Survey Data Analysis & Recommendations

Prepared for the Housing Department Management Team by: Nadine Adams-Austin Sarah Berman-Houston Gareth Boswell Fayzan Rotherham 22 July 2011

Table of Contents
Part A: Analysis of the data 1 2 3 4 5 6 7 Background ....................................................................................................................................... 1 Methodology ..................................................................................................................................... 1 Tenants' expectations, perceptions and gap scores across the 5 dimensions ........................ 3 Tenants' importance weightings across the 5 dimensions ......................................................... 5 Key expectations and gap scores within each dimension .......................................................... 5 A comparative analysis of key results across the 7 towns ......................................................... 6 Recommendations for performance improvement ....................................................................... 8

Part B: Evaluation of the Options 1 Discuss the roles you played and how you used the CAUSE framework or other approaches to support your problem structuring ................................................................................................... 13 1.1 Alternatives ....................................................................................... Error! Bookmark not defined. 1.2 Stakeholders .................................................................................................................................. 13 1.3 Uncertainties .................................................................................................................................. 13 1.4 External / Environmental ................................................................................................................ 13 2 Discuss the development of a value tree for the analysis of alternatives................................ 14

3 Explain the process of scoring and weighting you have used (and include a table or graph of values) ................................................................................................................................................ 14 4 Discuss the synthesis of information for each stakeholder or scenario and compare results across stakeholders / scenarios .......................................................................................................... 14 5 Carry out appropriate sensitivity analyses and outline what you learned from these ........... 14 5.1 Staff/Unions/Residents stakeholder sensitivity analysis ................................................................ 16 5.1.1 Residents preferred option: Outsource the housing service to a local cooperative housing association ............................................................................................................................. 16 5.1.2 Staff/Unions preferred option: A management buyout ............................................................. 16 5.1.3 Local tax payers preferred option: Outsource the housing service to a cooperative housing association ............................................................................................................................. 16 5.2 Local and National government stakeholder sensitivity analysis ................................................... 17 5.2.1 Elected members preferred option: Option B: Outsource the housing service to a local cooperative housing association ................................................................................................. 17 5.2.2 Local government preferred option: Option B: Outsource the housing service to a local cooperative housing association ................................................................................................. 18 5.3 Housing Manager stakeholder sensitivity analysis ........................................................................ 18 5.3.1 Private company manager preferred option: management buyout .......................................... 18 5.3.2 Housing Service Manager preferred option: management buyout ........................................... 20 5.3.3 Local Authority Manager preferred option: Management buyout ............................................. 20 5.3.4 Bank Manager preferred option: management buyout ............................................................. 20 6 Recommend a course of action (this may be a decision, a need to consider further alternatives, a need to design a more robust or better compromise alternative etc ...) ................ 22

7 Appendix A - Stakeholders ............................................................................................................ 23 7.1 Staff Representatives and Union Representatives ........................................................................ 23 7.2 Local Residents (service users) ..................................................................................................... 23 7.3 Local Residents (those who pay for services through the local property tax) ................................ 23 7.4 Elected Council representative ...................................................................................................... 23 7.5 The Scottish Government............................................................................................................... 24 7.6 Housing service manager............................................................................................................... 24 7.7 Local Authority Housing Manager .................................................................................................. 24 7.8 Local Cooperative Housing Association (HA) Manager ................................................................. 25 7.9 Private Company Manager............................................................................................................. 25 7.10 Bank Manager ................................................................................................................................ 25 8 9 Appendix B - Value Tree Analysis ................................................................................................ 26 Appendix C Scores and Weights ............................................................................................... 27

10 Appendix D Performance Profile ............................................................................................... 28

PART A: ANALYSIS OF THE DATA

1. Executive Summary
This report has been prepared for the Housing Department to provide context and analysis for the statistical outcome of a recent tenant survey. The report will present the relevant findings of the data, explain these findings in understandable terms, and provide recommendations for responding to the needs of the tenant population. A total of 550 questionnaires out of 2000 were returned, and have been analysed. Whilst response rates have varied between towns, a suitable statistical test has confirmed that there is no significant difference between the distribution of surveys returned compared with those distributed. We can therefore be confident that an appropriate cross-section of customers is represented by this data. Gap scores have shown us that the major areas for performance improvement are Reliability and Responsiveness. Some towns are more satisfied than others, however, and there is scope for reallocating resources according to the varying degrees of their importance to tenants. The towns of Erinlang and, to a lesser degree, Grantspey, require a large amount of strategic attention in making the necessary service improvements. The survey has revealed that most tenant dissatisfaction across the regions can be traced to poor staff performance. The Department must address this issue if tenant satisfaction is to be improved. As the intended audience is not of a statistical background, the body of this report has been kept straightforward. However, details of the data, along with graphs and other materials, have been added as appendices for those who desire to read further.

