BusinessCorporate FinanceThe woman from Auntie

The woman from Auntie

'Brutal' job cuts, government interference and a British public more vociferous than any institutional shareholder mean BBC group FD Zarin Patel faces a tough task. We talk to the woman charged with producing a leaner and fitter public broadcaster.

‘It’s the worst week in the history of the BBC,’ is how broadcasters’ union, Bectu, described last month’s bombshell announcement from White City.

It is easy to see why. A total of 3,780 jobs will be slashed and savings of £355m have been earmarked to be reinvested in different areas of the BBC. The announcement forms the basis of director general Mark Thompson’s quest to gain renewal of the BBC’s Royal Charter and marks the biggest overhaul of its infrastructure in years.

Thompson describes it as making the BBC a ‘simpler, more agile operation’, which will be ‘ready to take the creative lead in a very different, very challenging digital future’.

Perhaps not surprisingly, the BBC’s internal newspaper, Ariel, described it simply as ‘a very big hit’, in a bold, large-print headline on the front page of its edition the following day. Make no mistake about it, Thompson has rocked the BBC to its core.

Zarin Patel, the BBC’s group finance director, will play a central role in implementing the ambitious and, according to Bectu, ‘savage’, efficiency drive. Having worked with Thompson since 1 December on the cost-cutting plans, she is well placed to comment. ‘It’s a hell of a lot of money,’ she admits. ‘But it is doable’.

It’s down to Patel to oversee the trimming down of her own finance team, as well as the corporation as a whole. ‘Altogether we have about 850 in finance,’ she says. ‘We will lessen that by a third through outsourcing; a third of the posts will be reduced, meaning a third will be left. That will be the model.’

While Patel is reluctant to talk specific numbers, judging by what she says, the BBC’s internal finance team will be cut to around 300, which is a huge reduction however you dress it up.

The finance department will bear a considerable brunt of the overall cuts. It forms a large part of the BBC’s professional services division, which itself faces 1,730 job reductions and a £139m hit to its budget. The cuts amount to an unprecedented 46% of the overall professional services division. ‘Quite a large part of the £355m is coming from the professional services area and from buying better,’ says Patel. ‘We’ve made huge strides.’

Despite this, Patel expects most, if not all, of the cuts within finance to be achieved naturally rather than being forced through by compulsory redundancies. ‘In finance, because there is a high level of churn, and it’s a buoyant market at the moment, I think that most will be voluntary,’ she says.

She claims that, on top of this, the fact that her staff have the BBC listed as among their experiences will put them in good stead and prove attractive to potential employers.

Thompson’s overhaul of the BBC is no surprise. The BBC has often been portrayed as a large, unwieldy behemoth, full of waste and slow to accept change. It is an accusation Patel takes with good humour, although she adamantly rejects it.

‘You want people to use their money well – for example you want them to buy cameras from only two suppliers because you get a huge discount,’ she says. ‘But still, an editor might say: “Well this camera is better.” That is where the judgement comes in. I see waste as too simple a way of characterising it.’

Reducing waste and improving efficiency are, it seems, two subtly different things. One excellent way of achieving the latter is through the increasing use of technology ? something that Patel talks about with passion.

The subject regularly creeps into the conversation because Patel rightly sees it as a means to realising significant cost savings. In fact, she is so adamant of the benefits that she lists it among the top priorities when addressing the cost-cutting targets. ‘When John Smith became finance director we put in SAP and moved to a shared service centre model,’ she says. ‘Like most other companies we are half way through the change.

‘So, having got the thing in, how are we going to benefit from it? In essence that is what we have been doing for the past two and a half or three years with SAP ? learning how to use it and reaping the benefits.’

The ‘next level of evolution’ will be where the BBC moves to the next ‘step change’ to use the full functionality of such a system.

Both Patel and Thompson are in a difficult position. While the BBC receives a similar amount of attention from a thrifty public as a plc does from its shareholders, there is no bottom line to measure the corporation’s success. The public wants to know where its £126.50 licence fee is being spent and what they are getting for their money.

