the cost of quality service standards - ngo … · background 3 quality and service standards 4...

BNG NGO SERVICES RESEARCH: SNAPSHOT SURVEY The cost of quality service standards: Assessment and compliance reporting

© BREAKING NEW GROUND • DATE OF PUBLICATION MAY 2011 w: www.managementsupportonline.com.au© This publication is copyright. It may be reproduced in part or in whole for educational purposes provided appropriate acknowledgment is given to Bradfield Nyland Group and BNG NGO Services Online

THE COST OF QUALITY SERVICE STANDARDS: ASSESSMENT AND COMPLIANCE REPORTING FOR THE NOT-FOR-PROFIT SECTOR

Published by:

Breaking New Ground

Bradfield Nyland Group and

BNG NGO Services Online

t: +612 9569 1704

e: [email protected]

Breaking New Ground

(BNG) specialises in not for profit management,governance, organisational development and buildingcapabilities and capacity for communities,organisations and the people who work in them.

The Directors are Jane Bradfield and Dr Julie Nyland.

BNG incorporates:

Bradfield Nyland Group Consultancy Practice

The BNG consultancy practice works with not forprofit and community based organisations to improveperformance and develop good practice withinorganisations, enhance quality improvement atservice, operational and governance levels, transferskills and build capability, and assist organisations toproblem solve, learn and change.

BNG Consultancy Practice: www.bradfieldnylandgroup.com.au

BNG NGO Services Online

Management Support Online

- an online integrated service for Australian and NewZealand not for profit organisations specialising in notfor profit governance, management, operations andadministration. The MSO carries self paced animatedtraining sessions, organisational development activitiesand good practice guides, downloadable tools fortailoring, information sheets and resources, agateway to other specialist websites and resourcesand a confidential advice service.

MSO Subscriber Service: www.managementsupportonline.com.au

Standards and Performance Pathways

(SPP) – an integrated online system for thecompletion of self assessments and complianceactivities related to service and qualitystandards. It is supported by resources toenable NFPs to complete improvement/evidence based tasks, and, throughcross referencing of standards, provides a way of completing multiple setsof standards through a single assessment process.

The SPP addresses the time consuming and labour intensive aspects ofstandards implementation and compliance, and the duplication of effortrequired by NGOs with multiple government funding sources subject tomultiple sets of quality standards.

It has been specifically designed for human services in Australia, and itscontent covers the main sets of quality standards for NGOs that providehealth and community services.

The SPP is a unique product, carries an Australian Patent and is trademarked.

SPP: www.managementsupportonline.com.au

With a focus on innovative thinking and developing practical

solutions for the Australian community services sector, we

undertake self funded research on key issues that impact

on the NFP sector. This research project is part of our

ongoing research program that informs our work.

Authors: Wendy Gillett, Jane Bradfield, Julie Nyland

Report Layout and Graphics: Grave Design

ISBN: 978-0-646-55746-5


Breaking New Ground

© BREAKING NEW GROUND • 2011

Background 3

Quality and service standards 4

Profile of organisations responding 5

The compliance load 6

The standards assessment process –

what does it involve? 8

Performance reporting 9

The cost of compliance 11

What are the opportunities lost? 12

The cost benefit 13

Conclusions 14

Annexure 1 15


Contents


In 2010, the National Compact and the ProductivityCommission report identified the plethora of compliance andaccreditation systems at Commonwealth and State/Territorylevels and the need to reduce red tape and to streamlinereporting and accountability requirements. It highlighted theextraordinary compliance burden for Not-for Profits (NFPs) thatarises from what it described as ‘inconsistent, overlapping andredundant requirements across government agencies andlevels of government’ reflecting the fact that many NFPorganisations work with ‘multiple government agencies andwithin complex multi-tiered regulatory and fundingenvironments’. (Productivity Commission, 2010: p338)

Much of Productivity Commission’s focus was on the compliancerequirements that affect the largest number of NFPs – thosedealing with incorporation, taxation and fundraising. Thesubsequent response by Government to establish a national Not-for-Profit Regulator is primarily designed to address these issues.However, this area of compliance and reporting is only one ofthe three that impact the NFP sector:

• Legal and financial requirements (incorporation regulation, taxation, fundraising and other legislative requirements)

• Performance reporting: Performance reporting is directly attached to government funding, and covers all activity reporting and service agreement compliance

• Quality and service standards compliance


Background


3

While legal and financial requirements affect the greatestnumber of NFPs, it is the other two components of compliancethat have the greatest impact, and greatest cost for individualorganisations, and for Government overall. The impact mayfall on a smaller number of NFPs than legal and financialrequirements, but this group is vastly more significanteconomically and is responsible for the expenditure of themajority of the human services budget outsourced byGovernment.

