Issue 2
Decentralisation
March 2012
APS Human Capital Matters: Decentralisation
March 2013, Issue 2
Editor’s Note to Readers
Welcome to the second edition of Human Capital Matters for 2013—the digest for time poor
leaders and practitioners with an interest in human capital and organisational capability. This
edition discusses the relocation of government agencies away from the Centre to the regions and
the ‘virtual’ issues and challenges this raises for managers.
Decentralisation has been a fact of public sector life for some time, with the most ambitious and
numerically successful relocations occurring in the UK, going back to 1963. In that year, Sir
Gilbert Flemming’s review recommended the relocation of 57,000 jobs out of London. The next
such review, undertaken in 1973, recommended the dispersal of 31,500 positions, although only
around 10,000 of these were ever relocated. The Next Steps program of the late 1980s and 1990s
saw 19,000 posts relocated or established outside the South East between 1989 and 1993. More
recently there has been substantial impetus given to relocation in the UK by the Blair and Brown
Labour Governments which has been reconfirmed by the Coalition Government elected in May
2010. So that by December 2009, over 21,500 public sector jobs had been moved out of London
and the UK Budget Papers for 2010 (the first Coalition Budget) outlined the Government’s
intention to relocate a further 15,000 civil service jobs out of central London by 2015.
Relocation is also occurring in the Republic of Ireland and Northern Ireland; it was announced in
2012, that the relocation of the headquarters of Northern Ireland’s Agriculture Department to
Ballykelly would mean the movement of 800 positions to the North West. Other jurisdictions
which have also engaged in relocation in order to improve national government, social and
economic outcomes over the past two decades include France, Germany, Norway, Japan and
Canada (notably, British Columbia).
For many, the primary reason for relocating away from the Centre is because ‘…the
geographical decentralisation of the civil and public service is seen as an opportunity to secure
improved efficiency on the back of business process re-engineering (BPR), new working
practices and modernisation.’1 But there is a much broader range of benefits that accrue as a
result of decentralisation, particularly to the communities into which government employees are
relocated; this is a theme of a number of the papers in this edition of Human Capital Matters.
The report completed by Sir Michael Lyons in 2004 on the relocation of government employees
in the UK articulated the range of benefits that accrue from the relocation of Government
services. The Experian report commissioned as part of the larger Lyons report specifically
identified some of the benefits that can accrue to the regions into which public sector employees
are relocated. While a little dated these papers still resonate today.
The policy implications of public sector relocation in Northern Ireland were described in a
review chaired by Sir George Bain in 2008, many of which are applicable across a range of
jurisdictions. Le Goff’s study of relocation in Canada found that, to be successful, public sector
relocation programs must be based on the needs of sound governance and public sector
employees rather than private sector lobby groups. Finally, Ian Smith’s 2010 report focuses on
the savings to taxpayers of relocation while recognising the broader outcomes of relocation
Peter C. Humphreys and Orla O’Donnell, Public Service Decentralisation: Governance Opportunities and
Challenges, Institute of Public Administration, Dublin, 2006, p. xi.
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including economic stimulation, bringing government closer to the people and promoting a more
efficient public service.
But decentralisation is not without its management challenges, most of which centre on dealing
with a dispersed workforce. The paper by Hansen et al highlights that many of the challenges
facing dispersed teams can also occur in a collocated team, but are exacerbated in a dispersed
team. Finally, Ware and Grantham provide some very practical outcomes from their research
into the factors needed to manage remote workers successfully. As a special bonus, readers
might also like to look at Gerard McManus’s very short article in the Australian Institute of
Management’s Management Today (March 2013, pp. 24–25) which provides 21 tips on how
managers can keep remote employees motivated and connected.
Happy reading!
About Human Capital Matters
Human Capital Matters seeks to provide APS leaders and practitioners with easy access to the
issues of contemporary importance in public and private sector human capital and organisational
capability. It has been designed to provide interested readers with a monthly guide to the national
and international ideas that are shaping human capital thinking and practice.
Comments and suggestions welcome
Thank you to those who took the time to provide feedback on earlier editions of Human Capital
Matters. Comments, suggestions or questions regarding this publication are always welcome and
should be addressed to: humancapitalmatters@apsc.gov.au. Readers can also subscribe to the
mailing list through this email address.
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Experian, The Impact of Relocation, January 2004, London, 81 pp.
