Capability Reviews: Progress and Next Steps - The Civil Service

Capability Reviews:Progress and Next StepsCapability Reviews

ForewordThe challenge to the Capability Reviews is: ‘Are they bringing about sustainablechange and strengthening Civil Service capability? In short, are they making adifference?’ I believe that this document demonstrates that they are doing justthat. There is a picture of improvement, often against very challenging externaland internal pressures, in all of the Tranche 1 departments. Permanent secretariescare about their Capability Reviews, and they care about improving theirdepartments. We are seeing this leading to positive outcomes.I have personally been challenged by the Capability Review of my owndepartment, the Cabinet Office, and also by the recent independent evaluation ofthe Capability Reviews programme by the Sunningdale Institute. Both of thesepoint to some real successes, but both challenge us to see these as only the verystart of a new transformational agenda.Government needs both strong and capable delivery departments and also aneffective and expert centre, working well together. This report sets out theprogress made to date both in individual departments and also by the CivilService acting corporately. It also looks to the future and the next steps for creatingsustainable change.At the annual Civil Service Awards ceremony last month, I was privileged to hearabout some exceptional achievements by civil servants. I continue to be proud tolead the Civil Service, to recognise its successes and to challenge it to succeedfurther. We face significant challenges ahead, doing much more with less, in anincreasingly complex and demanding environment. I believe this programme ofCapability Reviews is helping us to face up to these challenges and move forwardwith increased confidence.I would like to thank again all those who have given their time and energy to makingthis programme a success. Nearly 100 review team members, drawn from a widerange of backgrounds, from the private sector to the Civil Service, including localauthority chief executives, and senior executives from the police and health service,have worked on reviews and returned to departments to provide assurance onprogress, supported by the Capability Reviews Team in the Cabinet Office.My permanent secretary colleagues and their boards have worked together withtheir departments to act on the findings of the reviews, and the professors of theSunningdale Institute have produced a stimulating and challenging evaluation.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS1

This has been an excellent example of the Civil Service working together inpartnership with pace and professionalism, drawing on expertise and learning frominside and beyond. I look forward to the next 18 months.Sir Gus O’Donnell KCBCabinet Secretary and Head of the Home Civil ServiceDecember 20072 FOREWORD

ContentsForeword 11. Tranche 1 departments: a year on 5Department for Children, Schools and Families 7Department for Work and Pensions 10Home Office 13Ministry of Justice 172. Common capability gaps: progress and next steps 21Programme-level analysis 21Overarching picture 24Leadership 24Skills, capacity and capability 34Delivery and performance 42Delivery models 503. Take-off or tail-off?: the future of the programme 58Sustaining momentum 58Introducing dynamic capabilities 61Annex A: The model of capability 64Annex B: Assessment categories 68CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS3

1. Tranche 1 departments: a year on‘However, as well as increasing the overall salience and urgency of theneed for change, encouraging more openness at board level, andproviding some common language and frameworks, the CapabilityReviews are also starting to impact on a number of substantive issueswithin departments, especially those in the first two tranches. TheCapability Reviews process has helped create an imperative for actionto tackle genuinely difficult problems.’Take-off or Tail-off? (Sunningdale Institute Evaluation)Four departments were reviewed initially: the Department for Constitutional Affairs(DCA) (as a pilot) and the Department for Education and Skills (DfES), the HomeOffice and the Department for Work and Pensions (DWP) (as Tranche 1). TheCapability Review reports for this first tranche were published in July 2006. Sincethen, there have been various machinery of government changes affecting thesedepartments: the Ministry of Justice (MoJ) has been created, taking on theresponsibilities of the DCA, together with responsibility for prisons and probation fromthe Home Office; responsibility for skills and higher education has transferred fromDfES to the new Department for Innovation, Universities and Skills (DIUS); a newDepartment for Children, Schools and Families (DCSF) inherits the remaining DfESresponsibilities within its new wider cross-government remit on children’s matters; theresponsibilities of DWP have remained unchanged.Given the significant differences between the MoJ and DCA, and the uniquechallenges of setting up a new department, the Cabinet Office has been workingwith the MoJ to support it in embedding machinery of government changesthrough the new organisational structure required to deliver its four Public ServiceAgreements (PSAs). During this interim period the Department has reconfigured itsaction plan to reflect the diagnosis of both the DCA and Home Office reviews.Progress will be tested through a re-review provisionally set for spring 2008.The Tranche 1 departments started from very different baselines. DfES was thesecond highest-performing department in the Capability Reviews programme, withfour elements scored ‘strong’ or ‘well placed’ and only one ‘urgent development area’in the element of Build capability. DWP also had four elements scored ‘strong’ or‘well placed’ and two ‘urgent development areas’. The Home Office started withsome significant challenges, with the review team having ‘serious concerns’ abouttwo elements. The DCA had five elements scored ‘strong’ or ‘well placed’ and three‘urgent development areas’. Consequently, the ‘journey’ has been very different foreach department. The Home Office has had more scope for improvement, but alsohas had to embark on a significant internal capability building programme to kickstartthat progress and manage machinery of government changes. DWP hascombined its change programme from the Capability Review with processimprovements and a very challenging agenda of efficiency savings and staff cuts.DCSF has focused on a targeted programme of improvement in strategy, leadershipCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS5

and people management. The MoJ is building on the significant progress madeon DCA’s agenda for action, to help build a new department and to realise thepotential of joining up services like the courts, prisons and probation to, for example,reduce re-offending.For all departments, there has been a cycle of regular monitoring and assurance,most recently with a series of ‘year on’ stocktakes between the Cabinet Secretaryand departmental boards for DCSF, DWP and the Home Office, held in the autumnof 2007. This section provides summaries of progress in the different departments.The departments have assessed themselves against the areas for actionrecommended in their reports. Three months following the review, the CabinetSecretary met the boards to assure himself that the departments’ plans were robustand on track. At six months and a year, members of the original review teamsreturned and conducted a series of interviews and workshops to produce anassurance opinion on the departments’ progress. The Cabinet Secretary met theboards to challenge them where necessary and to celebrate the improvements thathave been made. The summaries below set out the progress that has been made,established from this progress.6TRANCHE 1 DEPARTMENTS: A YEAR ON

Department for Children, Schools and FamiliesStarting from a strong position, the Department for Education and Skills(DfES), and subsequently the Department for Children, Schools and Families(DCSF), has grasped the transformation agenda firmly and has made goodprogress across the board in implementing the actions flowing from theirCapability Review.BaselineThese scores are a baseline reflecting the assessment of capability in July 2006 andhave not been updated. The summary below describes the Department’s progresssince then.LeadershipL1 Set direction Development areaL2 Ignite passion, pace and drive StrongL3 Take responsibility for leading delivery and change Well placedL4Build capabilityUrgentdevelopment areaStrategyS1Focus on outcomesDevelopment areaS2 Base choices on evidence Well placedS3 Build common purpose Well placedDeliveryD1 Plan, resource and prioritise Development areaD2 Develop clear roles, responsibilities and delivery model(s) Development areaD3 Manage performance Development areaDCSF was created in June 2007. The bulk of the new Department transferred fromthe old DfES. At the time DCSF felt that it faced largely the same challenges asthose identified in the DfES Capability Review, so the progress they have made overthe first year or so since publication of the review has been measured against theseoriginal areas for action.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS7

The review team gave the Department four areas for action to focus on. These were:• ‘Provide a coherent strategy which clearly defines the right delivery systems toachieve the desired outcomes’: developing, communicating and embeddingagreed strategic outcomes.• ‘Manage the delivery chain and performance manage delivery’: developing moreeffective relationships, particularly with non-departmental public bodies (NDPBs),and a sharper focus on performance.• ‘Achieve a transformation in the quality of – and the value attached to – peoplemanagement. Within the constraints of reducing staff numbers, focus hard onaddressing skills needs and on the effective deployment of staff. Actively addressareas of poor performance’: improving the development and performance of theDepartment’s people.• ‘Increase the impact of the board’: improving corporate leadership.Area for action 1: Provide a coherent strategy which clearly defines theright delivery systems to achieve the desired outcomesA successful strategy refresh and improved engagement between the previous DfESboard and ministers led to successful prioritisation of the Comprehensive SpendingReview (CSR) 2007 bid and development of Departmental Strategic Objectives. Thiswithstood the test of machinery of government changes and the arrival of a newSecretary of State. The Children’s Plan, published on 11 December 2007, and theDepartmental Strategic Objective 7 ‘Leading and managing the system’ togetherprovide an opportunity to give the Department, partners and stakeholders a clearvision and direction for the future of the Department.Area for action 2: Manage the delivery chain and performancemanage deliveryThe Department for Children, Schools and Families has made strong improvementsin relationships with key delivery partners at the top levels, due largely to thecreation of the DCSF (originally DfES) Group and personal efforts of seniorleadership teams in the Department and its partner organisations. More work isneeded to replicate this success at other levels. The DCSF Group is now bringinglocal authorities on board and has agreed a more strategic agenda, includingpushing forward the work to rationalise the Department’s delivery chains. DCSF hasmade some progress on cross-Whitehall working and will need to make furtherimprovements in joint working in the context of a more focused and joined-upagenda and the demands placed on joint working by the new cross-cutting PSAframework. Strengthened, regular corporate performance reporting will help theboard focus on the Department’s top priorities. A new ‘corporate bridge’ (see thecase study on page 28) is under development, building on the success of andlessons learned from the Schools Directorate’s ‘Bridge’, for which the SchoolsPerformance Unit recently won a Civil Service award for strategic analysis.8TRANCHE 1 DEPARTMENTS: A YEAR ON

This will act as an innovative and interactive area for problem solving andperformance management.Area for action 3: Achieve a transformation in the quality of – andthe value attached to – people management. Within the constraintsof reducing staff numbers, focus hard on addressing skills needs andon the effective deployment of staff. Actively address areas ofpoor performanceStaff have responded to clear messages on performance management and DCSFhas now got the basics set up in terms of systems and policies, for example onobjective setting, appraisal and pay awards, and managing poor performance. At the12-month point, the HR function was still undergoing significant changes under newleadership. These had not yet translated into full strategic HR support to theDepartment, although there are clear and robust plans in place to achieve this andpriority will be given to this area for action as part of the Department’s newDepartmental Strategic Objective 7, to ensure that the Department is well placedto make further improvements in its overall capability.Area for action 4: Increase the impact of the boardThere has been excellent feedback from staff and delivery partners on the personalefforts of the Permanent Secretary, David Bell, and other board members in drivingforward the transformation of the Department and also on the senior leadershipteam’s accessibility to staff. The board has been working more corporately, althoughthis is not yet universally recognised by staff. Board members should continue tofocus on this and on modelling the DCSF values and building strong relationshipswith the new ministerial team.ConclusionThe review team feels that DCSF has grasped the transformation agenda firmly andhas made good progress across the board in implementing the actions flowing fromtheir Capability Review.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS9

Department for Work and PensionsGood progress has been made against all of the areas for action. The boardhas taken the recommendations from the Capability Review seriously andacted upon them in ways that have had a positive impact on the Department.This has been undertaken alongside a challenging business transformationand efficiency agenda.BaselineThese scores are a baseline reflecting the assessment of capability in July 2006 andhave not been updated. The summary below describes the Department’s progresssince then.LeadershipL1 Set direction Development areaL2 Ignite passion, pace and drive Well placedL3 Take responsibility for leading delivery and change Development areaL4Build capabilityUrgentdevelopment areaStrategyS1Focus on outcomesDevelopment areaS2 Base choices on evidence StrongS3 Build common purpose Well placedDeliveryD1Plan, resource and prioritiseUrgentdevelopment areaD2 Develop clear roles, responsibilities and delivery model(s) Well placedD3 Manage performance Development areaThe review team gave the Department for Work and Pensions (DWP) three areas foraction to focus on. These were:• ‘Build an effective leadership team’: building a top team that is more collaborative,more visible and engages staff more effectively.10 TRANCHE 1 DEPARTMENTS: A YEAR ON

