Joint PPMA regional event for London and Southern/South East regions - 28 June 2013

1. PPMA
Joint Southern & South
East Region and London
Region Meeting
June 2013
www.pwc.co.uk

2. PwC
Introduction and overview
• PwC are working with the PPMA to develop thinking about the
‘future of the public sector workforce’
• The purpose of this work is to equip HR professional across the
councils sector to facilitate the discussion with their leadership teams
about the future size and shape of their own organisations – giving HR
a ‘place at the table’
• This session will given an overview so far of our thinking both about
the future of the workforce and the future of the HR function
2

3. PwC
The future of the public sector
workforce
Slide 3

4. PwC
Part 1. The future of the public sector workforce
Global context
Public Sector UK view
Workforce overview
Demand side issues
Supply side issues
The new world of public sector workforce
4

5. PwC
Global outlook remains very mixed, with BRICs
relatively strong but continuing storms in Europe
Source: PwC main scenario for 2012
Russia
Germany
UK
US
Brazil
India
Spain
Key
Canada
Mexic
o
South
Africa
Australia
Japan
Italy
Greece
Ireland
France
2.1
2.3
3.6
2.3
-2.0
0.3
-0.6
0.0
0.4
-1.7
2.5
5.0
-6.9
3.1
8.0
2.2
3.9
x.x = GDP growth in
2012
China
5

6. PwC
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
Apr May Jun Jul Aug Sep Oct Nov Dec January Feb March
The 2012 growth outlook for the Eurozone has
deteriorated sharply since last summer
Consensus economic forecasts for Eurozone GDP growth in 2012
1999-2010 average Eurozone growth: 1.5%
Source: Consensus forecasts
6

7. PwC
New strategic
playground
for growth &
development
across sectors
ECIC
Organisation Territory
Internal
control
External
control
Arena for
efficient
processes &
effective
services
Strategic
implementation
Public sector leaders need to balance their
internal and external focus...
7

8. PwC
...by creating the agile public body
A strategic leader, focused on and accountable for outcomes, not
processes, and which sees collaboration, accessibility and
transparency as core capabilities built through
...reducing the complexity of organisations
...enhancing customer intelligence
...developing new business models
8

9. PwC
Where necessary, prepare to deal with failure
where it becomes inevitable in a managed way
Strategic
Financial
Operational
Funding
available
to manage
risk
9

10. PwC
Public sector workforce statistics
• 5.7 million people work in the public
sector across the UK
• In September 2012 around 19.4% of
people in employment worked in the
public sector:
- 2.7 million central government
- 2.6 million local government
- 478,000 in public corporations.
• Top three industries in September
2012:
- National Health Service –
employing 1.6 million people
- Education – employing 1.5 million
people
- Public Administration – employing
1.1 million people
(Office of National Statistics Part of Public Sector Employment, Regional
Analysis of Public Sector Employment, Released: 06 March 2013)
10

11. PwC
Cross service demand side issues
11

12. PwC
Service demand and supply issues
• Political pressure to deliver better services
‘locally’ with local public resources
• Pressure to deliver ‘more for less’ ever decreasing
funding and increasing efficiency target
• UK ‘protectionist’ attitude towards public services
• Increasing use of technology – 24/7 client access
and support
• Aging population – pressure on adult health
and social care
• Troubled families – income divide
• Intergenerational worklessness
• Migrant population – net migration figures
12

13. PwC
Workforce challenges - macro
• Aging workforce – segmentation?
• ‘Millennials’ – different attitudes
• Increasing cost of workforce
• Decreased ‘mobility’
• Engaging the workforce in the solution
• Physical and cultural barriers across public services (T&C’s culture)
13