This report was commissioned by Sir Michael Lyons during the course of his major inquiry into
the relocation of government agencies from London and the South East (see abstract for Sir
Michael Lyons). It looks at public and private sector relocations across the UK, and examines the
economic impact of public sector relocation. It is based largely on a series of interviews with the
senior staff of 10 public sector bodies and the leaders of seven companies as well as a number of
case studies. Experian concluded that, ‘… relocation brings significant benefits to organisations,
enabling them to reduce operating costs, reshape their culture, and modernise working practices
in the light of new technology’ (p. 1). The study also reported that, ‘ … the economic benefit to
areas receiving relocated government functions was greater than had been believed, and that
there were broader, but less tangible benefits to these areas in terms of boosting skills and
investment, and building confidence for future development and investment’ (p. 1). On the basis
of this work and a literature search, it reached seven specific conclusions about the relocation of
government agencies which still have resonance today:
1. Relocation can deliver considerable cost benefits, principally in the areas of premises
costs and labour costs.
2. Relocations that focus on delivering operational change are likely to deliver greater
benefits than those that focus exclusively on labour and rental cost savings.
3. Organisations can benefit from improved labour force availability and better service
delivery.
4. Relocation can in some instances significantly advance wider Government imperatives,
such as regional growth, regeneration and devolution.
5. Effective planning and project management are required in order to facilitate a successful
move.
6. Relocation benefits must be sustained; long-term success requires careful risk
management and, critically, strong leadership and commitment from the top.
7. The debate as to whether or not ‘policy’ people can move from London will benefit from
much tighter definition and challenge; ‘policy’ and other senior jobs have been
successfully relocated in the past.
Experian (whose Business Strategies Division produced this report) is an information services
company operating in 44 countries.
Tine S. Hansen, Alexander Hope and Robert C. Moehler, ‘Managing
Geographically Dispersed Teams: From Temporary to Permanent Global
Virtual Teams’ (‘Built and Natural Environment Research Paper’),
Northumbria University, Newcastle upon Tyne, 2012, 16 pp.
The authors note that the rise and spread of ICT has enabled increasing use of geographically
dispersed work teams (Global Virtual Teams), and that originally these were mainly organised
for the purpose of undertaking temporary projects. However, they add that little research has
focused on the emergent challenge for organisations to move towards establishing more enduring
Global Virtual Team structures in order to leverage knowledge sharing and cooperation across
distance. To close this gap, the paper provides the outline of a research project designed to assist
organisations in doing so. The authors observe that new factors and influences are shaping
virtual work: the parameters in relation to increasing global competition have changed; a new
generation of self-motivated employees who are already practising virtual relationships has
emerged and is currently joining the global workforce; and the constant improvement in ICT.
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As the authors make clear working together over distance presents a number of challenges.
These may also be found in colocated teams, but they are almost invariably magnified due to
dispersion and involve issues of trust; coordination of work; conflict; culture; and ICT. The task
of building Global Virtual Teams, however, has been assisted by two developments related to
rapid and global ICT expansion. The first concerns recruitment of Generation Y employees or
the Millenium Generation (those born between 1977 and 1998) who are highly skilled at virtual
work. Many of these employees also fall within the category of so-called ‘native speakers’ of the
digital language of computers, video games and the Internet. Hitherto, one of the main Global
Virtual Team foci has been enhancing organisational flexibility and speed by leveraging
specialist skills. The authors argue, however, that in the future organisations will come
increasingly to rely on building permanent Global Teams due largely to increasing globalisation
and the need to outsource and build networks with partners to a greater degree than in the past.
They conclude by suggesting a number of areas for possible future research concerning the
extent to which organisations work via Global Virtual Teams. These include preparation for
working in such teams; the staffing of teams; and how Millenials entering an organisation shape
its approaches to Global Virtual Team activity.
Tine S. Hansen is based at the School of Technology and Business, VIA University College,
Denmark; Alexander Hope and Robert Moehler lecture in the School of the Built and Natural
Environment, Northumbria University, Newcastle upon Tyne.
Independent Review of Policy on Location of Public Sector Jobs, Report
(Chairman: Sir George Bain), HMSO, Belfast and London, 2008, 220 pp.
