The Howard Journal Val 30 No I . Feb 91 ISSN 0265-5527

Calling on the Experts: The Financial Management Initiative (FMI), Private Sector Management Consultants and

the Probation Service

CHRISTOPHER HUMPHREY Lecturer in Accounting, Department of Accounting and Finance,

University of Manchester

Abstract: This paper examines the Home Ofjce’s attempts to a p p b the Financial Management Initiative to the probation service in England and Wales, with particular emphasis being given to the use of private sector management consultants in the development o f a Financial Management Information System ( F M I S ) f o r the Service. The details of the FMl’s application are set out and the processes whereby the aims of the initiative were attenuated and defected are identijied. In consequence, the case adds support to the literature questioning the application of such initiatives in the public sector by illustrating how even the ‘experts‘ cannot provide simple solutions f o r the complex problems facing public sector managers.

In attempting to reform the management and accountability of organiza- tions remaining in the public sector, two particular strands in the policies of the post- 1979 Thatcher administrations have gained increasing prominence. First, the development of financial management information systems and secondly, the broad ranging use of private sector manage- ment consultants to assist both in the design and implementation of such systems. Both aspects of policy have been promoted by the central government as bringing much needed private sector management skills to what it regards as rather anarchic and disordered public service organisations - bureaucracies belonging to an age of inefficiency. This approach to management was perhaps most clearly encapsulated in the Financial Management Initiative (FMI), launched in 1982 (see Govern- ment White Paper 1982), which Fry (1984) classified as akin to the Conservative’s grand strategy towards central government departments. Its emphasis on objective setting, performance measurement, delegated resource management responsibilities and critical scrutinies of the value for money of service provision has been seen as having an appealing rationality. As Plowden (1985) noted:

it must also be right to identify the tasks to be done and the resources used in carrying out each of the multifarious activities of government to ensure that someone is clearly responsible at each level for managing these resources, and to devise information systems that provide people a t each level - including ministers

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- with accurate information about activities and resources down the line of command. The development of the techniques of management in this sense, in the civil service (and elsewhere in the public sector) is long overdue. (p. 399)

However, it is rare to find unqualified support for the FMI (at least amongst academics), even when it is recognised that it was apparently seeking to rectify some of the failings of earlier initiatives such as efficiency scrutinies, with their over-emphasis on costs and inputs (House of Commons 1981/82). Plowden, for example, felt that the claims as to what the FMI could achieve were over-optimistic, whilst Gray and Jenkins (1986) questioned its ability to cope with the pathological uncertainty and disorder of public administration. Metcalfe and Richards (1984) saw it as adopting an impoverished concept of management, whilst others have highlighted the inconsistencies in the government’s policies towards the public and private sectors (Parsons 1988) and the irony of implementing management systems which had been discredited in the private sector (Hopper 1986). A noteworthy example that Wildavsky (1978) drew on in criticising the idealisation of such systems is the experience of the Social and Rehabilitation Service in the USA. When administrators were asked what improvements they wished for the new Management by Objectives (MBO) system, they listed such things as management accountability, better team work, a need for clear goals and priorities and the development of management information systems - the very things that MBO was supposed to accomplish in the first place! Interestingly, calls for closer attention to the costs and benefits of new information systems have also come from those often required to develop them - the private sector management consultants. As Kirwan (1986), a consultant with Deloitte, Haskins and Sells pointed out:

In my experience it is very rare for the benefits of improved information to be rigorously evaluated before it is decided whether the cost of the new system is justified. Yet the size of the investment is often comparable to investments in, for example, plant, which are usually subject to extensive scrutiny before being approved. The main reason why information systems get through the net is the inherent difficulty of determining the value of the improved information the system will provide.(p. 62)

Contrasting perspectives on the potential of private sector management consultants are also evident. Undoubtedly, their growing involvement in the management of the public sector has had much to do with the favour in which they have been held by government ministers, and their compatibility with the ‘new’ management philosophy. However, one doesn’t have to look very far to find also expressions of support from senior managers in the field. A recently reported view in Social Services Insight magazine (10 January 1990) noted that:

what the likes of Price Waterhouse and Coopers and Lybrand have, is a conceptual model which can then be applied in a practical way. What they can do is approach our issues from a broader background than just social services, and that’s helpful; and they can act as a catalyst for the development of thinking within our organization. (p. 6)