2. Background
A satisfaction survey has recently been circulated amongst a sample of the tenant population. The objective of this survey is to gain an understanding of current service quality, and to identify areas for future improvement. This survey is designed to identify the expected and perceived service levels among customers in 7 towns. Five service dimensions were surveyed: Tangibles Reliability Responsiveness Assurance Empathy

The housing department wishes to use the survey results to identify the gaps in service levels amongst the regions, and across the business as a whole. Rather than issue a simple 4

satisfaction questionnaire, the department decided on a more sophisticated gap approach. Statistical methodology was therefore chosen as the optimal method for analysing the outputs of the survey. This report investigates how customer perceptions align with expectations, identifies key service gaps, and makes recommendations for how these gaps can be addressed.

3. Methodology
Customer response did not always conform to expected standards. Some questionnaires did not respond to certain questions and gave no weightings, some questions received several responses, and some customer weightings did not add up to 100. Our methods for addressing these inconsistencies are detailed below: Nine data items had more than one value assigned to each dimension. However, these multiple responses were in series such as 5,6 or 5, 6, 7. In order to capture the nature of the response, we took an average of the values given. 42 of the dimension questions were left blank, close to 10% of the data set. Rather than assume a value, and risk distorting such a significant amount of data, we reduced the sample size for each question by excluding these null value types. This will be reflected in the reporting. Weight value was empty for 15 out of 550 data items. We discarded these from the weightings analysis, as no logical assumption was possible. One value was given as a character instead of a number. This response was excluded, as no logical assumption was possible. Where a range of weight values were given, the values were averaged and scaled out to reach 100. 30 questionnaires showed cumulative weights that added up to more than 100%. 26 questionnaires showed cumulative weights that did not add up to 100%. For this, we scaled the individual values out of 100%

4. Tenants' expectations, perceptions and gap scores across the 5 dimensions

Tangibles Measures of tangibility comprised the physical condition of facilities, modernity of equipment, staff appearance and communication materials. The data clearly demonstrates that quality communication material is the most important criterion in this dimension for respondents, and their expectations in this area have not been met. However, the physical appearance of both facilities and staff match customer expectations. 5

The equipment provided exceeds expectations, making this a possible area for reallocation of investment. Reliability Measures of reliability comprised timeliness of service, sincere interest in solving tenants problems, doing a job right the first time, keeping service appointments, and keeping accurate records. This is a primary area of concern, as perceived service quality falls far short of tenant expectations across all measures of quality. It is clear from the data that the service fails to meet expected standards of timeliness, efficiency, and genuine staff interest in its problem-solving duties. Accuracy of records fared slightly better in matching expectations, but there is still ample room for improvement. Responsiveness Measures of responsiveness comprised informing tenants of when work will be done, providing prompt service, staff willingness to help tenants, and never being too busy to respond to tenant requests. None of these specific areas are currently satisfying customer expectations. The data demonstrates that expectations exceed perceptions of quality in this dimension, sometimes by a good amount. The most common point of tenant dissatisfaction is that they are not properly informed of when work will be performed. Assurance Measures of assurance comprised inspiring confidence in tenants, assuring confidentiality, being consistently polite and having sufficient knowledge to answer tenants questions. The data shows that there are areas for significant improvement in this dimension. Although staff courtesy and knowledge comes close to meeting expectations, tenants do not feel as confident or informed as they expect to when interacting with the housing service. Overall, customers have shown that their service expectations have not been met in this category.

Empathy Measures of empathy comprised informing tenants of what services are available, providing convenient operating hours and office locations, having the tenants best interests at heart, and understanding tenants individual needs. Tenants are satisfied with the convenience of operating hours. However, customers do not feel they are given individual attention, or that their best interests are being looked after. Perceptions do not meet expectation in these areas; in fact, the data shows that the service gaps in this area are among the widest service gaps identified by the survey.

4.1

Gap Scores Across Dimensions

Displaying weighted gap scores is a useful tool for quickly visualising the overall relationship perceptions and expectations. The table below shows that whilst no dimension achieved complete satisfaction amongst tenants, some areas are underperforming more than others. The largest service gaps are seen in Reliability, Responsiveness and Assurance, in that order.
Dimension Tangibles Reliability Responsiveness Assurance Empathy Average Expectation 5.6 6.5 6.53 6.4 6.5 Average Perception 5.22 4.9 4.98 5.1 5.4 Gap Score -0.41 -1.6 -1.55 -1.4 -1.1

4.2

Confidence Interval (95%)

Applying a confidence interval to these results enables a level of statistical inference about the larger population. A standard confidence interval of 95% was applied to the data set, allowing us to draw the following inferences about the majority of the tenant population:
Dimension Tangibles Reliability Responsiveness Assurance Empathy Confidence Expectations 6 6.5 6.5 6 6.5 Interval (95%) Confidence Interval (95%) Perceptions 5 5 5 5 5.4

Tangibles The majority of customers expects an average score of 6 across tangible services, but gives actual service quality an average score of 5. Although there is room for improvement, this is the most narrow service gap perceived by the tenant population. Reliability The tenants expectations of quality in this dimension are among the highest in the survey. Perceived quality levels fall far short of these expectations. Responsiveness

The tenant population also has quite high expectations around the responsiveness of the Housing Department, topping even reliability. Again, quality perception is exceptionally low in relation to expectation, making this dimension a source of significant disappointment. Assurance There is a service gap for the majority of the tenants, but it is not a major point of dissatisfaction. However, the Department should be aware that they are not instilling the confidence they could be in their customers. Empathy Most tenants have high expectation for the empathy of staff, but the perception of quality falls quite short of these standards. The majority of the population feels a lack of empathy in certain service areas, and the Department should focus on these points of contact.