• ‘Managing for improvement’: supporting middle management to engage front-linestaff and improving strategic HR.• ‘Learn how to learn’: building a departmental culture that encourages opennessand learning, both learning from what it does well and from addressingweaknesses and failures.Area for action 1: Build an effective leadership teamEach member of the executive team is now leading on one aspect of the changeprogramme and therefore operates as a leader of DWP as a whole, not just of theiragency or function. The executive team is now also assessed collectively for theirperformance bonus against the achievement of corporate objectives andcollaborative team working. The leadership team has engaged a board coach, andfeedback from staff suggests that such high-profile initiatives as the ‘Back to theFloor’ programme, in which each member of the executive team spent a weekworking in front-line offices, have been well received and have signalled that theleadership team is taking this initiative seriously. All members of the Senior CivilService (SCS) are now being asked to ‘return to the floor’ themselves. One memberof staff who took part in this programme is quoted as saying:‘There is nothing like sitting right next to staff and their customers to bringhome what an important job it is. How valuable it is, how hard it is and howrewarding it can be… [My] greater understanding of how people are workingand feeling will certainly help me as I do my job.’The review team now wants to see evidence of the executive team being trulyambitious about a future for DWP that makes the fullest use of its capabilities.The Department must find ways to convince staff of the value of and need for thischange, and demonstrate this by improved staff survey results for leadership.Area for action 2: Managing for improvementThe Capability Review found that too many front-line staff did not feel engaged inthe change process, nor did they feel their concerns were listened to or acted upon.In response to this, a lively communication document, DWP Journey, about changein the Department, now comes out regularly. Staff have also been given theopportunity to feed into a review of the Performance Development System, whichhas now been overhauled. A project, called iMatter, designed to engage staff in localdecision making and service improvement was piloted in Makerfield Benefit DeliveryCentre and has now been successfully rolled out to five other locations. Staff havealso been engaged through Lean masterclasses, two conferences for the SCS andan innovative operational managers conference.Good work has been done on building a customer proposition centred around the‘No wrong door’ concept, so that customers will always have their query dealt with,CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS11

egardless of which agency they contact. In addition, the ‘My DWP’ project will offercustomers a more modern route into DWP, via a secure online account.Area for action 3: Learn how to learnThere has been good joint working between HM Revenue & Customs (HMRC),North Tyneside Council and DWP in a pilot project in Wallsend to provide betteraccess to Jobseeker’s Allowance, housing benefits and Working Tax Credit. Onecustomer of the pilot noted that:‘They sort everything out now and even inform tax credits about any changes.’This is now being rolled out to six more local authorities. Front-line staff andcustomers were involved in nine Lean projects and this work has been informedby the HMRC experience of similar work. DWP is now establishing a Lean academyto capture the learning from its Lean work and share best practice internally andwith other government departments. External stakeholders have reported thatDWP is more outward looking and is engaging them successfully in the policymakingprocess.ConclusionsOne year on, the review team feels that good progress has been made against all ofthe areas for action. The board has taken the recommendations from the CapabilityReview seriously and acted upon them in ways that have had a positive impact onthe Department. The review team recognises that DWP now identifies with anambitious transformational agenda and is leading this change with energy.12 TRANCHE 1 DEPARTMENTS: A YEAR ON

Home OfficeStarting from a low base, the foundations of improvement have been put inplace with good progress in all five areas for action. The effects of changeare visible throughout the Department. The basics are in place to bring aboutreal improvement. But, as the Department acknowledges, there is a lot moreto do to achieve the step change the Home Office aspires to.BaselineThese scores are a baseline reflecting the assessment of capability in July 2006 andhave not been updated. The summary below describes the Department’s progresssince then.LeadershipL1Set directionUrgentdevelopment areaL2 Ignite passion, pace and drive Development areaL3 Take responsibility for leading delivery and change Development areaL4 Build capability Serious concernsStrategyS1Focus on outcomesDevelopment areaS2 Base choices on evidence Development areaS3 Build common purpose Development areaDeliveryD1 Plan, resource and prioritise Serious concernsD2Develop clear roles, responsibilities and delivery model(s)Urgentdevelopment areaD3 Manage performance Development areaThe Home Office was affected by machinery of government changes in May 2007,with various of its functions transferring to the MoJ. The changes have not affectedthe relevance of the areas for action identified by the review team for the Department.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS13

The review team gave the Department five areas for action to focus on. These were:• ‘Strengthen the board’: developing a more effective leadership team for theDepartment.• ‘Improve leadership and empowerment of the 250 most senior staff’: developmentof the SCS within the Department.• ‘Tackle the variety, appropriateness and complexity of business models and theirimpact on the delivery chain to improve operational grip and performance’:creating a more effective governance structure.• ‘Strengthen corporate services and how they support the business’: improvingcorporate services in support of a strong Home Office headquarters.• ‘Prioritise and allocate resources to what is important’: ensuring the Home Officefocuses its attention and resources on its core priorities.Area for action 1: Strengthen the boardThe Home Office board has been strengthened over the past year and is providingmore effective leadership for the Department. There have been new executive andnon-executive appointments, including a new HR director general and directorgeneral of the Office for Security and Counter-Terrorism. The board is much morefocused on key issues such as strategy, leadership, resources, prioritisation, talentdevelopment and reputation. The sub-board structures have been simplified throughthe new Home Office Framework, which provides more effective governance for theDepartment. Within the Department, the board is generally seen as a capable andeffective team, with strong individuals who work well together.Following the machinery of government changes, the board has worked with thenew ministerial team to agree a new strategy and set of objectives for theDepartment. The focus of the board is now on embedding these throughout theDepartment and ensuring work is directed towards achieving the new objectives.Area for action 2: Improve leadership and empowerment of the 250most senior staffThe Home Office have made a significant number of staff changes, strengtheningtheir broader leadership team – 28 out of the 50 directors in the Department arenew, and 17 have left. A comprehensive leadership development programme hasalso been put in place for all the Senior Civil Servants in the Department, includingskills assessments and tailored coaching and leadership development.This is a positive start. However, the Department recognises that there is more to do.Developing the wider leadership team, particularly at deputy director level, is vital ifthe Department is to create a team of high-quality, committed leaders with a clearand shared direction. These leaders must involve their staff and stakeholders indelivery, manage performance effectively and connect up their areas with the14 TRANCHE 1 DEPARTMENTS: A YEAR ON

Department’s wider agenda. Developing leaders who are able to do this is a priorityfor the Home Office’s Reform Programme over the next year.Area for action 3: Tackle the variety, appropriateness and complexity ofbusiness models and their impact on the delivery chain to improveoperational grip and performanceThe Home Office has implemented a new structure and operating model a yearahead of schedule. There is now a smaller, more focused headquarters, with moreresponsibility and resources devolved to the front-line delivery agencies andpartners. The Permanent Secretary holds the Department’s delivery groups andagencies to account through a series of monthly operating reviews that focus hardon performance. A Home Office Delivery Unit has also been established and isstarting to support the Department in addressing key delivery issues.The review team found that the greater responsibility devolved to the agencies, inparticular, has had an energising effect. However, the nature of the relationshipbetween the agencies and the Department’s headquarters is still evolving.Area for action 4: Strengthen corporate services and how they supportthe businessThe Home Office’s corporate services have improved in a number of areas, withprofessional expertise being brought in to strengthen teams across corporateservices. The Department has greatly improved its financial management anddelivered unqualified accounts for 2006/07. A new department-wide Information andCommunication Technology Strategy has been developed and new resourceallocation, business planning and risk management processes are in place. Therehas also been a strong focus on improving programme and project management(PPM) capability, with over 700 staff having completed PPM training. The HomeOffice has also improved its HR operations, including delivering this year’s payaward effectively.The Home Office recognises that some of the basic systems in the Department arestill fragile. A new chief information officer is being appointed with responsibility forimproving the IT capability of the Department and, in particular, ensuring that the ITand data can be combined in the most useful way across the Department.Area for action 5: Prioritise and allocate resources to what is importantThe Home Office board has given significant focus to effectively managing resourcesand priorities. Prior to machinery of government changes the Department workedwith the Home Secretary to take some tough prioritisation decisions in order toprovide additional funding to expand prisons capacity. The Department has alsoworked closely with the new Home Secretary to agree how resources should beprioritised under the new CSR undertaken in 2007.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS15

The Home Office has also improved its capabilities in both crisis management andcrisis avoidance. A new, more rigorous and systematic approach to risk managementhas been established, although the Home Office recognises that it will take furthertime and effort to truly embed a culture of active risk management throughout theDepartment. A flexible pool of staff is also in place to deal with issues as they arise.ConclusionOverall these changes have had a positive impact on the capability of the HomeOffice; the foundations have been put in place and there is a basis for realimprovement. But, as the Department acknowledges, there is a lot more to do. TheHome Office recognises that reform is a long-term programme. The achievementsso far are having an effect, but it will take time to achieve the step change the HomeOffice aspires to. The Home Office is therefore currently focusing on identifying andtaking the actions that can accelerate this improvement.16 TRANCHE 1 DEPARTMENTS: A YEAR ON

Ministry of JusticeThe MoJ was created from DCA and the Home Office through a majormachinery of government change. DCA employed 24,000 people and hada budget of £3.7bn. The MoJ has a budget of £8.8bn and directly employs77,000 people, making it the third largest employer in Whitehall. The newDepartment has focused on bringing its new functions and responsibilitiestogether coherently and addressing combined areas for action identifiedby the Capability Review process.BaselineThese scores are a baseline reflecting the assessment of capability of DCA in July2006 and have not been updated. The summary below describes DCA’s and MoJ’sprogress since then.LeadershipL1 Set direction Well placedL2 Ignite passion, pace and drive Development areaL3Take responsibility for leading delivery and changeUrgentdevelopment areaL4 Build capability Well placedStrategyS1Focus on outcomesStrongS2 Base choices on evidence Well placedS3 Build common purpose Well placedDeliveryD1D2Plan, resource and prioritiseDevelop clear roles, responsibilities and delivery model(s)Urgentdevelopment areaUrgentdevelopment areaD3 Manage performance Development areaCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS17

The review team gave DCA four areas for action to focus on. These were:• ‘Develop the senior leadership team, and improve how they engage with staff atall levels’: improving the way the senior leadership team works together and withstaff throughout the Department.• ‘Further develop the capacity to manage change and reform on a large scale andat pace’: improving change management and governance to tackle a toughagenda of change.• ‘Ensure clear, collective understanding of the business model to enable agenciesand NDPBs to operate within a tight corporate framework’: articulating andcommunicating a clear business model throughout the Department, its agenciesand NDPBs.• ‘Develop delivery capability to deliver more with less’: focusing on performancemanagement and delivering challenging outcomes.These broad areas for action remain valid going forward, and the board hasreconfigured the detailed action points to reflect the work now needed in establishingthe new Ministry.Area for action 1: Develop the senior leadership team, and improve howthey engage with staff at all levelsDCA made progress in this area, focusing on improving board communications withstaff and raising the board’s profile across the organisation. This was achieved byintroducing regular staff forums, holding board meetings outside London and hostingevents with the senior leadership team from across the Department, its NDPBs andagencies. The new MoJ board has continued with its commitment to improvingvisibility and communications, and has taken early action to set up a structuredprogramme of staff engagement across the Department.In addition, the board has participated in a programme of regular developmentawaydays. Since the creation of the MoJ, this has included focused sessions todevelop the future business model and ways of working. The regular programme ofevents for the senior leadership team continues to engage with the SCS on theleadership challenges for the Department.Area for action 2: Further develop the capacity to manage change andreform on a large scale and at paceProgress in delivering change formed a key part of the CSR 2007 process, withchange funding now separately identified, planned and managed in the financialplanning process. The introduction of change-specific financial controls means thatthere is more rigorous scrutiny of costs and benefits delivery and improvedprioritisation of change programmes and projects. With new change governancegroups now thoroughly embedded and working effectively, the board has goodvisibility and control over the Department’s mission-critical change portfolio.18 TRANCHE 1 DEPARTMENTS: A YEAR ON

A number of significant programmes have been delivered over the period, not leastthe project to establish the MoJ itself.Important steps have also been taken in developing the capacity to deliver efficientand effective management of change with the launch in November 2007 of theDepartment’s Programme, Project Management and Change profession.This accredits members against an agreed specialist competency framework, andprovides a forum for the exchange of lessons learnt and good practice amongst theproject and programme community.Whilst a number of initiatives and successful practices have been introduced thatshould lay good foundations for the future, these now need to be embedded, andreinforced where necessary, to meet the extended capability and capacityrequirements of the MoJ.Area for action 3: Ensure clear, collective understanding of the businessmodel to enable agencies and NDPBs to operate within a tightcorporate frameworkDCA had made good progress in this area, clarifying governance arrangements andthe business model for its core operations, NDPBs and associated agencies.In particular, strong collaborative relations with the Legal Services Commissionnow exist, having been developed through closer working around the changeagenda and governance forums. The commitment to Developing this relationshipfurther continues.A new high-level business model for the MoJ is now under development and, onceagreed, will be communicated across the organisation as part of the departmentalchange programme. Engaging staff in the detailed implications for their areas willpromote understanding of the model and the ways of working that it implies.Successful implementation will be a key challenge for the Department in the nextfew months.Area for action 4: Develop delivery capability to deliver more with lessDCA set up a performance sub-committee to focus board-level scrutiny on thebusiness-as-usual performance management challenges. This was extended oncreation of the MoJ and continues to operate well, supporting the main businessareas and focusing on the links between resources and performance. Developmentof a Departmental Operating Plan has further improved this planning process andfocus. Work is also in progress to develop the recently agreed DepartmentalStrategic Objectives and what they mean in terms of key performance indicators forthe business and for customer delivery.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS19

It is recognised that developing the capacity to deliver more with less will be asignificant and pertinent challenge for the MoJ, with tight budgetary constraints andan ambitious delivery agenda, as outlined, for example, in Lord Carter’s recentlypublished review of prisons, Securing the Future: Proposals for the Efficient andSustainable Use of Custody in England and Wales, published on 5 December 2007.ConclusionDCA had made significant progress against its areas for action and was able tobring these capabilities into the MoJ, together with the learning and developmentfrom those parts of the Home Office that joined the new Department. However, therewas a similarity in the areas of development identified for both DCA and the HomeOffice, which now need to be addressed by the new Department. Whilst importantprogress has already been made in establishing the Department and its newsystems, processes and ways of working, a considerable amount of work stillremains. This will provide a real challenge for the future.20 THE DEPARTMENT

