CUTBACK MANAGEMENT

Cutback Management

Cutback Management

Marginal adjustments, simplistic approaches and short-term measures simply won't suffice if we want government to be more efficient and effective rather than just smaller

The choices managers make and how they make them in response to this fiscal stress will shape the governmental landscape in South Carolina for years to come and will significantly impact virtually every aspect of life in our state. This article provides a brief overview of the major tasks, challenges, and issues of cutback management and concludes with suggested “best practices” in cutback management(Singh 1986 ).

The Challenges Of Cutback Management

Deciding what to cut

This is generally the most visible and controversial task. Decisions about what to cut have long-term strategic consequences for the organization and those it serves. There are no easy solutions. As we shall discuss in more detail later, simplistic measures and across-the-board approaches to cutting budgets generally have the effect of punishing those units that are efficient and effective, while not forcing those units that are inefficient or “fat” to make critical changes. Indeed such approaches almost ensure that no program or service area will have the support and resources required to achieve or maintain excellence. Unfortunately, given statutory mandates, bureaucratic rules and regulations, and the political environment in which they function, governmental managers may be severely constrained in deciding what and how to cutback. Within those parameters(Scott 1976 ), decisions about what to cut should be made in a systematic, inclusive manner with extensive involvement by employees and stakeholders. Beyond simply looking at the budget, these decisions should be guided by the organization's strategic plan and informed by performance measurement data.

Maintaining morale and retaining quality people

In his study of downsizing in the private sector, Cameron (1994) found that in one survey of senior managers of downsized companies, 74 percent reported that morale, trust, and productivity suffered after downsizing. He suggests that one explanation for this is that downsizing created “resentment and resistance” (p.191).

Indeed managers are faced with different challenges in maintaining morale and productivity depending on the phase of downsizing they are in (Armstrong and Duffy, 2001). In the early stages, based on news reports about the state of the economy and economic projections, and persistent rumors of possible budget cuts, layoffs, furloughs, etc., the workforce becomes increasingly uncertain about job security(Starbuck Greve Hedberg 1978). Turmoil increases. Organizational momentum is lost and inertia increases as managers and employees are hesitant to make decisions or take actions given an uncertain future. Highly mobile and skilled workers may begin a search for greener pastures. As the possibilities of cutbacks become reality, shock and disbelief set in. The “brain drain” continues as the best and most mobile staff leave the organization. Those who remain may get into a defensive, survival mode, keeping their heads down and avoiding risk. Rebellion and resistance may become more common as changes are announced. Commitment to the organization and its goals decreases as employees grow increasingly concerned about their own survival and security ...