The British council. Report on Change Management and Support Services

The British coucil Report o Chage Maagemet ad Support Services

Tim Burr Comptroller ad Auditor Geeral Natioal Audit Office 29 May 2008 The Natioal Audit Office study team cosisted of: Tim Bafield, Neil Carey, Sascha Kiess, Jaey Sacoto, Leae Sheldo, Kevi Summersgill This report ca be foud o the Natioal Audit Office web site at www.ao.org.uk For further iformatio about the Natioal Audit Office please cotact: Natioal Audit Office Press Office 157-197 Buckigham Palace Road Victoria Lodo SW1W 9SP Tel: 020 7798 7400 Email: equiries@ao.gsi.gov.uk Natioal Audit Office 2008

cotets summary 4 PArT oe chage maagemet 7 PArT TWo Fiacial maagemet 9 PArT Three iformatio systems ad techology 14 PArT Four maagemet of the global estate 17 PArT FiVe huma resource maagemet 20 PArT six procuremet 24 APPeDices 1 recommedatios 2 2 British coucil chage projects 2

summary 1 The British Coucil is a Registered Charity, a executive No-Departmetal Public Body ad a Public Corporatio. The Coucil is operatioally idepedet of Govermet ad its aim is to build mutually beeficial relatioships betwee people i the Uited Kigdom ad other coutries, ad to icrease appreciatio of the Uited Kigdom s creative ideas ad achievemets. It has described itself as the UK s iteratioal orgaisatio for educatioal opportuities ad cultural relatios, ad operates i some 110 coutries. I 2006-2007 it received some 195 millio from public grats, maily from the Foreig ad Commowealth Office, ad eared a further 350 millio, pricipally by teachig Eglish, deliverig examiatios overseas ad maagig cliet fuded cotracts. 2 The role of the British Coucil was cosidered by Lord Carter of Coles i his review of UK Public Diplomacy i 2005 ad agai by the Select Committee for Foreig Affairs i 2006. 1 The Select Committee oted that the Carter review did ot have a value-for-moey focus as part of its remit, ad recommeded that the Natioal Audit Office cosider coductig a Value for Moey Report o the Coucil. I their deliberatios, the Committee for Foreig Affairs expressed wide-ragig iterest; both i how the Coucil used its resources ad i how it measured its performace. Our examiatio, summarised i Figure 1, icluded the Coucil s key support services, the way it develops ad delivers services to customers, ad its Performace Measuremet systems. This report focuses o the iteral maagemet 1 Public Diplomacy is defied as Work aimig to iform ad egage idividuals ad orgaisatios overseas, i order to improve uderstadig of ad ifluece for the Uited Kigdom i a maer cosistet with govermetal medium ad log term goals. Review of UK Public Diplomacy by Lord Carter of Coles December 2005. 4 report o chage maagemet ad support services

summary 1 The scope of the Natioal Audit Office examiatio (mai features) Outcomes 1 Resultig from Customer-facig activities 1 eabled by Key support services (this report) The curret system to measure the Coucil s activities ad impacts The Eglish Laguage Teachig ad Examiatios Busiess Chage Maagemet People Maagemet The Coucil s Performace as show by its Scorecard Grat-fuded cultural ad educatioal activities Iformatio Techology Fiacial Maagemet Chages i progress to improve performace measuremet, (i cojuctio with other UK bodies ivolved i public diplomacy) Customer Service Excellece iitiatives ad Customer Relatioship Maagemet systems Procuremet Estates Maagemet Source: Natioal Audit Office NOTES 1 The fidigs from our work o how the Coucil achieves impact ad measures its performace are available olie at http://www.ao.org.uk/publicatios/idex.htm. 2 The mai exclusio from the scope of the study was the Coucil s work uder cotract for a rage of UK ad Iteratioal agecies, maily i support of Iteratioal Developmet Programmes. Such work is wo uder competitio ad at least covers its costs overall. Primary resposibility for the value for moey of this work lies with the agecies procurig it. of the British Coucil, pricipally chage maagemet ad support services. A separate report has bee published o the Coucil s exteral relatioships, its programmes ad performace. 2 3 Our overall coclusio, based o our work overseas ad i the UK, is that the British Coucil s performace is strog ad valued by its customers ad stakeholders, although it is a challege to secure cosistetly good performace across such a dispersed global etwork. The Coucil is flexibly allocatig its resources to alig with ew UK priorities, ad cotiues to implemet umerous ad extesive chage programmes aimed at icreasig its effectiveess ad efficiecy. Maagig so may simultaeous ad iter-depedet projects has preseted challeges. There is a eed for improvemet i support fuctios ad i terms of the maagemet iformatio ad tools that it has i place to ru its busiesses. 4 Effective support services are vital to eable the British Coucil s staff to deliver cosistetly high quality services to customers aroud the world. The provisio of support services has bee affected by the Coucil s trasitio from a orgaisatio i which 110 Coutry teams dealt directly with the UK, to oe i which they are grouped uder 12 Regios. I priciple this allows for stroger oversight ad more cosistet decisio-makig. The ew Regioal offices are a sesible locatio from which to brig specialist expertise to bear o coutry operatios, but oly regioal fiacial ad huma resource maagemet have had sigificat impact to date. Furthermore, maagemet iformatio for most support services is weak across the overseas etwork, with basic measures either collected icosistetly or ot at all. The Coucil s ew Resource Maagemet system provides a tool to help address this. 2 Natioal Audit Office The British Coucil: Achievig Impact, HC 625 2007/2008. report o chage maagemet ad support services

summary 5 With respect to particular services, our mai fidigs are that: The Coucil ow has a geerally high performig Iformatio Techology etwork, but there is much to do to put i place moder systems that eable customers to iteract easily with the Coucil through web-based ad other chaels. Accessible olie services will be icreasigly vital i eablig the Coucil to broade its reach. Fiacial Maagemet practices appear uder most criteria as good as, or better tha, those i UK govermet departmets. A ivestmet of over 100 millio i a ew resource maagemet system will require cosistecy i use, ad further tailorig to meet the Coucil s eeds, if it is to realise its full potetial. Estates Maagemet is clearly stroger i the UK tha overseas, where iformatio o the relative costs ad efficiecy of premises is icomplete, subjective or icosistet, maiteace plaig ad programmig is weak, ad qualified property expertise is scarce. Most skilled staff, based i Lodo, have bee focused o deliverig works projects i premises beig adapted, refitted or upgraded to meet ew security requiremets or busiess eeds, rather tha strategically o the estate as a whole. Huma Resource Maagemet is challegig for such a globally dispersed orgaisatio. Metrics, such as turover ad sick leave are readily available for UK-appoited staff, but are patchy or o-existet for those appoited locally. Differig terms ad coditios of service also cotribute to tesios betwee UK ad coutry-appoited staff. The Coucil is icreasig its HR expertise at a Regioal level through a etwork of Regioal Strategic Busiess Parters. At preset, very little Procuremet of goods ad services is udertake by purchasig specialists, ad util 2007 the Coucil has ot had adequate maagemet iformatio to uderstad what it buys ad where. It has oly a very small team of procuremet specialists. Work is ow uderway to cosolidate more procuremet, with a view to obtaiig the beefits of icreased purchasig power ad to greatly reduce the umber of suppliers used ad ivoices processed. Coclusios ad Recommedatios Our recommedatios are expaded o i greater detail at Appedix 1. 1 The rapid pace of chage i the Coucil ad the large umber of parallel chage programmes meas that programmes are difficult to itegrate, ad some projects withi the overseas chage programme have faced delays ad reschedulig. The Coucil should adopt more robust portfolio maagemet ad goverace practices to better match its chage programmes with its capacity for chage. This should help avoid slippage or worse tha expected dips i operatioal output. 2 The Coucil has idetified regioal maagemet as the right place to isert expert oversight ad directio of support services i its 110 coutry operatios. But there is more to do to get this workig cosistetly well. The Coucil should focus its pool of estates, huma resource ad procuremet specialists at regioal level to esure that these services reach cosistet stadards, ad to be accoutable for these service stadards to the corporate cetre. 3 While the Coucil maitais a good level of maagemet iformatio o the performace of UK corporate services, the Coucil does ot maitai comparable data o the performace of support services across the global etwork. It eeds cosistet performace metrics for its overseas estates, procuremet ad huma resource fuctios, with cosistet reportig of progress to the corporate cetre. report o chage maagemet ad support services