2. Common capability gaps: progressand next steps‘... we should not underestimate the significant catalyst for changeprovided by the Capability Reviews programme. Capability issues arebeing discussed more widely and openly, partly because the CapabilityReviews process has identified common capability gaps acrossdepartments.’Take-off or Tail-off? (Sunningdale Institute Evaluation)Programme-level analysisThere have now been 17 Capability Reviews of government departments, publishedover the last 18 months. The outcomes of the reviews have been as follows:Exhibit 1: Departmental capability assessmentsThese scores act as a baseline for improvement over the past 18 months.JULY 2006 DECEMBER 2006 APRIL 2007 JUNE 2007 DECEMBER 2007DCA DfES DWP HO DTI CO CLG DfID MoD FCO DCMS DEFRA DfT CPS DH HMT HMRCStrong – good capability for future delivery in place,in line with the capability model. Clear focus on theaction and improvement required to delivertransformation over the medium term.Well placed – well placed to address any gaps incapability for future delivery through practical actionsthat are planned or already underway. Is makingimprovements in capability and is expected to improvefurther in the medium term.Development area – the department should becapable of addressing some significant weaknessesin capability for future delivery by taking remedialaction. More action is required to close those gapsand deliver improvement over the medium term.Urgent development area – significant weaknessesin capability for future delivery that require urgentaction. Not well placed to address weaknesses andneeds significant additional action and support tosecure effective delivery. Not well placed to deliverimprovement over the medium term.Serious concerns – serious concerns about currentcapability. Intervention is required to address currentweaknesses and secure improvement in the mediumterm. (NB only used infrequently, for themost serious gaps.)CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS21

JULY 2006 DECEMBER 2006 APRIL 2007 JUNE 2007 DECEMBER 2007DCA DfES DWP HO DTI CO CLG DfID MoD FCO DCMS DEFRA DfT CPS DH HMT HMRCL1: Set directionL2: Passion, paceand driveL3: Deliveryand changeL4: BuildcapabilityS1: Focuson outcomesS2: Base choiceson evidenceS3: CommonpurposeD1: Plan, resource,prioritiseD2: Deliverymodel(s)D3: ManageperformanceSource: Capability Review reports, Capability Reviews Team 2006/07.• Every department has had at least one ‘urgent development area’;16 departments have had at least two ‘well placed’ scores.• The most common score is ‘development area’ at 39 per cent; 34 per cent ofscores were ‘well placed’ or ‘strong’.• Departments with ‘strong’ ratings range from the Department for InternationalDevelopment (DfID) with around 2,500 staff based in the UK and across theworld, to DWP with nearly 100,000 staff working in offices the length and breadthof the UK in direct service delivery.• The two departments with ‘serious concerns’ are both departments withsignificant and challenging delivery outcomes, working in a complex, fastchangingand very high-profile environment.Key points• This is a demanding agenda for improvement. Only one department is assessedas ‘strong’ or ‘well placed’ for more than half of the elements of capability.This means that departments are taking remedial actions to addressdevelopment areas before they can be well placed to improve to addresstheir future challenges.• However, there is much to build on. Departments all contain areas of goodpractice and strong performance. Even where departments are marked‘development area’ for specific elements, this can describe an area where thereis good practice to build on that has not yet been consistently applied.• Strong performance is widespread. Departments looking to improve and to learnfrom others will find similar departments with strengths that they can learn from,and people with skills they can draw on.• There is no pattern of improvement between tranches. Whilst the CapabilityReview results have been published and widely disseminated, departments in22 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

later tranches have not been able to build on the lessons from earlier tranches toan extent that is reflected in better scores.The importance of learning is discussed further in Chapter 3 of this report. TheSunningdale Institute’s evaluation describes ‘A “learning to learn” culture: withinwhich change is continuous rather than spasmodic and there is a commitment tolearn from anyone who does something better inside or outside the organisation’.Developing such a corporate culture and infrastructure across the Civil Service willbe vital to securing improvement.Exhibit 2: Assessments against each element of the model of capabilityThere are some clear patterns of departmental capability strengths and somecommon areas for development.S2: Base choiceson evidenceL2: Ignite passion,pace and driveS1: Focus onoutcomesL1: SetdirectionS3: Build commonpurposeD3: ManageperformanceL3: Leading deliveryand changeD1: Plan, resourceand prioritiseL4: BuildcapabilityD2: Roles,responsibilities,delivery model(s)Source: Capability Review reports, Capability Reviews Team 2006/07.These scores have not changed significantly since Tranche 3.• High scores in four elements are positively correlated with an overall high score –these are L1, L2 and S2 (three of the four highest-scoring elements), and D2(the lowest-scoring element).• All the ‘strong’ scores are for leadership or strategy, with more than half of thescores for S2 being ‘strong’ or ‘well placed’.• The three ‘serious concerns’ are in leadership or delivery.• Only one department – DCA in Tranche 1 – scored ‘well placed’ in L4.The common capability gaps discussed in this chapter reflect those elements ofcapability for which the scores were lowest. This, however, does not mean that thereshould be complacency in other areas; there is at least one department with anCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS23

‘urgent development need’ against each element. However, in the higher-scoringareas there should be more good practice to build on and learn from, anddepartments should be better placed to address their performance improvementwithout significant extra corporate effort.Overarching pictureThe report Capability Reviews: Tranche 3: Findings and Common Themes: CivilService – strengths and challenges (Cabinet Office, 2007), published alongside theTranche 3 Capability Reviews (‘the Tranche 3 report’), identified some key areasof strength for the Civil Service. It also identified four common overarchingcapability gaps:• leadership;• skills, capacity and capability;• delivery and performance; and• delivery models.This chapter sets out the progress that has been made to address these capabilitygaps, both in individual departments and also across the Civil Service as a whole.It also sets some ongoing challenges for the Civil Service that are picked up furtherin Chapter 3, which considers the future of the programme and the futuredevelopment of the corporate capability of the Civil Service.LeadershipWhy does this matter?The Capability Reviews programme focuses on leadership; it forms one of the threecomponents of the capability model and, as applied, the model focuses on the roleof each department’s leadership team in the areas of strategy and delivery.The Sunningdale Institute’s evaluation of the programme commented that:‘Establishing a strong top management team committed to change is one ofthe essential first steps of transformation – necessary but not sufficient.Therefore, the focus on top-management capabilities is the right choice at thisstage, provided that the limitations are recognised.’Research conducted with Senior Civil Servants has found that effective leadershipwas cited frequently as a key factor that could help change:‘… a clear decisive direction from the top – corporate behaviour by other seniormanagers and a recognition that the whole is greater than the sum of thepart[s]’24COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

or hinder it:‘lack of leadership from the top’‘lack of continuity and commitment from departmental leaders’.Capability Reviews: research with Senior Civil Servants byOpinion Leader Research (OLR)The Tranche 3 report identified the ability to set a clear direction for the organisationand to demonstrate pace and passion as strengths for the Civil Service. This remainsthe case, with 13 out of 17 departments having at least a ‘well placed’ score inone or both of these elements. As positive scores in both of these elements havebeen demonstrated as positive drivers of overall performance, this is encouraging.These capabilities have been tested during the significant changes in machineryof government, the transition to a new Prime Minister with new and different strategicgoals, and the CSR with its cross-cutting PSAs setting 30 key priorities acrossgovernment – from tackling climate change to making communities safer.Consequently, the areas of focus suggested by the Tranche 3 report were as follows:Collective leadershipChallengeLeading changeBuilding leadershipBoards acting as role models to exhibit an effectivecorporate culture of teamworkEffective challenge on boards, including externalchallenge, to support them in their role of managingperformanceManaging change effectively; in particular, boards drivingthrough and sustaining change in the long termEngaging the wider SCS in the business of departmentalleadershipHigh-level view of progress on leadershipEffective departmental leadership is the key to unlocking capability throughout theorganisation; consequently, departments rightly look to make early progress in thisarea, where capability gaps have been identified.Of the four common capability gaps identified in the Tranche 3 report, this is thearea against which there has been the most progress in departments. Permanentsecretaries and boards have taken this area seriously and many departments areimproving well.Executive teams are working hard on their own development and are makinggood progress. We are seeing good use of coaches and a willingness by boardsCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS25

and the senior leadership team to invest in improvement and stick with this agendaover time. Boards are taking time to think strategically and act as corporateleadership teams, rather than as the loose collection of baronies previouslyobserved in some departments.This is beginning to feed into more positive outcomes against leadership instaff surveys.Where this is happening we are seeing:At three months after the review:• A redesigned and significantly smaller board taking active decisions; ahigh-performance leadership strategy being implemented; and the seniorleadership team running workshops for staff across the organisation to articulateand communicate a clear vision to all staff.Case study: Leadership development in the Crown Prosecution Service (CPS)‘The Capability Review’s clear steer to the CPS was to drive forward a newleadership and management development strategy. The department workedhard and fast, with support from the National School of Government, to clarifythis strategy’s aims and has, for the past three months, been implementing thefirst phases.The CPS strategy has all the expected, traditional elements, but a few aspects ofthe CPS strategy are particularly striking:• ‘It’s about the business’: the CPS has deliberately crafted a clear line betweenleadership and management development activity and business improvement;• ‘It’s personal’: the CPS has sought the personal engagement of existing CPSleaders in owning the strategy, aiming to make clear to them how much theircommitment and energy impact on the pace and scale of the change that the CPSmust achieve;• ‘It’s more than just a training course’: the CPS has shaken up recruitment,selection, performance management and business process criteria toreflect the new approach to leadership and management, not just its trainingportfolio; and• ‘It’s long-term’: the CPS has decided to wait to identify and inspire its futureleaders through a new approach to succession planning at the same time asengaging current top staff.26 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

All of these aspects came together in the newly constructed CPS inductionprogramme for recently appointed Chief Crown Prosecutors (CCPs), led by twoexperienced CCPs and the new CPS Head of Leadership and Learning. Thethree-day, ‘up close and accountable’ induction took each of the four themes of theCPS leadership model (‘envision, inspire, engage and deliver’) and related these tothe critical actions, decisions and relationships that the CCPs have to attend to.This induction approach focused particularly on the CCPs as leaders of the wholeorganisation, not just their local area; as leaders of business outcomes; as leadersof people and in the community; and as leaders responsible for continuousimprovement. It also aimed to develop them quickly into a mutually supportiveleaders’ network. The CPS will bring together this ‘class of 2007’ for regular actionlearning meetings.In addition to this group event, the CPS has been working one-to-one with othernew leaders in the organisation, clarifying the department’s hopes andexpectations of them as leaders and managers, and the support it offers to helpthem meet the department’s high standards.The new, streamlined board will play a key role in modelling the new leadershipbehaviours and, with HR support, they are working to clarify how they will operateand behave. We are working with David Macleod, a Fellow of the National Schoolof Government, to help define and deliver a programme with and for the boardand its immediate reporting groups/committees. This will commence with a boardawayday, to take place by the end of 2007.’At six months after the review:• A board working together collaboratively, with clearer accountability, developedthrough such activities as a ‘board brainstorm’ on the department’s vision;key leadership appointments made to the board in delivery and change and infinance (Foreign and Commonwealth Office (FCO)).• High levels of understanding of, and commitment to, the Capability Reviewchange programme throughout the SCS (DfID).At a year after the review:• Significant improvements in key leadership metrics; effective collaborationbetween board and ministers reflected in clear decisions on business prioritiesand outcomes (DCSF).CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS27

Case study: Effective performance management by the board in DCSF‘DCSF, like its predecessor DfES, oversees a large-scale and complex deliverynetwork. DfES was one of the smallest departments but with responsibility forsignificant spend on the Government’s challenging agenda for children, familiesand young people. On top of DfES running costs and resources it had 18 NDPBsemploying 10,000 staff with annual running costs in excess of £500m. DCSFinherits much of this complex organisation and now has additional responsibilityacross government to achieve challenging outcomes for children. It is thereforeimportant that it has clear objectives and sophisticated management of itsdelivery chain linked to clear roles, responsibilities and accountabilities. Effectiveleadership by the DCSF board requires clear performance information and arelentless focus on delivery.Development of quarterly corporate performance reporting has enabled the DCSFboard to develop its capacity and willingness to challenge performance againstobjectives and PSAs, strengthening accountability across the department.Non-executive board members provide external challenge when the DCSF boardconsiders corporate performance, and they have been involved in a series ofchallenge panels focused on the likelihood of delivering PSAs. Delivery partners,including NDPBs, also have the opportunity to discuss performance issues forthe delivery chain as a whole through the DCSF Group (see the related casestudy on the DCSF Group on page 54), and their work is being aligned with thenew performance framework.Scrutiny of departmental risks is given by the Risk Committee, which includesall directors general and is chaired by the Director General Corporate Services.The Committee evaluates the most severe risks to DCSF in terms of delivery,operation and reputation. These are currently reported every quarter by thedepartment’s Permanent Secretary to the Secretary of State for Children, Schoolsand Families. This system of risk management is subject to additional scrutiny bythe department’s Audit and Risk Assurance Committee, which is chaired by one ofthe board’s non-executives and which has a majority of independent externalmembers, including the National Audit Office.Through the new system of improved quarterly reporting of progress against thedepartment’s new objectives and targets, the DCSF board will monitor theperformance of the overall schools and children’s system, the department andNDPBs. The department’s newly formed ‘corporate bridge’ enables staff in thedepartment to access and engage with information on the delivery of betteroutcomes for children, young people and families.’• The executive team is collectively assessed for a bonus against the achievementof corporate objectives and collaborative teamwork; there is positive feedbackabout a ‘more cohesive … more corporate and more effective board’ (DWP).28COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Case study: Collective leadership in DWP‘The Capability Review highlighted that the strong and clear structure of DWP’sagencies and supporting corporate functions had served the department well andhad delivered a great deal. But it also pointed out that there was a risk of poorlyjoined-up services for some of their customers, particularly those customers whosimultaneously use the services of more than one of their agencies.The review also noted that whilst there was very strong individual leadershipdemonstrated by the Permanent Secretary and his top team, there was less clearevidence that these individual strengths translated into coherent, collectiveleadership of DWP as a whole. One particular observation was that thedepartment’s executive team had yet to set a compelling vision for the future ofDWP. Whilst the Permanent Secretary had signalled his strong desire for a morecorporate approach, key delivery and policy decisions were often still being takenin individual business areas, rather than being reviewed, owned andcommunicated collectively by the team.In the department’s response to the Capability Review, the Permanent Secretary,Leigh Lewis, said: “Our current Business Strategy review is addressing these issues.But, in parallel, it is clear that we need increased collaboration across our topmanagement structure and that this must be led from the top by the executive team.”Since the review, DWP’s executive team has devoted significant time todeveloping and implementing the new business strategy and, in so doing, hasconsiderably strengthened its capability as a transformational leadership team.The keys to this have been top-level ownership of the transformation agenda,combined with a sustained focus on the needs of customers, irrespective oforganisational boundaries. The team has taken personal and collectiveaccountability for the business strategy and has supported the progress of the DWPChange Programme by driving the design of, and approach to, improved customerservices. Decisions about cross-cutting issues, such as joining up services forcustomers and driving waste out of existing processes, are made corporately, withexecutive team members prioritising customer service improvement.A powerful lesson has been learned. The more the top team has demonstratedits commitment to the corporate approach, the more effectively the businessstrategy has been developed, implemented and communicated. In turn, thefurther the strategy has progressed, the more the team has developed into acollective unit.As a result, DWP’s customers will soon begin to see changes to the way servicesare delivered. There will be more straightforward ways of signposting services tocustomers and handling their questions; common greeting and standards will bein place to help customers get a more consistent service; customers will not beasked to supply information that is already held by the department, and customerswill be able to access a secure DWP online account through www.direct.gov.uk.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS29

