From working with figures to words

Things work out alright in the end.

If things aren’t right then it’s not the end.

Here’s a story about how things worked out for me as a writer.

I see my career in two, roughly equal, parts. The first 19 years was a conventional career in local government finance. I was a trainee accountant for three years and after getting my professional qualification I worked my way up to be the chief finance officer of a large council.

I got that job aged 37 and by the time I was 40 I wanted to do something different. One of the reasons for that was the fact that, as the boss, I did not create (write) anything anymore. Instead, I reviewed and tweaked the reports and letters and so on that other people wrote, and I signed them off. I realised that the aspect of being an accountant that I liked the most was writing. I joked with people that I should have been a lawyer instead of an accountant. I was not prepared to re-train as a lawyer in my 40s. Instead, looking for variety, I became a freelance consultant.

One of the first things I did after leaving my job was write a novel, Power, Corruption and Lies. It was a story set in local government—write what you know, as they say—that was an enjoyable, and cathartic, creative challenge for me. I did eight drafts and friends read them. I sent it to publishers and agents. Even though it costs very little to send a proposal to a publisher or agent after a while, in my case about 30 rejections, it becomes harder and harder to do.

In December 2008 I went to South Sudan for a week to deliver some capacity-building training to the nascent Ministry of Commerce. Three things came out of that week for me. It led to a lot of other teaching engagements and my involvement with a project to build and run a girls school in Ibba, a South Sudanese village (see https://www.friendsofibba.org). The third thing was encouragement from my friend, and former teacher, that I write a public finance textbook to fill what he saw as a gap in the market.

I worked on a book proposal and sent it to three publishers. One said no, one said it was a good idea but they were not sure how to sell it, and the third said yes.

Financial Management and Accounting in the Public Sector was published in July 2011.

I’m proud of the book. It has been successful enough to yield a second and (next year) a third edition. And I have, since 2011, been commissioned more and more often to do projects that require both an understanding of financial management and the ability to write.

The moral of this story is that sometimes we do not achieve our goals in the way that we imagined them. Yes, I would like to have become a novelist and to earn a living as a full-time writer. Even so, I am a published author and there are people who pay me to put abstract concepts into words. All in all, things have worked out very well in the second half of my career.

PS

If there is a publisher or agent out there who wants to take a look at my municipal fiction then please get in touch. I am more than happy to brush the digital dust of the manuscript of Power, Corruption and Lies and send it to you.

All public managers should manage contracts

Choose a public service organisation — it could be where you work or your local government or a major hospital — and I will bet you that the number of human resources professionals is greater than the number of procurement professionals. Not only that, it will be far out of proportion with the split of the budget between employee and non-employee expenses. Why is that? 

An example

Let me use myself as an example. My CIPFA professional qualification course included general theories about management but it was mostly about accounting and trained me to be an accountant and not a manager. Therefore, after qualification, I went through the whole management development process as part of my professional development. I did management courses on recruitment, leading a team, equalities and diversity, disciplinary procedures and communication. I also did some skills-based training on things like report writing and presentations. What I didn’t do was any training in connection with procurement, contract management and negotiation skills. In fact, I don’t think those courses were available to me.

As it happened, almost immediately after I qualified I became involved in an outsourcing project and other outsourcing projects happened fairly regularly throughout the 20 or so years I worked as an public sector accountant. I learned, therefore, about procurement and contracts from the lawyers and procurement professionals I worked with. Whilst this is great on-the-job training, if I had been assigned to some different tasks and projects as a newly qualified accountant I never would have learned this stuff. I doubt, though, that it would have stopped me becoming a finance director because it was never on a person specification or asked about in an interview

Does it matter?

I think this matters. I think weak contract management skills is an under-recognised problem. 

The Open Contracting Partnership’s 2020 Annual Report estimates that public contracts amount to $13 trillion a year. That is something like 15% of the world’s total GDP and about half the total spending by governments. The proportion of government spending through public contracts will vary between countries and programme areas, but it is clear that procuring and managing contracts needs to be a significant component of the work done by public managers.

I think the senior managers in an organisation need to know how to manage contracts and suppliers given the proportion of spending that is not an employee spending. I find it very hard to believe that senior private sector managers get their jobs without having experience of managing contracts and suppliers. 

