Breaking the Consultocracy : A Case for Management Consulting Reduction within the Federal Public Service

Transcription

1 Breaking the Consultocracy : A Case for Management Consulting Reduction within the Federal Public Service Chris Blackmore, Master of Public Administration student Johnson-Shoyama Graduate School of Public Policy University of Regina campus February 2014

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3 TABLE OF CONTENTS 1. Introduction Background Proposal Conclusion Bibliography Breaking the Consultocracy Chris Blackmore

4 1. INTRODUCTION In its Throne Speech earlier this October, the Conservative government outlined their agenda for the coming session of Parliament. A major focus of the speech was continued government spending reductions, including a freeze on many departmental budgets. This was outlined specifically in their promise to improve efficiency and introduce cost-saving measures within the public service, amend the Public Service Labour Relations Act, and reform the way the federal system manages spending (May 2013a). These goals are in many ways a continuation of the increased focus by government on new public management (NPM) and market-based solutions for the delivery of services by the public sector. This reliance has only increased since the global financial crisis, with governments striving to find ways to increase efficiency and reduce costs to respond to both the international economic reality and the demands of the public. One specific tool the government has utilized to this end has been the hiring of private-sector management consultants. Tasked with bringing in best-practices from the business world, these consultants are hired by various departments to transform government services, making them leaner and more efficient. But has this reliance on private-sector consultants weakened the government s capacity to provide consistent, inhouse delivery of public services in the long-term? Pursuant to the Blueprint 2020 competition, established by the Privy Council Office, this paper aims to enhance the Federal Public Service s specific goal of increasing the capabilities and performance of its workforce. Specifically, I intend to illustrate that the government s current dependency on management consulting weakens its ability to effectively provide services in the long-term, and that investment in the innovative capacity of in-house government workers would better serve the Canadian public going in to the future. 1

5 2. BACKGROUND In the wake of the global financial crisis, governments have been searching for effective ways to increase efficiency within their operations, and two policy responses have emerged in response: the active and directing state, or a state that rolls back its powers to allow room for markets to respond (McCann 2013). The Government of Canada, along with numerous other governments throughout the world, are striving to do more with less, attempting to allow for more market-based reforms and solutions to cope with tighter budgetary constraints. The attempts to modernize and gain value for money have led to a greater focus on private-sector management practices, resource frugality, and increased emphasis on performance management and outputs (Lapsley 2009). Public service innovations are by their nature difficult. The regulations, risk management, and audit culture create barriers that can hamper innovation by punishing risks, with perceived government incompetence becoming a self-fulfilling prophecy (Borins 2002). Beyond this, public sector agencies are often monopolies without pressure to compete or innovate (Borins 2002). It is this ethos that has borne the idea of contracting management consulting firms to spearhead the modernization process within the public service. The Government of Canada s claim that the use of consultants provides a cost-effective and flexible solution is not a baseless one. In their study of the United Kingdom s public sector contracting, Domberger and Jensen provide empirical evidence that shows that savings can be generated to a substantial degree through the use of consultants, with millions of pounds saved by contracting out previously in-house public service jobs (Domberger and Jensen 1997). In addition, a major reason for the government contracts to consultants is the degree of technical specificity that may be required of a position, an expertise that may not be present within the existing workforce (Hefetz and Warner 2012). It can also be argued that seeking advice on innovation from private firms is merely logical, they are the actors in the market that see the benefit of efficiency translated into tangible profit. Yet, the trade-off with this is that they could also be the ones most likely to reduce costs at the expense of service quality, which can problematize their role within the public service framework (Hefetz and Warner 2012). Beyond this, there is also the critique that while private-sector consultants and the broader NPM framework, including its spinoffs such as lean, have promoted a degree of institutional efficiency, they are utilizing tools designed by, and for, private-sector organizations that could be viewed as inappropriate, or even antithetical, to public service environments. In his study on the use of management consulting in the UK s public service, Irvine Lapsley provides evidence of huge increases in consulting services spending by the UK government over the past two decades (Lapsley 2009). Public sector organizations would terminate staff to make room for consultants despite the creation of new projects and initiatives allowing them to evade recruitment restrictions that would not appear on the traditional payroll. Lapsley examines three UK government reports drafted between 1994 and 2007 that, while pointing to the possible value of management consultants within the public sector, concluded that their general utilization has resulted in poor value for money, and that they provide a poor replacement for core staff. In addition, Lapsley also notes an interesting phenomenon, that of the symbolic use of management consultants, whereby a reported 40% of public sector departments used management consultants when they were not necessary. The utilization was based on the belief that the consultants could be used as a kind of defensive shield if their project underperformed (Lapsley 2009). Breaking the Consultocracy Chris Blackmore 2

