When governments attempt to reorganize themselves, the changes they make have a huge bearing on the effectiveness of the public Sector. But, just like their corporate counterparts, Government reorganizations have a poor record of success. Results from a survey on HBR.org on the effectiveness of reorganizations (covering over 1,000 reorgs across all sectors and geographies, of which 87 were government institutions), provide pointers for how to get them right.
Looking at the government institutions data, while 75% delivered some benefits, only 13% delivered the planned objectives in the planned time. About the same proportion (14%) actually hurt the organization. According to the survey, the three biggest challenges faced by government reorganizations are (in order): unforeseen issues that slowed the process (e.g., failing to rewire the IT systems); that leaders actively resisted the changes; and that employees actively resisted the changes. (Politicians should remember those last two, when they start whipsawing around intelligence services who hold all the secrets!)
For these reasons, my last boss, David Cameron, the previous UK Prime Minister, was strongly opposed to “machinery of government changes,” as governmental reorgs are termed in the UK. But seismic political events can demand such changes. Hence, his successor, Theresa May, has taken a different tack: creating two new departments (Trade and Brexit) and merging two others (Business and Energy/ Climate Change). The full extent of Donald Trump’s departmental changes is not yet clear, but it is likely to be much, much greater than in the UK.
Understanding why public sector reorganizations produce such derisory results is the first step to tackling the problem. The main explanation is that the benefits of public sector reorganization are harder to nail down. In the private sector, improved outputs are typically easy-to-measure things like revenues or profit, but in the public sector the benefits may be harder-to-quantify things like reduced carbon emissions, greater military preparedness, or better health outcomes. This makes it even more important to define tangible benefits that can be measured before embarking on a reorg; but this happens very infrequently. Only 8% of the Government Reorgs in the survey had detailed unit-by-unit targets. Now, if the desired outcome is cost reduction, this is easy to measure in any sector. But perhaps surprisingly, despite all the talk about ballooning public sector budgets, only 15% of the government reorgs in the survey were focused on cost reduction.
In fact, the two most frequent reasons for government sector reorgs (accounting for more than half of them) are responding to a change in the political environment and a leader’s desire to reshape the organization. We are seeing this second one playing out in the U.S. right now. Unfortunately, the statistics show that these are the least successful reasons for launching reorgs, perhaps because the tangible benefits of these objectives are difficult to pin down and translate into a series of actions. Of course, politicians will always want to change things to suit their policy objectives or political calculations, but, even in these cases, it helps to clearly define and quantify the benefits before launching the changes. Otherwise, there is no objective way of judging between the pros and cons of different organizational options, and, ultimately, no one will know if the reorg has succeeded or not. For example, the UK government’s desire to merge the Business and Energy Departments was clearly an attempt to avoid too many ministers around the Cabinet table, following the creation of the two new departments. But, after this decision, significant effort went into working out the synergies between the two departments in a way which is now yielding fruit: for example, in developing a new strategy around energy storage and electric vehicles.
So, beyond being clear on the objectives, what are the other success factors in retooling the machinery of government?
The first is using the reorganization to change not only the reporting lines, but also mindsets and behaviors. It’s essential to get officials behind the objectives of the reorg. Worryingly, while almost all government reorgs in the survey involved moving around the lines and boxes, only half precisely defined the number of people needed per unit, and none (yes, none) changed the skill requirements or job profiles for roles. Unless you change people’s day to day activities, nothing really changes. In a government reorg, the median number of top positions changing is 20% to 30%. But even when all the top political appointees have been removed (in the current case of the U.S.), it does not mean that someone deep down in the department, whose boss’ boss’ boss’ boss has changed, will do anything differently. While politicians may believe that the machinery of government is simply there to implement his or her own wishes, the fact is that taking the time to explain to officials why a change is being made and, if possible, engendering excitement around it, will reap benefits in terms of changing behavior. We are all human, after all, and courtesy goes a long way. (Although, it is fair to say that some changes, such as those envisaged in the EPA, may be so extreme as to make this near to impossible for people who have committed their careers to the institution’s prior goals.) If politicians don’t do this, the machinery of government is likely to undermine the changes, and good people will probably leave (in 45% of government reorgs, personnel the department wanted to retain exited the organization).
The second success factor is to redesign work processes to link outcomes to the activities needed to deliver them. Dispiritingly, only one in six public sector reorgs redesigned the processes for how work gets done. One excellent example of how to do this well is the use of “pathways” in hospitals to provide clear guidance on who does what and when. Pathways might focus on how to detect and treat cancer or broken bones. They have both reduced variability and improved outcomes in patient care. Similarly, in the military, by improving the process across the logistics supply chain, units can ensure that front-line soldiers have access to exactly what they need. This process-based thinking has the additional benefit of addressing the links in the chain where information is passed from one person or group to another. It’s typically at these handover points, rather than within teams, where organizational delivery falls down. In cases where the outcome is not solely or directly delivered by the department (e.g., creating more jobs, building more houses, reducing deaths from lung cancer, signing trade deals, or stopping terrorist attacks), it can be more difficult to link processes directly to outcomes. But that just makes it even more important to define activities that contribute to those outcomes. Beware the government reorg that tells employees their new role is to “maintain a watching brief on [subject X]”.
The third success factor is accelerating the pace of implementation to make the reorganization deliver benefits as soon as possible. It should stand to reason that the improved outcomes that leaders want will not come about until the new organization is in place to deliver them. If the right outcomes have not been defined, this can be tricky. Despite this, government reorgs take on average 14 months to deliver, versus 11 months in the private sector (which is still way too long, incidentally). Not only does this delay the improved outcomes, it also drags out the misery for employees: academic research suggests that while people hate change, they hate uncertainty even more, and the longer the uncertainty, the more there is to hate. One cause of this is the unforeseen bottlenecks, highlighted above. Another is the notion of fairness within the public sector (in the private sector, you know life is unfair the moment you first encounter a slump, commodity crash, or other financial disaster). While, on balance, an admirable quality, it can lead to government reorg leaders taking too much time to ensure that everything is done fairly and people are happy (they aren’t: no one would vote for a reorg; they will only be happy once it’s done). The success of public sector reorganizations would be dramatically improved by having a good milestone-by-milestone plan and to deliver it in half or a third of the usual time, maximizing outcomes and minimizing misery.
So, will the new generation of populist politicians deliver on their plans to make life better for those left behind by globalization? Will others get the public sector working for those left behind to fight off the threat of the populists? It obviously depends on how good their plans are. But even if you have the very best plans, they’ll count for naught if you can’t get the machinery of government working for you. I was heartened to read in Civil Service World magazine that the head of the UK’s Ministry of Defence said: “There is a book on my desk called Reorg which I am going to start reading as I think about the department.” That’s the book I co-authored for HBR Press last year.
If your organization (public or private) has recently undergone a reorg, take our HBR survey to find out how successful it was.