Case Study

Topics: Management, Strategic management, Organization Pages: 14 (3059 words) Published: December 12, 2012



Page 613


Cordia LLP: service reform in the public sector
David Potter and Gerry Johnson

Throughout the world governments – central and local – are wrestling with how to manage increasingly pressured budgets, increase efficiency and improve quality of services. Glasgow City Council in Scotland has made structural changes to its services that are amongst the most radical in local government. Cordia is the result of one such change. Previously Cordia was a Council department. In 2009 Direct and Care became a Limited Liability Partnership (LLP) with the remit to develop its services as a business operating at ‘arm’s length’ from the Council. But what would be involved in developing and implementing a strategy to deliver the benefits of such a change? ●

Direct and Care Services (DACS) was a department of
Glasgow City Council. It provided school catering, home
care services and facilities management to other departments of the council and more prestigious catering services to public and private sector customers through
Encore Hospitality Services. The department had been led
by Fergus Chambers as Executive Director. Changes were
triggered when, in 2008, Glasgow City Council settled an
equal pay dispute which resulted in manual pay rates for
DACS employees increasing by an average of 20 per cent.
Fergus explained:
Our predominantly female workers were graded at the
same level as the predominantly male workers in other
Council departments. But in many of those departments
the male manual staff got bonuses and therefore we
were open to pay disputes; we were not equal pay proof.
We had to compensate staff over the last 5 years. We
also had to develop a new pay and grading structure for
the future. I have to ‘break even’ over a 3 year rolling period, so the Council decided that if we did not improve
upon our competitive position they may have to consider other models for some of the services we offered. The favoured solution was a limited liability partnership
(LLP). That means that as an LLP we would start on
day one with a clean bill of health financially and it
would give us a chance to improve efficiency over time.
It would give us breathing space. We would not have
to face an immediate competitive position. So we were
established as an LLP.
99.9 per cent of the LLP is owned by the Council:
the balance is owned by a company that is also owned

Source: Brendan Murphy, Cordia.

by the Council and we still have politicians on the Board.
So the Council still controls the strategic direction. The
overall beneficiary is, of course, also the Council. If
we generate profits they will either be re-invested or
given back to the Council. But as a LLP we can trade as
an independent company. We are no longer bound by
Council rules and regulations.
In 2009 the department and all 9000 employees were
transferred from the Council to Cordia (LLP). Fergus was
appointed as Managing Director of the new business.

Organisational structure and culture
The new business inherited disparate service divisions
from its former status as a council department. In 2009
these remained unaltered as Fergus held the view that
the classic division of labour by service type was the most
efficient way to organise the affairs of the LLP. Also he did not want to fundamentally alter management arrangements

This case was prepared by David Potter and Gerry Johnson. It is intended as a basis for class discussion and not as an illustration of good or bad practice. © David Potter and Gerry Johnson 2010. Not to be reproduced or quoted without permission.





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Figure 1 Cordia’s organisational structure

at such an early stage. The organisational structure for
Cordia (LLP) is shown in Figure 1.
Under this structure, Cordia (LLP) has three operational...
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