Finance and Resources Committee

Transcription

1 Finance and Resources Committee 10am, Thursday, 19 March 2015 An engaged and empowered workforce: workforce strategy Item number Report number Executive/routine Wards Executive summary The Council continues to operate in a challenging environment with increases in demand for key services with ongoing financial constraints. The organisation s most important asset is its people and this is reflected most strongly in the Council s expenditure profile where spend on employee costs forms the largest single element of the Council s budget This report outlines the Council s Workforce Strategy , high level implementation plan and progress to date. Links Coalition pledges P25, 26, 27, 29 & 30 Council outcomes CO24, 25, 26 & 27 Single Outcome Agreement

2 Report An engaged and empowered workforce: workforce strategy Recommendations 1.1 To note progress to date; 1.2 To approve the Council s Workforce Strategy , outlined in appendix one to this report; 1.3 To agree future phases of the workforce implementation plan outlined in appendix two of this report. Background 2.1 The Council s most important asset is its people and this is reflected most strongly in the Council s expenditure profile where spend on employee costs forms the largest single element of the Council s budget. 2.2 The Council continues to operate in a challenging environment with increases in demand for key services with ongoing financial constraints. The Best Value follow up report by the Accounts Commission in December 2014 identified key areas for improvement where Council progress has been slower than anticipated including a need to develop a comprehensive workforce strategy to support the delivery of the following priorities: BOLD transformation programme; effective and enhanced corporate working; and achievement of challenging levels of future savings. 2.3 To respond effectively to the internal and external climate the Council has agreed a clear vision and three complementary strategic themes underpinned by the requirement to deliver lean and agile council services. A key element of this approach is ensuring the Council has an engaged and empowered workforce. 2.4 In addition, the Council has ensured that all elements of good practice outlined in the Audit Scotland report Scotland s Public Sector Workforce have been embedded in the Council s ongoing and future workforce strategy and planning arrangements. 2.5 This report provides further information on the following areas: Finance and Resources Committee 19 March 2015 Page 2

3 2.5.1 an overview of progress; Council s Workforce Strategy ; Employee engagement; Next steps; and Risks and Challenges. Main report 3.1 Overview of progress 3.2 The Council s approach to workforce strategy and future planning was outlined in May Good progress has been made across all key areas highlighted in the plan as follows: the Chief Executive s proposals for the Council s future operating model were outlined in the Organise to Deliver report and agreed by the Council in December 2014 clearly setting the Council s: future organisational structure; and future service delivery arrangements implementation of the operating model is closely aligned to delivery of the Council s BOLD transformation programme which has been designed to support the Council to achieve 67m additional annual savings by the close of financial year 2017/18; and the BOLD business cases: delivering a lean and agile Council, were agreed by this Committee on 15 January The business cases set out the potential impact of role reductions across the Council To support the above the following are also in place: current state baseline for the organisation with financial verification: a baseline exercise was undertaken in May 2014 producing organisational and establishment information for all service areas, ensuring the Council has a clear understanding of its current workforce; identification and agreement of the key factors affecting future workforce requirements; robust PRD and enhanced performance management processes; the BOLD business cases and projects underway, particularly Business and Support Services and Localities, have made significant progress identifying both numbers Finance and Resources Committee 19 March 2015 Page 3

4 and skills for the future workforce. This includes an early assessment of medium to longer term requirements; and organisational design principles are in place to simplify future management structures and reporting lines for staff and reducing the levels within the future Council to a best practice ratio of around 1: Workforce Strategy The Council s workforce strategy, set out in appendix one to this report, is designed to support the performance of all staff by defining goals, objectives and expectations of the workforce as a whole. The strategy will also support and enable key elements of the agreed BOLD transformation programme. 3.5 The strategy will support the Council to: deliver improved services by linking business strategy to people plans; decide and plan for how many employees are and will be needed; ensure that sufficient and appropriate staff training, development and performance management arrangements are in place; identify workstyle changes along with longer term workplace accommodation requirements; and implement diversity policies effectively. 3.6 The workforce strategy and implementation plan aim to deliver an engaged and empowered workforce structured around three core and inter-related workstreams: a skilled and flexible workforce; talent and succession planning; and inclusive leadership. 3.7 Workforce planning is an ongoing, responsive and iterative process that is now built into the Council s corporate and business planning cycle. The key principles at each stage of the ongoing process of workforce assessment will focus on ensuring service and BOLD transformation plans are business led and based on service needs; outcome driven with defined measures for success; customer focused; and designed to build responsibility, discipline and empowerment. Finance and Resources Committee 19 March 2015 Page 4

