Heads Roll

Well we've certainly had confirmation of a couple of things about big bad boys G4S and Serco in recent days. They're ruthless, money talks and they're desperate. When the chips are down, your share price is sliding and the shareholders get uneasy with the corporate policy of biting the government hand that feeds you, then heads at the top roll:-

Richard Morris, a 10-year veteran of G4S, had only been regional chief executive of UK and Ireland since October 2012. He got the job after the previous incumbent quit in the wake of the bungled 2012 Olympics security contract. Before taking the UK role, Mr Morris was group managing director for G4S Care and Justice Services from early 2011.

He has left with immediate effect on contractual terms, suggesting he will receive his notice period.

Those close to G4S maintained it was his decision to resign but the timing of his exit looks significant amid the continued row with the Ministry of Justice over claims G4S and fellow outsourcer Serco overcharged for the electronic tagging of prisoners.

G4S maintains no dishonesty took place but is urgently trying to make peace with the Government, a valuable customer, which is poised to complete its own investigation into the tagging fiasco imminently.

The FTSE 100 company has pulled out of the bidding for some new Whitehall contracts until the crisis is resolved, potentially costing G4S many millions in lost revenue.

For both companies to get rid of their top people within days of each other does seem remarkable and is clearly an unvarnished attempt at appeasing the likes of Chris Grayling, whatever the outcome of the current fraud investigations:- 

The chief executive at Serco, a security firm at the centre of an overcharging scandal, has resigned. Outgoing boss Chris Hyman said the best way for the company to move forward "is for me to step back". Serco is being investigated by the Serious Fraud Office (SFO) after claims it had overcharged the government by "tens of millions" of pounds for electronic tags for criminals. The government welcomed the news, describing it as a "positive move".

They may be desperate to demonstrate rehabilitation, but they are probably too big to change, as this article from the Independent only last month makes clear:-

The main reason for Serco's spectacular fall from grace – and, more crucially, suspension from winning lucrative government contracts – can be summed up very simply: the FTSE 100 group, though possibly not for much longer, has 120,000 employees.

That's an empire, not a company. Those at the top may have little or no awareness of, let alone any control over, what those closer to the bottom of the pile get up to.

So it was that Serco ended up referring some of its employees to the police last week over allegations of fraud related to the misreporting of numbers on a £285m contract to run prison vans in London and East Anglia. Serco insisted there was "no evidence" that senior management had any idea what was going on – and that is the root of its problems.

Having a huge, unwieldy empire is exactly what got G4S into trouble at the Olympics last year. Senior managers were shocked to discover that the group didn't have enough security guards to cover the Games, because although this was a high-profile contract, it was also fairly small fry for a company with more than 620,000 employees.

Responsibility was delegated –arguably abdicated – and authority compromised. In such disparate organisations, it is far easier for rogue employees of business units to try and hide their mistakes, and then get away with it until the problems escalate to an unsavoury degree.

It looks as if the purge was expected judging by this report from October 19th explaining why it would take more than a change in personnel at the top:- 

On Thursday, the Financial Times reported that Serco is predicted to be purging its senior UK management as part of the drive to improve its governmental relationship following its tumultuous year. However, the news left critics doubting whether a mere change in personnel could reform an entire company culture. 

“You can’t change a culture in three months,” Andre Spicer, professor of organizational behavior at Cass Business School, told the paper. “The only times that might be possible is if there’s a severe external threat or emergency but I don’t think Serco is in that position at the moment.” 

Further commentators have urged caution on the part of Serco. “One of the reasons that these public service markets often go wrong is because the pace and scale of reform is causing significant problems. In the rush to develop public service markets, avoidable errors have been made in design and oversight,”Nechal Panchamia, a researcher at the Institute for Government, told RT. 

“What we would urge the government is to slow down, learn quickly from mistakes, and correct them out of the system before another mistake grabs the headline,” she said. 

The penny seems to have dropped with both companies and each are apparently planning to separate their corporate structures, not least so as to be able to contain any future reputational damage. G4S intends to hive off the cash-carrying business and Serco wants to ring fence the government contract work. Unfortunately it's bad news for us because, being cynical, it now looks increasingly as if the ground has been prepared sufficiently for both companies to be welcomed back into the government fold. 

But there's always Margaret Hodge, chair of the powerful Public Accounts Committee to contend with, and she's been fuming over Serco trying to quietly palm off that troublesome health contract down in Cornwall. Not before time either there is a concerted campaign to extend the Freedom of Information legislation to private companies holding government contracts. The following is the wording of an Early Day Motion on the subject:-    

That this House praises the Freedom of Information Act 2000 for the transparency and openness it has brought to the public sector and the public right of access of information held by central and local government and its agencies; notes that public services delivered by private companies are currently beyond the scope of the 2000 Act; further notes that, as growing amounts of public services are privatised, ever decreasing amounts of public spend are subject to freedom of information; and supports calls to extend the legislation so that public services contracted out to the private and third sector are covered by freedom of information legislation.

As already mentioned, the focus returns to Parliament next week with an Opposition debate in the House of Commons on the whole TR omnishambles set for Wednesday afternoon 30th October. Lets make sure our MP's are geared up to attend and ask plenty of awkward questions, like "why can't the Risk Register be published?" I see Harry Fletcher via twitter is volunteering to help anyone prepare a suitable question. 

Finally, we have a date for a Napo strike on November 5th, the day following a further Fire Brigade Union strike and a strike by postal workers. We all know probation staff hate taking industrial action, but this is different and is about the very future of the whole profession and ethos of our work. Surely we cannot allow history to record that we did nothing to try and stop this madness?