part oe Chage Maagemet 1.1 The Coucil s Strategy 2010 itroduced a five year programme of chage affectig the whole orgaisatio. It comprised two mai chage programmes for overseas ad UK operatios, ad liked with these the itroductio of a ew resource maagemet system (FABS) ad a move from locally desiged ad delivered projects to larger scale Regioal ad Global projects. This large programme of reorgaisatio has ot bee completed to its origial schedule. The extet of chage 1.2 The Coucil s chage programmes have bee ambitious i both scope ad timig. The UK Operatioal Chage Programme aimed to ehace the efficiecy ad capability of UK operatios, itroduce a improved, stadardised project ad cotract maagemet process, icrease professioal sector expertise, ad ehace capability to support iovatio ad customer service i the UK ad Overseas. 1.3 The Overseas Chage Programme grouped 110 separate coutry operatios withi 12 Regios. This became the platform to deliver seve substatial eablig projects. 3 Regios had discretio to implemet the projects i the most appropriate way for them, uder Regioal Chage Programme Maagers. Each produced busiess plas settig out how they iteded to deliver their Regioal Chage Programmes, icludig additioal projects to meet specific regioal eeds. O this basis, the Coucil is startig to review the Regioal chage programmes to idetify good practice ad successes, ad has carried out a Health check i the Middle East Regio. The Overseas Chage Programme cost 15.9 millio i the two years 2006-07 ad 2007-08 ad has geerated total savigs of 8.3 millio i the same period. 1.4 The scale of the chage programmes ad the impact o staffig levels has adversely affected staff satisfactio ad morale, most clearly amog the UK workforce. I the Coucil s staff survey, though staff were aware of the eed for chage, oly 39 per cet of UK staff aswered positively to questios o job security. 4 Although it is ot uusual for orgaisatios udergoig a process of chage to see a fall i job satisfactio, levels of staff satisfactio across the Coucil were 12 per cet below the orm for comparable orgaisatios. Furthermore, i 2008, oly 24 per cet of Coucil staff respoded positively to questios o their satisfactio with the way chage is maaged. 5 Our staff survey, while ot askig specific questios o the amout or maagemet of chage, also elicited commets which idicated that some staff had felt udervalued as a result of the chage programme. While the UK restructurig was completed without the eed for large-scale redudacies, the UK workforce has bee reduced from 752 to 690 Full Time Equivalets, maily through a recruitmet freeze ad turover. Deliverig chage 1.5 The UK Operatioal Chage Programme set a ambitious timetable ad achieved some otable successes i deliverig o time ad uder budget. It implemeted the ew structure for UK Operatios withi schedule, ad the programme is expected to geerate savigs of over 3 millio i 2007-08 ad aual savigs of 2 millio goig forward. However, the Coucil has struggled to fill all of the specialist posts. At the ed of 2007, ietee of the 64 seior positios remaied ufilled. The Coucil opted for rapid implemetatio of the Programme, ad while it recogised that this ivolved risks, the pace of chage created difficulties i itegratig the ew UK Operatioal structure with the parallel Overseas Chage Programme, ad with projects i corporate services ad implemetig the ew FABS resource maagemet system. 3 Commuicatios, Customer Service Excellece, Kowledge maagemet ad Marketig (i British Coucil: Achievig Impact, HC XXX), ad the ew resource maagemet system, fiace restructurig ad Huma Resources, (Parts 2, 3 ad 5 of this report). 4 British Coucil Staff survey, 2008. 5 British Coucil Staff survey, 2008. report o chage maagemet ad support services 7

part oe 1.6 There has bee some slippage i eablig projects uder the Overseas Chage Programme. Regios submit quarterly returs to the UK which track the progress of their Programme agaist their aticipated beefits, ad fiacial savigs. However, the Coucil does ot maitai cosolidated data o the Regios progress o their eablig projects, as set out i their Busiess Plas. It is therefore difficult to determie the extet of deferral across the Coucil as a whole. May regios have actively re-plaed their chage programme to reduce implemetatio risks. Iitially the Chia Regio plaed 22 eablig projects, but some have sice bee postpoed or cacelled ad two have bee added (see Figure 2). British Coucil Chia is ow focusig o six core projects ad has spread the maagemet of these across the Regio ad staggered project timescales. 1.7 Programme cacellatio ad reschedulig is ofte udertake to reduce risks, for example to prevet the roll out of FABS coicidig with the year ed, or i respose to exteral factors. However, i some cases, delays have arise because UK corporate decisios have ot kept pace with the eeds of the regioal busiess, especially regardig Huma Resource policies, or ew partership models for teachig cetres ad premises. The volume of chage also preseted challeges for staff capacity, especially i the overseas etwork. The Coucil plaed for temporary dips i delivery i some Regios due, i particular, to the implemetatio of the ew FABS system. However, the commitmet required to deliver such a wide-ragig chage programme has impacted more widely. For example i the Idia ad Sri Laka regio, the six mai regioal projects all took loger tha expected to progress through the plaig stage, i part because of competig priorities. UK Oversight of the Overseas Chage Programme 1.8 Corporate oversight of overseas chage has bee stroger for the programme overall, tha for some idividual projects. Staff turover i the UK has limited oversight of some of the eablig projects. The Customer Relatioship Maagemet project has had three project maagers sice 2006. The Customer Service Excellece Project team was also uder-resourced for most of 2007, ad the Programme Director ad Seior Resposible Officer have both chaged sice the project started i 2005. A full team has bee i place sice September 2007, ad the project has bee exteded by two years to March 2010. 2 Status of Chia s Regioal Chage Programme Project Status Completed Proceedig as scheduled Cacelled O-hold Ruig behid schedule Yet to start Number of projects 2 9 5 3 4 1 Example projects Frieds of British Coucil Hog Kog FABS Marketig Premises efficiecy Status i Mailad Chia Bradig Developmet Services Global cotract maagemet Customer Relatioship Maagemet Kowledge maagemet Preparig for Network expasio Source: Natioal Audit Office aalysis of British Coucil data 1.9 The Corporate Headquarters supports a regioal programme maagers etwork as a forum for staff to share good practice o the Overseas Chage Programme. This has icluded twice yearly workshops, mothly telecofereces ad pages o the Coucil s Itraet site. However, the etwork has ot always promoted cosistecy betwee regios, for example both Idia ad Chia have completed a detailed customer segmetatio exercise for their T3 audieces but were uaware of work i other regios. The Coucil iteds to carry out a review of selected Regioal chage programmes through OGC Gateway healthchecks. 1.10 Sice the start of the Strategy 2010 Chage Programme, the Coucil has iitiated a further series of chage projects across the orgaisatio; a full list is at Appedix 2. The mai project to have a impact o the Coucil s UK operatios will be the Global Platform Moderisatio ad Relocatio Project. A decisio is expected o the scope of this project i September 2008. report o chage maagemet ad support services

part two Fiacial Maagemet 2.1 The Coucil i most respects achieves good stadards of fiacial maagemet, but faces some uusual ad complex risks. It will also eed to lear to make best use of its ew resource maagemet system to achieve cosistet excellece. Compariso with UK cetral govermet stadards 2.2 The British Coucil s overall fiacial maagemet is comparable with stadards i cetral govermet departmets. I late 2007, we surveyed 37 cetral govermet departmets to aalyse existig stadards of fiacial maagemet i the sector. 6 The Coucil matches the stadards beig achieved by departmets i most areas; for example i terms of its overall progress i implemetig accruals accoutig, i publishig its accouts before the Parliametary Summer Recess, ad i its ability to switch resources to higher priorities. Particular stregths, where the Coucil has doe better tha most departmets, iclude its record of cotrollig its spedig withi its aual grat-i-aid, (achievig a udersped of just 0.1 millio out of 189 millio i 2006-07). 2.3 As i most areas of its busiess, the Coucil is part-way through umerous chages i its fiacial maagemet arragemets, which we aalyse i the followig paragraphs. These chages should help it address areas of relative weakess idetified through our survey. These weakesses were: The eed for a clearer relatioship betwee fiacial decisios ad resource iputs o oe had, ad busiess outputs o the other; A record of spedig betwee half ad two thirds of its capital resources i the last quarter of recet fiacial years, compared to a still-high 30 40 per cet i most UK govermet departmets. Such peaks i spedig icrease risks to value for moey ad fiacial cotrol; ad Relatively late submissio of fiacial results to maagemet durig the year (20 days compared to a media of 12 days achieved i cetral govermet). Oe factor is the timeliess ad reliability of data from feeder systems. The ew fiacial ad resource maagemet system 2.4 The British Coucil has bee istallig a ew fiacial ad resource maagemet system, which is ot yet rolled out across the whole etwork. I 2001 it decided to itroduce a ew system based o the prove ad widely used SAP software. This has bee a very large ad demadig project for a orgaisatio as complex, globally-dispersed, though still as relatively small as the Coucil. The origial completio date slipped (from August 2007 to Jue 2009) as the Coucil ecoutered ad respoded to problems i the iitial rollout, or reprogrammed to mitigate risks, such as avoidig trasitios ear the ed of the fiacial year. Most issues were ot techical, but cetred o the eed to better prepare coutry busiesses ad staff to be coverted to ew ways of workig. A mid term OGC healthcheck i October 2006 cofirmed that lessos had bee leared ad built ito plaig for subsequet roll-outs. 7 6 The results were published i HC 240, Improvig the maagemet of fiacial resources i cetral govermet, February 2008. 7 The project has also had three Office of Govermet Commerce Gateway reviews, at Gateway stages 2, 3, ad 4. report o chage maagemet ad support services 9

