Road map on successfully changing from public sector to mutual status
23 May 2013
The coalition government has made it a policy to support public sector organisations like hospitals, colleges or housing associations becoming ‘mutual’ organisations. Now the Oxford Centre for Mutual and Employee-owned Business at Oxford University has published a report into how some of the first organisations to make the change have achieved this transition successfully.
Researchers from Kellogg College, Oxford, and Warwick University interviewed managers and stakeholders at six pioneering public sector mutuals in the UK to find out how they made the transition. They include Central Manchester Foundation Trust Hospital, Rochdale Boroughwide Housing and Salford Community Leisure Trust. They also discussed the future of mutualisation with Lambeth County Council, the first county council in the country with the declared intention to become a Cooperative Council.
The report examines issues concerning governance, leadership, confounding factors and the level of support that employees and other stakeholders need to become engaged in the process of turning the public sector organisation into a more devolved mutual model.
Co-author Dr Yeoman said: ‘Our report concludes that governance is not enough: building the member community, making mutual values meaningful, and developing distinctive leadership practices are crucial. For example, one new mutual had all its employees going out to visit users of the service; another reached out to marginalised community members who had never been asked to get involved in decision-making before. Good mutuals are not created from new legal structures – they are made out of reconfigured relationships.’
The report, Becoming a Public Service Mutual: Understanding Transition and Change, concludes that organisations also need money, external support and favourable market conditions to support them. It also suggests that affordable expert advice should be made available for those spearheading the change. They have to be able to access new organisational models and practices of leadership that demonstrate a shift in the way targets are set, says the report. Mutuals which are more financially independent of the public sector reported that regulations are also a major competitive disadvantage, as they strive to operate in commercial marketplaces.
Co author Dr William Davies from the University of Warwick said: ‘The Cabinet Office has set a target of one million public sector workers to be transferred into mutual organisations by the end of the government’s current term of office, and there are 100 mutuals in the Cabinet Office pipeline with government investment of £10 million for a mutual support programme. But a systematic understanding of the purpose of the mutual and how they are created appears to be lacking. This research on the transition experiences of new public sector mutuals is both timely and necessary.’
An earlier report by the Oxford Centre for Mutual and Employee-owned Business contributed to the Ownership Commission report (March, 2012) which found that good ownership requires institutional plurality, stewardship governance, and stakeholder engagement.
Dr Yeoman said: ‘The important contribution that mutuals already make, and could make in the future, to a healthy degree of corporate diversity is increasingly being recognised. Mutuals are now being viewed as an attractive alternative to privatisation. This could be due to a combination of underlying social trends, including a loss of trust in political and social institutions, a reduction in the state funding of public services, and a rising social and economic need in what many perceive to be an increasingly unequal society.’
For interview or the full report, please contact the University of Oxford Press Office on +44 (0)1865 280