Commercial in Confidence
Group Business Plan 2016/17
www.manchestergrowth.co.uk
Contents Section Page 1. Introduction
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2. Ambition, Strategic Priorities and 3 Year Forward Look
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3. Business Transformation
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4. Internal Transformation
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5. Business Units:
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» Skills » Employment » Business Support and Business Finance » Organisational Development Services » Marketing » Strategy and Research » Corporate Services 6. Finance
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7. Performance Management
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8. Risk Management
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Appendices 23 Internal Transformation KPIs and Targets for 2016/17 Glossary
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1. Introduction Purpose The Manchester Growth Company’s (MGC) purpose is to enable growth, create jobs and improve lives in Greater Manchester (GM) and all locations in which it operates. It is driven by economic development strategy and is commercially focussed. Any surpluses are re-invested to support achieving our aims. The Group was formed with core objectives to drive forward Greater Manchester’s (GM) economic development and help deliver the Greater Manchester Strategy (GMS) to address GVA growth differential, (for GM to become a net contributor to the national economy) and to ensure the inclusive impact of growth. MGC provides the Combined Authority and the LEP with additional resource to tackle these strategic challenges.
Key themes In addition to our core objectives there are a number of themes within this Business Plan that reflect our unique nature and our potential to become a powerful agent for change wherever we operate: • Our sense of place to ensure that we always keep to our core purpose of delivering economic growth in GM, and in other geographies in which we operate, and that we do this in partnership and within a framework of local accountability. • The commercial nature and activities of MGC which generate the income necessary to deliver our economic development role and enable re-investment to increase the scale, scope and quality of our services and achieve our ambition to become a high performing organisation. • The scale, range and depth of our activities which represent a unique ability to provide holistic, integrated services and solutions which deliver maximum individual benefit and economic impact for our customers, commissioners and stakeholders. • Our growing class leading status in a number of areas such as employment programmes, business support and alternative finance for business which are hallmarks of our scale and quality, providing a foundation for commercial success of MGC and of Greater Manchester’s, profile and reputation regionally, nationally and internationally. • Our ability to use our unique positioning within commercial markets and across a range of public sector programmes to become a “thought leader” by applying our insight and intelligence to help shape and influence the economic development policies and systems in which we operate. These themes are underpinned by the understanding that our staff are our greatest asset and that it is they who will ultimately enable MGC to achieve success through their skill, knowledge and commitment and by following the values which have been adopted across the organisation during 2015 – stronger together, build on success, empower people, do the right thing and make a positive difference.
Context The Business Plan also takes account of external factors shaping our activity. These were set out in detail in the Business Plan issues paper with key themes highlighted below: • Continued underlying economic progress from the recent recession and labour market recovery although accompanied by uncertainty in global markets, with additional economic risks presented by declining oil prices, reduced growth in China, increased risk of terrorism, euro-currency risk and climate change. • UK Government economic priorities centred on improving business productivity, increased exporting, rebalancing the economy (sectors and geography) and increased focus on skills in particular, apprenticeships, along with continued reductions in public borrowing and welfare spending. • The November 2015 Comprehensive Spending Review (CSR) which placed further pressure on national Departmental and Local Authority budgets and has already impacted on some national programmes, such as the demise of the national Business Growth Services and a forthcoming restructure of UKTI. Also as a result of CSR 2016/17, there will be a radical change in the way in which key services will be funded such the work and health programmes and apprenticeships.
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1. Introduction (continued) • A continued drive towards devolution to cities with Greater Manchester at the forefront of this process, the associated election of GM’s mayor in 2017 and the emerging GM spatial framework (alongside a range of other GM responses such as sector deep dives, low pay etc). • Continued support for and growth of the Northern Powerhouse agenda. • A referendum in June 2016, on EU membership, with the possibility of a Brexit. These represent both risks and opportunities for MGC. Reductions in Government and Local Authority spend present commercial/financial risks to MGC although in some areas, such as Employment and Skills, these may result in a radical re-structuring of the provider market from which new commercial opportunities could emerge. Changes to the way in which apprenticeships are funded represent both a risk and an opportunity and MGC’s engagement with businesses to provide holistic solutions to their needs will be a key aspect of our response to this change. The evolution of the Northern Powerhouse and continued devolution to cities represents a significant opportunity for MGC to position itself as a major player in the delivery of economic development services across the North of England. The specific nature of these challenges and details of how MGC will adapt and respond are set out in greater detail in this Business Plan. The Financial Plan at Section 5 identifies a projected surplus out-turn position for MGC legal entity for 2016/17 of circa £1m on an income of £114m (£101m 2015/16).