part two 2.5 The estimated costs ad beefits of the FABS project over the 12 year period edig 2013-14 are show i Figure 3. Potetial beefits of the ew system 2.6 The system should improve the accessibility of fiacial data, oce it is embedded successfully across the whole orgaisatio. It has the potetial to improve value for moey through cashable savigs, improved maagemet iformatio ad better decisio-makig. But this depeds o collectig, aalysig ad usig data i a cosistet ad well-uderstood maer across the global etwork. The 2006 OGC healthcheck idetified that the Coucil was ot achievig the stadardisatio that it had aticipated i terms of: Busiess processes of FABS ad the feeder systems that support it; Data itegrity (cosistet use ad codig of data to capture fiacial iformatio accurately ad cosistetly); Roles (eablig staff to move easily betwee regios or departmets without requirig re-traiig); ad Iformatio ad budget structures (orgaisatio structures, projects ad cost cetres) derived from clear global reportig requiremets. The orgaisatio has foud it difficult to defie its requiremets for maagemet iformatio for plaig, moitorig, reportig ad decisio-makig. Oe factor has bee the amout of parallel chage, such as regioalisatio, that the Coucil has bee experiecig over the programme period. Particular challeges remai i areas such as estates maagemet iformatio ad procuremet (part 4 ad part 6), ad i project work where fiacial ad resource moitorig is still beig doe off lie (Mai Report British Coucil: Achievig Impact, part 2). Scope ad objectives of the British Coucil s ew Fiacial ad Busiess System (FABS) FABS is far more tha a ew fiace system, it will replace aroud twety separate legacy systems ad itroduce stadard busiess processes. It is beig implemeted globally i all 110 coutries. It covers: Travel ad expeses; Traiig ad awards; Studet registratio; Customer billig; Projects ad evets; Procuremet; Plaig ad reportig; ad Fiacial ad Maagemet Accoutig. The Coucil s previous systems did ot commuicate easily with each other, creatig cosiderable uecessary re-keyig ad recociliatio work, thereby makig maagemet iformatio ureliable ad difficult to extract. The Coucil iteds that FABS will icrease the proportio of time ad resources devoted to operatioal work, provide timely ad reliable maagemet iformatio ad begi to allow customers to iteract with the British Coucil virtually. Source: British Coucil health check of the implemetatio of FABS 2.7 I ay orgaisatio, phasig i a ew resource maagemet system ad replacig systems familiar to users will be usettlig for those ivolved. But frustratio with FABS was the sigle greatest source of egative commet i our survey of Coucil staff, ad exteded to those who had bee usig it for two or more years (see Figure 4). 8 Particular issues were that day-to-day processes take loger tha before, ofte greatly so, divertig operatioal staff from customer facig activities ad i some cases leadig to lower morale, ad that the user iterface is couter-ituitive, over-complicated ad has to be re-leared by ifrequet users. However, there were some positive commets; some respodets felt that the system had great potetial, such as quicker availability of real time iformatio ad the ability to coduct more detailed queries, for users prepared to ivest the time ad effort to assimilate it. Users reported varyig experieces with the traiig o the system. 8 Source: Olie survey of Coucil staff by the NAO, o Coucil support services: Oct 2007. 10 report o chage maagemet ad support services

part two 3 Implemetig the FABs Resource Maagemet system origial estimated programme latest estimated costs costs ad beefits to 2013-14 ad beefits to 2013-14 ( millio, udiscouted) ( millio, udiscouted) Istallatio Programme ad ruig costs 2 7 System Coectivity 34 34 LESS: Cashable savigs from use of FABS 1 (86) (105) Net Programme Cost (Savig) (10) (4) No-cashable savigs (15) (15) Source: British Coucil Busiess Cases 2001 ad 2006 NOTE 1 Estimated cashable savigs accrue maily from reductios i staffig i the UK ad Overseas, by moderisig processes i fiace, procuremet ad other busiess fuctios. Savigs are show et of exit costs from previous arragemets. 4 British Coucil staff s perceptio of the ew Fiacial ad Busiess System FABS provides me with the iformatio I eed whe ad where I eed it FABS is user-friedly I have received adequate traiig i FABS FABS fulfils its fuctios adequately FABS has made my work more effective FABS has made my work more efficiet FABS is robust ad reliable 0 20 40 60 80 100 Per cet Strogly agree or agree Neutral Strogly disagree or disagree Source: Natioal Audit Office Survey of Coucil staff, 2007 report o chage maagemet ad support services 11

part two 2.8 Users of key busiess-critical systems withi FABS report mixed views about their performace. A ew itegrated system to register Eglish laguage studets has bee implemeted i about half of the 50 coutries with teachig cetres; to be rolled out by mid-2009 to lik all cetres worldwide. As part of the FABS system it offers maagers much improved cosolidatio ad aalysis of maagemet iformatio at a regioal or global level, ad removes the eed for subsequet re-etry of data ito fiacial systems. But staff iputtig data to it widely perceive it as less customised for the Coucil s busiess tha the previous bespoke, stad-aloe registratio system. The ew system was desiged origially for the uiversity market where most studets register oly oce a year, whereas the Coucil s teachig cetres offer short courses ad studet turover is much higher. Despite cosiderable prior developmet work to evaluate ad tailor the system, registerig each ew studet still takes five miutes rather tha 1.5 miutes uder the Coucil system it replaced; potetially a sigificat resource cost give that the Coucil registers studets over 540,000 times a year. 9 There are complemetary savigs i staff time elsewhere, for example by eablig existig studets to re-register olie, ad from less maual extractio of maagemet iformatio at successive levels throughout the orgaisatio. The Coucil has recogised that it would be iefficiet ad a high risk to further revise ad recofigure the system i the midst of a global rollout, but recogises the importace of cotiuig to improve it afterwards i order to deliver steadily ehaced customer ad busiess beefits, as users of the system become more practised. 2.9 The Coucil has ot yet decided whether or whe to activate further fuctioality available withi the FABS suite, for example facilities for recordig staff time ad for recordig iteractios with customers, (although it is ow pilotig time loggig i its UK Operatios team). I part, this is to avoid over-stretchig the iitial implemetatio programme beyod the capacity of the orgaisatio to deliver it, ad i part to esure that each decisio oly proceeds after a robust busiess case. Maagig busiess risks 2.10 The British Coucil is maagig sigificat risks that are uusual i the UK govermet cotext. Historically, the Coucil has had differet legal ad tax status aroud the world, reflectig i part the varyig expectatios ad practices of host govermets. Accordig to local circumstaces its UK staff may, or may ot, be diplomats; its activities may or may ot have charitable status; ad its commercial busiesses ad staff may or may ot pay tax. The key busiess risks are that uclear status might lead to large demads for tax arrears; to complaits by competitors of ufair competitio; or be used by host authorities to puish the UK where political relatioships are fraught. Though graded as a moderate risk overall, tax ad status is a high risk i a small miority of coutries, where the Coucil s legal status is ambiguous or where UK diplomatic relatios with the host coutry, such as Russia, are difficult. The risk is ot quatified globally, but is i high risk coutries. 2.11 I December 2005, Lord Carter s review of public diplomacy cocluded that the Coucil must be proactive i addressig its growig umber of tax issues i order to maage risks to reputatio ad public diplomacy objectives. Sice early 2006, the Coucil has had a programme to regularise its status worldwide, givig priority to this i the te highest risk coutries by the ed of 2009. A ideal outcome i some coutries is for the Coucil to be registered as a brach of a iteratioal charity, but progress will deped o complex legal, diplomatic ad fiacial aalyses ad egotiatios, coducted maily i-coutry but supported from the UK. 2.12 The risk of fraud or fiacial cotrol failure is greater for the Coucil tha may other govermet bodies due to its dispersed overseas operatios, its eed to operate i cash ecoomies ad to udertake substatial local purchasig. The risk has bee amplified i recet years by the sigificat chages the orgaisatio is goig through. The Coucil mitigates these risks through its framework of fiacial procedures ad systems, ad has geerally maitaied soud iteral cotrols ad good fiacial 9 Equivalet to the direct time of about 25-30 full time staff. 12 report o chage maagemet ad support services