Put simply, while the compliance requirements may beirritating and frustrating for human services NFPs, and a pooruse of human energy, it is Government money that is beingspent and subsequently wasted.

Furthermore, there is no data on the overall cost of multipleand inefficient systems of performance reporting and qualitystandards compliance. The anecdotal evidence submitted tothe Productivity Commission and to other Commonwealth andState/Territory reduction in ‘red tape’ projects indicates thatthe cost is significant.

The purpose of this initial piece of research was to get a‘snapshot’ picture of the extent of multiple reportingrequirements and of the estimated costs of assessment andreporting for quality and service standards.

There are approximately 600,000 not for profit groups in Australia, with about one third (220,000) being incorporated

bodies. Of these, about 10% (60,000) are considered to be ‘economically significant’ and most of these receive

government funding. A substantial majority of these undertake work in the community services sector and as such

are subject to a range of quality and service standards related to the service funding they receive.1

1 Contribution of the Not-for-Profit Sector, Productivity Commission Research Report, 2010


Quality and service standards


4

The current standards and compliance environment is anadministrative and reporting nightmare for fundedorganisations and funding departments, with fundedorganisations having to divert significant time and resourcesaway from frontline services to complete multiple standardsrequirements, and many funding departments being inundatedwith hardcopy reports and difficult to collate data.

While the burden of quality standards and compliance costs iscommon knowledge in the NGO sector, most of the availableinformation is anecdotal. This research project provide boththe NFP sector and Government with some hard facts tosupport the anecdotal evidence about just how much this pieceof ‘red tape’ is costing.

The research was conducted over a three week period in April2011 with the support of State and Territory Councils of SocialServices and other peak bodies. A total of 134 organisationscompleted an online survey about the costs of qualitystandards and compliance reporting.

The survey looked at funding levels, compliance requirements– type and number of standards, the components of standardsassessments (organisational reviews, workbooks, alignment ofpolicies), the time and cost of standards assessment andreporting requirements, the perceived benefits derived fromquality management processes and the load of performanceand activity reporting. Information was also gathered aboutthe profile of the organisations responding, the size, location,service type and client focus.

There are at least 45 sets of significant standards for the community services sector, rising to well over 50 sets when

State or Territory variations on national standards are included. Under current arrangements, funded organisations

are required to complete each of their service standards requirements and to separately report on their standards

compliance for each source of government funding they receive. Additionally, a significant proportion of these

organisations are also required to embark on formal standards accreditation and licensing processes.


Profile of organisations responding


5

Micro Annual income less than $150,000, 11% of respondents:

Small Annual income $150,001-$2,000,000, 59% of respondents

Medium Annual income $2,000,001-$5,000,000, 11% of respondents

Large Annual income $5,000,001-$10,000,000, 9% of respondents

Very Large Annual income more than $10,000,000, 9% of respondents

The service types or organisations responding to the survey wereas broad as the sector. Respondents were asked to identify up tofive service types. The highest reported service types were:

Accommodation/Housing/Residential/Homelessness 28%

Home and Community Care 26%

Counselling/Family relationships/Family support 22%

Community Development/Information and resources 19%

Multi purpose organisation/Neighbourhood centre 19%

Education and Training 13%

Health/Medical 10%

Child protection/Child safety/Out of Home Care 10%

Domestic and Family violence 9%

Alcohol and other drugs 9%

There was also a good representation of both metropolitan/large city (62%) and rural or remote (38%).

The number of service outlets was largely reflective oforganisational size/income, however over 50% of allrespondents had more than one service outlet. Almost onethird of all micro and small organisations had between 2–5service outlets.

