Derby City Council wasted £1.2m on HR advice

Derby City Council spent £1.2m more than it intended to because of mistakes made in managing the implementation of a job evaluation process, it has emerged.

A report into the Council’s failures under its previous administration have been laid bare in a report by Grant Thornton called Report in the Public Interest.

One such error centres around the implementation of Job Evaluation (JE) which, says Grant Thornton was “characterised by failures of governance”.

JE involves the sizing of all jobs within an organisation to establish their relative importance to the organisation and their relative difficulty.

The Council appointed a small HR consultancy, Aquarius, in 2012, to assist it with JE.

The report states: “It transpired that Aquarius did not have the intellectual copyright to carry out the Hay evaluations which were required by the Council.”

The decision to appoint Aquarius was “flawed”, as Hay had tendered a lower price for the work, and a referee for Aquarius had questioned whether the firm could deliver Hay evaluations.

According to Grant Thornton, a junior officer queried the decision in September 2012 but the issue was not escalated to senior management.

Grant Thornton adds: “Some important decisions were made too low in the organisation and former senior officers failed to put in place proper project management arrangements or provide adequate oversight.”

Later in April 2013 the then strategic director of resources (SDoR) was told by a Hay representative that he was aware that Aquarius was using the Hay methodology in breach of Hay’s copyright.

The report says: “The SDoR should have raised this issue corporately and with the Council’s Chief Legal Officer. He failed to do this. Aquarius denied it was using the Hay methodology, but the Council’s former senior officers, continued, wrongly, to assume that the firm was licensed to use the approach.

In January 2014, Hay Group wrote to the Council’s then leader, Paul Bayliss, and chief executive, Adam Wilkinson, highlighting the copyright issue and the possible legal consequences for the Council. This again was not surfaced corporately.

Grant Thornton says that by June 2014 it was clear, following external legal advice, that continuing with Aquarius was untenable. The firm adds: “However it should have been clear as early as September 2013 that asking a firm other than Hay to apply a Hay-based approach would be problematic.”

The Monitoring Officer produced a paper in June 2014 which outlined options. As a result of the project failings, the SDoR was subject to disciplinary action and subsequently dismissed.

The director of HR was also initially suspended but left the Council on mutually agreed terms.

Aquarius did no further work and Hay was engaged to complete the project, which involved repeating the work completed by Aquarius.

That work is on-going. Total spend on Job Evaluation to Spring 2016 was of the order of £5m, but the Council has estimated that the mismanagement of the project, associated with the Aquarius contract, has cost the Council an additional £1.2m as well as imposing stress on staff through the prolongation of the process.

Councillor Ranjit Banwait, leader of the Council, said: ““Firstly, I would like to thank Grant Thornton for their work in concluding this report. I am confident that many of the issues reported by our External Auditors today are in the past; those issues that are more recent in nature are being reviewed and addressed – robust measures are already in place following an extensive overhaul of our governance framework.

“Grant Thornton recognises improvements by the current leadership and senior management teams and I would like to re-assure the people of Derby that we will discharge the Council’s duties with the utmost integrity.”