Senior public servants have an unprecedented opportunity to improve public services – particularly within the organisations where to date politics has most constrained progress.
This period feels extremely tough, but by learning the lessons of both public and private sector change, civil servants could win the backing of politicians, the public, and the workforce for service redesign.
There is a risk that simple cuts in line with budget reductions will destroy morale, productivity and taxpayer value-for-money; a different approach is needed, not least to react to the new policy agendas around transparency, localism, competition and commissioning. Meanwhile, demographic changes, and evolving consumer expectations around the use of technology and service quality, also demand a response.
Other root cause issues must be addressed. There have been decades of under-investment in management, information and decision-making systems, partly because ministers preferred to win headlines with policy announcements than be held to account for delivering results. A better understanding of cost-per-outcome would foster better connections between announcements and frontline delivery, and a start has already been made through benchmarking and departmental business plans.
Workforce productivity is a delicate topic, but for years a limited adoption of new techniques and working practices in the public sector has led productivity to fall behind that of the private sector. Recent policies emphasising commissioning from a marketplace of providers may improve things, but only if provider organisations are allowed to fail.
Another blockage lies in funding systems. The public sector moved to multi-year funding only in 1999, and finance chiefs must still juggle transformation costs, redundancies, ongoing delivery costs and savings within tightly-monitored ‘envelopes’. This is one reason why we may see an increase in trading funds, which can roll over surplus or debt more easily.
Finally, officials’ risk aversion must be overcome. These challenges may sound like another set of priorities to set alongside cost reductions, but in fact they’re a means to make those savings. The four-step approach outlined below should help.
First, we must re-evaluate the public service requirement, assessing what is essential and separating out ‘nice-to-haves’. This could be achieved by exploring individual organisational remits, services or products; or, more bravely and expensively, by considering target groups and working back from their needs. The private sector is brilliant at understanding where it adds value, and removing unnecessary expenses. Examples include ‘disruptive technologies’ such as online retail, and outcome-based outsourcing.
Second, civil service leaders should redesign organisations to best meet the identified requirements. This doesn’t need lots of consultants – but where external advisers are used, the model should be one of knowledge transfer and joint working rather than a ‘do it to/for us’ approach. Operating models are best developed with small groups of staff, across all levels, who can describe the capabilities required – which in turn drive detailed process and other design work.
Third, engage and empower the workforce. Strong leadership will challenge norms to encourage goal-driven behaviour; push decision-making down the chain; incentivise individual performance with outcome-linked pay; ring-fence funds for experimentation; and learn from mistakes, instead of allocating blame. This supports necessary ‘creative destruction’ – a concept originally put forward by Marx, and latterly adopted by free-marketeers to describe a process of increasing efficiency in an organisation.
Finally, and a hard truth: current cost reduction plans must be exceeded. Politicians, the workforce, and the public must be persuaded to accept a short-term diminution of services on the credible promise of a better tomorrow. This is where the support of the workforce, the quality of the target operating model, and the rigour of assessment over the requirement really matter – offering the evidence base to persuade and convince; and the baseline to deliver to.
This is a very different view of public service change to one in which costs must be cut to match shrinking budgets. It is worth reflecting on the different result it might achieve: a smaller, more empowered workforce, supplying better-regarded services to an engaged public. Only then can the ‘cost’ agenda be replaced by a much-needed, sustained focus on ‘value’ in public service delivery.
Alasdair Ramage is a principal at consultancy Moorhouse. He worked at HM Treasury as lead for the 2009 Operational Efficiency Programme.
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