In their recent 12-month stocktake of the department’s progress since the originalreport, the review team commented that “there had been a significant and positivetransformation at director level. Below that level, an increasingly strengthenedleadership community was being created, with each SCS member accepting atleast one corporate responsibility which went beyond their day-to-dayresponsibilities.” They highlighted, by way of example, “the improvements that hadbeen made in delivering strong board cohesion and effective leadership for whichthe executive team could take particular credit”.’Where departments are making less progress, we are seeing:• slower progress in making appointments to key leadership roles, including roleswith oversight and leadership of change;• little impact by non-executive directors;• a lack of clarity on individual roles on boards and on the board’s collectiveresponsibilities; and• a lack of real engagement in leadership in the department beyond board leveland their immediate reports.What is most difficult for departments in improving leadership?The biggest challenges are:• Leading change. Change leadership is difficult for departments. Expertise inchange is not recognised as a profession or specific skill within government, andconsequently some boards have found it difficult to understand how to lead andresource the complex change programmes emerging from the Capability Reviewsand other drivers. Whilst there has been progress in this area, this is by no meansuniversal. Increasingly, departments are appointing experienced specialists, withpositive results; but in some departments managing a change programme is notyet seen as a role requiring particular skills. Departments need to develop theirown capability and skills in this area and not rely on external appointment.Currently skills in leading change are not widespread in departments, and thosewith such skills are not always effectively deployed.• Getting the most out of non-executive directors (NEDs). Many departmentshave appointed new NEDs and there is now a strong cadre of external expertscommitted to improving their departments and the Civil Service as a whole. It isstill, however, early days, and we do not yet see NEDs consistently playing astrong challenge and support role for boards. The potential of this group is yetto be fully realised.• Clarity about the role of boards. The concept of Civil Service boards acting asmore than a representative forum, with the key relationships being vertical, is stillrelatively new. Many boards have slimmed down and become significantly morestrategic. But we are still seeing some departments struggling to articulate andenact a distinctive and value-adding role for the board, particularly aroundeffective leadership and decision making.30COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

• Engaging the wider SCS. This is a difficult challenge for even those departmentsthat are performing best in leadership. We have seen encouraging signs from theOLR research we commissioned recently, which shows a clear majority of PayBands 1 and 2 feeling positive and committed to change and Civil Service reform.For example:– 83 per cent felt achieving Civil Service reform was extremely or very importantfor the future delivery of public services;– 88 per cent were extremely or very committed to the reform agenda andmaking change happen in their departments; and– 87 per cent strongly agreed that it was their responsibility to play their part indriving change forward in their department.This is yet, however, to develop into strongly positive commitment and action, andthe ability to make change stick is still viewed with scepticism by some.‘[To make change happen, we need] stronger, united leadership from the top ofthe department with the courage to face different issues and make a decisionon them.’Research with Senior Civil Servants by Opinion Leader Research (OLR)This level of commitment provides, however, a good base for departments to buildon as they move into the next phase. It is particularly encouraging that leaders in thewider SCS see it as their responsibility to drive change forward, rather than leavingit to their boards.What is the centre doing to build capability in leadership?Leadership is the area where there is most activity from the centre, led by the CivilService Capability Group (CSCG, formerly the Corporate Development Group) in theCabinet Office. The Capability Review of the Cabinet Office said:‘The current Cabinet Office Corporate Development Group, which is chargedwith Civil Service reform from the centre, does not at present command theauthority with departments needed to lead this work. It needs to strengthen itsskills and re-launch itself if it is to succeed in doing so.’Capability Review of the Cabinet Office (2006)CSCG has undergone a wide-ranging and challenging transition throughout thelifespan of Capability Reviews. This has included external recruitment in specialistareas, including change management and leadership, and the incorporation of theCapability Reviews Team into the group. Restructuring the group will provide a muchstronger focus on developing capability in leadership and change management, andshould increase CSCG’s ability to respond to capability gaps identified through thereview and assurance programme. However, there is still some way to go before thisbecomes routine. More about the role of CSCG in the future is set out in Chapter 3.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS31

CSCG is also working more effectively with the National School of Government tocommission the design, development and delivery of a range of consultancy andtraining products aimed at increasing the leadership capability and capacity in the SCS.Progress against leadership issues raised by the Capability Reviews includes:• the development of the Top 200 Civil Servants (permanent secretaries anddirectors general) as a community, which has been a key success in increasingthe commitment to a more collaborative and engaged form of leadership. The Top200 now meet regularly to address key issues of importance to the Civil Service;• a stronger emphasis on talent management and succession planning indepartments and at the centre, with departments reporting regularly to the SeniorLeadership Committee and being challenged on their plans;• new capability and expertise within CSCG in the area of change leadership, witha specific remit to support departments in their change programmes;• embedding the leadership framework into performance management for SeniorCivil Servants, so that each of them is assessed on their leadership capability; and• a new ‘base camp’ induction event for all new Senior Civil Servants, to make themfully aware of their corporate responsibilities.Case study: Developing leaders‘SCS Base Camp is a new corporate leadership programme developed in directresponse to the findings of the Capability Reviews. There are approximately 500new entrants to the SCS each year and, for the first time, civil servants recentlyappointed or promoted to the SCS will have an opportunity to examine what theCivil Service does, the job of leadership and the role of Senior Civil Servants incorporate leadership.A key element of the programme is to give new Senior Civil Servants a betterunderstanding of the leadership framework, and how it relates to their role. It alsofocuses on some of the main challenges the Civil Service faces and theimportance of corporate leadership to overcoming these.The Cabinet Office and the National School of Government launched theprogramme in October 2007. Sir Jon Shortridge (Permanent Secretary – WelshAssembly Government) hosted and was supported by many high-calibre publicand private sector speakers. Ninety-one participants from 23 departmentsattended; a third were women and 2 per cent were ethnic minority staff.Feedback was extremely positive, with 96 per cent of participants reporting thatthe event met its aims well or very well and 89 per cent reporting that theirpersonal learning goals were well or very well met. The consistent theme in thefeedback was the quality of the speakers and facilitators. Participants reallyvalued the opportunity to hear today’s leaders talk openly and honestly aboutwhat they have learnt, how they approach leadership and the expectations theyhave of the ‘next generation’ of leaders.32 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Participants’ comments included:“As a newcomer to the Civil Service after 20+ years in the private sector,I thoroughly enjoyed the sessions and the experiences shared by thepresenters” – externally recruited Director, Home Office“Really good – it was focused on leadership and after it I think we’ll all be morefocused on being good leaders and empowering others. [The presenters were]all excellent and a very impressive line-up” – Deputy Director, Defra“I have left in a very motivated way” – externally recruited Director, WelshAssembly Government“I wanted/needed broader contextual framework for my work. I now feel thatI understand where the Civil Service is going and I want to be part of it!” –externally recruited Deputy Director, DWP.’Areas where more work is required include:• A number of ‘Top 200 taskforces’ have been set up with a focus on differentissues. This has been a positive development, with some real achievements.However, the taskforces’ impact has been variable. They are not always alignedwith the most important issues for the Civil Service, and nor are they supportedwith any significant resources. The commitment, courage and insightdemonstrated by the Directors General on review teams have shown how muchthis group has to contribute to Civil Service reform and leadership – more shouldbe done to make the most of this.• The potential role of NEDs has been highlighted in Capability Reviews since thefirst reports in July 2006. The Sunningdale Institute also recognised this in itsevaluation of the Capability Reviews:‘A recurrent theme in several Capability Review reports and in our fieldworkis that the role of NEDs has not been sufficiently thought through. ManyNEDs feel that the current way of working makes little use of their abilitiesand experience. In particular, effective challenge is not always welcomed.’Whilst many departments have appointed excellent NEDs and are beginning touse them effectively, there is more to be done at corporate level to address thisissue. This should be addressed urgently.• Engaging the wider SCS and its feeder grades in the business of leadership hasbeen recognised as a critical factor for success and a major challenge fordepartments. There is a clear need for more work to educate and engage CivilService middle and senior managers in the business of leadership and change.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS33

Skills, capacity and capabilityWhy does this matter?The skills, capacity and capability of the Civil Service have been under scrutinyfor some time. Over recent years the way government delivers has evolvedconsiderably. Changes include:• increased commissioning and contracting for service delivery in a wide rangeof areas, working with the wider public sector, private sector and third sector;• an increased emphasis on ‘horizontal’ challenges, either through a move tointegrated service delivery to customers or the development of integratedstrategic and policy solutions to challenges such as climate change or socialexclusion; and• challenging targets for efficiency, tough outcomes through the new PSAs andmore focus on open and transparent performance management.All of these trends require an emphasis on building a strong, capable and skilledCivil Service.The Public Administration Select Committee recently published a report on Skills forGovernment (August 2007). In response, the Government stated that:‘The Government, the Cabinet Secretary and all permanent secretaries arecommitted to developing a culture of excellence that continually improves skillsand capability.’And that:‘The Government and senior leaders are very clear that there is much more tobe done and agree that collective action is critical if the Civil Service is todeliver the services the public expect now and into the future.’Skills for Government: Government Response to the Committee’s NinthReport of Session 2006–07 (November 2007)In terms of the Capability Reviews model, this area sits within L4 – Build capability.This focuses on areas such as talent and leadership development, managing poorperformance, and diversity. Whilst there have been some examples of excellent workin these areas, such as the achievements of the CPS in building and harnessing thetalents of an increasingly diverse organisation, this is not generally the case. After17 reviews, only one department has scored ‘well placed’ in this area (the formerDepartment for Constitutional Affairs), suggesting that it remains a key developmentarea for the Civil Service.34 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Consequently, the areas of focus suggested by the Tranche 3 report were asfollows:Better peoplemanagementBetter HR and othercorporate servicesSkills gapsEnsuring that people are managed effectively, poorperformance is tackled rigorously and people at all levelsare stretched, challenged and motivated to performBuilding more effective and professional corporateservices in government departments so that they cancontribute effectively to raising business performanceUnderstanding the skills required to deliver againsttomorrow’s challenges and systematically developingstaff to meet themHigh-level view of progress on skills, capacity and capabilityEffective progress in this area is a mix of system changes and deeper culturalchange, often in the face of deep-seated assumptions and ways of behaving. Whilstthe 18 months since the first Capability Reviews were published have seen a largenumber of new appointments into HR departments, new appraisal systems andskills audits, outcomes in terms of changed behaviours and perceptions are harderto identify. This is the Capability Review area for action that departments are findingmost challenging.Positive progress we are seeing in departments includes:At three months after the review:• Specific capability objectives for all senior managers; plans for new appointmentsto strengthen finance; and the development of a new Integrated PeopleStrategy (CPS).At six months after the review:• A focus on driving up analytical skills throughout the department, with staff havinga clearer understanding of the analytical tools and resources available to themand how to use them effectively. Training, workshops and events led by the chiefanalyst (Communities and Local Government (CLG)).CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS35