6 Looking at the use of management consulting within the Canadian context, Michael Howlett and Andrea Migone note the increased expenditures on management consulting within Canada during the 2000s (Howlett and Migone 2013). Using government data, they show that the four largest departments in terms of management consulting expenditures (Public Works and Government Services, National Defence, Human Resources and Skills Development, and Public Safety and Emergency Preparedness) had payroll increases of only 9% but had personnel outsourcing cost increases of 100%. In this way, we can see that there are additional issues of transparency with this utilization of consultants. Finally, a significant finding within the spending data indicates that the number and amount of management consulting contracts, despite spiking during the years leading up to and following the global financial crisis, have been declining in recent years (Howlett and Migone 2013). Despite this data, Howlett and Migone maintain that the evidence still indicates that management consultants have maintained a generally fixed character within the service, largely escaping traditional reporting and accountability measures. Moreover, they point to a Public Service Commission study that found that temporary contracts were often used improperly to address longterm resourcing needs (Howlett and Migone 2013). Denis Saint-Martin argues that, as a product of their past two decades of using management consultants, both Canada and the UK have established what he refers to as a consultocracy within their public services, wherein management consultants hold an overly influential role (Lapsley 2009). Arguably, one of the largest concerns with this dependency is the a priori assumption on behalf of government that management consultants are effective agents of change in the public service context. 3

7 3. PROPOSAL The public innovation proposed here is a systemic reimagining of how the federal government approaches NPM. There is much literature arguing that the central blind spot of the NPM approach is that there is an inherent difference between citizen and consumer. It is further argued that privatization of public services can disengage citizens from the democratic connection to government, as well as make government de-prioritize its accounting for future generations, social good, and considerations of equity in favour of market-based solutions (Denhardt and Denhardt 2002; Hefetz and Warner 2013). In his examination of public innovation, Geoff Mulgan argues there are 4 types of horizons that governments can view and act within: short-term, mid-term, long-term, and generational (Mulgan 2008). I would make the argument that in many ways the Government of Canada has not adapted beyond the short-term/firefighting mode following the global financial crisis. Indeed, some argue that the government has not implemented aggressive enough initiatives to move past the crisis in a meaningful way, failing to gain new insights, stagnating, and blindly cutting costs to avoid risk (Williams 2012). Regardless of whether this is due to risk aversion, what needs to take place is a look towards the long-term, with what will be necessary in terms of the human capital and innovative capacity to provide the level of services that Canadians require from their public service, in an effective and sustainable manner. Sanford Borins has written that based on quantitative evidence, the bulk of public innovation is derived from middle management and front-line staff (Borins 2002; Mulgan 2008). In light of the federal service staffing cuts and replacement of normally full-time positions with consulting contracts, long-term innovation is being sacrificed as short-term self-preservation has taken precedence in the mind of many bureaucrats in the public service (May 2013b). Indeed, if as reported by the government, 60% of the rationale for the growth of consulting is increased workload and staff shortages (Howlett and Migone 2013), it would no doubt behoove the government to invest in effective long-term recruitment strategies that reduces the usage of consultants. As Borins indicates, the public service has shown an ability to foster informal leadership and bottom-up innovation; by stemming the unnecessary management consulting levels, and removing the fears of job loss, a space can be created where workers can move beyond survival, to increase their innovative capacities. This allows the bureaucracy, not a private-firm (or collection of private firms), to be responsible for the success of its own public service and will create a stable continuation of service delivery to meet the needs of Canadians into the future. To augment this change, government should increase investment in, and re-focus parts of the Canada School of Public Service (CSPS) towards innovative learning. Currently, the CSPS teaches many courses in directlyapplicable and practical skills, but enhancing the creative potential of public-sector employees could be an important addition to the CSPS mandate. In addition, the increased ability of the CSPS could provide greater savings to the government, removing tuition costs associated with training workers at universities. In addition to this, there could also be the establishment of specific teams or units within the federal government, whose mandate is to innovate the ways government operates (Mulgan 2008). Currently, the federal government administers an Employee Innovation Program that is designed to provide incentives to federal government workers who find efficiencies and savings in service delivery. However, this proposal advises Breaking the Consultocracy Chris Blackmore 4