5. Customer Weightings across Dimensions

Tenants were asked to assign relative importance weightings to each of the five dimensions, according to how relevant each factor was to their individual needs. After cleansing the data as explained in the Methodology section, the weightings clearly demonstrate that reliability and responsiveness are the most important factors to tenants, whilst tangibles are the least important. The weightings were also analysed on a regional basis. Again, reliability is the most important aspect of service across all towns. Responsiveness is a close second, particularly in the towns of Bracklin and Grantspey. Assurance and empathy are important to all regions, particularly in the towns of Arnmuir and Deebank.

6. Key expectations and gap scores within each dimension

Tangibles Communication materials, equipment and facilities are clearly of high importance to the tenant population. Tenants expect accessible and attractive tangible goods. The data shows that this performance in this area could be improved by roughly 50 percent. This is an area where strategic changes could make a difference. However, the gap scores show that this dimension is performing well in relation to the others. Reliability This dimension contains a number of key tenant expectations. Accuracy of paperwork, and staff provision of appropriate and timely service, stand out as the areas of greatest importance. The data shows that a great deal of improvement can and should be achieved here. Responsiveness The highest expectations in this dimension concerns department staff: prompt service, enthusiasm, and willingness to help tenants. The data demonstrates a service gap of roughly 25 percent around these areas, with the highest gap occurring in the area of being kept informed by staff of work schedules. These scores clearly indicate that staff training would go a long way toward improving tenant satisfaction levels.

Assurance The key expectation in this dimension is for tenants to feel assured of their confidentiality. The second most significant expectation is that staff will be consistently polite. Gaps of 20 and 26 percent, respectively, show that these areas fall short of customer expectations. Although these are not the most significant service gaps, assurance is an area that the department would do well to improve. Empathy Tenants expect that their best interests will be important to staff, but their perceptions in this area do not match these high expectations. The tenants also expect the department to understand their individual needs, but again, perceptions do not align with these expectations. On a positive note, the housing department is meeting tenant expectations in its scheduling repairs and maintenance.

7. Comparative analysis of key results across the 7 towns

Arnmuir The weakest service performance in the town of Arnmuir is in the dimension of Reliability. Most disappointing in this dimension is staff ability to get a job right the first time the data shows that perception of this service area falls particularly short of tenant expectations. The other area in the Reliability dimension that tenants find particularly unsatisfactory is staff interest in solving their problems. Another dimension that showed very low perceptions in relation to expectations was Assurance. Tenants expected to feel confident in the Departments abilities, and they expected staff to be consistently polite. These factors in particular scored badly in the survey. Low scores were also given to Responsiveness. The most significant service gaps in this dimension concerned being informed exactly when work was to be carried out, and staff being too busy to respond to their questions. However, whilst the tenants in Arnmuir are dissatisfied across all dimensions, their perceptions are the closest to expectations of all the towns surveyed. Although there is room for improvement, the Department does not have far to go to bridge the service gap in Armuir. Bracklin The tenants in Bracklin reported satisfaction with more areas than any other region. Perceptions aligned with expectations in communication materials, sincere interest of staff, staff knowledge, and work being performed at convenient times. These tenants were also the closest to being completely satisfied with Tangibles. However, the dimension of Responsiveness is a major weakness in Bracklin. Tenants are equally unhappy with all aspects of this dimension. The second worst performing dimension is Reliability. Of particular concern is getting a job done by the time it is promised, and getting a job done right the first time. These two factors fall equally short of expectations.

Cambus Although the data shows ample room for improvement of services, the tenants of Cambus are not hugely dissatisfied. In fact, their expectations are exceeded by the quality of Tangibles. Reliability performance scored the worst, especially in the area of getting a job done right the first time, and done by the time it is promised. Dissatisfaction with the sincere interest of staff accounts for a large service gap as well. However, this is somewhat mitigated by the fact that Reliability received a particularly low importance weighting. The dimension of Responsiveness also shows poor perceptions against expectations. The major pain points are being informed exactly when work is carried out, and receiving prompt service Cambus tenants weighted Assurance the lowest of all the regions. Deebank The tenants of Deebank report the highest expectations of Tangibles. Happily, these high expectations are exceeded by the quality of Tangibles. The Deebank population is the least disappointed by the quality of Reliability, and are the closest to being satisfied by promptness of service and staff attitude. They are also reasonably satisfied with Responsiveness. They have high expectations of Assurance, along with high perceptions. In fact, the data shows that Deebank has the lowest service gaps in the Assurance dimension. Deebank has the highest perception of office location convenience. Although the Deebank tenants are fairly content, there are areas that need attention. In the Responsiveness dimension, tenants show poor perceptions of promptness of service, and being informed exactly when work will be carried out. And although Assurance performs well in general, improvements can be made in staff knowledge and assurance of confidentiality. Erinlang This town is dissatisfied with everything, and by quite a lot, although they are almost satisfied with the quality of Tangibles. However, Tangibles was given only a medium amount of importance by tenants. Perceptions of Reliability are exceptionally low in relation to expectations. The worst scorers are the sincere interest of staff, and getting a job right the first time. These two areas showed equally bad perceptions. The second worst performer is Responsiveness. Being informed of exactly when work will be carried out, and receiving prompt service showed particularly wide service gaps. The tenants of Erinlang are the most dissatisfied with service quality of any population in the regions. This town requires a high level of Department attention.

