Strategic Management Techniques in the Public Sector - Essay Example

343300 - Strategic Management Strategic Management Techniques in the Public Sector What is strategic management? Strategic management, on the other hand, is the larger, more holistic process that encompasses the planning, implementation, evaluation, and updating of a strategic agenda aimed at maintaining the most viable fit between an organization and its external environment and moving into the future in a deliberate, purposeful manner. While strategic planning is the “cornerstone” of the strategic management process,(Vinzant and Vinzant, 1996) strategic management is the overarching process of managing large scale, sometimes very fundamental change in order to assure a high level of performance in the long run (Poister, 2005). The scope for strategic management in the public sector Stewart (2004) suggested that the concept of strategic management can generate genuine traction in the public sector if it is used as a means of reconstructing the political-bureaucratic relationship in ways which reflect the realities of developments in public management, while acknowledging the distinctive role and potential of public agencies. Three kinds of strategic thinking are significant (1) policy strategy; (2) organisational strategy; and (3) managerial strategy. (1) Policy strategy Policy strategy is what government wants to change — its agenda, and the ways in which the agency will move to help it achieve this agenda. There is no clear analogue to policy strategy in the private sector, because companies sell goods and services, they do not change authoritative relations in the societies in which they work. Policy strategy is not the same as the ‘outcomes’ agencies put forward in their portfolio budget statements, because these are ‘backcast’ from legislated mandates, and are too broad and bland to be used for true strategic purposes. Rather, policy strategy refers to the ongoing relationships Ministers and agencies use in developing and deploying policy. It is both an opportunity for departments, and a discipline for Ministers (Stewart, 2004). (2) Organisational strategy Organisational strategy is more akin to strategy in the private sector. It is what the organization does to meet the needs and expectations of its stakeholders, what it does to underpin its future in a world in which competitive pressures are never far away. Organisational strategy must derive from policy strategy, because this is an obvious way of meeting ministerial expectations, but it also takes in the values-based, cultural and historical qualities of the agency itself. As This area of strategy also informs the relationship with Ministers, not because Ministers become involved directly in the way departments are run, but because Ministers have a legitimate interest in the corporate health and sustainability of the agencies that operate in their name (Stewart, 2004). (3) Managerial strategy The technical activities of budget-making and reporting, the vast array of operational decisionmaking and the deployment of resources for achieving agreed objectives are activities that are usually held to be unequivocally ‘managerial’ in the sense that they appear to be removed from the strategic realms already discussed. Here, too, however, values-based choices are being made, and there is merit in making them as explicit as possible. The pursuit of greater efficiency is unarguably important, but it cannot be the sole raison d’etre of management in a public organisation. Managing for other, less measurable values, can take place only when the political dimensions of strategy are acknowledged (Stewart, 2004). Case Study One: Department of Transportations (DOTs) The need for effective strategic planning and management Effective strategic management practices are of critical importance to state departments of transportation (DOTs) because they have been operating in an era of unprecedented change over the past decade (NAPA, 1995; and Lockwood, 1998, Poister, 2005). The external “drivers” of this change include the following: Increased demands for accountability from the public, elected officials, and the media Growing recognition of the need to find multimodal solutions to transportation problems Mandates for DOTs to support economic development and environmental stewardship goals as well as transportation outcomes Pressure to become more customer oriented in the way they do business Pressure to produce more, in some cases with fewer resources or smaller work forces The “graying of the workforce,” along with new challenges in attracting and retaining qualified personnel Dramatic advances in available technologies Significant changes in the intergovernmental system regarding federal, state, regional, and local responsibilities for transportation planning and programming Strategic Management Practices What approaches have state DOTs found to be effective for implementing strategic initiatives and achieving strategic goals and objectives? Some DOTs that have been involved in strategic planning for a longer time have developed at this point, or are currently developing, comprehensive approaches to strategic management. This entails linking a department’s strategic planning process with its Driving Decisions through Action Plans and Business Plans While some departments develop action plans to implement their strategic initiatives as separate projects, DOTs increasingly are using ongoing business planning, program planning, or work planning to drive their strategic agendas into the management and decision-making processes of the organization. The business planning model requires, or at least encourages, districts, functional divisions, and other organizational units to address department-wide strategic goals and objectives on an ongoing basis through their shorter term business plans, operational plans, or work programs (Poister, 2005). In response to the question “Does your department require district or regional offices, and/or functional divisions and units, to develop annual or multiyear business plans or operating plans that directly contribute to accomplishing your overall strategic goals and objectives,” 17 of the 24 state DOTs and all six Canadian provincial DOTs responding to the survey answered in the affirmative. Furthermore, in all but one of these departments, the business plans developed by the organizational units must be approved by top management in order to assure that they are directly aligned with department-wide strategic plans. The use of business plans to drive department-level strategic plans down into the organization is seen as critical for encouraging a focus on the department’s overall strategic agenda, imposing discipline on operating-level decision making, enforcing strategic priorities throughout the organization, and identifying and emphasizing action items designed to achieve strategic objectives. Many of the survey respondents made comments to the effect that without the use of business plans in this way, strategic goals and objectives simply would not be achieved (Poister, 2005). For example, the Wisconsin DOT (WisDOT) uses both action plans and business plans to drive the six emphasis areas identified in its strategic plan down into the department. The action plans, developed every six years, call for department-wide initiatives that cut across organizational lines to advance the overall emphasis areas. Action teams, led by high-level sponsors, are created for each of the emphasis areas and held responsible for defining strategic objectives and then developing and implementing specific initiatives designed to achieve those objectives (Poister, 2005). In addition to these