5 3.8 Employee engagement 3.9 Employee engagement is essential to move Council business and services forward. The key drivers of engagement, also identified as priorities for improvement in both the Investors in People (IiP) audit and the results of the 2014 employee survey, include: engagement with the Council s vision and values; effective line management; senior leadership; learning and development; and workload and work-life balance Pride in our People (PIOP) is a key element of the Council s current employee engagement approach consisting of both leadership and staff events. Given the pace of change, it is critical to engage employees on a continuous basis, so that they are aligned around the Council s vision and outcomes, BOLD objectives, focus on the right things, continue to be more productive and are ambassadors of the Council A range of approaches are being considered in addition to PIOP, both qualitative and quantitative, to consult employees and to shape, target and continue to ensure effective communication on all elements of the BOLD transformation programme. This work is being supported by the Council s employee engagement forum to develop appropriate techniques for engaging staff in all service areas and to monitor engagement levels Next steps 3.13 The Council s high level workforce implementation plan and timeline, with assigned lead officers, will continue to be followed and monitored to ensure the Council continues to make good progress to embed key elements of the workforce strategy and achieve workforce related savings. The plan is phased to align closely with the implementation of the new Council structure, operating model and BOLD transformation programme Key activities underway at present include an emphasis on transition and redeployment support, creation of a skills academy, options for a revised voluntary redundancy policy and performance management re-design. A further report to this Committee in three months will update on progress and seek approval of proposed next steps for each of these areas. Finance and Resources Committee 19 March 2015 Page 5

6 3.15 Risks and challenges 3.16 There are a number of key risks and dependencies to consider as the Council embeds the workforce strategy and implements the workforce implementation plan as follows: Leadership: the strategy and related savings require strong leadership and ongoing active management to ensure a successful outcome; People and Organisation: there is a clear need for dedicated, effective support for the Council s programme of business change and across each element of the workforce plan to ensure implementation of key elements within agreed timescales. There is a current delivery risk related to the capacity of existing Human Resource professional functions to support the significant level and amount of work across the Council to ensure successful workforce alignment and transformation; Timescales: any delays to the workforce project implementation timeline could impair the savings identified and achievable; Redundancy pledge: in light of the Council s no compulsory redundancy pledge, every effort will be made to achieve the required reduction in roles on a voluntary basis where possible. The necessary level of cost reduction cannot be achieved solely by redeploying surplus staff elsewhere in the organisation; Savings: there is a risk that agreed savings within service areas for 2015/16 may impact on planned staff savings within the BOLD business cases; and Service and financial benefits tracking: tight tracking of financial and nonfinancial benefits will be undertaken throughout implementation closely aligned to developments to improve business insight and management information. Measures of success 4.1 The Council s workforce arrangements are designed to ensure an engaged and empowered workforce with skills to meet evolving and changing service requirements for the Council s customers. Financial impact 5.1 There are no direct financial impacts as a result of this report. Finance and Resources Committee 19 March 2015 Page 6

7 Risk, policy, compliance and governance impact 6.1 Effective workforce strategy and planning is a key enabler of well run organisations and essential to ensure the Council is able to manage and plan the people impact of achieving the planned business change and savings. Equalities impact 7.1 There are no significant equalities impacts arising directly from this report, however, equalities impact assessments will be completed on all key deliverables during implementation of the Council s workforce strategy , as appropriate. Sustainability impact 8.1 There is no direct sustainability impact of this report. Consultation and engagement 9.1 Initial consultation has been undertaken with directorates and services to identify and assess existing workforce planning activity throughout the Council. 9.2 Consultation and engagement with key stakeholders, including all service area management teams, Trade Unions and elected members are planned. 9.3 External engagement with the Improvement Service and other public sector organisations on their approach to workforce planning and creating a workforce strategy has been undertaken. Background reading/external references Alastair D Maclean Director of Corporate Governance Finance and Resources Committee 19 March 2015 Page 7

