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Birmingham City Council’s inspirational journey to a three-star finance function

In early 2019, CIPFA was commissioned to undertake a review of Birmingham City Council’s finance function as part of a drive to improve governance arrangements at the organisation.

At this time, Birmingham was awarded one star based on the CIPFA five-star Financial Management Model.

The key findings and recommendations of CIPFA’s review were as follows.

  • There was a lack of accountability for financial performance across the council’s services.
  • The finance function structure lacked efficiency and was not fully fit for purpose.
  • The council’s financial strategies needed improving. 
  • A response was needed to a failure to deal with management culture issues.
  • The conditions for delivery of accountability for financial performance needed improving across budget holders.
  • The effectiveness of finance decision support needed strengthening.
  • There was a need for more effective financial management capability.

What Birmingham needed was a change programme that could be implemented, and more importantly that could deliver, across all levels of the organisation.

Striving for excellence through transformation

Birmingham launched into action, kick-starting a comprehensive improvement plan that involved fulfilling CIPFA’s recommendations alongside implementing an Oracle ERP best-in-class cloud solution.

A finance target operating model (TOM) has been developed with the staff and key stakeholders that encompasses the CIPFA improvements and set Birmingham on a journey for best in class. The council’s impressive transformation since the 2019 review is down to the following key developments.

  1. Financial leadership at the organisation has evolved. There is now a focus on continual improvement through learning from the best in class and a culture shift that now sees the finance function as holistic and not merely a corporate responsibility, along with developing succession planning and knowledge transfer to continue the momentum. This is aided by the creation of strategic business partner roles, underpinned by multi-disciplinary finance teams, to provide efficient, effective business partnering to designated directorate stakeholders, along with providing finance management support and financial modelling for service departments.

  2. Recruitment has changed. Senior finance officers have demonstrated a strategic focus on building teams who “know what good looks like” and have refined their advertising, ensuring job descriptions are relevant and reflect the needs of a modern finance function.

  3. Collaboration and engagement with staff have greatly improved. This has had a positive effect on staff motivation, which feeds through into their day-to-day work, advancing their skills development and making them feel like truly valued team members.

  4. By drawing in capacity and capability to support the journey. The council has been able to develop its expertise and increase its capacity by partnering with other teams within the council, bringing in a delivery partner and employing interims to support the teams. The overriding principle of this is for the delivery partner to work hand in hand with Birmingham staff to ensure change and improvement is owned and driven by Birmingham and is not being “done to Birmingham”.

  5. A system of accountability letters was introduced, which helped to clarify the difference between ‘finance’ and the ‘role of the budget holder’. Importantly, business partners and budget holders worked together on this initiative, meaning budget holders are properly equipped to take responsibility for their budgets.

  6. Financial reporting and transparency has greatly improved with the introduction of exception and risk-based reporting. This has given senior leaders and members greater visibility of the main areas of focus for financial issues and areas for challenge.

Long-term change for long-term success

Birmingham City Council’s success in revolutionising its finance function is remarkable. 

Senior finance officers at the organisation understand that what matters going forward is the value and impact these new practices and behavioural change have had and continue to have. 

Birmingham’s journey is not over. There is still improvement to be made, and a four-star finance function is the next milestone to reach. Continuous, sustained improvement for the long term will ensure the council achieves this and more. The example Birmingham has set shows other councils what is possible, and we hope it is a source of motivation for those facing similar challenges.

If you’re interested in reading the full report on Birmingham’s journey, please contact Chris Tidswell, Senior Solutions Manager at CIPFA.