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Public sector to social enterprise

Making the transition workshop, 4 August 2010

Have you ever felt frustrated by the protocols and process of the public sector? Wanted to explore new business models and ways of delivering services? Wished for faster decision-making, more control of resources or more direct accountability to customers?

Over the past few years, groups of staff in the NHS have been exercising their ‘right to request’ to deliver services through a social enterprise. It is a model which is being closely studied by Local Government.

On the 4 August 2010, we brought some of our most enterprising Local Innovation Award winners - Halton Borough Council and Merseyside Fire and Rescue - together with expertise drawn from Local Partnerships and the NHS, to understand more about the journey of taking existing services from the public sector into a social enterprise.

Problems and opportunities with the social enterprise approach

Participants quickly identified the positives with this approach:

Strengths included

  • publicly owned rather than state owned services
  • faster decision-making
  • greater freedom
  • improved capacity for innovation

Opportunities were

  • more control of the commercial side of the business
  • reducing management overheads
  • capitalising on the credibility of positive brands, such as the NHS and the Fire Service
  • identifying new revenue streams and investors
  • engaging a fresh sense of commitment and ownership from staff
  • improving two-way communication with staff to increase capacity for change

Weaknesses included

  • it's a resource intensive process requiring dedicated funding, plus a great deal of time and effort from leading personnel
  • information gaps concerning option appraisal, legal and managerial processes
  • difficulty in accurately understanding profit and loss before accounts are disaggregated
  • difficulty in negotiating corporate resources, such as IT and HR
  • the importance of finding appropriate staff with the right skills to lead the changes

Threats included

  • negative impact on staff terms and conditions, especially public sector pensions; though this problem was not insurmountable - for instance some participants were using ‘community interest companies’ to allow transference of NHS pensions
  • union opposition - though a number of participants had experienced union support because the initiative was viewed as a route to staff empowerment and sustainability of employment
  • a much higher level of personal risk and responsibility than in the public sector

Mapping the social enterprise journey

Dan Gregory from Local Partnerships provided an overview of the journey from public sector to social enterprise. This included a route map with milestones – download the social enterprise milestones map (PDF, 1 page, 64KB). Dan identified some core business planning issues that should be considered:

  • mission, strategy and core business
  • commercial and market analysis
  • products and services
  • resources
  • financial forecasting
  • management - including risks and compliance
  • membership and governance
  • communications and stakeholder management
  • transition planning

The workshop then went on to examine what information participants would need to create their own business plans. Learning points included:

  • it’s worth investing time in options appraisal before embarking on a social enterprise
  • defining your core business is crucial
  • disentangle costs from the corporate budgets. For example, HR and IT
  • start finding the answers to the ‘deal breaking’ issues, such as pensions
  • consider how you will measure and report on your social impact
  • don’t forget the importance of a sound financial model

Watch short video clips from the business planning exercise: clips are of Jayne Mottershead from Blackpool, Fylde and Wyre Hospitals, and Dan Gregory from Local Partnerships.

Identifying and influencing the people that matter

Dan Gregory identified groups of stakeholders that are crucial to the journey, this included:

  • staff, senior management, unions
  • service users, community
  • governing body, government – local, regional and national
  • commissioners, regulators
  • other providers

Workshop participants then conducted their own stakeholder analysis. This exercise helped them determine the stakeholders level of interest in the changes, anticipating their likely attitude and their capacity to assist (or sabotage) change.

The group then discussed communications strategies to influence the most important positive and negative groups. Key talking points included:

  • remember that some stakeholders may change in importance over time – commissioners may not remain essential to your business plan as other revenue streams appear
  • some stakeholders influence each other and must be jointly considered
  • intensive engagement of staff is essential if you are contemplating a staff vote – this course of action can be risky

Social enterprise in practice case studies

Representatives from Salford Health Matters and the Wishing Well project in Crewe presented their experiences of developing a social enterprise. Read these two short case studies to find out about the benefits, issues and risks involved.

Further resources on social enterprise

There are a range of resources available to those considering embarking on the public sector to social enterprise journey. For further information on:

For more information on:

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