History
Police funding has risen by £4. 8 billion dollars and 77 per cent (39 per cent in real terms) since 1997. However the days where forces have enjoyed this kind of levels of funding are over.
Chief Constables and mature management recognize that the annual cycle of looking for efficiencies year-on-year is not sustainable, and will not address the cash shortfall throughout years to come.
Facing slower funding growth and real cash loss in their budgets, the Police Service must adopt innovative techniques which generate the productivity and efficiency gains required to deliver high quality policing to the public.
The step-change with performance required to meet this challenge will only be achieved when the police service fully embraces effective resource management besides making efficient and productive use of its technology, partnerships and individuals.
The finance function has an essential role to play around addressing these challenges and supporting Forces' objectives financially and efficiently.
Challenge
Police Forces tend to nurture the divisional and departmental culture rather than a corporate one, using individual procurement activities that do not exploit economies associated with scale. This is in part the result of over a decade of devolving functions from the center to the. divisions.
In order to reduce costs, enhance efficiency and mitigate against the threat of "top down" mandatory, centrally-driven initiatives, Police Forces need to set up a company back office and induce behavioral change. This alter must involve compliance with a corporate culture rather than a number of silos running through the organization.
Developing a Best in Class Financial Function
Traditionally finance functions within Police Forces possess focused on transactional processing with only limited support with regard to management information and business decision support. With a restored focus on efficiencies, there is now a pressing need for finance divisions to transform in order to add greater value to the force although with minimal costs.
1) Aligning to Force Strategy
Because Police Forces need finance to function, it is imperative which finance and operations are closely aligned. This cooperation can be very powerful and help deliver significant improvements to a Pressure, but in order to achieve this model, there are many barriers to conquer. Finance Directors must look at whether their Force will be ready for this collaboration, but more importantly, they must consider if the Force itself can survive without it.
Finance needs a clear vision that centers around its role like a balanced business partner. However to achieve this vision a huge work is required from the bottom up to understand the significant complexity in fundamental systems and processes and to devise a way forward that may work for that particular organization.
The success of any transform management program is dependent on its execution. Change is usually difficult and costly to execute correctly, and often, Law enforcement Forces lack the relevant experience to achieve such change. Even though finance directors are required to hold appropriate professional qualifications (as opposed to being former police officers as was the case a couple of years ago) many have progressed within the Public Sector having limited opportunities for learning from and interaction by using best in class methodologies. In addition cultural issues around self-preservation can present barriers to change.
Whilst it is relatively easy to get the information of finance transformation across, securing commitment to set about bold change can be tough. Business cases often absence the quality required to drive through change and even where they may be of exceptional quality senior police officers often lack the industrial awareness to trust them.
2) Supporting Force Choices
Many Finance Directors are keen to develop their finance features. The challenge they face is convincing the rest of the Force that this finance function can add value - by devoting additional time and effort to financial analysis and providing senior administration with the tools to understand the financial implications of main strategic decisions.
Maintaining Financial Controls and Managing Danger
Sarbanes Oxley, International Financial Reporting Standards (IFRS), Basel II and Individual Capital Assessments (ICA) have all place financial controls and reporting under the spotlight in the personal sector. This in turn is increasing the spotlight on monetary controls in the public sector.
A 'Best in Class' Police Force finance function will not just have the minimum handles to meet the regulatory requirements but will evaluate how the laws and regulations that the finance function are required to comply with, could be leveraged to provide value to the organization. Providing strategic info that will enable the force to meet its objectives is really a key task for a leading finance function.
3) Worth to the Force
The drive for development over the last 10 years or so, has moved decision making to the Divisions and has resulted in an increase in costs in the finance function. Through utilizing a amount of initiatives in a program of transformation, a Force may leverage up to 40% of savings on the cost of financial together with improving the responsiveness of finance teams and also the quality of financial information. These initiatives include:
Centralization
Through centralizing the finance function, a Police Force can create centres of excellence where industry best practice can be created and shared. This will not only re-empower the department, making greater independence and objectivity in assessing projects and gratification, but also lead to more consistent management information and a greater degree of control. A Police Force can also develop a business companion group to act as strategic liaisons to departments as well as divisions. The business partners would, for example , advise on how the actual departmental and divisional commanders can meet the budget at a later date months instead of merely advising that the budget has been skipped for the previous month.
With the mundane number crunching becoming performed in a shared service center, finance professionals will discover they now have time to act as business partners to sections and departments and focus on the strategic issues.