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Improve Leadership and Management

Getting through financial distress requires strong leadership. Fortunately, leadership is a skill that can be learned and that can be exercised by members at every level of the organization. Financial recovery can be a rocky road, so good management will be needed to keep the organization on the path towards financial sustainability. This section describes strategies to strengthen the leadership and management capacity that supports a recovery process.

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Leadership Training
Reorganizing
Change Ingrained Attitudes and Beliefs
Management Training Program
Improve Teamwork
Succession planning
Scorecards and Dashboards
Improve Communications

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Leadership Training

Jurisdictions with good leaders throughout the organization are able to solve problems quickly and recover from mistakes fast. Internal communications are smoother and external communications are more plentiful. Formal training and mentorship programs can be used to develop leadership skills. Developing succession plans can help identify the most likely candidates for leadership training regardless of their current position. Best Resources:

Change Ingrained Attitudes and Beliefs

Achieving financial resiliency will often require changing the values, attitudes, and behaviors of the organization (i.e., organizational culture) to one where, among other things, the financial implications of decisions are openly discussed by key decision makers, there is a focus on the outcomes and value produced by programs, and outside perspectives from citizens are sought out. When individuals have internalized these sorts of values, the organization will tend more towards financial sustainability. This is because sustainability doesn’t depend on compliance with rules or policies that are not consistent with what people might do in the absence of the rules. Rather, the values, attitudes, and beliefs held by individuals are consistent with the organization’s financial policies and strategies, giving policies and strategies a power they could never have on their own.
Making a culture change, though, is not an easy task. It requires strong leadership from the top authorities in the organization, a long-term and sustained focus, and perhaps even removing personnel who are resistant to the culture change. Below is an overview of the key steps in making a culture change based on the work of noted organizational development expert Edgar Schein in his book Process Consultation.

 

  • Assess culture and change readiness. An assessment will arm you with information and evidence to support a culture change. It will tell you what the current culture is like, identify the available levers of change and barriers, and help recruit others with influence in the organization to the cause. The assessment can cover items such as:
    • Is there a vision statement, clear goals, and are they accepted by employees?
    • What are the current values, beliefs, and attitudes?
    • How high or low is employee morale?
    • What is employees’ level of trust of managers and co-workers? 
    • Is there conflict between different groups and, if so, how much?
    • Are the organization’s leaders seen as credible?

 

For instance, if you find that employees have a low level of trust in managers, you may need to take steps to improve trust. Otherwise, employees will be unlikely to be receptive to later steps in the culture change process.

 

  • Determine new values and announce them. Before you can change the culture you have to know what you want the culture to change to. For example, perhaps the goal is for the organization to become more inclusive of the public or for decisions to become driven more by data and evidence, rather than intuition. Articulate the envisioned culture in a set of values that can be shared with others. Also, explain the reason for the culture change. For example, is a different culture necessary to reach a valued public goal or perhaps to reduce cost and avoid job losses? An announced culture change will be more successful if it is part of a larger strategic and performance framework.
  • Identify behaviors needed to realize the new culture. Culture is composed of values, attitudes, and behaviors. Behaviors are the easiest of the three to change, so the work of culture change focuses there. Identify the kinds of behaviors that represent manifestations of the desired culture. Then, model the new behaviors (“lead by example”) and work with managers to describe to them the specific behavioral practices they need to adopt and then support them via feedback and skill practice. It is important that this task be completed concurrently with or very soon after the announcement of the new values. The new behaviors make the new values concrete and must be exhibited consistently throughout the leadership. For instance, if trying to move toward a culture that values data-driven decisions, an important new behavior for those requesting a budget would be bringing data on program effectiveness to support budget requests and for budget decision makers to demand such data.  
  • Measure and create incentives for the new behaviors. Use a performance management system to measure the extent to which managers exhibit the desired behaviors and to reward them accordingly. As managers are rewarded for the new way of behaving, they come to view the new behavior as a good thing. Once they view it as “good,” it has become a value. Baltimore’s famous CitiStat performance measurement system is one well-known example of how to measure and reward behaviors that support data-driven decision making. The city collects performance data across a variety of programs, and agency heads regularly meet with the mayor’s representatives to review the data. Agency heads are grilled about their performance. Particularly good performance has been publicly rewarded (with tickets to sporting events or concerts, for example) and it has not been uncommon for under-performing agencies heads to be replaced. This sends a clear message that the mayor takes performance seriously. 
  • Engage employees. Find ways to engage employees more deeply in the mission and values. In many cases, it will benefit the leader of the culture change to become a facilitator, encourager, and supporter of employees as they work on flexible, cross-functional teams to analyze and solve problems. In this mode, the leader pushes ownership and responsibility on to the staff to solve problems in way that is in accordance with the organization’s values. In Baltimore’s CitiStat system, city agencies must be prepared to answer any performance questions raised by the mayor or cabinet at a bimonthly CitiStat session. Hence, agencies must come prepared with data and evidence to explain unfavorable changes in performance statistics and what will be done about it.
  • Find ways to deal with resistant employees. The reality is that culture change will be difficult to realize for some employees. It may be necessary to find a way for these employees to move on. For instance, if structured correctly, an early retirement incentive may enable these employees to move on while containing personnel costs.

Improve Teamwork

As public service and policy problems have become more complex, they require a wide array of knowledge, skills, and abilities to solve. No one person is going to be able to bring the full array of necessary attributes to bear on the problem. Rather, individuals that collectively possess the needed attributes should act in coordination to solve the problem.