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Forthside Tenants in Forthside are satisfied with tangibles, for the most part, but the data shows at least some dissatisfaction with everything else. Perceptions of Reliability are the lowest, and account for the lowest gap score in the data set. The lowest perceptions against expectations are reported around sincere interest of staff, and getting a job right the first time. Responsiveness also scored very low. The Forthside tenants have high expectations for prompt service, and perceptions do not come close to matching these expectations. Tenants also reported wide service gaps around staff being too busy, and less than willing, to help with their questions and concerns.

Grantspey The population in Grantspey is satisfied with the quality of Tangibles, but dissatisfied by a good bit with everything else. The worst service gaps are in the dimension of Reliability. In particular, the sincere interest of staff, and getting a job right the first time, were scored quite low by tenants. There are also quite low perceptions in the dimension of Responsiveness - being informed exactly when work will be carried out, and staff too busy to respond, are the worst performers in this data set. Grantspey also identifies major service gaps in Empathy. Most problems here concern staff attitudes, and staff understanding of individual needs.

8. Recommendations for Performance Improvement

The data is remarkably consistent across the regions: all towns report their primary dimensions of dissatisfaction to be Responsiveness and Reliability. Deebank is the one exception, with the poorest performing dimensions being Reliability and Assurance. Tangibles show the highest perceptions against expectations, satisfying and even exceeding expectations in some regions. Cambus and Deebank clearly receive over-investment in Tangibles, evidenced by exceeded expectations in these towns. The fact that perceptions exceed expectations is clearly demonstrated by the positive weighted gap scores. This investment can and should be reallocated to staff training and/or recruitment, as the majority of service gaps concern the quality of staff competence and attitude. The town of Deebank in particular seems content with most dimensions, whilst Erinlang tenants are highly dissatisfied with the quality of service they receive from the Department. If possible, a staff exchange should take place between these two regions. This would allow more competent staff members from Deebank to model best service practice for Erinlang staff in a live environment whilst improving service for Erinlang tenants.

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The data also shows that getting a job right the first time and informing tenants of maintenance schedules are major problems in most towns. At its heart, these issues demonstrate a lack of consideration for the customers experience. In fact, the tenants may not be perceived as customers at all, an attitude which would account for some of the low scores across Reliability and Responsiveness. The Department must create a customer-focused service culture amongst its operations staff. This includes implementing a Customer Experience programme which maps contact points, identifies appropriate behavior, and builds accountability into performance evaluation. In short, the Department must see itself as a business, and treat its staff like professionals. Holding staff to a high standard, and rewarding them appropriately, will improve measures of service quality more effectively than a simple round of compulsory staff training. Along the same lines, in order to function at an optimal level the Department must regularly assess customer perceptions and reallocate resource accordingly. For example, the town of Cambus gave Assurance a low importance rating, which indicates that Department spend in this area would go further toward customer satisfaction if it were reallocated to another town. Deebank, for example, reports quite low perceptions of Assurance, and would benefit from the reassignment of a particularly knowledgeable staff member.

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PART B: EVALUATION OF THE OPTIONS 1. Problem structuring and Stakeholder modelling

The CAUSE framework was used to support problem structuring. It also provided guidance in evaluating the four options currently under consideration by the Housing Department: Option A: Staff training Option B: Outsource the housing service to a local cooperative housing association Option C: Outsource the housing service to a private sector company Option D: A management buy out

1.1 Stakeholder Modelling

After careful analysis of the brief provided by the Department, eleven distinct stakeholders in four categories were identified (see Appendix A Stakeholders). Each stakeholder has unique priorities and primary considerations, making it necessary to explore the four options from multiple perspectives. Modelling of these perspectives was performed as indicated below: Gareth o o o Nadine o o Sarah o o Management buy-out Housing Service/Local Authority Housing/Housing Association/Private Company Manager Bank Manager Elected Council representative The Scottish Government Staff Representatives and Union Representatives Local Residents (service users) Local Residents (those who pay for services through the local property tax)

Fayzan o Analyst and facilitator

Each author had an established role from the outset of the evaluation process. This gave each key decision maker an equal voice in the decision analysis.

