As the business sector undergoes transformations in order to adapt to an ever-changing climate, the question remains: How does the public sector measure up? Is the public sector experiencing the same rapid transformation? Sivan Machali, team leader at NGG Engineering Solutions, lays out the facts.
In today’s digital age, the lightning speed of global development compels organizations to constantly adapt and undergo significant transformations in order to survive and keep up with the complex, fast-paced changes.
Knowing how to implement new business models, regulations, digital models and automation—as well as maintaining operational excellence—constitutes only part of the significant changes adopted by businesses. These changes are key in attaining new resources and capabilities that hadn’t been necessary in the past, and which advance the organization’s goals in reaching its target pace and results.
But what about the public sector?
Up until a few years ago, public sector organizations weren’t even players in the game. They lagged behind, reacting to the change slowly and heavy-handedly. But the fast-developing environment and the enormous amount of change make it impossible for organizations in the public sector to continue to sit by idly as the world marches forward. The public, who are these organization’s clients, are exposed to and influenced by these changes, which in turn shape their wants, needs and expectations from the service providers with which they engage.
How does the fast-changing environment affect organizations in the public sector?
Do they experience these changes the same way that the business world experiences them? What are some of the ways organizations react to these changes?
Before we delve into a review of these effects, let’s note the distinction between organizations within the public sector and those within the business sector. This is reflected in several main areas:
- The organization’s purpose and objectives: Organizations in the public sector are designed to provide essential services to the public, and unlike businesses, their activities are not necessarily for profit. Therefore, their success cannot be measured by their financial profit, unlike businesses, for which profits are the primary litmus test of success.
- Efficacy: Public organizations are measured by their success in meeting goals in specific areas, and doing so in a way that is economical and beneficial to the public. A local authority will be considered successful if it can supply residents with a wide array of municipal services (education, sanitation, landscaping, etc.) while maintaining a balanced budget and steering clear of financial deficits. A successful business organization, however, will gauge itself by its bottom line—an increase in profits and a reduction in costs. Another issue to consider in terms of efficiency is that employees in the public sector are also members of the public themselves. This means that a reduction in resources may actually translate into a negative effect on the public. An organization in the public sector must constantly balance its needs to operate in an effective way along with the public’s best interests.
- Competitiveness: Organizations in the public sector operate in a very non-competitive environment compared to businesses. This has direct consequences on their efficiency.
- Criticism: Public administrative organizations operate based on directives from the law because they serve the greater public. Any deviation from the law will result in citizens filing complaints with the bodies that oversee or audit the organization, such as the organization’s internal auditor, the state comptroller or the even the courts. In contrast, businesses have a narrower exposure to the public and can more easily implement changes in their policies and operations to advance their own goals (barring any explicitly illegal activities, of course).
The underlying premise of organizations in the public sector is that they are not for-profit organizations, but rather bodies that serve the best interests of the public (or a particular sector of the public).
As a result of this mindset, a number of norms and work ethics have become prevalent, such as:
- Wasted resources and inflated operating structures
- Failure to remain within budget
- Rigidity and resistance to change
- Inflexibility in organizational structures (such as workers’ committees and wage contracts)
- A service ethic that does not measure up to that of other leading organizations in the market.
These norms engender responses that are very different than those in the business world, making it difficult for the public sector to adopt business model mindsets and incorporate them into their strategic and daily operation. In order to get up to speed, organizations in the public sector require resources and skills that their current employees may not necessarily possess.
When it comes to the public sector, there is one tool that is essential for getting up to speed with the changing times, undergoing transformative adaptations and significantly improving performance: instilling an outlook that prizes operational excellence and directly links the desired outputs to the inputs and the resources managed. This is done by applying an approach of gauging and measurement.
Some of the transformations undergone by organizations were significantly influenced by the way the public sector’s organizations operate.
in that it inspired them to devise and advance models that would make the organizations more effective and improve operations.
Two of these transformations are notable:
- Changing the customers’/citizens’ standards and expectations: In Israel, citizens are customers and temporary users of a variety of services on the market. Every day, they engage with service providers who behave much differently than those working in the public sector. The difference lies in the following areas:
- Means of services available – Businesses have developed direct service platforms in order to minimize frontal/phone interactions between the service provider and the customer.
- How long it takes to address the customer’s request (Service Level Agreement, or SLA) – Using operational models such as back office units, for example, lightens the load on the front line and streamlines activities, cutting down on waiting time.
- Transparency – At any time, the customer can ask about the status of his or her request and where it currently stands.
- “One Stop Shop” – It helps to reduce specialization and introduce greater flexibility into the process of assigning representatives who respond to a variety of customer inquiries.
- Simplifying processes – Constantly devise new ways to streamline processes and engage with the customers in simplified ways.
There is a tremendous gap between the practices listed above and the way the public sector operates. In the public sector, the standard behavior expected from service providers is extremely low in comparison to businesses, which make customer service a priority. Businesses know that they exist in a competitive market and that customer service directly translates into profits, contributing to the overall success of the organization.
- The level of available technology exacerbates stagnation in the public sector: Technology has become the infrastructure for carrying out any organizational need. Adopting technological systems allows organizations to become faster, operate more efficiently and reduce precious resources, like manpower and time. Increased efficiency has an effect on the processes that the customers experience on their end. Breaking knowledge barriers and fostering a culture of transparency boosts our performance, as does sharing information both within and outside the organization.
The organizations in the public sector can no longer ignore the new technologies. They encounter them when various needs arise, such as when engaging with businesses or public bodies that have already adopted automation.
So, how do you tackle this reality? How do organizations in the public sector respond to the breakneck pace of all the changes that lie ahead?
How do they adapt themselves to the same models used by service-providing businesses? Here, too, we’ll outline two main paths:
The first—and most popular—way of catching up to speed is by way of privatization. Privatization allows organizations to change themselves in a fundamental way and shed the burdensome traits so often associated with the public sector. This gives them a serious boost and elevates them to the cutting edge of their field.
Recently, NGG was involved in a project initiated by a government ministry, which had decided to privatize one of its service centers, outsourcing its operations to a specialized company. The sole purpose of this initiative was to facilitate a uniform standard of service commensurate with the service to be expected from service providers. Because they chose to employ an external operating source, the government ministry was exposed to a number of new approaches: today’s operating models currently used in service centers; gauging mechanisms that promote high-level performance over time; advanced information systems for managing shifts; and more.
Not long after these changes were instituted and these models were introduced, improved performance followed. Already by the third week, lag time was slashed, fewer people dropped requests and the length of phone calls were significantly reduced. At the same time, customer satisfaction as well as stakeholder satisfaction increased.
The second—and very popular—way is to digitize the organization’s operations as one of the core existing processes.
It is important to note that organizations within the public sector are often very underdeveloped. The only way to bring an organization like this up to speed in a sufficiently transformative way is to change the mindset within the organization and adapt it to the constraints it currently faces.
Digital accessibility is a standard service that any member of the public expects from his or her service providers. Organizations must make sure that their own infrastructures can support digitization.
For an organization to be successful, it’s not enough to merely respond to these transformations with digitization and better customer service for the public; organizations must keep an eye on the effects this digitization has on all aspects of the organization—how and if they alter job definitions, the effect on work interfaces for various bodies within the organization (for example, information systems), measurement and auditing methods, routines, other related processes and more.
Another influence that is extremely relevant for organizations that engage in public service is the way digitization leads to a reduction in resources needed. Oftentimes, organizations are met with a barrier that needs to be taken down, or a particular job that needs to be redefined after the organization has undergone changes to its work processes. What the organization must do is assign the particular change to an already extant service provider within the organization and ensure that they achieve whatever standard is expected by the population they serve. That way, the organization can avoid unanticipated challenges during the planning process.
After working with a range of organizations in the public sector, NGG developed a multi-level model that handles all aspects of organizational readiness within an environment rife with disruptions. One of the main models is digital transformation. This model includes a sub-model that examines the organization’s digital readiness.
After mapping out the organization and analyzing it according to the principles we mentioned, we are left with an organizational map that allows the organization to accurately assess their own readiness toward digital transformation. Using this map, the organization can formulate concrete plans of action and craft a road map.
In conclusion, in an environment of fast-paced development and change, the public sector can no longer afford to sit idly by and resist the winds of change. On the one hand, organizations cannot quickly adapt nor initiate organizational changes when they are weighed down by things like bureaucracy, rigidity, workers’ committees and more. On the other hand, they also cannot ignore the public’s expectations for quality customer service nor the availability of advanced technology (which is also familiar to the public). These factors foster a constant need to react and adapt to change.
Undergoing privatization, outsourcing and digitizing an organization that has a secure, supportive infrastructure is a winning way to achieve operational excellence that draws the line between desired outputs and the resources needed to create them. All of these factors allow organizations in the public sector to jumpstart their path toward change, improve their functionality in a way that is sustainable over time and is proven to improve performance. The result is a win-win for the organization and for the public, bringing about a truly transformative and efficient age for us all.