8 Links Coalition pledges Council outcomes Single Outcome Agreement Appendices P25 introduce a living wage for Council employees, encourage its adoption by Council subsidiaries and contractors and its wider development. P26 establish a policy of no compulsory redundancies. P27 seek to work in full partnership with Council staff and their representatives. P29 ensure the Council continues to take on apprentices and steps up efforts to prepare young people for work. P30 continue to maintain a sound financial position including long term financial planning. CO24 the Council communicates effectively internally and externally and has an excellent reputation for customer care. CO25 the Council has efficient and effective services that deliver on outcomes. CO26 the Council engages with stakeholders and works in partnership to improve services and deliver on agreed objectives. CO27 the Council supports, invests in and develops our people. Appendix one: Workforce strategy : an engaged and empowered workforce. Appendix two: Workforce implementation plan Finance and Resources Committee 19 March 2015 Page 8

9 City of Edinburgh Council An engaged and empowered workforce An engaged and empowered workforce Workforce Strategy Key principles The council s most important asset is its people. This is reflected most strongly in Council expenditure where spend on employee salaries and costs forms the largest single element of the council budget. For any organisation the vast majority of any improvement in impact, efficiency or effectiveness comes when the right people, with the right blend of knowledge, skills and behaviours, are deployed appropriately throughout its structure. Towards that goal, this workforce strategy aims to set out the council s approach to ensure we achieve that correct blend. It makes the link between the Council s vision, the challenging outcomes and targets we set ourselves, and our plans for staff development and training, workforce deployment, recruitment and retention. The implementation of this plan will help the Council to: deliver improved services by linking business strategy to people plans; decide and plan for how many employees are and will be needed; manage and control employment expenditure; ensure that sufficient and appropriate staff training and development is provided; manage peaks and troughs in supply and demand for different skills; retain employees and identify longer term workplace accommodation requirements; implement diversity policies effectively; and manage staff performance and attendance. Page 1 An engaged and empowered workforce

10 1 A Lean and Agile Council Background The Council continues to operate in a challenging environment with increases in demand for services with ongoing financial restraints. The Best Value follow up report by the Accounts Commission in December 2014 identified key areas for improvement including a need to develop a comprehensive workforce strategy. This paper provides this strategy and will support the Council in the delivery of: Transformational change; Effective corporate working; and Future savings requirements. Council vision and strategic themes To respond to the changing internal & external climate the Council s vision and strategic delivery model are evolving. The Council s Business Plan for is built around a single vision for the city and three strategic themes that drive the work of all services. This strategic vision for the organisation drives all Council strategies and plans, including this workforce strategy, proposals included in the Organise to Deliver programme, and work included in the BOLD transformation programme. Council Vision Our vision is to ensure that Edinburgh is a thriving, successful and sustainable capital city To deliver this vision, Council services focus work around three complementary strategic themes. These are: Improve quality of life Ensure economic vitality Build excellent places To ensure delivery of the Council vision & strategic themes and underpinning all work, the Council aims to: Deliver lean and agile Council services Throughout all its work, the Council aims to be: A lean and agile Council A Council built around a culture of excellent customer experience and effective, efficient services. Focused on Customers A Council focused on understanding our customers to deliver the outcomes that matter to them. Engaged and empowered people A Council where positive outcomes are delivered by a motivated workforce of high performing flexible people. Page 2 An engaged and empowered workforce

11 Drivers of change The delivery of our vision for the council and the city will be challenging and requires fundamental changes to be made in the way we deliver our services. These changes can be expected to pose significant challenges and opportunities for the council and its workforce. The way the council responds to these challenges and plans for its future workforce needs should be built from a sound appreciation of the pressures, both internal and external in source, which affect its employees and demand for the services they provide. A summary of these pressures and drivers for change is provided below. More detail on external drivers for change can be found in Appendix 2 to this paper. More detail on the profile of council staff is provided in Appendix 3 to this paper. Internal Drivers Rising employment costs Increasing sickness absence rates Increasing service demands New ways of working Increased demand for flexible working New and Changing skills requirements External Drivers Local Government budget cuts Public Sector Reform Health and Social Care Integration No compulsory redundancy policy Edinburgh Living Wage Rising cost of living Labour market skill shortages Population growth & demographic change Inward migration, increasing diversity Rising Customer Expectations New models for service delivery In response to these pressures, the Council has developed a new model for service delivery. Plans for this model are set out in the Organise to Deliver report approved by Council in December The new delivery model recognises that the City of Edinburgh Council serves a large, diverse and growing city and economy. The Council must be able to fulfil its role as a direct provider of services, a commissioner of services, a partner in service design, a leadership authority and a capital city. In addition to increased demand and resource constraints the Council must also be in a position to respond more effectively to legislative change. Towards this, the proposed delivery model creates a fundamental change from the current the council is organised. A key element of the new approach is a focus on empowering front line staff in our communities to ensure devolved decision making and improved outcomes for citizens. In addition the model will provide new opportunities for enhanced partnership working across the City deliver significant efficiencies to drive out savings to address the financial challenges the Council faces. The Council s new service delivery model recognises that efficiency can be assisted through streamlining delivery and sharpening focus. The workforce strategy is essential to ensure successful delivery of this model through supporting staff, enabling a more flexible & skilled workforce and leadership development. This model supports strengthened, strategic workforce planning that can deliver both at a corporate level as well as supporting local services. Page 3 An engaged and empowered workforce

