Monitoring your organisational running costs and their impact on performance


Value for Money Indicators – monitoring your organisational running costs and their impact on performance

Investigating trends helps organisations to understand what impact savings can have on their organisational performance. A common assumption is that in challenging times cutting your organisational running costs will have a negative impact on the performance of the organisation. Data from CIPFA’s Value for Money Indicators exercise, however, shows that not every organisation suffers this spending related performance decline.

Looking at the service costs and performance in the Finance Indicators stream, the average finance costs have decreased from 2013 to 2017. Ideally this decrease in departmental spending would show no impact on the effectiveness on the performance of the finance department. In fact, our analysis shows that three major groups of members (central government, local government, and NHS foundation trusts) have improved their performance. 

In particular, those NHS foundation trusts which provided data during that period managed to achieve the highest improvement in performance followed by local and central government. Indeed, two indicators from the Finance Indicators stream are highlighting this improvement. The cycle time between period-end closure to the distribution of routine financial reports has decreased by 0.3 days for trusts but only by 0.1 days for central government and 0.2 days for local government. Similarly the cycle time from date of year-end to submission of accounts for audit has decreased by 0.15 days for trusts and 0.06 for local government. This observation is particularly surprising taking into account that all three groups have roughly the same number of professionally qualified finance staff as a percentage of the total finance staff and a similar increase over the five year period. 

Monitoring those trends and being aware of the department’s costs are key benefits for our customers and highlighted by organisations in our annual user satisfaction survey.

“We find the CIPFA Benchmark exercise useful for both establishing baseline performance against other NHS trusts and the corporate world. It is useful to monitor success of improvements we have made following previous benchmarks and the associated actions put into place to address some of the lower performing areas."
Gloucestershire Hospitals NHS Foundation Trust

If you want to gain a better insight into your organisation’s back-office functions you can join CIPFA’s Value for Money Indicators Benchmarking exercise by visiting our website or call us on T: 020 7543 5600.