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2. AMBITION, STRATEGIC PRIORITIES AND 3 YEAR FORWARD LOOK Ambition MGC’s corporate ambition is to be a key enabler to GM’s economic growth, set and drive agendas and be a high performing organisation that is the deliverer of choice in target markets. MGC will: • Deliver measurable economic growth and account for our performance to the stakeholders, thus enhancing our reputation and profile. • Increase the scale of our commercial activity in order to achieve a growth in turnover and profit to generate increased surpluses for re-investment in scale, breadth and quality of service provision. • Provide fully integrated services to our customers to improve customer benefits, increase economic impact, maximise our USP as the only organisation able to offer such an integrated package and enhance our own commercial success. • Utilise our strategic and commercial knowledge and intelligence to shape and influence local and national economic development policy and delivery systems to spread best practice. • Be an employer of choice, attracting and retaining the very best people and attaining recognition as a high performing organisation. • Transform our internal systems and processes to become a robust and agile organisation thereby maintaining our reputation for delivering quality services with passion and commitment.
Strategic Priorities To support this ambition our strategic priorities for the 2016/17 are set out below. These are supported by a set of individual Business Unit operational objectives, set out later in this Plan.
Support and Enable GM Strategic Priorities In particular on Devolution, position GM at the heart of the Northern Powerhouse and delivering on behalf of, and in partnership with, the GM Local Authorities, with MGC playing a leading role in driving forward key strategic initiatives and positioning GM on a local, national and international stage.
Increase the Productivity Performance of GM Using our evidence base and understanding of the GM economy to ensure that MGC delivers services that enables more and higher value businesses to be created as well as improved employment and wage rates, and in doing so supports the aim that all parts of GM and specifically proactive action for those underperforming areas, to have a strong and sustainable economic function to stimulate future growth and maximise their ability to share in its benefits.
Achieve Internationalisation Ambitions Building on the new Internationalisation Strategy and outcomes of the Marketing Manchester and MIDAS Reviews, MGC will play a lead role in supporting GM to achieve its international ambitions by increasing the volume and value of International Trade, Inward Investment and Leisure and Business Tourism, in addition to promoting GM on a global platform and exploiting the potential of City of Science.
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2. A MBITION, STRATEGIC PRIORITIES AND 3 YEAR FORWARD LOOK (Continued) Achieve Improved Surplus Secure commercial growth in target business areas (e.g. Work Company, Business Finance Solutions, Organisational Development Services/Consulting and Aspire) and increase both the Group’s overall turnover and profit.
Improve Efficiencies Ensure that the overall MGC operating and shared services cost base is minimised and that broader resource (sustainability) efficiencies are maximised. Also, improve cash reserves and ensure effective financial management.
Integrate Services Design, promote and deliver packaged services to business customers and increase cross selling and cross referrals throughout the Group, utilising enhanced targeting of clients and resulting in increased market penetration.
Deliver Internal Transformation With the MGC values at the core of all activity and building on progress to date, MGC will move to complete its internal transformation which delivers the change required to achieve MGC’s ambition, its aspiration to become a high performing organisation and to maximise the impact the organisation has on the communities with which it works through our approach to social value.
Develop MGC Leadership Role Develop and implement mechanisms for harnessing and utilising MGC’s unique access to knowledge and intelligence in order to establish the Group as a “thought leader” for economic policy and delivery solutions. Utilise our unique positioning and intelligence to achieve prime contractor/strategic partner status within key partnerships and supply chains. The above strategic priorities are enabled through MGC working in strategic partnerships to enhance the collective effort focused on achieving GM priorities. These partnerships extend across all our services and include education, voluntary, private and public organisations. In the last 12 months these have seen a significant increase especially related to our approach to new European funds and with the GM Futures and GM Colleges initiatives.