12 Proposed Council delivery model and structure Development of this delivery model aligns with and is driven by the Council s agreed transformational change programme BOLD (Better Outcomes through Leaner Delivery). This programme was set up to help the Council transform the way it delivers services and addresses increasing financial challenges. BOLD has supported the budget proposals for 2015/16 and is now focused on developing workstreams that will give the Council more focus on delivering priorities and helping the organisation change and improve. Key components of the programme, and their implications for council workforce are summarised below. BOLD business case Neighbourhoods and Partnerships Business and support services Future state Local and city wide services integrated through a common geography Introduce simplified, customer focused processes for service access and delivery Refined approach to third sector grants and contracts New strategic model focused on customer outcomes Enable increased collaboration between Council and third sector organisations with reduced duplication and inefficiency Integrated, consolidated approach to the delivery of support services Drive collaborative behaviours, discourage silo working Driven by the needs of all Council Services Technology enabled support functions Self service options complemented by operational and strategic support Greater use of customer insight and business intelligence Integrated support services Workforce Impacts Empowered decision making at a local level Reduce the need for management layers People motivated to develop their own resilience and well being through positive local contact Improved process reviews Planned staff reductions Removal of time consuming non core activities Improved internal customer experiences Provision of better insight and management information to assist with decision making Planned staff reductions Streamlining of communication, processes and service delivery functions Locality focus provided through dedicated client managers Changing skills requirements Page 4 An engaged and empowered workforce

13 Change Management Detailed change management plans will be essential to ensure that the Council is able to respond to these pressures and deliver a sustainable and successful transformation. These plans will include communications and engagements with staff and stakeholders throughout the change process. The need for good change management is emphasised by the results of the 2014 survey of Council employees. This provided a positive overall picture of staff engagement, with rising trends identified in key measures such as job satisfaction and pride in the organisation. At the same time, however, data show that while 75% of employees have a good understanding of the need for change in the organisation, less than a third feel that change in their area is being well managed or that they have an opportunity to have a say on changes before they are made. Communication about change is also highlighted as an area for improvement, with fewer than half of all staff agreeing that the reasons for change have been well communicated. Employee Survey results, 2012 and 2014 (% who agree) I understand the need for change I support the need for change I am kept informed about changes that affect me The reasons for change are well communicated to me Change affecting my service area is managed well I am able to have a say on changes that affect me before they are made 30% 28% 29% 29% 52% 49% 47% 45% 75% 73% 70% 67% Page 5 An engaged and empowered workforce

14 2 An engaged and empowered workforce Delivering an engaged and empowered workforce Our work to deliver an engaged and empowered workforce is structured around three core and inter related workstreams. Each workstream is planned to deliver a number of specific outcomes. A skilled and flexible workforce Inclusive leadership Talent and succession planning 1. A skilled and flexible workforce Our people understand and are motivated by the contribution they make to the organisation and its vision Our people share ownership for delivering the Councils vision and goals Our people are ready for and motivated by the need for change and continuous improvement Our people work to clear and consistent performance standards across all parts of the organisation Council values and standards drive the way performance is rewarded across the organisation Our culture supports people to continually develop their own skills and performance. 2. Talent and succession planning Council wide, integrated workforce plans are in place in all parts of the organisation to ensure we have the right capacity in place to deliver our vision. Talent acquisition plans are in place to deliver a pipeline of staff to meet our future workforce needs Talented people with high potential are engaged and retained in the organisation. Staff with high potential have appropriate opportunities to develop within their current roles and have easily identifiable career pathways. People with potential to meet future business needs are engaged with and supported for transition to new roles. 3. Inclusive Leadership Our leaders provide clarity of vision and purpose, aligned to clear and compelling goals for all parts of the organisation. We have a strong corporate management team acting cohesively and providing one organisation wide leadership voice. Leaders at all levels of the organisation are supported and empowered to build commitment among staff to the Council s vision, values and culture. Targeted management and leadership support is provided at all levels of the organisation. Appropriate procedures and controls are in place to support improved management of workforce performance and costs. Leaders at all levels have access to the tools and information to allow them to effectively develop and manage their teams. Page 6 An engaged and empowered workforce

