Having moved into an era of "recovery" from the previous preference to "supersize" everything, public sector entities are finding themselves reflecting carefully on how to achieve that optimal size which allows them to provide services at the levels expected, for a cost that is deemed acceptable. How does an entity identify and reach that desired organizational size?
Of utmost importance in determining what "size" makes the most sense is a clear vision for what the service mission, mix, and measurement must be. In other words, what is it that this public sector entity is expected or required to provide and at what level? Given the lack of alternatives for their residents, many public sector organizations have found themselves straying from their core mission and service areas. The current fiscal situation provides an excellent opportunity for all public sector entities to reexamine their strategic priorities and the continuum of services and activities that support those priorities.
A key question often forgotten in this strategic discussion is: what will truly define our success? Even more important than clarity around the mission of your entity is an understanding of the desired outcome or impact of that focus and how it will affect the community. For example, every community desires resident safety; however, each community may desire safety for different reasons or in a slightly different context (i.e., need to reduce crime, need to maintain perceived quality of life in conjunction with growth goals). Understanding the specific impact desired of this activity or service will significantly change how the organization is structured.
Once the scope of service and resultant impact is defined, careful consideration must be given to how then to provide that service. In this time of significant fiscal constraints (i.e., poor economy, no tolerance for fee or tax increases), the full continuum of alternative service delivery approaches must be explored from both a service enhancement, as well as fiscal improvement perspective. Alternative service delivery options include:
- Should we continue to provide that service or activity?
- Are we providing the service in the most efficient manner?
- What fiscal benefit is required to make a change worthwhile?
- Would there be synergies (fiscal and service) to providing this activity jointly with others?
- Is there someone else out there who does a better job of providing this service?
- Can we focus on higher priority activities by offering this through a different service delivery option?
- What benefits and risks do we incur if we no longer provide this service as we currently do?
Rightsizing does not equal downsizing. In many cases, an entity will determine the need to shift resources to a higher priority area. However, in other cases, the need to reduce workforce or work hours goes hand in hand with the required strategy for allocating resources at their optimal level. For example, Baker Tilly worked with a city that determined that rather than outsource payroll functions, leaving central payroll approach and staffing as it was made sense, as long as they fully implemented an automated time entry system and then reallocated those department-level resources to other higher value activities.
Once an organization has identified the various options for consideration, it is critical to ensure that any change adopted allows the entity flexibility and assurance of success. How does an entity ensure it is moving to this optimal size in a manner that is sustainable internally? Two of the key elements are: 1) Stakeholder buy-in; and 2) Realistic and revamped delivery approaches.
During our extensive work with a multitude of public sector organizations of all sizes and types, we have found the following factors essential to the success of a sustainable change in service delivery approach. The first two are a clear fiscal benefit and maintained or improved service delivery. In other words, if it saves you all the money in the world, but will result in a majority of your "customers" being unsatisfied with the service, it is a nonstarter.
Additionally, while both positive fiscal benefit and enhanced service are required, they are not enough alone. The other four elements of trust, leadership, employee support, and perception of need (or understanding of benefit) are equally if not even more significant.
Organizations that have successfully rightsized their operations have done so intentionally and have taken important steps to bring their employees, partners, and customers along as key stakeholders in the process.
One of the key areas of emphasis in creating a culture that embraces rightsizing as a positive occurrence is the understanding and accommodating of employee concerns relative to both the process and the outcome. Organizations that acknowledge rather than steamroll over employees’ true reactions to rightsizing initiatives will find themselves with longer-term success. We have seen the typical employee reaction to rightsizing to be as follows:
Five stages of denial in rightsizing
Those organizations who set up a framework to proactively address concerns at each one of these stages will find themselves bringing employees along as stakeholders in the process. This can eliminate an adversarial relationship that might otherwise appear. Specific tools and approaches that others have successfully used include:
- Rightsizing initiative/campaign-based approaches (e.g.., website with transparent information regarding initiative status, anticipated benefits, timelines)
- Continuous improvement teams and frameworks
- Process specific LEAN teams
- Budget reduction employee support teams
- City administrator /key elected official sound-off forums
Rightsizing is not easy and should not be taken lightly. However, with an intentional, well-reasoned, and comprehensive approach, organizations can use rightsizing initiatives to strengthen organizational fiscal and service position and cultural strength.