3 Year Forward Look Whilst our focus is clearly the year ahead, our priorities and supporting objectives have a three year time horizon. If we achieve the aims and objectives set out in this Business Plan, with a supporting external environment, by 2019 MGC and its business units will be: Manchester Growth Company Group – recognised by its clients, stakeholders, funders and staff as a high performing organisation with a strong and robust control environment which includes fully accredited quality, financial, data and people management systems and is adaptable to change. The Group’s services will be fully integrated, from initial promotion through to delivery, and well tested mechanisms will be in place to enable accurate measurement of economic and social impact. We will be an employer of choice with our values and culture fully embedded and our staff able to grow and thrive in an environment which supports learning, development, knowledge sharing and a real say in the priorities and direction of the company. This will be supported by modern and resilient IT infrastructure and systems. Our ambition, as articulated in this Business Plan, will have been achieved. If our approach is successful, by 2019 MGC will be a key enabler to achieving Greater Manchester’s economic and inclusion objectives, have a deep footprint across the wider North, and developed with key markets elsewhere. MGC will be recognised as class leading deliverer of an expanded and integrated set of economic development services (ranging from consulting, design, delivery and evaluation) across people, business and place development issues. MGC would have a turnover in excess of £150m p.a., producing sufficient surpluses to meet its reinvestment needs and growth aspirations.
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2. A MBITION, STRATEGIC PRIORITIES AND 3 YEAR FORWARD LOOK (Continued) The Skills Company An established apprenticeship provider of choice for the public sector and businesses (particularly large ‘levied’ businesses). The ambition is not just to be a sole provider in this space but to act as a strategic partner assembling a collaborative supply chain to deliver comprehensive solutions. We will also be delivering new training which underpins areas like Health & Care reform and will be known in at least two other core cities for product innovation linked to place need. Strong leadership and collaborative delivery will be a key component of our success. Our preApprenticeship training will be engaging those further away from the labour market and will hook them into a learning journey that will see these individuals develop key skills for a working life, enter into and thrive in the workplace.
The Work Company Having established its credibility through the successful delivery of GM’s Working Well Expansion and Skills for Employment, The Work Company will have become a prime contractor for the Government’s new Work and Health Programme in GM, managing a network of high quality local provision to maximise sustainable employment opportunities for GM’s most deprived residents. The company will also have become a recognised national expert in the provision of health related employment interventions and a provider of choice for DWP prime contractors as well as a credible provider of broader recovery services for people with drug, alcohol and mental health problems. Our delivery success and high reputation will have led to significantly enhanced business as a sub-contracted employability provider at national level, delivering the new Work and Health Programme as well as DWP ESF programmes across the North of England, Midlands and other areas across the UK.
Marketing Manchester Marketing Manchester has strengthened its reputation as the leading Destination Management Organisation for the North of England, working with partners to deliver leading-edge international and national marketing campaigns and events. It will have established effective inward investment sector marketing programmes, aligned with trade and industry activity in key markets; energised the marketing of MGC services, positioning them successfully in the market place; established a growth model for business visits and events, working in partnership with the convention sector; and built relationships with high profile international individuals and sports, cultural and education organisations to collectively raise Manchester’s international reputation through inspired story telling and thought leadership.
Strategy and Research The GM Mayor will be in post, supported by a Mayoral Office informing and shaping the priorities and development of GM. The policy, strategy and research function will be fully involved in shaping the devolution of further powers and budgets from Whitehall to GM, allowing more local priority setting and decision making and enabling GM to turn around public services, moving GM towards becoming a net contributor to the exchequer. Commercial research activity will be pursued as part of a wider approach to a commercial economic development function across MGC and GM. Our evidence-led approaches will continue to shape both GM and national agendas, and GM will maintain its position at the forefront of driving the national devolution agenda.
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2. A MBITION, STRATEGIC PRIORITIES AND 3 YEAR FORWARD LOOK (Continued)
INTERNATIONAL TRADE Business Support and Business Finance A recognised enabler of productivity growth in GM, providing the leading Business Growth Hub in the country, facilitating a network of public and private sector providers and directly delivering in GM a range of devolved, cost effective business growth and inward investment services with high GVA impact whilst developing niche, class-leading commercial services. We will also be the leading provider of alternative business finance and manager of alternative funds, underpinned with class-leading finance systems and technologies. Pantone 295
Black
Organisational Development Services A leading provider of consultancy, training and certification services across many sectors, helping leaders grow their organisations and creating lasting impact. We will support them in managing the major uncertainties they face, in driving high performance and productivity and in rejuvenating their businesses in the face of adverse competitive and market pressures. The positive trend in revenue and returns will have supported an increasing range of B2B consultancy services including environmental consultancy and manufacturing advisory services.
