Private Success, Public Problems: Organisational Change During Privatisation

DSSD (DERA Support Services Division) supports the sites, information technology and finances of the Defence Evaluation and Research Agency (DERA). DERA is one of the UK's largest trading fund agencies with a turnover exceeding £1 billion and over 12,000 employees. During 1995 we reviewed DERA, through a study of core and non-core activities, and identified DSSD as a candidate for privatisation. A decision to proceed with privatisation of DSSD was announced in March of this year and is scheduled for completion around February 1997.

DSSD is a significant operation in its own right - the notice of the proposed privatisation in the Financial Times of 27 August dryly notes that "the business has an annual turnover of around £150 million and employs some 1800 staff on DERA sites throughout the United Kingdom". As this article is written, we are in the midst of the multitude of activities necessary to support a successful privatisation, e.g. meetings with accountants, lawyers and financiers; re-specification of internal contracts as explicit external ones; establishing private sector systems for finance and management; reinforcing DSSD's sales and marketing; to name but a few. Despite the flurry of activity surrounding the £150 million figure noted above, our most important work is working with the second figure, our 1800 staff, to build a long-term future for DSSD.

DSSD's workforce reflects its work. DSSD provides DERA with a wide range of support services, grouped in three areas:

• site services - comprising activities such as property management, maintenance, graphics, waste disposal, stores and supplies, conferences, health and safety services;
• information services - covering facilities management, systems development, security, communications, voice networks, data networks, PC support, Internet and Intranets;
• financial services - including ledger accounting, budgeting, fixed asset accounting, management accounting, stock control, consulting, financial modeling and analysis.

Not surprisingly, DSSD has staff from property, computing and accounting throughout its sites, as well as large numbers coming from other backgrounds such as defence, science, exhibitions, graphic design, marketing and other government departments. Some of the services are unique - supercomputing support, highly secure networks, hazardous sites. What has united these people in the past has been a tradition of service to DERA (and its forebears), and through DERA support for the armed forces and the nation. Our challenge during this period of transition has been to find ways of uniting DSSD's people together in support of a relatively new organisation which is striding out on its own feet for the first time.

We did not start on this project without some experience, some might say too much experience, in change. DSSD had been transformed along with most of the DERA organisation over the past five years to the point that John Chisholm, the Chief Executive, appropriated the most frequently asked question as the title of his talk to the teams, "Why Are We Doing All This?". In that talk and subsequent paper, he outlined many of the achievements, some of the pain, a bit of the humour and thanked the people who made it possible - our fellow employees. DSSD was an integral part of that change programme and at the heart of many of the financial achievements, including a reduction of the cost base in the order of £135 million per annum. John Chisholm's programme for change has served us well - to make change happen you need a crisis; if you don't have a crisis, create one; new directions are best led by new faces. Yet as we undertake privatisation, the programme requires interpretation and adjustment. Management studies of change, including one I participated in, "Vision into Action" (which identified 10 change themes) support John Chisholms's view that charismatic change leaders develop an intense sense of urgency by identifying or creating a crisis. In order to galvanise support, we might promote a crisis throughout the organisation, but will it lead to an appropriate response? These studies also show that management development, alignment of terms and conditions, decentralization and delayering, although less dramatic than crisis development, can show similar benefits during periods of change. We have the crisis of privatisation and we are coldly using the other themes.

Over the past 15 years in the public sector, "privatisation" has become a loaded word. Privatisation can convey excitement, misapprehension and mistrust. In the private sector, "privatisation" is almost meaningless, irrelevant, unless the private organisation has clients who have undertaken it. Many of the connotations of privatisation to the public sector employee are unfortunate, but not surprising. In many quarters, privatisation has been a bogey word, used to intimidate people into courses of action. In some quarters, privatisations have been criticised, sometimes unfairly, sometimes with justification, particularly where privatisations have had iniquitous results. We have had to deal with many of these misunderstandings, so our first course of action has been communication. We have been helped here by the sophistication of the workforce, which is highly educated. Our overall approach can be summarised as "Communication, Contribution, Consensus and Commitment". We communicate the problem(s) with the objective of gaining contributions, which leads to consensus on the approach and commitment from those involved in contributing.

There is never enough communication, but the effort has been impressive. The obvious actions have been meetings and presentations from DSSD's Managing Director, Graham Love on down through our teams. Graham alone is spending up to 50% of his time just talking people through the process of change. DSSD are using DERA's successful Talk Back system, a cascading monthly briefing programme. Other straightforward courses of action have been the publication of a fortnightly newsletter, "Privately Yours" (now on its 10th edition), awaydays, helplines and videos. Contribution, consensus and commitment require more innovative ideas by line managers. Ideas have included the involvement of staff in suggesting new names for the organisation, development of an Intranet web site (starting with "Privately Yours") and helplines.

DSSD has had to tackle development, pay and grading issues. Private sector remuneration systems provide different incentives from public sector ones. DERA has moved a significant way towards remuneration systems in line with the best of the private sector. DERA's Reward Management Review Project (RMRP) has been under development for some time and is being put in place this year. The new system provides more flexibility and more alignment of personal goals with organisational goals. Contributing to organisational performance is the principal measure of success. DSSD has adopted DERA's system and is devoting even more effort to ensuring that it reflects best private sector practice.

More subtle has been trying to get the message about privatisation right. Balance is a particular problem. Privatisation will affect people variably - total change here, business as usual there. "Continuity and change" are resonate public sector themes, but the uncertainty implicit in these conjoined themes is disturbing to many. Our reaction so far has been to view privatisation as a large project which will transform many of the external-facing areas, such as sales and marketing, but retain similar themes of service, quality and efficiency in operational areas, particularly those dealing with DSSD's principal customer, DERA. Privatisation issues are important, a crisis for some, but not for most of DSSD. Continuity and change coexist.

And success? Well, we will not know the full answer for some time. We do know that the full answer will at best mention partial success. There is so much to do with so many people in such a short time. Our success, if success it is, will be a private one. The new owners of DSSD may thank our people, but the wider world will little note it. Our failure, if failure it becomes, will be all too public. Even with success DSSD will also have to manage change processes all over again, many times, in order to be successful. DSSD will have to accept and absorb people from many of the clients it will gain as it takes on management of their facilities. DSSD's ability to help this process of change will be a key competitive skill. We have to learn - that is our crisis. Our people, today and tomorrow, truly are our highest priority.

References

John Chisholm, "Why Are We Doing All This?", Journal of Strategic Change, Vol. 4.2, pages 245-262 (1995).

Michael Mainelli, "Vision Into Action: A Study of Corporate Culture", Journal of Strategic Change, Vol.1.4, pages 189-201 (1992).

Michael Mainelli, The Z/Yen Group (acting Business Development Director DSSD, later Comax)

[A version of this article originally appeared as "Private Success, Public Problems - Organisational Change During Privatisation", The Public Sector A-Z of Human Resources 1997, Public Sector Information Ltd (1997) pages 80-82.]