBB scored 332 (58% above the minimum). These scores are illustrated in Figure 3. Figure 3 – Difference from Baseline (%) Summary for D&CS / IBB 100 90 80 70 60 50 40 30 20 10 0 D&CS IBB 5.2 At indicator level, two areas of concern emerged (coloured amber in the scoring summary in Appendix 3). Both D&CS and IBB only just met the minimum standard against the Audit & Assurance indicator reflecting the audit rating received. IBB just met the standard for Delivering Efficiency based on the results of the efficiency index. 5.3 Full details of the scores against each indicator for D&CS / IBB are provided in Appendix 3. Version 1.0 November 2006 11
  • 12. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 6. Key Findings – Pension Service 6.1 Scores for Pension Service suggest that the service is currently fit for purpose but with stresses in particular areas. The total score for Retirement Pension (RP) was well above the minimum standard (59%) as was the score for Pension Credit (PC) (29%). These scores are illustrated in Figure 4. Figure 4 – Difference from Baseline (%) Summary for Pension Service 100 90 80 70 60 50 40 30 20 10 0 RP PC 6.2 At indicator level it is clear that pressures exist within PC, which is a relatively inexperienced business area that administers one of the more complex social security benefits. This business unit only just met the standard (i.e. a score of 5) for Delivering Efficiency (reflecting high unit costs) and was 20% below the acceptable standard for Clearance Times (fresh claims targets were not met). It was just above the standard (i.e. a score of 6) for Financial Accuracy, Continuity and Security of Service, Flexibility and Responsiveness and Capability. 5.4 Full details of the scores against each indicator for Pension Service are provided in Appendix 3. Version 1.0 November 2006 12
  • 13. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 7. Key Findings – Jobs & Benefits / Social Security Offices Overall Assessment 7.1 The assessment finds that all network offices are currently fit for purpose overall, with none falling below the minimum acceptable total score. However analysis of results at indicator level suggests that some pressure areas exist and that there is a significant risk that change could not be absorbed without a negative impact on the ‘fit for purpose’ status overall: • 22 offices did not meet the minimum standard for 1 or more indicators (i.e. a score of 4 or less, coloured red in Appendix 4); and • 34 are only just meeting or just above the standard for 1 or more indicators (i.e. a score of 5-6, coloured amber in Appendix 4). The indicators against which offices were least likely to score well were Continuity and Security of Service and Resilience due to Size. This relates to office size and the impact that absence and Alternative Working Patterns (AWP) can have on the capacity of smaller offices to consistently provide core services. 7.2 Details of the scores for each office against each indicator are provided in Appendix 4 along with a rank ordered summary of total scores. Further analysis of the scores by theme and by office is provided in the sections below. Assessment Themes – Business Performance 7.3 All but 2 offices scored well above the acceptable standard which indicates that the network is currently meeting key operational targets overall. Two offices scored just above the standard overall. 7.4 At indicator level one office was below the standard for Clearance Times (Coleraine) and 1 was below the standard for Financial Accuracy (Omagh). Both these offices were just above the minimum score for Head of Work and Coleraine was just above the minimum for Financial Accuracy. Overall 8 offices were just above the standard for Head of Work and 8 were just meeting or just above the standard for Financial Accuracy. 7.5 The scores suggest that while the office network is managing to meet key operational targets overall, pressures exist as regards the head of work in some offices. Version 1.0 November 2006 13
  • 14. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Assessment Themes – Financial Performance 7.6 All offices are currently meeting the overall standard in this area and most scored at least 20% above. 7.7 Financial management scores were very strong reflecting success in meeting headcount reduction targets and performance against budgets. 7.8 Scores against Delivering Efficiency were less positive, with 3 offices not meeting the standard, 6 just meeting the minimum and 12 just above. This reflects increasing unit costs and increases to staff costs:benefit paid ratio in some areas. Assessment Themes – Risks 7.9 Performance in this area was well above the minimum standard for approximately two thirds of the office network, but scores for 15 offices were either below the standard set (4 offices), just meeting the standard (2 offices) or just above (9 offices). This suggests pressures as regards internal control within the jobs and benefits network, and risks to the Agency’s capacity to provide core services in all offices at all times. 7.10 Smaller offices struggled to meet the minimum standards in this area. Eleven offices were below the acceptable standard for Resilience due to Size reflecting their limited capacity to withstand change due to their small number of staff. This tended to be associated with lower scores for Continuity & Security of Service. Nine offices were below the standard here, reflecting high levels of AWP and absence, the impact of which would be exacerbated where staff numbers are lower. 7.11 Audit and Assurance scores are applied on a district basis. All offices in a district receive the same score as ratings are based on audits of sample offices extrapolated across each district. The current assessment found that 2 of the 6 districts are below the standard, 1 is only just meeting the minimum and 1 district is just above the standard. Smaller offices face a challenge in ensuring segregation of duty and tackling fraud and error. Assessment Themes – Agility 7.12 The experience of change across the office network (e.g. the Jobs and Benefits transformation) is high and 29 offices scored well above the minimum standard with none failing to meet the standard. Five offices were just above the minimum standard and 1 office was just meeting it. 7.13 Against the individual indicators, 1 office was below the standard for Capacity for Change, 2 just met the standard and 5 were just above. Version 1.0 November 2006 14