15 3 Implementation Key Principles Implementation of the workstreams described above is part of an ongoing, responsive and iterative process to be built into the corporate planning cycle. Key projects to be delivered through this process are outlined below. Key principles at all stages of the process, all elements of this workforce strategy will be Business led, informed and built around the needs of service providers. Outcome driven, with defined success measures and a clear evaluation methodology. Customer focused, based on customer input to ensure solutions that make it easy for people to fulfil their responsibilities and adopt of new ways of working. Designed in a way that builds responsibility, discipline and empowerment at all levels within the business. Review Understand and agree current needs and pressures Model Examine and plan for future workforce requirements Implement Implement and monitor key action plans Implement Objective: Implement and monitor key action plans Key projects Workforce control and support framework Strategic resource plans Leadership and management development Culture, engagement and inclusion Model Objective: Examine and plan for future workforce requirement Key projects Identify future workforce requirements Develop resourcing strategy for each Skills needs and potential imbalances service Model and review findings with services to agree strategic gaps and shortages Develop strategic approach for workforce controls Review Objective: Understand and agree current and workforce needs and pressures Key projects Review fit with goals and vision for the organisation Current workforce requirements Current workforce skills and deployment Identify current skills and gaps and shortages Identify current cost and resource pressure Page 7 An engaged and empowered workforce

16 Project Plan and Timeline A number of the tasks and projects required as part of this strategy are already in place or in progress, including Defining organisational goals and vision Staff engagement: Pride in Our People programme Corporate Employee Survey 2014 Best Value Audit and Follow up Organise to deliver and new streamlined delivery models Development of baseline workforce information and review of existing workforce control processes The timeline below provides a overview of planned projects for delivery through 2015/16 to 2017/18. A more detailed project plan is provided in Appendix 1 to this paper. Strategic Workforce Planning Priorities Phase 1 (Short Term) Phase 2 (Medium Term) Phase 3 (Long Term) A skilled and flexible workforce Workforce Planning Framework Workforce Controls Current workforce skills and deployment Change engagement and readiness building Organise to Deliver Future workforce skills requirements Strategy for learning and development Transition and redeployment support Targeted capability interventions Talent and Succession Management Workforce Controls Integrated Workforce Plans Reward and recognition strategy Talent and succession development Talent acquisition strategy Organisation goals and vision BOLD Inclusive Leadership Pride In Our People Corporate Employee Survey Performance Management redesign Inclusion strategy Employer Brand development Best Value Audit and follow up Leadership management learning redesign Page 8 An engaged and empowered workforce

17 Appendix 1 External drivers of Council performance Page 9 An engaged and empowered workforce

18 City of Edinburgh Council T External Drivers of Council Performance February 2015

19 External drivers of Council performance: Summary of key findings Introduction The Council and its workforce have undergone many changes in the past few years and more challenges and opportunities are expected to arise in the future. Given these pressures, it is critical that the Council Business Plan for is built from an understanding of our city and its residents and a vision of the pressures the Council is likely to face in the next few years. In order to develop this understanding, it is useful to examine both the internal and external factors likely to drive Council performance. Internal factors include issues within the control of the organisation, including structure, budget allocation, workforce management and others. These factors, and the Council s response to them, are discussed and outlined in the Organise to Deliver proposals presented to Council in December 2014, and the BOLD programme business cases presented to Council in January External factors include issues out-with the direct control of the Council, but which are expected to have a strong influence on the way the organisation operates. This paper focuses on a review of these external influences and adopts a PESTLE approach to help guide thinking about issues which impact on the Council. This approach is a commonly used business tool to support the identification and analysis of the Political, Economic, Social, Technological, Legal and Environmental factors that can impact on an organisation. In doing so, the analysis focuses on issues which are expected to show or cause significant change within the next ten years. Summary of key findings Adopting the PESTLE approach highlights the following key pressures for Council business planning: Political: Major structural and transformational change programmes driven by the public sector reform agenda, pensions reform and Health and Social Care integration will have a significant impact on the way Council staff work and are managed. The effective implementation of the health and social care legislation will be key in ensuring a care centric service which is not impeded by inter-organisational structural issues. These interact with key local workforce policies such as the adoption of the Edinburgh Living Wage and the Council s no compulsory redundancy policy. Economic: The transformational response needed to meet the financial challenges facing the Council requires significant changes in the way the Council operates. Alongside this, the Council operates in an environment of rising cost of living and wage pressures, high housing costs, and within a labour market in which shortages have been identified in the key skills the organisation needs to develop. Edinburgh is a city with a well External drivers of Council performance, February

