A 4-step delivery transparency model

This article is written by Shagufta Hassan — Lead for the Cost Base Transparency project at the Financial Conduct Authority, UK. Model created by Shagufta and Craig Chapman, Finance Director, Financial Conduct Authority.

• The problem: Demand for public services is increasing faster than government budgets can keep pace. Public sector organisations increasingly need to make difficult decisions about where and how money is spent.
• Why it matters: The public expect greater transparency and accountability from public service providers about how they’re making these decisions. They also want to know they are getting the biggest bang for their tax-paying buck.
• The solution: A new model which public sector organisations can use to both plan and demonstrate they are making the best use of finite resources to deliver public services.

Nearly 20 years ago, I took six months off from my relatively junior civil service job in the UK to go and work for an education non-governmental organisation (NGO) in Karachi, Pakistan. I saw business planning and resource allocation as something mundane done by the finance and executive teams which had little impact on my role. But standing in a poor, rural school in Sindh, my perspective changed. I watched teachers struggling with limited resources with a huge class of small children. One of the mums stood outside the grilled window peering in. She called me close and explained that she was a ‘maasi’ — a cleaner for local households, hired by the hour. She and other local women were prioritising their children’s education but were dependent on the NGO to provide this for free. She knew the NGO was looking to close the school and was desperate to know what the options would be for her two daughters. They needed an education so that their lives would be better than hers. On the ride back to Karachi that evening, I spoke to Saima, the NGO coordinator. She sighed. “We have limited resources but demand for school places is really high. We really need to be careful how we spend our money and where we place our people.”

There’s nothing abstract about resource prioritisation and allocation — they can fundamentally change the course of people's lives. Terms like productivity, organisational effectiveness and efficiency sound dry, but they directly translate into critical outcomes: a life-changing surgery, a child's school placement or that vital extra hour of support from a social worker. As citizens, it's imperative that we hold public sector organisations accountable because_ how_ they deliver, not just what they deliver, profoundly affects individuals, particularly the most vulnerable among us.

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As public servants, it's our duty to ensure our operations are transparent. But transparency shouldn't start when we unveil the final decision. Sharing how we reached those decisions also means we can be held accountable for our thinking. We are entrusted with providing services as effectively as possible. That entails not only ‘accounting’ for the work our teams do but explaining the link between their hours worked and the outcomes we actually achieved.

While the example presented here offers a simple overview of the delivery transparency model, it can be applied to more sophisticated purposes.

Wrestling with the best way to do this, we developed a universal model for any organisation that helps deliver exactly this transparency.

**Step 1: Understand an organisation’s functions **

Using a ‘functional’ approach is a useful way to think about what the organisation is delivering and how much staff effort and other resources are needed to deliver it.

Take an educational NGO with a workforce of 700 staff across various roles, including in the head office and in schools. Each school has three functions — to collect funding, provide resources for community schools and to run their own NGO schools. The 700 staff contribute to many functions, splitting their time as needed. The challenge is that in traditional planning models, budgets are allocated vertically i.e to the finance team, but deliverables are considered and measured horizontally from a functional perspective i.e., how many schools are being supported. This misalignment makes linking deliverables to costs difficult.

Having a picture of how much each function costs in terms of staff effort is a first step towards transparency.

This starts to provide an interesting picture of where staff effort is being absorbed.

The key lies in involving individuals who are closest to the actual work in completing this table. For instance, Saima, the NGO Coordinator, may provide invaluable insights into why she is involved in all three functions. She can do this despite the fact that neither she nor her manager might previously have registered her significant time commitment to, for example, the ‘collecting funding’ aspect.

Using time measurement systems can certainly offer a more sophisticated analysis. But simply getting the right people together in a workshop can also yield meaningful results. By getting first-hand input from those directly engaged in the various functions, organisations can achieve a much clearer understanding of resource allocation realities.

**Step 2: Understand what each function is delivering **

The next step is to understand what these efforts are delivering for each function.

**Step 3: Examine each function **

Now that you have the big picture, it’s useful to drill down into each individual function.

Focus on each function (for example supporting community schools)

Deliverables (Stack 1) are relatively well understood in the public sector, as well as the need to make sure that outcomes, outputs and activities are aligned and measured.

But what we often don’t examine is the relationship between Deliverables and Demand (Stack 2) i.e. the demand for the services, how the demand is processed and allocated resources — usually using a formal or informal prioritisation process. That’s why, very occasionally, a smile when handing in a request to the IT helpdesk will get you a laptop faster than a colleague who has been waiting for a month.

In our example — say there are 6,000 local community schools asking the NGO for help with resources. The NGO can’t afford to support them all. But they do have a prioritisation process with agreed criteria which allows them to decide who gets the resources. Likewise, the demand for NGO’s own schools is high — with more than 10,000 student places required. Again, the NGO has a prioritisation framework in place to agree on where and which schools will operate. A prioritisation framework can be dialled up or down depending on available resources. So, for example, if more resources become available schools that meet even six out of the seven previously mandatory criteria can be resourced.

The NGO knows what resources and costs (Stack 3) delivery requires — for example how much a school costs to run.

Now that the NGO understands the relationship between deliverables (Stack 1), drivers (Stack 2) and resources and costs (Stack 3) for each function, it has a fuller picture of what is happening and going forward can plan better. It now has a framework which allows for a deeper — and more flexible — conversation about priorities, staff effort, outcomes and even future investments based on actual spending and data. It can now experiment with changing different components and see what the potential result is.

**Step 4: Make it your own **

Once the organisation understands each function, it can compare them — and there’s a lot that can be explored further from an operational perspective. In our example, for example, the NGO’s executive could compare all three functions and see if each cost was what was expected. Was the NGO board surprised to hear that processing one endowment of £20M required a staff effort of 145 FTE? Were 25 HR staff really needed to help collect funding? Did they decide that instead of running ten own schools it was better to put that effort into resourcing more community schools?

In conclusion

In summary, while the example presented here offers a simple overview of the delivery transparency model, it can be applied to more sophisticated purposes. For example, to examine more complex organisations, explore the operational benefits of longer-term capital investments or understand the productivity benefits of AI and support strategic workforce planning.

Luckily for the mum I met all those years ago, in the end, the school was able to continue operating. I’d like to think that perhaps her children became teachers themselves. Because, ultimately, driving operational efficiency can transform lives.

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