Managing change in the public sector in the wake of recession

Written by
Changeboard Team

13 Mar 2010

13 Mar 2010 • by Changeboard Team

Ongoing budget cuts in public sector

Research from the Institute of Leadership & Management reveals widespread concern among public sector managers that centrally-imposed budget cuts are going to result in significant headcount reductions, as well as damage staff health and morale.

The survey of 1,554 managers reveals that just over two-thirds believe their teams are operating at full capacity with little or no room for efficiency savings. They say that they are worried that blanket cuts to public sector budgets will leave them unable to deliver frontline services and satisfy their customers’ needs.

The report, Leading Change in the Public Sector, found over two-thirds (69%) of managers had experienced budget cuts in the past year. The overwhelming majority expect further major cuts in the next 12-18 months in the form of streamlining processes and reduced training and development budgets.

Opportunity for public sector to innovate?

Amidst these concerns, managers recognised that increased financial pressure would bring real opportunities for the public sector to improve working practices. In particular, over half are looking forward to developing more creative solutions to service delivery. Managers revealed that cuts will also provide a welcome opportunity to improve teamwork and communication, deal with inefficiency, make important decisions and manage out poor performers.

The research dispels many of the myths about the public sector and its managers, including the belief that it has remained untouched by the economic downturn. The fallout from the recession has already affected budgets and resourcing levels and will continue to do so, potentially at the expense of crucial public services and staff wellbeing.

Despite concern about the impact of cuts there are positive signs here. It is heartening to see that public sector managers are up for the Challenge that awaits them, and confident they can achieve major savings through greater innovation and more effective performance management. Rather than having their budgets salami-sliced from afar, managers need the freedom and support to deliver radical changes to service delivery. The question is whether government, senior management and policy makers will enable them to do so.

Now, more than ever, we need to develop public sector managers and support them to drive innovation, productivity and performance, so that vital day-to-day services do not suffer.

Trouble ahead for public sector managers?

Leading 'Change in the Public Sector' reveals that the months ahead will intensify the pressure on managers. When respondents were asked to anticipate the main challenges of the next 18 months, they identified budget constraints, increased workload and resourcing constraints.

The research also reveals that:

  • One third of respondents might leave the public sector in the next 12-18 months, with a quarter of those citing redundancy as a possible reason.
    despite their concerns, managers are surprisingly upbeat, with 70% either satisfied or very satisfied in their role.
  • Over half of managers believe senior management team do not understand their teams’ functions and responsibilities, while 31% think their bosses are ill-equipped to deal with budget cuts.
  • The main sources of dissatisfaction are bureaucracy/red tape, lack of resources, unrealistic budget cuts and failure to deal effectively with underperforming staff.
  • Public sector managers are surprisingly ambivalent about a change in government, despite 77% believing that this will happen and the majority thinking that any culture shift will be a negative one.

Public sector leaders need to tackle fears head on

At a panel discussion at the launch of the report Martin Horton, chief executive, Society of Local Authority Chief Executives, said:

“The biggest Challenge for leaders in public sector organisations today is to be honest about their anxieties, fears, doubts – the scale of the problem. It’s raining out there and people don’t want to be told it’s sunny, they want to know where the umbrellas are.”

At the same event, Valerie Bayliss, governor of Sheffield University, talking about performance management, said:

“What I’d like to see is senior managers receiving training in how to run performance management effectively from the top, because they need to set the climate in which performance management can be handled properly. Skills across top management are going to have to change and develop to manage the situation we’re going into.”

Engagement & development - key for public sector

So how can change by managed in the public sector? The public sector certainly has the managerial raw materials to make change happen, but needs to ensure these managers are engaged and developed to deliver on their demands for more innovative solutions. Managers should not be tasked to improve efficiency by implementing crude cuts and be expected to continue with a business as usual approach but under greater pressure and with fewer resources, as this can only impact adversely on service delivery. 

Fundamentally, the government, policy makers, HR directors and organisational leaders need to capitalise on the spirit of optimism and opportunity identified by this research. Strong leadership is required to support and empower public sector managers, allowing them the freedom to make decisions that are appropriate to the circumstances, so that they can drive innovation, productivity and performance.

Public sector managers - key to achieving success

Leading 'Change in the Public Sector' has revealed a strong commitment by managers to the services they deliver and a desire to do their best with the available resources.

The Challenge for policy-makers now is not to see public sector managers as barriers to achieving goals, rather as allies in their campaign.