The review team, appointed in December 2007, was asked to devise ‘an agenda for action’ and
‘a set of practical recommendations for the longer-term approach to the location of public sector
jobs’ in Northern Ireland. The authors begin (Chapter 1) by noting the increasing attention given
in recent years, both nationally and internationally, to the relocation of public sector jobs from
capital cities. In Chapter 2, they discuss the broader context for relocation by focusing on the
role that relocation might play in regional regeneration of Northern Ireland’s depressed areas and
in helping to rebuild deteriorating infrastructure. The public sector in Northern Ireland accounts
for 31% of employee jobs and 13% of the overall population (of all ages), figures higher than the
comparable ones for the UK overall and the Republic of Ireland. Many public servants travel
from remote areas to work in Belfast at considerable economic and other costs to themselves.
Chapter 3 looks at how these pressures could be eased. In Chapter 4, the authors discuss the three
main reasons for relocation as revealed in the literature on the subject: enhancing the delivery of
effective public services; promoting more balanced regional economic development and
reducing social deprivation; and promoting sustainability. They add that relocation provides a
catalyst to maximise the potential of technology and can be a fillip to the adoption of new
working practices, thus creating greater effectiveness and efficiency.
Chapter 5 of the study outlines the experience of relocation in Northern Ireland, the Republic of
Ireland, Wales, England and Scotland. The review team concludes that the extent to which it has
been able to draw conclusions on the subject has been largely determined by the degree of
maturity of the various relocation strategies. Scotland’s, for example, is nine years old and is
therefore easy to assess. They also observe that the recent English experience demonstrates the
success that can be achieved where a clear and measurable objective (to reduce costs) is set from
the outset, and the right environment (regional cost disparities) exists to achieve this objective.
They also note that in all these jurisdictions the physical relocation of people gives rise to
significant human resource and industrial relations issues. The study argues (Chapter 6) that
flexible working arrangements based on the innovative use of ICT are the key to successful
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relocation. In Chapters 7 and 8, the authors propose a relocation program for Northern Ireland
and make 27 recommendations (pp. 19–22) for doing so. A number of these could be
implemented in other jurisdictions. They include:
1. Relocations should be implemented in a phased approach over a period of, say, five years
(Recommendation 10).
2. Relocation should be considered in the event of the restructuring of government
departments, lease breaks, and where opportunities exist to enhance service delivery, to
cluster services or to colocate services (Recommendation 17).
3. Clear objectives and benefits-realisation plans should be developed at the outset of
relocation projects as part of the business case (Recommendation 23).
4. A small central unit should be set up to provide direction, oversight, and support on
relocation (Recommendation 26).
The eight members of the review team were drawn from the public and private sectors and
emphasise that they do not represent any particular interest or point of view: ‘ … we bring
experience to the table, not representation.’
Philippe Le Goff, Moving Public Servants to the Regions, Parliament of
Canada, Ottawa, March 2005, 6 pp.
The author notes that the idea of moving public servants out of Ottawa into the regions was first
mooted in the mid-1970s. An ambitious relocation program had been embarked upon by the
Canadian Government in order to promote national unity, regional economic development,
balanced urban growth and enhanced delivery of services. Some 10,000 positions were identified
for relocation to 24 different cities. However, the project was discontinued in the early 1980s,
largely on the grounds of cost and in the face of employee opposition. In 2005, however, the
Government announced that three small agencies would be relocated and these moves took
place. After discussing how Canadian Government jobs are distributed across the country, the
author goes on to identify the strengths and weaknesses of relocation. He concludes by proposing
the establishment of a rigorous and transparent analytical framework that might help to maximise
the positive impact of spreading federal jobs across Canada and reduce the arbitrariness—
whether real or perceived—which in the past has sometimes been associated with relocation.
The author notes the USA federal public service’s high degree of decentralisation (in 2002, for
example, only 16.6% of federal jobs were concentrated in (and near) Washington, DC). The
figure for the UK (in 2004) was 16.6%—excluding military personnel). In 2005, some 35% of
Australian Public Service staff was located in Canberra. In the same year in Canada, 31% of
federal government employees worked in the National Capital Region in (and around) OttawaGatineau. The author concludes that the degree to which federal jobs are spread across a country
seems to depend greatly on demographic and economic imperatives. He cites a number of
reasons for relocation: first and foremost, regional development; secondly, lower operating costs
in the regions; thirdly, distributing growth and creating synergies to maximise the effectiveness
of public spending; and, finally, bringing federal jobs closer to pools of available workers in
order to alleviate the impact of an ageing public service. The author also outlines a number of
arguments against relocation: high short-term human resources and materiel costs; disruption of
the community structure with the coming of a large number of public servants who may enjoy
higher salaries than local residents do; and unexpected and high costs of public servants
travelling across a vast country like Canada on official business (assuming that teleconferencing
cannot meet all public sector communications needs).