Profile of respondents by organisational size

Location of main office Organisational focus

ATSI

PWD

Elderly Other

* More than one answer possible


The compliance load


6

With over 45 sets of significant quality service standards

applying to various service types across the country,

many funded organisations are subject to multiple sets of

standards assessment and compliance reporting.

In this snapshot survey, respondent organisations identifiedover 30 sets standards for which they were required tocomplete quality standards assessments and submitcompliance reports. The most common standard was theCommunity Care Common Standards with almost one quarterof all respondents required to comply with these standards.

The impact is felt by almost all organisations, large and small,with over 85% of organisations in the survey undertakingmultiple assessments against compliance standards.

Assessments against standards Commonwealthfunded organisations

Assessments against standards State/Territoryfunded organisations

Number of standards assessments by funding source

The majority of organisations were undertaking multipleassessments, and of course this is compounded for thoseorganisations receiving both Commonwealth and State/Territory funding. (Almost two thirds of respondentorganisations that received State/Territory funding alsoreceived Commonwealth funding. Over 95% of those receivingCommonwealth funding, also received State/Territory funding).

Considering the picture for organisations funded byCommonwealth and/or State Territory Government we can see:

• A significant number of these organisations have to complete over 6 sets of standards assessment and compliance reports.

• Almost 40% of these organisations spend more than 40 hours per assessment and with 60% of them spending more than 25 hours per standard assessment, (not including work required to meet compliance requirements).

• For small organisations, 85% completed multiple sets of standards assessment and compliance reports.

• 22% of all organisations were required to undertake between 2–5 assessments against service or quality standards.

• 19% of all organisations undertook between 4–10 assessments, i.e. 2–5 assessments for Commonwealth and 2–5 assessments for State/Territory Governments; and

• 13% undertook 6–15 assessments.


The compliance load continued


7

The expectations on organisations in relation to assessmentsagainst standards are similar for both State/Territory andCommonwealth funding, however the impact varies dependingon organisational size.

• Almost 50% of micro and small organisations funded by the Commonwealth where required to undertake multiple assessments against quality or service standards, whereas there were more than 70% of micro and small organisations funded at the State/Territory level that required multiple assessments.

• For medium size organisations, 75% of organisations had to complete multiple assessments (for both State/Territory and Commonwealth funding).

• For large and very large organisations 80% of Commonwealth funded organisations had to complete multiple assessments, whereas over 95% or those organisations receiving State/Territory funding had multiple assessments against standards.

Considering the impact of both the Commonwealth andState/Territory requirements for standards assessment andcompliance reporting, there are a significant number oforganisations balancing the load of standards and performancereports.

Overall 59% of organisations received both State/Territory andCommonwealth funds and had multiple standards assessmentand compliance reporting requirements. Of that group 86%had to meet over 4 standards assessment and compliancereporting requirements.

Organisations were asked about the frequency of core activitiesoften included as part of the standards assessment process.These included:

• organisational review or self assessment

• completion of work books, workplans or other reportingdocuments

• alignment of policies or other organisational documentswith a set of standards; and

• external assessment or accreditation.

In reviewing the data, it is clear that all organisations regardlessof size had to undertake the same activity multiple times over athree year period. For some organisations, irrespective of size,it appears that this duplication of process increased the level ofbenefit from the process. For other organisations, againirrespective of size, the reverse was true, where the more timesthey repeated an activity, the greater the likelihood they sawthe process as being more cost than benefit.

This suggests it is factors related to the organisationalprocess/es involved in undertaking the work, rather than theactivity itself which contributes to the level of perceived benefit.

• Over a third of all organisations surveyed undertook anorganisational review or self assessment three times in thelast three years. Large and very large organisations haddone this more than 5 times in the last three years.

• A third of all organisations had completed workbooks, workplans or other reporting documents more than 5 times inthe last 3 years.

• For micro, small and medium organisations the majoritywere undertaking a review and realignments of policies orother organisational documents against a set of standardson an annual basis.

• Amendments to a standard or the development of newstandards required substantial rework for organisations.