part two reportig practices. Although it routiely idetifies a umber of frauds each year through maagemet ad iteral audit processes, these have maily bee of low value ad have ot idicated sigificat cotrol failure. Losses due to fraud totalled 77,000 i 2006-07 resultig from 24 separate icidets. Implemetatio of the ew resource maagemet system i Souther Africa, the first coverted regio comprisig several coutries, resulted i weakeed cotrols ad a partial breakdow of accoutig processes. The Coucil lauched a recovery project which successfully corrected the accoutig records ad re-established the cotrol framework. The rollout was temporarily paused i order to establish the lessos leart from the Souther Africa failure ad to date subsequet implemetatios have bee successful. Most recetly, a fraud was ucovered i West Africa with losses estimated at 180,000. The Coucil has ivestigated the causes of the fraud, take actio agaist those persoel ivolved, is followig due legal process to recover the losses, ad has draw up a actio pla to mitigate agaist future similar occurreces. 2.13 Fluctuatios i exchage rates could lead to fiacial gais or losses i the Coucil s reveue earig busiesses. The risk is assessed as high. Various mitigatios are i place, such as cotracts desiged with icome ad costs i the same currecy, ad active maagemet of foreig cash balaces where local exchage cotrols limit the Coucil s ability to utilise them. Followig cosultacy advice i 2007, two commercial foreig exchage tradig systems are beig tested, ad a joit approach for batchig currecy trasactios with the Foreig ad Commowealth Office is beig cosidered to further mitigate the risk. Efficiecy Gais 2.14 The British Coucil is makig efficiecy gais but the umbers must be iterpreted with cautio. I 2005 the Coucil committed to the Foreig ad Commowealth Office ad the Treasury to makig efficiecy gais of 13 millio over the three years edig March 2008. It also expects to make over 5 millio of efficiecy gais withi its full-cost recovery busiess. The Coucil has a detailed process to moitor ad validate the fiacial gais that arise from a umber of its major chage programmes, as well as various stadaloe efficiecy projects. It also takes steps to embed the gais across the orgaisatio by reducig regioal budgets accordig to the headcout reductios. By September 2007 it had recorded gais of 9.5 millio, maily through reduced or reallocated staff headcout i the UK ad overseas. 2.15 I lie with measuremet guidace issued to govermet departmets, the Coucil s reported savigs do ot take ito accout the additioal costs icurred to achieve them. 10 For example, the restructurig of the Coucil s UK ad overseas etwork, which eabled the headcout reductios, icurred oe-off costs of over 10 millio for items such as project maagemet, cosultacy ad redudacy. The Coucil also recorded gais of 1 millio a year through avoidig the licesig ad cosultacy costs associated with operatig its previous fiacial maagemet system, but this does ot take ito accout the operatig costs of the ew system that is replacig it. I other areas such as ew systems to improve decisio-makig, savigs are likely to be uderstated, as savigs are ot captured where the costs of attemptig to measure them would be disproportioate. 2.16 Some gais were achieved through reallocatio of posts to higher priority regios ad programmes. I such cases, the Coucil has more tha complied with the official guidace by reportig oly the overall et reductio i posts accoutig for both the reductio i the low priority regios ad the (smaller overall) icrease i higher priority oes. This approach quatifies the ecoomies achieved by reallocatio. The Coucil believes that these ecoomies are also geuie efficiecies, because its other performace measures idicate that outputs ad outcomes have bee at least sustaied over the same period. More robust measures of how the reallocatio has affected outputs ad outcomes i the affected regios would be eeded to provide further cofirmatio of efficiecy gais. 10 Guidace issued by the Office for Govermet Commerce, ad latterly by HM Treasury. report o chage maagemet ad support services 13

part three Iformatio Systems ad Techology 3.1 I a 2007 iteral survey of seior British Coucil maagers, 87 per cet cosidered Iformatio Techology critical or very importat to the busiess ad that the fuctio should respod quickly to customer demads. It is a major commitmet for the Coucil, which spet some 50 millio (equivalet to ie per cet of its turover) o iformatio systems ad services i 2006-07. The British Coucil s IT etwork is well maaged, though its performace i deliverig ew projects ad services is less clear. Network availability ad performace 3.2 Maitaiig a Global Iformatio Techology Ifrastructure that meets the eeds of a diverse busiess i 110 coutries worldwide is o small challege. Notably, differig stadards of commuicatios systems i host coutries ca ifluece the cost ad performace of the Coucil s IT provisio. The Coucil has applied ITIL, the most widely accepted iteratioal approach to IT service maagemet, ad overall the Coucil s IT etwork ad its global desktop of basic office tools such as email ad web access are ow performig well. 11 Network availability ad performace has improved over the past 18 moths. System availability is high at over 99 per cet, ad a similar proportio of service icidets that occur are resolved withi agreed service levels. 12 3.3 Our Survey of Coucil staff i late 2007 idicated some variatio of experieces aroud the etwork, but showed geeral recogitio that system availability ad performace is good ad had improved i recet moths. We oted a high level of system availability ad resposiveess durig our visits to Coucil operatios. The Coucil s ow surveys of seior maagers broadly support this picture, with betwee 80 ad 90 per cet satisfied with global coectivity. May of the etwork issues that arose related to the itroductio of ew services or the heavy use of limited badwidth by staff accessig ew iteret resources. The Coucil is reviewig these factors. 3.4 The Coucil s cetral IT maagemet fuctio has strog practices ad processes. I terms of goverace, the cetral fuctio is headed by a Chief Iformatio Officer who reports directly to a Executive Board member. Staff retetio rates, at 95 per cet, are very high by the stadards of a professio where turover of specialist staff ca be a serious problem. There is a miimum fiveday aual ivestmet i IT staff developmet ad skills traiig cetrally, although the equivalet ivestmet i the Coucil s wider global IT commuity is ot clear. The Coucil is also applyig the Iformatio Security disciplies of relevat British Stadards (ISO 27001), whilst ot seekig formal accreditatio because of the cost. IT solutios for customers 3.5 IT solutios are ot yet sufficietly customerfocused. Though most Coucil staff valued havig a basic IT ifrastructure that worked acceptably well, resposes to the our staff survey idicated that the Coucil has bee too slow i implemetig ew customer-facig IT solutios to help develop its busiess (Figure 5). 3.6 Coucil staff had good awareess of the IT solutios ad techologies icreasigly beig used by its 18 35 T3 target audiece, ad, though recogisig that most large orgaisatios fid the pace of moder techological chage difficult to match, may expressed disappoitmet that the Coucil, give its missio to be creative ad to commuicate, was ot closer to the forefrot, as Figure 6 o page 16 shows. The Coucil has made some 11 IT Iformatio Library. Recommeded to UK public bodies by the Office of Govermet Commerce. The stadard provides a cohesive set of best practice guidace draw from the public ad private sectors across the world. 12 Excludig the FABS resource maagemet system curretly beig implemeted. 14 report o chage maagemet ad support services

part three progress towards meetig these aspiratios ad there are examples to be foud aroud the Coucil etwork where progressive techology is beig adopted. For example, i Spai the laguage teachig busiess seds immediate automated text messages to parets of youg learers who do ot atted their classes, ad circulates details of other courses or products that the studet might fid of iterest through the same medium. 3.7 Staff perceived various reasos why progress had ot bee quicker, predomiatly: corporate risk aversio ad coservativeess, with a focus o cotrol to preserve etwork security ad to coserve fiite etwork capacity, rather tha o iovatio; bureaucracy ad exteded timescales to respod to user chage requests, ad a focus o what would work i the UK as opposed to differig eviromets overseas; ad icompatibility of existig Coucil software with its ewly itroduced itraet techology, GTI2, or exteded periods to test compatibility. 3.8 The British Coucil has a very large olie presece, estimated at over 600 websites. Most sites fuctio largely as iformatio boards, offerig little by way of iteractivity with customers. The sheer scale of the material, most of it geerated by idividual coutry operatios or Coucil teams i the UK, has also cotributed to problems of ucoordiated or out-of date messages, or icosistet ad cofusig avigatio. Smaller coutry operatios, (such as Libya ad Tazaia), with less local techical or editorial resources, fid it more difficult tha large operatios such as Idia ad Chia to keep their olie presece up to date. 3.9 I November 2007, the Coucil iitiated a olie trasformatio programme to develop capabilities to egage more effectively with stakeholders ad customers o-lie. Iitially, this is workig with specialist agecies to produce a improved corporate homepage ad brad, focusig o the eeds of UK stakeholders ad the media. Aother agecy is helpig to develop a stroger olie presece for four top priority global products, IterActio, Creative Cities, Global XChage ad Climate Security. IT Project delivery 3.10 Measures of project delivery to time ad cost have bee deficiet. Util recetly, the Coucil did ot measure the delivery of its IT projects agaist the timescales ad budgets that were set for them at the outset. I practice, baselie budgets ad timetables have bee revised at least aually; the system beig desiged primarily to esure that the Coucil spet withi its aual IT budget. As a result there has bee o systematic data o the average cost ad time variace of completed projects over their lifetimes, or tred data to show whether overall performace is gettig better or worse. The Coucil s IT brach does, however, operate a system of post project evaluatio which gathers participats mai views o factors ifluecig project successes or failures. Fidigs have emphasised the importace of strog project commuicatios, goverace arragemets, plaig, traiig, supplier relatioships ad project maagemet methodologies. 5 Views of British Coucil staff o the use of Iformatio ad Commuicatio Techology (ICT) i the orgaisatio I have received adequate traiig i the ICT systems I have used withi the last three moths The ICT systems help me to perform my job more efficietly The British Coucil makes full use of ICT to improve its services The ICT support fuctio respods to my equiries promptly The support provided by ICT meets my eeds effectively ICT systems are robust ad reliable 0 20 40 60 80 100 Per cet Strogly agree or agree Neutral Strogly disagree or disagree Source: Natioal Audit Office Survey of Coucil staff, 2007 report o chage maagemet ad support services 15