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Such views, though, do not marry well with closer critiques of the consultant’s expertise base. Knapp (1984) highlighted a number of serious methodological and contextual errors in three special studies undertaken for the Audit Commission by Arthur Andersen, and could only watch with horror (tinged with amusement) at the consultants’ attempts to advertise the ‘tenuous social work experiences of their teams’. McSweeney and Sherer (1989) examined the methodologies outlined in a number of the large accounting firms’ Value-For-Money (VFM) audit manuals and found them to be derived from a very narrow knowledge base. The determining organisational metaphor was that of the machine and, whilst elsewhere this is seen as only one of a whole range of images of an organisation (see Morgan 1986), McSweeney and Sherer (1989) concluded that its rationalistic assumptions are not contested:

Prior specification of a few uncontested, unambiguous and tangible goals for each local authority task and a local authority as a whole is regarded as both always feasible and always highly desirable. (p. 306)

Given the uncertainty and ambiguity associated with notions of the effectiveness of many local authority services, they were also not surprised to find the Audit Commission (1986) concluding that VFM audits had so far paid little attention to such considerations.

The problems encountered by public sector initiatives in the tradition of the FMI are relatively well documented (see Rhodes 1987; Pollitt et al. 1988; Humphrey 1990). A recurring theme in analyses of unanticipated consequences and resistances to change (particularly at the operational, as distinct from the managerial, level) has been the discord between a perceived rhetoric of effectiveness and the apparent hard reality of the government’s desire to reduce the size of the public sector. That the FMI has been viewed with suspicion by some middle and junior grade civil servants has been picked up in overviews of the application of the FMI (see House of Commons 1986/87a). However, as yet there remains little detailed investigation of the organisational consequences of applying the FMI. To date, studies from an organisa- tional perspective have tended to be brief, technical accounts (see Thorpe- Tracy 1987; Coates 1987; Pavelin 1987). This paper is an attempt to help to fill the gap by examining the application of the FMI in the probation service in England and Wales, with particular reference to the develop- ment of a financial management information system (FMIS) for the service. In so doing, it is hoped that the paper can enhance understanding of why the FMI has struggled to provide the changes sought and has resulted in official reports (Efficiency Unit 1988: House of Commons 1988/89) concluding that the FMI has only scratched the surface of its task (Fry 1988, p. 431). With private sector consultants being involved in the FMIS development, the paper can also contribute to debates about their suitability as agents of change in public sector management practices.

The data primarily come from interviews during late 1987 with people involved in the FMI process, including Home Office and probation

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service representatives and members of the consulting firm engaged, and on an examination of minutes of meetings, official documents and papers. The interviews were loosely structured to encourage the expression of beliefs and feelings about events that took place. An attempt was made to reduce inaccuracies by interviewing a range of people, wherever possible including staff with similar roles and duties in relation to the FMI. Interview data were also checked against minutes (both official and unofficial) of meetings. The paper assumes a basic awareness of the structure of local probation services and their accountability to the Home Office and local probation committees.

Struggling With Autonomy and Complexity: 1982-1985

The broad logic of the FMI dictated two distinct phases of development - the specification of both national and local statements of objectives and priorities, coupled with the creation and implementation of a financial management information system (to assist both local area services and the Home Office in monitoring performance in relation to the newly specified objectives and priorities). Both aspects of this process of change, however, found progress rather difficult. The National Statement was intended to serve as the basis for applying the FMI to the probation service. Described as the ‘first overt attempt by central government to influence local probation services’ (Lloyd 1986), it sought to ensure that expend- iture is related to ‘clear objectives and is securing value for taxpayers’ money’ (Home Office 1984). Resources were now to determine policy, rather than the other way round (Faulkner 1984), and by attaching a low priority to the social and civil work duties of the service, the National Statement was seen as attempting to make probation a ‘tougher option’ (Beaumont 1984; Lloyd 1986). Each area was required to produce a statement of local aims in response to the National Statement. However, rather than comprising a rational explication of financially informed objectives, Lloyd (1986) suggested that the local statements were more of a symbolic defence of the legitimacy of the established probation culture. The issue of prioritisation was perhaps the most controversial. One area statement noted that ‘all priorities are priorities even when they have to be ranked. No duties can be ignored or given inadequate attention’, whilst another stressed that ‘the meeting of social need does not always fit neatly into notions of financial management initiatives’.