1.2 Uncertainties
Defining the roles for the group made the brainstorming of uncertainties easier, as each team member was positioned to contribute from their unique viewpoint. This is discussed is more detail in the next section.

1.3 External / Environmental

Our analysis included discussion of how wider environmental factors could affect the decision making process. For example, although we did not consider other Local Authorities to be relevant stakeholders in our analysis, we do recognise that they will have an impact on policies 13

produced by the central Scottish government, which may in turn affect the Housing Department. However, every action and decision by a variety of external group and individual presents the risk possible knock-on effects for the Department. The decision was taken to focus our analysis on the known perspectives and priorities of the primary stakeholders.

2. Developing a value tree for the analysis of alternatives

By playing the defined roles, each author was able to ensure that the root of the value tree was comprised of the key uncertainties. These uncertainties were then split into the appropriate sub categories. This ensured that the each node of the value tree was relevant to, and understood by, all stakeholders. We debated the most appropriate composition, such as nodes representing uncertainties, or nodes representing stakeholders. However it became clear that this problem required uncertainties. The final output is shown in Appendix Value Tree Analysis.

2.1 Scoring and weighting process

Please see Appendix C Scores and Weights, which contains the final scores we reached. For all the uncertainties, we chose to use a Local Scale for our reference points, where 0 corresponds to least important and 100 to the most important. Role play assisted in VISA Step 3 Set Scores. Each team member provided insights from the stakeholders that they represented, which in turn allowed us to arrive at a considered view as to the local scale for each uncertainty. To facilitate a discussion for VISA Step 4 Set Weights, each team member separately produced weights for the uncertainties, which the facilitator then merged for further review in a group discussion to arrive at a final consensus. The final weights that we arrived at can be seen in the diagram in Appendix B - Value Tree Analysis.

Discuss the synthesis of information for each stakeholder or scenario and compare results across stakeholders / scenarios
To enable opinions to be more fully formed and considered, we conducted the Part B assignment over multiple group meetings. In preparation for each meeting the facilitator requested that the other team members prepare appropriate input for group reflection that highlighted the positions of their representative stakeholders. At this point we had produced: Scores, see Appendix C Scores and Weights Weightings, see Appendix C Scores and Weights with the diagram in Appendix B - Value Tree Analysis Please see Appendix D Performance Profile, which shows a breakdown of Best and Worst uncertainties for each of the four alternatives. At this point the two alternatives Outsource the housing service to a local cooperative housing association and A management buy out clearly appear to be two options that are worth considering further.

Carry out appropriate sensitivity analyses and outline what you learned from these
Once we had reached Step 5 - Analyze Value Tree, using sensitivity charts etc. enabled each team member to produce results that reflected the aspirations of their stakeholders. This showed that it was

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possible for one stakeholder to imply that the results showed in their favour, when in actuality charts needed to be compared alongside representations for all the views of the other stakeholders.

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Staff/Unions/Residents stakeholder sensitivity analysis

Residents preferred option: Outsource the housing service to a local cooperative housing association The sensitivity chart indicates that having taken adjusted each criteria weight according to the preference of residents, the preferred option is to outsourcing to a local cooperative housing association. In this situation, the best interests of the residents are deemed to be met, these being management of service gaps, to deliver a high quality service by addressing all service needs. This option is well suited to achieve this objective, considering that the residents have direct representation in the appointed housing association, which precludes poor communication of service needs and facilitates a rapid response to any service quality issues in the shortest possible time. Staff/Unions preferred option: A management buyout A management buyout appears to favour the best interests of the staff and the associated unions. A principal concern for all staff, and by default, the unions is job retention as the housing service undergoes ownership and management change. Although TUPE regulations are expected to protect these rights, thereby providing assurance to the staff/unions at the initial stages of a change in the business ownership, there is no long-term guarantee that the status quo will be maintained. Many employees in this service will remain in the department over the medium to long term, and this uncertainty therefore creates a significant uneasiness in the ranks of personnel employed by the local authority. A management buyout thus empowers the employees to manage their own future and imparts a sense of job security in that the future of their employment is placed firmly in the hands of those whom they already rub shoulders throughout the working day, and who shall therefore empathise with them most over job security issues. Local tax payers preferred option: Outsource the housing service to a cooperative housing association Local taxpayers have many interests in the decision to improve service delivery, beyond the obvious management of service gaps and service quality delivered in fulfilment of service needs. From the perspective of the tax payer, there are deeper concerns such as the budget allocation of government funding, and their own contributions through tax payment which they expect to be managed optimally to deliver the best service possible in the short to medium term. In the short term, the operating budget is a sure indicator of where these funds are allocated to and maintenance of full control over the management of funds shall assure these remain allocated to deliver optimal results. From the perspective of the tax payer, local authorities may, either through historical experience or as a result of distrust in politicians, not be the best custodians and administrators of these funds. Local

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authorities may also not have the best interests of the taxpayers at heart when decisions are made in respect of resource allocation and control, considering that the actions are not directed solely by the taxpayer, but more so by government policy, over which the tax payer may feel they have insufficient representation and/or immediate control. Outsourcing this service to a local cooperative thus resonates well with the interests of the taxpayer, considering that fund allocation and control is more focussed on the tangible service needs of the customer, thus amounting to effective short and medium term administration of the tax payers contributions.