20 established global competitive edge in key sectors. Our forward strategy for being proactive in attracting investment and sustainable growth, as well as having an active talent growth agenda, is important to help improve standards of living and support long term high value growth in the city. Social: Edinburgh is the fastest growing local authority in Scotland, with much of this growth concentrated in among young people and residents of pensionable age. Demographic changes are strongly driven by high rates of in migration with increasing diversity in the ethnic mix of the population. At the same time, customer expectations of Council staff both in quality and responsiveness of service and pressure for greater openness and transparency, and greater demand for locally responsive services are increasing over time. Technological: New ways of working among Council staff and new expectations among customers - including innovation in new equipment, new techniques, new methodologies, increased reliance on mobile devices and social media - are expected to increase the need for improved ICT skills, infrastructure and resources council-wide. Legal: Council staff and workforce managers operate within a developing legal framework in which is important to maintain a high level of engagement and understanding of changes in service obligations and standards. Key areas include employment law, equalities and equal pay obligations, health and safety, consumer rights legislation, environmental legislation amongst others. The important current discussions about further devolution to Scotland are key considerations in terms of Edinburgh s role as Capital City. Whilst the constitutional issues are not core business of the council, we must ensure that we are ready to fulfil the key enabling and facilitating role that is expected of a Capital City. Environmental: Legislative and social pressures are leading to increased awareness of environmental and sustainability concerns among Council customers and partners. Such pressures increase expectations of Council staff in both attitudes and working practices in all aspects of the Council's operations. Delivery models are changing and the role of the council in, for example, facilitating the development of an Energy Services Company ( ESCO ) exemplifies why the council has a role in leading new business opportunities. External drivers of Council performance, February

21 PESTLE Analysis Summary of key external drivers Environmental Legal Technological Service obligations Employment law Equalities and diversity Equal pay Health and safety Constitutional change Environmental legislation and pressures New ways of working Increased expectations and awareness Digital service development ICT development Big data New ways of working Changing work environments Public sector reform HSC integration Community Empowerment Living wage No compulsory redundancy Population growth Demographic changes Increasing diversity Increased expectations Flexible working Work-life balance Budget pressures Cost of living Poverty & income inequality Wage growth pressure Skills gaps Political Investment need Social Economic External drivers of Council performance, February

22 External drivers of Council performance: Analysis of drivers Political Public sector reform Pensions reform and longer working lives Health and Social Care Integration Personalisation of Health and Social Care Community Empowerment Bill Edinburgh Living Wage The Scottish Government is dedicated to ensuring that all public services work with maximum efficiency to deliver maximum benefit to the people of Scotland. This commitment comes in a period where the resources available to local government are reducing, meaning that the Council and its workforce must develop new and innovative ways to maintain and improve the services we offer. Such changes include increased and more effective working with partners across the city. Following agreement with Local authority employers and trade unions, the new design of the Local Government Pension Scheme (LGPS) in Scotland will start from 1st April Changes implemented include a move to career average earnings basis for calculating benefits and alignment with state pension age. Alongside this, the Pensions Act 2011 sets out changes to the age from which the basic state pension can be claimed. Over the period to 2027 the basic stage pension age is planned to rise in stages from 65 to 68 years for both men and women. The integration of health and social care services affects major areas of the Council's workforce and potentially represents the biggest change in local government since reorganisation in The programme aims to ensure that public services are designed around the needs of the service user, and that public bodies seek to overcome the organisational barriers that get in the way of delivering seamless integrated health and social care, including increasing shared service provision between the Council and the NHS and increasing partnership with third party providers. Currently 55% of the health and social care workforce are contracted to 3rd parties or employed by external agencies. Personalisation of health and social care services enables citizens, either individually or in groups, to find the right solutions for them and to participate in the delivery of a service. From being a recipient of services, citizens can become actively involved in selecting and shaping the services they receive. Alongside mechanisms such as self directed support (SDS), these policies involve significant changes in the way health and social care services are delivered and managed in the city and increased partnership with third party providers. Community Empowerment highlights the important role that communities can play in participating in new models of service delivery that maximise the impact and value of public assets, including people, buildings and local knowledge. The implementation of the Bill may lead to significant changes in the way that Council staff work with local communities and customers. The Council introduced the Edinburgh Living Wage (ELW) on 1 January 2013 at an hourly rate of Further developments, including adoption of ELW where possible by organisations such as Edinburgh Leisure and Festival City Theatres Trust are already in place, while the inclusion of an ELW commitment in the Council's procurement process being explored at present. Potential workforce challenges and complexities are recognised in Council reporting on the policy and include impacts on Council staffing costs, impacts on the cost competitiveness of trading organisations, and impacts on the Council's pay and grading structure. External drivers of Council performance, February