I t was within this context that work began on the Financial Management Information System (FMIS). The pilot work, under the supervision of the Probation Inspectorate, was soon struggling with the practicalities of performance measurement and fell down at their first hurdle - the recording of what probation staff did. Time sheets were completed in many different ways and much time was classified under ‘other activities’. On review, the lack of objective measures applicable to probation casework was seen as precluding any simple time recording exercise (Home Office 1985) and the pilot work was halted by Ministers. Interviews with members of C6 (Probation) Division suggested that the

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failure of the pilot projects had virtually exhausted its attempts to apply FMI principles. As one official commented:

so at the end of the pilot-studies, and after a lot of hoo-ing and haa-ing, we realIy came to the conclusion that we couldn’t solve this problem. We couldn’t measure effectiveness properly. We didn’t know how we could possibly take the thing any further.

Calling in the Experts The cancellation of the pilot projects led to direct intervention by Ministers, and in June 1985 it was formally announced that management consultants were to be invited to tender for the FMIS contract. The intervention of Ministers was widely expected, given their perceived commitment to tighter financial management in the probation service. As one area CPO (chief probation officer) noted ‘it was only a matter of hearing that things were running into the sand with the home-made variety that triggered the decision to go ahead’. There was some suspicion that the employment of outside consultants had always been the preferred option. According to members of C6 Division, Ministers sought to get private sector consultants involved with the FMIS ‘to provide a professional input’. A joint Home Office/ACOP working group had been set up in late 1984 to consider how to proceed with the FMIS. This now became a national steering group, with National Association of Probation Oficers (NAPO) and Central Council of Probation Committees (CCPC) representatives joining after the firm of consultants had been appointed. Its duty was to monitor and advise on the progress of the consultancy, although all final decision regarding the consultancy rested with Ministers.

Four firms of consultants were officially approached in December 1985 and each met informally with a panel of Home Office and ACOP representatives, prior to final interviews in February 1986. The terms of reference given to the consultants were as follows:

By examining the functions, organisation of and demands on a chosen sample of area probation services, to advise on the requirements of a Financial Management Information System for the efficient, effective and economical use of their resources, and, in particular, to devise and apply a cost-effective means of getting the necessary information.

The generality of the terms of reference reflect divergent views within the steering group, notably about whether the FMIS was to be a system primarily for the Home Office or one for local area services. ACOP representatives acknowledged the Home Office’s need for a more defensible resource allocation system. In the words of a senior oficial of C6:

It’s almost unbelievable that, although we largely pay for the Service, no budgets are ever sent in - or they haven’t been until recently. There’s no detailed knowledge of what each individual Probation Service is spending.

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Nevertheless, ACOP representatives were concerned that a system designed more for the Home Of ice would result in a pure costing exercise, with the issue of effectiveness being removed from the agenda. At the September 1985 meeting of the steering group, C6 officials assured the group that the primary aim was to facilitate local management decision making. This was reiterated at meetings with the consultants. In consequence, ACOP representatives generally began to see the FMIS as a n exciting, helpful development. The prospect of being able to work with outside consultants also appeared to have contributed to the positive atmosphere. The consultants’ apparent sensitivity to social work concerns and their view of the FMIS as a co-operative venture had helped them win the contract. According to one of the A C O P representatives noted, the chosen consultants stood out through:

the language that they used and their insistence - I remember this - on consulting staff at all stages and saying that it must be seen as a kind of co-operative enterprise, that it couldn’t be imposed on people. All this seemed absolutely right. With the others i t was more casual.

The chosen firm (the consultancy wing of a n international firm of chartered accountants) were confident that they could improve on the existing situation regarding resource management, and were selected unanimously as the firm most capable of ‘carrying the thing off. A comment by an ACOP representative on the steering group illustrated the high sense of anticipation generated by the consultants’ appointment:

I saw FMI as a kind of voyage of exploration, particularly by expert explorers . . . That’s what attracted one enormously. I mean we are amateurs, in a sense, in this field. But if you’ve got expert explorers, which is what they ought to be, they could actually point out that you could get this and this and this information which could be useful.

That the project would be of an exploratory, adaptive nature was also emphasised by the consultants:

I t was made clear to us afterwards that one of the reasons why we won the competitive tender for this project was that we did not have an off-the-shelf solution. And we made quite a strong point at the selection process that we would be learning about the Service as we went along; we would be devising a solution which was special to it and not in any way something that’s used elsewhere.

