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CHAPTER 6
Critical Decision Making - Case Study
Context
In the year preceding this review, Turning Point Scotland cancelled a large contract with a Scottish local authority. This decision had significant implications for the organisation, its service users and staff. As part of this review, we asked TPS to reflect on the processes and key events which led to this decision. This particular decision was selected by SWIA because of how effectively it demonstrated the pivotal role boards have to be 'in control' of organisations. It reinforced the importance of boards being provided with good, timely and thorough reporting by senior management and operational staff and the key function of board members to challenge and question reports, contribute to and reinforce action plans and to ultimately make what can be difficult decisions for an organisation.
Our remit was to critically consider the decision making processes and how they related to the key areas of governance. We were provided with board meeting minutes, reports, and key correspondence between TPS and the purchasing local authority. We also held a focus group with staff and board members who had been involved in the decision making process which led to the termination of this contract. We did not evaluate the decision itself and we did not review or analyse the actions of the purchasing local authority.
Chronology
1990s
Services of Turning Point Scotland 15 were commissioned as part of a hospital reprovisioning programme for adults with learning disabilities. The service had developed in two phases and the number of service users increased, beyond what had originally been agreed.
2003
It was evident from TPS financial reporting that services within the project were operating at costs significantly above budget. TPS was making up this shortfall from other sources within the organisation. At the same time, senior staff at TPS noted concerns about the quality of some of the services being provided by this project.
2003-2005
The board had been aware of the financial difficulties faced by the project, but did not take conclusive action until 2005. Staff and board members told us how during this two year period, they continued to operate the project and deliver a service. Staff continued to negotiate with the local authority, acting on good faith that the funding difficulties would be resolved. These activities were regularly reported to the board. In early 2005, the board asked staff to review the project with the following two aims: reduce the deficit and improve the quality of its services.
This review was shared with the local authority who expressed their disappointment that savings could not be achieved. The local authority did not agree to the proposed costing and maintained that TPS needed to reduce the overall running costs of the service. TPS concluded that they could not meet the savings requested by the local authority, without in their opinion significantly compromising the integrity of the project. Meanwhile, TPS did introduce changes to the management of the project aimed at addressing concerns about its performance found on the review.
April 2005
The board decided that the financial problems faced by this service had to be resolved. At the April 2005 board meeting, a clear action plan was put in place by the board to address the problems faced by the project. Management were given six months to come up with options for the future of this project. An options paper was presented to the board in November 2005. This was considered and one of the five options for the continuation of the service was agreed. It was also determined that a final decision about the future of the service would be made in early December after the agreed option was discussed with the local authority.
December 2005
The proposed option was discussed with the local authority, but was not accepted. TPS and the purchasing local authority could not agree a way forward for the service, without reducing its overall cost. At an extraordinary board meeting in December 2005, the board made the decision to cancel the contract.
January 2006
The local authority was officially informed of the decision to end the contract. The chief executive of TPS met with senior staff from the local authority and outlined the reasons for the decision and followed this up in writing. TPS and the local authority agreed a plan for the transfer of services and staff. TPS informed regulatory bodies of the actions that had been taken. TPS and the local authority agreed to work together to manage the flow of information to staff, users, carers and the media.
The services previously provided by this project were transferred from TPS to other providers. Some staff moved to work with new providers and some were allocated to other positions within TPS. The care of all service users was assessed by TPS and their care transferred to the new providers.
Discussion
This service was intended to be a working partnership between TPS and a local authority in delivering social care. However, there was no formal written partnership agreement, contract or service level agreement in place when the project began and as it moved into its second phase. On reflection, TPS recognised that greater clarity in the partnership, including budget scrutiny was needed from the beginning of this service and the lack of these may have contributed to the challenges it later faced. We concluded that the lack of clear partnership from the beginning inhibited the extent to which either TPS or the local authority could be held fully accountable for the cancellation of this contract.
According to documentation provided by TPS, the extent of the financial problems with the project were apparent in 2003. The decision to terminate the contract was not made until December 2005. In the intervening period, a series of actions was undertaken by TPS in an attempt to resolve these difficulties. These were unsuccessful. We think that management actively engaged with the board in addressing the risks posed to the organisation by this service. It was evident during this review that staff and the board believed in this project and what it was trying to achieve. We found that although the reporting structures within TPS ensured the board and management were aware of these difficulties, decisive action was not taken until they became acute.
In 2005 the board took authoritative actions as outlined above. We think these actions were constructive, but questioned why they had not been happened earlier. Board members have an obligation to make responsible decisions for the organisation. Deciding to terminate this contract had clearly been personally difficult for all those involved, which may explain why the organisation took the time it did in trying to resolve the issues. Ultimately, we think the board fulfilled its substantive duty and made the fiscally responsible decision for the organisation.
Overall, we think board members and management demonstrated good leadership in guiding the organisation towards the final decision to terminate the contract. We think the board and TPS management considered the implications of this situation on the organisation as a whole, the service users and staff as they considered what actions to take.
We were told that in reaching its decision the board considered other options for the project, and how financial drains on other services were being caused by the deficit in this one large project. Furthermore, resources being used to cover the deficit were also deflected away from the development of other TPS services. The board also carefully considered the implications of a decision to terminate the contract on the public perception of TPS and the implications for future business. We think it was appropriate for the board to have had these considerations.
Following the final decision by the board, management demonstrated a commitment to work with the local authority in ensuring a smooth transition for both staff and service users. They had discussed with the trade union implications for staff and supported the movement of staff either within TPS or to the new providers. They worked with the local authority to ensure a smooth transition for service users, including making arrangements for some people to remain where they had been living previously. We heard from stakeholders that this transfer had been handled well by TPS.
TPS demonstrated good leadership in how it worked with the local authority and its staff in transferring the services to other providers. It upheld its commitment to co-operate with this process and ensured that services to users were not compromised. TPS also reflected on the decision and changed a number of its internal processes as a result of the experience. TPS had also undertaken to share these lessons with other organisations operating in the voluntary sector. TPS are to be commended for their own self-reflection on the experience and for allowing others to learn from it.
We think the management and board of TPS handled the flow of information about the termination of the project well and with integrity. They achieved a reasonable balance between keeping people informed and not raising fears and/or expectations. The board ensured there was direct communication with staff through a series of briefings. We were told that at the time, staff had mixed views on the decision taken by TPS but some have since come to acknowledge it was the right decision for the organisation.
Both the board and the management told us how significant lessons had been learned as a direct result of this episode. A clear and comprehensive process was introduced for regular reporting to the board, services that were operating at a deficit and clarification of when a service would be considered financially failing. Furthermore, TPS now worked more rigorously with purchasers to establish clearer partnerships, agreements and contracts. TPS had improved its internal systems of quality management and continuous improvement through the use of regular meetings with purchasers and internal quality management tools. TPS also recognised that they operated in a 'commercial market', and it was important for the organisation to consider how other providers may be able to provide the same level of service they do and the implications of this for TPS and future strategic and business planning.
This case study was conducted a year and half after the decision outlined here had been taken. It was clear to SWIA inspectors that TPS had learned significant lessons and had made many positive changes to organisation as a result of this experience. It had been a difficult episode for the organisation. However, it clearly demonstrates the importance of good, sound governance for organisations operating in the voluntary sector.
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