Case study: Better analysis in CLGBackground‘In December 2006 the department found itself in the uncomfortable position ofhaving been judged to be failing to base policy making and delivery consistentlyon evidence. In responding to the Capability Review’s challenges, it wasimportant from the outset to acknowledge that there were already some excellentexamples in CLG of integrating high-quality evidence and analysis into policy.However, this was patchy – we were some way from a point where analysis andevidence are integrated into our culture, systems and working practiceshabitually and consistently.Change programmeIn order to address the department’s shortcomings and to deliver sustainableimprovements, it was quickly concluded that it would be necessary to developcapacity at both the supply and demand ends of the policy development anddelivery chain. As a result, a twin-track approach has been implemented to deliverthe required step change in performance.On the supply side, we have strengthened the department’s analytical capability,by increasing the number of economists by 30 per cent. Three panels of outsideexperts have been established to bring a wider perspective, re-energise ourapproach to policy development, and offer a stronger challenge role. Senioranalysts are now on a number of programme boards where key decisions aretaken on major projects. We have developed and delivered an Introduction toEconomics workshop. We have also introduced a number of coaching networksfor our analysts to provide training and advice to staff on a range of techniques,including evaluations, value for money and modelling.In terms of raising demand for analysis, effort has been focused on policy teamsto achieve the desired change in working practices. It was essential for them tounderstand the value and role of analytical advice and to actively challenge thoseinstances where it is not provided or where it is seen to be weak. An intensiveprogramme of workshops and masterclasses has been provided for our SeniorCivil Servants. ‘Six analytical questions to ask of any policy’ have been devised tohelp policy teams engage in the debate with analysts at an early stage. We havebrought in high-profile figures from the media world to emphasise the importanceof analysis, including Evan Davis, the BBC’s economics editor, and Martin Wolf,chief economics commentator for the Financial Times. A very successful ‘Analysisfor all’ event was held in June 2007 to raise awareness of the work of analysisin the department. Changes have also been made to the ways the departmentsynthesises and presents evidence and advice to ministers and the board –‘evidence packs’ are now an established part of this process.36 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Building up the supply and demand sides is key, but it is not enough. At theheart of success is the idea that policy teams and analysts work in partnershiptowards a common understanding of the evidence base and its implications – andthat this is embedded into working practices so it becomes the norm. The roll-outof new ways of working in the Departmental Transformation Programme hashelped to drive progress on this, as has the tremendous support from seniorfigures in the department.ConclusionHave we cracked it? There is no doubt that massive improvements have beenmade, and the department has been very receptive to the changes. But thesechanges need to be sustainable in the long term and performance needs to bemonitored to ensure that it is improving and that the department is realising thebenefits of the programme. So we are not quite there yet and we are continuingour efforts to bring CLG in line with the very best.’• A new people strategy and plan, aimed at building skills and capabilities, hasbeen developed and implemented (Cabinet Office).Case study: The Cabinet Office people strategy and plan‘We developed the Cabinet Office people strategy and plan in order to build ourcurrent and future skills and capabilities and to respond to issues identified by ourCapability Review and people surveys. The process involved continued consultationwith staff to ensure that we are responding to their needs and to build their trust,whilst also improving our understanding of the department’s business model andthe context within which we all work.Based on the life-cycle of an employee, the people strategy sets out a clearframework for achieving excellence in the way we lead, manage and develop ourpeople. It also puts this ambition in context by explaining how and why thedepartment needs to change in terms of skills and capabilities, and how this will beachieved by clarifying the ‘offer’ to our people and the expectations we put on them.The accompanying plan sets out the short-, medium- and long-term actions that weare undertaking to make the strategy a reality. This has been a valuable tool forprioritising and sequencing activity and ensuring that we have robust PPMdisciplines in place. It also shows staff the journey that we are on – enabling themboth to support us and to hold us to account.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS37

Amongst the actions that we prioritised were: reshaping HR to deliver the strategy,whilst preparing for shared services, revamping the induction process, launching anew brokerage service and introducing a new learning and development offer. Theprogress we have made was highlighted recently by ‘People Week’, a new venturededicated to explaining how HR works, offering taster training sessions, HRsurgeries and seminars on the department’s new values. With over 80 events,proactive board endorsement and a range of different communication channels,People Week was a great success and an important demonstration to staff of howHR has become a proactive, customer-focused driving force for the department.The progress we have made has been acknowledged by the review team (“Werecognise the progress you have made through … improvements in Cabinet Officesystems, including tangible action in HR”), by a board member (“HR are definitelyon an upward trend”) and most importantly by staff (“It’s a very welcomedevelopment by the Cabinet Office for its staff”).’Case study: Performance management in the Department for Business,Enterprise and Regulatory Reform (BERR)‘Every department has a challenge in building a high-performance culture at alllevels. In BERR we have made it very clear to everyone that objective setting andmid- and end-year reviews are a key part of their role as a member of thedepartment, and that a manager’s own performance will partly be judged by theirability to performance manage their staff.But compliance with the process is not enough: we see the key to a performanceculture being in the ability to give and receive honest feedback. To that end,members of the management board set time aside to give each other feedback andto work on feedback with their own staff. Cross-departmental training programmeshave also been established, which aim to address the issue from another angle. Forexample, there has been a very positive response to a diversity training programmefor senior managers, which included role-playing giving feedback to staff with verydifferent backgrounds from the manager.’At a year after the review:• Staff have responded to changes in performance management. Clear messageshave been communicated and the basics set up, with appraisals completed andpay awards paid on schedule. Some tougher conversations are being had on poorperformance and ‘priority movers’ (surplus staff) are being dealt with moreproactively (DCSF).38 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Case study: Development work with directors in the Home Office‘A programme of targeted, practical workshops on skills related to peoplemanagement is currently being delivered for all directors in the Home Office.The workshops focus on:• coaching skills;• giving and receiving feedback; and• engaging people.The format centres on practising concrete skills in small groups, in the context ofdirectors’ own business situations.The workshops were commissioned in response to the skills assessment,development planning and person-profiling work carried out with directors in late2006 by means of structured one-to-one coaching. Participant feedback to date hasbeen good, showing improvement through the life of the programme. This approachreflects both our commitment to continuous improvement in delivery, and also thesense that this common learning experience may prove valuable in bringingdirectors together as a leadership group.We will be using some qualitative interviewing of deputy directors to evaluate whatbehavioural changes are taking place as a result of the directors’ workshops.We are now also planning to extend the programme of workshops to deputydirectors throughout the Home Office in early 2008, alongside more tailored workwith directorates on their leadership and learning needs.This will continue to be complemented by our successful series of high-profilemasterclasses (which participants have described as “inspirational” and “excellent”)and by executive coaching, workshops and corporate programmes.’Where departments are making less progress, we are seeing:• HR functions not yet capable of making a strategic input to the changeprogramme or the design of the future workforce. HR is seen as transactional andnot providing the support required by the business;• people management not regarded as a core role for managers; and• skills surveys and strategies too narrowly focused and not consistently foundedon a clear and strategic vision of the future workforce.What is most difficult for departments in improving skills, capacity andcapability?The biggest challenges are:• Performance management. Departments know that they need to focus on thisarea, which has consistently scored poor results in staff surveys, with only 33 percent of the SCS being satisfied with the way performance is managed in theirCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS39

departments (SCS Survey 2006). It is these leaders in the SCS who are in largepart responsible for performance management of their own staff and also forcreating an environment where others manage performance effectively. Whilstdepartments are working to improve, this is a difficult process, requiring bothcultural and behavioural change (managers taking their responsibilities in thisarea seriously) and also process change (linking individual performanceconsistently to organisational goals). The challenge is to improve peoplemanagement as a routine part of effective line management and to increasestaff confidence that the skills and systems required to manage performanceeffectively are in place.• Better HR. Many departments now have HR directors who are making asignificant impact on HR and business strategy. Permanent secretaries andboards are engaging with this more seriously, with HR moving up the agenda.There is generally greater awareness that people issues are a core part of thebusiness and that HR is more than a transactional function. There is a growingunderstanding of the complexity and challenge of people issues we face in achanging world and labour market. This is both positive and vital. But there is stilla long way to go before Whitehall HR is ‘best in breed’, with professional skillsembedded throughout the workforce.• Skills development. Again, there are positive examples here. Of SCSrespondents, 54 per cent thought their Capability Review has been quite or veryeffective at developing skills to meet current and future challenges (OLRresearch). But most departments lack a clear skills baseline to build on and anunderstanding of their future workforce and its skills needs. This means that skillsdevelopment programmes are often short term and focused on technical skillssuch as programme management and finance.What is the centre doing to build skills, capacity and capability?This area is dealt with by a number of different players: the National School ofGovernment, Government Skills, CSCG and a number of heads of professionsituated in different parts of the centre and in departments. Considerable activity isunder way.• Government Skills, the Sector Skills Council for government, is fully operationaland has a remit for skills across the whole government workforce. It hascompleted a baseline skills audit of over 40,000 people and is developing a skillsstrategy for government. Government Skills is also considering the next phase ofProfessional Skills for Government, including plans to require all those in the FastStream and entering the SCS to have a broad range of experience.40 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Case study: A skills strategy for governmentBackground‘Government Skills undertook a major programme of evidence gathering andanalysis over the course of 2007, and validated the finding of the CapabilityReviews that greater focus on raising skills standards for individuals was a keyelement in the strengthening of corporate capability.ProposalsGovernment Skills has worked with employers in central government to develop astrategic response to these issues which will be launched as a new Skills Strategyfor Government early in 2008.The Skills Strategy, once agreed, will commit government employers to a significant,collective effort to raise skill levels right across the workforce. Implementing thestrategy will deliver, over a 2–3 year period, a new environment in which:• employees at all levels understand the professional skills standards they need toattain, and see the career benefits of attaining them;• employers are working together across government to target investment oncurrent and future common skills priorities;• providers are delivering higher-quality, better value for money skills developmentinterventions that are responsive to the needs of the sector; and• educational institutions are beginning, through a practical dialogue withgovernment employers, to develop fresh approaches to strengthening the skills ofthe talent pool from which we draw our future workforce.Specific proposals for action to make this happen include:• strengthening professions;• setting professional skills standards for all, and linking them to careers;• joint commissioning to meet common skills needs;• investing in a major expansion of apprenticeships; and• starting an ambitious programme of engagement with the higher education andfurther education sectors.ConclusionArticulating, agreeing and launching a Skills Strategy for Government will only bethe beginning of a real response to the challenge of raising skills. Onceimplementation begins, there will be some valuable early benefits, particularly in thearea of common action, but the significant advances in organisational capability willcome to fruition in the medium term, as the strategic changes feed through intohigher skills standards.’• The SCS performance system has been strengthened for 2007/08 to includecorporate objectives and leadership behaviours and to provide for a clear linkbetween business and personal objectives. A Top 200 taskforce has produced aperformance management pack for members of the Top 200 group.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS41

• The National School for Government has worked with CSCG to improve thesupport available to NEDs through an induction programme and seminars, andthrough guidance to departments on working effectively with NEDs.• Work has progressed in a range of professional areas to improve corporate skills:– The OGC is carrying out procurement capability reviews across Whitehall.– A group of 40 consultants are producing guidance on embedding financialskills within government.– The IT Academy has been established with support from the National Schoolof Government, offering a range of development opportunities to ITprofessionals, and work is under way to establish an HR Academy.– The National School of Government has set up a policy portal to provide onlinesupport to policy professionals.– The Government Communication Network offers access to a wide collection ofresources, good practice, and learning and development opportunities.• The HR Leaders’ Council is developing as an effective group, with a strongcommitment to addressing key issues for the profession, including thedevelopment of a professional framework, a new talent strategy and academy.Over recent months, departments and the centre have worked together to identifythose issues that need to be addressed collectively. A new ‘people framework’ forthe Civil Service is also being developed.It is clear that performance management must continue to be a strong focus for boththe centre and departments. CSCG currently sets the framework for SCSperformance management; this is operated in departments and made real byindividuals in day-to-day interactions and relationships. This is an area where a fargreater corporate emphasis on identifying good practice and learning from bothinside and beyond the Civil Service would be invaluable.Strong progress is being made in skills development in many of the corporatefunctions. IT, finance, communications and HR are building communities and skills.It will be important to continue to focus on the skills required by those in policy andoperational delivery roles. Further work needs to be done to develop a peopleframework for the whole of government, which will involve identifying the CivilService workforce of the future with its characteristics and skills needs and usingthis as a baseline for departments to assess their people’s skills and develop newbusiness-focused skills strategies.Delivery and performanceWhy does this matter?Capability Reviews look for systems and structures; sustainable capability that willenable departments to deliver excellent outcomes routinely against the significantchallenges of resource constraints and rising expectations.42COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

The recent CSR has emphasised the importance of delivery and performance in arange of contexts:‘While much has been achieved in the past decade, the context in which publicservices operate is changing rapidly, becoming increasingly challenging andcomplex. The social, economic and environmental trends affecting the UK arebuilding into new pressures on public services, and these developmentstogether with the achievements of the past ten years are generating risingexpectations from the public.’2007 Pre-Budget Report and Comprehensive Spending AgreementThe response to this includes:• public sector improvement, which includes ambitious priorities, providing moreopportunities and empowerment for front-line workers and setting citizens at theheart of service delivery;• a new framework for performance management, with 30 new cross-cutting PSAsbeing monitored and assured by the Prime Minister’s Delivery Unit (PMDU);• service transformation, as set out in Sir David Varney’s report, including sharedservices, IT professionalism and better delivery; and• embedding efficiency and value for money.These all require a strong focus on delivery and performance in departments.The Capability Reviews identified some key challenges in this area. CapabilityReviews focus on the ability of the leadership teams in departments to drive deliveryand manage performance, with a focus on future challenges rather than on currentachievement of targets. Findings here have been mixed. Whilst 7 out of 17departments had an ‘urgent development area’ or ‘serious concerns’ for Plan,resource and prioritise (D1), a further 7 departments were assessed as ‘well placed’.This demonstrates that there is some strong performance in this area upon whichthe Civil Service can build.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS43

