• Civil Service governance
• Accountability
  • Capability Reviews
    • Background
    • Reports
    • Tools
    • PASC
    • Video
    • Review: Change: Deliver
    • Press
  • Civil Service boards
• Diversity
• Statistics
• Public bodies
• Public appointments
• Nationality requirements
• Government communications

About the Civil Service

Capability Review of the Foreign and Commonwealth Office

Contents

• Foreword
• The Department’s response
• 1. The Department
• 2. Current delivery challenges
• 3. Challenges for future delivery
• 4. Assessment of capability for future delivery
• 5. Capability Review findings
• 6. Key areas for action
• Annex A: The model of capability
• Annex B: Assessment categories

Foreword

The purpose of departmental Capability Reviews is to use honest and robust assessments of future capabilities to identify the specific measures that are needed if central government departments are to play their part in enabling the UK to meet the considerable challenges of the future.

Over the course of the last generation there has been a transformation in the UK economy and wider society. In the era of globalisation, international trends in, for example, migration, production techniques and energy consumption have a profound effect on an outwardly facing nation like the UK. Global competition places a premium on productivity and flexibility. Harnessing new technology, developing new, high-value skills and embracing change have all enabled the UK economy to respond to these challenges, but only because companies, communities and individuals have had to learn to adapt to rapid change. As the pace of change quickens, skills and flexibility will become even more important.

Just as these trends have required a major change in the behaviour of all parts of UK society - corporate, community and individual - the challenges of the future require a response from government too. If the State, through public services, is to enable the UK to thrive over the decades to come, public services and those who deliver them must also become more flexible and adaptable, more individual, more expert and more professional.

And the environment in which public services are delivered is also changing fast. Migration, an ageing population and changing lifestyles are amongst the factors that have made the UK population - the users of public services - more diverse than ever before. The nature of public services means that often the normal market-based ways in which suppliers learn what customers think of services are only partly available. But technological and lifestyle changes mean that the public's expectations are rising, as those who use services rightly demand something tailored to their needs and delivered in the way most convenient for them.

Equipping public services for these challenges requires a transformation of the nature of government. The Capability Reviews mark an important part of this process for the centre, with an examination of what the needs going forward are for each government department.

Underpinning each review is how each department can play the role of enabler. In the modern era of technological change and consumer choice, it is not for government to control or prescribe what people want and receive.

Instead, a clear vision of what the centre should do is fundamental. High-level targets are an important tool, but the centre cannot and should not seek to micro-manage everything. Instead, the centre needs strong strategic capability to set and review priorities, as well as robust systems for managing performance and tackling areas of weakness. Getting the right skills in place, particularly operational skills, is of critical importance. Equally crucial is ensuring that policy is designed in a way that uses what works for customers and providers. These are the themes of the Capability Reviews.

Each Capability Review has been carried out by the Capability Reviews Team in the Cabinet Office, with a team of external reviewers assembled specially for the department under review. These reviewers have been drawn from the private sector, the wider public sector and board-level members of other government departments. The teams' wealth of experience provides external challenge and insight as well as contributing to sharing best practice across Whitehall.

I would like to thank and acknowledge the support of the review team for the Foreign and Commonwealth Office (FCO), without whom this report would not have been possible. The members of the team were:

• Dan Bernard, former Managing Director, B&Q plc
• Karen de Segundo, former Chief Executive, Shell Renewables
• Mark Hammond, Chief Executive, West Sussex County Council
• Stephen Hawker CB, former Director General-level civil servant
• Mark Neale, Director General, HM Treasury

This report is just the beginning. The real challenge for FCO comes in implementing what has been identified as needing to be done. Key actions which address the areas for improvement have been agreed between the Cabinet Secretary and the Permanent Secretary of the Department. The Capability Reviews Team will regularly review progress and provide support to help ensure that FCO is on track to deliver.

Sir Gus O'Donnell KCB Cabinet Secretary and Head of the Home Civil Service

March 2007

Back to top

The Department's response

The Permanent Under Secretary's response

Globalisation opens up huge opportunities for the UK, but also new threats to our security and prosperity. This makes the mission of the Foreign and Commonwealth Office (FCO) - 'working for UK interests in a safe, just and prosperous world' - all the more vital. Our global network of Posts is a unique asset for the Government. We work closely with almost every government department and with a wide range of other stakeholders in the UK.

As the world changes, FCO is going through a profound transformation. I am proud of the way that FCO is rising to this challenge. We have reorganised to focus on the 10 Cabinet-endorsed International Priorities. Reflecting these priorities, we are moving staff out of our London headquarters and Europe to strengthen our capacity in the major powers of the future, such as China and India. We are shifting UK Trade and Investment resources to our highest-priority markets. We have staff working in difficult, and sometimes dangerous, conditions in Iraq, Afghanistan and elsewhere. We have found innovative ways of meeting the rapidly growing demand for our visa and consular services, including through commercial partners, and our Rapid Deployment Teams are ready at the shortest notice to bring assistance to British citizens caught up in violence or natural disasters anywhere in the world.

I am determined to go further. I have set out for staff my vision of what FCO needs to be to deliver our priorities: committed to the values of public service; confident about making a difference; and creative in transforming the way we work. We are strengthening the senior leadership team of FCO with the external recruitment of a director general for finance, chief information officer and director of communications.

My Board and I welcomed the Capability Review of the FCO and worked closely with the team. This review helps us by giving added impetus and focus to the ambitious change programme that we have embarked on. As we make this journey it is important that we build on our great strengths. As the review recognises, FCO is regarded by other foreign services as one of the best in the world and is widely admired for the high calibre of its staff. My Board and I accept that there is much more to be done to ensure that FCO is effective and efficient in delivering internationally for the Government in the 21st century. To achieve that, our implementation plan sets out specific measures and a timetable in four key areas.

