The switch to social enterprises

Encouraging NHS employees to become their own boss is all well and good, but how can they transform public sector organisations into successful social enterprises? This is a key question for those NHS staff which are being given the opportunity to transform their organisations into employee-led social enterprises that they will control and run for the benefit of the wider community. Many of these employees have only ever worked in the public sector and do not have any experience of running a private sector business. They need help and guidance to ensure that they set the right foundations for their organisation going forward. So far only a handful of organisations have started making the move into social enterprise. One such example is Central Essex Community Services (CECS), the provider of all community health services in Mid Essex. Serving 360,000 people, Central Essex Community Services is set to become independent from Mid Essex PCT in April 2011 and will set up a community interest company. Forward thinking CECS has been very forward thinking in preparing for this change in terms undertaking a full review of its existing contractual arrangements, setting up a contract management process for all new contracts, and has started changing its culture and 'skilling up' in order to operate successfully as an independent business. If you're looking to transform your organisation, take immediate steps to understand your existing business. This means identifying all of your key relationships and understanding how they work. Where contracts do not exist put them in place and where they do exist, make sure that they are set up in the right way – where necessary, change or renegotiate. Don't rely on vague and out of date service level agreements or gentlemen's agreements. Make sure that all new contractual arrangements are set up following an agreed process and involving the right people. Do not allow staff to commit your organisation to commercial relationships without following this process. Put a stop to contracts being signed by any member of staff and avoid commencing activity before a legal agreement is finalised and in place. Make sure that everyone in your organisation understands this process and why it must be complied with. When negotiating specific terms, do not commit to longer term arrangements than you need to; make sure that any arrangement you enter into gives you the flexibility that you need and understand the extent of any liability that you take on. Whether you are delivering or receiving a service make sure that the nature of the service, how and when it will be delivered and the cost of the service is clearly stated. This type of detail can be set out in a schedule to the contract that you enter into. If you are moving to social enterprise get informed quickly. Understand your options and take the right steps to establish the entity that will work best for your organisation. A combination of undertaking the legal groundwork referred to above and choosing the right legal entity for your social enterprise will start you off in the right direction and give your organisation the chance to succeed outside of the public sector. Now is the time to ditch the old habits and vague and inconsistent practices that have evolved in your public sector organisation to date and take up new switched on methods of operating which will take your organisation into the 21st century and make it a real success. John Burchill is a director at the Legal Director