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  While governments around the world strive to cut the cost of central and local government, research by global management consulting firm A.T.Kearney shows that efforts which focus solely on cost are misguided.
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By focusing on solutions that offer the best value for money and which meet customer expectations, rather than those which merely offer the lowest cost, governments will increase the ability of their agencies to meet public sector reform targets. “Agile” agencies are nearly 20% better at implementing reform than their less agile counterparts.

A.T. Kearney's research, undertaken in collaboration with the Public Policy Group of the London School of Economics and Political Science, draws on census data, in-depth surveys and detailed discussions with 52 agencies from the governments of Australia, Canada, France, Germany, Italy, New Zealand, the United Kingdom and the United States. It was designed to better understand what characteristics agencies needed to be sufficiently “agile” to effectively deliver major change programmes and how their performance could be improved. The research focused on three main policy areas, tax and revenue; health and welfare; and criminal justice and security, examining 75 major governmental change initiatives.

A.T. Kearney plans to repeat the research on an annual basis to monitor the development of “agile” government around the world and to continue to develop a greater understanding of what agencies can do to improve their performance.

Other major findings were that all agencies, central or local, large or small and across the complete range of government activity, have the ability to become more effective and flexible; that the best way to improve performance is through a series of outcome-focused change projects rather than single, monolithic programmes; that agencies that focus solely on delivering the will of their political masters rather than meeting the needs of their customers will become increasingly ill-equipped to deliver real change; that agencies can increase the effectiveness of their change programmes by incentivising their customers to change with them rather than resorting to rules and penalties; and that as older civil servants retire, there are opportunities to slim down and reinvigorate with new minds and new thinking to make governments more capable of effective change.

The objectives of the UK government's recently announced efficiency review, which are to release resources to frontline services and to focus on the needs of customers, are endorsed by the findings of the research.

Commenting on the research, Craig Baker, global head of A.T. Kearney's government practice said: “Our research showed strong performances from Canada, New Zealand and Australia. While on the projects we reviewed, the United Kingdom had room for improvement, we expect to see a likely better performance from UK agencies in the future. In addition, the work currently being undertaken to improve efficiency in the UK public sector by shifting resources to frontline, customer-focused activities, is in line with our findings on how to make governments more “agile”.

“The pressures on governments and their agencies to deliver more with less and to do so more quickly are intense. We wanted to find out what it is that makes government organisations agile; what gives them speed, flexibility and responsiveness and how these characteristics can be developed. Agencies need to understand what it is that stands in the way of their making change and to remove these barriers.

“Any agency can become “agile”, regardless of size, service or country. The most successful focus on customer service, organisational change and leadership and to be successful requires the support of customer focused e- government systems and forward looking performance management measures

The Six Aspects of Agility: Key Findings

Six major aspects of agility were identified by A.T. Kearney: Organisational change; leadership; culture and values; customer service; e-government; and performance management. Taken together, agencies that focus on these areas will be better equipped to develop agility in their operations.

Organisational change

Study participants said the biggest challenge they faced in implementing organisational change was in freeing up resources from existing activities to devote to new initiatives. Organisational rigidity and silo structures and thinking tend to inhibit cooperation and communication throughout agencies, which make finding the necessary resources that much more complicated. In fact, study participants express much less concern about having the required skills available in house than about their ability to deploy them. Other hurdles to change initiatives include lack of strategic clarity and perceived lack of commitment from senior leaders.

Changing demographics also influence how government agencies are structured. Three quarters of public sector employees in the United States, for example, will be eligible for retirement by 2010, and nearly half are expected to leave their posts; in Canada, nearly 70 percent of government employees will retire over the next seven years. In fact, of the countries in our study, only Germany's federal government has more civil servants in their 20s than their 50s.

However, governments that are on the cusp of massive retirements may also be able to take advantage of their situation. As older civil servants retire, there are opportunities to slim down and reinvigorate with new minds and new thinking to make governments more capable of effective change.