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3. Business Transformation Financial Development: Income, Surplus and Cash Since the establishment of MGC, specific priority has been devoted to making MGC a single, coherent organisation with a clear and focused vision to provide effective and efficient services which are commercially successful and directly address the economic objectives of GM and other places in which we operate. This has required a combination of internal change, which is covered by our internal transformation agenda set out in section 4, and re-positioning and growth in our external service delivery. MGC income has grown significantly in recent years from £66m in 2012/13 to £114m forecast budget for 2016/17, of which £5m is due to inclusion of Marketing Manchester in the MGC legal entity with the remainder driven by its new strategic direction. Whilst this growth has brought significant benefits in terms of our scale, profile, positioning and ability to address strategic economic objectives it also results in challenges. Surpluses diminished in 2014/15 to £761k although this was largely due to a series of one-off issues and taking these into account the underlying financial performance of the Group would still have been reasonable in 2014/15 (£2.4m surplus). However, a significant element of the Group’s income growth since 2012/13 has been an increase in grant income which does not provide surplus for re-investment. In addition some of this grant funding, most notably ERDF, is paid quarterly in arrears and typical delays in processing claims by DCLG create a significant cash flow drag on the business. Also our ambitions to expand our skills and employment portfolios by accessing ESF and to operate as prime contractor for employment programmes in GM carry further cash flow implications including dealing with payment by results. Recognising the strategic imperative and benefits brought by developments in the MGC strategy and business model there is also a clear need for distinct strategies to develop income that is surplus generating with better margins, together with a relentless focus on cost and cash management.
Business Direction The proposals in this Business Plan seek to increase our momentum in areas of commercial/surplus potential, many of which are already established. Areas of development are set out below and whilst not geographically bounded will in many cases inevitably have a ‘northern’ focus: • Lever intellectual assets for commercial exploitation. In the business support area we have developed successful products which have been delivered to businesses to support their growth and are at a stage where they are beginning to earn commercial income for example – resource efficiency, manufacturing and, in the medium term, innovation. These will now be taken forward through our ODS/consulting business (see below) for full commercial realisation. • Reposition Organisational Development Services as the route to market for all B2B consulting activities. In 2016/17 we will establish IDG as the lead and market facing brand for MGC commercial consulting and organisational development business. By capitalising on the knowledge and skills within MGC to develop scalable revenue generating services we will increase our return on investments made in developing services previously limited in scale or geographical reach. • Develop our consultancy/advisory service offering to ‘places’ (including Government, LA, and LEPs) focused on economic and business development leveraging the integrated multi-service capacity of the group and the distinctive capabilities of our policy, research and evaluation activity. This will be done in a way which does not conflict with our primary role to support economic growth in GM. • Income from commercial courses in skills. Investment in sales resource to drive growth in income from this area, supporting the ambition for income diversification and resource utilisation. • Increased emphasis on Aspire sales. Aspire will aim to maintain its current 9% margin but increase it absolute turnover, taking a greater volume of private sector business. • Investment in the Work Company’s business development resource to grow income, including outside of GM.
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3. Business Transformation (Continued) • Expanding BFS providing “back-office” financial services: BFS has in the last two years provided a range of services to fund managers and other providers to support their operations. This has included providing the national collections service for the Start-up Loans Company and a due diligence, disbursement and collection service for the Oldham Business Leadership Group. New FCA requirements, combined with a strong reputation, are currently driving such opportunities and we intend to further expand such commercial services. The most notable, immediate opportunity is the transfer of management to BFS of existing books from organisations previously contracted to the Start-up Loans Company; we have already taken under our management seven such books and expect to extend this to a further nine to fourteen. BFS growth will be supported by a new fintech system which will require Group investment. • Undertake a broader ranging strategic assessment of potential additional commercial/surplus generating markets related to MGC service portfolio.
Cost Control To improve the Group’s surplus and cash position, there will be an enhanced focus on cost reduction and cash-flow management:
Cost reduction programme A cost review group was created in June 2014. Savings of £456k were achieved in 2014/15 and approximately £250k has been identified during 2015/16. The cost review group is evolving its approach to achieve sustainable savings through taking a more thematic approach. Target areas for future cost reduction include travel, recruitment, stationery / office consumables and energy with a target saving of at least £105K in 2016/17. Overhead costs are also recovered across grant-based contracts and this is built into the bidding and contract review process so that it is clear what contribution each grant funded project makes to overheads. It is becoming increasingly important given the volume of grant income that systems and processes are in place to ensure cost recovery is appropriately maximised.