8 moving beyond that, to an actual institutional unit likely within a central agency such as the Treasury Board Secretariat. This method has been attempted by other governments, for instance, Denmark has established an in-house consultancy to enhance creativity and innovation, working alongside businesses and citizens (Mulgan 2008). This proposal does not purport to upend the culture of NPM, or even to end consulting within the public service. In certain areas, such as IT, consulting can be a necessary short-term tool to maintain effective operations. To address this, what can be done is the implementation of selective criteria for public service contractors, to determine which services are essential for technical purposes. From there, a strategy can in turn be implemented to ensure that the appropriate amount of knowledge-sharing and training is being done with inhouse workers, or if the roles are ones that can be proven to be more efficient when contracted out. What this paper does propose, is the weaning of government off of management consulting dependency and to increase the long-term sustainability and effectiveness of the government s in-house human capital, regardless of the management ideology at the fore. If the statistical trend in the number of contracts is any indication, this move is happening within the federal service and should be continued. Ultimately, for any of these ideas to work, and for any meaningful innovation within the public service to occur at all, there must be an established amount of acceptable risk and spending to actualize these innovations. While obviously, it will be important to minimize unnecessary risk and cost, finding that space needs to be paramount. Moreover, and arguably more important than this space, there must be a trust between politicians and the public servants, that aims to foster innovative ideas, rather than stifle them (Borins 2002). 5

9 4. CONCLUSION The aim of this paper has been to present the current status of the public service s reliance on private consulting firms and to problematize their utilization. While the firms may provide a level of innovation, technical expertise, and short-term cost savings, this comes at the cost of diminished long-term capability of the public service. To help combat this, the proposal put forth is the reduced utilization of management consulting, combined with increasing the innovative capacity of in-house human capital. Beyond mere hiring increases, the government can attempt to maintain a value for money approach by investing in innovative learning through the CSPS and the establishment of a government unit mandated focus solely on innovating government operations, thereby fostering a public service with an innovative bent. Breaking the Consultocracy Chris Blackmore 6

10 5. BIBLIOGRAPHY Borins, Sanford Leadership and Innovation in the Public Sector. Leadership and Organization Development Journal 23 (8): Denhardt, Robert B, and Janet V Denhardt The New Public Service: Serving Rather than Steering. Public Administration Review 60 (6): Domberger, Simon, and Paul Jensen Contracting Out by the Public Sector: Theory, Evidence, and Prospects. Oxford Review of Economic Policy 13 (4): Hefetz, Amir, and Mildred E. Warner Contracting or Public Delivery? The Importance of Service, Market, and Management Characteristics. Journal of Public Administration Research and Theory 22 (2): Howlett, Michael and Andrea Migone The Permanence of Temporary Services: The Reliance of Canadian Federal Departments on Policy and Management Consultants. Canadian Public Administration 56 (3): Lapsley, Irvine New Public Management: The Cruellest Invention of the Human Spirit? Abacus 45 (1): 1-21 May, Kathryn. 2013a. Government vows broad changes to public service in throne speech. Ottawa Citizen. October b. Kevin Page calls for public service renewal from the ground up. Ottawa Citizen. November 7. McCann, Leo Reforming Public Services after the Crash: The Roles of Framing and Hoping. Public Administration 91 (1): 5-16 Mulgan, Geoff Ready or Not? Taking Innovation in the Public Sector Seriously. NESTA. org.uk/library/documents/readyornot.pdf Williams, Russell A The Limits of Policy Analytical Capacity: Canadian Financial Regulatory Reform. International Journal of Public Sector Management 25 (6/7):

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12 Johnson-Shoyama Graduate School of Public Policy University of Regina Campus 3737 Wascana Parkway, Regina, SK Canada S4S 0A2 Phone: Fax: University of Saskatchewan Campus 101 Diefenbaker Place, Saskatoon, SK Canada S7N 5B8 Phone: Fax: Outreach and Training College Avenue Campus Gallery Building, 2nd Floor Regina, SK Canada S4S 0A2 Phone: Fax: