Managers didn’t understand own departments

Read this headline and weep: Public sector didn’t understand their own departments: English

Senior managers of government departments had little understanding of how their organisations ran when the government took office in 2008, says Finance Minister Bill English.

Addressing a Trans-Tasman Business Circle lunch in Wellington, English said that while people in the capital were more sceptical, the rest of the country have “tears of joy” in their eyes at the government’s plans to rein in the public sector after a decade of heavy spending increases.

It’s not a lack of sympathy for the people affected as individuals. Change is often difficult and unsettling especially if your job is under threat. But from the outside the public sector appears to be bloated and inefficient.

No private sector manager would last long if s/he didn’t understand what they were managing, there’s no excuse for allowing it in the public sector.

However, public service bosses were grasping nettle.

“I’m impressed that departments realise these are not circumstances they can wait out,” he said. “Two years ago, most public sector heads did not understand their organisations. They have a better grip on it now”, following benchmarking studies and a steady focus on cost reduction.

“They now need better industrial relations,” said English. “We can’t get through this process without intensive engagement between management and, particularly, front line staff.”

Nonetheless, the actual cuts expected of government departments over the next four years amounted to only 1% of total spending, in keeping with the government’s political strategy of making “reasonably significant but not too scary decisions” on the way to its longer term goals.

The trick is cut the fat without damaging the muscle. It’s a balancing act which requires the co-operation of the people involved, at least some of whom have it in their power to sabotage the plans.

“That recipe appears to be working,” English said. “Despite having delivered the tightest Budget in 20 years, we have got pretty broad public approval for it. They understand why we’re doing what we are doing.”

If the latest Budget’s forecasts were correct, New Zealand could expect to be one of only two developed economies in the Organisation for Economic Cooperation and Development to be running a Budget surplus by 2015.

There is quite a bit of scepticism about Budget forecast for growth but we are already seeing increased economic activity in the provinces.

Two small examples: I was ordering curtains for one of the dairy farm houses last week and the business owners said they were very busy. A friend rang from Central Otago today, she’s wanting curtains and one business she went to said it would be the end of the month before they’d have time to measure her windows.

The highest prices for agricultural commodities since the Holyoake years would underpin the recovery, while there was no question about whether or not $15 billion to $20 billion would be spent rebuilding Christchurch over the next three or four years.

“It will be spent,” he said, and the impact on the New Zealand economy would be, relatively speaking, three times as great as the rebuild required by the Japanese tsunami.

However, he predicted the non-tradeable sector – businesses not involved in producing for export and import substitution markets – would continue to find times tough for the foreseeable future.

“The great thing about this global recession is that it was an unambiguous signal to stop borrowing up large and spending. That’s why it’s still tough running a retail outlet in Willis Street (in Wellington’s central business district). There has been a big shift in New Zealanders’ attitudes.

“Miserable economists expect people to back to old bad habits” once the economy improves. “However, I believe in you,” English told the high end Wellington business audience.

A combination of the lessons learned from the recession and the aftermath of the Canterbury earthquakes has changed attitudes to spending in the south.

There’s always been a Presbyterian attitude to conspicuous consumption down here. That’s even more evident now with people more committed to saving and investment and a lot less interested in buying things for buying’s sake.

5 Responses to Managers didn’t understand own departments

  1. Deborah says:

    Hmm…. it’s not that managers don’t, or didn’t, understand their own departments. It’s that Bill English said they didn’t understand their own departments. There’s a difference.

    It’s not consistent with my experience in the public sector, where there was constant analysis of what my department was doing, and how it was doing it, and whether it could be doing it better, and whether it ought to be doing x, y, or z at all.

    I suggest that English’s statement about the public sector is not an objective assessment, but a party political statement. That’s fair enough – he’s a politician. But it also ought to tell you what weight to give to his pronouncements.

  2. Scott says:

    No private sector manager would last long if s/he didn’t understand what they were managing

    Having working in the private sector for all my working life, I’ve seen a fair few managers. I can’t agree with your assessment.

    There are plenty of inept managers in the private sector. It’s part of the reason why New Zealand businesses don’t perform well. We have a culture of management mediocrity.

    There is quite a bit of scepticism about Budget forecast for growth

    The Budget forecasts have been spectacularly wrong every year since this government took office. I don’t share your optimism.

    Budget forecasts have been spectacularly wrong for the last few years, so I’m not sharing your optimism.

  3. Scott says:

    I’m not sure what went wrong with my comnment… ignore the last sentence!

  4. homepaddock says:

    Deborah – politicians do tend to take a political view.

    Scott – Fair point. I’ve seen a fair few managers too, some have been brilliant, some have been hopeless and some in between.

    It’s not easy to sack people for not being particularly good at what they do even after a lot of effort has been put into helping them do it better.

  5. Richard says:

    There is a culture in the public sector whereby political parties in government are transient but the those employed in public sector expect to be rolled over (and to be reemployed) when governments change . This is right – we need continuity of services.
    Where it is not right is the expectation of public servants to expect a job for life and will block change to preserve their jobs- like Universities, although they are more efficient than they were; but are they largely survive on government funding.
    Scott makes a good point. But the difference I have with him is that most private enterprises need to make a profit to survive. This “profit” element has little relevance in the public sector and is difficult to measure.
    Finally if we really want to get ahead we politicians like Joyce, Key etc- who know the mustard, rather than English, Mallard etc, career politicians.

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