The consultants’ appointment can be seen a s marking quite a significant shift in the atmosphere surrounding the FMIS project. T h e earlier struggles were now attributed to a lack of financial management expertise within the Service, rather than to any inherent limitations in the logic of the FMI. What is particularly intriguing is that this shift had taken place despite the consultants stating that they would be ‘learning as they went along’ and with only a very limited analysis being undertaken of the outcome of the consultants’ prior work in the public sector. Such assignments (which included work in the police service) may well have assumed a questionable relevance given that the consultants were promising a system specially suited to the probation service. However,

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this should not detract from the degree of faith that had been placed in the consultants. They were seen as the undisputed experts, an expertise that had assumed an almost mythical quality. According to one of the ACOP representatives on the steering group, the consultants were in a different league to any they had worked with before, whilst a member of C6 noted that with all their ‘modern techniques of measurement and great experience in such matters’, the consultants had as good a chance as anybody of succeeding.

Laying the Foundation Stones: A Promising Start The FMIS project was divided into four main stages, from the initial specification of systems requirements, through an experimental prototype stage to piloting and the final FMIS specification and implementation.

Once the consultants started their work, it soon became clear to them that one person’s suitable, workable system was another person’s dog’s breakfast.In particular, the division ofopinion over the central-local focus of the FMIS led the consultants to seek confirmation of their terms of reference at an early meeting of the steering group. They were in favour of an FMIS designed primarily for local areas, with a degree of commonality built into help satisfy some national information needs. As one consultant observed:

it would inculcate best management practice . . . and the nearest way to get effectiveness, economy and efficiency is to empower the local management to learn how to manage well and to give them every tool for managing well, rather than just to introduce a national monitoring system.

At the May 1986 meeting of the steering group, its chairman (the head of C6 Division) confirmed that the FMIS should be designed primarily for local areas. ACOP representatives saw the consultants’ stance as promising as they appeared to have ‘resisted being seduced or being diverted by the Home Office to meet the Home Office agendas’. This stance also helped to alleviate the fears of NAPO representatives, although they remained least trusting about the purpose of the FMI. One of their first direct contacts with it had been at a talk in early 1986 given by a member of the Society of Civil and Public Servants (SCPS) and a member of C6 Division to regional NAPO representatives. NAPO were aware of cuts in social work departments following the application of value-for-money principles and the SCPs official warned of similar consequences in probation. The threat posed by the FMI was set out in the SCPs ‘FMI guide for negotiators’ distributed at the meeting, which argued that the increased ‘managerialisation’ sought by the FMI articulated well with the government’s intentions of pushing unions to the fringes of work-place organisation. The C6 official was unable to dispel such fears, particularly as his speech confirmed that the FMIS project was being pushed by Ministers. An apparent failure of the FMI to give attention to outputs and effectiveness in the DHSS had also filtered through to NAPO, and this fostered the suspicion that the FMIS was

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going to establish a ‘framework for rate-capping the Probation Service’. This context certainly helped portray the consultants to NAPO in a comparatively less enthusiastic light (in line with the view expressed by the Council of Civil Service Unions in its submission to the Public Accounts Committee investigating the FMI (House of Commons 1986/87a) and the reported views of practitioners in social services departments - see Knapp 1984; Miller 1984). Nevertheless, the promise that the FMIS would address issues of service effectiveness held some attractiveness as it promised to be of relevance to the work of maingrade staff. As one NAPO representative noted, at least the FMIS was offering the prospect of improving on the present situation, where decisions were frequently made ‘on a feel the seaweed basis’.

The consultants’ fact-finding work was undertaken between April and June, 1986, with the results being discussed at the July meeting of the steering group. The consultants undertook visits to eight probation area services where they interviewed a cross section of area management staff, members of the probation committee and representatives of local authority finance departments. Other interviews were held with members of the various Home Office divisions and representative service organisa- tions. Overall, the stage one report gave the impression that the systems design task was likely to be more complicated than the consultants had originally envisaged. In interview, one of them stated that for organisa- tions of the size of some of the area services, ‘they have got very rudimentary systems, at present, for collecting and integrating informa- tion’. He also felt that the ‘individual, autonomous’ ethos of the probation professional had resulted in less authoritarian management structures than in other parts of the public sector. Despite the rudimentary nature of existing systems, the consultants’ report concluded that the things probation staff wanted measuring (including their impact on probationers’ drug or alcohol addiction or levels of stress) were highly complex and would require innovative measurement systems. Further, probation staff had provided ‘few suggestions of how quality or good practice could be described or measured’. By the end of stage one the consultants had originally hoped to have been able to classify information requirements into ‘essential’, ‘desirable’ and ‘interesting’ categories. However, they had found ‘interviewees not yet in a position to make such distinctions’. Part of the problem was the apparent wide variations in probation practice, and the lack of agreement as to what constitutes good practice. This uncertainty had implications for the joint venture approach. For as one of the consultants commented, their expertise with regard to such matters was relatively restricted:

when we come to effectiveness and objectives and planning processes, each client knows a lot more about what he’s trying to achieve than the consultants do. What we can provide is a methodology, a n approach, a way ofrelating the different parts of a logical sequence and developing it.