We will articulate FCO's distinctive contribution to the delivery of the UK's objectives overseas.

As the review recognises, the Government's agreement to the International Priorities has helped the Department to reorganise and shift its focus. We have developed joint strategies with other government departments to deliver on priorities such as energy security, sustainable development, drugs and organised crime work, and climate change.

My Board and I accept that we need to go further to articulate more clearly for our staff and our stakeholders the distinctive contribution that FCO makes in delivering these priorities, and the work of our Posts overseas in delivering the Government's overseas agenda on behalf of other government departments. We must also focus even more sharply on our highest priorities. We shall need the cooperation of our partner departments, as well as the Cabinet Office, in achieving this outcome. Specifically, we intend:

• within six months, to review with key stakeholders and partners how FCO can best contribute in the future to the delivery of the Government's overseas agenda, and the consequences for the Department's future role, shape and business model;
• also within six months, to establish a strengthened policy planning staff to underpin this work;
• within 12 months, to tighten the Department's focus on the top strategic priorities and to further prioritise resources to deliver them; and
• within 24 months, to review the strategic priorities and Public Service Agreement (PSA) targets and to reallocate resources as necessary.

FCO, the Department for International Development (DFID) and the Ministry of Defence (MOD) share particular interests in developing and delivering government policy overseas. In many countries, we also have concurrent FCO, DFID and MOD presence on the ground. It is for this reason that we have been meeting regularly as permanent secretaries of the 'international' departments to discuss shared issues.

Looking ahead, we see the establishment of joint PSA targets as a further opportunity to intensify joint working on a basis of clearly defined roles and accountabilities, drawing on the unique strengths of each department. We will build on the success and lessons drawn from past experience, and we will welcome the new challenges - and opportunities - for joint planning, action and monitoring to address our shared government missions. We will also continue looking for opportunities to exchange staff and share our skills to address widening policy agendas. As we take forward our departmental action plans over the months ahead, we will continue to work closely with each other and more widely within Whitehall to ensure that shared challenges are met with shared action.

We will strengthen change management capability and communications.

We have embarked on an ambitious modernisation programme which will lead to the biggest changes in the way our Posts operate in living memory. This will include a major programme to introduce regional shared service centres which will improve the quality of administrative support at reduced cost; introducing biometrics for entry clearance and passports; renewing our global IT platform; and deploying staff more flexibly. I have restructured the FCO's Board, and introduced a new Change Committee. We intend to:

• within six months, significantly increase the resources devoted to managing change, including by appointing a director general for service delivery and business change and recruiting a qualified and experienced change director;
• within 12 months, incorporate the results of work on FCO's distinctive contribution into a comprehensive, coherent and integrated change programme; and
• within 24 months, successfully deliver key elements of the change programme, notably biometric visas, the Future Firecrest IT platform, and the first shared service centres.

We will strengthen strategic management of HR and knowledge.

People are at the heart of what we do. We need high-calibre staff with the skills, experience and expertise to influence developments overseas and to provide high-quality services. We have modernised our HR management over the past three years by: cutting HR staff numbers by around one-third; increasing the level of professional expertise; focusing resources on providing solutions to business problems, including through the HR manager network; improving learning and development; introducing a more rigorous assessment and performance management framework; and enshrining the principles of good HR management through a People Strategy.

We recognise that we need to build on this by:

• within six months, making progress with the agreed strategy in order to deliver higher levels of diversity in FCO recruitment, and working to achieve challenging FCO diversity targets in the Senior Management Structure (SMS); opening up more SMS jobs to direct open competition or interdepartmental trawl; and holding an external competition to recruit a director of HR with the necessary skills and experience;
• within 12 months, drawing up a workforce plan, based on a skills audit, that sets out the skills required at all levels in FCO and the recruitment and interchange activities necessary to deliver them; using this to develop an HR strategy that has the workforce plan at its core; producing career guidance for FCO staff to underpin this; drawing up a strategy for the management of locally engaged staff in order to use this highly skilled staff resource more creatively; and
• within 24 months, renewing or revising our People Strategy to meet our business needs; achieving Investors in People re-accreditation; and meeting efficiency targets arising from the Comprehensive Spending Review of 2007.

We will strengthen business planning processes and disciplines.

We recognise that our business planning and resource allocation systems need to be overhauled to deliver the International Priorities. The Capability Review has given further impetus to our work. Our objective is a clear and transparent business planning framework that targets resources to the International Priorities and links them, through clearly defined objectives and milestones, to actions in London and at Posts. We will build on our improved management information in order to: ensure our resources are being used where they can have most impact; support resource reprioritisation; improve measurement of outcomes, both successful and unsuccessful, in order to identify best practice; and facilitate accurate reporting to Parliament. To this end:

• by September 2007, we will have agreed business plans for each of our International Priorities, as set out in the Active Diplomacy for a Changing World: The UK's International Priorities White Paper. These will specify the five key outcomes sought, and identify the priority action countries for each. Flowing from these business plans will be a set of country business plans, which will identify the actions required in each priority country in order to deliver the key outcomes;
• we will establish clear responsibilities and accountabilities of the key management roles in FCO, including Board members, directors, and heads of mission;
• by February 2008, we will have concluded a resource allocation round which will target the resources received by FCO in the Comprehensive Spending Review of 2007 for the period 1 April 2008 to 31 March 2011 to our International Priorities; and
• our business planning framework will constitute the 'spine' on which we will hang resource allocation decisions; the measurement of performance against objectives and our PSA targets; risk reporting and management; and the performance assessment of individual managers.