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To make possible successful relocation exercises, the author advocates the development of a
framework which includes decision-making criteria not shaped by the interests of private sector
lobby groups but rather by the needs of sound governance and public sector employees. He
proposes three considerations for each party to the exercise—the agencies concerned and the
target region.
For agencies under consideration:
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

They should be relatively independent or specialised, so that the move does not impair
their interaction with their partner departments or agencies in Canada.
They should not have continual interaction with political officials or develop public
policy on a daily basis; otherwise, they should not be located outside the capital city.
Special attention should be paid to the demographic and professional characteristics of
employees asked to move.
For the target region:



The move should boost the local economy and contribute to the local economic base.
Labour and office space must be available, and transportation constraints, such as the
availability of flight connections, must not detract from the agency’s operations.
The target regions must have some appeal to the public servants who are moved (e.g.
language, job opportunities for spouses, schools).
The author concludes that a rigorous framework containing these elements would enable longterm consideration to be given to the federal presence across the country, so as to maximise the
policy’s positive impact. A Federal Government presence in regional Canada could thereby be
considered a central feature of an integrated economic policy.
At the time of writing, Philippe Le Goff worked in the Economics Division of the Canadian
Parliament’s Information and Research Service. He is now employed in its International Affairs,
Trade and Finance Division.
Sir Michael Lyons, Well Placed to Deliver? Shaping the Pattern of Government
Service, HMSO, London, March 2004, 154 pp.
In April 2003, the Government asked the leading local government specialist Sir Michael Lyons
to undertake an independent review of ‘public sector relocation’ across the UK as a basis for
improving the delivery and efficiency of public services and the regional balance of economic
activity. Sir Michael identified some 27,000 jobs which could be transferred from London and
the South East to the regions and estimated that this would save more than £2 billion over 15
years. What made the Lyons report so significant—and continues to make it so—is that its
author realised (and explained) the wider role that relocation could play in improving public
services; in reducing disparity in the economic fortunes of the regions; in enhancing national
competitiveness; and in facilitating stable devolution of functions within England and to
Scotland, Wales and Northern Ireland.
Sir Michael worked closely with government departments in framing his recommendations. He
assessed their proposals by considering research evidence on the business and economic impacts
of dispersal; made a high-level comparison of alternative locations; and engaged in wide-ranging
consultation. Lyons was at pains to distinguish his approach from earlier relocation exercises. As
he put it:
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Past relocation was undertaken largely as a series of one-off drives, led by the centre. The
main drivers were cost savings, and the need to boost flagging local economies. Dispersal
was limited by the technology of the time, and by a civil service culture based on
assumptions about proximity. In this respect the past is not a good guide to future
practice (p. 13).
At a time when ICT was transforming civil service communications and proximity had become
less of a factor, Lyons nevertheless remained mindful of the positive implications of relocation
for many regional areas. Sir Michael proffered 10 recommendations/conclusions. All were
accepted by the Government and incorporated into its current Spending Review. Several of the
Lyons recommendations remain relevant to relocation exercises in many jurisdictions. The
recommendations are summarised below:
1. Of the 27,000 jobs identified for dispersal, 20,000 should be dispersed in the first
tranche—urgently and as part of the Government’s Spending Review.
2. Major dispersals are likely to be costly in the short-term and Government must factor this
consideration into its calculations.
3. Departments should implement their relocation plans alongside efforts to align their pay
with local labour market conditions; failure to make progress on locally flexible pay will
limit the efficiency gains from dispersal, and could undermine the economic benefits for
receiving locations.
4. Whitehall headquarters should be radically slimmed down, so as to better reflect a clearer
understanding of what is really needed in London, and of the distinction between policy
and delivery.
5. There should be a strongly enforced presumption against London and South East
locations for new government bodies and activities as well as functions which do not
need to be performed in London.
6. Cabinet needs to give continuing political impetus to the relocation agenda.
7. Permanent Secretaries and other public sector leaders must make locational
considerations an integral part of their responsibilities (e.g. in business planning).
8. The Government has to take responsibility for the whole pattern of its locational
decision-making, and where necessary review and question departments’ locational
preferences.
9. The Government’s Office portfolio must be much more tightly managed in order to
ensure that exits from London are well-coordinated and overall value for money assured.
10. The civil service needs a more coordinated approach if it is to minimise the costs and the
adverse impacts on staff involved in relocation and redundancy (pp. 3–4).