Given such difficulties, the consultants stated that they had decided to start working first on the FMIS’s ‘product costing system’ (which would

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relate the cost of staff time to ‘intermediate outputs’ -such as the number of court reports written). Once this had got underway, the work would be broadened to include the effectiveness of service provision. The references to product costings, intermediate objectives and ‘time analysis’ as the fundamental building block of the FMIS caused concern amongst service representatives on the steering group. Of particular concern were the indications that the FMIS would require continuous time recording, which was seen as inoperable. The consultants’ response did much to maintain the confidence of the group. They agreed to discuss further the matter of time recording, and stressed that they would ensure a proper balance between ‘the statistical raw material of the FMIS on the one hand and quality and effectiveness on the other’.

Overall, it is important to keep in perspective any concerns about the FMIS project in July 1986. The circulation of the stage one report throughout the service generated no major criticisms, satisfaction and optimism about the assignment remained in both the Home Ofice and area services. In the words of one area CPO, the report ‘gave us the confidence to think tall and look for high standards’. The stage was now set for the move forward from fact finding to prototyping and what the stage one report referred to as ‘a joint exploration of procedural and “user” issues in an informal atmosphere where experimentation is both acceptable and encouraged’.

From Tall Thoughts to Serious Doubts

At the June 1986 meeting of the steering group, it was decided that the prototype work should be undertaken in one metropolitan and one shire county area service. This section examines the development of the prototype FMIS in the metropolitan area during which dramatic changes took place in the atmosphere of the project. From entertaining tall thoughts, the steering group was by March 1987 openly questioning the whole future of the assignment.

One division of the metropolitan area was selected for the focus of the stage two work. The overriding view amongst both divisional, and area management reflected the general optimism of the national steering group. It was effectively summed up by the service’s ‘project manager’ (a senior probation officer who had been assigned to the project team for the prototype period) who felt that working with consultants of ‘this sort of quality . . . was a terrific opportunity’. For the first three months of the prototype project, the consultants mainly worked with area and divisional management staff to establish an administrative framework. In order to develop a product costing system, the consultants then sought to identify staff activities and asked divisional seniors to provide an outline activity classification. Progress with the work activity classification, though, was not rapid. The classifications provided by the seniors were deemed by the consultants to be over-complex, subjective and not readily quantifiable. In turn, the seniors were concerned that the consultants were in danger of equating activity with effectiveness. The consultants met with the seniors

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in August 1986 and responded to the concerns by giving the same reassurances that they had provided to the national steering group - that quality of service issues would be given greater consideration later in the prototype work.

The August meeting with seniors also discussed the importance of retaining the commitment of maingrade staff, but as the prototype work proceeded this became increasingly difficult. The introductory staff workshops, held at the end of September 1986, were not a great success. By the end of the sessions, the majority of maingrade staff perceived the FMIS as the precursor of a cost-cutting initiative. One consultant noted that references to an ‘open policy’ were immediately suspected by some staff as indicating that the consultants had something to hide. Not all maingrade staff approached the workshops sceptically. They were, however, discomfited by the apparent centrality of time recording. The slick, prepackaged style of the consultants’ presentation also hindered the perception of a ‘joint venture’ with staff. Despite such worries, divisional management remained mainly supportive of the project. One of the divisional seniors summed up their position as still ‘travelling hopefully . . . we were aware that they (the consultants) had got one hell of a job, for which we’d not been able to find any answers’.

This trust in the consultants’ ability, however, was not to survive the time-recording exercises. The circulation, in early October, of draft time sheets by the consultants encountered criticisms by both management and maingrade staff. As one senior commented:

all that was there were the things, ifwe’d said to a Probation Officer ‘just draw up a list of the things that you basically do’ . . . he/she could have done it in five minutes. It had been stripped to the barest minimum.

The production of revised time sheets failed to stem the criticism. One senior felt that the consultants’ expectation of trouble with time recording had eventually led them to opt for simplicity so that staff would not have to spend much time filling in the time sheets. Ironically, though, a maingrade officer concluded that the draft time sheets had served to make staff more suspicious that the information from a FMIS was only to be used by area headquarters or the Home Ofice in resource allocation decisions. A further complication was that officers began at this stage to notice friction between the area-based consultants and their colleagues at headquarters. There was a perception that the formers’ willingness to listen to the complaints of staff had stifled them. They had ‘gone native’. As one officer commented, ‘I think they got sucked in a bit with us’, and caught ‘the probation disease’.