The Tranche 3 report identified the following areas for focus:Managing againstprioritiesEffective performancemanagementStrategy to deliveryGetting the basics rightSetting clear priorities and then managing against them,taking tough decisions to stop programmes wherenecessary and allocating resources consistently topriority areasEffective performance management driven by the boardand embedded throughout the organisation and deliverychainTurning the department’s strategy into effectively realiseddelivery and consistently ensuring that delivery plans arealigned to meet strategic objectivesConsistent application of project managementdisciplines, from planning to benefits realisation; a cultureof continuous improvement and sharing and embeddingbest practiceHigh-level view of progress on delivery and performanceThe Capability Reviews painted a picture of good practice in some areas, but notsystematically applied. The abilities to prioritise effectively and to turn effectivestrategy making into actual delivery both require a strong grasp of strategy. ‘Gettingthe basics right’ means a rigorous application of good practice, consistent sharingof learning and an ability not to be blown off course by events. Departments havefound this a challenging area in which to make progress. However, Senior CivilServants are clear that Capability Reviews are helping to move their departmentsforward:• 63 per cent thought the Capability Review was quite or very effective in ensuringthat the department knows how well it is performing; and• 31 per cent identified changes in strategic planning, including:‘more clarity in the corporate business planning process, disseminating theresults to everybody – hence a clear link between everybody’s jobs and thepriorities of the department’‘We have a whole new business planning framework.’Positive progress we are seeing includes:At three months after the review:• Developing an action plan for improving performance management informationand redrafting the vision and strategy to focus on outcomes for customers (CPS).44 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

At six months after the review:• A corporate business plan setting out a ‘top 20’ list of priorities, circulated to allstaff; strengthened business planning and balanced scorecard; strong financialmanagement and a clear ‘line of sight’ from the top priorities to individualperformance (BERR/Department of Trade and Industry (DTI)).Case study: Planning and prioritising in BERR‘BERR implemented a completely new business planning framework for 2007/08,with the goal of achieving greater clarity on the department’s role, objectives andkey priorities. The result was a new Corporate Plan that was acclaimed as a modelby the non-executive members of the department’s management board.The BERR Corporate Plan sets out the department’s overall purpose, high-levelobjectives and strategic context. From these flow the top priorities, main deliverablesand key risks for the year, and these are clearly linked to the department’s resourcesand structure. An important innovation was the development of a departmental ‘top20’ list of priorities. The management board was heavily involved in the developmentof this list and it forms the main focus of their in-year reviews of delivery.Underpinning the Corporate Plan is a series of group plans, which follow thecorporate model and set out in more detail each group’s objectives, priorities andresources.The Corporate Plan and group plans were the subject of extensive internalcommunications activity, including a flyer sent to all staff, explaining the plans andhow to use them, and team-by-team discussions examining how their workcontributes to the group plans and Corporate Plan. Each member of staff should beable to see how their individual objectives feed up through team and groupobjectives to the departmental objectives set out in the Corporate Plan.The new plan is the subject of rigorous performance reviews during the year. Themanagement board reviews key risks and the ‘top 20’ by exception on a monthlybasis and conducts a full review of departmental performance each quarter.This is underpinned by a new and more extensive series of half-yearly three-tierperformance reviews. First, each director general reviews the teams in their groups,and then the Permanent Secretary reviews the performance of each group. Theheadlines of these performance reviews are communicated to all staff so they canfeed through to individual performance.BERR will be looking to further develop this model next year. Its next plan will bestructured around the department’s new strategic objectives and will provide moredetailed information on the deployment of resources to actions and objectives.’CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS45

• A new business planning framework and process, linked to strategic priorities;resource allocation clearly linked to priorities (FCO).Case study: Business planning in the FCO‘One of the most unpopular days of the year for any manager in the FCO is the daywhen instructions thud onto the desk (or fill up the available space in your in-box)asking for draft objectives for the coming year. Even worse when you have to draftobjectives for the next three years, and worse still when the system has changed –yet again! This was the scenario facing the Business Planning Team in the FCO onceour board made the decision to adopt business planning practices earlier this year.But why change to business planning at all? First, the objective-setting exercises wehad run for years in ever more complex ways weren’t delivering what we wanted.Second, the Capability Reviewers had told us clearly that our planning practicesweren’t up to scratch. So we had to do something.We had to devise a business planning model pretty much from scratch, test it, rollit out and get buy-in from across the disparate FCO network: from policy wonks inLondon, and from super-embassies such as Washington to the smallest posts onthe smallest islands. The business planning model we devised has an inbuilt tensionbetween resourcing our Departmental Strategic Objectives (which the CapabilityReviewers liked) and resourcing our large overseas network (which, at first, theydidn’t). We had to be sure that our plan was the most appropriate one for us. Wecompared business planning frameworks across Whitehall and in local government.We brought in consultants to give our model a health check. We set up aconsultative group and a project board to run our ideas by.In the FCO, we traditionally burnish a project until it is gleaming and new and thenlaunch it fully formed. Dints and scars quickly accumulate. We then tinker with it,during which time interest turns to the next big thing. This time, we decided to use2007/08 as a trial year to roll out an unpolished, rough-hewn framework across thewhole network, which meant that everyone was involved in trying to make it work.Then we had to sell it to staff. We needed to impress upon everyone that businessplanning required a culture change in how the FCO goes about its work. We tookadvantage of all the FCO’s internal communications systems to keep businessplanning to the fore in people’s minds: we established a web page on the FCO’sintranet; the Permanent Secretary, who is the driving force behind our businessplanning, regularly sent messages to staff; we drafted templates and guidance foreach stage of the process, etc.We’ve just completed our mid-year review, using the new framework. It has been asuccess (our newly arrived, externally appointed Director General Finance couldn’tbelieve the FCO had not done this before). It’s not been perfect, but we didn’t expectit to be. It’s less ‘process light’ than we wanted, but corrections resulting from ourcurrent ‘lessons learned’ exercise should deal with that; this year it’s been less‘benefit heavy’ than it needs to be – but again, as the process beds down, we areconfident it will deliver. It takes at least a couple of years to run a good businessplanning process. But it has shown that it should provide the return we need to bringtogether more effectively what we do and the resources we need to do it.46 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Our challenge now is to ensure that we take on board the lessons we’ve learnedfrom this trial year so that everything necessary is in place when we ‘go live’ in April2008. A good sign is that already the results of our mid-year review are informingresource allocations for the new CSR period.’At a year after the review:• Evidence of tough decisions on priorities being taken collectively and on anongoing basis, including dropping previous priorities; more effective riskmanagement at board level and throughout the business; operating reviewsand monthly stocktakes of delivery programmes (Home Office).Where departments are making less progress, we are seeing:• insufficiently challenging programme management and governance, and lackof clarity on roles and accountability;• too many competing projects with no clear sense of priorities;• underdeveloped delivery skills; and• no clear narrative for staff about the vision and purpose of the department toenable them to deliver what is really needed.What is most difficult for departments in improving delivery and performance?Recent years have seen significant achievements in delivery outcomes, many ofwhich have been focused on tangible output-based PSA targets – for example,reductions in waiting lists, bringing more offenders to justice and improved GCSEperformance in schools. But there is still more to do and departments now have anincreasingly challenging set of objectives and outcomes in cross-cutting PSAs andDepartmental Strategic Objectives, which they will need to achieve through newways of working – which puts the spotlight more strongly on improvement in thisarea. The biggest challenges for departments are as follows:• Performance management. The previous section addressed the topic ofperformance management for individuals; individual performance managementrequires a clear ‘line of sight’ to business performance management. Effectiveperformance management for a department is not simply about effective toolsand techniques – though the consistent and rigorous applications of tools such asbalanced scorecards and business planning is important. It is also about creatinga culture of performance management that encourages challenge (also describedin the ‘Leadership’ section of this chapter), openness and learning. Whenperformance fails, it is often because front-line messages about problems havefailed to get through; they may have been watered down or seen as unacceptable.Shifting from this requires more bravery and an increased focus on performancethroughout the organisation.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS47

• Prioritisation. When asked what would make the most difference to enablingchange to happen, the most common factor identified by the SCS was ‘clearobjectives’ – ‘real prioritisation: deciding what the key changes are and reallyfollowing them through’ and ‘clear communication … about goals andmechanisms for getting there, and being very clear about individual roles’. Factorshindering change included ‘too many competing priorities’ and ‘lack of commonobjectives and prioritisation’. There is a widespread perception within departmentsthat leaders are not setting priorities effectively enough, and this links back to thechallenge of developing strategies that are both deliverable and delivered.What is the centre doing to build capability in delivery and performance?Delivery and performance involves PMDU, HM Treasury, OGC, the Strategy Unit andTransformational Government. The heads of profession for operational delivery andpolicy delivery also have a key role in improving skills in this area.• Departments’ progress towards delivering the 30 new PSAs will be monitored andassessed by PMDU, which previously had a narrower focus on the PrimeMinister’s top priorities for delivery.Case study: Improving performance management in government‘Going forward, the Government has announced a new performance managementframework for the 2008–2011 CSR period. This includes a streamlined set of30 new PSAs, which set the Government’s priority outcomes for the next threeyears and span departmental boundaries, setting out a shared vision and leadingcollaboration at all levels in the delivery system. The new framework also includes:• a single Delivery Agreement for each PSA, developed in consultation withfront-line workers and the public, and published to strengthen accountabilityand ownership across organisational boundaries;• a key role for new Cabinet Committees which will drive performance on crossgovernmentPSAs by regularly monitoring progress and holding departments andprogrammes to account. The Government is also examining the scope for buildingPSAs explicitly into the performance management framework for the Civil Service –ensuring a relentless focus on PSA delivery in Whitehall;• a small basket of national, outcome-focused indicators to support each PSA,ensuring robust and transparent performance measurement alongside genuinerationalisation, with a significant reduction in the overall number of priorityindicators attached to PSAs;• targets used where appropriate to deliver improved performance andaccountability; with nationally set targets reserved for a small subset of PSAindicators that require firm central direction, and far greater space for increasedlocal target setting;48 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

• a more comprehensive approach to performance monitoring, with eachdepartment publishing a set of Departmental Strategic Objectives for the CSR2007 period, alongside the smaller, prioritised set of PSAs. This will for the firsttime bring all performance monitoring into a single framework, covering both theGovernment’s highest priorities (PSAs) and the wider span of departmentalbusiness; and• across the whole framework, a premium on the use of high-quality, timely datawhilst freeing up the front line by reducing low-value data burdens.’• PMDU and the Capability Reviews Team are developing a new PSA review tool,which will focus on addressing capability gaps in areas such as leadership andcapacity, governance and accountability, and delivery models that can adverselyimpact delivery.• OGC operates the Gateway review process for projects and programmes andoffers guidance and tools and techniques for PPM.• The Strategy Unit has produced guidance on commissioning and works withdepartments on developing strategy.• The heads of profession for policy and operational delivery have developedvarious proposals for improving the deliverability of policy.• Sir David Varney has been appointed as the Prime Minister’s chief adviser onservice transformation, working closely with Alexis Cleveland as Director Generalof Service Transformation. He will also chair the Delivery Council, which will beresponsible for delivering the Service Transformation Agreement (STA) thatunderpins the whole PSA set.There needs to be an increased focus on delivery in departments and on sharingbest practice and learning in this area across government. PMDU has significantknowledge of what works in operational delivery and this should be disseminatedfurther, supplemented by learning from the new PSA reviews.Capability Reviews focus on the leadership team’s role in delivery. Civil servants lookto their leaders to set priorities, manage performance and develop strategies thatlead to improved performance and delivery. A key priority therefore is to ensure thatcurrent and future leaders are equipped to fill that role. Leadership development atall levels must have a firm focus on this.It is also important that the development of strategy and policies at the centre and indepartments is closely informed by delivery considerations. The dual reporting lineof PMDU to the Treasury and the Cabinet Office should improve this, as will thealignment of all PSAs with the STA.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS49

Delivery modelsWhy does this matter?In this report, the term ‘delivery model’ describes – in simple terms – how anorganisation is set up internally and how it is connected to delivery arms, partners oragents in order to deliver its services.The operation of departmental delivery models is one of the issues that has beenraised in each tranche of reviews as a concern. In Tranche 1 the focus was ondepartmental centres:‘Departmental centres must examine rigorously what the department is doingacross the range of activities, and assess how well it supports front-linedelivery and whether a particular function … needs to be enhanced,undertaken somewhere else or stopped altogether.’In Tranche 2:‘... there is scope for improving the understanding of appropriate [delivery]models, how they link together and, ultimately, the effectiveness of differentlevers to improve delivery to the public.’The Tranche 3 report noted that:‘To achieve complex and challenging delivery outcomes and efficiencies,departments need to make smart decisions about how they deliver them andabout the incentives, accountabilities, roles and responsibilities underpinningtheir operations.’The trends noted earlier about cross-departmental PSAs, a focus on delivery to thecustomer rather than on the provider, increased commissioning and a more diversenetwork of provision make this particularly salient. Understanding delivery andoperating an effective delivery model must be at the heart of the capabilitiesrequired by any government department, whether it delivers services directlyor operates purely as a sponsor/commissioner.50 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

