Smart Streamlining

Two new reports out this past week focus on tools and techniques for agencies to cope with the new fiscal austerity they face in years ahead. One is by the Partnership for Public Service, the other by the Government Accountability Office. They are both worth reading because they focus on smart ways to make cuts – not the old standby of across-the-board chops to be “fair” to every program.

Austerity budgets are intimidating to face. But done right, they can be a lever for needed innovations. Here are two reports that offer similar advice. One is from an historical perspective; the other is based on ongoing austerity initiatives.

Making Smart Cuts. The Partnership for Public Service released a report with lessons from the 1990s budget cutting era.

The report identifies eight budget cutting strategies used in the 1990s, such as across-the-board cuts, programmatic cuts, cuts in administrative costs, and reengineering. It found that “none of the strategies would be successful in isolation. . . “ The report also identified four conditions of success for any downsizing effort:

• Top leadership involvement
• Finding new ways to do the work
• A combination of the 8 budget-cutting strategies, and
• The use of change management strategies.

The Partnership’s report recommends:

• The president and Congress to communicate a clear vision for what the federal government should deliver, and designate a high-level official to lead the cost-savings effort.
• The Congress should set cost-reduction targets and allow agencies flexibility in determining the best way to meet those targets.
• The agency heads should consider alternative ways of delivering services and performing functions and not just doing the same things the same way, with fewer people.

Key Practices for Streamlining. The Government Accountability Office released a report with key practices currently in use by several federal agencies and state governments to cope with budget cuts underway. Agency initiatives surveyed include the Defense Department’s Efficiencies Initiative, Homeland Security’s Efficiency Review, and HUD’s Transformation Initiative. State government programs included the Texas Sunset Advisory Commission, Iowa’s Lean Enterprise Office, and Virginia’s Productivity Investment Fund.

GAO summed up the following key practices:

• Use change management strategies, such as ensuring top leadership involvement, a dedicated implementation team, goals and timetables, and engaging employees for their ideas.
• Pursue both short-term and long-term efficiency initiatives, including “a fundamental reexamination of programs and related organizational processes” as well as improve efficiency by taking steps “to “streamline or consolidate management or operational processes and functions to make them more cost effective.”
• Build institutional capacity for sustaining improved efficiency, such as Defense’s continuous improvement initiative.

GAO recommends that OMB use existing governmentwide management councils to share lessons learned across agencies, and to work with Congress to develop proposals for mechanisms to fund investments in longer-term efficiency improvement projects. (Note: Congress has funded such a project which is the subject of a recent IBM Center report: The Partnership Fund for Program Integrity Innovation).

In addition to the rich details of the various initiatives in its case studies, the GAO report ends with a four-page list of more than 35 recent presidential and OMB directives to improve performance or to cut various administrative costs. That list alone (with their hotlinks to the original directives) is a valuable checklist for harried agency executives trying to keep up with the flood of directives to work better and cost less!