One of the division’s offices commenced the first time-recording exercise in early November. Staff in the other office, though, demanded a longer consultation period to consider the second draft version of the time sheets. Here, the atmosphere was far more hostile to the consultants. One senior referred to a ‘horrendous day’ when staff in the ofice refused to meet with the consultants. Their grievances resulted in a vote on whether to continue to be involved with the project. The vote was close, with a

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narrow majority being in favour of maintaining participation (which was in accordance with the views of the division’s ACPO and area headquarters’ staff). The tension and suspicion that was increasingly surrounding the project also hindered the completion of the time sheets. Some staff were doubtful about how diligently some of the time sheets had been completed. Accuracy was also not enhanced by the local NAP0 branch issuing guidance on the time that staff should expect to spend on various activities. Further problems were caused by the simplicity of the time sheets’ activity classification, with many staff stating that they had little option but to classify time as having been spent on ‘other activities’ or had invented their own categories.

When the first time recording exercise was completed, work began on building up the FMIS. Following a basic product costing model, information was collected on activities and costs for the operational period of the prototype (October 1986 to February 1987) and combined with notional timings (derived from the time-recording exercise) to produce a series of product costings. The other major element of work undertaken at this stage related to effectiveness measurement. By holding a series of meetings with probation staff, focussing solely on the measurement of effectiveness, the consultants managed to regain some of the lost initiative. A number of short papers were produced which contained some relatively simple, but specific measures of effectiveness such as the number of probation orders discharged early. Several divisional staff stated that, although it felt like they had really pushed the consultants to look at effectiveness, the FMIS now at last looked as if it was getting somewhere. However, such progress was dramatically reversed when the consultants distributed a paper reporting the results of the product costing work, in January 1987. The paper (over 40 pages in length) comprising mainly of costings and time analyses, and was tentative in tone. Reactions from divisional staff were uniformly unfavourable. One senior remarked: ‘I think it was shock/horror on everybody’s faces when that six inch pack landed in everybody’s tray’, whilst another noted: ‘I had to read the damn thing three times. It nearly drove me barmy . . . I think most people gave up with it’. Concern was expressed over the remoteness of the output measures, the reliability of the time-recording data (where in some cases up to 60% of total time had been apportioned to ‘other activities’) and the relevance of some of the cost comparisons. A note prepared by the area’s chief probation officer reflected the general dissatisfaction with the prototype work. He felt that the consultants’ report was full of excessive minutiae and yet was based on output measures which were simplistic in the extreme. He concluded:

the first stage prototype report leaves many, many questions and the needs for further explanations of quite crucial aspects - in all a very difficult and badly expressed report which is of no immediate help to local practitioners, local senior managers, or Headquarters staff.

The criticisms that were being made of the report were not just about the way the consultants had presented their findings, but were also being

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directed at the very nature and content of the consultants’ work. Divisional management staff, unhappy with continually seeing ‘nothing for what we’d put in’, were increasingly questioning the consultants’ ability to cope. In interview, several commented that the consultants had frequently referred to the probation service as the most perplexing organisation they had ever worked in. This questioning came to a head towards the end of January 1987. High level area management met with the leaders of the consultancy team to discuss the project’s future. The discussions culminated in the project partner asking for suggestions as what they should do next. According to one of the area’s DCPOs, this effectively marked the end of any perception within the area of the consultants as the undoubted experts in resource management. According to the area’s research and information officer, the FMIS at national level discussions:

all sounds terribly grandiose and terribly sophisticated . . . and then you get down to the nitty gritty of ‘what are they (the consultants) actually doing down in the division?’. ‘Well, they’re counting officer’s hours. They’re dividing the heating allowance into the office’. What actual value is that? . . . There’s a sort of dissonance between the two things, between these grand sounding terms and what is actually going on. What happened, I think, to some extent, was that all the nitty gritty came out when they actually got down to work on the grass roots level. And all of a sudden grand sounding terminology cuts no ice, it butters no clients, it does nothing.

In a similar fashion, the division’s ACPO likened the project to the fable about the Emperor’s new clothes and commented how as the consultants’ work unfolded, the realisation spread that ‘there was nothing there’.