I think that if an organisation’s managers know nothing about contract management and supplier relationship management then they do not know the good from the bad, they do not know if their organisation is good or bad at managing its suppliers. That has to be an issue. 

What should be done?

Actually I don’t think the answer is for public sector organisations just to recruit a mass of qualified procurement professionals and hope that fixes things. What I think needs to happen is more subtle than that. I think public managers need their training and development to encompass the provision of public services through outsourced suppliers just as much as through direct employees. They should continue to have their training in recruitment and diversity and so on; but they should also have training in the parallel arts of procurement, contract management, and supplier relationship management. 

This applies to public finance professionals just as much as to public managers in general. Public finance professionals can play a positive role through the whole contract life-cycle. They can help in the procurement phase; they need to understand contracts in order to give advice during the delivery phase of a contract, and how it affects the budget. If things go wrong then public finance professionals can help with the exit from the contract and its replacement with an alternative supplier or even the direct provision by the public organisation.

None of these things will happen by accident. I think the professional accounting syllabuses need to incorporate procurement, contract management and negotiation as key skills for finance professionals. I think they could also encourage their students to adopt a more commercial approach in their thinking so they can understand suppliers better. 

More generally, a good starting point for any organisation would be to analyse how much of its activity is done by direct employees and how much by contractors and train its managers to match.

Money must flow

On the David McWilliams Podcast this week (episode 141) the subject was Bitcoin. More specifically it was about whether Bitcoin is money or not. David McWilliams explained his view that it’s not money because people hoard it rather than spend it. (The premise of the show is that David MacWilliams, a professional economist, explains current economic issues to his childhood friend, and the show’s producer, John. It is like listening in to two friends having a chat about the news in a bar or cafe. Check it out.)

This reminded me of something a tour guide said to my family and me when we were on holiday in India. It is something that has stuck with me for almost 15 years. Whenever we were at a tourist site, or passing by street hawkers, the guide, Ramesh, would say, “Money must flow.”

It’s a simple phrase but it resonated with me. If we spent our rupees on postcards, souvenirs, drinks, or whatever else then the money would flow into the community. In this way our tourism would help local people and the money we brought from England would circulate through the community.

I think this is what David McWilliams was getting at. I have choices about what to do with the money I earn. I could save it for the future and I might do that by converting the cash into bonds or gold or anything else I think will hold or increase its value. To that end I could buy some bitcoins or other digital assets like the non-fungible tokens that have appeared recently for works of art. 

Alternatively, I could spend the money. If I am going to spend the money, I can see why I might convert it into rupees, or dollars or euros or some other currency depending on where I plan to do the spending. Would anyone convert their money into bitcoin with the aim of spending the bitcoin? Well, perhaps criminals would, but would regular citizens do that? I think not.

Next time you are in a souk in north Africa, or outside a tourist attraction in India, or in a desert town in the Andes, remember that money must flow: spend your money with local people and local businesses. And give generous tips to your tour guides!

Why does the UK’s tax year begin on 6 April?

Historically, in Britain taxes were due on the first day of the year, which was 25 March (Lady Day). When Britain (and its empire) moved from the Julian calendar to the Gregorian calendar in 1752 it was necessary to ‘lose’ 11 days so that 2 September 1752 was followed by 14 September 1752. Taxpayers did not want to have to pay their taxes 11 days early, as they saw it, and so the first day of the tax year moved from 25 March to 5 April.

Then, in 1800 another was lost when compared with the Julian calendar because in the Gregorian calendar 1800 was not a leap year and so the first day of the tax year became 6 April.

Another day was ‘lost’ from the calendar in 1900 but this time the British government did not change the dates of the tax year and it has remained the same ever since.

Help the next generation of women reach their potential

In South Sudan most girls drop out of school early, before they achieve any formal qualifications. In fact, teenage girls are more likely to die in childbirth than complete their secondary education.

At the beginning of February the government of South Sudan published the results of the nationwide primary school leaving certificate which were taken sat at the end of November 2018.

The top scorer in the 2018 examinations was a girl from a small village in the south west of the country. She was joined in the national top ten by five of her classmates. That’s 6 out of the top ten scorers in the country were girls from the same small school: Ibba Girls Boarding School. This is a school that opened in 2014 with 40 girls in a single class and 2018 was the first year that its girls were old enough to sit the leaving certificate. It is a remarkable achievement.