part three 6 Olie fuctioality idetified as importat by British Coucil staff Fuctioality required Widely available ad affordable web-based coferecig, istat messagig or email o the move. Potetial beefit Facilitate flexible ad regioal-based workig ad reduce travellig, especially as the Coucil moves to more itra-regioal workig. British Coucil Progress Audio ad video coferecig has bee available globally for several years, though ot web-based. It is rollig out ROAM, a secure system to eable travellig staff to access their emails, shared documets ad the orgaisatio s itraet ad corporate applicatios. Voice over Iteret Protocol telephoy, ad SMS text-based commuicatio with customers. Ecoomies i call costs. Better reach to mobile telephoe users. Rollig out Voice over Iteret telephoy. Corporate kowledge maagemet systems. Pricipally, more sustaied ad cosistet maagemet of relatioships with curret ad potetial customers. Customer relatioship maagemet project i progress ad pilotig i Chia regio. Olie course paymets ad exam registratio. Icrease accessibility of laguage teachig ad examiatio services for studets. Existig studets i four coutries ca ow re-register olie. Reistatemet of the olie public access catalogue. Eable customers to check availability of, ad to order; Eglish learig materials. Fuctioality to establish availability of materials has bee provided, but it is ot yet possible to make or reew loas. Quicker ad better access to moder web-based social etworkig tools. To target the T3 audiece through chaels such as olie etworkig sites ad discussio commuities. The Coucil has experimeted with a presece i iteret domais such as Secod Life ad a Eglish ad Exams olie commuity. Source: Natioal Audit Office survey of Coucil staff, ad examiatio of Coucil IT Programmes 3.11 I April 2007 the Coucil bega to collect data o delivery of IT projects, but it is too soo for this to geerate useful tred data. A sapshot of the 16 projects i progress durig 2007-08 is at Figure 7. Commo reasos for slippage icludes chages i project scope or user requiremets, ad projects beig put o hold to switch resources to higher priorities. Data o average cost outturs is less complete but appears better. The Coucil s biggest IT project sice 2005, to improve global coectivity, was delivered for 12.6 millio, withi a budget of 18.7 millio set at iceptio. 7 Summary of British Coucil IT projects i progress durig 2007-08 Number of projects: 16 (3 completed) Timescales Costs 000 Origial Project Legth 7.3 moths 391 at project iceptio.. Average age of projects at time of Natioal Audit Office aalysis. 8.9 moths by which time the latest estimate 10.6 moths 317 of project duratio was Which equates to a average extesio i duratio of.. 44 per cet Source: Natioal Audit Office aalysis of British Coucil Summary Programme Costs ad duratios 16 report o chage maagemet ad support services

part Four Maagemet of the Global Estate 4.1 At March 2007, the market value of the Coucil s freehold ad log leasehold properties was 86 millio; the Coucil also spet 21 millio i 2006-07 o reted premises, maily office accommodatio. Over 90 per cet of its total busiess floorspace, estimated at some 185,000 square metres, is i over 200 properties overseas. These offices are used ot just to accommodate Coucil staff but also to receive public callers, to host public ad etworkig evets ad exhibitios, ad to house the Coucil s Eglish laguage teachig ad examiatios busiess. I some istaces they geerate retal icome. The Coucil s stakeholders early all cosider that its etwork of offices costitutes a vital overseas shopwidow for the UK, i the way that Foreig ad Commowealth Office s more secured Embassies ad High Commissios caot. 4.2 Coucil staff respodig to our survey reported a wide rage of experieces of their workig eviromet; idicatig quite a diverse estate. The resposes idicated geerally itesive use of office space, i some cases to the extet that this felt too tight. But geerally, staff satisfactio was higher for estates maagemet, at about 60 per cet, tha for other support services. Estates Maagemet iformatio 4.3 Maagemet of the global estate is hidered by a lack of maagemet iformatio ad specialist expertise. 4.4 Maagemet iformatio is better i the UK tha for the overseas estate ad shows positive results. Sice 2002, the Coucil has followed up its 1990s relocatio of posts from cetral Lodo to cheaper premises i Machester, by closig small offices aroud the coutry, savig estimated ruig costs of 1.7 millio a year. This ratioalisatio, from 23 UK buildigs dow to five, is cotiuig. Comparative measures of efficiecy already appear positive. For example, i 2006 the average space per full time employee was withi UK cetral govermet ad private sector averages, (12.1 square metres per perso, compared to 14.5 for cetral govermet s civil estate ad 13.2 for the UK private sector). I 2006 the Coucil s UK estate cost was also, at 395 per square metre, just withi the average cost reported by the UK Civil Estate, (at 403 per square metre). 13 Good estate maagemet practices are also followed; for example all UK buildigs are classified as accessible to disabled people, ad a evirometal maagemet system is beig developed for implemetatio by November 2008. I the UK there is a well publicised help desk facility which aswers all premises-related equiries ad requests for facilities maagemet support. All requests are logged ad moitored at least mothly to idetify treds, ad most staff appear reasoably cotet with their workig eviromet. 4.5 I cotrast, the comparative performace of the global estate etwork is much less clear. The Coucil does ot maitai equivalet measures which demostrate the itesity with which office space is used, or the cost per square metre of space, across its global etwork. There is o uiversal stadard for measurig floorspace used across the overseas etwork, so estates statistics reflect a icosistet assortmet of et ad gross floor areas, the results of which are difficult to iterpret or to use reliably for iformed compariso. The Coucil does ot kow which of its overseas offices would meet UK stadards for disabled access, or which have bee subject to evirometal audits for eergy use. Commets by Coucil staff idicate that disabled access ad facilities are deficiet i some premises, ad perceive a lack of guidace o the subject from the UK. 13 Source for Comparators: 2006 Occupiers Survey, Ivestmet Property Database. report o chage maagemet ad support services 17

part four 4.6 The maagemet data available i coutries is ot stadardised across the etwork. I Hog Kog, facilities maagemet has bee cotracted out to a specialist compay which provides a mothly moitorig report comprisig relatively sophisticated measures, such as utilities cosumptio, helpdesk activity ad the flow of people through the buildig. This has bee used by the Hog Kog office to moitor the performace of exteral cotractors, pla maiteace programmes, ad to make decisios about how to maximise the use of space to geerate icome. I other coutries, total premises costs are kow, but are ot used for regular comparative aalyses, to iform judgemets as to whether to chage practices, to improve the existig facilities or to relocate. Nor are premise costs always allocated to the specific buildigs they relate to, which ca be a sigificat ucertaity i larger Coucil operatios with several differet premises i more tha oe city. 4.7 The Coucil s corporate cetre has started to develop performace idicators for the overseas estate etwork, aggregated at coutry level. Betwee 2001 ad 2006 it ra a fitess for purpose exercise i which Coucil coutry directors graded their estates agaist set criteria such as property locatio, appearace ad cofiguratio. The exercise idicated where coutry maagemet cosidered their estates failed to meet operatioal eeds, ad this qualitative assessmet was compared to available cost data. Aual costs per square metre were highly variable, from as little as 40 per square metre i parts of Africa ad the Idia sub-cotiet, to more tha te times as much i parts of the Far East or Cetral Europe. Much of the stated cost variatio is because freehold premises owed by the Coucil do ot carry a retal cost. Coversely, properties that have bee recetly fitted out will carry a sigificat depreciatio expese for the cost of the work. I terms of fitess for purpose, about half of premises did ot meet the Coucil s overall defiitio of adequate. There was o strog correlatio betwee premises cost ad perceived fitess. Though the exercise was a useful start, more detailed aalysis at the level of idividual buildigs, validatig the quality assessmets ad the stated costs per square foot ad comparig them to orms i the local property markets, would be ecessary to iform decisio-makig about whether to vacate, retai, maitai or reovate premises. Professioalism i Estates Maagemet 4.8 There is a limited pool of property professioals to maage such a dispersed estate. The Coucil maitais a overseas estates team of 15 people i the UK, icludig 12 staff qualified i buildig desig, project maagemet, asset maagemet, security ad health ad safety. I recet years over 80 per cet of the team s resources have bee dedicated to maagig a bow-wave of idividual works projects, such as office relocatios ad fit-outs ad security ehacemets. 14 Little time has bee dedicated to aalysig ad maagig the performace of the overall overseas estate. 4.9 At the coutry or local level, estates ad facilities maagemet expertise is weaker; usually a geeralist, locally egaged perso acts part time as a buildig or facilities maager, dealig with day-to-day issues. It would be iefficiet to have dedicated property maagemet expertise at each of the Coucil s 110 Coutry operatios, ad the Coucil has istead omiated estates co ordiators i each of its 12 Regios. However oe of the iitially appoited co-ordiators are property maagemet specialists with relevat professioal qualificatios. Some are Coutry Directors, others are regioal decisio-support officers, ad others are more juior, geeralist locally egaged staff. All have other o estates resposibilities. Opeig ad closure decisios 4.10 Opeig ad closure decisios follow a objective decisio makig process, but better post project evaluatio is eeded. Betwee 2005 ad 2007 the British Coucil closed some 19 offices, icludig 14 teachig cetres ad withdrew completely from oe coutry (Peru). It opeed two offices i high priority coutries for the UK, (Libya ad Algeria), where it had had o presece for decades. This approximates to about four per cet aual turover i operatig locatios; a chur rate which is likely to be sustaied for the ext three years. I order to release further resources the Coucil expects to close aother 10 coutry operatios by 2010. Ievitably, some closure decisios are cotetious ad criticised by users of the facilities. Most decisios will have diplomatic ad political cosideratios, which the Coucil discusses with the Foreig ad Commowealth Office. 14 Typically about 40 major projects at ay oe time ad about 60 mior projects (uder 100,000) per year. 18 report o chage maagemet ad support services