Local and National government stakeholder sensitivity analysis

Elected members preferred option: Option B: Outsource the housing service to a local cooperative housing association Elected members have a number of conflicting priorities and concerns, with a need to ensure that the cuts required of central government are delivered, and a seemingly conflicting need to influence residents in such a way that they perceive an improvement in quality, which in the short to mid-term could impact on future local election decisions. Hence, there is an underlying political focus on any key decision being made. Budget options are therefore highly important, whether on a local level in terms of dictating exactly how much money is available for any of these options and identifying cost savings, or in terms of looking at alternative options beyond the four given such as finding alternative funding from external sources or building a case for more funding from government because of specific causes. It should be noted hence that regardless of the results indicated from the management software, it is likely to be used as a contributing factor to the final decision politically, and elected members would be seeking out more information, for instance looking at what is happening in neighbouring regions, risk factors associated with each option, and possible political repercussions of choosing any one option, before proceeding. As part of being seen to represent and consider the needs of local residents, elected members would also be interested in accounting for service needs. Elected members will also be reluctant to take any option which will regarded as a relinquishment of control, unless they could fully demonstrate how this would deliver improved service quality and reduce costs with minimal risk to the council (and indirectly to local residents taxes). Staff-related concerns would be of less concern to elected members. While it would be beneficial to have staff and unions on side, neither party can argue against the need to save money and provide a higher quality service, from the findings of the resident survey. One possible viewpoint is that current staff have helped to contribute to the current perception of the councils services, and if they are unwilling to admit to this problem, then no amount of union argument or training being made available will help improve the situation. From these priorities, the software shows that the preferred option would be to outsource the housing service to a local cooperative housing association. Depending on the nature of the councils arrangements with the housing association, there may be scope for an element of control to be kept, especially considering that the local authority will be assisting with set up costs and contributing to the Housing Associations annual costs.

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However, as indicated above, it is believed that elected members would want more information about this option before committing further, as it would be important to them to be able to communicate the benefits and savings to be achieved by following this route, and they would want to assure themselves that in the current political and economic climate that residents would be broadly in support of their option choice or that they had appropriate plans in place to be able to deal with any opposition. Local government preferred option: Option B: Outsource the housing service to a local cooperative housing association The local council as a whole will be directed the priorities of the elected members, given its function to help deliver elected members strategies and visions over a political term. The main point of difference for local government is that it would also have to consider operational issues and staff concerns. For instance, losing any staff as a result of making training mandatory, or through some of the options, will incur costs and time. There may also be implications to service quality if Option 1 were chosen for instance the organisation might have to consider how a temporary dip in service quality could be managed while change and improvements were being embedded. So for local government, while staffing issues would be less important than the other areas, it would not necessarily be zero weighting. With this extra consideration, the software also shows Option B as the recommended option. As local government decisions would then be expected to go for approval by the senior management team(s) and / or elected members, a robust case would need to be developed to take this option forward if it was supported by the elected members, notably, assertions such as the, Housing Association should in theory at least be able to provide high levels of service quality to tenants, would need to be substantiated further.

Housing Manager stakeholder sensitivity analysis

Private company manager preferred option: management buyout The private company manager is concerned with Budget both the capital budget and the operating budget rate high on the list of priorities. With the exception of setup costs which figure highly, Political Needs and their sub-criteria do not factor into this managers decision making process. Staff-related concerns do figure into the decision, but only at a mid-weight ranking. The private company manager is not overly concerned with the residents perception of quality and service gaps are only important in that the bare minimum must be done in order to retain the customer base. As for Management sub-criteria, the major areas of concern are the business plan and budget allocation. Both of these rank quite highly. Managing service gaps is a factor, but not a major one. The important Stakeholders are the shareholders this category gets the maximum weighting. The bank is important as well, but to a lesser degree. Residents weigh in only slightly. Taken together, the software predicts that a management buyout would seem the best option to the private company manager. There are simply too many aspects of this business that that he/she has no experience with, no time for, and no interest in. In his/her professional opinion, the requirements of this

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project would be best served by retaining human resources which possess the required knowledge, experience and commitment to its objectives.