The six girls I have mentioned, and the other 29 girls in their class, have now begun the first of the four years that will make up their secondary education.

The school is not only a benefit to the girl pupils. The girls take what they learn home with them to share with their siblings and even their parents. And the school provides employment, with salaries that are reliably paid each month, to more than thirty people. It has a very positive impact on the local community. The national Ministry of Education has noticed this and wants more schools like IGBS across the country.

Ibba Girls Boarding School shows what can be achieved by girls from the poorest of backgrounds if only they have the chance. But the local community cannot afford to run the school — nor can the state education ministry — so the girls rely on funding from the Friends of Ibba Girls School, a British charity of which I am the treasurer (it’s one of the ways I practise what I teach). Here’s a 2-minute video about the school.

If you’ve read this far you won’t be surprised by me asking you to consider supporting the school with a monthly donation. You can find out more about the school, and make a one-off or recurring donation, at our website. If you happen to be involved with an institution that makes grants to a charity like Friends of Ibba Girls School, or know someone who is looking to make a major donation to a good cause, then please email me and we can have a conversation about it.

Book recommendation: Getting to Yes by Roger Fisher and William Ury

Last week I saw this story about how Northamptonshire County Council hopes to deal with the financial difficulty it is in by renegotiating its supplier contracts. Taken on face value, if 70 per cent of spending is through contracts with external suppliers it makes sense to seek to reduce expenditure by renegotiating some or all of those contracts. The expert cited in the article is, rightly in my view, concerned about how difficult this task will be, especially given that the suppliers know how perilous the Council’s financial position is.

There is a risk that some of the suppliers might not want to renegotiate, and that others might walk away from the negotiating table, but I think the Council’s team need to try. Step one might be to identify a priority order for dealing with the contracts, taking into account factors such as size, duration, the historical performance of the supplier, etc. But what next? How can the Council negotiate itself new deals it can afford?

This is where my book recommendation comes in. Over the years I’ve attended several courses on negotiation skills but none of them have been as helpful as reading Getting to Yes by Roger Fisher and William Ury. This is a relatively short book, written in a friendly, easy style and it can set you up for any kind of negotiation—in your home life as well as at work. The authors are part of the Program on Negotiation (PoN) at Harvard Business School so they know what they are writing about.

There’s no getting away from the fact that successful negotiations rely on preparation. The better you are prepared the better the outcome will be. And, if I boil it down, the preparations require two main things. First you need to understand your BATNA (the best alternative to a negotiated settlement you have) and the other party’s BATNA. Understanding both of these helps you to evaluate whether the offer on the table is acceptable or not to either or both of you.

The second key message in the book is to focus on each party’s interests and not to take fixed positions. The authors believe that if the parties focus on their interests and think creatively they can often find solutions that both are happy with. This is a way of thinking about negotiations in a way that is not so conflictual and more prone to result in win-win solutions than win-lose solutions.

Connecting this back to Northamptonshire Council’s predicament, they are clearly going to have to do a lot of work to understand the BATNAs relating to so many contracts but that will be an essential step. And although it may be a difficult situation, if the Council focuses on the interests of both parties it may work out agreeable solutions. Clearly the Council is desperately in need of reducing its financial commitments but there are choices. What I don’t think will work very well is the Council making an aggressive opening statement along the lines of “As one of our contractors we need you to reduce your prices by 50%.” The chances are that this will make the contractor defensive and likely to take a position of pushing back with an explanation of why that can’t and won’t happen.

To get the spending reductions it is after the Council needs to have a constructive dialogue focused on “getting to yes”. It has options that can help this dialogue such as reducing the volume of services, reducing performance standards, offering longer contract durations, offering exclusivity, changing the terms of the contract that the supplier feels are onerous or that oblige the supplier to incur higher costs. There could be many more. The important thing will be listening to the other party to each contract on an individual basis, working out what their interests are and then working together to agree a change or set of changes to the contract that give each party what they are looking for.

If this has whetted your appetite about Getting to Yes you can buy the book from Amazon using this link. Also, the PoN’s website is a useful resource and you can sign up for their daily newsletter on the site. Alternatively you can follow PoN on Twitter at @harvardnegoti8 and William Ury is @WilliamUryGTY.