Developing Service Level Agreements in Local Government

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Why Introduce Service Level Agreements?

For the local authority sector, the concept of formal contracts for internal services, especially when combined with a rigid pricing mechanism, can seem unnecessarily bureaucratic, even outdated if associated with a previous ‘Compulsive Competitive Tendering’ era of local government management.

However, effective service level agreements (SLAs) between support and frontline delivery services don’t necessarily have to fit this mould.

In the age of the Comprehensive Performance Assessment and in particular, the assessment of local authorities’ Use of Resources, the local government sector needs to find the best ways of demonstrating that it can integrate both support and service provider functions to provide value for money to the end customer.

In this context, the SLA can be adapted as a critical management tool, especially if it is seen as part of a wider performance management framework. It can lay the groundwork for a consistent ‘customer-driven’ approach, not just to the outside world but to the network of internal customers of support services.

How to Introduce SLAs for Internal Services

Essentially there are 4 key principles which should underpin any SLA:

1. Culture

What is the appetite for establishing a 'customer focussed' culture?
Are senior managers and staff signed up and enthused about supporting SLA management and monitoring?
Where are the barriers to success likely to lie?

2. Communication

Are you clear about the formal & informal communication channels needed to make this work?
Do staff know how they are going to be involved in the consultation/negotiation process?
How will issues/changes/recommendations for improvement be shared?

3. Clarity

SLAs must be transparent:

What services are being provided?
What is the cost of provision?
How do we know we're getting a quality service?
Who is owning the process?

4. Continuous Improvement

SLAs should be active, not static documents - how will you achieve this?
Customers and service providers need to work together to understand reasons for sub-performance and make changes to address this.
Don't forget: both parties should be striving for the same thing - excellent Authority-wide service delivery

These principles should lie at the heart of any work to develop and implement SLAs within an authority. The process should also be cost/benefit driven. An authority will need to make a preliminary assessment of its priorities and weigh up the need for greater information about the quality and costs of services against the additional bureaucracy associated with gathering and measuring information.

An efficient approach is to align any SLA requirements, where possible, with existing performance measurement practices and data on costs and outputs.

Main Components of an SLA

Not all SLAs will follow the same format but the key elements generally include:

purpose & objectives;
main parties, roles & responsibilities, including conflict resolution;
duration of the agreement;
availability of services;
review & monitoring arrangements, including change procedures;
statement on services - clearly set out, concise and in a format which can be reviewed and updated easily;
performance measures – that tell the providers and customers how they are going to be able to assess if they’re getting a high quality service; and
charging mechanism - as best practice, this should apply the Cipfa ‘Best Value Accounting Code of Practice’ principles for recharging (‘Complete Recharging, Correct Recipients, Transparency, Flexibility, Reality, Predictability/Stability, Materiality’).

Six Steps to Developing SLAs

Introducing SLAs should be seen primarily as a phased process. This will include:

Understanding the ‘baseline’ position
How are services really working at present? What are the current customer and service provider expectations? To what service standards are staff working at the moment? Do they know what the main outputs are for key activities?
Understand the drivers & demands likely to be placed on the SLA implementation process
Is there a stated need for market testing or benchmarking? What is the level of interest in understanding the costs associated with certain activities? Are there known efficiency gaps/shortfalls that the SLAs may be expected to address? Where is external scrutiny likely to lie?
Initial consultation with service providers/customers
Who are the customers? Who is going to ‘own’ the negotiation process up to final sign-off of SLAs? Who needs to be directly involved with reviewing iterations of SLAs? Who needs to be kept informed of progress but not directly involved?
Agreeing a framework for SLA development
This will include getting the basics agreed up front: i.e. one SLA for all customers or tailored SLAs for different customer groups? Is a general customer charter needed? What is the standard reporting/monitoring process?
Developing detailed SLAs with providers and customers
This will need to be a carefully managed, iterative process with clear milestones & endpoints. Think about maximising use of limited staff time by facilitated consultation events & designated ‘owners’ of each review stage.
Agreeing implementation & roll-out plans
The authority will need a clear route-map, with identification of any trial periods (eg. to collect necessary cost & output data) and responsible personnel. It can often be extremely useful to factor in a ‘shadow running’ period for SLAs, after which the authority can take stock and make any final changes before rolling out for real. Implementation is best managed as a separate stage from the development of SLAs.

However you manage your approach, any SLA will need to work in practice for your own organisation, i.e. be ‘fit for purpose’. It is often useful to build in an evaluation stage into the implementation plan, to pick up the main learning points which, for example, could be based around the four principles (Culture, Communication, Clarity & Continuous Improvement).

If you have any questions about the subjects covered in this white paper or you would like to find out more about how Oakleigh Consulting could help your organisation, please contact us on 0161 835 4100 or email us.

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