Governments around the world are facing a new reality of having to show ratings agencies such as S&P and Moody’s their ability to keep their deficits and debt growths under control. The reality is that many governments are running debts equal to 45 percent or more of their GDP. Many are also running double-digit deficits on top of these debt loads. As we’ve seen in Europe, the inability to relay confidence in a government’s finances can have dire consequences. Borrowing costs can escalate, credibility of financial management can erode and governments may be forced to pay additional interest charges, all of which can cripple the financial viability of a government organization.
In this new environment, governments are trying to grapple with two opposing issues at once: lowering spending, yet at the same time raising productivity to increase the ongoing movement of trade and business to boost GDP.
While transfers for healthcare, education and transportation projects often account for an excess of 80 percent of a typical annual budget, these are often the services that governments do not wish to curtail. When one looks at the remaining expenditures after transfers, payroll is typically the next largest expense, representing as much as 50 percent of a remaining budget. Thus, given these expense ratios of most governments, it is payroll that is typically targeted first to lower spending. In the short term, many governments are scaling down their staffing levels to address short term financial expenses.
However, in the long term, many governments will face large attrition rates as Baby Boomers start to retire. To this end, many governments have already indicated that they do not plan to replace these personnel at the same rate of attrition. This will result in smaller governments in the future. But are smaller versions of the SAME governments the answer?
From the policy and regulation perspective, a reduced workforce will drastically impact the ability of governments to solicit stakeholder input, write legislation and liase with industry, labour and other third parties—which are all key to crafting effective policies that drive business growth and economic progress. It will also constrain the speed by which policy changes can occur to accommodate new business development and growth.
Although the immediate impact of a reduced workforce will be marginally felt, as time moves on and issues arise, this impact will start to have a snowball effect on the ability of governments to compete in the global market. This will become increasingly apparent as industry and businesses decide not to allocate their investment dollars to regions with poor policy track records. While a smaller government workforce may be inevitable, the key for governments to succeed in this new environment will be to empower fewer employees to do more with less.
Using workforce modernization to strike a new balance
Given this perfect storm of competing initiatives—the need to reduce costs while boosting productivity to stimulate business growth—governments at all levels should be looking at workplace modernization initiatives to help address the complexity of this challenge. Leveraging new technological capabilities that are deployed strategically, governments can enable smaller workforces to collaborate more effectively not only with each other, but with external stakeholders to facilitate policies and legislation that drives business growth.
While many governments have leveraged technology such as SharePoint Portal server and Microsoft Office to boost worker productivity, in many instances, they have not put forward true workplace modernization initiatives that look at the business processes, provide the proper training, and establish goals upfront to drive measurable outcomes. Without this holistic approach, many of these projects have resulted in a smattering of technology investments that do not allow government organizations to realize their true productivity potential. When done right, however, the impact of a workforce modernization initiative can be truly transformative. Consider this UK case study featuring a workforce modernization initiative spearheaded by the West Yorkshire Fire & Rescue Service.
Back in the late 80s and early 90s, Office productivity tools were used to replace the typing pools that once existed. But since then, many organizations have not evolved far beyond this first step. Given the fiscal demands of today’s economic environment, government organizations need to broaden their workforce modernization practices to boost the productivity of smaller workforces. By doing this strategically, governments can both reduce costs and boost productivity, allowing them to appease ratings agencies and effectively manage policy and legislation changes to promote business and economic growth.
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