23 No compulsory redundancy policy Economic Public sector financial pressures Wage growth pressures Poverty and Inequality Persistent unemployment Investment requirements A policy of no compulsory redundancies was introduced as one of 53 pledges made by the Capital Coalition in May Since the introduction of the pledge there have been no compulsory redundancies made by the Council, with all efforts made to redeploy all surplus staff. The policy continues to be monitored closely for cost effectiveness and business efficacy, with challenges recognised around the policy's impact on budgets, current severance schemes, on employment policies such as redeployment and the associated resource requirements, the availability of suitable alternative employment, and the impact on training resources. Council financial projections show an increasing gap emerging between the financial resources available to local government and demand for the services it provides. Due to increased demand for services and reductions in funding, the Council needs to find savings of 327 million over the next four years. The transformational response needed to meet these challenges will require significant changes in the way the Council's workforce is managed and operates. The Scottish economy shows steady recovery from recession, with output growth rates and employment both returning to close to pre-2008 levels during 2014 and Despite this, growth in average earnings and household incomes continues to lag behind the long term rate of inflation. In real terms, median household incomes in Scotland remained 8% below their pre-recession peak in 2013, indicating a continuing downward pressure on the ability of families to maintain living standards. These factors can be expected to result in future increased demand for pay awards above the levels agreed in recent years. Around one in five of all households in Edinburgh live on incomes below the UK Government defined poverty threshold. This is a level of poverty higher than many other Scottish local authorities and similar to the average across Scotland and the UK as a whole. Alongside this, Edinburgh exhibits very high levels of income inequality, with pockets of poverty and deprivation alongside areas of relative affluence. Such poverty and income inequality are associated with a wide range of complex social issues, many of which increase demand for and on services provided by the Council and other public sector agencies. Recent estimates suggest that the cost to the public sector of child poverty alone in the city may be as high as 156m per annum. Despite recent strong growth in the number of jobs located in the city, unemployment in Edinburgh remains persistently above the low levels recorded in the pre-recession period. A total of 7,900 city residents claimed Job Seekers Allowance in mid 2014, well above the 5,700 recorded during the same month in Forecasts commissioned by City of Edinburgh Council show that this number is unlikely to drop significantly in the next decade, with unemployment forecast to remain around 3% of the city workforce throughout the period to Such unemployment levels can represent a significant recruitment pool for the Council, with potential for the targeting of staff recruitment efforts and promotion of employment, apprenticeship, placement and other opportunities on groups and areas of high unemployment. At the same time, low income and poverty impacts arising from persistent unemployment are associated with increased pressure and costs for council services across all areas. Edinburgh is a city with a well established global competitive edge in key sectors. Our forward strategies for being proactive in attracting investment and our active talent growth agenda are important to help improve standards of living and support long term high value growth in the city. External drivers of Council performance, February

