Any significant change, especially one concerning streamlining budgets, inevitably comes with fear and anxiety. Image: Pla2na/Shutterstock.com
By: Vanessa Akhtar, for KotterAs federal agencies grapple with tightening budgets, leaders and teams face the challenge of maintaining or enhancing their quality of service with fewer resources. Making do with less has created a sense of urgency while maintaining an emphasis on strategies that can maximize efficiency without sacrificing results. However, the problem is not only about cost-cutting or stricter cost management; it is also about engaging and future proofing talent at a time when tension around the future is running high. Government leaders need solutions that balance fiscal responsibility with their commitment to effective public service while building strong teams for tomorrow. The below four strategies can help create an approach that looks toward forward growth and enables sustainable cost management.
Acknowledge and Address Anxiety
Any significant change, especially one concerning streamlining budgets, inevitably comes with fear and anxiety. The human brain has a natural Survive response when it encounters a new situation that threatens old perceptions or standards. Centralization, automation, and staff reductions (all common in cost cutting efforts) create a high level of uncertainty that prompts employees to direct all attention toward the “threat” and ask tough questions like, “What is my role in the future state?”
Questions like this one may not be answerable right away, but leaders can take steps to reduce the fight-or-flight Survive response that is likely felt across the business. This means recognizing the reality of the situation and letting employees know what will be possible once a more stable cost structure is in place. Intentional and clear communication shared via multiple channels will help ensure that the message sticks. Acknowledge what is known or unknown, share any anticipated timelines, and provide points of contact so employees can reach out with any lingering questions.
Stick to Core Principles
Reducing headcount, decreasing travel, and renegotiating vendor contracts are quick-fix strategies for operations and maintenance cost savings that can be used in a pinch. However, these approaches alone don’t set up an agency or department for long-term success. Leaders should instead ground cost management decisions in a set of core principles that balance what is needed today with what is needed in the future to achieve longer-term goals. These core principles should be defined according to specific department needs or agency values. For example, the Environmental Protection Agency protects people and the planet from significant health risks, so they may establish a guiding principle that cost management efforts must be done in a way that doesn’t stifle research around toxic exposure.
If headcount reduction becomes necessary, which is often the case when facing economic headwinds, leaders need to minimize both short- and long-term disruption by making sure that layoffs will do more than create temporary savings. Talent needs should be assessed based on what the department or agency is likely to require in the future rather than what has been required in the past. The same idea of principles-based decision making should guide talent strategy and any decisions around headcount reduction.
Future Proof Talent
Government employees often enjoy long tenures and provide years of dedicated service, but this does not preclude them from developing new skills and ways of working. This long-term service also increases the need to attract quality talent, with the right skills, when hiring new employees. Nearly every industry is facing some sort of disruption, whether from artificial intelligence or emerging consumer habits or something else altogether, that are requiring new capabilities. Leaders need to clearly define what skills are going to be most critical for their workforce to thrive in the future—including technical or subject matter expertise and “soft” skills.
The highest return on investment is likely to be seen from investing in skills that are transferable across roles and that will enable employees to quickly respond to unforeseen disruptions. Building agility, adaptability, and problem-solving skills among teams will equip them to quickly identify market dynamics and proactively respond to emerging opportunities. This is true regardless of title, level, or function.
Engage Employees in the Solution
Cost management efforts are usually driven top-down such that the most senior executive or business unit leader sets a holistic target or strict budget and dictates what slice of that each team must meet. While it’s important for these individuals to clearly communicate what the scope of cost cutting will be, it’s nearly impossible for them to achieve their goals in a sustainable way by dictating from above and hoping those below them will follow. Government agencies rely on many people across title, levels, and areas of expertise to create solutions and drive projects forward. This only becomes possible when leaders help junior colleagues understand what needs to be achieved, why it needs to be achieved at this moment in time, and what will be enabled by cost management efforts. Those closest to the work will then be able to help solve the challenge.
For example, a large municipal utility was facing a large-scale digital implementation – going from pencil and paper to SAP. As part of this effort, they needed to clean a significant amount of data to enable to the implementation. They reached out to a number of outside providers for help but they were all either unable to commit to the necessary timeframe or far too expensive. As an alternative approach, a team of 85 volunteers who signed up to address the issue, spent 90 days updating addresses and meter numbers. They knocked on doors, cleared bushes, and knocked down walls – whatever it took. At the end of the sprint, they had cleaned 150,000 data points. This not only saved them money by not hiring contractors, but it also enabled a successful implementation that carved the path for increased collection of unpaid bills and a streamlined procurement process. Imagine is every employee across government agencies was encouraged to take action like this? The snowball effect of catalyzing broad-based action will generate unimaginable results.
The government sector is not alone in facing very real economic challenges. However, federal leaders are primed to approach cost management efforts in a thoughtful and strategic way that meets immediate needs while setting their agency up for future success. Finding sustainable solutions that mitigate the Survive impulse and allow teams to flourish—even when belts are tightened—depends on acknowledging the anxious elephant in the room, staying true to core principles, preparing talent for what’s next, and engaging employees at all levels.
Vanessa Akhtar is a Managing Director at change management and strategy execution firm Kotter. She has a doctorate in Counseling & Performance Psychology from Boston University and is the co-author of Change: How Organizations Achieve Hard-to-Imagine Results Despite Uncertain and Volatile Times.
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