Teamwork will be essential for analyzing, developing, and implementing financial recovery strategies to save money and improve efficiency. For example, a team might be assigned to investigate and recommend strategies for reducing health-care costs. If people in the organization do not work together well as teams, then the quality of the organization’s recovery strategies and implementation will suffer.

Teams may perform below their potential for any number of specific reasons, but one shared characteristic of under-performing teams is often the lack of time spent on evaluating team performance and solving impediments to team performance. Team performance is influenced by four major factors:

  • Context. The need for teamwork, the team structure, and the support offered by the environment.
  • Change. The ability of the team to monitor its own performance and adjust as needed.
  • Competencies. The team’s ability to perform critical team skills like team-based decision making, managing conflict, and assigning and completing tasks.
  • Composition. The skills of the team members, their motivation, and the size of the team.


For more on optimizing these four factors consult Team Building: Proven Strategies for Improving Team Performance by William G. Dyer, W. Gibb Dyer, and Jeffrey H. Dyer.

Scorecards and Dashboards

Scorecards and dashboards summarize the key indicators of greatest interest to decision makers. They can be used to center board attention on strategic issues. They can also demonstrate that routine services are operating within established parameters and focus attention on routine operations only when they are outside of parameters. This is an excellent method for connecting resource allocation decisions to outcomes.  Best Resources:

Reorganizing

Reorganizing is well-worn response to financial challenges. However, moving boxes around on an organizational chart will often not fix underlying problems like lack of goal clarity, ill-defined group processes, or dysfunctional personal relations. Therefore, you should be sure that a reorganization is the right treatment for what ails the government. Assuming it is, reorganization should be guided by the organization’s mission and strategic objectives. It should answer the question: what is the best organization to achieve our goals? Best Resources:

Management Training Program

Line employees that are promoted to management ranks may not have management skills, especially finance and budget management skills. A formal training program can provide them with the right skills and may also be helpful to existing management staff. Work to ensure that best practices and expectations, especially regarding internal administration, are thoroughly documented and accessible by new and continuing managers. Avoid assuming what anyone knows about how it has always been done.  Best Resources:

Succession Planning

Maintaining a management team that carefully considers the financial implications of its decisions and that is always looking for new ideas is essential to financial sustainability. A succession plan identifies key positions and characteristics needed in management positions to support the achievement and maintenance of financial sustainability. The plan also addresses strategies for developing these characteristics in existing employees who may one day fill the positions and provides a framework for looking outside the organization for new talent. Be sure to identify likely retirements or vacancies and the design of key positions beyond the current incumbent’s skill set. Best Resources:

Improve Communications

Contributed by James Garnett


During financial distress, communications are often poor. Strategies for improving communication can focus on task related communication, communication with the public, and morale and commitment.

Task Related Communication Treatments:

  • Level with employees about the nature and extent of fiscal stress. Withholding or soft-peddling bad news is typically counterproductive. Research and experience show that uncertainty is usually harder to take than certain knowledge about future unpleasant events. Employees who are not informed tend to spend too much time and effort imagining worst-case scenarios and spreading rumors about them.
  • Help employees understand the implications of acting or not acting. Employees who understand the full picture and the stakes involved are more likely to support managerial actions—and are in a better position to contribute ideas and solutions.
  • Open communication among departments, central administration (including the finance officer), and staff is critical for making sure cost control is taken seriously and for cost-saving innovations to be openly discussed and take hold once initiated.
  • Supply supervisors and others with enough information so they can be credible sources. This helps supervisor and staff morale and diminishes the likelihood of destructive rumors.
  • Bring the public information officer or other communication professional into the loop so he or she can help devise strategy for communicating internally and externally about financial problems or actions. This usually requires explaining any financial complexities in basic ways that can then be conveyed to the public and other stakeholders.
  • Communicate with peer agencies or professional associations since these can be sources of cost-saving innovations or lead to direct interagency cooperation. 

Public Communication Treatments:

  • Bring your public information officer or other communication professional into the loop so he or she can help devise strategy for communicating about financial problems or actions. This usually requires explaining any financial complexities in basic ways that can then be conveyed to the public or other stakeholders.
  • Rally support of your stakeholders by arming them with information about the implications of fiscal stress and potential cuts. Clients of your services and other key stakeholders need information and encouragement to support your cause in policy arenas. Do this carefully to avoid being seen as maverick or too political. 
  • Communicate with peer agencies or professional associations since these can be sources of cost-saving innovations or lead to direct interagency cooperation. Professional associations can also offer impartial guidance and a credible forum for discussion of the issues. 

Morale and Commitment Treatments:

  • Level with employees about the nature and extent of fiscal stress.  Withholding or soft-peddling bad news is typically counterproductive. Research and experience show that uncertainty is usually harder to take than certain knowledge of a bad future event. Employees who are not informed tend to spend too much time and effort imagining worst-case scenarios and spreading rumors about them. 
  • Help employees understand the implications of acting or not acting.  Employees who understand the full picture and the stakes involved are more likely to support managerial actions—and are in a better position to contribute ideas and solutions.
  • Open communication among departments, central administration (including the finance officer), and staff is critical for making sure cost control is taken seriously and for cost-saving innovations to be openly discussed and take hold once initiated.
  • Supply supervisors and others with enough information so they can be credible sources. This helps supervisor and staff morale and diminishes the likelihood of destructive rumors.
  • Avoid even the appearance of inequitable communication and treatment among staff and departments. Recognizing that most employees can accept the uglier side of retrenchment if treated with dignity and respect will make the process more palatable. If a specific service area is to be reduced more than another, be clear about the reason, especially as it reflects the organization’s priorities and legal mandates.


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