part four 4.11 The Coucil s policy is to cosider closure of teachig cetres where they caot at least break eve ad where the busiess does ot achieve substatial o-commercial impacts. Though decisio-makig was geerally objective, some teachig cetre closures i the period could have bee better justified, because they did ot take ito accout the full costs of closure or the potetial to turaroud the busiess. I the 2005 closure of the Kyoto teachig cetre, a more robust decisio would have take ito accout full closure costs, such as payig off cosequet lease liabilities. Actual closure costs equated to 3 4 years historic deficits. The cetre had bee i deficit for two years, followig relocatio to a ew district, ad marketig to attract a ew clietele was oly the begiig to bear fruit. Most closure decisios were ot subsequetly reviewed post-closure to cofirm how far the project assumptios, ad the decisio, had prove valid. The Coucil is revisig its processes to iclude busiess improvemet potetial i future decisios, ad to adopt appraisals based o projected log-term discouted cash-flows. 4.14 Idetifyig ad schedulig the maiteace ad reewal eeds of a estate is a foudatio of strog property maagemet. Some operatios we visited have i place plaed prevetative maiteace programmes, (such as for the Coucil s New Delhi office i Idia), but most did ot. Oe cospicuous gap was i respect of the Coucil s ew Office ad Teachig Cetre i Tripoli Libya, which was commissioed i 2006 at a capital cost of 0.7 millio but without a forward plaed prevetative maiteace programme i place. I the absece of a systematic plaed maiteace programme, it is difficult for the Coucil to determie whether or ot it is allocatig maiteace fuds where they are most eeded, or buildig up a backlog of ecessary maiteace or reewal work ad impairig the value of its assets. 4.12 The Coucil is begiig to recogise that closig its local office eed ot mea losig all egagemet withi a particular coutry. It has begu to thik about supplemetig its traditioal higher-cost, office-based presece, with other models which ivolve delivery from out-of-coutry, via regioal hubs. This applies particularly i its Europea regios, (See Mai Report British Coucil, Achievig Impact, Part 1). Maiteace ad Reewal 4.13 Programmig ad prioritisatio of maiteace ad reewal is weaker for the overseas etwork tha i the UK. Historically i the Coucil s overseas etwork, local property maagemet has bee a resposibility of idividual coutry directors, who could request specialist support from the UK. Oe Coutry Director told us that it had bee difficult for a idividual Director to judge the value for moey of expediture o their premises objectively i isolatio, ad that regioal decisio-makig would be preferable. report o chage maagemet ad support services 19

part Five Huma Resource Maagemet 5.1 The British Coucil has a pool of committed ad skilled staff, but challeges remai i maagig a globally dispersed workforce. Differet groups of staff with distict terms ad coditios presets a challege to maage expectatios 5.2 The Coucil employs over 7,900 staff across its global etwork, of which aroud 6,800 (86 per cet) work overseas. Payroll costs, at 191 millio, represeted 38 per cet of its total resources expeded i 2006-07. Maagig such a dispersed workforce is a challege, eve more so whe the workforce is split ito five groups of staff which each have specific Terms ad Coditios of Service, are govered by differig policies, ad are subject to varyig bodies of employmet law (Figure 8). While differet policies ad coditios of service are applicable to each staff group, there is a core set of key policies ad terms that apply to all categories of staff globally. These iclude a Code of Coduct, procedures for grievaces ad disciplie, health ad safety, performace maagemet ad the recruitmet processes. 5.3 Our survey of employees foud that differig Terms ad Coditios of Service ad levels of pay ca be a source of tesio i overseas offices. The most commo complait was the disparity i pay ad beefits betwee UK-appoited ad coutry-appoited staff, especially for those i middle-maagemet positios ad below. Over oe third of staff disagreed or strogly disagreed that the British Coucil offers satisfactory pay, risig to over half amog teachig staff. The British Coucil s ow survey of staff i 2007 foud that satisfactio with the overall beefits package was oe of the three questios with the largest fall i satisfactio o the previous year. Coutries are free to determie the appropriate applicatio of corporate priciples for settig pay for coutry-appoited staff, ad set rates based o market positioig i their coutry, although Lodo does have to approve pay levels. I order to esure that remueratio for coutry-appoited staff does ot damage the Coucil s ability to recruit ad retai high quality staff, most coutry operatios have used exteral cosultats to bechmark Coucil salaries agaist comparable orgaisatios. The British Coucil aims to pay i the middle of the market, except where the ability to recruit ad retai the right staff ecessitates higher rates. However, the Coucil does ot hold cetral statistics o turover for coutry-appoited staff, therefore it is hard to measure the effectiveess of pay bechmarkig o recruitmet ad retetio across the etwork. 5.4 To promote some cosistecy i terms of employmet betwee groups ad across all global locatios, there are core stadards which all overseas offices must apply. For example all coutry-appoited staff are etitled to a miimum of 35 days paid leave. It is the Coutry Directors resposibility to esure that the Terms ad Coditios of Service meet these miimum stadards. The cetral huma resource team reviews compliace periodically, usually every three years; the ext full review of coutry staff employmet terms is scheduled to be carried out i 2008. I 2006, the Coucil started a project to revise ad update core employmet offers (excludig pay) ad ed-of-service beefits for both local ad etwork teachers. They expect to start implemetig these chages durig 2008-09. 5.5 Higher levels of iterregioal workig meas that differeces i terms of employmet are icreasigly visible ad ca affect staff morale. Some regios have adopted regioal terms of employmet to address these morale issues. For example British Coucil East ad West Africa is ow workig to regioal Terms ad Coditios egotiated by the Regioal Director, with support from a regioal HR specialist. However this may ot always be possible i regios where coutries have differig labour laws which preset challeges whe tryig to produce a harmoised set of terms as i Easter Europe. 20 report o chage maagemet ad support services

part five 8 Terms ad Coditios of service per sub group of British Coucil staff Staffig subset Number of staff Terms ad Coditios of Service determied by: Applicable body of employmet law UK-based staff cotracted ad workig i the UK. 1,097 British Coucil Huma Resources UK team. UK employmet law. UK-appoited staff overseas cotracted i the UK ad workig overseas. 203 British Coucil Huma Resources UK team. UK employmet law. Coutry-appoited staff (staff outside the UK who are cotracted i the coutry or territory i which they work or staff o iteral trasfer overseas). 4,816 Coutry/regioal Huma Resources Maager ad Coutry Director, based o corporate core stadards. Local employmet laws (icludig EU legislatio for EU coutries). Teachig staff etwork cotracts. 624 Head Eglish Laguage Operatios. Various depeds o coutryspecific arragemets. Teachig staff locally appoited. 1,185 Coutry/regioal Directors i cooperatio with the Teachig Cetre Maager, ad idividual cotacts. Based o Corporate Core Stadards. Local employmet laws. Source: Natioal Audit Office summarisatio from Coucil staff couts, Jauary 2008 Maagig staff performace ad developmet 5.6 Performace ad staff developmet arragemets are strog for UK staff, but measures are less robust for those coutry-appoited. A exteral cotractor, Ipsos MORI, has carried out a aual staff survey for the Coucil sice 2003. The 2007 survey compared the Coucil to average resposes from Public ad private sector bodies, ad foud that they were i lie with or above the orm for 30 out of 33 public sector, ad 29 out of 34 private sector questios. Key stregths icluded; strog motivatio ad commitmet to helpig the orgaisatio be successful; a sese of pride i workig for the Coucil ad strog performace o diversity idicators. I 2006-07, over half of the Coucil s seior maagemet team were female, ad the Coucil exceeded its target for ethic miority staff i seior maagemet positios. 15 Areas which were idetified as havig the potetial for improvemet icluded; better maagig tesios betwee maagerial levels to icrease the satisfactio of middle maagers ad staff s perceptio of seior maagemet, ad makig teachers feel more valued ad itegrated ito the orgaisatio. Maagig staff through periods of chage was also highlighted as a area for developmet (paragraph 1.4). The Coucil reports the results of the staff survey to its Executive Board, the Trustees Board, ad to all staff, ad develops actios plas for areas where it feels orgaisatioal performace eeds to be improved. 5.7 All Coucil staff should have a aual job pla, agreed with their lie maager, with objectives which are liked i to higher level plas, such as team, departmet, coutry or regio. Maagers must have two formal meetigs o performace ad developmet per year with their staff; oe mid year review ad oe at the year ed. There is also a madatory performace maagemet e-learig course which all staff complete as part of their iductio to the Coucil, though Coucil figures show that oly 42 per cet of staff have actually completed this. Huma Resources UK collect performace data o UKappoited staff ad esure that all staff have completed their performace appraisals, but the process is less robust for coutry-appoited staff. Lie maagers ad coutry directors are resposible for esurig that all staff have a aual appraisal but do ot systematically collect or report data o this. Verbatim commets idicated that ot all staff had completed performace appraisals ad that the Coucil does ot sufficietly moitor o-compliace. 15 British Coucil Equal Opportuities moitorig data, Jue 2007. Report o Chage Maagemet ad Support Services 21