24 Rising housing costs Skills gaps and shortages Social Population growth, growing dependency rates Net inward migration and increasing diversity The cost of housing in Edinburgh remains high in comparison to surrounding areas and the rest of Scotland. Average private rents in the city are estimated at around 20% above that recorded in other Scottish cities (Source: Citylets.co.uk), while average house prices rose by 12% in the 12 months to June Within this context demand for affordable housing remains high. Council estimates show that Edinburgh needs to build an average of 3,600 new homes every year for the next ten years to meet housing need and demand requirements. The availability and affordability of housing in the city has potential to impact significantly on the Council's ability to recruit staff from outwith the Edinburgh market area, as well as having impacts on levels and distribution of demand for council services. The Council is one of the largest single employers in the city and operates within a local labour market in which demand for key skills and qualifications cannot always be easily met by the available supply. 15% of all businesses in Scotland report having staff who lack the basic skills needed to do their job, while business report having difficulty finding appropriately skilled staff in Scotland for some 17% of all vacancies advertised. Such skills gaps have a significant impact on an organisation's ability to meet its objectives. Recognising these issues, the Centre for Employment Research in Scotland in 2010 identified 10 skills areas ranked as High priority skill needs with a need for immediate action for the Scottish economy. These included areas such as Management and Leadership skills, ICT skills among managers and professionals, care professions and frontline customer service skills, as well as basic employability skills, literacy and numeracy. The recognition of shortages in such areas emphasises the importance of forward planning and training programmes to ensure the Council can access the skills it needs to meet service demands. Over the next 20 years, Edinburgh is projected to be home to the fastest growing population of any local authority in Scotland. By 2027 the city's population is projected to rise to almost 566,000 people, an increase of 83,000 (17%) over the level estimated in Much of this projected increase is expected to come among groups at either end of the age spectrum. The population of children aged 0-15 is projected to grow by 24% (an additional 17,400 children), while the population aged over 65 is projected to grow by 35% (an additional 25,000 older residents). Alongside other trends, including increased longevity, increased numbers of smaller and single person households, these factors are associated with likely increased demand for older people's and children's services in the city. Consequences from a Council workforce perspective include a likely increase in demand for older people's care workers, teachers, classroom assistants and other staff groups. One key driver for demographic change in Edinburgh is the city's increasing role as a focus of migration into Scotland. Over 70% of the population growth projected in the city for the period to 2027 is expected to come from net inward migration. This represents a continuation of the trend observed over the past decade, with the ethnic diversity of the city having changed significantly in the period between 2001 and The number of city residents who were born outside the UK, for instance, almost doubled in this period, with particularly strong growth in migrants from Poland and other EU Accession countries. Such migration trends represent a challenge to services meeting the needs of an increasingly diverse customer group. From a workforce planning perspective, these flows also represents an opportunity and requirement to recruit workers from a more diverse range of backgrounds. Increased Customer expectations of Council staff in quality and responsiveness of service, as well as preferences in the location and channel through which customer services are provided are increasing and changing over time. Such expectations place additional pressure on Council staff to recognise the expectations changing needs of customers, to ensure that appropriate digital and ICT infrastructure is in place to meet demands, and to develop the workforce skills needed to improve and maintain customer satisfaction. External drivers of Council performance, February

25 Work-life balance Technological Digital services and big data opportunities Need for improved IT skills across the workforce Changing work environments Legal Employment law and other legal requirements Constitutional change Work life Balance is often stated as one key areas of employee satisfaction (or dissatisfaction). Only 48% of Council staff report having an 'acceptable workload' in 2014, while a quarter of all staff said they do not achieve a good balance between their private and working life. Such pressures can be expected to lead to increasing demand for flexible working hours and patterns, posing challenges in terms of development of effective management of the workforce. The amount of data generated by the digital economy is growing rapidly. Analysing this data offers tremendous potential for efficiency gains and new business models and opportunities. These include provision of better insight and management information to assist with decision making, improved process reviews, removal of time consuming non-core activities for frontline staff, better integration of services to reduce duplication and improve the customer experience, and improved collaboration between the Council and its partners. New ways of working among Council staff, with innovation in new equipment, new techniques, new methodologies can be expected to increase the need for improved ICT skills across the workforce. These requirements arise both in development of systems and software needed, and in the effective use of new tools by staff in all parts of the organisation. The development of different ways of working impacts on training needs within the workforce as well as posing challenges to the Council in the recruitment of appropriate skilled staff. Demand for remote and home working can be expected to increase across the workforce and will require the organisation to continue to develop the systems and infrastructure needed to support different ways of working, without compromising security, service quality or data protection issues. Council staff and workforce managers operate within a developing legal framework in which is important to maintain a high level of engagement and understanding of changes in service obligations and standards. Key areas include employment law, equalities and equal pay obligations, health and safety, consumer rights legislation, environmental legislation amongst others. The important current discussions about further devolution to Scotland are key considerations in terms of Edinburgh s role as Capital City. Whilst the constitutional issues are not core business of the council, we must ensure that we are ready to fulfil the key enabling and facilitating role that is expected of a Capital City. Environmental Increased environmental awareness Legislative and social pressures are leading to increased awareness of environmental and sustainability concerns among Council customers and partners. Such pressures increase expectations of Council staff in both attitudes and working practices in all aspects of the Council's operations. External drivers of Council performance, February