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4. Internal Transformation At the formation of the group, MGC embarked on a programme of internal transformation which not only sought to fully integrate the 17 operating companies, but also to create an organisation which is able to fulfil its strategic objectives and adapt to change. Central to the success of the programme is the shaping of the organisation culture, which is underpinned by the newly implemented company values: make a positive difference, stronger together, empower people, build on success and do the right thing. Significant progress has been made on our transformation to date, however the programme is not complete and will continue throughout 2016/17. Much of what has been achieved so far has focussed on putting in place the foundations of a robust and adaptable organisation with consistency in working practices. Going forward the focus of the programme moves more towards harnessing the true potential of operating as an integrated business to ensure additional growth, greater client engagement, enhanced outputs and maximised resource efficiencies. The core objectives of our internal transformation are to ensure that MGC has: • Strong Governance and Management, supported by a robust internal procedural framework and control environment positioning MGC as an exemplar organisation to clients, stakeholders and business partners. • Efficient, effective and integrated MGC service provision, both internally and externally, to maximise engagement and performance with client groups. • Achieved its aim to become a high performing organisation and an employer of choice. • The right approach, processes and infrastructure to improve efficiency and drive down costs. • Strong and appropriate positioning in the marketplace and with stakeholder groups and client base which aligns with the Group ambition. With regards to oversight of the transformation agenda, the programme involves all business units and is overseen by Group SMT. The initiative has a dedicated programme manager and responsible SMT members ensuring activity is driven forward within agreed timescales. Below group SMT, the plan is overseen by the OD steering group which brings together representatives from the senior leadership team across the business units and is empowered to drive forward the implementation of the agreed plan. In addition, activity is driven through a number of other task focussed groups including cost review group and CRM steering group. Progress to date and key 2016-17 priorities are set out in Appendix 1
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5. Business Units
Skills
Employment
Business Support and Business Finance
Organisational Development Services
Marketing
Strategy and Research
Corporate Services
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6. Finance Budget for 2016/17 Business Unit
Income £k
Expenditure £k
Surplus/(Deficit) £k
MGC Holding Company
8,203
8,956
(753)
Skills
22,849
22,941
(92)
Organisational Development
9,039
7,748
1,291
Employment
30,087
29,551
536
International Trade
4,176
4,053
123
Business Growth Hub
29,924
29,918
5
BFS
3,823
2,892
932
MIDAS
2,010
2,108
(98)
Total Business
39,933
38,971
962
Challenge 4 Change
349
349
0
Marketing Manchester
5,220
5,379
(159)
New Economy
3,467
3,467
0
Total MGC Group
119,147
117,362
1,785
Total MGC (legal entity)
113,670
111,787
1,883
Total MGC (legal entity net BFS Core)
112,833
111,787
1,045
2016/17 Budget Assumptions • Income only budgeted where it has been ‘won’ • SFA income assumed at £14.7m, to be confirmed in June 2016 • Full ERDF programme included • Skills for Employment not included • Planned cost reduction programme – targeted savings to be achieved across Group in travel, mileage, recruitment, office consumables and energy • Interest charges included for CA loan and bank overdraft
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7. Performance Management Performance planning, management and reporting system The Group operates a performance planning, management and reporting system which is summarised in the diagram below.
PLANNING MGC Business Plan
Business Unit Operational Plans and cross MGC Internal Transformation Plan
PERFORMANCE
ACCOUNTABILITY
Quarterly reviews by SMT, MGC Board and Advisory Boards
Input from CA, LEP, LAs to business plan
Allignment to GMS and reporting to CA against GMS targets
Quarterly reviews by SMT, MGC Board and Advisory Boards
Evaluating GM economic impact Service Team Plans
Monthly reviews by SMT
Staff Objectives
Ongoing satff reviews with managers and 2 formal performance appraisals p.a.
Activity and preformance reporting to LAs and LEP
DELIVERY
The system contains the following elements: • Development of the annual Business Plan, which is informed by an assessment of past performance and progress to date and is subject to extensive engagement with MGC staff, the Board and external stakeholders. • A cascade of the Business Plan’s priorities, objectives and KPI targets to:
» Business Unit Operational Plans and a cross-MGC Internal Transformation Plan
» Service Team Plans
» Staff objectives
• Delivery and performance which is assessed and reviewed at the following levels:
» Ongoing reviews of staff performance against objectives through normal management over-sight with formal interim and end of year performance appraisals
» Evaluation and customer feedback to support ongoing reviews and continuous improvement of services
» Monthly reviews of performance against Service Team Plans at Business Unit level
» Monthly reviews of Business Unit delivery performance by Group SMT
» Quarterly reviews of performance against Business Unit Operational Plans and against the Internal Transformation Plan by Group SMT
» Quarterly Performance Reports, assessing progress against Business Plan priorities, objectives and KPI targets, to Advisory Boards and Group Board
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7. Performance Management (Continued) • Accountability to key GM stakeholders by:
» Consultation with and input from the LEP, Combined Authority and Local Authorities as the Business Plan is developed and finalised
» Evaluation of the economic impact of service delivery to understand the contribution of programmes to GMS
» Reporting of performance and progress: quarterly reporting of KPIs by each Local Authority to TMEDL; six monthly narrative reports on business support activity and performance to each Local Authority; and six monthly performance reporting against Business Plan priorities, objectives and KPI targets to the LEP.
