By Mark Pegg and Steve Watson
16 December 2010
With a harsh financial winter ahead, finance managers must be ready to step into the cold and guide other departments and their own staff through the blizzards ahead. Mark Pegg and Steve Watson offer ten tips for leading from the front
This is the perfect storm for public services in the UK. With a mountain of debt and hugely painful cuts in spending already under way, public servants at every level are shivering in a very chill wind.
Making the sort of cost savings that are needed can’t be done just by salami-slicing budgets, or squeezing more productivity out of existing services. This is not a time for the faint-hearted.
But it is an opportunity for leaders to come forward and be bold, imaginative and creative.
At the heart of this transformation process is the finance department. This is not just about saying ‘no’ more often and more loudly. When there is so much less money, finance must take the lead as a critical champion of new inter-departmental thinking, helping to develop a radical vision for change in the way services are supported and delivered.
This is the best way of showing your organisation how you add value, and ensure the best possible outcomes with the slender resources available. You can help develop the organisational competence to lead with scarce resources. There is much to do.
When there is no way of avoiding change, the usual arguments, delaying tactics, obfuscations and distraction techniques in the budget round – and wishful thinking in the forecasts – will not work. The finance teams that succeed will be those that can see the bigger picture, bring departments together and offer radical, cheaper and value-for-money options for operational leaders to adopt.
So what are the guidelines for finance teams handling cuts in funding and services? The same rules apply as in better times – but they are more critical, less flexible and require greater vision and resilience.
Ten leadership tips
1. Focus on value and service provision rather than inputs and costs
What is the organisation or department set up to do? What is its output? It is sometimes hard to take an objective view, particularly with the immediate threat facing people’s current jobs, but no unit can escape the need to justify its deployment of financial resources. When the economic situation is tight it is all the more important to be clear what the business case is in terms of the agreed service provision of the finance department – and its clients.
2. Get radical fast
The cuts are vast and many services will fall into the ‘stop doing’ and ‘do differently’ category. Take the opportunity to address the areas that have so far avoided changing bad working practices. Then go further and develop a vision to share services and restructure working practices.
Cut out the ‘nice to have’, but also encourage the adoption of new ways of providing services and of working together across departmental boundaries. Offer options involving customer choice and outsourcing to operating departments and invite them to come back with more radical proposals.
3. Focus on a better longer-term future
A major leadership role is to think strategically beyond the current dilemmas and create a sense of the positive future: something to aim for. How it is described depends on what is acceptable locally: some like visions, pictures, goals, strap-lines, regular discussions. Use whatever works to lift the perspective of others from seeing the current problems as self-contained tasks to hurdles to be overcome to achieve something better.
4. Communicate relentlessly
Few messages get heard first time round – and even fewer understood, remembered, accepted or internalised. Sometimes the message has to be repeated eight or nine times before the listener has a chance of making enough sense of it to use the content. This is particularly so in times of stress. Where there is a lack of official information, people will naturally fill the gap with their own conclusions, based on rumours and hearsay. Reinforcing existing messages can therefore be as useful as providing new information at these times.
5. Be transparent and where possible give everyone the same information
Avoid the temptation to select different information for different recipients – except for genuine reasons of tailored presentation. People’s sensitivity to fairness of communication and any possible impression of favouritism will be heightened. Many staff will need to go through the ‘transition curve’. Give them time to take the shock, recover and begin to adapt to the new paradigms.
6. Provide information, personally and interactively
Allow as much feedback on information as you can. Don’t hide behind email or postal systems. If you don’t already visit the recipients, start a new habit - and listen to what they say.
7. Try to avoid using financial and business jargon
Consenting financial leaders might happily use ‘business-speak’ among themselves – and get away with it with a broader audience during less stringent times. But in tougher times they will find such language creates an unnecessary distance between them and the people they are talking to. Examples include using ‘resources’ for people and ‘rightsizing’ to mean cutting staff.
8. Involve people – ask for help
While it is tempting to be strongly top-down, it is better to involve your team and partners and access the ‘wisdom of crowds’. Ask for ideas to get beyond the immediate future. Be more willing to consider the unusual and the unconventional ideas – this is the time where maverick thinking might actually be the way to go.
9. Use more small human touches
Pay extra attention to small personal gestures such as thanks, gifts, acknowledgements and feedback even if your budget prevents you from making significant financial rewards. Many studies show that non-financial gestures can create a healthy ‘social’ environment and be more effective than financial ones.
10. Double your effort in getting to know the team as individuals
As well as ensuring that all the data you provide is transparent, find out how each individual prefers to receive it. Go beyond their needs as team members and information recipients. As a leader, make connections. What are their long-term aspirations? What are their concerns? Who might relish the chance to take on more responsibility? For those who are actual or potential job victims, get involved in their plans ‘on the outside’.
Try to make these hard times a lot less difficult. If you can do this, you might not become more popular, but you might just earn the respect of staff and clients.
Mark Pegg and Steve Watson are directors of Ashridge Business School, heading respectively the public sector and finance for managers programmes