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Housing Service Manager preferred option: management buyout The housing service manager is highly concerned with all aspects of budget, political needs, local authority government, staff and residents. He/she is less concerned about the Scottish Government, but it does have some weight as a consideration. As for Management, he/she is highly concerned with managing service gaps and budget allocation, but is not so concerned with the business plan. The only stakeholders this individual really values are the residents shareholders and the bank do not factor in at all. The preferred outcome is a management buyout. Given the complexity of the business and the number of factors that are of serious concern, simple staff training will not suffice, and a private company is not an appropriate environment for a project with so many political needs and public stakeholders. Local Authority Manager preferred option: Management buyout The local authority manager has one overriding priority cope with the impending budget cuts whilst ensuring that enough money remains to cover the considerable responsibilities of the local authority. This individual is greatly concerned with all aspects of the budget, giving these criteria a heavy weighting. Political needs are a consideration as well, but taxation, possible savings and initial setup costs are the most important of these. Staff and residents get middle weighting. They are a consideration, but this manager has a huge amount of staff and customers across a range of public services. The management practices of this particular business are not of great concern either. They do rate, but only in as much as they get the most value for money and keep the customers happy enough not to cause issues. The residents are the only stakeholders who figure in this scenario, as meeting residents expectations is an important indicator of this Managers job performance. The preferred outcome is a management buyout, as this represents a viable chance to save considerable money and reduce the local authoritys burden of service, whilst maintaining staff consistency for the tenants. Bank Manager preferred option: management buyout The bank managers priorities are simple: budget, business plan, shareholders and, of course, the bank. Criteria around staff, residents and service quality do get some weight, but only as far as they are managed enough to achieve sufficient return on investment. Due to the bank managers relatively limited scope of interest, this is a simple decision. As long as the business plan is strong and the budget is well-managed, he/she will support the management

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buyout. This aligns with the fact that the bank as already expressed interest in backing this project.

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Recommend a course of action (this may be a decision, a need to consider further alternatives, a need to design a more robust or better compromise alternative etc ...)
Having arrived at Step 5 - Analyse the Results, and having reviewed each of the stakeholders sensitivity analysis, we arrive at the XY Chart. This presents a very simplistic view of the results. The XY Chart conclusions are also corroborated by the Appendix D Performance Profile, which shows a break down of Best and Worst uncertainties for each of the four alternatives. From these charts and the above sensitivity analyses, enables us to draw two key conclusions:

Alternatives to be immediately dismissed

The two alternatives: Staff training and Outsource the housing service to a private sector company have much lower overall scores, were not selected by any individual sensitivity analyses and should be immediately discounted.

Alternatives to be considered further

The remaining two alternatives Outsource the housing service to a local cooperative housing association and A management buy out achieved very similar scores. This can be concluded both from individual stakeholder sensitivity analyses, where team members were permitted to change weights, to reflect their stakeholders opinions, in addition to the overall XY Chart. Therefore, we suggest that the key decision makers within the Local Authority should review these findings, and combine with additional insights from elsewhere, which should include: More detailed financial analysis Consider ways that the stakeholder needs can be adequate met and measured, such as allowing the Local Authority some amount of control over ongoing operations.

The research findings detailed in Part A of this report clearly indicated that the dimensions of Reliability and Responsiveness are of the greatest importance to tenants. It is understood by the analysis already undertaken, that in theory outsourcing to a local cooperative housing association would be best approach for improving service quality such as in these areas. Also local and national governments may expect to have greater control over a local cooperative housing association, rather than a management buy out company. It is stated that residents perceive that service quality such as Reliability and Responsiveness would not actually improve from a management buy-out, and with operating budgets being cut, this may be expected to further negatively impact this performance. Therefore taking the above points holistically into account, we recommend that the option to be pursued should be that to outsource to a local cooperative housing association.

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Appendix A - Stakeholders
Staff Representatives and Union Representatives
Option A o Provide additional staff training focussed primarily on those areas where the largest service quality gaps have been identified through your own analysis. The training will be focussed on how staff can realistically improve the service they provide tenants given existing budget constraints. Such training will not necessarily incur a high cost as it is thought that much of the training can be done in-house and that staff can be released from their day-to-day activities in small groups so as to minimise disruption. Option C o Staff currently working in the housing service would need to apply for their jobs with the successful private bidder and there are no guarantees as to how many would be employed or what terms and conditions would be. Understandably the local trades/labour union is concerned about the impact on its members of this option (although only around 40% of housing service staff are union members) Option D. o It is anticipated that most staff would transfer over to the new organisation after the buy out but this is not guaranteed. Option C o tenants have expressed concerns that the private company would be able to raise rents as it wanted Option D o Local residents are concerned that quality of service may not improve given that it would be the same management and the same staff as at present Option A o Still in council control so continuing impact on taxes Option B o the local authority would pay an annual contribution to the HAs running costs of around 500k Option C o The cost savings to the housing service however under this option are considerable Option D o Might be less burden on shareholders Option B o The HA should in theory at least be able to provide high levels of service quality to tenants. Most of the existing housing service staff would automatically be transferred to the HA with existing terms and conditions. However, there would be the option for staff who did not want to transfer to take voluntary redundancy. The local authority estimates it could incur a one-off cost of between 250k and 350k for this. In addition, the setup costs to the local authority for this option would be relatively high (around million) as the authority supports the new HA to get established (offices, IT systems etc) and the local authority would pay an annual contribution to the HAs running costs of around 500k. Option C o Elected representatives serving on the local authority have also expressed concern about the lack of control over the private company

