Best in Class Finance Functions For Police Forces

Background

Police funding has risen by £4.8 billion and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed such levels of funding are over.

Chief Constables and senior management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall in years to come.
Facing slower funding growth and real cash deficits in their budgets, the Police Service must adopt innovative strategies which generate the productivity and efficiency gains needed to deliver high quality policing to the public.

The step-change in performance required to meet this challenge will only be achieved if the police service fully embraces effective resource management and makes efficient and productive use of its technology, partnerships and people.

The finance function has an essential role to play in addressing these challenges and supporting Forces’ objectives economically and efficiently.

Challenge

Police Forces tend to nurture a divisional and departmental culture rather than a corporate one, with individual procurement activities that do not exploit economies of scale. This is in part the result of over a decade of devolving functions from the center to the.divisions.

In order to reduce costs, improve efficiency and mitigate against the threat of “top down” mandatory, centrally-driven initiatives, Police Forces need to set up a corporate back office and induce behavioral change. This change must involve compliance with a corporate culture rather than a series of silos running through the organization.

Developing a Best in Class Finance Function

Traditionally finance functions within Police Forces have focused on transactional processing with only limited support for management information and business decision support. With a renewed focus on efficiencies, there is now a pressing need for finance departments to transform in order to add greater value to the force but with minimal costs.

1) Aligning to Force Strategy

As Police Forces need finance to function, it is imperative that finance and operations are closely aligned. This collaboration can be very powerful and help deliver significant improvements to a Force, but in order to achieve this model, there are many barriers to overcome. Finance Directors must look at whether their Force is ready for this collaboration, but more importantly, they must consider whether the Force itself can survive without it.

Finance requires a clear vision that centers around its role as a balanced business partner. However to achieve this vision a huge effort is required from the bottom up to understand the significant complexity in underlying systems and processes and to devise a way forward that can work for that particular organization.

The success of any change management program is dependent on its execution. Change is difficult and costly to execute correctly, and often, Police Forces lack the relevant experience to achieve such change. Although finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a few years ago) many have progressed within the Public Sector with limited opportunities for learning from and interaction with best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.

Whilst it is relatively easy to get the message of finance transformation across, securing commitment to embark on bold change can be tough. Business cases often lack the quality required to drive through change and even where they are of exceptional quality senior police officers often lack the commercial awareness to trust them.

2) Supporting Force Decisions

Many Finance Directors are keen to develop their finance functions. The challenge they face is convincing the rest of the Force that the finance function can add value – by devoting more time and effort to financial analysis and providing senior management with the tools to understand the financial implications of major strategic decisions.

Maintaining Financial Controls and Managing Risk

Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all put financial controls and reporting under the spotlight in the private sector. This in turn is increasing the spotlight on financial controls in the public sector.

A ‘Best in Class’ Police Force finance function will not just have the minimum controls to meet the regulatory requirements but will evaluate how the legislation and regulations that the finance function are required to comply with, can be leveraged to provide value to the organization. Providing strategic information that will enable the force to meet its objectives is a key task for a leading finance function.

3) Value to the Force

The drive for development over the last decade or so, has moved decision making to the Divisions and has led to an increase in costs in the finance function. Through utilizing a number of initiatives in a program of transformation, a Force can leverage up to 40% of savings on the cost of finance together with improving the responsiveness of finance teams and the quality of financial information. These initiatives include:

Centralization

By centralizing the finance function, a Police Force can create centers of excellence where industry best practice can be developed and shared. This will not only re-empower the department, creating greater independence and objectivity in assessing projects and performance, but also lead to more consistent management information and a higher degree of control. A Police Force can also develop a business partner group to act as strategic liaisons to departments and divisions. The business partners would, for example, advise on how the departmental and divisional commanders can meet the budget in future months instead of merely advising that the budget has been missed for the previous month.

With the mundane number crunching being performed in a shared service center, finance professionals will find they now have time to act as business partners to divisions and departments and focus on the strategic issues.

The cultural impact on the departments and divisional commanders should not be underestimated. Commanders will be concerned that:

o Their budgets will be centralized
o Workloads would increase
o There will be limited access to finance individuals
o There will not be on site support

However, if the centralized shared service center is designed appropriately none of the above should apply. In fact from centralization under a best practice model, leaders should accrue the following benefits:

o Strategic advice provided by business partners
o Increased flexibility
o Improved management information
o Faster transactions
o Reduced number of unresolved queries
o Greater clarity on service and cost of provision
o Forum for finance to be strategically aligned to the needs of the Force

A Force that moves from a de-centralized to a centralized system should try and ensure that the finance function does not lose touch with the Chief Constable and Divisional Commanders. Forces need to have a robust business case for finance transformation combined with a governance structure that spans operational, tactical and strategic requirements. There is a risk that potential benefits of implementing such a change may not be realized if the program is not carefully managed. Investment is needed to create a successful centralized finance function. Typically the future potential benefits of greater visibility and control, consistent processes, standardized management information, economies of scale, long-term cost savings and an empowered group of proud finance professionals, should outweigh those initial costs.