My Board and I accept the scale and the urgency of the changes required to maintain FCO as one of the best foreign services in the world: fast, flexible and focused in delivering for the whole of the Government. We recognise that this will be a real challenge for the leadership of the Department at home and abroad. I am convinced we will have the capability to achieve these goals, provided that we follow through rigorously on the implementation plan summarised here. This will be a top priority for the Board over the next two years.

Peter Ricketts Permanent Under Secretary and Head of the Diplomatic Service Foreign and Commonwealth Office

March 2007

Back to top

1. The Department

The purpose of the Foreign and Commonwealth Office (FCO) is to work for UK interests in a safe, just and prosperous world. This includes developing and delivering specific international policies; identifying and influencing developments overseas that affect the UK; and providing consular, visa and commercial services to UK citizens, businesses and others.

The structure and focus of FCO have changed considerably over the past decade. The Department has broadened its role from classic diplomatic work to include the delivery of services to the public and the provision of an international platform for government departments and agencies to pursue the UK Government's objectives abroad. Since 2003, the Department has reorganised and significantly shifted its focus further to deliver - in concert with other government departments - the UK's International Priorities as established in its 2003 White Paper UK International Priorities: A Strategy for the Foreign and Commonwealth Office, which was updated in 2006 by the Active Diplomacy in a Changing World: The UK's International Priorities White Paper.

These International Priorities respond to the expected opportunities for, and risks to, UK interests over the next 10 years. They underline how closely domestic and international policies are now interconnected, and represent a huge international agenda ranging from countering global terrorism to contributing to building an effective and globally competitive European Union (EU).

FCO has an extensive global network of 260 Posts ('Posts' is a generic term covering all the Department's offices overseas) in 145 countries. The network of Posts includes 140 Embassies and High Commissions in capital cities; 10 Missions to international organisations such as the UN, the EU and NATO; 10 Posts in Overseas Territories; and 100 Consulates or Deputy High Commissions outside capital cities. This network is not static. Since 2000, the Department has opened 23 new Posts and closed 34 others, with 11 being transferred from the leadership of UK-based staff to that of locally engaged staff. Posts can range from a single member of staff to several hundred, drawn from FCO and many other departments and agencies. The Department has also shifted staff and other resources to key Posts outside Europe, including those in China, India and Pakistan, whilst meeting new demands in Iraq and Afghanistan.

Through its network of Posts, the Department undertakes 'public diplomacy' to help deliver the International Priorities. It also delivers services to the British public, businesses and travellers. These include providing travel advice, issuing passports, assisting travellers in difficulty and distress, and dealing with major emergencies such as the Indian Ocean tsunami and the events in Lebanon in 2006. Demand for consular services is rising rapidly as UK citizens continue to travel more and settle overseas in greater numbers. FCO is increasing the profile and priority it gives to these areas of work.

The Department has joint ministerial and management responsibility with the Home Office for UK Visas, which regulates entry and settlement into the UK. It also shares responsibility with the Department of Trade and Industry for UK Trade and Investment, which both helps UK companies do business overseas and works to attract inward investment to the UK.

The Department employs about 6,000 UK civil servants, 60 per cent of whom are in the Diplomatic Service. Around half are overseas at any one time, with the remainder based in London, Croydon and Milton Keynes. Around 10,000 'locally engaged staff' are recruited and managed by individual Posts, representing close to two-thirds of the Department's workforce. Some 40 Posts are staffed entirely by locally engaged staff.

The Department's annual budget in 2006/07 was £1.9bn. Its own core budget is about £1bn - approximately 0.2 per cent of total government expenditure. This includes capital spending of £110m per year, mainly spent on IT and on the estate, which comprises over 1,800 owned properties valued at £1.2bn. The rest is distributed as grants to the BBC World Service and the British Council, as ring-fenced resources for conflict prevention and as subscriptions to international organisations such as the UN. The Department sponsors nine advisory and executive non-departmental public bodies, administered at arm's length from FCO, including the British Council and the Westminster Foundation for Democracy.

The FCO Board, chaired by the Permanent Under Secretary, provides corporate leadership to the Department. The Board has five executive sub-committees (Finance, HR, Investment, Change, and Audit and Risk), with non-executive director involvement.

The Senior Leadership Forum, which brings together the Board and the most senior heads of mission overseas, is being used increasingly to promote corporate leadership by drawing senior heads of mission into the decision-making process.

Back to top

2. Current delivery challenges

FCO, working in conjunction with other departments, focuses on delivering the UK's International Priorities as the Government's core international objectives.

The White Paper Active Diplomacy for a Changing World: The UK's International Priorities, published in March 2006, set out nine International Priorities for the UK. In June 2006, the Foreign Secretary added a further strategic priority on climate security. These International Priorities are shared across government. They provide the organisational framework and delivery focus for FCO. They are ambitious and present a complex set of challenges, particularly where the UK's influence is not direct. The International Priorities are:

1.         Making the world safer from global terrorism and weapons of mass destruction.

2.         Reducing the harm to the UK from international crime, including drug trafficking, people smuggling and money laundering.

3.         Preventing and resolving conflict through a strong international system.

4.         Building an effective and globally competitive EU in a secure neighbourhood.

5.         Supporting the UK economy and business through an open and expanding global economy, science and innovation and secure energy supplies.

6.         Achieving climate security by promoting a faster transition to a sustainable, low carbon global economy.

7.         Promoting sustainable development and poverty reduction underpinned by human rights, democracy, good governance and protection of the environment.

8.         Managing migration and combating illegal immigration.

9.         Delivering high-quality support for British nationals abroad, in normal times and in crises.

10.       Ensuring the security and good governance of the UK's Overseas Territories.

The Department also has nine PSA targets set out in the Spending Review of 2004.

The Department has nine PSA targets, which it uses to measure progress towards meeting 6 of the 10 International Priorities. The PSA targets are as follows.