The Tranche 3 report identified the following areas for action:Departmental centresSupporting systems andprocessesManaging throughrelationshipsUnderstanding thebusiness modelBuilding a small and strategic ‘core’ that sets directionand adds value, with clear roles and responsibilitiesDeveloping clear systems and processes that operatethroughout the delivery chain, including clear governanceand accountabilities for delivering outcomesManaging through relationships, influencing andnegotiation, as well as direct deliveryArticulating the department’s business model andcommunicating it throughout the department and todelivery agents, stakeholders and partners; ensuring thatcurrent and future policy decisions are informed by anunderstanding of the business modelHigh-level view of progress on delivery modelsDepartments have shown a spread of performance here, but with some significantlypositive improvements in a range of departments. After leadership, this is the areashowing most progress. Departmental leaders have devoted significant effort toimproving relationships with their delivery partners and to focusing on governanceand accountability.Positive progress we are seeing includes:At three months after the review:• Regular meetings between departmental directors general and agency/NDPB chiefexecutives and boards learning from each other (Department for Transport).At six months after the review:• New governance structures in place and beginning to operate effectively;rationalised internal systems and culture change to support more efficientdecision making; head office organisational changes under way (Ministry ofDefence).• More positive and active engagement with delivery partners; active relationshipmanagement of sponsored bodies; the board meeting with delivery partners;awareness of the operating model disseminated throughout the department(DTI/BERR).CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS51

Case study: The Department for Culture, Media and Sport (DCMS) and itssponsored bodies‘DCMS delivers outcomes through ‘arm’s length’ relationships with a wide range ofpublic bodies. These include NDPBs such as Arts Council England, Sport Englandand English Heritage, and museums and galleries such as the Imperial WarMuseum and the Tate.The Capability Review of DCMS recommended that the department shouldexamine and more clearly define where and how it can add value to the sectors inwhich it operates. The review also recommended that the department should adopta more strategic and risk-based approach to its interactions with its sponsoredbodies in those sectors. Taking these steps would ensure that unnecessary andlow-value interactions and activities could be dispensed with, and resources andattention re-focused on those areas where the department really can make avaluable or unique contribution.Since publication of the Capability Review, DCMS has created an advisory board,bringing together the senior leadership team in the department with chiefexecutives and directors of some of the department’s key sponsored bodies.The role of the advisory board is to optimise DCMS’s relationship and strategiccollaboration with its major partners. It provides an external view on DCMS’sstrategic direction and cross-cutting issues, and advice on the structure andnature of delivery relationships and how to maximise their effectiveness indelivering the department’s strategic aims.In addition to the introduction of the advisory board, DCMS is undertaking arisk-based assessment of its sponsored bodies to enable it to define and agreethe appropriate level and nature of interaction between the department and NDPBs.Funding agreements covering the CSR period will be tailored to reflect the riskassessment of each body, and the department is reducing the administrative burdenit imposes on NDPBs by removing or streamlining regular and ad hoc informationrequests that do not add significant value.Taken together, these measures should help DCMS to make a more strategic andvaluable contribution to the sectors in which it operates.’At a year after the review:• A framework developed that clarifies the department’s delivery model and a clearshift to a more strategic centre; higher energy, sharper focus and greateremphasis on delivery in agencies (Home Office).52 COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

Case study: The Home Office Strategic Centre‘The Home Office established a small Strategic Centre in April 2007 as part of itsReform Programme commitments.The purpose of the Strategic Centre is to help the Home Office work better acrossits delivery areas as one department to improve delivery and protect the public.The Home Office has taken an innovative approach to the design of the StrategicCentre, separating it from professional and shared services and enabling it tofocus on supporting the Home Office board to make strategic choices anddrive performance.The Strategic Centre is a small, tightly coordinated virtual team of 120 staff whogive strategic advice to the Home Office board, are responsible for a small numberof the most critical processes and work closely with each other and with colleaguesacross the department, drawing on their advice and expertise.The most critical processes were identified as:• setting overall strategy and direction for the department;• allocating resources in line with the strategy; and• driving and supporting delivery of the department’s objectives.The Strategic Centre has been working through a mix of formal and informalmeans with:• a specific objective for heads of units for their Strategic Centre role;• a director general with responsibility for making the Strategic Centre work; and• fortnightly Senior Management Team meetings to identify key issues for thedepartment and develop joined-up advice for the Home Office board.The early results look promising for the new ways of working. For example, anew planning process was designed with wide-ranging input from across thedepartment, and preparation for operating reviews is done collaboratively betweenthe Strategic Centre and delivery areas. Another success has been betterintegration of IT strategies into the wider departmental strategy.’CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS53

Case study: The DCSF Group‘As part of the DfES response to the Capability Review findings (July 2006),a number of key delivery partners, such as the Qualifications and CurriculumAuthority, the National College for School Leadership and the Teacher DevelopmentAgency, were invited to work with the department to create a senior managementgroup (members include the Permanent Secretary and board members, chiefexecutives and also periodically the chairs of the delivery partners) that would focusacross the whole of the education and skills policy and delivery systems. 1 During itsearly months, the group recognised its joint delivery responsibilities, with itsmembers as leaders and managers of the system as well as of their ownorganisations’ contributions to delivery. At the instigation of members, it has movedfrom a focus on building relationships and sharing information to developing aprogramme of work to add value to system strategy and delivery, and, following themachinery of government changes in summer 2007 (to create the new DCSF),it now focuses on the whole children’s services network.The group meets monthly, and has a high attendance rate (evidence of the prioritythat members give to this work), taking input from all members in developingsolutions to shared issues. This has made a big difference in understanding theconcerns of different parties within the wider context of the entire delivery chain. Inthe examination of delivery issues, the way in which the new DCSF and othergovernment departments need to change, in order to improve their interaction withdelivery partners and to maximise the opportunities for success, has been apparent.Group members are working together to define their contribution to delivery in termsof the new PSAs and Departmental Strategic Objectives. For example, officials areworking together with partners to apply a new process to ensure that deliverypartners’ remit letters reflect the contribution the organisations must make todelivery of the department’s Delivery Agreements, whilst recognising eachorganisation’s particular constitutional position and its system leadership role.The group has contributed to strategic thinking around the recently publishedChildren’s Plan, which will shape the DCSF’s and partners’ agendas for yearsto come.The more honest and open exchange of views and recognition of the shareddelivery challenges is leading to more fundamental transparency, with the groupregularly discussing performance issues relating to the component parts of thedelivery chain as well as the delivery chain as a whole.1Specialist groups also operate (finance directors, chief information officers, communications and security, etc).54COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

The group is expanding to include local authority and government officerepresentation, recognising the important elements of the delivery chain theyrepresent and the need to engage them in system leadership issues if deliverythroughout the chain is to be improved. A key tactic to build this wider leadershipteam is a planned ‘Top 100’ event (similar to the Whitehall Top 200 group), wheredepartmental and partners’ senior leaders will work together to understand whatsystem leadership means in their delivery context, establish clearly the contributionthey make and devise strategies for delivery of the Children’s Plan.Feedback from group members on its value in the first year has been positive.Steve Munby, Chief Executive of the National College for School Leadership,said: “The group has enabled delivery partners to understand and engage inthe bigger picture with the department for the first time for some time.”’Where departments are making less progress, we are seeing:• no clear operating model and reorganisations enacted without a clear rationale;• respective roles and responsibilities of the department and its delivery bodies areunclear; and• effective relationship management at board level not reflected throughout thewider department.Departments are finding that in many policy areas their ability to deliver isincreasingly dependent on their ability to deliver with and through a highly complexnetwork of delivery partners. Doing this effectively requires that departments havea robust understanding of their delivery chain, in order to produce workable deliveryplans and to ensure that the model for delivery is effective and efficient. Theemerging concept of a ‘delivery model’ that describes the totality of how the deliverychain is set up to deliver provides a helpful foundation, but more needs to be done tosupport departments in getting this right.Some progress has been made. In developing published Delivery Agreements forthe new PSAs, departments were required to map their delivery chains. This hasraised awareness of the importance of having an effective delivery model.Key challenges are set out below:• Creating a strategic centre. This continues to be challenging. Some departmentsare embarking on ambitious programmes to create cores that look significantlydifferent, focusing on strategy, relationship management, commissioning andnetworks, and working in much more flexible and devolved ways. It is too early totell how effective this may be. Previous attempts to make similar reforms have runinto difficulties around the delineation of roles and responsibilities, and it requiresspecific skill sets within departments both to carry out the changes required andalso to operate effectively within a more strategic centre.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS55

• Building effective relationships and understanding the business model.We are seeing real progress in these areas, but still limited mostly to board andsenior levels. Policy decisions that involve organisational change are still notroutinely informed by an understanding of current delivery models. Working-levelrelationships do not always add the value that they should to operationaleffectiveness.• Systems and processes. Departments are still unsure about which to use intheir routine relations with their delivery bodies, beyond those standards set inlegal and operating frameworks.What is the centre doing to build capability in delivery models?Various parts of the centre have been involved in work to support departments indeveloping a more evidence-based approach to delivery models.• PMDU is developing a delivery models tool to help departments with thechallenging task of strengthening their delivery model, ie improve the way inwhich the department and the rest of the delivery chain are set up to deliverparticular objectives.Case study: Strengthening the delivery model for achieving the socialexclusion PSA‘Earlier this year, the Social Exclusion Task Force was tasked with leading a crossgovernmentprogramme to tackle social exclusion. In August, whilst working on theDelivery Agreement for the new social exclusion PSA, the team decided to test andstrengthen their delivery model further by piloting the new delivery models tool. Overthe next six weeks, the team participated in six workshops facilitated by PMDU, inwhich the external facilitators helped them to articulate more clearly what they weretrying to achieve and how they and their delivery chain were set up to achieve it,and then to identify weak parts of the model that needed to be strengthened.The product delivered three clear benefits to the team:• better shared understanding of their plans and the risks to delivery;• greater assurance that certain parts of their model were robust; and• evidence pointing to five weaker parts of the model where the team either neededto fill knowledge gaps or revise their plans. For instance, there was a clear need torevise some of the performance management arrangements.Feedback from the team on the tool itself was positive:“The workshops worked well...” “tough at times...” “questions posed by thefacilitators were very challenging but extremely helpful...” “its major value hasbeen in structuring our thinking on the delivery chain and identifying those areaswhere we need to do more work and/or improve our understanding.”’56COMMON CAPABILITY GAPS: PROGRESS AND NEXT STEPS

• The Sunningdale Institute facilitated a network of Senior Civil Servants to work asa learning set looking at delivery models. This offered a useful space for people toshare good practice and network with peers.• Alex Allan has led a group looking at delivery models. The group includesmembers of the Top 200 and agency chief executives and has covered analysisof governance mechanisms. The group is currently pulling together a ‘challenges’document for the Top 200.There is a strong case for more work and focus to be given to this area. To date,work has tended to be ad hoc and reliant on the interests of individuals. There isa need for more access to expertise and to best practice in the public and privatesectors, as well as to international examples.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS57

3. Take-off or tail-off?: the future ofthe programmeIn May 2007, the Civil Service Steering Board (CSSB) commissioned a team fromthe Sunningdale Institute to evaluate the Capability Reviews programme, analysewhat had been achieved so far and make suggestions for how to build on theprogramme to deliver the next stage of Civil Service reform.The evaluation said that the Capability Reviews programme has made a good startand that:‘Few previous attempts to reform the Civil Service, and none where the leadershipcame from within the Civil Service rather than being politically-driven, have hadsuch a good start.’It also warned that the gains made so far could slip away without committed actionand follow-up.Whilst the evaluation is independent, the team involved its clients (CSSB and thewider group of permanent secretaries) at key points in the project, not least toensure that the findings resonated with those who will be charged with acting onthem. This engagement has meant that some of the recommendations are alreadybeing acted upon; in other cases, the Civil Service is still considering how best totake them forward.With the strong sense of ownership that the evaluation has generated amongst thegroup of permanent secretaries across the Civil Service comes the expectation thatthey will act on its findings. Therefore the evaluation team will take stock of theprogress that has been made after a suitable period of time – probably six months –and report back to the Cabinet Secretary.The recommendations of the evaluation form two groups:• those designed to sustain momentum and strengthen the short- to medium-termimpetus of reform; and• more far-reaching recommendations designed to catalyse a more profoundchange in how the Civil Service delivers by introducing dynamic capabilities.Within these two broad headings, recommendations ranged from strategic reforms toprocess changes.Sustaining momentumThe evaluation found that a good start has been made and that, whilst the CivilService reform is not in danger of ‘going backwards’, there is a risk that the gainsmade by the programme will ‘tail off’ if momentum is not maintained. The figureopposite, reproduced from the evaluation report, sets this out.58 TAKE-OFF OR TAIL-OFF?: THE FUTURE OF THE PROGRAMME