Leadership

Leaders in “agile” organisations are able to influence the nature of change. They consider the health of the whole organisation—their people, the environment in which their employees work and the values they share. These leaders provide the guidance that keeps everyone focused on fulfilling the organisation's fundamental purpose.

Yet while leadership ranks among the most important aspects of agility, it is also one of the biggest obstacles. Many of our respondents said their biggest impediment to agility were a lack of a clear strategy and little (or no) commitment to change from the senior levels of the organisation.

Culture and values

A.T Kearney's findings reveal that 90 percent of the most agile agencies also rank among the top performers in organisational culture and values. These agencies do more upfront work: they build the case for change, align leadership and the organisation around key objectives, and get buy-in from staff members. Ultimately, the goal is to foster a culture in which people feel connected to the strategy.

“Agile” organisations also create an environment that focuses on capturing and sharing of knowledge and then apply what they have learned to achieving the overall vision. In fact, twice as many agile agencies (versus average agencies) say they would invest in acquiring or improving their research innovation and skills. These organisations are flexible and always ready for change—continuously drawing on their resources to explore new approaches that will generate even more changes.

Customer service

As an agency becomes “agile”, it also becomes adept at managing customer relationships. For example, an agency might adopt more efficient, cost-effective channels (such as the internet or automated phone systems) to deliver services—and offer customers incentives to use these channels. However, relatively few governments have been successful in emulating corporate programmes in which companies shift customers from high-cost to low-cost channels. One reason is that the majority of government agencies surveyed focus more on trying to change customer behaviour through rules and penalties rather than through incentives. In other words, most rely on the stick instead of the carrot.

E-government

One of the keys to agility is to use technology as a trigger for transformation throughout the organisation. E-governments use electronic communication to replace burdensome paper transactions, transforming the way the agencies do their business and integrating different areas of government. But e-government means much more than providing online services; it also means using technology to redefine the way agencies conduct business. Specifically, standardizing IT systems to improve interoperability was ranked as the most important technology-related initiative by 23 percent of survey participants. Enhancing management information systems came in second with 16 percent, followed by eliminating paper processes with 3 percent. In fact, participants ranked building better websites the least important technology-related initiative.

Performance management

An “agile” agency simultaneously focuses on two areas: operating effectively and efficiently, and achieving specific societal outcomes. An “agile” organisation also monitors how it deploys new initiatives, allowing leadership to understand where more resources might be needed to ensure the success of change programmes. In particular, an “agile” organisation measures its progress from within, using leading indicators based on goals for future performance—even when the future looms close and the pressure to respond to new challenges and deliver outcomes increases. Forward planning is key to successful performance management. Take the example of Australia's National Childcare Accreditation Council (NCAC).

Through forward planning and flexibility, the NCAC was able to successfully deliver quality assurance to a new sector of child care requiring new registration systems, policies and procedures, and customer communications—just two months after the political directive was made. “Although we were not directly involved in the political decision-making, forward planning allowed us to understand what we could achieve and what the initial requirements would be. The minister gave us the directive in early April 2001—and the registration processes were up and running on the first of July,” explains Denise Taylor, NCAC's Chief Executive Officer.

Conclusions

Agencies need to understand what aspects of agility make the biggest difference for their organisations and then excel at them. While the top “agile” agencies do well at what they consider important, the least “agile” agencies gravitate around a grey middle ground, where priorities are unclear and performance is weak. The most “agile” agencies attach high value to customer service, organisational change capabilities and leadership as drivers of speed, flexibility and responsiveness.

Their organisational culture and values are strongly aligned with these characteristics. But there is still room to improve, particularly for agencies that are using electronic means to focus on customer needs and are fine-tuning their approaches to performance management. True agility is always manifested in the tangible results.

Craig Baker of A.T. Kearney concluded: “There are some useful lessons in our research about what governments and their agencies can do to improve their performance. “Any agency can become “agile”. The most successful are characterised by their focus on customer service, by their willingness to change their organisation and through strong leadership” “The benefits of pursuing agility as an organisational vision are clear; improved productivity, employee and customer satisfaction and a higher quality of service for citizens.”
 
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