14. PwC
Specific workforce challenges
LG & EducationHealth
Central Gov ‘Blue light’
Significant
reorganisation
Long lead
time to
develop skills
Cost of
workforce
Funding cuts affecting pay
and promotions causing
increased resignations and
making it harder to attract
candidates
Reduction in
management
positions increasing
spans of control to
reduce cost
Increase in
partnerships
to save money
New operating
models
Lack of
transparency
between input
and outcomes
Movement of
services from
central to
local delivery
Combining of back
office functions to
save on cost –
centralised HRSS
New structure –
PCC replacing
police authorities
Amalgamating police
fleets and centralising
contracts leading to
larger areas covered and
more generalist roles
Modernisation –
implementation of
new systems
resulting in
changes to roles
14
Integration of
community
service
delivery

15. PwC
Delivery models: the public-private continuum
Public sector control Hybrids Private sector control
Executive
Agency
Trading
Fund
NDPB
Public
Corporation
Joint
Venture
PPP
Privatisation
Mutual
JV
BPO
GovCo
Permanently
employed?
Outsourced?
15

16. PwC
Cross service ‘supply’ side considerations
16
Service delivery
Own
Buy
Share

17. PwC
Own
• Retention of
rare skills
• Workforce cost
• Motivation and
engagement
Share
• Performance
culture – shared
goals
• Multidisciplinary
teams – T&Cs
Buy
• Performance
measurement
• Different
organisations
aims?
• Motivation of
workforce
Cross service ‘supply’ side workforce
considerations
17

18. PwC
The future of the public service workforce
We need to work
across existing and
emerging boundaries
creating evidence
based strategy and
prioritised workforce
interventions focused
around:
18
Future
Workforce
Strategy
Productivity
Flexibility
AgilityCollaboration
Efficiency

19. PwC
The changing role of the HR function
Slide 19

20. PwC
Market trends - HR call to action
• HR functions have changed significantly over the past
decade however there are still serious questions about
HR’s ability to drive the change needed to deliver
growth.
• To become a true strategic business partner, means
understanding the company’s business, industry and
strategy. HR needs to be actively involved in
investment and business decisions and looking to
financial measures to gauge results. A strategic HR function
should act as a consultant to the company on all
people issues, providing insights that can help business
leaders make the rights decisions and helping to craft the
right business strategy including those around new
market entry.
• If HR is not focused on the strategic business issues that
have a direct impact on overall value then their future
may be bleak. With CFOs taking a much wider role
around growth and business transformation, HR leaders
need to become more strategic or face becoming
purely functional
(Source: PwC 14th Annual Global CEO Survey ‘Growth re-imagined. The race for
talent is back on)
20

21. PwC
Market trends - HR call to action
“HR needs to be actively involved in investment and business
decisions and looking to financial measures to gauge results.
A strategic HR function should act as a consultant to the
company on all people issues, providing insights that can
help business leaders make the right decisions and helping to
craft the right business strategy including those around new
market entry.”
• What needs to be in place to enable this to happen?
• If these things are not in place, what can be done to
counteract this?
21

22. PwC
Market trends - CEO business and people
challenges
22
90% of CEOs
expect their key
operations to grow in
BRICs.
66%of CEOs
say that a lack of the
right skills is their
biggest talent
challenge.
66% of CEOs
fear talent shortages
will constrain their
company’s growth.
83% of CEOs
intend to make
“some” or a “major”
change to their
strategies for
managing people.
(Source: PwC 14th Annual Global CEO Survey 2011 ‘Growth re-imagined. The race for talent is back on)

23. PwC
Business related pressures causing HR functions
to transform
23
From the CEO
• Focus on ‘core competencies’
• Companies retrench to focus
on core activities
• Creates pressure on HR to
‘prove its worth’
From the CFO
• Pressure for cost
reduction
• Benchmarking against
sector high performers
• Requirement to
demonstrate the ROI for
HR activities’
From line manager
• Support for them to have the
autonomy to manage their teams
• Tools to improve the
performance of their teams
• Less labour intensive interaction
with HR
From employees
• Improving service to
employees
• Modern employees act as
‘volunteers’ and demand high
standards of service from HR
• Employees have a new one-to-
one relationship with
companies