• Deter, check and roll back programmes for the development of weapons of mass destruction.
• Reduce the risk from international terrorism so that UK citizens can go about their business freely and with confidence.
• By 2008, improve effectiveness of UK and international support for conflict prevention. This is a joint target with the Department for International Development (DFID) and the Ministry of Defence (MOD).
• Work towards a reformed and effective (post-enlargement) EU.
• Play a leading role in the development of the European Security agenda, and enhance capabilities. This is a joint target with MOD.
• By 2008, deliver a measurable improvement in the business performance of UK Trade and Investment's international trade customers and maintain the UK as the prime location in the EU for foreign direct investment. This is a joint target with the Department of Trade and Industry (DTI).
• Increase understanding of, and engagement with, Islamic countries and communities.
• Promote sustainable development, underpinned by democracy, good governance and human rights.
• Secure effective and efficient consular and entry clearance services. This is a joint target with the Home Office.

As part of the Comprehensive Spending Review of 2007, the Department expects to agree a smaller set of cross-government PSA targets. It will also establish a set of Departmental Strategic Objectives, based on the International Priorities and intended to bring its PSA targets into full alignment with the International Priorities.

The Department is making good progress towards its PSA, Gershon efficiency savings, headcount reduction and staff relocation targets.

Although some of its PSA targets are very challenging, the Department indicated in its 2006 Autumn Performance Report that it is making good progress towards meeting them.

By the end of December 2006, the Department had achieved efficiency savings of £69m, and is on track to meet its Gershon efficiency savings target of £120m by the end of 2007/08. It had also reduced the number of its UK-based staff by 256, close to its April 2007 target of reducing headcount by 265, and is on course to meet its headcount reduction target of 310 by April 2008. It had also relocated 123 jobs out of London and identified a further 174 for relocation, against its Lyons target of relocating 450 by 2010.

The Department has achieved some significant successes in recent years.

Significant successes against the Department's PSA targets and the International Priorities include:

• securing the approval of UN Security Council Resolution 1737 in 2006, demanding an end to Iranian nuclear enrichment and reprocessing activities;
• in cooperation with MOD and DFID, helping transform Sierra Leone from a conflict-ridden state - exporting instability and harm to the region - to a stable, peaceful, democratic and increasingly successful country;
• supporting roadshows with visiting Muslim scholars attended by over 60,000 young British Muslims; recordings of these events were in the top 20 iTunes category of Religion and Spirituality for over three months;
• coordinating the UK's negotiations on the 2006 EU Services Directive, which is expected to deliver up to £5bn a year to the UK economy and create up to 135,000 jobs in the UK;
• providing the base in the overseas network for nearly 150 liaison officers (from the Serious Organised Crime Agency, Crown Prosecution Service, HM Revenue and Customs and the police) to seize 2 tonnes of heroin and 15 tonnes of cocaine and to recover £30m of drug-related assets in 2005/06;
• securing, through the work of UK Trade and Investment, over 1,200 inward investment decisions in 2005/06, an all-time record;
• using the largest-ever Rapid Deployment Team to help evacuate 4,600 British nationals from Lebanon to Cyprus in summer 2006; and
• driving greater efficiency in the UK Visas operation, enabling growth of 55 per cent in customer demand in the last four years to be met with only a 22 per cent increase in staff.

Back to top

3. Challenges for future delivery

The Department's mission and the context in which it works are changing.

FCO is widely regarded as world class by other diplomatic services. But the nature of diplomacy and foreign policy is now changing significantly. The ability of FCO to retain its leading position amongst other foreign services will depend on how successfully it embraces that change. The following four challenges stand out.

Domestic and international issues are increasingly interlinked, requiring the Department to define more clearly its distinctive contribution and to work more closely and more effectively across government.

Political and military issues remain a significant international focus, but the UK's objectives overseas now also address social, economic and environmental issues, including successfully managing migration and the opportunities offered by globalising world markets, gaining international support for effective action on climate change, and combating serious organised crime and international terrorism. Expertise on many of these issues, including their international dimensions, may increasingly lie in other parts of government. A growing number of departments therefore have a role to play in developing and supporting international policy in Whitehall and in delivering it cohesively overseas. FCO has to be able to articulate clearly for the benefit of its staff and its partners the particular contribution and value it brings to new and changing areas of overseas policy. Other departments will have to do likewise. Additionally, and as the Capability Review of the Cabinet Office in December 2006 emphasised, the centre of government needs to ensure that the machinery of government as a whole supports effective cross-government working on international policies and priorities. The Capability Reviews of the Ministry of Defence and the Department for International Development, and the common themes report published today alongside this review, set out the action that other parts of government need to take for more cohesive development and delivery of UK overseas policy.

Diplomacy is conducted in new ways and through new channels.

In an inter-connected world of mass travel and fast communication, prime ministers and presidents conduct much international business face to face. Policy experts can

readily meet or exchange views with their counterparts in many other countries without having to rely on FCO's network of Posts. Non-governmental organisations, faith groups, the business sector and the media are becoming increasingly important stakeholders, and electronic communications have opened up a range of alternative means of conducting business. The Department must continue to adapt to this new reality. This includes ensuring that its local and subject expertise is more focused and more readily accessible to its partners and its own staff, that its Posts complement diplomacy conducted through the new channels, and that it fully exploits the opportunities arising from new communication channels.

UK and other countries' citizens and businesses demand ever-higher standards of service delivery.

The Department provides an important range of services and support to citizens overseas, to those who wish to visit the UK and to businesses seeking to deepen commercial ties between the UK and other countries. All these groups expect an ever-more efficient and responsive service. Both the volume of demand and standards expected of FCO's services are rising. It is vital to the UK that this demand is met and that people's expectations of the service are fulfilled. Failure risks reducing the number of businesses that choose to trade with and invest in the UK, and the number of overseas citizens who choose to visit, study or work in the UK. The challenge for FCO is to provide increasingly professional, efficient and well-managed operations, applying best practice consistently and effectively across its network.