crosscutting action plans, WisDOT’s functional divisions develop their own business plans, which focus on strategic initiatives designed to support the Department’s strategic emphasis areas as well as plan their more routine, ongoing work. In these biennial business plans the divisions define in greater detail what they will be doing over the following two years to contribute to each of WisDOT’s emphasis areas. Progress on selected business plan items is reported to the top management team twice per year, while more detailed status reports on progress in implementing business plan items that support the overall strategic plan are updated and made accessible to departmental managers and employees on an ongoing basis (Poister, 2005). Case Study Two: UWV organization in the Netherlands It is found that many organizations in the public sector increasingly use the organization development (OD) as change initiatives. Many public organizations need change because they are in urgent needs to change policies, legislation, technology, top management, or to reorganize their organizational structures such as joint ventures with private organizations, and breaking up of their agencies. Therefore, many organizations in the public sector require a change and it is necessary for them to initiate change. Such change requires the public organizations to make decisions on changes to be made and large scale strategic changes so that they can regain congruence between objectives of their organizations and environment. In the public sector, organizations need to adopt a new strategic-management-inspired approach which is expected to generate change in a top-down fashion. Ferlie et al. (1996: 86) described the management of change in the public sector as ‘top-down radical shock strategies and the exercise of political clout’. This type of change can fit with the strategic management approach in which top-down approach is used to implement the strategic management process after the strategies are formulated (Sminia et al, 2006). In Netherlands, the UWV organization provided a research opportunity. With the opportunity, the research can study on the process of planned change in the public sector. UWV is an administrative organization which administers the Dutch collective employee benefit regulations. This organization was established or founded on 1 January 2002. Previous seven separate administrative organizations were merged into one which emerges as UWV. After the merger activity, the VizleR project was initiated and launched in March 2002 (VizIeR stands for Voorzieningen Inkoop Reı¨ntegratie, or provisions purchasing reintegration) (Sminia et al, 2006). The primary aim of the project is to focus on the working area of disablement. In addition the project deals with specifically the purchases of services from external suppliers. The project helps disable workers who are long-term ill and partly disabled to reintegrate into a working situation. The project provides these services to those workers, employers and others who are badly in need of them. The major objective of the VizleR project is to establish a new organizational unit within UWV. It is expected that the project unit is run by September 2003. The orgzanizational unit is expected to handle 90 per cent of the applications within six weeks with its newly designed work with clear procedures and transparency (Sminia et al, 2006). Here, the project raises the question of introducing OD alongside the strategic management approach to make changes in the public sector. The UWV reveals that it will be feasible to do so. However the role of top management plays a crucial and vital role in this change process. In the beginning of the ViZieR project, it is found that the OD logic had become part of the strategic process. During the first two phases, the project focuses script and the participants’ role script (Sminia et al, 2006). With regard to the power of decision script, however, the UWV practice of this being a top management prerogative was being challenged throughout the project; but the top team apparently felt obliged to hold on to the privilege. This was, of course, amply demonstrated by their intervention, which changed the initial project design by putting the ‘project strand’ first and the ‘change strand’ second. This did not kill off the initial enthusiasm of the UWV workforce right away, judging from the presence of the OD logic in events during the subsequent design phase. However, OD references with regard to the project focus script and the participants’ role scripts more or less disappeared from the scene during the remainder of the project, indicating that the strategic management logic had prevailed (Sminia et al, 2006). It is observed that the simultaneous approach to strategic change is in practice not easily achieved. From the UWV experience, two observations can be made. First, the role of OD can be found specifically in a simultaneous approach to strategic change process. The plan utilized the change standard’s results as inputs in the project strand of the project VizeR. In the beginning, this set-up performed well. It produces the results in the specifications for an initial design of the new work process, as well as it helped to employment of new staff in the subsequent subprojects (Sminia et al, 2006). From the top management of UWV point of view, the preference was given to the project strand and the realization of the associated goals. However the project was designed according to the simultaneous approach to strategic change and the top team was working according to a contingent approach. It tried to time and sequence the approach to the course and the requirements of the change process perceived by the top team. With judgment from the UWV employees’ responses, there are effects of introducing OD into an organization but not seeing it through during the whole project will have impact on the course and outcome (Beer, 2000; Beer and Noria, 2000b; and Kanter, 1983). In the beginning, commitment, trust and confidence were built up which were oozed away after the intervention of UWV management and started working in a top-down fashion and introducing skepticism in regard to bottom-up change (Sminia et al, 2006). Second, it is found that the role of top management is vital and esseintial in creating the possibility for the employees to participate for the course and the outcome of the change project. In the beginning there were three large-scale conferences held. This resulted in enhancing the level of cooperation among team members and stakeholders. Surveys conducted after the conferences revealed that the conferences have contributed to the increases in enthusiasm and commitment to the project (Sminia et al, 2006). References: Vinzant, D.H.; Vinzant, J. Strategy and Organizational Capacity: Finding a Fit Public Productivity & Management Review 1996, 20:2, 139–57. Poister, Theodore H. Strategic Planning and Management in State Departments of Transportation. Intl Journal of Public Administration, 28: 1035–1056, 2005 National Academy of Public Administration. State Departments of Transportation: Strategies for Change, NCHRP Report 371. Transportation Research Board: Washington, DC, 1995. Lockwood, S.C. The Changing State DOT, American Association of State Highways and Transportation Officials: Washington, DC, 1998. Stewart, Jenny. The meaning of strategy in the public sector. Australian Journal of Public Administration. 63(4):16–21, December 2004 Sminia, Harry, and Nistelrooij, Antonie Van. 2006. Strategic Management and Organization Development: Planned Change in a Public Sector Organization Journal of Change Management Vol. 6, No. 1, 99–113, March 2006 Read More