24. PwC
HR related pressures causing HR functions to
transform
24
From the HR Community
• Better, clearer, simpler
governance
• Wanting better integration E2E –
stop the silos
• Getting technology enablers to
function in the right way
• Better recognition for the ‘stretch’
From the HR Market Place
• Focus on integrated
transformation
• 2nd generation outsourcing & 3rd
generation cloud based services
• Making multi-functional shared
services work
• HR Software as a Service
From the HR Leadership
• Focus on aligning business
objectives and HR priorities
• Delivering measurable HR Value
• Achieving greater influence at
the top table
• Doing more with less – being
leaner
From Internal HR
• Greater focus on benchmarking
against the market and competitors
• How to work around current
technology constraints without
creating a culture of ‘patches’
• Ensuring effective governance and
control of HR related work
• Building better capability to manage
supplier relationships directly

25. PwC
The people challenges in transformational change
The present economic climate is demanding major workforce reform
• How do we define our people strategy?
• If we get it wrong, we will not be able to deliver our future business strategy
• How do we strategically plan our workforce requirements and deliver them?
• If we get it wrong, we could end up with the wrong workforce to deliver our strategy
• How do we reduce the cost of the workforce and improve flexibility and
productivity?
• If we get it wrong, we could run out of money/not meet budget
• How do we identify the talent in the organisation and retain them?
• If we get it wrong, we could lose the talent to take our business forward
• How do we develop the right structure and roles to enable new cost effective
operating models?
• If we get it wrong, we could end up with a model that fails to work in practice
• How do we have an HR function fit to drive workforce reform whilst reducing its
cost?
• If we get it wrong, we may never deliver our financial and people requirements
25

26. PwC
In summary, the case for stepping up the pace of
HR change is increasing
26
Common challenges potentially
impacting how HR will be
delivered in the future...
Cost reduction
Consolidation
Regulation & Risk
Globalisation
In addition, HR is facing
‘internal’ pressures...
HRCustomers
Global
Differentiated
Fragmented
HRRoles
Strategic Focus
(BPs)
Aligned to strategy
(CoE)
Effective delivery
(SSC, Local HR)
HREnablers
Technology
Global Standards
Measured value
In addition, to the demands made
by the business, there are
strategic priorities for HR
Talent
• New employee preferences &
requirements
• Branding & sourcing of talent
• Attraction & retention of global &
diverse talent
Culture
• Increased need to manage risk and
embed ethics in corporate culture
• Increased focus on organising and
incentivise around the customer
• Cross cultural integration challenges
Change
• Significant HR support to manage
organisational change
• Increased complexity in business
processes and structures
• Need to expand service delivery
models into new countries and
segments
• The credit crunch has put cost
reduction and efficiency at the top of
senior executives agendas
• Increasing regulation in some
sectors
•Significant increase in cross-border
M&A
• The continuation of globalisation –
for example, internationally mobile
employee base and off-shoring

27. PwC
Evaluating our own drivers
27
From the HR Community
• ’
From leadership From the HR Leadership
From manager and
employees
In two groups evaluate the key drivers in the public sector

28. PwC
HR Priorities - Business themes that trigger
change in People and/or HR priorities
28
Enables Shapes
Enables Shapes
Business Strategy defines the
direction, positioning, scope,
objectives and competitive
differentiation
People Strategy defines the
leadership, talent, culture and
operating model
requirements to align to the
Business Strategy
HR Priorities articulates the
strategic direction and
imperatives of the HR
organisation and builds out
the capabilities required to
align to the People Strategy
 Critical workforce capabilities – viewing productivity
and skills development as an integral part of
transformation programs.
 Managing change in turbulent times –guiding
organisations through change and transformation and
build organisational capability.
 Talent management in the increasingly global
environment– establishing holistic, integrated,
technology-enabled, new talent supply chains.
 Improving organisational effectiveness – striving for
high performance in operating models, culture,
leadership, adaptability and sustainability.
 Learning and collaboration – considering social media
environments and new ways of working, blended
learning and learning as a business.
 Measurement – focusing on data-driven, value
outcomes in building competencies, process
effectiveness, productivity and organisational
performance
Business
Strategy
People Strategy
HR Priorities

