Whitehall departments are 30% more complex than the world’s largest companies. Complexity is not uncontrollable or inevitable, but tackling it requires a strong, top-down approach
Cabinet Office Minister Francis Maude has claimed that the coalition government achieved £3.75bn in savings in the 10 months following the May 2010 election. But a recent analysis of over 70 National Audit Office and parliamentary select committee reports found that government departments have wasted over £31bn in the past two years alone.
This demonstrates the extent of the challenge Chancellor George Osborne is facing in shoring up the public finances and delivering the £81bn in cuts promised in the 2010 Spending Review. It also lends support to new research which shows the harmful effects of complexity on the public sector. Unless the government takes a comprehensive approach to tackling harmful complexity, tax-funded efforts and resources will continue to be diverted from the services that most add value to the public, further straining government budgets.
The Public sector complexity review, which extends our studies of private sector inefficiencies, surveyed 150 civil servants across all major government departments about the impact of internal and external complexity. The findings were particularly concerning when contrasted with our previous study, the Global simplicity index (GSI).
The GSI showed that the world’s largest 200 companies are each losing, on average, $1.2bn a year to harmful complexity. In contrast, this latest research found that central government departments are, on average, 30% more complex than these largest companies. Imagine, then, the impact harmful complexity is having on public sector finances, as well as service delivery?
Despite the obvious differences between public and private sector organisations, both share the same core principles; they need to be as effective and efficient as they can in everything they do. This is particularly important for the public sector, given the sensitivity of its debt-reduction plans. The ratings agency Moody's recently noted that the country's prized triple-A rating depended on keeping the deficit reduction plan on track.
And whilst the government isn’t likely to divert from its austerity plans, public sector leaders need to do more about complexity. It must no longer be viewed as an uncontrollable and ‘inevitable’ cost of operating in the public sector. Our study found that complexity was being handled by some departments more successfully than others. For example, the Department for Business, Innovation and Skills was the most complex department, and was over 50% more complex than the Ministry of Justice. Interestingly, the MoJ, the least complex department in the survey, was also recently identified to be one of the most efficient departments on a number of standard measures.
To tackle this problem, there needs to be a top-down approach. Senior civil servants have to first demonstrate a commitment to reducing complexity. Managers then need to identify the biggest complexity problems and their impact. Front-line staff – those at the coal-face taking the daily brunt of complexity – need to be engaged and shown that they will benefit significantly from reducing complexity. Finally, and most importantly, new behaviours, tools and skills must be learnt and reinforced through reward systems, recruitment etc.
With fewer people and smaller budgets, it will not be possible to maintain quality public services unless government removes complexity and significantly changes the way work gets done. This study shows that embedding a culture of simplicity throughout the public sector should be an essential part of the coalition’s strategy.
Professor Simon Collinson is Simplicity’s Research Director and professor of international business and innovation at Henley Business School. For a copy of the report go to www.simplicitypartnership.com