part five 5.8 Almost half of Coucil staff who completed our survey respoded egatively to the statemet the competecy framework is clear ad easy to apply to my role. Teachers especially felt that the 13 behavioural competecies were difficult to apply, ad geeral staff raised cocers over the clarity of competecies ad the time it took to complete the forms. Staff also idicated that the performace appraisals are ot strogly liked ito developmet eeds or the wider objectives of the Coucil. Some 20 per cet of respodets to our survey disagreed or strogly disagreed with the statemet the appraisal process helps me set measurable objectives which make clear what is expected of me. From April 2008, the Coucil is rollig out a ew approach to performace maagemet which focuses o the delivery of idividual ad team results that are better liked to corporate goals, ad o staff developmet. There will be quarterly reviews ad a five-poit ratig scale for aual assessmets to allow better discrimiatio betwee outstadig ad usatisfactory performace. 5.9 Util 2003-04, the Coucil was committed to ivestig three per cet of its payroll to staff developmet. It comfortably met this target for the years 2001-02 to 2003-04 but discotiued corporate reportig of this measure i 2004-05. The curret corporate stadard remais three per cet of payroll, but i additio, staff are etitled to a miimum of six days off-the-job traiig ad developmet activities per year. The amout of time ad proportio of payroll actually spet should be recorded through the performace maagemet process ad through the ew resource maagemet system. However, the Coucil is uable to provide figures o how may staff meet that target or what proportio of its total payroll is spet o learig ad developmet. The Coucil has collected data for UK staff ad oe sample overseas regio i 2006-07. These very icomplete figures idicated that the target was more tha met (4.7 per cet) i the UK ad met overseas. Data for the whole etwork will be reported from the ed of the 2007-08 year. Staff turover ad sick leave 5.10 Measures for staff turover, post rotatio ad sick leave are oly available for UK-appoited staff. Staff turover is variable throughout the British Coucil etwork, reflectig the differig market coditios i which it operates. The average turover for UK-appoited staff is similar to the civil service average at 7.5 per cet, however, i 2007-08, turover rose to 11.9 per cet due to UK office closures ad redudacies as a result of the UK Operatioal Chage project. If iteral trasfers are icluded however, turover of UK-appoited staff i seior maagemet posts is much higher; out of 243 seior posts there had bee 222 ew starters, temporary promotios or people o iteral trasfers i the year betwee September 2006 ad Sept 2007. 16 There is o turover data for overseas staff, but these ted to mirror wider employmet treds of the coutry they are located i. For example turover i Hog Kog is aroud 20 per cet, which is average i that competitive market. Oe exceptio to this tred is teachers, who ofte have much higher turover figures. For example, i Libya, turover of coutry-staff is very low, but it is over 50 per cet for teachig staff o the Libya Eglish Teachig i Uiversities Project. Most of these are cotracted i the UK o oe year cotracts but were uprepared for remote postigs ad difficulties with visas. British Coucil Libya are ow workig to better prepare ad iform Project teachig staff prior to postig i order to improve retetio rates. 5.11 Rapid staff rotatio i some posts ad coutries is presetig a challege for the Coucil to esure that essetial local kowledge is ot lost. Maitaiig staff cotiuity ad developig persoal relatioships ad etworks is vital to good customer relatios, especially i the absece of a comprehesive cotacts maagemet system. 17 Both Coucil staff ad exteral stakeholders have raised rapid rotatio of staff as a issue; for example there have bee three East Asia Regioal Directors i the past year. Turover of staff i the UK has also affected the Coucil s ability to moitor cetral Chage projects, as discussed i paragraph 1.8, above. 16 UK appoited staff at Coucil Pay Bad 9 ad 10. 17 Natioal Audit Office The British Coucil: Achievig Impact HCXXX 2007-2008. 22 Report o Chage Maagemet ad Support Services

part five 5.12 The British Coucil maitais cetral sick leave statistics for its UK-appoited staff. As i other areas, coutries keep their ow sickess absece data for teachig ad locally recruited staff. For the 2006-07 year, the Coucil s sick leave data shows that it lost a average of 18 days per UK employee. I cotrast, the Departmet for Iteratioal Developmet ad the Foreig ad Commowealth Office lost oly 4.6 ad 2.9 days per perso respectively. 18 Based o a average all-iclusive employmet cost of UK staff of 37,000 per year, this would represet a aual cost to the Coucil of 2.8 millio. Figures from 2007-08 show that sick leave for UK staff has see a substatial decrease to 6.9 days per year. This decrease is largely due to more robust moitorig arragemets to close sickess files whe staff retur to work ad suggests that the previous figure of 18 days may have bee over-reported. It is too soo to tell how much of the decrease is due to improved data collectio methods, ad how much is due to a geuie reductio i sickess absece. Huma Resource Expertise 5.13 The UK-based Huma Resource team is staffed by 68 employees at a cost of 4.3 millio. The Coucil has ot to date collated the time ad cost of overseas staff egaged i huma resources work. Some of these are full-time; others sped varyig proportios of their time o other work i additio to huma resources. The Corporate HR team s resposibilities iclude developig policy ad supportig UK-appoited staff o issues such as traiig or takig up iteratioal assigmets. Withi this team, there is a dedicated Overseas Team of five staff to provide support to overseas maagers o issues such as recruitig ad retaiig coutry-appoited staff, grievaces ad implemetig chage programmes. The Coucil aims to stregthe its Huma Resource expertise at a Regioal level. 5.14 Staff respodig to our survey were geerally positive about the visibility of the Huma Resources team, although respodets idetified some ucertaity as to who to approach i the evet of a Huma Resources query. Staff based i the Coucil s overseas offices teded to be less certai as to who was the most appropriate cotact, though there was wide variatio betwee regios. Overseas staff teded to be less satisfied with the support provided where there was o dedicated Huma Resource maager i-coutry. UK-appoited staff based overseas sometimes felt that Huma Resources UK were too remote to be able to deal with their query. 5.16 Maagig Huma Resource issues at a coutry-level has proved a challege for smaller coutries which do ot have the resources available to provide a dedicated HR maager. For example, i Libya, Huma Resource is maaged by the Coutry Director, with the Deputy Director actig as the Huma Resources Champio. Smaller coutries have also struggled to recruit local Huma Resource professioals. Delegatig resposibility to 110 coutries has also led to variatios i stadards betwee the coutries, as corporate guidelies were broad ad allowed wide discretio for Coutry Directors. 5.17 Uder the Huma Resources Chage Project, the Coucil is icreasig its professioal Huma Resources capacity at a Regioal level while also restructurig its UK corporate Huma Resources fuctio ad trasferrig overseas the work of the curret UK-based overseas team. The Coucil are part way through appoitig a etwork of professioally qualified, Regioal Strategic Busiess Parters. These will be coordiated by a Huma Resources Strategic Busiess Parter i the UK. The Coucil iteds that regioal Huma Resources services teams will provide more effective ad efficiet support to overseas maagers ad staff ad will replace the previous ad hoc arragemets where the umber ad expertise of Huma Resources persoel i the regios was partly iflueced by historic reasos. For example, where the presece of Huma Resources maagerial expertise was demaded by issues such as complex local employmet laws. 5.18 Some coutries are already seeig the beefits of movig to a regioal structure. For example, Tazaia s Huma Resource is ow maaged by the East ad West Africa Regioal Huma Resources team i Nairobi. This has resulted i a harmoised set of Terms ad Coditios of Service ad a cosistet approach to learig ad developmet ad redudacies. The challege will be to maitai a appropriate balace betwee developig regioal expertise to avoid overburdeig small offices ad provide cosolidated data, ad maitaiig sufficiet local kowledge to be able to maage Huma Resources i coutries with differet labour laws ad requiremets. 18 Cabiet Office Aalysis of Sickess Absece, FY2006-07, RED scietific limited. Report o Chage Maagemet ad Support Services 23