As for all public services, the Government is seeking greater efficiency and effectiveness from the Department.

The public service reform agenda demands increased efficiency and effectiveness - delivering more and better with less - from the whole of the public sector, including government departments. The Department has made good progress on the efficiency agenda but, as with other departments, the Comprehensive Spending Review of 2007 settlement is likely to present fresh challenges in managing tight resources. This challenge is even more pressing for FCO as incremental improvement will not be enough to maintain standards, and more ambitious change will be needed which goes beyond the Department's current plans.

Back to top

4. Assessment of capability for future delivery

Leadership

Leadership assessment

L1	Set direction		Urgent development area
L2	Ignite passion, pace and drive		Well placed
L3	Take responsibility for leading delivery and change		Development area
L4	Build capability		Development area

Strategy

Strategy assessment

S1	Focus on outcomes		Development area
S2	Base choices on evidence		Well placed
S3	Build common purpose		Well placed

Delivery

Delivery assessment

D1	Plan, resource and prioritise		Urgent development area
D2	Develop clear roles, responsibilities and business model(s)		Development area
D3	Manage performance		Well placed

The model of capability is shown at Annex A. The assessment categories are shown at Annex B.

Back to top

5. Capability Review findings

Leadership

The Department has many inspiring leaders and has earned a reputation for attracting committed, capable people of the highest calibre.

• FCO is regarded by other foreign services as one of the best in the world. It is widely admired for the high calibre of its staff and its ability to articulate a coherent UK Government view and to project that view in negotiations. These strengths enable the UK to punch above its weight in the European Union and other international arenas.
• Staff regard the new Permanent Under Secretary as a strong leader. Since his arrival in June 2006, he has been working hard to raise the visibility of the senior leadership team.
• The senior leaders display considerable passion and commitment to their work, and at director level many talented individuals are emerging who will take the organisation forward. Heads of mission play a visible leadership role in Posts, and the best amongst them are impressive role models who demonstrate as strong a commitment to delivering better services as to traditional diplomacy.
• The passion and commitment of the senior leadership team inspire front-line staff; which is all the more impressive when many of those staff are being asked to work in increasingly difficult and dangerous environments.
• The new Permanent Under Secretary has appointed to the Board a director general of finance and a chief information officer, both professionally qualified and externally recruited. Further changes to the Board will be made from April 2007, including the appointment of a director general, business change and service delivery. This, together with the external challenge provided by the two private sector non-executive directors, will increase the Board's professional expertise and capacity to lead and manage change.
• The Department has changed considerably in recent years and the Board accepts the pressing need for further change. The Board has agreed an ambitious set of further change initiatives - initially for corporate services and service delivery functions - over the next five years. It has also revitalised its Change Committee reporting to the Board.
• The Department is making progress on developing a broader set of skills in line with the Cabinet Office's Professional Skills for Government initiative. The Board is clearly communicating its changed expectations regarding skills and experience, and is strengthening corporate leadership behaviours amongst senior staff. The rigorous Assessment and Development Centres for staff aiming for senior management positions, and the leadership training given to all heads of mission, demonstrate the Department's commitment to improving leadership.

However, FCO has not articulated clearly enough either for itself or its partners its distinctive contribution to the Government's objectives.

• Staff, other departments and external stakeholders do not yet see FCO's leaders as clear and confident enough in defining the Department's role. They are looking for a definitive and agreed account of FCO's role, and hence the unique contribution it can make to achieving the International Priorities, collectively and individually, and of the kind of organisation it needs to become to do so successfully.
• The UK's International Priorities provide an overall framework for FCO to focus its work and build common purpose with other government departments. However, the limited clarity within the Department on the relative importance of its contributions to the various International Priorities creates problems for front-line delivery.
• The 2006 White Paper provides a high-level statement on the role of FCO. However, this statement has not consistently been turned into detailed working agreements with other departments on FCO's distinctive role and contribution to the delivery of the International Priorities.
• This means that there is no single, widely understood and accepted mechanism in Whitehall for agreeing roles and responsibilities, and clarifying accountability. There is evidence of a more integrated understanding of respective roles and relationships in some individual Posts, but this approach needs to be applied more systematically across the Department.
• Without clarity of roles and responsibilities, the Department is finding it difficult to set direction and provide a compelling case for why and how it needs to change its structures and ways of working, other than to achieve cost savings. This is also inhibiting its efforts at all levels to develop robust business plans and success measures; to prioritise work and allocate tight resources to where they can make the most difference; and to identify and develop staff with the skills and experience required. This issue is therefore both urgent and at the heart of the capability challenge the Department faces.

As a result, there is inadequate clarity, pace and coherence in the direction of the Department's strategic change.

• The Permanent Under Secretary's personal contribution to opening a debate on change since his arrival in June 2006 has been well received by staff.
• Staff have an appetite for change and want to see more progress more quickly. However, many remain unclear of the direction of change and its benefits, and are sceptical about the Department's capacity to lead and manage it effectively across its dispersed network.
• The individual change projects have not been welded into a coherent, integrated change plan for the Department. And they do not address sufficiently potential changes to delivery of the core diplomatic and political functions, such as the initiatives being piloted in the wide-ranging ('zero-based') review of its European network.
• The governance and leadership structures are not yet adequate to drive the scale and pace of change needed to manage a complex range of interdependent programmes to a successful conclusion. This will be a major challenge for the new director general, business change and service delivery, and require strong leadership and buy-in from the Board and Senior Leadership Forum.
• Professional change management skills, both at working and senior levels, are currently inadequate to implement increasingly complex change programmes.
• There is no compelling narrative to explain to staff and stakeholders how the planned changes will underpin the foreign service that FCO needs to become if it is to meet its new challenges, and how they will be expected to work and make a career within it.

