3.29 Whilst our examination confirmed that the Division's overall staff planning processes were sound, there were some areas where the arrangements could be strengthened. The most critical to the management of the partnership and the commissioning and assessment of new work, because they affect the continuity of the Department's skill base, were:
■ staff rotation, both between units and between individual key posts;
■ contingency planning for key posts; and
■ succession planning, especially in the smaller units and for key posts.
3.30 There has been limited staff rotation within parts of Business and Management Services Division, for example in both the Commercial Group and the Resource and Work Centre Group, despite the view, widely held within the Department, that staff rotation is desirable for both career development and for the Department. The situation has arisen because:
■ there is less scope and opportunity for staff rotation where units are small and specialist;
■ unit managers tend to resist releasing staff with scarce skills or when workloads are expanding; and
■ the devolution of responsibility for development of staff can sometimes prevent local managers viewing matters from the wider Divisional perspective.
3.31 There is also some concern among the managers of specialist units, such as the operational research specialists and the Feasibility Appraisal Service, that current Department personnel practice tends to favour the acquisition of core rather than specialist skills. This perception discouraged staff from moving into specialist areas, and made movement out of them more difficult. Managers considered that this limited their ability to set up career development and succession plans involving interchange with other areas of the Department, especially if staff perceived that development and training in specialist skills was at the expense of the core skills they believe are essential for wider promotion.
3.32 Among those managing the EDS partnership, critical knowledge is held by relatively few individuals. This is unsurprising, given the specialist technical or contractual knowledge that has to be developed and, indeed, there are advantages in terms of:
■ continuity;
■ development of experience as well as knowledge of technical issues; and
■ establishing firm relationships with managers from EDS.
3.33 But there are also potential disadvantages, including:
■ individuals becoming isolated from the rest of the Department;
■ managers and staff becoming over-familiar with their opposite numbers in EDS, risking a loss of objectivity;
■ people becoming stale and less innovative; and
■ critical knowledge becoming confined to a limited group.
3.34 While there was little evidence that the first three risks had materialised, this is probably due less to any planning or deliberate action than to the pressures created by the Department's change programme, and to changes of key EDS people.
3.35 However, as regards the fourth risk, important detailed knowledge about the contract is confined to a limited number of individuals within the Commercial Group and Partnership Development Group. Equally, very few people in the Department have sufficient technical knowledge of the large-scale application of information systems and information technology to advise on strategic issues. In both areas there have been no significant changes of staff involved since the start of the contract.
3.36 There were no formal succession plans for any of the staff in key positions in the Commercial Group and the Resource and Work Centre Group. Neither were there formal contingency plans, although it was well known who could cover which positions on a temporary and, in some cases, a permanent basis. These informal plans were, however, based on the assumption that only one post at a time might need to be covered. No plan existed for a situation where several key members are lost within a short period.
3.37 We recognise that the small size of some units critical to the management of the contract and the technical assessment of EDS proposals makes career progression and job rotation difficult to plan and carry through. These factors, however, combined with caution about moving staff regarded as crucial to maintaining relationships within the partnership, have led to virtually all staff turnover stopping in some units. We believe that this:
■ concentrates important skills and knowledge among too few individuals;
■ heightens the risk that the departure of these people will result in critical, and perhaps irreplaceable, knowledge and skills being lost to the Department; and
■ may result in a decline in performance through over-familiarity with their existing roles.
3.38 These findings are of concern in view of the widespread external demand for staff with the specialist skills which the Department has developed, both in outsourcing large information technology service contracts and in evaluating the technical aspects of proposals. And increased internal demand for such skills arising from the Inland Revenue's new responsibility for managing the former Contributions Agency's contract with Andersen Consulting for operating the national insurance recording system increases the risk to the successful management of the partnership with EDS.
3.39 The Department told us that it had included the need to develop succession plans for critical areas in its risk management plan. There were a number of people with a general knowledge of the contract whose expertise could be developed to meet specific needs and a recruitment initiative in autumn 1999 had added to that pool.