Responding to Change in the Public and Third Sector

03 July 2020

The impacts of “lockdown” to deal with COVID-19 have shone a light on how we go about our lives.  Much of the illumination is humbling and uplifting; such as the reminder of the immense contribution of key workers and examples of flourishing community action. These last few months have also exacerbated and highlighted equality gaps – for example for low earners, those in deprived areas and many living alone with care needs. 

We don’t need to read data from the Office for National Statistics to know that lockdown has had a monumental impact on the economy and the employment prospects of many workers. Scotland’s Public Sector bodies and charitable organisations are not immune to the economic pressures created by COVID-19. They are critical to so much of our lives and the nation’s response to the consequences of COVID-19, but they have needed to adapt to and invest in new service delivery models, alongside reduced income to fund activities. 

Be it completing repairs to enable a tenant to enter their new home, managing the financial impact of the loss of rates and rent, not being able to open a shop which helped fund charitable activities or welcoming the next cohort of students… the need to adapt came overnight. The responses have been truly impressive and demonstrate that the sector can adapt as quickly as any other. A good example being local authorities assessing and processing Business Support Fund grant applications, with over £920 million from this vital support scheme awarded up to 30 June 2020.

Some of the positive aspects of managing change in the lockdown period have been:

  • There are many examples of leadership teams spending more time with staff throughout their organisation, albeit virtually. Time saved in not commuting is often dedicated to team meetings or one-to-ones. Chief Executives have commented that they have learned more about the people they work with, appreciate their role to a greater extent and are determined to carry forward greater engagement into the ‘new normal’. 
  • Similarly, interactions with service users and with communities have sometimes needed to evolve. These interactions reveal the strengths and limitations of technology, staffing models and infrastructure. Lockdown has been a catalyst for positive change, in recognising the need to formalise community collaboration, revitalise customer engagement and increase transparency.
  • Those bodies which have invested in digital transformation have been able to continue delivering services and access real-time financial information needed to make decisions. There are also examples of remote working exposing significant weaknesses in systems or finance function structures.  Some charitable organisations, in particular, have not been able to invest in technology or people. Over the last few months AAB’s Virtual Finance Function team has successfully responded to support charities with immediate year-end statutory reporting needs and monthly reporting to enable those key decisions to be made by Trustees.
  • Governance arrangements have been streamlined in many organisations, with committee structures temporarily adapted to facilitate a timely response to the pandemic. In due course, it is important that there is a retrospective review of governance and scrutiny through lockdown, to fine-tune for the future.
  • Risk management frameworks have been tested. Business continuity and stakeholder engagement risks have developed new dimensions with the overnight cessation of physical interaction and access to workplaces. It has been great to see audit and risk committees using risk registers more effectively than in the past, appreciating that they highlight out-of-tolerance risks and the controls/actions needed in the short term to keep sight of the organisation strategy. 
  • Internal audit plans have also needed to be adapted to new risks and to remote working. I consider that it is more valuable for internal audit to provide assurance on areas such as Return to Office Plans, Cyber Risks and robustness of Business Planning rather than trying to simply plough on with conducting the “pre-COVID” internal audit plan in a remote setting.  Audit and risk committees have been dedicating time to revisiting and directing the internal audit plan as a supportive force during the pandemic.

Making quick decisions has been key for all organisations, even if they have been tough calls to make. Some of these decisions have had an immediate impact, whereas others have been focused on “plan ahead” scenarios over a longer time-frame.

At AAB we channelled all of this activity through a dedicated ‘Plan Ahead Team’ which was formed shortly after lockdown started back in March.  The team is focused on building multiple scenarios of what the future could look like for our business, and identify both options and actions needed to act tactically and strategically. It’s also about collecting the forward-looking data that will give an early indication if a particular scenario is emerging and allow us to act quickly as a result. 

We have a number of small interconnected teams with projects running concurrently as part of Plan Ahead, drawing on the skills and experience of people across our business as and when required, and also spreading the load to allow us to act quickly and stay ahead. This approach, coupled with the fact that we have spent the last eighteen months understanding agile methodology and adopting it into our everyday working lives, has proved really effective.

I am sure that agility is one of the many areas organisations have been reflecting on over the last few months, and will be an area of focus for the public sector and third sector, like many others, as they look to continue to adapt in the months to come.

By Andy Shaw, Partner and Head of Public Sector & Not-For Profit  

To find out more about how AAB works with the Public and Third Sector, click here

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