There is insufficient strategic planning to develop and make full use of the capabilities of the Department's staff.

• The Department has made a significant strategic shift from a traditional, paternalistic culture to one in which staff manage their own careers, supported by a much smaller and more expert HR function.
• The recent People Strategy, which defines for the first time appropriate HR management behaviours for all categories of staff within FCO, is a positive step. However, the Department does not yet use HR as a strategic tool to manage and develop its 16,000-strong global workforce and to drive and support change and organisational redesign. It does not have a coherent workforce strategy to identify the full range of skills and experience it needs for the future and is therefore not in a position to develop or acquire what it lacks.
• Whilst the Department has made progress in building professional HR skills, these remain insufficient, particularly at more senior levels, for the challenges it faces.
• The Department's 10,000 locally engaged staff, about two-thirds of its total workforce, make an impressive contribution to delivery of the International Priorities. However, FCO has not addressed with sufficient energy or rigour the right balance between the strategic management of its locally engaged staff and the local responsibility of the Posts that recruit and deploy them. Many locally engaged staff have first-class skills, but some still feel treated as second-class citizens.
• The Department remains relatively closed, with limited interchange with other government departments and external organisations. To meet current and future delivery challenges, the Department needs to widen its skills and experience, and open up for competition a higher proportion of appointments to senior posts.
• The Department has diversity targets set below the Whitehall average which nevertheless remain challenging to achieve for senior grades, particularly at Board and Senior Leadership Forum levels. The appointment of a new equality and diversity manager from the private sector is a useful step forward here.

Strategy

The UK's International Priorities are compelling objectives and provide a good basis for strategic thinking and building common purpose.

• The International Priorities are a real strategic strength for the Department. They are well understood by its staff and contribute to building common purpose with staff from other government departments out in Posts.
• The Department has worked successfully with other departments in Whitehall to establish a range of strategies relating to the International Priorities. It has also developed country strategies with the Cabinet Office and Number 10 for countries that are particularly important to the achievement of the UK's International Priorities.
• There are also clear strategies for the individual service delivery functions - UK Visas and UK Trade and Industry (UKTI) - that the Department manages jointly with the Home Office and Department of Trade and Industry (DTI) respectively.
• FCO has some formal links in place with other government departments to enable cross-Whitehall consultation in formulating the objectives and work of Posts and ensuring that agreed strategies are pursued coherently.

Staff have formidable knowledge and expertise in analysing issues and identifying policy options.

• The world-class diplomatic and influencing skills of staff, combined with an in-depth knowledge of countries and languages, provide a strong foundation for the development of evidence-based strategy and policy making. Political analysis skills within FCO are held in particularly high regard by ministers and other departments.
• The consular service makes effective use of comparative management information and customer feedback in its service delivery work to prioritise and shape forward activity. UKTI is valued by British business in the UK and abroad for the quality of its market research.
• There are impressive examples of the Department contributing its local knowledge to the development of cross-government strategic analysis, and working with other government departments to deliver services overseas. The work of the overseas network to maximise the impact of the Stern Review on the Economics of Climate Change (2006) is a good example of this.

The Department has yet to articulate sufficiently clearly the International Priorities' intended outcomes, particularly for political and diplomatic work, and to make best use of its knowledge to influence Whitehall policy debates.

• The Department is innovative and disciplined at developing clear and strategic outcomes and measures for its service delivery functions. However, this approach is applied much less consistently to other aspects of its work, for example in defining clear outcomes and success measures right across the International Priorities, particularly in the more difficult areas of political and diplomatic work.
• Staff and stakeholders would like the Department to have a better grasp of the relationship between domestic and foreign policy, play a stronger role in this area, and use its expertise to lead and influence policy debate in Whitehall. The re-establishment of the Department's policy planning staff should help position it to inform policy debates more effectively.
• FCO prides itself on the knowledge it acquires. However, its emphasis on keeping its information secure inhibits the sharing and dissemination of knowledge systematically across the network. It has not effectively exploited the power of new IT. FCO has not attached sufficient priority to managing and mobilising the knowledge it acquires. Its ICT strategy and work on the Future Firecrest IT system are intended to address knowledge management issues, but technological solutions will not be enough.

Delivery

FCO delivers a number of services very well, often in partnership with other departments, and is capable of thinking radically about its delivery models.

• The Department delivers good-quality services to the public, often in partnership with other departments. UKTI - jointly managed with DTI - is well regarded by British businesses in the UK and abroad. Consular services are responding to rapidly increasing demands by UK citizens travelling and living abroad. For example, they are providing targeted travel advice through the 'Know Before You Go' campaign, and Rapid Deployment Teams have been set up to sharpen the Department's response to international crises.
• The Department is effective at managing and tracking performance in its service delivery functions, and uses this to drive innovation. UK Visas - jointly managed with the Home Office - is a world-leading service with real innovation driven by customer needs, as exemplified in New Delhi and Lagos where service quality and efficiency have improved significantly. UK Visas' introduction of a balanced scorecard, bringing together performance data on key issues, has enabled staff throughout the delivery chain to monitor the impact of their work. UKTI is extending its existing clear targets for inward investment to cover its work on overseas trade. In Spain the consular service is using performance data to analyse the relative effectiveness of individual consulates and disseminate good practice, and is creating innovative delivery partnerships with, for example, Age Concern.
• The Department's strengths in service delivery demonstrate that it is capable of thinking radically about its delivery model and that it has the potential to extend this approach to its diplomatic functions, as the recent zero-based review of its network in Europe demonstrates.