Relocation continued under the Blair and Brown Labour Governments (21,500 staff dispersed by
November 2009) and remains a high priority of the Coalition Government elected in May 2010.
The main reason for the policy of relocation’s longevity was perhaps set out by Lyons himself.
Relocation decisions, he argued, are ‘ … an integral part of the wider efforts to improve
efficiency and service delivery in government and must be primarily business-case led, rather
than imposed by diktat … I was in no doubt that my work was relevant to a broader debate about
governance and power in the UK …’ (p. 9).
At the time he produced this report, Sir Michael Lyons was Director of the Institute of Local
Government Studies at the University of Birmingham.
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Ian R. Smith, Relocation: Transforming Where and How Government Works,
London, March 2010, 76 pp.
This independent review was commissioned by the Chancellor of the Exchequer through HM
Treasury. It examines the scope for further transfers of government agencies from London and
the South East as part of a drive to create a ‘smarter government’. Mr Smith concludes that there
remains considerable latitude for further relocation and therefore a continuing rebalancing of
government activity between London in particular and the rest of the UK. More specifically, he
recommends that 15,000 civil service jobs be relocated from London between 2010 and 2015.
He goes on to recommend that the Government should pursue a long-term goal of reducing the
number of civil servants in London by at least one-third by 2020. This study builds on the
relocation work initiated by successive governments following Sir Michael Lyons’s 2004 report
into relocation (see abstract for Sir Michael Lyons).
Mr Smith states that the major objective of the relocation process he recommends is to save
taxpayers’ funds but adds that it also has three other purposes:



to stimulate economic vibrancy in the UK’s regions and through linkages with the private
sector, encourage the creation of centres of excellence that help build clusters of
international competitiveness and contribute to growth and job creation;
to bring government closer to the people; and
to promote 21st century, efficient and fit-for-purpose public service ‘campuses’ in the
regions, thereby contributing to the vision of a world-class Digital Britain with modern
communications and flexible ways of working (he adds that Regional Ministers and the
Wales, Scotland and Northern Ireland Offices, working with Regional Development
Agencies (RDAs), Government Offices, the Devolved Administrations and Local
Authorities, should take the lead in developing propositions for these campuses).
In order to facilitate this process, the review recommends that government offices in London be
managed as an integrated campus that will control redevelopment potential. This should involve
at its core a reduction of government property located in London (and a commensurate reduction
in the heavy costs of maintaining such property), and the use of some of the savings from this
exercise to assist in relocation. Finally, the author recommends that a Cabinet Committee and the
Chief Secretary to the Treasury should oversee relocation and hold departments to account for
their decisions.
Ian R. Smith was a former CEO of the publishers Reed Elsevier when he produced this report.
James Ware and Charles Grantham, Managing a Remote Workforce: Proven
Practices from Successful Leaders, The Work Design Collaborative, LLC,
Berkeley, California, 2010, 27 pp.
The authors present the findings of their study of the key factors needed to manage remote
workers successfully. They examine in detail the experiences of several leading-edge
organisations in order to identify what really works on the ground, and in what conditions, to
secure the best outcomes from remotely-placed employees. They base their investigation around
three fundamental management questions:
1. Why do organisations launch distributed work programs in the first place?
2. What practices and tools do successful organisations rely on to manage remote staff
effectively?
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3. What critical advice do successful leaders of distributed teams have for organisations that
are just getting started?
The study is based on an extensive series of interviews with managers and academic specialists;
from these discussions the authors compile a set of basic principles and guidelines for high-order
remote worker management. They conclude that, regardless of how or why organisations
develop formal distributed work programs, those who do it successfully invariably follow five
basic principles:
1. Remote work is introduced strategically (the program is formal, explicit and sponsored
by senior management).
2. The organisation and its members learn to work differently over time (although
employees essentially continue to do the same work while being in different places,
‘going mobile’ requires some fundamental changes in how they get that work done, and
change always calls for the redesign of core business processes and adjustments in the
way managers operate and communicate).
3. Training is a central part of the program (the training includes both managers of remote
workers and the remote employees themselves).
4. The effective deployment and use of collaboration technologies is central to making
distributed work arrangements a success.
5. Success also depends on ‘planning thoughtfully’ and ‘implementing aggressively’ (‘plan
the work, and work the plan’).
James Ware and Charles Grantham founded the Work Design Collaborative, LLC, based in
Berkeley, California, in 2001. It is a research and advisory firm which aims to enhance work as
an activity and to shape the workplace of the future.
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