In addition to the time and cost of assessment againststandards, there is also the significant work undertaken byorganisations to meet compliance requirements. In anenvironment where a large number of organisations are notseeing the benefit of this effort, there is a real question of theeffectiveness of the quality improvement work beingundertaken. Organisations were also asked if they hadimplemented any quality systems on their own initiative. Over60% of organisations reported that they had not, perhapsreflecting a combination of both lack of capacity given thedemands of meeting the mandatory compliance requirementsand lack of perceived benefit from participating in qualitymanagement processes.


The standards assessment process – what does it involve?


8

Of those that had implemented quality systems,there were three main groupings:

Implementation of formal external quality systems (over 70%)

Alignment to existing standards (17.5%)

Self designed or industry based quality assurancesystems (10%)

The most common formal external quality systemsimplemented by organisations were:

International Standards Organisation 9001 (28%); and the

Quality Improvement Council (QIC) Health and Community Services Standards (26%)

In addition to the requirement to comply with particular

standards as part of Government funding, organisations

are also required to submit detailed reports on activities,

performance and outcomes as part of the funding agreement.

The Productivity Commission Report highlights the impact ofthese multiple requirements, stating that “Current informationrequirements imposed on NFPs for funding and evaluationpurposes are poorly designed and unduly burdensome.”(Productivity Commission, 2010: pXXI)


Performance reporting


9

Number of State/Territory reports required on activities, performance and outcomes

Number of Commonwealth reports required on activities, performance and outcomes

Number of specific or separate reports on activities, performance or outcomes provided to Government in an average year

For small organisations, the vast majority had multiplestandards to assess themselves against and comply with, aswell as multiple activity, performance and outcomes reports.

• Over 60% of organisations funded by State/Territory governments completed over 5 specific or separate reports on activities, performance and outcomes in an average year. The comparable figure for those organisations receiving Commonwealth funds was 40%.

• For small and micro organisations over 50% completed more than 5 specific or separate reports on activities, performance and outcomes in an average year.

• Large and very large organisations were likely to have more reports, which is to be expected given the higher income level, however the load across micro, small and medium is still significant where between 50–80% of organisations undertook more than 5 specific or separate reports on activities, performance and outcomes in an average year.

• 21% of organisations undertook between 8–20 specific or separate reports on activities, performance and outcomes in an average year.

• More than 13% of organisations undertook over 25 specific or separate reports on activities, performance and outcomes in an average year.


Performance reporting continued


10

The Productivity Commission Report highlights that “atorganisational level there is a lack of understanding about totalactivity costs, in particular indirect costs.” The submission by theNational Roundtable of Non-profit Organisations to the ProductivityCommission presented a similar view “other important issues...[include] ... the extent to which the sector is able to fully cost itsservices”. (Productivity Commission, 2010: p281)

Given the challenges faced by organisations in accessingaccurate costing data, the above figures of course, only providean indicative picture.

In addition to the costs of meeting standards assessment andreporting requirements, organisations are also faced withundertaking implementation work to meet compliancerequirements. For organisations that have multiple standards, theabove costs of standards assessment and compliance reportingare estimated to represent only a fraction of the total cost.

In assessing the cost, organisations recognise there are a range of other costs related to standards assessment andcompliance reporting.


The cost of compliance


11

Organisational spend on standards assessment and compliance reporting by size

Size of organisation

• Over 70% of small organisations surveyed spend more than $5,000 annually to meet standards assessment and compliance reporting requirements

• More than half of all small organisations surveyed were spending over $10,000 annually

• 5% of micro and small organisations spent over $50,000 annually

• Almost all medium, large and very large organisations spent over $10,000 annually

• One organisation reported spending one third of its income on meeting standards assessment and compliance reporting

• Almost two thirds of those spending above $50,000 reported spending well over $100,000 with one organisation advising recent standards assessment and compliance reporting changes had cost the organisation over $400,000

• A third of small organisations reported losing over 280 hours annually (this is equivalent to two months of a full time worker)

• Almost two thirds of medium organisations were losing over 280 hours annually

• One organisation reported spending over 10,000 hours on standards assessment and compliance reporting (the equivalent of more than 5 full time staff).

With a more efficient system, many of these hours could havebeen redirected into direct service delivery.

When the majority of organisations have multiple standardsassessments and compliance reports and each assessmenttakes over 3 days (for 50% of respondents) the cumulativeimpact is crippling an already overloaded sector.

