I wrote in conclusion to a blog in June 2019:
‘Public sector, public service and third sector organisations (charities, CICs, NFP’s) ALL have a purpose to fulfil. ALL are constrained to generate over time at least as much income (whether from trading, grants, gifts, commissions or donations) as their expenses. None have profit as the primary purpose of their existence’ (ref 1).
I was drawn back to it and a number of its stablemates on the topic of effectiveness and efficiency by a pre-announcement (or is it a non-announcement when a statement is made announcing that something is to be announced later…?) about changes in the funding of various forms of clinical education, much of which, while delivered by Universities, appears to take the form of a modern apprenticeship.
The news report stated, “The Government has cut funding for nursing courses” then in the next paragraph “Ministers have quietly frozen grants”.
So, setting aside the slightly misleading headline – cutting funding and freezing grants are not the same thing – the whole distracts from the underlying challenge faced by government itself and all those organisations, public, 3rd sector and private, that depend on it. If the government can’t or won’t spend more money (for whatever reason) then its suppliers must experience, at best, fixed income, at worst reductions in their income.
If income falls then so, surely, must costs. The typical response to this by organisational leaders (and I am not directing my thoughts exclusively to Universities) is the equivalent of “cutting lecturer jobs to save cash”. I cannot of course speak to or for the responses of individual institutions nor to either the effectiveness of their educational processes or efficiency of their deployment of teaching resources (people, rooms, laboratories) or support resources (technicians, lab assistants, administrative staff).
But then, often, neither can they!
Why? Accepting the aphorism that ‘all models are wrong, some are useful’ (George Box), it seems to me that the resource allocation and workload models adopted by many institutions fail to adequately reflect the complexity and demands of modern organisational life – they may work in theory but not in practice. The consequence is often stress, apparent poor performance (when the practice cannot match the theory) and, of course, failure to deliver expected outcomes.
From discussion with a number of professionals across healthcare, higher education (healthcare, engineering, information science, construction), criminal justice, infrastructure engineering – all dependent on central or local government as their main ‘customer’ – I have noted that there is an epidemic of cost-cutting all focused on the people that deliver whatever the service happens to be and rooted in those imperfect resource allocation and workload models. This response may, just possibly, ameliorate the symptoms of the immediately presenting problem. In the medium term though if there is nobody to deliver the service then there is no future income for doing so and in the longer term there will be no newly qualified practitioners nor anybody to teach them.
Cutting the immediate costs of delivery may be expedient (and depending on the financial fragility of the particular organisation – some of which appear very fragile – may be necessary) but it does not address the substantive problem which is that the costs are too high.
As I have said elsewhere, ‘Don’t reduce your costs, improve your process’ (ref 2)
The present structure and processes of any existing organisation are rooted in its history and typically informed by the bureaucratic strictures laid out by Weber in the 1920s. These strictures have served us well. They facilitated the development of contemporary large scale administrative organisations but are now mature and in need of reinvention. Only through reinvention can we adequately exploit the capabilities of both recent organisational thinking and 21st century technologies, especially AI.
A more thoughtful undoubtedly challenging but much more sustainable approach for institutions faced with fixed or reducing income is to readdress the fundamentals of their whole organisation. To do this they need to identify the underlying drivers of their costs and redesign or reinvent themselves as necessary starting with their processes and overall structures. Processes and structures drive costs because they shape the ways in which decisions can be made, they constrain or enable the productivity and efficiency of each individual and the emergent productivity of the institution as a whole.
To deliver the change required, organisational leaders in concert with the people who deliver the service need to:
1: Clarify the purpose and identity of the organisation (the basis of effectiveness);
2: Determine the processes necessary for fulfilling purpose and the control structures necessary to regulating them;
3: Recognise that processes can be classified as:
3.1: Core: they do the things the organisation does;
3.2: Enabling: they are fundamental to core activities being realised;
3.3: Discretionary: they are the result of choices about scope;
3.4: Waste: any process that is not part of 3.1, 3.2, 3.3
4: Measure: evaluate or measure the efficiency with which any process utilises its resources in the fulfilment of purpose;
5: Use the yield gap as the basis of enabling adaptation to deliver performance gains.
It is my experience over many interventions in many organisations across many sectors and industries that with intelligent organisation it is always possible to do more with less.
Ref 1: https://beckfordconsulting.com/effectiveness/purposeful-and-effective/
Ref 2: https://beckfordconsulting.com/effectiveness/dont-reduce-costs/