29. PwC
HR Priorities - Different business strategies will
drive differing HR responses
29
Alternative business strategy changes require an accompanying realignment of People strategy & HR
priorities.
Survive Restructure & Refocus Expand
Focused primarily on short-term
actions to manage costs, cash flow and
revenues to ensure survival.
 Rationalise vendor contracts
 Labour cost reduction
 Consider lower cost labour locations
 Operational efficiency improvements
 Optimise processes and functions
 Protect employer brand
Using rapidly changing environment
as context to restructure - strengthen
leadership and critical talent, review
operating model and culture to
optimise agility and innovation
 Rigorous workforce planning
 Critical skills and role development
 Talent retention
 Engagement and alignment
 Payroll and rewards optimisation
 Performance management
Take advantage of market
disruptions to acquire capabilities,
market share, and new talent
 Leadership capability review and
enhancement
 Talent acquisition
 Post merger activities
 Workforce segmentation
 Governance and organisation
architectures
HR priority interventions
Business Strategy

30. PwC
These drivers are fundamentally changing the
people operating model
30
Linkingemploymentbrandwithoverallbrandstrategy
Business Strategy
People Management Strategy
Human Resource Strategy
Role of manager
Culture
(behaviour)
Retain
&
Engag
e
Build &
Grow
Talent
Perform
&
Reward
Attra
ct
Optimise (Incl. measurement and benchmarking)
“Lineofsight”
Linkingstrategytoactivity
Change Levers
HR
Structure & Capability
HR
Operating Model &
Technology Platform
Role of HR
In defining the People and HR
Strategies it is important to
recognise that they need to be
effectively aligned with the wider
business strategy.
It is also essential to understand the
importance of integrating other
component elements which make
up the broader system and which
underpins business change.

31. PwC
Managing
the HR
function
Aligning
people
to strategy
Managing
financial risks
Creating and
measuring
shareholder
value
• Payroll
management
• Benefits admin
Personnel
administration
• Job grading
• Salary admin
• Manpower
planning
• Compliance
(tax, labour
law, etc)
• International
assignments
• Pensions
HR management
• Personal
Performance
Management
• Training and
Development
• Reward
• HR Function
effectiveness
HR performance
• Governance
• Leadership
alignment
• Leadership
development
and talent
management
• New core
capabilities
• Employee
engagement
• Performance
management
Organisational
effectiveness
• Transformation
al change
• People
elements of
process or
systems
change
• M&A due
diligence &
integration
Managing change
• eHR
• Outsourcing
• HR Function
design
HR efficiency
Financial and accounting impact of people, people-related costs and HR interventions
Basic
Personnel
Services
Control and
Compliance
Specialised
Expertise
Strategic
Business
Partner
Change
Specialist
Administrator
Enforcer
Expert
Business Partner
Change Agent
Slide 31
And the type of HR function

32. PwC
There is no single generic solution
“There is no one single organisational solution for HR (…). Each organisation will need to
find a way that best fits with its unique situation”
Transforming HR, Creating value through people – Reddington, Williamson, Withers
However…..
• Today's HR models all encompass four common elements, however the
shape and focus of these vary from organisation to organisation
E-HR
Portal
Employee Self Services (ESS)
Manager Self Services (MSS)
Specialist HR
HR Leaders
i.e. Centres of Expertise
Business HR
i.e. HR Business Partners
Transactional HR
i.e. Shared Services /
Outsource
1 2
3 4
Admin Expert /
Functional Expert
Change Agent/
Strategic Partner
Strategic Partner/
Leader
Employee Champion /
Employee Advocate &
Human Capital
Developer
Slide 32

33. PwC
Function capability
Slide 33

34. PwC
People & Capability - HR needs to addresses
capability and behaviour
HR has recognised that sustained functional performance requires an approach that
addresses capability and behaviour. HR capability will focus on less traditional HR
skills, such as:
• Trend spotter
• Talent assessor
• Business leader and consultant
• Strategy developer
Building business capability and support:
• Creating clear line manager accountability
• Providing the right tools, development and support
• Reinforcing the people management role
By focusing on capability HR can realise more value from historic investments in
technology and process
34

35. PwC
People & Capability – Building capability in the
HR function
Personal Attributes
Required for excellent performance across all levels and functions
E.g. Results orientation, Commitment, Continuous Learning, Honest &
Integrity
Leadership & Management Competencies
Success factors that differentiate performance across career levels and
bands
E.g. Strategic thinking, Resource management, Networking, teamwork,
Goal setting
HR Core Competencies
Success factors that are shared across all HR roles
E.g. Insights & Influence, Operational excellence, Stewardship
HR Role Specific Competencies
Success factors that distinguish sub-functional/role specific
competencies
35
• There are levels of competencies
required to function within HR
• As organisations look to transform
they also need to consider how key
HR competencies need to adjust
• It should also be aligned to the
attributes and the leadership
competencies of the entire
organisation
HR Business
Partner
Centre of
Expertise
HR Operations Local/ Generalist
HR
Business
Management

36. PwC
People & Capability – Building capability in the
HR function
36
Strategic
Orientation
Functional Alignment
Leadership
Transactional
Business
Partner
Centre of
Expertise
Local/
Generalist HR
HR Operations
HR is recognising that sustained functional performance requires a different approach that fully
addresses HR and business capability and behaviour. New roles in the HR function equally dictate new
capability (skills, knowledge and experience) requirements. Some roles will focus on strategy alignment,
others will focus on operational excellence.
Business
Management

37. PwC
People & Capability – Building capability in the
HR function
37
HR Business
Partner
• Aligned to business shape
• Enhance business performance
• Act as a change agent and strategic partner
to the business
Centres of
Expertise
HR Operations
Local HR/
Generalist
Business
Management
Typical Role attributes Changes in capability required
• Provision of best-in-class strategy, policy
and process
•Lead specialist interventions & provide deep
specialist advice to the HR community
• Delivers scaled operational services to the
business and HR
• Works with external vendors and supplier s
• Quality and customer experience
• Provision of ‘near-to-customer’ tactical HR
support, for example succession planning and
performance management support
• Promotes a commercially-run and compliant
function
• Governance and reporting
• Financial and strategic planning
• Risk and compliance
• Increases in business acumen and
strategic influence
• Increases in deep technical specialism
and increased awareness of best in class
approaches to their specialism
• Strategy development, program design
• Increases in customer awareness and
service management
• Service & performance focus
• Org design, development & HR
effectiveness
• Relationship management
• Project & Product management
• Sometimes an entirely new capability in
HR
• Increase focus on planning &
performance
37

38. PwC
Building our own ‘From ... To’ model
38
Strategic input
Data
interrogation
and utilisation
Impact
Managing
Planning
New mindset Barriers and solutions

39. PwC
Building our own ‘From ... To’ model – potential
responses
39
Strategic input
• Taking strategies, plans, solutions and
helping to implement them effectively
Data
interrogation
and utilisation
Impact
Managing
Planning
Current mindset New mindset
• Producing statistics and reports on time
and accurately
• Credibility though meeting delivery
expectations consistently
• Ensuring that individual, team and
funtional objectives are delivered to required
parameter
•Ensuring that planning is done effectively, in
line with operational and business cycles
• Shaping solutions at inception to ensure
they are more relevant, can be landed and
are sustainable
•Analysing data to identify trends, issues
and remedial solutions.
•Identifying gaps in data captures and
working with internal partners to fill gaps
•Building, developing and maintaining
relationships through accessibility and
demonstration of expertise on a day to day
basis
• Continual review of how functional
services are delivered with respect to
meeting ongoing organisational
requirements
• Identifying key emerging issues through
organisational and environmental scanning
and adapting planning to take account of
these

40. PwC
Summary and close
Slide 40

41. PwC
Closing remarks
• Our external and internal factors are influencing the size, shape and
composition of our workforce
• We need to change and adapt to meet these changes and deliver
effective services of the future
• The HR function has a key role to play ..... but our ‘mindset’ need to
change to give us a place at the table
41

42. Thanks
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