Efficiency drive
Chancellor Alastair Darling’s April budget speech confirmed that the pressure is rising for the public sector to increase efficiency and cut spending. He announced plans to make £9 billion in efficiency cuts each year by 2013 and to find other ways to save an additional £5 billion in 2010-11. That’s in addition to £30 billion in savings expected in the current spending review period. Local authorities will have to meet public demand and expectations, while maintaining quality and reducing costs.
Many councils are feeling the impact of income cuts. According to the Local Government Association (LGA), threefifths have reduced headcount since October 2008, with a similar number of job cuts planned for 2009. Around 7,000 jobs have been lost already, and according to LGA vice-chairman Sir Jeremy Beecham, they are the result of a £2.5 billion income cut.
Measuring Efficiency
Local government efficiency is a measure of resources expended relative to the outputs produced by them, and improved efficiency requires a reduction in the running costs of services over time. However, measuring efficiency and quality is a complex task. Many local authorities have introduced work processes or institutional arrangements designed to contribute to efficiency and service quality. Some councils have introduced tools to measure specific services, and all local authorities now need to set criteria that capture key elements of performance in order to demonstrate their results.
The measurement criteria must include:
• Financial management
• Human resource management
• Information technology management
• Capital management
• Managing for results
Key indicators are essential in the following four areas: record management, internal audit, performance appraisal, and project evaluation. Within each of the essential four areas, three intermediate dimensions of performance are needed: “results focus,” accountability and employee morale.
Managers in local authorities have their work cut out establishing these new performance measurement and evaluation processes and ensuring they are demonstrating they are ‘managing for results’. This is on top of other potential challenges including the need to redistribute job roles, delegate additional responsibilities to employees, achieve more with fewer resources and, in many cases, make difficult decisions about redundancies.
Gain visibility of the workforce and uncover your knowledge gaps
Managing for results in an economic downturn requires a greater focus on employee performance. One simple, effective and often overlooked approach to saving money and improving employee performance is to address knowledge gaps and improve the knowledge and skills of staff at all levels. For a local authority, this is often one of the few effective ways to reduce costs.
One of the main barriers preventing local government executives from tackling underperformance is the lack of up to date and accurate information about the skills, competence and confidence of their employees. Without this information, it is incredibly difficult for employers to understand how to best utilise staff, how to reassign roles or address knowledge gaps.
An effective solution to overcome these challenges is to introduce a customised knowledge development programme based on individual employee assessments. Such assessments are used widely in the private sector. So why not change the way employees are assessed in central and local government?
Delivering assessments would give mangers vital insight into employee skills, competence and confidence. However, individuals will need to be assessed regularly as a high proportion of local authority officers move through various jobs and ranks at many different types of council throughout their careers. Managers cannot be certain that all of their staff understand their changing roles or if they require further coaching, mentoring or training without regular assessment.
Delivering improved and more cost effective employee training
Effective assessments are customised for each role and at each level within local government and test individuals through realistic job based scenarios. Such assessments highlight strengths, weaknesses and knowledge gaps immediately. This makes it easier for managers to identify the type of intervention required to ensure employees realise their full potential whilst the council or government department is achieving optimum productivity.
Individual tailored employee training and development programmes can then be developed which will improve performance levels. A key benefit is that employees will get the right coaching, training and mentoring at the right time, which will boost their morale. This approach will enable a local authority to tailor its learning and development spending and it eliminates the need for “one size fits all” programmes which can be expensive and ineffective in addressing knowledge gaps.
Making more informed decisions about employees
Top performers can also be identified through assessments. These are the ‘go-to’ people in the department who are a consistent and reliable resource for other employees. Identifying these top performers will help managers improve efficiency and productivity in several ways. When faced with difficult expense reduction decisions, assessment programmes help to determine objectively the capability of all employees. They also identify which employees have the potential to deliver training to their peers or are able to coach and mentor others. When faced with cutting services, managers must know which individuals have the potential to be re-deployed elsewhere.
Eradicating employee misunderstanding
If all government departments were to identify and address employee skills and knowledge gaps overall efficiency would improve significantly. Last year, a report from the industry analyst firm IDC, entitled “Counting the Cost of Employee Misunderstanding,” revealed that one in four employees do not understand certain aspects of their job role and that major knowledge gaps remain unaddressed in many organisations.
A misunderstanding can range from misinterpreting a policy, process or job function, to a combination of all three. These kinds of misunderstandings are inevitable, but they can also be incredibly costly - the report estimates that UK and U.S. businesses lose £18.7 bn a year as a result of employee misunderstandings and also suffer damaged relationships with key customers and clients.
With public sector spending under scrutiny, public confidence in the government at an all time low, falling staff morale and pressure mounting to reduce costs, now is the time to tackle employee underperformance.
Customised employee assessments can be the first step in objectively identifying the interventions needed to help improve efficiency and morale at many levels within government. They can help streamline a department’s knowledge base, enhance capacity, improve performance and avoid costly mistakes and errors that result from employee misunderstandings.
Managers are accountable for organisational efficiency and effectiveness. For them to be effective they must introduce improved methods of measuring and reporting on the skills, knowledge and understanding of their staff in the context of the services for which they are responsible.