However, the Department's business model does not clearly define responsibilities and accountabilities for delivery.

• The Department's current organisational model was introduced in 2004 in response to the introduction of the International Priorities. The model consists of a matrix system of thematic directorates focused on delivering the International Priorities, overlaying regional geographic directorates that manage the network of Posts.
• The Department has made a serious effort to embed this matrix approach into the systems and culture of the organisation, although tensions remain which inhibit rapid and bold decisions on overall prioritisation and blur accountabilities.
• There is, for example, no consistent approach to the division of labour between London and the Posts, the handling of strategic priorities within regions, or working with other government departments overseas. Success and innovation in these areas, such as the changes flowing from the zero-based review of the Department's network in Europe, are not systematically carried through the organisation.
• Without a clear business model that consistently applies best practice across the network, the Department will not be well placed to deliver on its objectives and the International Priorities.

Business planning, resource allocation and prioritisation are weak, and are not driven consistently by the International Priorities.

• The Department has weak business planning, resource allocation and prioritisation processes. The International Priorities do not directly drive the allocation of resources across the organisation. There is limited clarity on the relative importance of FCO's contributions to the various International Priorities. As a result, many Posts are pursuing most of the International Priorities, resulting in resources being spread very thinly across these priorities. At the same time, resources are slow to get to some Posts located in countries that are a priority for UK foreign policy.
• The Board recognises these weaknesses and is taking steps to address them through improvements in the use of key performance indicators and risk management, and proposals for a new, integrated business planning approach.
• The Department does not have a systematic approach for measuring the impact of individual Posts and policies, although some Posts have developed their own methods for doing so. Heads of mission do not have full control of the resources used in Post, which reduces accountability for resources and performance.
• Whilst the business planning proposals are moving the Department in the right direction, they do not at this stage sufficiently address the major problems of resource allocation and weak prioritisation.

Back to top

6. Key areas for action

Area for action 1 - articulate clearly the Department's distinctive contribution to delivering the UK's objectives overseas and the implications for its future role, shape and business model

• The Board needs to analyse and then articulate more clearly - for staff, stakeholders and the rest of government - what the role of FCO will be and hence its distinctive contribution alongside its partners to delivering the UK's objectives overseas, particularly the International Priorities. This should build on the Department's central role as the Government's international platform.
• The Department should develop this in consultation with Number 10, other government departments and external stakeholders, and secure systematic agreement about roles, responsibilities, ways of working and desired outcomes. It should be robust in the face of the future delivery challenges.
• The outcomes of this work should then inform the future shape of the business, including the structure of the network of Posts and the balance of responsibilities and resources between the UK and Posts. This work should also clarify the skills needed by FCO staff to make a difference, and to respond effectively, to changing international priorities and challenges. It should take account of ideas and innovations developed in the zero-based review of its European network and in other parts of the organisation.
• There should then be concerted communication, externally and with staff, about the organisation's future role and strengths, and the nature and direction of the change programme needed to mobilise those strengths.

Area for action 2 - strengthen change management capability and communications

• The Department needs to bring the current panoply of change programmes together into a coordinated, integrated programme, and the overall impact of this programme on the network should be considered and monitored by the Board.
• The programme should incorporate the results of the work outlined under Area for action 1 above, as well as the existing service delivery-orientated changes.
• The leadership and governance arrangements for managing the change programme effectively need to be improved. The Department also needs to consider how it can increase change management capacity in terms of the skills, professional expertise and resources required to deliver a complex programme.
• Strong focus should be put on communicating the change programme and, in particular, on explaining how the change initiatives support and will drive the future role and shape of the foreign service in the 21st century.

Area for action 3 - strengthen the strategic management of HR and knowledge to support the future role and shape of the Department

• The impact of the changing role of the Department needs to be worked through thoroughly in terms of the people, skills and knowledge required to make it happen. This includes developing an HR strategy, which has at its core a workforce plan that provides:
• a detailed view of the mix of grade distribution, skills and diversity of experience that will be needed, covering the entire workforce (both UK and locally engaged staff);
• proposals for maximising the capabilities and contributions of locally engaged staff (including exploring the business case in some regions for these staff to have greater career and geographical mobility);
• details of how the Department can be made more open, with more secondments and interchanges at all levels with other organisations, and a greater proportion of senior appointments opened up to external competition; and
• details of how the Department will manage diversity and talent more actively.
• Once the HR strategy and workforce plan are in place, the Department should develop guidance to explain to all staff how they can best pursue their careers and what is expected of them.
• The Department needs to ensure that its ICT strategy will deliver the necessary tools to support its future role and shape, with particular focus on effective support for inter-governmental working and the management of knowledge.

Area for action 4 - strengthen business planning processes and disciplines to underpin more effective performance measures and resource allocation

• The business planning proposals being developed need to include establishing clear performance measures for all aspects of the Department's business - political and diplomatic work as well as service delivery. The Department also needs to ensure clear accountability for performance against agreed objectives within its matrix system of thematic and regional geographic directorates.
• Business planning must link directly to high-level decisions on resource allocation, with clear lines of accountability.
• Business planning must be consistently applied across the Department, enforced where necessary by the Board.
• The Department needs to ensure that managers are trained in the skills required to undertake business planning, and that effective business planning and performance management become central to core management responsibilities across the organisation.

Back to top

Annex A: The model of capability

The model of capability has been designed specifically for the Capability Reviews. It was developed through consultation with senior leaders in Whitehall and external experts. The model is deliberately selective and designed to focus on the most crucial areas of capability - leadership, strategy and delivery.

The reviews provide an assessment of capability for departments, identify key areas for improvement and set out key actions to address these areas.

The scope of the reviews is to assess the capability of departments' senior leadership in the areas above, using the model of capability. The model enables judgements to be made against 10 elements across leadership, strategy and delivery, using an underlying group of 49 questions.