At the January 1987 area steering group meeting, the consultants announced that there would only be one more time-recording exercise rather than the two previously agreed. The second time-recording exercise now had as its sole aim the testing of the consistency of the data collected in the first. The consultants reported findings on effectiveness measure- ment in early February 1987. The paper presented a hierarchical model of objectives, incorporating national, area, divisional and team objectives. For each category of objectives, the consultants had attempted to identify assessment criteria methods of assessment and targets to be achieved (although in some cases, for example, measures of community probation effectiveness, the paper only provided question marks). The provisional tone of the paper was deeply disappointing to staff who saw it as a rushed and isolated document. Comments by divisional staff, that the consultants ‘never looked beyond cost accounting’ were indicative of the perceived one-sidedness of the project. The service’s project manager felt that the consultants had responded to pressure by retreating into what they found comfortable and became more concerned with just ‘making their own view of the system work’. According to one senior, no one could believe the consultants’ reassurances any more and people stopped pushing for changes. The only perceived beneficiary from an input-focussed FMIS was the Home Ofice, but interestingly, several divisional staff pointed out that, as yet, there was very little that even the Home Office could have

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utilised from the project. As a result, the second time-recording exercise was generally not seen as such a threatening activity, and it was completed without the drama of the first exercise.

In interview, the consultants highlighted the difficulty of getting anyone to assume ownership of the FMIS, given the context of the design task. They spoke of being left in an ‘on test’ position, with the service adopting a ‘let’s wait and see what they come up with policy’. The consultants’ comments were generally disputed by area staff. However, certain divisional representatives, whilst critical of the consultants’ inability to link some of the simpler effectiveness measures with the product costing data, did see some validity in the consultants’ claims. As one senior stated:

I think we copped out on a certain part of it . . , I don’t think there really was the will to get into tackling the very thorny issue of effectiveness on our own. I think it was easier to dump it all on the consultants and say ‘you’re getting half a million pounds to do this and really you should do it’.

The service’s project manager also felt that they could have been more helpful:

I felt that we gave them quite confusing messages on occasions. I suppose all organisations tend to retire into the obscure when they feel a bit under threat. And looking back on it, I do wonder whether we didn’t sometimes try to overburden them with the complexities and try to insist all the time that they’d have to be more subtle and far reaching.

The dissatisfaction with the product at the area level, filtered through to the national steering group and at its February 1987 meeting its chair concluded that the consultancy may well be terminated once the prototype work was completed. If anything, the knowledge that the Home Office were considering the project’s possible abandonment seemed to encourage damage limitation strategies (to ensure that any failure of the FMIS was not seen as your responsibility). Some staff believed that there had been an incentive to ‘bombard’ the consultants on the issue of effectiveness measurement to highlight the latter’s inadequacies. The maintenance of an appearance of co-operation was another strategy designed to deflect criticism. Correspondingly, there was a suspicion that the consultants were less interested in developing the system any further, and were more concerned with ensuring that they at least had something with which to justify their involvement to the Home Office.

The project continued to be dogged by problems during 1987. The consultants in meeting with the area management acknowledged that it might not after all prove possible to integrate any effectiveness measures and product costing in one computer model. The June 1987 meeting of the area steering group discussed the significant discrepancies between the results of the first and second time-recording exercises, thus casting doubt on the validity of the mainstay of the product costing system. Ironically, one service representative felt that the discrepancies showed the need for continuous time-recording - the very approach that the consultants had first recommended but which service management had deemed un- workable!

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Concluding Comments

Because there were more probation staff interviewed than consultants, it may be thought that this paper has been unfair to the consultants. However, the case as it stands could be seen as lending some support to claims that no consultants could have succeeded. Certainly, any organisation intent on destroying the credibility of consultants could find little fault with the strategies adopted by the probation service. I t could also be argued that too much was expected of the consultants in the first place - although it remains a matter of reflection as to whether a consulting firm stressing the complexities of the assignment would have compared favourably in competition with the incumbent consultants who were promising that the FMIS was ‘do-able’.

However, the purpose of this paper is not to attribute blame to any of the parties involved or to provide a definitive judgment on the FMIS project, particularly given that the project is still continuing and is unlikely to be completed until a t least 1991. The intention is rather to show how the project did not follow the plot that had apparently been written for it by those who commissioned it, and to reflect on the implications of this process.

Two points are especially noteworthy. First, is the speed with which the atmosphere associated with the consultancy based project changed. In particular, how the apparent promise and simplistic appeal of accounting techniques and consultants crumbled in the face of the complex reality of the probation service, and how the desire for legitimation displaced any rationalistic aims for the centrally funded project to produce better information and performance. Secondly, in turning out the way it did, the case study does much to support the literature questioning the merits of such initiatives, in terms of their ability to improve the effectiveness of resource management in the public sector. Indeed, any limited reading of this literature would enable one to see that the experiences of the probation service with the FMI are anything but unusual.

