The government has set out plans to set up a consulting hub, effectively an internal consultancy for government, as part of efforts to cut departments’ use of external consultants – which Cabinet Office minister Lord Agnew has said has infantilised the civil service.
This is not the first time that the government has aimed to control consultancy costs, and there are lessons from what has gone before that need to be considered for a successful internal consultancy to survive and thrive.
The first thing to consider is to be clear about what the key aim is for running this function. Is it for cost savings, public sector efficiency or to boost the skills of civil servants? It is important to be clear here, as this will influence the final model used.
Added to this, the government needs to look at whether there is an existing organisation that is being run that could be used as a model, or developed into an internal consultancy. Examples that should be considered before starting afresh could include the Infrastructure and Projects Authority and the Government Commercial Organisation (including the complex transaction team).
It is also important to consider what skills are really required to run this organisation. What is the optimum mix of internal and external staff? The ideal scenario, in line with Lord Agnew and Cabinet Office permanent secretary Alex Chisholm’s aims, will be for civil servants to make up most of the team. However, this is never as straightforward as it seems and there is likely to be a degree of reliance on external support. This needs to be identified at the beginning with a ratio agreed (and stuck to) where possible.
We also have to consider size and scalability. The government will need to find the balance between starting out too small, and thus not being able to build a positive reputation quickly enough and to meet the needs of programmes, which may lead to it fizzling out. Similarly, trying to grow too quickly without the right people and processes could lead to non-delivery. If this happens, it would likely lead to management consultancies being brought in to turn things around, ultimately defeating the object. In short, they don’t want run before they can walk.
And, once they can walk, what is the optimum amount of time for consultants to stay in this organisation? To ensure that burnout and elitism does not take over, and there is a breadth of fresh ideas, consultants should rotate out around every two years. This will also assist with greater knowledge transfer.
But government will also need to consider attraction and retention more broadly. Once these civil servants have been in the hub for a period of time it will become a hunting ground for management consultancies (who can offer much higher salaries). The government will need to consider how they make themselves more attractive than the Big Four or other management consultancies to retain them, which could be a problem within renewed pay restraint. So what can the government do to retain these individuals in the longer term?
This is just one of a number of questions around incentives. How will this organisation gain buy-in? Many organisations, particularly in certain areas of central government, do not like paying for services. Another question concerns working practices of civil servants working the hub.
Traditional management consultants work all hours to deliver for the customer not just to do a good job, but also to win more business – and often those leading teams have financial incentives. How can the Treasury incentivise the civil servants to deliver at the same pace with similar outcomes?
Decisions on each of these issues are critical to creating and successfully running a consulting hub or internal consultancy, and should not be taken without clear analysis.
Iain Greenwood is a former civil servant, where his roles included working on assurance on Cabinet Office consultancy cost controls.