Dealing with a Downturn

Assisting the University of Alaska find its way to a more efficient, effective institution in midst of an economic downturn, and observing how the State of Alaska is approaching the same challenge offers up food for thought on how best to meet such a challenge.

What is clear is that top down solutions rarely go well.  There are two fundamental reasons for this.  First, we know from managing and witnessing countless change efforts that, fundamentally, employees resist being “done to”.  This is related to the second reason, which is that those at the top are not close enough to work to understand the impacts of across the board cuts and the like.

Top down solutions, e.g. cut your program by 10%,  are often chosen by legislative bodies and governors.  My sense is that this approach is rooted in either a lack of time (the fault of the governing entity) or a lack of faith in the willingness/ability of employees to “cut their own throat”.  They view the employees or unions as being intent on defending their turf at the expense of seeing the entire enterprise go down in flames.  If you are rooted in that belief, well, of course you would not give the employees the responsibility to find and implement a solution.

Numerous projects intended on solving the problem of an underperforming process or system have convinced me that employees will overcome resistance to change and define/implement a solution as long as minimal conditions are met by leadership.

What are those minimal conditions?

• The need for the change must be clear and have integrity.  If it is simply to make more money at the expense of the employees, it won’t fly.  If it is truly needed for the enterprise to survive or even thrive in a competitive environment, the change can be sold.
• Management must share the pain.  If the problem is conserving costs and management is not willing to look at its own costs first, it will be a difficult sell.
• Management is not asking employees to threaten their own survival.  That is, there must be some protection for those being asked to find a more efficient alternative.  The protection could be that lay offs would be by attrition or that individuals would be trained for other positions etc.

If the need for change is clear and defensible and if faith is placed in the employees to find a solution, then the solution can be had. Repeatedly, I have seen front-line teams design innovative solutions that cut costs by as much as 50%. They are inherently highly motivated to better serve their customers and to be more productive.  Productivity is the basis of morale.  Even though doing so will mean considerable personal unknown in the near term and the need to make uncomfortable changes, teams are exhilarated at the chance to define and create their own destiny.

The challenge for political institutions is that often the need to make drastic changes comes too late for an employee driven process to work.  Instead, the top down, “find a way to do it with 15% less resource” in the budget process is employed.  There is a fundamental problem in logic here.  You can’t do it for less until you have defined how to do it for less.  Thus, what you end up with is simply less, i.e. less service to the public.  Political institutions need to find the courage to be proactive.  To be able to foresee the need for define anew how we do things based on the knowledge that the current course is not sustainable.

Government at all levels, schools of higher learning and many others are all finding that our current models are not sustainable.  Witness health care costs, costs of higher education, Social Security.  To get ahead of the curve and prevent serious cut backs in service, leaders should look to those doing the work to point the way as they are closest to those being served and have the highest stake in finding a solution.