Performance Targets for 2016/17: The Group’s performance targets for 2016/17 are attached at Appendix 2. These have been developed against a unified performance management framework which allows the Group to assess its direct contribution to GMS priorities and targets. The framework reflects the Group’s overall operating framework by linking inputs, activities, outputs and outcomes. MGC’s top 10 KPI delivery targets for 2016/17, nine of which are higher than the equivalent in the previous year, are as follows: Key Performance Indicator - Delivery
2016/17 Target
2015/16 Target
£M of additional GVA / economic impact
£402M
£340M
No. of new jobs created
9,400
8,400
No. of business start ups
4,000
3,200
£M of increased overseas and domestic sales
£477M
£450M
£M of grant or loan investment in existing and new businesses
£69M
£45M
No. of businesses supported
12,400
10,400
No. of inward investments into GM
90
90
No. of clients placed into work
22,700
9,000
No. of apprenticeship starts
3,057
3,514*
No. of successfully completed apprenticeships
2,362
2,100
* As advised in successive quarterly performance reports, the 2015/16 target will not be met. Based on actuals to end December 2015, the projection for the full year is 2,800. If this figure is realised, the 2016/17 target will represent a modest uplift on the previous year’s performance.
In addition, targets have been set for internal KPIs and these are as follows: Key Performance Indicator - Internal
Target
Actual turnover compared to forecast
100%
Net Surplus
£1.045m
Recruitment - % unfilled vacancies
8%
Staff turnover - % voluntary staff leavers
18%
Sickness absence - % sickness absence
2.3%
% IT System Uptime
100%
The full set of KPIs and targets for 2016/17 is included at Appendix 2. Set against these are the comparable targets for 2015/16 with explanations provided for significant upward or downward variations. The basis for most of the targets is the contracts that we hold with multiple funding bodies. Consequently, there is not necessarily a correlation between previous years’ figures and the year ahead as figures will vary depending on where we are in a particular contract period and which contracts are live at a particular point in time.
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7. Performance Management (Continued) Reporting Reporting will be in the form of narrative progress assessment against Business Plan priorities and KPI data against targets. The following reporting cycle will apply. Audience Group Board
Inputs
Activities
Outputs
Quarterly
Advisory Boards
Quarterly Quarterly
Quarterly
GM LEP Local Authorities*
Outcomes Quarterly Six monthly
Quarterly
Quarterly
Quarterly
*Note: Local Authorities receive reports showing, by district, those activities, outputs and outcomes that can be measured at a LA level. Every six months, each Authority also receives a full narrative report of business support activity in its area.
Evaluation The Group is committed to the independent evaluation of its services to assess their impact on the economy, their contribution to GMS objectives and their effectiveness from a customer perspective in order to inform service reviews and improvement. To date, full evaluations have been completed for Access to Finance, Business Loans, Inward Investment and the Textiles Growth Programme and an interim evaluation has been completed for the Business Growth Hub. Findings from these evaluations have been used, together with the findings of the Annual Business Survey, to inform the development of new services and the enhancement of existing services. They have also been to support new funding applications. The Group’s approach to evaluation will be extended to those employment and skills activities where independent evaluation would provide additional high value impact data over and above that already obtained from existing data capture.
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8. Risk Management MGC has in place an integrated risk management strategy and a risk register detailing key strategic and operational risks is regularly reviewed by senior management and the MGC Audit Committee. The high level risk register considers cross cutting risks which could impact on all areas of the Group as well as significant risks relating to the individual operation companies. This is supported by more detailed individual risk registers for each business unit within the Group. As part of the business planning process, a fresh consideration of new and emerging risks is undertaken in order to understand potential threats to Business Plan priorities and objectives and the action required to mitigate them. These are set out below and the Risk Register is being updated to reflect them. Risk Area
Cross Group Changes to global economy and EU membership
Cross Group Mayoral election
Summary description of risk
Current Actions
Residual (Net) Risk
Business uncertainty with consequent holding back on investment required to drive growth and significant reduction in resources available to MGC if European funding programmes are brought to a premature end due to a UK referendum decision to exit the EU.