part six Procuremet 6.1 The British Coucil has started to examie the scope to cosolidate its procuremet to achieve further efficiecies. Limited data o procuremet 6.2 The Coucil speds some 350 millio a year o third party goods ad services worldwide. I 2006, it cocluded that it was i a relatively weak commercial positio, otig i particular a lack of robust expediture data from which to develop plas to achieve fiacial savigs i specific categories of purchases. The Coucil has ot kow how much it speds i its 110 coutries worldwide o differet categories of procuremet. Relatively little expediture is procured through corporately egotiated deals. Limited pool of expertise 6.3 The Coucil has a actig Head of Strategic Procuremet based i the UK who is supported by a team of three, of whom oe is professioally qualified i purchasig, ad by the services of a outsourced procuremet compay. To date cetrally egotiated cotracts worth 7.8 millio a year, (equivalet to two per cet of aual o-pay expediture), for purchases such as travel ad accommodatio, have maily bee limited to the UK. Iformatio techology ifrastructure services costig some 15 millio, (a further four per cet of o-pay expediture) are also procured cetrally from the UK. 6.4 The Coucil does ot maitai data o the extet of professioalism amogst staff procurig goods ad services overseas. I the coutries we visited, o procuremet officers claimed formal procuremet qualificatios, though some had relevat prior experiece ad local kowledge i office maagemet for the Coucil or previous employers. I Idia, some cetral traiig i purchasig risks had bee delivered i 2003-04. At preset, there is little specialist expertise or capability i place to maage procuremet from the regioal tier. Cosolidatig Procuremet 6.5 The British Coucil is startig to cosolidate procuremet. Regioal or global procuremet will ot always be more cost effective tha local purchasig. I some coutries importig goods from outside will icur prohibitive trasport costs or import duties, or hadlig delays which might put at risk the delivery of Coucil services or projects. Most local purchasers i the offices we visited expressed reservatios over the value for moey of global or regioal cotracts, citig advatages of timeliess ad quality of service gaied from usig local suppliers. I some parts of the world, regioal or iteratioal suppliers do ot have a local presece which would eable the Coucil to obtai ecoomies of scale. Some savigs have bee achieved through cosolidated procuremet, for example through establishig regioal travel maagemet cotracts ad a sigle British Coucil magazie across Idia ad Sri Laka. Such arragemets have however bee the exceptio rather tha the orm. 6.6 Compared to other support services, procuremet drew more eutral assessmets from staff, reflectig that fewer staff are directly ivolved i it, ad have less cotact with the Coucil s cetral procuremet team (Figure 9). Coucil staff respodig to our survey expressed two prevalet perceptios regardig procuremet: The strategic procuremet team appeared very small ad stretched for the scale of the busiess, ad therefore uable to provide sustaied or proactive support. 24 report o chage maagemet ad support services

part six Twice as may staff were cotet with the performace of cetrally egotiated suppliers tha were dissatisfied; except that travel arragemets offered by the Coucil s cotracted travel maagemet compaies 19 were ofte see as far from the cheapest available, ad offerig iferior value for moey to alteratives that staff had idetified through iteret compariso sites. I some Coutries travel maagemet compaies purchase o the Coucil s behalf, derivig a commissio. I Idia, the Coucil reported better results with a arragemet whereby they use the Compay as a source of travel market itelligece, to iform their ow purchasig. 6.7 I December 2006, the Coucil egaged exteral cosultats to collate its aual expediture ad to assess what categories should the be cosidered for further detailed aalysis leadig to cost reductio opportuities. It took several moths to derive cosistet data from the first five of the Coucil s 13 regios 20 operatig the ew FABS fiacial maagemet system, but by August 2007 the review had cocluded that: about half of the 244 millio total o-pay spedig idetified could be positively iflueced by specialists i purchasig to some extet, maily professioal services, estates ad facilities, IT ad telecommuicatios, travel, marketig ad temporary staff; ad there is scope to reduce the umber of suppliers used (31,000 i 2006/07), ad the umber of separate trasactios (166,000) beig processed, icludig may of low value, (47,000 were for uder 100). 6.8 Progress agaist these aims will deped o the ability of the Coucil to derive usable data from FABS i all its regios, ad to brig sufficiet procuremet expertise to bear o the most worthwhile opportuities. Sice the cosultats report the Coucil has re-tedered for temporary staff i the UK ad udertake VAT mitigatio to realise some 300,000 aual savigs i the ew cotract. It has also started work o re-tederig the cotracts for hotel ad coferece services i the UK. 9 Views of staff o how well procuremet is maaged i the British Coucil The guidace ad advice regardig procuremet published o the itraet is easy to follow The Strategic Procuremet team is helpig staff to develop their skills i relatio to the procuremet process The Strategic Procuremet team is resposive whe I eed help i orderig goods ad supplies over the 80,000 threshold Techology is used to make the process of orderig ad payig for goods efficiet Techology is used to make the process of orderig ad payig for goods clear The goods ad supplies that are provided cetrally are of appropriate quality (Travel, hotel bookig, computer equipmet) The procuremet process for orderig goods ad supplies is clear ad easy to follow 0 20 40 60 80 100 Per cet Strogly agree or agree Neutral Strogly disagree or disagree Source: Natioal Audit Office Survey of Coucil staff, 2007 19 Sourced through the Office of Govermet Commerce. 20 Russia was the a separate regio. Report o Chage Maagemet ad Support Services 25

Appedix oe Recommedatios The rapid pace of chage i the Coucil ad the large umber of parallel chage programmes meas that programmes are difficult to itegrate, ad some projects withi the overseas chage programme have faced delays ad reschedulig. Although reschedulig is ofte a respose to exteral factors ad the impact of FABS, some eablig projects have slipped due to limited staff capacity to progress simultaeous projects. The amout of chage is also havig a effect o staff satisfactio. The Coucil has idetified regioal maagemet as the right place to isert expert oversight ad directio of support services i its 110 coutry operatios. But there is more to do to get this workig cosistetly well. The Coucil should adopt more robust portfolio maagemet ad goverace practices to better match its chage programmes with its capacity for chage. This should help avoid slippage or worse tha expected dips i operatioal output. The Corporate cetre i the UK should coduct a status review of each regio s progress i its eablig projects, ad determie how this impacts o corporate targets. The review should also examie how the regios have each implemeted the various eablig projects uder their chage programmes with a view to sharig good practice. The Cetre should the map all the elemets of the regioal chage programmes oto the UK chage programme ad eabler projects to esure that key iterdepedecies are flagged. The Cetre should check that all UK-maaged projects are adequately staffed for the project duratio, ad that staff rotatio is kept to a miimum i key posts. The Coucil should focus its pool of estates, huma resource ad procuremet specialists at regioal level to esure that these services reach cosistet stadards, ad to be accoutable for these service stadards to the corporate cetre. The Coucil should put i place qualified professioals i estates maagemet, huma resources ad procuremet to provide regioal oversight ad icrease cosistecy betwee regios. The regioal professioal etwork should have a sigle cotact poit i the UK for each support service to provide guidace ad policy advice to the Regios. The regioal represetatives should be resposible for checkig that coutry ad regioal stadards ad policies comply with corporate stadards ad policies, for example for Terms ad Coditios of Service. Closer UK ivolvemet i the etwork s chage programme will reduce the risk that some regioal chage is held up, pedig decisios from the corporate cetre or progress o iterliked programmes. It will also allow the Coucil to more accurately allocate resources to differet chage projects. Regioal coordiators will be best placed to idetify ad pursue ecoomies of scale ad to support more expert, objective ad cosistet decisio makig. Likig this pool of expertise ito the UK will provide greater oversight of the etwork for the UK corporate service teams. 26 report o chage maagemet ad support services

appedix oe Sice 2005, the Coucil has bee i trasitio from a orgaisatio which allowed its idividual coutry operatios more autoomy. While the Coucil maitais a good level of maagemet iformatio o the performace of UK corporate services, the Coucil does ot yet have comparable data o the performace of support services across the global etwork. The Coucil eeds cosistet performace metrics for its overseas estates, procuremet ad huma resource fuctios, with cosistet reportig of progress to the corporate cetre. The Corporate cetre should set cosistet performace maagemet idicators for support service health ad require regios to report back o these for their overseas estate, procuremet ad maagemet of coutry appoited staff. These metrics could iclude Estates: stadardised floor space measure, disabled access, total premises costs. HR: Turover, sick leave, completio of performace appraisals for coutry-appoited persoel. Procuremet: Regioal sped across categories of procuremet. Take up of corporate reductios. Improvig the stadard of performace data o the overseas etwork will promote cosistet stadards across the etwork, ad eable the corporate cetre to make decisios based o a complete picture of the Coucil. report o chage maagemet ad support services 27

Appedix two British Coucil Chage projects Project Descriptio Aticipated delivery date Status UK Operatioal Chage Programme Delivered Sept 2007 Complete Busiess Systems Trasformatio Programme Icludes: FABS roll-out Global Shared Services 2009 (origially 2008) Ogoig Bakig Project Global Performace System August 2009 Global Platform ad Moderisatio Project Reorgaisig UK Operatios to provide the most efficiet ad effective meas of servig the Overseas etwork. Scope to be decided i September 2008 Scopig stage O-lie Trasformatio Improve the Coucil s O-lie presece ad customer iteractio To be cofirmed Busiess Case HR Trasformatio Programme 2009 GIS efficiecy Programme Itroducig remote workig Various Busiess As Usual projects Ogoig GIS Trasformatio Programme Maistreamig FABS ad addressig Busiess Process Developmet September 2008 Ogoig Tax ad Status To address the tax ad diplomatic status of the Coucil i its overseas offices 2009 (uder revisio) Ogoig Overseas Chage Programme Reorgaise 110 coutries ito 12 Regios Delivered Ogoig Overseas Chage Programme compoet projects Customer Service Excellece Customer Relatioship Maagemet Commuicatios Complete Fiace restructurig HR restructurig Kowledge maagemet Marketig 28 report o chage maagemet ad support services