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Case Study: Brendan O’Keefe: Head of Services to Young People at Royal Borough of Kensington and Chelsea
“Above everything is the realisation that this is the best way of delivering the service.”
Royal Borough of Kensington and Chelsea Youth Services are currently in the process of transitioning out of the Council into an employee-led mutual in the form of a social enterprise. The service provides a range of support and developmental opportunities for young people, including: sports and performing arts projects, information, advice and guidance services, and training opportunities. This spin-out is currently receiving support from the Cabinet Office Mutual Pathfinder Programme.
Brendan O’Keefe interview:
Why did you choose to try to spin out into a social enterprise?
We looked at several options: becoming a partnership trust, staying with the local authority, creating a trading company, etc. None of them is sufficient in itself to give us the opportunity to create something of the size and scale we want; social enterprise allows us to take control of our destiny. We presented our case to our chief executive and this is what was approved. We currently bring in £200,000 of trading income and we could probably bring in more. However, not enough to keep us afloat. I brought in our management team and did an options analysis and we agreed amongst us that social enterprise was the best. So we decided to put this forward to our staff.
When do you think you will spin out?
We would do it tomorrow if we could! We are tackling the legal complexities of the procurement and contracting process at the moment. We also have to convince Council Members this is the right thing to do with public funds. Our aim is to create the company form by April 2012 and to begin the process of separating from the Council after that. We have put in a lot of energy into this. You need to be very dedicated to this as you will find yourself working very long hours on top of an already demanding workload. Above everything is the realisation that this is the best way of delivering the service and it will be a very different way of working and we will all be happy with the new way of working. One piece of advice I have I guess is that you should forget about your social life for a while and have a very strong sense of commitment.
How have you involved your staff?
I currently have under me 175 staff members which includes a management team of 4 senior managers. We have used a wide variety of methodologies to involve them in this process including using a community website, a staff bulletin every 2/3 weeks, emails, seminars, face to face meetings, team meetings and conferences. In many ways the face to face option has worked best.
We recently ran two conferences in one day to enable different staff to attend. We asked staff to vote about whether to take on this spin out idea and 81% voted yes they wanted to go with it (caveats included those who wanted to know more). One of the things that came up was that staff said that it was much too top-down led, and for it to work it needed it to be more bottom-up. They were right, because actually to make the change happen initially it was lead by the management team. However, I feel that I have to let go and so we are now we are going to have staff members come in as project managers to come in and work on our name, logo, mission statement and so on; basically involving them in the creation of the social enterprise.
We are also going to have a Shadow Board of directors and within it have 4/5 spots for democratically elected staff members who will oversee the project. We have never done anything like this before; it is quite exciting really. We are keen to make staff much more involved in governance. It feels like a watershed moment where we are moving from something we thought about conceptually, to making it a reality. What managers like myself need to learn is that we are used to working through hierarchy, while working in a mutual requires a lot more consensus, but at the same time we have to realise that this is not going to be a workers co-operative.
How have you involved service users?
We have a youth forum that is made up of 30 young people who give advice on service delivery, quality assurance, mystery shopping and serve as the sounding board for new ideas. We are setting them up as a social enterprise serving as a research and advisory group. They advise on peer research (we train them on this) and that is a highly saleable commodity and they have a very good advisory board. They will have 2 places on the Shadow board. We are learning from them and they are learning from us. These very bright and enthusiastic young people are from a wide variety of background and ages. The two places on the Shadow Board can be selected through the Youth Parliament as they are already elected representatives.
We want to make sure that in terms of service users we have much more of a co-production element and that they are involved in the service. We want them to have governance role and they are very enthusiastic about it.
What happens in a council if there is no leadership?
The number of councils giving the green light to pursue social enterprise options appears to be limited at the moment. Some are opposed to idea of mutualisation and then there are those that appreciate that it is a very difficult and hugely complex situation in terms of contracts, legality etc. Some are thinking they will wait to see what happens with others before they decided to go down this path. But there needs to be leadership support from the top if social enterprise as a concept is to flourish.