The Victorian State Services Association report on the Reviewof Not for Profit Regulation confirms the findings of thisresearch regarding the concerns of organisations in relation toadditional costs of accreditation and quality standards andabout staff time being diverted away from operational areas.

“Staff time has to be diverted away from service delivery totraining in new procedures” and there are “increased levels ofwork necessary to integrate new systems in internal policy andprocedures...2” . The report also highlighted the significant costof reporting against multiple standards across Human Servicesin Victoria.

What small organisations said about additionalcompliance costs:

“Single Manager - loss of time in other key operationaland strategic areas whilst complying with standards.Pressure on Manager enormous to fulfil all requirements”

“Backfill for staff taken off line to participate indeveloping standards or meeting standards; Training forstaff around standards; Admin costs in branding all ofthe material and revising new versions of the material;Uploading new versions onto intranet and printing papercopies for staff; Bringing the Board members up to speedon the standards”

“Designing, update and maintenance of data bases tocapture all the various stats required by each differencefunding body - and because the goal posts keepchanging we have to keep getting new ones. The time toenter all these stats is also a factor.”

“Our organisation only has 1 full time worker - they'renot a 'dedicated QA position' but it IS part of their roleand comes at the expense of other service delivery andorganisational development (including grant writing). Soit costs us in wages; it also costs us in LOST INCOMEdue to lost time!”


What are the opportunities lost?


12

In addition to the financial impact of standards assessment and compliance reporting, there is also of course the

opportunities lost, the service hours lost due to this over-burdensome system of multiple standards.

2 (Review of Not for profit regulation – Final report, Victorian State Services Authority 2007: p54)


The cost benefit


“Cost is to client services as there is more and moreadministrative expectations placed on organisations andthis can only come from dollars that are supposed tosupport clients. The cost is at the grass roots where thereis already significant under resourcing.”

Benefit by organisational size

Benefit identified by major service types

The perception of the extent to which the organisation and/or itsclients benefited from the quality management processes theyparticipated in varied most noticeably by organisational size.Smaller organisations were more likely to see less benefit, withover a 46% of micro organisations and 35% of small organisationsrating their participation in quality management processes aseither ‘more cost than benefit’ or ‘little or no benefit’ at all.

The large percentage of micro and small organisations that seequality management processes as more cost then benefitdespite the relatively low amount they spend, suggested thatthe cost to these organisations is a service cost.

One organisation that recognised there was some improvementor benefit gained from their participation in quality managementprocesses felt there was a “loss of time in other key operationaland strategic areas whilst complying with standards”.

There were also some significant differences in the level ofperceived benefit across the various service types, relatedmost likely to the varying standards assessment requirementsand processes across the NFP sector.

Over 50% of organisations providing Accommodation, Housingor Homelessness services found their participation in qualitymanagement processes to result in reasonable or significantimprovements or benefits. On the other hand this dropped to34% for organisations involved in Home and Community Careand 30% for those providing Community Development, FamilyServices or a range of service types (‘Multi Purpose’).

13

Over 85% of organisations surveyed are undertaking duplicatemultiple standards assessments and compliance reports. Inaddition they are also completing multiple separate reports onactivities, performance and outcomes. Despite the fact thatsome organisations are able to draw benefit from undertakingthe same activity multiple times, there is still significant wastedeffort involved.

At a practical level, most governments at State/Territory leveland the Commonwealth government have ‘red tape reduction’programs under way, and in some jurisdictions this includestackling the multiple standards issue. Reducing the overallnumber of standards and the inconsistency in reportingrequirements will be a major improvement but this will notoccur quickly enough nor is it likely to be enough to completelyaddress the current issues.

It also seems that, as fast as standards are rationalised theyare often being ‘reborn’ in another corner – the disabilityservices, chid care and homelessness sectors are all in theprocess of the development and implementation of new ‘qualityframeworks’, with the impact on service standards complianceyet to be seen. Even the recent rationalisation of fourstandards under the Community Care Common Standards willhave the impact of a new set of standards for many in theHome and Community Care (HACC) funded sector.

Organisations repeatedly have to undertake organisationalreviews, realign policies and other documents to meetstandards and compile workbooks or work plans. Government,the NFP sector and importantly clients can not afford this level of duplication and wasted effort in such an underresourced sector.