Each review has been carried out by the Capability Reviews Team with a team of external reviewers assembled specially for the department under review. These reviewers have been drawn from the private sector, the wider public sector and board-level members of other government departments.

The Capability Reviews Team will regularly review progress and provide support to help ensure that the department is on track to deliver.

Leadership

Key questions that test current capability

L1 Set direction

• How do you set a clear direction and articulate the vision to provide a compelling and coherent view of the future?
• How do you take difficult decisions, and do you follow them through?
• How do you generate common ownership of the vision amongst the board, the department and delivery owners?
• How do you maintain focus when faced with crises/system shocks? How do you balance this with the need to keep the vision up to date when circumstances change?

L2 Ignite passion, pace and drive

• Are you seen as role models in the department, inspiring the respect, trust, loyalty and confidence of superiors, peers and staff? Do you talk, listen and act on feedback and thereby demonstrate an understanding of the business?
• Do you display passion about meeting delivery outcomes?
• How do you engage personally with customers and staff in the department and across the system?
• How do you maintain energy and enthusiasm? How do you inspire staff to be proud to work for the organisation?

L3 Take responsibility for leading delivery and change

• Do you drive delivery by: taking responsibility, welcoming challenging feedback on performance and learning lessons from successes and failures?
• How do you role-model an effective corporate culture of teamwork within the system? Do you and the senior leadership team act as an effective guiding coalition and initiate work across boundaries to achieve delivery outcomes?
• Do you accept the pressing need for change? Do you demonstrate your personal commitment to that change?
• How do you manage change effectively? How do you champion and drive through that change, addressing and overcoming resistance when it occurs?
• Are you open, honest, courageous and unflinching in delivering tough messages to your ministers and the department?

L4 Build capability

• How do you nurture talent and encourage innovation in order to build capacity?
• Do you have a leadership development/promotion process that is fair and transparent?
• How do you manage the performance of everyone by rewarding good performance and tackling poor performance?
• Do you get enthusiastically involved in identifying talent and building capability in individuals and teams?
• Do your culture, behaviour and staff profile reflect the diversity of the customers you serve?

Strategy

Key questions that test current capability

S1 Focus on outcomes

• Do you have one overarching set of clear and challenging outcomes, aims and objectives that will improve the overall quality of life for customers and benefit the nation?
• How do you work with ministers to develop strategy?
• How do you negotiate trade-offs between 'priority' policies?
• How do you work with other departments and partners external to government when developing strategy?

S2 Base choices on evidence

• How do you understand what your customers and stakeholders want?
• How do you identify future trends and plan for them? How well do you identify and manage the associated risks?
• How do you innovate by developing creative solutions to challenging problems? How do you ensure appropriate ambition?
• How do you choose between the range of options available?
• Once a strategic challenge has been identified, what process do you follow to address it, and who is involved?
• How do you ensure that your decisions are informed by sound evidence and analysis?
• How do you design systems that deliver your strategic objectives? How do you consider whole systems and understand the cost base?

S3 Build common purpose

• How do you align and enthuse the different players in the delivery chain to deliver?
• How do you remove obstacles to effective joint working? How do you share learning in order to ensure the strategy is delivered?

Delivery

Key questions that test current capability

D1 Plan, resource and prioritise

• Do you have the right skills, resources, structures and plans necessary to deliver the strategy as part of a clear model of delivery?
• Do you prioritise (and de-prioritise) and sequence deliverables, taking account of a proper risk management strategy, focused on change management priorities?
• Are your delivery plans aligned with the strategy? Are they robust and regularly reviewed?
• Are your delivery plans consistent with each other? Do they form a coherent whole that will deliver your strategy?
• How do you maintain a focus on efficiency and value for money?

D2 Develop clear roles, responsibilities and business model(s)

• Is the purpose of the departmental centre and headquarters functions clear?
• How do you ensure you have clear roles and responsibilities, rewards and incentives, which are understood across the delivery chain? Do they reflect the business model(s), and are they supported by appropriate governance arrangements?
• How well do you understand your business model(s)?
• How do you know whether you have the right balance between centralised and decentralised services?
• How do you identify and agree accountabilities and responsibilities for delivering desired outcomes across the delivery chain? How do you make sure that they are clear and well understood by all parties?
• How do you negotiate and contract with delivery agents, stakeholders and partners? How are these agreements documented and shared?

D3 Manage performance

• Do you have high-quality performance information supported by research and analytical capability? Does it allow you to track performance across the delivery chain?
• Do you actively respond to performance issues and follow them up?
• How effective is high-level programme and risk management across the delivery chain?
• How do you ensure and maintain effective control of the department's resources and the quality of its outputs?
• How do you know that your delivery chain understands customer needs and the drivers for satisfaction and responds to them?
• How do you ensure that your delivery chain captures and realises benefits?
• How do you feed this information back into the development of your strategy?

Back to top

Annex B: Assessment categories

Strong - good capability for future delivery in place, in line with the capability model. Clear focus on the action and improvement required to deliver transformation over the medium term.

Well placed - well placed to address any gaps in capability for future delivery through practical actions that are planned or already underway. Is making improvements in capability and is expected to improve further in the medium term.

Development area - the department should be capable of addressing some significant weaknesses in capability for future delivery by taking remedial action. More action is required to close those gaps and deliver improvement over the medium term.

Urgent development area - significant weaknesses in capability for future delivery that require urgent action. Not well placed to address weaknesses and needs significant additional action and support to secure effective delivery. Not well placed to deliver improvement over the medium term.

Serious concerns - serious concerns about current capability. Intervention is required to address current weaknesses and secure improvement in the medium term. (NB only used infrequently, for the most serious gaps.)

Back to top