To reduce the commercial, operational and capability risks, the finance functions can be completely outsourced or partially outsourced to third parties. This will provide guaranteed cost benefits and may provide the opportunity to leverage relationships with vendors that provide best practice processes.

Process Efficiencies

Typically for Police Forces the focus on development has developed a silo based culture with disparate processes. As a result significant opportunities exist for standardization and simplification of processes which provide scalability, reduce manual effort and deliver business benefit. From simply rationalizing processes, a force can typically accrue a 40% reduction in the number of processes. An example of this is the use of electronic bank statements instead of using the manual bank statement for bank reconciliation and accounts receivable processes. This would save considerable effort that is involved in analyzing the data, moving the data onto different spreadsheet and inputting the data into the financial systems.

Organizations that possess a silo operating model tend to have significant inefficiencies and duplication in their processes, for example in HR and Payroll. This is largely due to the teams involved meeting their own goals but not aligning to the corporate objectives of an organization. Police Forces have a number of independent teams that are reliant on one another for data with finance in departments, divisions and headquarters sending and receiving information from each other as well as from the rest of the Force. The silo model leads to ineffective data being received by the teams that then have to carry out additional work to obtain the information required.

Whilst the argument for development has been well made in the context of moving decision making closer to operational service delivery, the added cost in terms of resources, duplication and misaligned processes has rarely featured in the debate. In the current financial climate these costs need to be recognized.

Culture

Within transactional processes, a leading finance function will set up targets for staff members on a daily basis. This target setting is an element of the metric based culture that leading finance functions develop. If the appropriate metrics of productivity and quality are applied and when these targets are challenging but not impossible, this is proven to result in improvements to productivity and quality.

A ‘Best in Class’ finance function in Police Forces will have a service focused culture, with the primary objectives of providing a high level of satisfaction for its customers (departments, divisions, employees & suppliers). A ‘Best in Class’ finance function will measure customer satisfaction on a timely basis through a metric based approach. This will be combined with a team wide focus on process improvement, with process owners, that will not necessarily be the team leads, owning force-wide improvement to each of the finance processes.

Organizational Improvements

Organizational structures within Police Forces are typically made up of supervisors leading teams of one to four team members. Through centralizing and consolidating the finance function, an opportunity exists to increase the span of control to best practice levels of 6 to 8 team members to one team lead / supervisor. By adjusting the organizational structure and increasing the span of control, Police Forces can accrue significant cashable benefit from a reduction in the number of team leads and team leads can accrue better management experience from managing larger teams.

Technology Enabled Improvements

There are a significant number of technology improvements that a Police Force could implement to help develop a ‘Best in Class’ finance function.

These include:

A) Scanning and workflow

Through adopting a scanning and workflow solution to replace manual processes, improved visibility, transparency and efficiencies can be reaped.

B) Call logging, tracking and workflow tool

Police Forces generally have a number of individuals responding to internal and supplier queries. These queries are neither logged nor tracked. The consequence of this is dual:

o Queries consume considerable effort within a particular finance team. There is a high risk of duplicated effort from the lack of logging of queries. For example, a query could be responded to for 30 minutes by person A in the finance team. Due to this query not being logged, if the individual that raised the query called up again and spoke to a different person then just for one additional question, this could take up to 20 minutes to ensure that the background was appropriately explained.

o Queries can have numerous interfaces with the business. An unresolved query can be responded against by up to four separate teams with considerable delay in providing a clear answer for the supplier.

The implementation of a call logging, tracking and workflow tool to document, measure and close internal and supplier queries combined with the set up of a central queries team, would significantly reduce the effort involved in responding to queries within the finance departments and divisions, as well as within the actual divisions and departments, and procurement.

C) Database solution

Throughout finance departments there are a significant number of spreadsheets utilized prior to input into the financial system. There is a tendency to transfer information manually from one spreadsheet to another to meet the needs of different teams.

Replacing the spreadsheets with a database solution would rationalize the number of inputs and lead to effort savings for the front line Police Officers as well as Police Staff.

D) Customize reports

In obtaining management information from the financial systems, police staff run a series of reports, import these into excel, use lookups to match the data and implement pivots to illustrate the data as required. There is significant manual effort that is involved in carrying out this work. Through customizing reports the outputs from the financial system can be set up to provide the data in the formats required through the click of a button. This would have the benefit of reduced effort and improved motivation for team members that previously carried out these mundane tasks.

In designing, procuring and implementing new technology enabling tools, a Police Force will face a number of challenges including investment approval; IT capacity; capability; and procurement.

These challenges can be mitigated through partnering with a third party service company with whom the investment can be shared, the skills can be provided and the procurement cycle can be minimized.

Conclusion

It is clear that cultural, process and technology change is required if police forces are to deliver both sustainable efficiencies and high quality services. In an environment where for the first time forces face real cash deficits and face having to reduce police officer and support staff numbers whilst maintaining current performance levels the current finance delivery models requires new thinking.

