If you led a Public Service Mutual into existence a few years ago you should be rightfully proud of your achievement in getting out of port and, of course, still being here to share the tale. But, as austerity bites, which are the main problems to watch for – and what of the solutions?
1. Incomplete top teams.
Most PSMs emerge with first-class operational leaders but nobody who has run a large business before. The talent of many PSM leaders is such that they have made the ops-manager to CEO journey very well indeed. But this isn’t everyone. Some are struggling. Regardless of this, few firms in the PSM sector have the full senior contingent needed for commercial survival as large, complex organisations. The best PSMs have filled some of these gaps, ideally bringing in DNA from other sectors, but a good many have not. Gaps are particularly obvious in the areas of strategic finance and commercial development. A solution is, of course, to go out early to find the right talent. To this end, Stepping Out Talent, our specialist recruitment arm for PSMs has helped several PSMs to find the people they need to complete their team. This includes Care Plus CIC (CEO) and Provide CIC for whom we sourced a Director of Organisational Development.
2. Under-capitalised organisations.
Businesses of £10m, £20m, £50m need more than a few weeks’ working capital to survive. Businesses need capital to be constantly improving their business. Rivals to PSMs in the commercial sector, will seek investment on a perpetual basis. Yet we frequently hear PSMs say that their overall capital needs are met by being paid a month in advance rather than in arrears. This is akin to claiming you can survive on water but not food. Yes, you can stay alive for quite a long time. But without the nutrition of investment your business will probably lose against fully-fed competition. The solution here is to think early about investment into the business so that it is geared to improve and grow. To this end we worked with Chime CIC to source investment from Social and Sustainable Capital to open a state-of-the-art retail operation in Exeter in 2015.
3. Under-strength Boards.
Many PSMs still have either public-sector-style governance which is too output-focused and producer-dominated or very weak governance that is kept that way, often subconsciously, by a founder CEO. Boards have to strike a clever balance between scrutiny and creativity. They need people on them who bring expertise and experience not available in the executive team. The chair, in particular, has to embody this balance. Boards also have to evolve as the PSM moves from its infancy into growth then maturity. The solution here is to be evaluating and replenishing the Board on a regular basis. Our people in Stepping Out Talent have sourced high quality non-executives for Catalyst Choices CIC, Independence Matters CIC and Provide CIC.
4. Legacy Culture.
We still, four years after ‘Right to Request’ ended, walk into PSMs where people still wear NHS or Council lanyards. Or where email addresses land at .gov or .nhs. Interestingly, these are often the kinds of organisations that need to do more to establish a new outlook among staff. Occasionally we see a reluctance to make decisive breaks with their public sector heritage in terms of staffing, productivity or attitudes. This manifests itself in a culture that is more like that of the public sector parent than a new commercial business. Thankfully, we also see many new PSMs use the opportunity of a new start to re-invent themselves under a new name, colours and core values. One such business is our client Independence Matters CIC whose ‘I Matter’ campaign we worked with them on to galvanise employee energy around ‘I Matter’.
5. Low Market Awareness.
The defining feature of the public sector is its insularity. Public sector bodies, on the whole, do not lie awake worrying about what others are doing - even if the rival is right next door and doing twice as well. Indeed to draw attention to it might actually cause embarrassment. So better say nothing or, better still, claim ‘that wouldn’t work here’. Fortunately, the very best PSMs have taken strong medicine to counter this tendency in their own organisations. But dangerous traces of insularity sometimes live on. The most lethal variant concerns market awareness. Some PSMs are only beginning to understand their strengths and weaknesses next to rivals. These are investing in a first class understanding of their markets. To this end, Stepping Out has helped several PSMs to get a better understanding of their markets and win new business. These include Balance CIC in SW London and NAViGO CIC in NE Lincs, both successful, high-growth PSMs
To conclude, with the weather getting worse in the public economy, any PSM with these kinds of problems is going to be vulnerable. At Stepping Out we have helped 30 PSMs to get into a much better place, working as a growth partner right across the business, from sourcing talent, to helping identify investors right through to leading imaginative programmes of rebranding and strategic renewal. If you would like Stepping Out to look with you at the potential of your venture, then get in touch and we’ll run a free one day session with your top-team to explore the pressing issues. Just email me, email@example.comBack to stepping out now