Exhibit 3: Change trajectoriesCapability Reviews have generated forward momentum for change.Extentof changeCurrent trajectory:keep goingTail offSprint(Capability Review)‘You are here’Go backwardsPiecemeal changeTimeSource: Take-off or Tail-off? (Sunningdale Institute Evaluation)In order to sustain momentum, the evaluation recommended action in two areas:• the ‘vertical’ dimension within departments; and• the ‘horizontal’ dimension on cross-cutting issues and common capability gaps.Reforming the centreAn effective Whitehall centre is essential to delivering either of these dimensions.The evaluation recommended that the Cabinet Office should focus on developingthree key capabilities:• knowledge capture and transfer: a small and highly expert central unit couldprovide the infrastructure for knowledge transfer;• overcoming common capability gaps: a centre of excellence withunderstanding of the gaps and the capacity to source solutions; and• talent management: much better resourcing of the corporate capability to findthe right people for the right place.The Cabinet Office Capability Review painted a similar picture and the CabinetOffice is already taking action in response. Chapter 2 of this report has bothdemonstrated that there is significant scope for better knowledge capture andtransfer and also set out a picture of real but uneven progress in overcomingcommon capability gaps. Whilst some progress has been made, for exampleCAPABILITY REVIEWS: PROGRESS AND NEXT STEPS59

the creation of the new CSCG and the strengthening of resources to maketransformational government a reality, further action is needed.Departments agree that the centre should create an infrastructure that allows themto learn from each other and from outside, and that it should be a small, high-qualityresource. To ensure that this happens, CSCG will:• work with a small group drawn from across government and outside (with anominated sponsor member from the CSSB) to identify:– what corporate infrastructure, incentives and support are needed to addressknowledge transfer and capability gaps; and– a method, some pilot projects and any supporting infrastructure needed toimplement the ‘task teams’ approach to address specific capability issues;• work with the HR profession to identify what more is needed to ensure that thereis the right corporate capability in the right place and how to release capacity toareas of greatest need; and• build up a small number of subject experts in key areas not covered bythe professions to ensure that we have the ability to broker and add value tocross-government networks in those areas – for example, board effectivenessand change.In addition and in response to the evaluation, progress is being made in a numberof other areas to strengthen the vertical and horizontal dimensions of reform.These are set out below.Reviews of PSA capabilityThe evaluation recognises that the new cross-cutting PSAs make it even moreimportant that departments have the ability to work effectively across traditionalboundaries to deliver the strategic priorities of the government of the day. This isa difficult area and one where most departments can improve, as set out in theoverarching report that accompanied the Tranche 3 reviews.PMDU and the Capability Reviews Team are working together with departments todevelop a new PSA review tool aimed at identifying and tackling the key barriers todelivery. This will be piloted over the next few months.Changes to the Capability Reviews programmeThere are a number of programme changes that will be made over the next12 months to strengthen the programme and ensure that departments improvetheir capability. These are described below:• ‘Two years on’: At the two-year point, departments will be re-reviewed andre-scored, based on the current model of capability. The re-review will bepublished and involve external review team members in a way similar to the60 TAKE-OFF OR TAIL-OFF?: THE FUTURE OF THE PROGRAMME

original reviews. The re-review will have the flexibility to take account of existingdepartmental change programmes and will place a greater onus on thedepartment to provide evidence for improvement.• Moderation: As part of the two-year re-reviews, changes will be made to themoderation process to make it more transparent to departments. For example,departments will have an opportunity to respond to the case put forward by thereview team members.• Intervention: The evaluation recommended that more be done at a corporate,Civil Service-wide level to help departments that are not making the necessaryimprovements in their capability. Where this is deemed to be the case, theCapability Reviews Team will be asked to undertake extended assurance todeliver the strong corporate oversight required to ensure that a department doesthe right things to improve its capability.It is important that departments make use of people who can add value to deliveryand help improve their capability. This includes ministers, whose involvement shouldincrease over time, as capability and delivering outcomes for citizens become evenmore focused through the reviews of PSA capability. The centre will explore how thiscan be most effective in helping to ensure that departments have the capability todeliver. Similarly, NEDs of departmental boards also have an important role to play,and Chapter 2 sets out the progress being made on this.Introducing dynamic capabilitiesThe evaluation concludes that the Capability Reviews programme has created anopportunity to make even more significant gains above that of simply sustainingthe original programme: to move to a state of dynamic capability, whereimprovement is everyone’s business and the leadership of change is distributedthroughout the organisation. This is reflected in the figure overleaf, reproduced fromthe evaluation report.CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS61

Exhibit 4: Change trajectories, including dynamic capabilityThere is a further challenging ascent to dynamic capability.Extentof changeDynamic capabilityClimbCurrent trajectory:keep goingTail offPiecemeal changeSprint(Capability Review)‘You are here’Go backwardsTimeSource: Take-off or Tail-off? (Sunningdale Institute Evaluation)The evaluation defines dynamic capability in an organisation as characterised by:• socially distributed leadership;• a ‘learning to learn’ culture; and• effective cross-department working.It goes on to say that there are three routines that need to be developedor strengthened:• Benchmarking and learning: This means making more extensive andsystematic use of learning from benchmarks; that learning is codified anddisseminated; and that we learn from delivery failures.• Visioning and stretch: This means that the leaders in the Civil Service set out acompelling vision as a routine not an exception; and that more time is spent earlyin initiatives on establishing the final aims and outcomes.• Measurement: This is needed to support socially distributed leadership (byensuring that performance can be measured rather than micromanaged) andto ensure that metrics are owned by those responsible for delivery.These routines need to be consciously designed; they are not a continuation of‘business as usual’, even though most departments already have weaker versions ofthem. In some departments – in some areas – these routines are already embeddedto the level the evaluation describes.62 TAKE-OFF OR TAIL-OFF?: THE FUTURE OF THE PROGRAMME

Departments increasingly have to work more effectively together and with a widerange of network hierarchies, delivery partners and bodies. Therefore the ability forthem and the centre to identify and apply business tools that work across the CivilService will be of particular value to them. Again, some tools and processes arein place or being rolled out, for example the delivery models tool described inChapter 2.In other areas there is more work to do and, in re-shaping how the Cabinet Officeworks, CSCG will embed these routines in how it works and will consider howprogress can be made in this area across Whitehall. It will also set out what isexpected of our senior leadership teams. This in turn might lead to discussionsabout how permanent secretaries are able to both lead and drive work that couldwell have implications for how departments organise themselves. This might make acase for chief operating officers in some areas who can keep driving the businessand today’s delivery in order to allow permanent secretaries to focus on leading theorganisation towards a more ambitious future.The challenge for all departments and the centre is to consider how to exposetheir people, and particularly those with the most potential, to this different way ofworking. One way is for CSCG to work with a Top 200 group to investigate andanswer the question:How do we create a learning culture, capture knowledge and build methodsand tools into our organisation to ensure that this learning can then beembedded across the Civil Service in a way similar to the delivery models tool?CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS63

Annex A: The model of capabilityDeliveryManageperformanceSet directionDevelop clearroles, responsibilitiesand deliverymodel(s)D3L1Ignite passion,pace and driveLeadershipD2L2Plan,resource andprioritiseD1L3Take responsibilityfor leading deliveryand changeS3L4BuildcommonpurposeS2S1BuildcapabilityBase choiceson evidenceFocus onoutcomesStrategyThe model of capability has been designed specifically for the Capability Reviews.It was developed through consultation with senior leaders in Whitehall and externalexperts. The model is deliberately selective and designed to focus on the mostcrucial areas of capability – leadership, strategy and delivery.The reviews provide an assessment of capability for departments, identify key areasfor improvement and set out key actions to address these areas.The scope of the reviews is to assess the capability of departments’ seniorleadership in the areas above, using the model of capability. The model enablesjudgements to be made against 10 elements across leadership, strategy anddelivery, using an underlying group of 39 questions.Each review has been carried out by the Capability Reviews Team with a team ofexternal reviewers assembled specially for the department under review. Thesereviewers have been drawn from the private sector, the wider public sector andboard-level members of other government departments.The Capability Reviews Team will regularly review progress and provide support tohelp ensure that the department is on track to deliver.64 ANNEX A: THE MODEL OF CAPABILITY

LeadershipKey questions that test current capabilityL1Set direction• Do you have a clear, compelling and coherent vision for the future?• How do you take tough decisions, and do you follow them through?• How do you generate common ownership of the vision with your political leadership,the board, the organisation and delivery partners?• How do you keep the vision up to date, seizing opportunities when circumstanceschange?L2Ignite passion, pace and drive• Are you visible, outward-looking role models, communicating effectively and inspiringthe respect, trust, loyalty and confidence of staff and stakeholders?• Do you display integrity, confidence and self-awareness in your engagement with staffand stakeholders, actively encouraging, listening to and acting on feedback?• Do you display passion about achieving ambitious results for customers, focusing onimpact, celebrating achievement and challenging the organisation to improve?• How do you create and sustain a unifying culture and set of values/behaviours whichpromote energy, enthusiasm and pride in the organisation and its vision?L3Take responsibility for leading delivery and change• How do you role-model an effective corporate culture of teamwork at board level,including making effective use of non-executive directors?• Do you and the senior leadership team accept the pressing need for change,demonstrate your personal commitment to it and act as an effective guiding coalition?• How do you initiate and drive work across boundaries to achieve delivery outcomes?• How do you manage change effectively, addressing and overcoming resistance whenit occurs?L4Build capability• How do you identify and nurture talent and grow experience in individuals and teams?• Do you have the right skills across the organisation to deliver the vision? Do you havea workforce development strategy to get the best from everyone and plan effectivelyfor succession in key posts?• How do you manage the performance of everyone transparently and consistently,rewarding good performance and tackling poor performance? Are everyone’sperformance objectives aligned with the strategic objectives of the organisation?• Do you reflect the diversity of the customers you serve?CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS65

StrategyKey questions that test current capabilityS1Focus on outcomes• Do you have a clear, coherent and achievable strategy with a single, overarchingset of challenging outcomes, aims, objectives and success measures?• Is your strategy clear what success looks like and focused on improving theoverall quality of life for customers and benefiting the nation?• How do you negotiate trade-offs between ‘priority’ outcomes?• How do you work with your political leadership to develop your strategy?S2Base choices on evidence• How do you understand and respond to what your customers want?• How do you identify future trends, plan for them and choose between the range ofoptions available?• How do you ensure that your decisions are informed by sound evidence andanalysis?• How do you cultivate innovative solutions to existing and new problems?S3Build common purpose• How do you engage, align and enthuse partners in the delivery chain to worktogether as a team to deliver the strategy?• How do you remove obstacles to effective joint working?• How do you work with partners when developing strategy?66ANNEX A: THE MODEL OF CAPABILITY

DeliveryKey questions that test current capabilityD1Plan, resource and prioritise• Do your business planning processes effectively prioritise and sequencedeliverables to deliver your strategic outcomes?• Are your delivery plans robust, consistent and aligned with the strategy? Takentogether, will they effectively deliver all of your strategic outcomes?• How do you maintain effective control of the organisation’s resources? Do yourdelivery plans include key drivers of cost, with financial implications clearlyconsidered and suitable levels of financial flexibility within the organisation?• Are your delivery plans regularly reviewed?D2Develop clear roles, responsibilities and delivery model(s)• Is the purpose of the centre/headquarters functions clear?• How do you identify and agree roles, responsibilities and accountabilities fordelivering your strategic outcomes across the delivery chain? Are theseunderstood and supported by appropriate rewards and incentives, andgovernance arrangements?• Do you have clear and well understood delivery models which will deliver yourstrategic outcomes?• How do you work with partners to build capability in the delivery chain?D3Manage performance• Do you take personal responsibility for driving performance and striving forexcellence across the organisation in pursuit of your strategic outcomes?• Do you have high-quality, timely and well-understood performance information,supported by analytical capability, which allows you to track performance acrossthe delivery chain? Is performance information aligned with the strategicobjectives of the organisation?• How effectively are programmes and risk managed across the delivery chain?How do you realise and recycle benefits from programmes?• How do you use financial information to drive greater efficiency and valuefor money?CAPABILITY REVIEWS: PROGRESS AND NEXT STEPS67

Annex B: Assessment categoriesStrong – good capability for future delivery in place, in line with thecapability model. Clear focus on the action and improvement requiredto deliver transformation over the medium term.Well placed – well placed to address any gaps in capability for futuredelivery through practical actions that are planned or already underway.Is making improvements in capability and is expected to improve further inthe medium term.Development area – the department should be capable of addressingsome significant weaknesses in capability for future delivery by takingremedial action. More action is required to close those gaps and deliverimprovement over the medium term.Urgent development area – significant weaknesses in capability for futuredelivery that require urgent action. Not well placed to address weaknessesand needs significant additional action and support to secure effectivedelivery. Not well placed to deliver improvement over the medium term.Serious concerns – serious concerns about current capability.Intervention is required to address current weaknesses and secureimprovement in the medium term. (NB only used infrequently, for themost serious gaps.)68ANNEX B: ASSESSMENT CATEGORIES

Capability Reviews TeamCabinet OfficeAdmiralty ArchThe MallLondon SW1A 2WHTelephone: 020 7276 1369E-mail: capabilityreviews@cabinet-office.x.gsi.gov.ukWeb address: www.civilservice.gov.uk/capabilityreviewsPublication date: December 2007© Crown copyright 2007All rights reserved by the Cabinet Office, United Kingdom. No part of thispublication may be copied or reproduced or stored or transmitted in anyform without the prior written consent of the Cabinet Office.For permission please contact capabilityreviews@cabinet-office.x.gsi.gov.ukThe material used in this publication is constituted from 75% post-consumer waste and 25% virgin fibreRef: 284226/1207Prepared for the Cabinet Office by COI