As ministers seek to minimise the impact of spending cuts on the frontline, Whitehall faces its own cuts of up to 40 per cent. Agencies and departments are being abolished and functions amalgamated. All of this will have a significant impact on effectiveness.
Government departments provide a mixture of policy development, project delivery and administration. They tend to be organised in teams with fixed responsibilities and of a size dictated more by history than priorities. This leads to two forms of inefficiency. First, the organisation has no mechanism for putting its resources where they are most needed. Second, these teams create processes and activities that persist beyond their useful life.
For some government policy departments, as little as 30 per cent of staff time is invested in delivering priority projects.
A new balance must be found. Professional services firms, for example, pool most of their staff, allocating them responsively to work priorities. They are more efficient and effective as a result. Teams are created to respond to specific requirements and disbanded once the requirement is met. People have permanent employment, but they switch seamlessly between different pieces of work.
Professional services firms often measure utilisation levels, how much time their people spend on fee-earning work, as one of their key performance indicators. They usually expect those levels to be between 60 and 80 per cent. This is a clear incentive to focus on priority work.
Government departments have been exploring for some years the idea of flexible resource management, where people and budgets follow the work. Some success has been achieved, however, few, if any, have used it to cut costs and halt non-priority work. Yet for those prepared to change there are three significant benefits. First, it will drive out distractions, increasing effectiveness as lower priority activities will be ignored. Second, it will give the organisation greater clarity over what it does and where cuts can be made. The department will understand where its highest priorities are and target resources to them. Finally, by reforming central teams, departments can show that they are determined to achieve savings without damaging service provision.
However, this requires a new way of working. It requires explicit prioritisation, from ministers down. Attempts so far are not encouraging. One government department managed part of its workload with self-employed contractors on short-term contracts, who often stayed for years. In 2006, the department drastically reduced the number of contractors as part of an efficiency programme but failed to change ways of working or to make better use of resources. It ended up hiring contractors again and, four years later, had built up nearly the same number it had started with.
The prize for Whitehall departments that make flexible resource management work is significant and has never been more important. Once spending reduction targets are finalised, there may be little choice but to take this kind of radical action.
Harriet Oppenheimer is an organisation efficiency specialist at PA Consulting Group.
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