Despite the downturn in the FMIS project, the consultants were given approval to begin stage three of the project. The Home Office (1988) decided to approve plans for the development of a functional systems specification for the FMIS and would fund further work if ‘something useful, workable and affordable seems capable of production’. The general view amongst service representatives on the steering group, however, was that even if the consultancy project eventually was dropped, it would be replaced by another initiative rooted in the concept of accountable resource management. Consistent with this belief was the establishment by the Home Office, in mid 1987, of a ‘performance indicators working party’ focussing on probation work. The Home Office were not alone in keeping faith in the FMIS and related developments. One area CPO interviewed stated that even with all the problems experienced in stage two, he knew of a number of areas, including his own, who would still welcome the chance to work with management consultants and to get such systems developed.

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The capacity of accounting and the merchants of accounting change to maintain their legitimacy in the face of setbacks is not particular to the probation service. I t is occurring in other areas of the public sector, most notably in the National Health Service (see Nahapiet 1988; Rea and Cooper 1988). One key factor which would appear to be contributing to this process is that accounting/resource management based initiatives frequently stand alone as not having to pass the ‘cost-effectivness’ hurdle. As the National Audit Office’s investigation of the FMI (House of Commons 1986/87b, p. 10) noted ‘it would not be realistic to expect the improved financial management . . . to result in readily-quantifiable savings. In the light of these considerations, departments are clearly not in a position to measure the cost-effectiveness of their FMI systems’. In a world where value-for-money is apparently king, it is difficult, if not impossible, to think of approval being given to any service related plans on the scale of the FMI (for example, for the probation service the estimated costs of the FMIS project are forecast to be E8-12 million on completion) solely on the grounds that they are worth doing, even though their effects cannot be measured. In this respect, one is reminded of one of the rules of thumb that Wildavsky (1973) suggested government officials should apply when contemplating the installation of new information systems - the rule of the mounting mirage:

Everybody could use the better information. No one is doing as well as he could if he only knew better. The possible benefits of better information, therefore, are readily apparent in the present. The costs lie in the future. But because the costs arrive before the benefits, the mirage mounts, as it were, to encompass an even finer future that will compensate for the increasingly miserable present.

This raised status of accounting heightens the risk of encouraging change for little more than the sake of change. This can result in inadequate consideration being given to what really was wrong with the ‘old control systems’ (remembering that systems can be systems without having to exist in the very formal state of national and local objectives, performance indicators and internal audits - see Hofstede 1981; Cooper, Hayes and Wolf 198 1) and the displacement of traditional service criteria, by financially related criteria. I t is of no small significance that today one tends to hear talk of social workers needing to provide cost-effective, as distinct from welfare-effective, services. In such a context, it is also not surprising to see that in the last few years the probation service, apart from the FMIS project has experienced investigations by the Audit Commission (1989), the National Audit Office (1989)’ an efficiency scrutiny of the Inspectorate (Grimsey 1987)’ the development of a national matrix of performance indicators and the related ‘desk-top’ inspections and has held a conference for chief probation officers on the issue of performance measurement and financial management informa- tion systems.

One final word. As an accounting researcher I have frequently been asked by colleagues what the probation service has got to do with accounting. To which, I reply with a quote provided by a senior probation

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officer in the FMIS prototype area, that he never realised how much accounting there was in probation! In anticipating a new decade in which accounting seems set to establish the parameters for debate in probation, it is hoped that the experiences documented here will give cause for serious reflection. Accounting undoubtedly has an enabling potential that can be captured, but it also has an unnerving ability to generate unintended, dysfunctional consequences. Thus, although in the uncertain and complex world of probation (and in many other areas of the public sector) the seemingly logical, ‘natural’ problem solving capacity of accounting (Hopwood 1984) can be enticing, it is surely time that more serious consideration were given to conclusions such as Hopper’s (1986), that there are no simple solutions to the complex problems facing public sector managers.

Notes ’ The case study material on which this paper is based has been analysed in a

different and more expansive form in an article currently in the review process for possible publication in the Journal ofdccounting, Organizations and Society. The financial support of The Nufield Foundation facilitated the preparation of this paper and is gratefully acknowledged, as are the helpful comments and suggestions of Ken Pease and Paul Wilding.

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