• The 2015 GM Business Survey seeks to establish intelligence on the importance of EU membership to GM companies. The results of the survey will be available early in 2016/17.
Risk Impact
• Through GMCA and the LEP, the Group will monitor closely emerging conclusions on the future of EU funding programmes in the event of an exit decision.
Uncertainty for MGC • Maintain close relationships with GMCA to ensure full understanding in terms of the Group’s of latest thinking on future devolution future role and remit (where there is a risk agenda and likely Mayoral priorities. of negative change/ • Continue to increase the focus of reduction and an MGC activities on GM’s strategic opportunity for an priorities and develop GM stakeholder enhanced/ strengthened relationships. role) and a potential barrier to long term • Continue to demonstrate strong planning. performance across all areas and account for that performance, showing strong contribution to GM priorities, to key stakeholders.
Risk Likelihood
Risk Score
4
2
8
4
2
8
Key to risk assessment Impact Score
5 Catastrophic
4 Substantial
3 Significant
2 Moderate
1 Minor
Likelihood score
5 Almost certain
4 Highly probable
3 Probable
2 Unlikely
1 Almost impossible
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8. Risk Management (Continued)
Risk Area
Summary description of risk
Cross Group Cash Flow
Current Actions
Residual (Net) Risk Risk Impact
Risk Likelihood
4
3
12
4
3
12
5
3
15
The working capital • Discussions underway with key requirements of the funders, notably DCLG and GMCA in Group’s existing and relation the ERDF and match funding prospective contracts for business support, to explore all possible means of reducing the gap exceed the amount of cash available, acting as between expenditure and income. a brake on the amount of new business that can • Discussions underway with bank and be sought and limiting CIT re increased overdraft and loan facilities. the Group’s capability to achieve commercial growth. • Additional resources being recruited to the BSBF Contracts Team which are essential to ensure submission of prompt and accurate claims for ERDF funding and the timely receipt of ERDF income.
Cross Group Growth in commercial income
Cross Group IT
The commercial income projected in this Business Plan does not materialise, placing a constraint on the Group’s ability to re-invest in key infrastructure such as IT which in turn limits the Group’s ability to compete for, and win, new business
• Development of detailed commercial strategies and action plans by relevant Business Units to ensure that the gross projections in the Business Plan are achieved, with close monitoring at Business Unit, Group SMT and MGC Board/Advisory Boards throughout 2016/17.
MGC’s IT infrastructure is out-dated and not for purpose, making the Group susceptible to business critical disruption and document/data loss and acting as a barrier to securing new business.
• Short-term fixes have been put in place following IT system failures suffered by the Group in September 2015 which reduces the risk of server corruption.
Risk Score
• Continued pressure on costs, at Business Unit and corporate level, through cost review process and new approaches to procurement to secure better vfm and cost efficiencies across the Group.
• Fully costed IT Strategy in development and to be brought to the MGC Board in March 2016.
Key to risk assessment Impact Score
5 Catastrophic
4 Substantial
3 Significant
2 Moderate
1 Minor
Likelihood score
5 Almost certain
4 Highly probable
3 Probable
2 Unlikely
1 Almost impossible
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8. Risk Management (Continued)
Risk Area
Cross Group Loss/retention of staff
Summary description of risk
Current Actions
Residual (Net) Risk
Loss of key members of staff as the labour market improves and concerns remain over remuneration and benefits.
• Deliver remaining elements of People Framework such as embedding the values, pay progression, learning & development, ECC/staff communications and IiP.
Risk Impact
Risk Likelihood
Risk Score
3
3
9
4
2
8
3
3
9
4
2
8
• Utilise intelligence from 2016 staff survey to develop timely and robust action plans to address key concerns from staff. Cross Group Robust procedures and controls
Incidents of fraud, non-compliance with contracts or poor business practice arising from inadequate procedures, controls and management oversight.
• Immediate remedial action taken following audit identification of weaknesses in systems and processes in Autumn 2015. • Strengthened processes in place to ensure regular audit of compliance with key procedures. • System and process review underway to ensure that all output collection and reporting is robust and backed by evidence.