  • 15. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Two were below the standard for Flexibility and Responsiveness, 3 just met the standard and 8 were just above. As regards Capability all met the standard with 1 just meeting it and 6 just above. 7.14 The assessment suggests that while the office network generally has good experience in implementing change, there is limited flexibility to redeploy resources to meet business needs in some areas and this might impact on its capacity to absorb further change while maintaining business performance. Office Level Assessment 7.15 Figure 6 overleaf shows the rank order of offices by total score (a rank score table is also provided in Appendix 4). It illustrates that the lowest scoring offices are Newcastle, Coleraine, Dungannon, Omagh and Larne. Figure 5 below summarises the areas in which these offices scored below or just at the acceptable standard, highlighting the challenges faced in ensuring continuity and security of service. Figure 5 – Analysis of Lowest Ranking Offices Newcastle Coleraine Dungannon Omagh Larne Continuity & Security of Service Flexibility & Responsiveness Resilience due to Size Capacity for Change Financial Accuracy Delivering Efficiency Head of Work Capability Key Red – Below minimum standard i.e. score of 4 or below Amber – Equal to or just above minimum standard (i.e. score of 5-6) Version 1.0 November 2006 15
  • 16. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position Figure 6 – Overall Ranks Assigned to Each Office SCATTERGRAM OF OVERALL RANKS ASSIGNED TO EACH OFFICE 40 35 NEWCASTLE C'RAINE D'GANNON OMAGH LARNE 30 LURGAN CARRICK B'HINCH C'TOWN OVERALL RANK 25 P'DOWN B'BRIDGE STRABANE KILKEEL FOYLE NEWRY 20 L'GELVIN D'PATRICK BANGOR M'FELT 15 ARMAGH E'KILLEN LIMAVADY H'WOOD RD N'ABBEY B'MENA 10 LISBURN N'ARDS ANTRIM CORP ST 5 A'TOWN SHANKILL K'BREDA B'MONEY FALLS RD S'BURY SQ 0 Increasing Performance & Ability to Absorb Change Version 1.0 November 2006 16
  • 17. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 8. Conclusions 8.1 This assessment concludes that the Agency is currently exceptionally fit for purpose with performance well in excess of the minimum standards. As the scoring in Appendix 2 shows, at a corporate level the Agency is significantly in excess of the standards set against: • Business Performance – reflecting the Agency’s strong performance against key operational targets; • Financial Performance - illustrating the Agency’s success in driving forward efficiency measures and maintaining appropriate financial controls and governance; • Risks – reflecting the sound systems of internal control in place at an Agency level and its capacity to provide continuous service; and • Agility – indicating the strength of the Agency overall to implement change while retaining focus on business performance. 8.2 This assessment also demonstrates that the Agency’s centralised benefits are currently Fit for Purpose. D&CS, IBB, Retirement Pension and Pension Credit scored well above the minimum standard set (as the summary of scores shows in Appendix 3). 8.3 All network offices are also currently Fit for Purpose. As the summary in Appendix 4 shows offices are performing very well in terms of Business Performance & Financial Performance indicating that they are meeting key business targets, operating with the necessary financial controls and using resources appropriately to deliver services as efficiently as possible. 8.4 However pressures exist across the office network: • 22 offices did not meet the minimum standard for 1 or more indicators (i.e. a score of 4 or less, coloured red in Appendix 4); and • 34 only just met the standard for 1 or more indicators (i.e. scored 5 or 6, coloured amber in Appendix 4). Version 1.0 November 2006 17
  • 18. Strategic Business Review Section 2A Current Assessment Analysis Report – Baseline Position 8.5 The indicators against which performance was weakest were Continuity and Security of Service and Resilience due to Size. This indicates challenges in relation to ensuring that core business is provided effectively at all times in all offices. The key risk to the Agency is that offices with these vulnerabilities may not cope well with further change. 8.6 Despite the Agency’s current position of being exceptionally Fit for Purpose overall this assessment concludes that some vulnerabilities exist at business unit level. This raises the question as to the degree of change that can be absorbed across the Agency without a negative impact on business performance. 8.7 The third report in this series gives an overview of the changes and pressures which the Agency anticipates will be manifest in the next period to 2010 and the final report analyses the impact of them and the Agency’s ability to cope. Version 1.0 November 2006 18