Creating a cost conscious public sector

In this time of cost saving, there are a number of ‘big ticket’ savings taking place such as reorganisations and service changes. While these have their place, to make cost saving a reality also means considering the small things, seeking innovation and getting everyone involved in trimming the fat from every part of the organisation. It sounds easy in theory but we all know it is hard in practice. Unlike the private sector, public sector staff have no personal investment in saving money, nor are there personal consequences of profligacy which, in the private sector, can be seen in reduced profits, less capital for investment, lower salaries and bonuses and falling share prices as well as getting the sack. As a result, the priority needed to ensure money is saved is not the same.
If, however, you can encourage staff to treat public money as if it was their own, to take ownership of the savings initiatives and to be cost conscious in every aspect of their working lives, the potential for savings are huge. So, how do you make it happen?

Involve the team in identifying the ‘little’ savings. When a household is economising, what do they look at? Turning off lights, taking the bus not a taxi, taking a packed lunch instead of buying a sandwich. By giving staff shared responsibility and inviting similar economies, they will begin to see this as their own money and start to act accordingly. The Spending Challenge ^[1] of 2010 did this and looking at the suggestions which came in, many are small: e.g. “stop free tea and coffee”. The process will be helped if you lead by example and are equally economical. The rules are no different for you.

As a manager you need to break down the barriers that make the changes 'difficult’. Be prepared to sanction ‘out of process’ actions, challenge things that do not make common sense and push for infrastructure changes - if they will save money. As a real life example, we worked for a government office where there was one photocopier for the office (which spanned two floors). By buying a small domestic copier from the local retailer and reclaiming via the expenses system, there were significant savings in the hours spent running up and down stairs and waiting in line for the copier. The CapEx process would have taken ten weeks (and lots of management time) and, because of a blanket spending freeze, would have been rejected automatically. 

Mechanisms for enabling savings and getting more savings out of your ideas and those of your team need to be improved across the public sector by providing e.g. on-line forums to share cost reduction ideas. A good idea in your place is quite likely to work elsewhere so share the good news. Appoint someone in the team (not necessarily senior) to be responsible for sharing ideas, looking for collaboration opportunities (bulk buying, price comparisons, standardisation) and for other ideas that might help you save more. Look outside the traditional boundaries of government and see where social enterprise can help too.

It is not an easy task, and there is alot that needs to be done to make this a possibility but the potential for making savings is there to be had.

To speak to a consultant about how we can help your organisation deliver public services, please contact us now.

¹ http://www.hm-treasury.gov.uk/spend_spendingchallenge.htm