And in a world where advertising supports the majority of media, calls for the abolition of the licence fee are becoming increasingly vociferous. ‘What it comes down to is the question of “Is there a space in the market for a public service broadcaster?” I think that through the consultation that we have done,

in essence we asked the country the same question, the answer is a resounding “yes”.’

Even so, how that money is spent is the fundamental question. To invest in the right technology now will put the BBC in a very strong position in the future, but at the same time Patel cannot afford to become complacent over the day-to-day running of Auntie. ‘Our audiences are changing every day, so we are going to be taking some risks. You know, will this piece of technology really take off,’ says Patel.

‘Some years ago we didn’t accurately predict the rise of text messaging or how successful the internet would be. Now, as we sit here, how do we know what’s going to be a success? So, the organisation has to be fit to manage those uncertainties.’

She says this can lead to certain doubts creeping in: ‘do we end up doing too much?’ she asks. But the very nature of the BBC means that is highly unlikely to happen.

‘Because we are a universal broadcaster, our ethos is “something for everyone”. That means that we have a kind of underlying DNA that means we have to do everything, and we have to do it to the best quality,’ says Patel.

Part of the battle to improve that quality includes the corporation’s corporate governance structure, which will be tightened in the coming months.

As the government’s green paper on the BBC’s Royal Charter review says: ‘A new system is required, which provides direct accountability to licence fee payers and upholds the public interest in spending their money.’ To help with this, the government has proposed replacing its present board of directors with a new ‘BBC Trust’.

‘The trust would assess the performance of the BBC’s services, and approve high-level strategy and budgets,’ says the document. ‘It will need to adopt new standards of openness and transparency.’

Patel is adamant that the BBC’s corporate governance is as rigorous as any in business and describes its annual report as being ‘as good as any plc’s’. The corporate governance reforms are about ‘the separation of governance from management’, she says.

It is clear that the world’s favourite broadcaster is at something of a crossroads. Facing a fight for the renewal of its 2007 Royal Charter, and having being rocked to the very core by the Iraq dossier, Auntie has never seen the kind of public scrutiny it now faces.

Thompson and Patel are clear that the BBC has to be seen to be delivering the best quality possible for the licence fee. This means it must ensure that it delivers this quality now in addition to positioning itself for the future.

‘It’s all about transformation and getting us on a sound financial footing for the next two years, which is the close of the current charter,’ says Patel. ‘It’s a huge operational job. You know, 28 million licence fee payers, the country’s biggest database, one of the country’s biggest direct marketing operations. It is a huge operational engine.’

Despite the obvious challenges ahead, Patel appears relaxed and confident. Just an hour after our interview she was due to face a potentially hostile question and answer session with BBC staff and media journalist, Nick Higham.

But she is better placed than most to answer any question thrown at her with conviction. She has been working flat out on the BBC’s overhaul with Thompson since 1 December and is confident that the future will be bright for the BBC.

Unfortunately for Patel, the unions have taken a different view and are threatening strike action ? unless a three-month pause in the plans is granted. Never a dull day at the BBC.

Zarin Patel on…

Her role
‘My job is to create an infrastructure that makes sure that we are as efficient as we can be so that the people who have to worry about the quality are worrying about the quality.’

Going forward
‘I think delivery and transformation are absolutely going to be number one on our agenda, but very close to number one, is that now we’ve had the green paper, this is where the really hard work starts.’

Improving financial efficiency
‘This is about complexity. We are a complex organisation as we are under huge amounts of scrutiny all the time. That creates complexity. Instead of having 17 different processes, do we really need seven?’

IFRS challenge
‘We are in this kind of “not knowing” mode. We are suddenly developing a new language. We are doing leases at the moment – that’s probably one of the biggest issues.’

The profession
‘If you asked me to join the profession now, I would not. And that bothers me because of the long-term effect it could have. That’s one of the things I want to pick up in the next year, is really just to re-connect with my profession.’

The BBC’s reforms
‘This is a really critical point, and we are trying to get [the message] across the organisation that we can’t carry on. An organisation should transform itself once every 10 years, not once every three years.’

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