Are other departments catching on?
There is lots of enthusiasm and I have done internal presentations to gain their interest. We have devised a gateway process for aspiring entrepreneurs. We have designed some criterion (asking questions like e.g. is there a market for service) and once you go through that and pass, the idea can come forward.
We had a business plan, did an options paper and options appraisal. We had an outline business plan and I am writing right now an interim business plan and then we will have final one – the one that will be presented to council members
Would you hold on to Council branding?
Yes, because the council has a very strong brand and a reputation of excellent services. However, we will also develop our own identity. We learnt from a spin out from another council that they kept the email address, branding even though they were separate. When the contract had run out after 3 years a lot of their staff did not realise that they did not work in the Council anymore. We will avoid this mistake.
What has been the deal with Terms and Conditions?
Very early on when I spoke to our Chief Executive we spoke about transferring under TUPE and guaranteeing pensions access. Without that being agreed it would be very hard to convince staff this is the right thing to do. This has helped in discussions with the unions.
How do you teach yourself the new skills?
When I sat down to write down the Terms of References for the Shadow board I realised how much I would have to give away. So in some ways it’s not a skill thing but more of a psychological thing.
Was being a Pathfinder quite crucial to this process of developing new skills?
We applied for Pathfinder status and we had two weeks to make up our mind. We reserved the right to retract at any stage. The benefits involve having a business mentor and access to a network of experts and advisors, people who know what all of this is about. Our business mentor is Mark Sesnan from Greenwich Leisure Limited. Being a part of the Pathfinder has helped to create links to legal advice, business advice etc.
Aside from the Pathfinder how did you get business advice?
Our Chief Executive has set aside some money for us in terms of us getting legal and business advice, which has been mostly used for legal and financial. It requires financial backing to take on something at this level of risk.
Do you think some of your staff is becoming more entrepreneurial? Is there a need to provide them with more training?
There is definitely a need to, especially in terms of marketing, business development, bid-writing skills, project management and performance management. If we are to apply our business model to other councils how will we grow? Do we move staff to different roles or do we bring in people from outside (which will cost more)?
The staff have become quite interested in thinking about how they can raise money to support the services. The staff now understand that we cannot rely completely on the Council and the government for funding in future and that we need to think of other sources to run services. Two of our centres are planning to become self sufficient. One of our sport centres has a business plan and sells services to RBS, Burberry etc. and has already brought in significant sums in income. Another one of our sports centres is providing accommodation in London to European groups at competitive prices.
It is also good to bear in mind that while we got the massive vote in favour of this change, we will need to monitor and make sure that people continue to be in favour and are happy.
What is the most challenging aspect of spinning out?
The legal aspect is very complex and Treasury guidance on joint ventures is suddenly something of immense interest to me. Staff engagement also crucial; convincing 175 people that their future security lies somewhere outside of the NHS is a difficult task.
What are the long term prospects?
Very good I think. Not entering with eyes shut. We have had lots of conversations with people that might want to commission us including organisations that might want to work with us who are not necessarily commissioners. What we are really trading on is our newness and our novelty value. People are keen to be involved. There is also interest from large multinational companies interested in joint ventures. But I am not naïve about that; they have never shown any interest in my service in the past why are they interested now? However, if there is a good commercial reason for doing so we will. They may be suspicious and see it as back door privatisation; so we need to tread warily.
When do you see it happening?
April 2012 we are expecting to spin out. We only really started this process properly 8/9 months ago and we launched it in late October. We are on a tight schedule but we want to do it soon. We will have a transition period, where we will work alongside the council and then move. It will enable us to make sure of our agreements with them.
I have read that that within the NHS spinning-out can take 2-3 years. That seems like a lot of time because you are very vulnerable at that time frame to cuts and so on; but we are hoping to do it sooner rather than later.