‘Insourcing’ is the new ‘outsourcing’

Jules Pretty and Day Nursery Graduates, University of Essex
Creating a wholly-owned subsidiary company to house the commercial activities of a university is fundamentally about cultural change rather than cost saving. If the focus is placed firmly on stripping out payroll costs through reducing rates of pay and associated staff benefits, then the project is doomed to failure, says Peter Church Director of Campus Services at the University of Essex.

By contrast, ‘insourcing’ by establishing a new company anchored on a more dynamic approach to employee relations will drive the efficiencies which deliver incremental surplus. This may be regarded as a bold claim, but the success story behind University of Essex Campus Services (‘UECS’) is testimony to this business philosophy.

UECS was founded in September 2010 as a wholly-owned trading subsidiary of the University of Essex to house not only the commercial business of conferencing, but also student experience activities such as catering, residences, sport and a nursery. Within six months a total of 150 staff were TUPE transferred into this SPV and the remaining 150 staff are scheduled to transfer in summer 2014. The transfers were effected following detailed consultation with all employees and the trades’ unions.

The journey undertaken by the staff of the Day Nursery is an excellent case study of successfully implementing cultural change and delivering incremental growth. In 2010 the University of Essex was faced with a difficult decision as to what the future should hold for the Nursery, which was a valuable service on campus having traded for over 35 years, but with a payroll to sales of 85% was delivering annual 5-figure losses.

The bleak choices seemed to be closure or out-sourcing to a private provider with the harsh consequences for existing staff pension provisions and a likely worsening of the service offered specifically to staff and students.

Just six months into my tenure at the University, I tabled an alternative model which the University boldly supported. This business plan involved all existing nursery staff being TUPE transferred into a new subsidiary company on existing Terms & Conditions including preserving pension rights, but with new staff being employed on commercial contracts reflecting the market place. This proposal, anchored on the principle of long-term sustainability and job creation, was supported by all nursery employees and also was given the blessing of Unison.

The following three years have been a period of unprecedented success. Staff retention was recognised as an important business KPI. If in the future employees could not be enticed to join or stay based on attractive employment packages, then management would need to invest significant focus into making sure the nursery was the best possible place to work with exceptional staff morale.

Investment has been directed into welfare, team building and training with large numbers of staff attending courses ranging from special educational needs to equality and diversity. The Nursery now champions a strong culture of succession planning, with rewards firmly anchored on performance.

Jessica Morrissey, Senior Nursery Nurse, explains: ‘After my initial reservations as to what becoming part of UECS really meant, I am delighted with the opportunities it has given me and all the Nursery staff to develop our careers and reach our full potential’.

The nursery very quickly was able to stabilize its finances, reducing the payroll to sales within 3 years to 67%, and delivering a £250,000 surplus in the 2012/13 financial year. This has enabled UECS to invest £60,000 into a refurbishment of the nursery in addition to gift-aiding valuable funds back into the university to support core educational objectives including research.

Staff have been encouraged to engage more proactively in the activities of the nursery, and recent events have included a visit to the children by the famous author Trish Cooke and a mini-graduation for leavers attended by Professor Jules Pretty OBE, Deputy Vice-Chancellor.

The last words are best left to the General Manager Elaine Dixon, who said: ‘Having worked in the Day Nursery since 1978, becoming part of UECS was without doubt the best way forward. Staff morale is at an all-time high and the nursery is now financially successful. It has become a valuable asset for the university and I am very proud to be part of an enthusiastic team’.

Peter Church is Director of Campus Services at the University of Essex.