Local Residents (service users)

Local Residents (those who pay for services through the local property tax)

Elected Council representative

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o The cost savings to the housing service however under this option are considerable Option D o Elected representatives have argued that the local authority would have no future influence over local housing policy which could cause major problems for economic growth and development, tourism and so on. o From this it appears that the elected official will be directly responsible for the housing budget allocated, and by shrinking the budget too far, may break the viability of the private company. The Scottish Government provide grants to each LA for social housing. Therefore they will wish to have influence over how each local authority prioritise spending such as on social housing

The Scottish Government

Housing service manager

The housing service currently has an annual operating budget of around 1.5 million which goes on staff costs, operating costs and the cost of property repairs. Under current economic conditions, the service anticipates that its operating budget is likely to be cut considerably over the next few years putting further pressure on the service in terms of quality and service. Any budget cuts are likely to lead to a reduction in staff numbers although it is hoped this can be done through natural wastage rather than redundancy. The capital budget allocated to the service for property upgrades and new build is likely to fall to zero. Option A. o The Departmental manager is aware that staff training will not necessarily address all the gaps identified. The manager is also aware that such training is not necessarily a guarantee of improved performance and quality as some staff have been very reluctant to accept any responsibility for the service quality gaps identified. Option D. o Existing management and staff of the housing service to organise a management buy out. This would involve the existing management team paying the local authority an agreed amount for the existing housing stock. The new service would then be responsible for providing the service to local tenants and the local authority would have no more involvement. It is anticipated that most staff would transfer over to the new organisation after the buy out but this is not guaranteed. o The manager needs to build a business plan that anticipates budget cuts, by seeking alternative revenue streams (such as renting properties privately), and planning for staff reductions Option B o The HA would be run by a Board made up of people nominated by the local authority to ensure good governance and also by elected representatives of the tenants who would therefore have a direct involvement in the running of the service. The HA should in theory at least be able to provide high levels of service quality to tenants. Most of the existing housing service staff would automatically be transferred to the HA with existing terms and conditions. However, there would be the option for staff who did not want to transfer to take voluntary redundancy. The local authority estimates it could incur a one-off cost of between 250k and 350k for this. In addition, the setup costs to the local authority for this option would be relatively high (around million) as the authority supports the new HA to get established (offices, IT systems etc) and the local authority would pay an annual contribution to the HAs running costs of around 500k. Option D o There is also a risk to the local authority that if the new service is not financially viable in the medium term and goes out of business, the local authority will have to pick up the pieces.

Local Authority Housing Manager

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Local Cooperative Housing Association (HA) Manager

Option B o The second option is to outsource the entire service to a local cooperative housing association (HA). HAs are non-profit organisations run by their tenants but employing professional staff to carry out the day-to-day activities of the service and also to provide professional management. Option C o The third option would be to outsource the entire service to the private sector. This would be done through an invitation-to-tender process whereby private companies would bid for the annual payment they would require from the local authority to provide the service. The local authority would then pay that fee each year to the successful bidder to provide the service for the next 5 years. It is not clear, given the current recession in the UK, what level of payment private firms might require but a guesstimate is that it could be as low as 250k. The private company would also retain the rental income generated by the housing stock from providing the service. Option D o A Scottish bank has already indicated it would consider providing the funding for the buyout. Its not known what the current value of the housing stock is but an informal estimate is between 10-15 million.

Private Company Manager

Bank Manager

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Appendix B - Value Tree Analysis

This diagram depicts the value tree that our group collectively built, showing our key uncertainties, and how that breaks down into sub-sections. The weights that were defined in VISA Step 4 Set Weights, are also shown.

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Appendix C Scores and Weights

For all the uncertainties, we chose to use a Local Scale, where 0 implies least important and 100 is most important. We took the combined views of all the stakeholders to arrive at the decision, as to how each uncertainty would be impacted by the four alternatives. It should be noted that at face value, some scores might not immediately seem logical, however within the context of our arguments become clear. For example, the impact of the Unions as an uncertainty, are least important to the Staff Training option, as we considered the unions would approve of this, whereas the alternative to Outsource to a third party, might cause significant disquiet within the Unions, therefore making this most important. The weights that we collectively arrived at, are shown in the above diagram in 5 Appendix B - Value Tree Analysis.

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Appendix D Performance Profile

Although there is a lot of volatility which can mask differences between the four alternatives, its easy to see which alternatives come out best and worst, with the results shown in the following table. We can draw the following conclusions from this: All options have a similar number of uncertainties that come out Best Staff training and Outsource the housing service to a private sector company have significant uncertainties that come out worst Overall Outsource the housing service to a local cooperative housing association and A management buy out appear to be two options that are worth considering further.

Alternative Staff training Outsource the housing service to a local cooperative housing association Outsource the housing service to a private sector company A management buy out

# of uncertainties, considered Best 4 4

# of uncertainties, considered Worst -13 -1

Difference between Best and Worst -9 3

6 4

-7 -3

-1 1

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