Organisations need a system which builds capacity, so thatthere is a clear relationship between investment (time, dollars)and benefit. In the current environment, each new standard orchange in standard or performance reporting requirements,exponentially increases the cost to organisations, and this doesnot need to be the case.

Given the number of organisations undertaking multipleassessments and performance reports, an averageorganisation (5 standards assessments and 5 performancereports) would spend a minimum of 6 weeks a year assessingand reporting, without even making a dent in the compliancework required.

Conservatively the sector could be losing in excess of 2.7 million hours annually to standards assessment andcompliance reporting. Clearly, a substantial proportion of theselost hours could be and should be allocated to service delivery.


Conclusions


14

Prior to this research being undertaken, numerous review and reports had identified the unnecessary load that

regulatory and compliance requirements are having on the Not-for-profit (NFP) sector. The issue of compliance

requirements related to quality and service standards has tended to be overlooked amongst the sheer volume of other

regulatory regimes. However, NFPs providing human services and, to an increasing extent their government funding

providers, are all too aware of the impact of quality standards on funded services. This research has begun to quantify

that impact in terms of volume, cost, time and lost opportunity.

The SPP an integrated online system for the completion of selfassessments and compliance activities related to service andquality standards. It is designed to address the time consumingand labour intensive aspects of standards implementation andcompliance, while building organisational capacity of NGOs,particularly those with multiple government funding sourcessubject to multiple sets of quality standards.

It has been specifically designed for human services in Australia,and its content covers the main sets of quality standards forNGOs that provide health and community services.

Below is the list of quality service standards that have beenidentified and/or mapped by BNG NGO Services Online andthese are being progressive loaded up on to the SPP. (For a complete list of standards carried by the SPP: www.managementsupportonline.com.au)

Those standards marked with an asterisk (*) were reported as being the standards that applied to the respondentorganisations.


Annexure 1


15

Quality service standards referred to in the Report

This research was undertaken, in part, to inform the work by BNG NGO Services Online on the development of the

newly launched Standards and Performance Pathways (SPP).

Accreditation Title Reported by respondents

Accreditation Standards Residential Aged Care *

ACT Standards for Disability Services

Australian Business Excellence Framework *

Community Legal Services Program Service Standards *

Disability Employment & Rehabilitation

EQuIP *

Family Day Care Quality Assurance

Family Relationships Services (FRSP) Performance Framework *

Health Quality and Complaints Commission Standards

ISO 9000 *



16

Annexure 1 continued

National Australian Service Excellence Program (replacing current SEP from 1 July)

National Community Care Common Standards *

National Community Housing Standards *

National Disability Advocacy Program Quality Improvement *

National Health Care Standards

National Out of Home Care *

National Standards for Disability Services *

National Standards for Mental Health Services

National Standards for Outside School Hours Care

National Standards for Involving Volunteers *

NSW Disability Services Standards *

NSW Good Practice Guidelines *

NSW Pre Qualification Scheme for accommodation support

NT Disability Services Standards

OATSIH Organisational Risk Assessment *

Out of School hours Quality Assurance

QIC Health & Community Services Core Standards (National) *

QLD Child Safety Service Standards *

QLD Disability Advocacy Standards *

QLD Disability Service Standards *

QLD Health Performance Framework for NGOs

QLD Out of Home Care Licensing

QLD Standards for Community Services *

Quality Improvement and Accreditation System (Long Day Care)

SA Psychological Rehabilitation Support Service Standards *



Annexure 1 continued


17

SA Service Excellence Standards (Certificate level) *

SA Standards for Disability Services

SA Standards of Alternative Care

Supported Accommodation Assistance Program *

TAS Disability Standards *

TAS Quality and Safety Standards Framework *

VIC Alcohol & Other Drug Quality Framework

VIC Department Human Services single standard (being developed) *

VIC Homelessness Assistance Service Standards

VIC Industry Standards for Disability Services

VIC Registration Standards for CSOs

WA Alcohol and Other Drug Sector Quality Framework *

WA Disability Services Standards *

WA Service Standards for NGO Providers of Community Mental Health Services

WA Standards for children and young people in protection and care


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