Background
Public sector organisations adopt change to ensure that service delivery to their clients is done at a reduced cost. Zhou and Tse (2006) assert that profit-making organisations, which are reluctant to embrace change, risk losing their competitive edge. Hence, they fail to realise the needs of their clients. In the case of SCC (Suffolk County Council), clients who are also residents of SCC depend on the county for the provision of public goods and services.
In ensuring that SCC continues to provide essential services to its clients, a reduction of operational costs is compulsory. This move implies that the environmental situation that compels the council to adopt the proposed change already exists. Change management theory prescribes different ways of leading during change together with different approaches of successful implementation of change. Possible alternatives that can be utilised at SCC include transformational change, transactional change, and Atkinson’s flexible firm theory (Senior & Swailes 2010). However, different theories may apply at the same time since the change is often too complex to implement successfully through one theory (Burnes 2009).
Application of more than one theory to drive organisational change is particularly important where change elements of one theory are necessary for preparing avenues for implementing such change facets. This goal is achieved through other sets of organisational change management theories (Bruch & Gerber 2005).
Implementation of transformational change occurs radically instead of following incremental phases. Under situations that compel organisations to implement transformational change such as environmental pressures, for instance the need to cut down costs, ability and willingness for all change agents to work within an environment that is characterised by high complexity becomes unavoidable (Burke 2002). Bass and Steidlmeier (2002, p.211) reckon, ‘transformational change requires a shift in mindset, behaviour, and ways of working together.’ In this context, transformational change only occurs through successful implementation of effective approaches for cultural change together with change management.
Transformational leaders are influential to their followers. They consistently seek new ways of achieving more things, which they would actually not do ordinarily, despite the fact that they can benefit them or their followers (MacGregor & Dunn 2001). Thus, leaders need to articulate personal reasons for change as organisational motivation. Although some transformational changes such as salary cuts and implementation of redundant programmes may lead to disadvantaging followers in the short-term, they may benefit them in the long-term. Transformational change is deployed in organisations that require sudden turn around, transition, or even a spark to rejuvenate. The leadership style has the advantage of setting a vision and inspirations that are necessary for the followers to pursue to drive organisational success (Polychroniou 2009).
Transactional change focuses on the alteration of systems, managerial and organisational structures, and organisational climate to induce performance. In contrast, determinants of success for a transformational change include changes in the organisation in terms of its vision, people, services, and processes for delivering services (Hautala 2006). For this goal to be realised, transactional change may be necessary for new structures and system to permit the alteration of organisational processes. This strategy underlines the need for change implementation through several theories.
Atkinson’s flexible firm theory focuses on segregating employees into two groups, namely the peripheral and the core group. The core group houses all employees who are highly required by an organisation to achieve its functionality (Fagan, Hegewisch & Pillinger 2006). Thus, it cannot run in their absence. Therefore, they cannot be rendered redundant due to overdependence of an organisation on their knowledge, skill base, and experience in running its affairs. The peripheral group constitutes employees who are non-vital to an organisation’s functionality (Burnes 2009). Such employees are either adequate in supply or in excess of supply in the market, are required during certain times, such as peak times, or are required to execute certain organisational tasks before leaving.
Problems
Possible alternatives for ensuring that SCC eliminates budget deficit presents some problems. Mrs. Hill’s is aware that reducing managerial staff members’ pay by 30 percent only produces savings of £55million. Thus, cutting expenditure by reducing the pay only eliminates about 35 percent of the deficit. The problem is then how to eliminate the rest of 65% deficit. One possible solution is running a redundancy programme so that all peripheral employees, as suggested by Atkinson’s flexible firm theory, are eliminated to leave only the core employees. However, this plan is also problematic since the programme will require the council to pay the vacating people their benefits. Mrs. Hill’s says that the council cannot afford using taxpayers’ money to pay people to leave.
From a narrow perspective, reducing managerial staff members’ pay by 30 percent and running redundancy programme can help lower the SCC’s expenditure. However, from a broader perspective, this strategy might also introduce other problems such as low motivation and poor job satisfaction. These problems might cancel the effect of the redundancy programme and reduction of workers’ pay by reducing their performance so that quality and speedy service delivery to the clients becomes a challenge.
Hence, SCC must derive solutions to the problems of maintaining morale and job satisfaction levels among its employees upon the implementation of a redundancy programme or cutting staff members’ pay. How to accomplish this goal remains problematic since people have different sources of wok motivation.
People work to satisfy their needs, which keep on evolving. Thus, when one need is satisfied, it stops being a source of drive for working. In this end, it becomes important for SSC to identify the needs that compel its people to report to work every day. The Maslow’s theory on the hierarchy of needs is an important starting point. Maslow asserts that human needs, which force them to work, can be grouped into five categories, namely ‘physical needs, safety needs, social needs, esteem needs, and self-actualisation’ (Lussier & Achua 2004, p109.).
The first three needs have a monetary reward in the form of salaries and wages attached to them. Persons who belong to these levels can be motivated through remuneration schemes. At SCC, reducing salaries will translate into low work motivation and poor job satisfaction. Taylor’s scientific management model supports this position by stating that people are motivated by money (Lussier & Achua 2004).
Taylor’s theory suggests that competitive salaries and incentive schemes such as ASPIRE can form an important starting point towards the creation and maintaining of a motivated workforce. Crook (2011) reveals that salaries and wages are not always a source of motivation, especially for people who seek recognition and sense of organisational ownership. Thus, for such groups of SCC managers, if the fire (the compelling reason) goes out, all other factors such as salaries and wages are redundant so that SCC can deliver on its new strategic direction by reducing cost without impairing the performance of employees through cutting salaries and wages that are paid to managers.
