Magazine article Public Finance

Mastering the Machine

Magazine article Public Finance

Mastering the Machine

Article excerpt

For senior civil servants, the past few months have been dominated by changes in the machinery of government - mergers and demergers and other reshuffling of government departments. And if early indications are anything to go by, there will be no let-up once Gordon Brown steps through the door of Number 10.

'Merger and acquisition' activity is commonplace in the private sector. In fact, we are witnessing record levels of this kind of activity across Europe. But does it represent value for money for the public sector?

Previous experience is not very encouraging. Of the 28 central government departments created between 1960 and 1979, 13 had been wound up by 1981. Since 1997, the pace of upheaval has increased: of the 14 big Whitehall departments, nine have been newly created or rejigged. But in the main it has taken years before new departments operate in a really integrated way.

In the corporate world, less than half of mergers and acquisitions create value for shareholders. Usually, it's not the deal itself that is flawed but the lack of attention given by top management to post-deal implementation. The lesson here for the public sector is that well prepared mergers are more likely to succeed. Senior management needs to focus on both the short-term synergies around the deal and the longer-term opportunities to rethink the way their organisation operates.

Most government departments now face a slowdown in spending and are focusing on citizen-centric public services. In a world where there is broad consensus over public policy issues, organisational flexibility is becoming increasingly important.

We can expect to see more organisational redesign work within and across departments. The real question is not whether there should be machinery of government changes, but how senior civil servants should most effectively implement organisational changes.

Lessons can be learned from the private sector. Due diligence can be carried out on the new organisation to assess and analyse its governance, management system, finances, processes, tools and operations. The chief executive - the permanent secretary - must minimise the risks of transition and realise the value of change as soon as possible.

All this is about people, technology and money. Changes in the machinery of government affect employees on several levels and require a sustained focus in three areas.

First, the strategy, priorities, design and overall culture will change. Boundaries are redrawn, priorities alter and people often have a new boss. …

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