Late in 2011 Clic Sargent, the cancer charity that supports children, young people and their families, found itself facing a deficit of £1m on its annual income of about £22m.
This meant it would have to abandon its goal of growing its front-line services, cut back services or cut costs. It was determined to continue growing, which meant it needed to remove £1m from its cost base without cutting services.
A decision was made to resist arbitrary cost-cutting and to find more effective working methods, ways of achieving genuine efficiencies and shifting the culture of teams.
Using models from the private sector, the charity launched a two-year programme in 2012 called Better by Design, which was completed in April this year and has led to savings and additional income worth £1.1m a year. It cost £130,000 to run, and a similar amount was invested in improving operations such as IT.
Clic Sargent, formed in 2005 by the merger of Clic and Sargent Cancer Care for Children, has now made information about Better by Design available to other charities in the hope it will help them make similar savings.
The programme led to a saving of 8 per cent of the charity's non-service delivery costs (see Facing up to the deficit), much of it in fundraising and support services. More than 60 staff, about 14 per cent of the workforce of 430, were directly involved in Better by Design projects.
A key part of the programme was involving staff as much as possible: an early survey revealed that three-quarters of staff believed the charity could work more effectively and more than two-thirds said costs were not always kept to a minimum.
The charity used a business improvement technique called Learn Six Sigma, which had been developed by the manufacturers Toyota and Motorola in the 1980s and 1990s to cut waste and improve quality.
Instead of buying the technologies and software for these business improvement techniques, Clic Sargent developed its own toolkit, designed to get staff fully involved. It wanted any changes to be driven by staff, not outsiders, so it did not hire consultants. But it did take advantage of expertise offered by some of its corporate partners, including Tesco, Zurich and GlaxoSmithKline. It also got advice from the lifeboat charity the RNLI, which had its own improvement programme.
The first area the programme looked at was stock management – 94 per cent of staff said it could benefit from changes. The successful outcome here gave the programme momentum.
Significant lessons were learned early on. It was recognised, for example, that many staff struggled with the language of business process management, so this was tackled gradually with coaching. Coaching was also used to help staff become more comfortable with handling or interpreting data.
Staff who felt less confident about the programme were encouraged to seek additional coaching in its tools and techniques.
It was also recognised that some staff would see the review as a simple cost-cutting exercise in disguise, so communication was prioritised from the start, through as many personal conversations as possible outside meetings and through asking for feedback and genuinely wanting it.
An important part of the programme was encouraging staff to avoid making assumptions or relying on professional judgements. Instead, they were shown how to use data to demonstrate that a decision was correct.
The success of early, easier projects kept everyone motivated. But about halfway through it began to get harder to maintain energy and enthusiasm, and more complex projects were requiring more time and effort to yield improvements. It was at this stage that it was crucial to keep reminding staff that the programme was all about reducing costs without affecting services.
The charity says that in many such programmes, change is driven by senior managers who already believe they know the solution. Although project teams in Better by Design were mostly made up of senior people, it wanted to consult junior managers and staff. Staff were encouraged to make suggestions for improvements, as long as they could back them up with evidence, and some senior managers had the uncomfortable experience of having the way they worked challenged.
The next step, the charity says, is to find ways of making continuous improvement part of its culture. Senior staff were mostly used to implement Better by Design, because that was regarded as the quickest way to make progress, but the charity would like to include more front-line staff in the process now the financial pressure has eased a little.
Training and development of staff is a key element in continuous improvement. For example, Clic Sargent is putting 10 per cent of its staff through a Lean Six Sigma course in the next two years. Continuous improvement will now be included in the personal objectives of all senior staff, and the business plan challenges each part of the charity to achieve and report back on at least one business improvement in their area each year.
Interview: Lorraine Clifton, chief executive, Clic Sargent
"It was really hard work, but we've done it in a positive way that has strengthened the charity rather than weakened it," says Lorraine Clifton, chief executive of Clic Sargent, of the Better by Design programme.
Clifton stresses the importance of genuinely engaging with staff on the programme and showing them it was an attempt to make the charity more efficient rather than simply cutting costs.
"No one really likes working in a place where they can see significant inefficiencies," says Clifton, who previously worked as a chief executive in the NHS and in the private sector. "I've always had an interest in organisational development and believed that nearly all organisations can become more efficient if a business improvement programme is carried out in the right way." She adds that the voluntary sector is not always willing to look at how processes can be made more efficient and their quality improved.
The charity was lucky to have a very supportive board, says Clifton, as well as an experienced and well-regarded head of change management in Sherine Wheeler. "We chose not to use external consultants because we wanted the programme to feel like 'ours' rather than something imposed from outside," says Clifton.
She adds: "The fact that Sherine had worked here for a long time and had credibility with the staff meant we were able to handle it internally. It was also crucial that I, as chief executive, was personally backing it. Any other charity that is considering a similar programme needs to make sure it has backing from the top."
Clifton is very comfortable with the decision to publish the report about Better by Design on the charity's website. "We got help and advice from other charities, and corporates, when we were planning our programme, so it feels appropriate to share our experience with others," she says.
Publishing the report might also stand Clic Sargent in good stead with potential corporate supporters and major trusts, says Clifton, because it demonstrates the charity's determination to be as efficient as possible.
The next step, she says, is to make sure the ideas behind Better by Design continue to live on in the organisation. "Some people were encouraging me to keep it going, but it's very difficult for staff to continue working at that pace. And when we launched the programme, we agreed an end point."
Clifton says she hopes the 60 or so staff who were closely involved in the programme will become "internal champions" for continuous improvement at the charity. The fact that each directorate will be expected to achieve at least one significant business improvement each year is also important, she says.
"I want a culture in which, instead of one team blaming another over some kind of inefficiency, they both get together to look at how it can be improved," she says.