Rethinking VFM?

I’ve just spent an entertaining morning listening to speakers talk about the state of public sector internal audit at the CIPFA Internal Audit conference. What was refreshing was that, despite the austerity environment, there were a number of positive stories about IA functions engaging with their organisations to deliver meaningful insight and fuel change.

One of the presentations, by Malcolm Prowle and Lynn Barrow, covered every public sector manager’s favourite letters: VFM – Value For Money. We heard how the VFM push has been going for 30 plus years and yet still many organisations say that their leadership doesn’t have a handle on how to drive a VFM culture.

On the train on the way back from the session I found myself thinking more and more about this. The speakers talked about changing the message – from VFM to CPI or Continuous Process Improvement and, for me at least, this makes far more sense.

Audit is a risk based activity. Auditors look at the Controls that organisations put in place to manage their Risks. But those Risks do not exist in a vacuum. They are Risks to the organisation’s ability to deliver on its Objectives.

To my mind, VFM is not an Objective. Ask someone waiting for news of their loved one who is in surgery and I guarantee that VFM is not high on their agenda. They want a successful outcome to the operation. Their main concern here, their Objective, is patient safety. There is a risk that the operation will not be carried out in the most efficient and cost effective way, thereby not representing great value for money, but this is a Risk and not in itself an Objective.

Does elevating avoidance of a Risk to the status of Objective work? It can in some places. In industries where there is a real and present danger to human life then the goal of “Zero Harm” can drive real shifts in behaviour. But I would argue that this is easier because it is a tangible, easily understood goal. Ask a dozen people to describe it and you will get a dozen similar answers. Ask a dozen people to describe VFM and you’ll get some clarity, but also some mumbling and some confusion. And if you don’t have a clear Objective then you won’t have clear progress.

Is Continuous Process Improvement any better? You can argue it is still intangible, but I would say it has more scope for acceptance and culture change than VFM. Equally importantly it encompasses and enlarges the scope of VFM, which many would say has become too much about cost cutting and not enough about innovation.

I don’t work in the public sector. I’m not beholden to an elected representative who has a political as well as a service agenda to deliver on. I may be completely off key here (please let me know if I am) but as someone who works with those in both Public and Private Sector internal audit Continuous Improvement makes more sense to me.

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