The Herzberg’s two-factor theory suggests that employees have two groups of needs in an organisation. These are hygiene (excellent working environment and reasonable salaries) and motivators. Motivators include factors such as ‘recognition, responsibility, achievement, and opportunities for progression’ (Huselid 2007, p. 639). Researchers have confirmed positive correlation between aspects of this theory and job satisfaction. For instance, Huselid (2007) found that satisfaction with salaries and wages influences employee performance and commitment in work. Satisfaction emanates from the capacity of wages and salaries to help the low ranking employees meet their basic needs.
Among the high-ranking employees, delegation of responsibilities, recognition, provision of opportunities for growth, and increment of higher achievements in one’s profession act as important sources of job satisfaction (Huselid 2007). Consequently, SCC must resolve the problems of ensuring that its strategies of cutting costs do not influence negatively factors that correlate with employee performance as suggested by Herzberg’s two-factor theory, Maslow’s theory, and The Taylor’s theory.
Solutions
For Suffolk County Council to have the capacity to deliver public goods and services, it needs to operate at low costs so that it can serve many clients while operating within budgetary constraints. However, this case is not the current situation. The council has large numbers of staff people and large expenditure. Mrs. Hill’s, the County council’s CEO, anticipates that this strategy will make the council have a deficit of £153 in its budget. With its new strategic direction, the council is still evaluating the most appropriate change that will reduce costs. All staff members appreciate that a change is inevitable. However, the interrogative on the most appropriate change that will eliminate the gap of £153 million in the council’s budget without affecting the council’s way of operation remains unanswered.
Several solutions can be effective for different extents. The council can identify the cause of various problems that it attempts to solve through various programmes in an effort to solve them permanently so that they do not create yearly recurrent costs. The council can build the necessary social capital so that communities can stop relying on it in the resolution of various problems. However, in some situations, some services cannot be switched off completely. In such situations, collaboration with all stakeholders for the SCC has the capacity to deliver such services at lower costs, especially when all wastes in service delivery are eliminated. All these approaches call for holistic change through transformational change as opposed to transactional change since structural changes may not produce the desired change.
Transformational change finds applicability within organisations that are characterised by reduced morale by workers. Sakiru and D’silva (2013, p.36) confirm, ‘Transformational leaders stand out from other leaders in their ability to quickly assess a company’s current situation and formulate a vision for growth or improvement.’ They also possess the ability to ensure adequate and effective communication of success strategies and vision to all organisational stakeholders. This advantage can aid SCC to handle challenging external and internal situations. Transformational change will enable it see the bigger picture on the future position of the company in the context of adoption of certain changes. Indeed, organisations that operate under hard financial, environmental, and even political conditions require the inputs of transformational leaders who inspire followers (Prati 2003).
Through integration of people in the change process, transformational change at SSC provides a room for communicating to the followers that radical change is meant for their long-term benefit. Since people prefer an organisation that delivers utmost good in the long-term, such understanding may help reduce resistance to change. Consequently altering processes, people’s behaviours, mindsets, and their understanding of the purpose of the change are the key pillars for enhancing change at SCC. Changing services implies the need for reducing wastes in service delivery through deployment of lean thinking pedagogy. While delivering services in the public sector, costs increase with an increase in service demand (Marsh & McConnell 2010).
This reality evidences the significance of approaches for resolving the problems that are experienced by SCC through switching off some of the council’s service demands. By reducing service demand, the associated costs of delivering services reduce. Focusing SCC’s effort on resolving permanently certain problems that require yearly allocation of funds can help in the elimination of extra 65% deficit in the budget without running an expensive redundancy programme.
SCC has 175 managers who appreciate the need for change that reduces the cost of the council. This observation constitutes a strength that it can utilise to drive change that can be implemented through cutting 30% of salaries that are paid to managers in an effort to reduce the budget deficit by 35%. This solution only works if all managers are in the level of self-actualisation and esteem in Maslow’s hierarchy of needs so that salary satisfaction is not a source of motivation. This suggests that SCC should not consider pay cuts for employees in the lower hierarchy of needs in the Maslow’s motivational model in a bid to prevent negative impairment of their performance.
Conclusions
SCC struggles with three main alternatives that may theoretically help in achieving the concerns of SSC’s new strategic direction, which is aimed at reducing the cost of running the county council. The first alternative is introducing employee redundancy programme while the second one entails conducting pay cuts. The third alternative involves switching off some services. Each of the solutions has advantages and disadvantages. Thus, it is suggested in the paper that SCC has to consider various theories for effective management of change together with theories that develop factors that influence employee performance. Any change must be adopted to reduce costs while ensuring maintained employee work morale and job satisfaction.
Recommendations
SCC needs to consider cutting the salaries of managers by 30% to trim down the budget arrears by 35 %. It should neglect considering some employees redundant at least in the short run. This plan will eliminate the possibilities of anxiety among the remaining employees. It ensures that their motivation and job satisfaction remain unaffected by the change. The recommendation relies on Maslow and Herzberg’s two-factor theories. Maslow’s theory maintains that people who seek to satisfy their basic needs are motivated by salaries and wage satisfaction, as opposed to those who seek esteem needs and self-actualisation. Cutting managers’ salaries may not affect their motivation because they are all aware of the need and the purpose of the new strategic direction of the SCC.
The strategy of switching off some services and/or reducing wastes implies that SCC will need to downsize its human resource in the future due to the reduction of services that are delivered to clients. Therefore, SCC needs to consider implementing voluntary redundancy programme slowly as people adapt to the change in the end. Change, as a complex process, requires technical knowhow and expertise to implement. Thus, SCC needs to employ change experts. This effort calls for the utilisation of Atkinson’s flexible firm theory since such needs comprise the peripheral group of SCC employees. However, such personnel must constitute transformational leaders.
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