Cross Group Data Protection
Conflict of Interest
Consolidation of client data into a single CRM is incomplete due to data protection/sharing constraints which comprises ability to undertake cross MGC analysis to support integrated services, account management and cross-selling.
• Full assessment undertaken of historic data protection statements under which existing data has been collected.
Increased commissioning role of CA/LEP/NE raises concerns about separation of roles and may result in challenge to and non-awarding of contracts.
• Monitor progression of commissioning role.
• Plan being assembled regarding action to be taken to ensure that xisting data can be shared across MGC via CRM. • New Data Protection Statement drafted for all future data collation which enables sharing across MGC via CRM.
• Review current conflict of interest requirements and arrangements. • Amend governance, processes and activities as appropriate.
Key to risk assessment Impact Score
5 Catastrophic
4 Substantial
3 Significant
2 Moderate
1 Minor
Likelihood score
5 Almost certain
4 Highly probable
3 Probable
2 Unlikely
1 Almost impossible
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8. Risk Management (Continued)
Risk Area
Summary description of risk
Skills Apprenticeship
Current Actions
Residual (Net) Risk Risk Impact
Risk Likelihood
4
3
12
4
3
12
4
3
12
4
3
12
The new Government • The 2016/17 Business Plan sets an system for operational objective to transform our apprenticeship funding product base, sales approach, from 2017 could result delivery and central functions to prepare for the new system in 2017. in significantly less take up of apprentices by companies, which would • MGC’s significant engagement with GM businesses, through the Business be a policy failure for GM and would have a Growth Hub and other services, will be used to promote apprenticeships severe impact on MGC’s core business. in order to encourage widespread take up of the proposed voucher system.
Employment Work Programme
Business Support Devolution of national funding
Business Finance Growth in start up loan portfolio
MGC’s income and market position suffer from reduced Government funding for the Work Programme in 2016/17 and tougher market competition for the new Work and Health Programme from 2017/18.
• Strong performance and supply chain management on key existing GM contracts such as Working Well Expansion, Skills for Employment and NCS is essential in 2016/17 to position ourselves as a prime contractor for the new Work and Health programme.
The cancellation of the national Business Growth Service means that the budget, which was to be devolved to GM from April 2017, is no longer available.
• GMCA/LEP is making representations to Government to clarify the impact of the cancellation of BGS on the devolution agreement and the availability of future funding.
BFS governance and FCA compliance capacity and capability is insufficient to provide robust oversight of a significantly increased start up loan portfolio.
• BFS Board has agreed to undertake a review which will include composition of the BFS Board and also consider the role of MGC Audit Committee in providing additional oversight.
Risk Score
• In parallel, negotiation of large scale sub-contracting opportunities outside of GM, together with development and diversification of our health and work offer, is a key priority for the year ahead.
• Following the planned appointment of a dedicated Compliance Officer in March 2016, a further review of compliance capability and capacity will be undertaken and recommendations made on any additional resources required to ensure full FCA compliance.
Key to risk assessment Impact Score
5 Catastrophic
4 Substantial
3 Significant
2 Moderate
1 Minor
Likelihood score
5 Almost certain
4 Highly probable
3 Probable
2 Unlikely
1 Almost impossible
MANCHESTER GROWTH COMPANY GROUP BUSINESS PLAN 2016/17
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8. Risk Management (Continued)
Risk Area
ODS Investors in People
Summary description of risk
Current Actions
Residual (Net) Risk
As a result of the CSR decision to wind down UKCES by 31 March 2017, the IIP delivery model changes in a way that adversely impacts on the current MGC licence to deliver IIP in the North of England to March 2019.
• In the absence of any communication since the CSR announcement in November 2015, the four UK delivery partners have written to BIS seeking clarification as to the next steps
Risk Impact
Risk Likelihood
5
2
• Informal feedback suggests that options are being considered and the delivery network may be able to influence the outcome. UKCES’s new CEO, who is known to MGC, was appointed at end of February and may be open to a conversation.
Risk Score
10
Key to risk assessment Impact Score
5 Catastrophic
4 Substantial
3 Significant
2 Moderate
1 Minor
Likelihood score
5 Almost certain
4 Highly probable
3 Probable
2 Unlikely
1 Almost impossible
MANCHESTER GROWTH COMPANY GROUP BUSINESS PLAN 2016/17
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Appendix
Select any appendices for more information
Internal Transformation
KPIs and Targets for 2016/17
MANCHESTER GROWTH COMPANY GROUP BUSINESS PLAN 2016/17
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3094MGC
Glossary