While there a number of barriers to be overcome in achieving a best in class finance function, it won’t be long before such a decision becomes mandatory. Those who are ahead of the curve will inevitably find themselves in a stronger position.

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The Three P’s of Project Management

Project Managers are People Managers. Many of us have heard this over the years, but is that it? Are we nothing more than people managers? I will agree that we are responsible for managing people and that this is a portion of the PM (Project Manager) role. I ask that we take a moment to look at a couple of facts. Many PM’s get certification from the PMI (Project Management Institute) which is ISO (International Organization for Standardization) recognized certification. Additionally, one could also receive a Masters Degree in Project Management. With that in mind, are PM’s really nothing more than people managers? Is there really a perception that PM’s do nothing more than manage people? Is people management the most important function of a PM?In this article I want to present the three P’s of project management. The three P’s are to take into account the elements and structure of project management. As most of us know, there are five project management process groups and nine knowledge areas (please refer to the PMBOK guide for clarification). I can assure you that there is more than people management when it comes to the process groups and knowledge areas. On the other hand, without people and without people management projects can not be accomplished. So people management is important but without the other two P’s will a project be successful? Let me present the three P’s of Project Management and follow them with a review.1) People Management
2) Process Management and
3) Performance ManagementPeople Management is essential in regards to project management. It takes the leadership of the project manager to guide a team towards working together in symmetry to accomplish the objectives of a project. I feel that cooperation and collaboration are a couple of key ingredients when it comes to people management. Without cooperation and/or collaboration by the team or an individual on the team, a project can end up in jeopardy.How do you build a team that fosters collaboration and cooperation? I have found that the best decisions are made by a team not an individual. Early on in a project I bring the team together to discuss the objectives of the project. Then to engage the subject matter experts and the IT resources in a discussion that elicits the best decisions. I ask questions and encourage the team to do the same. Next we look at making a decision. I follow this up by looking for options or alternatives by asking if there is a better way. The information presented here leads to new and better decisions. New decisions are based on new information, get the team to to collaborate and cooperate and the best decisions will be made. The best information will be presented and individuals will be contributors.It is common for any team to go through forming, norming, storming and conforming in order to grow. The PM expects this and is prepared to manage it accordingly so the team performs. It is persuasive assertiveness that, when used effectively, leads the team in overcoming differences and strives for project success.To this point we have only discussed people management, and frankly, teams can be organized for all sorts of reasons and the team leader can use the information above to leverage the team. Is people management another term for project management?Process Management is equally important to People Management. Without either of these, the ability to provide a successful project outcome is severely diminished. To improve the outcome of a project the PM utilizes sound and repeatable processes that lead to a successful project implementation. PM’s use their knowledge, skills and effectiveness to incorporate the project management process groups and knowledge areas. If the project management process groups and knowledge areas are not effectively managed along with the team there will be project chaos. If your project is in chaos or total chaos, what areas of project management are not being effectively involved in your project? Do you need to look far?I feel that without the utilization of a project management process that projects will wander and drift like a message in a bottle, no charted course and an unknown destination. I have felt the pains of projects without process. They struggled with technology implementations, cost over-runs and the project scope in constant flux. The end result, failure.I found that a similar team managed the next version of an application with a project management process in place, the results were outstanding. There was a solid scope document that provided the necessary information for user acceptance testing. There were five change requests made that went through the change control procedure, four were approved. The plan target date was not only achieved, but the work was completed ahead of schedule. Being ahead of schedule meant cost savings thus the project was completed under budget. All of this was achieved and there were no product defects.Could this have been accomplished with people skills alone? Would you be able to create project symmetry without a project management process? I feel you already know the answers to these questions.Finally there is Performance Management. For the most part, this category falls under process management for all intensive purposes. I like to breakout performance management and look at it from a different perspective. The purpose of performance management is to answer the question … How is you project coming along? When that is asked it should be able to be address the triple constraints. Is the project on schedule? Is it within budget? Will it meet the project scope? By measuring the triple constraints, a PM can track the actual progress of a project and make adjustments based on this information. Performance management holds the team accountable and keeps the senior team informed.Let’s take a moment to look back at earlier questions. Are project managers nothing more than people managers? Is people management the most important function of a PM? My response to this is that project managers must balance both people and process management. One without the other will not provide the optimum outcome.Special Note: I want to convey that I am not overlooking Quality. Quality falls under the knowledge areas which is referred to in the earlier process writings. I hope to go into greater detail on this topic in a future article. In addition, I am not overlooking problem management. I feel that problem management falls under people management since problems are found by people and decisions are made by people.With everything that has been presented here, it is important to keep in mind that Project Managers bring so much more to the success of a project than their ability to manage people. The three P’s of project management, (people, process and performance management) take into account much of the criteria needed for successful project management. As project managers, we are trained, skilled and experienced in this field. If projects are going well we know we are doing the right things. If projects are not going well, reflect on this and take action to correct its course. How well are your projects being managed?