The Civil Service "Do More With Less" Dilemma

May 2 , 2024
By Scott Blackburn , Andrew Pickergill and Jorg Schubert

As governments strive to meet the complex demands of the 21st century, adopting innovative management strategies, technological advancements, and a collaborative approach with the private sector will be crucial. In a think-piece edited here to a short form, Scott Blackburn, a senior partner of McKinsey & Company (Washington DC), Andrew Pickergill, a senior partner (Toronto), and Jorg Schubert, a partner (Dubai), have argued for a renewed focus on customer service and productivity to enhance the ability of public sector agencies to serve the public more effectively, cultivating a more resilient and prosperous society.

Governments worldwide are at a crossroads, facing increasing pressure to enhance public trust and improve service delivery despite a complex array of socio-economic challenges. In response, many are turning to innovative management strategies and technological advancements to transform their operations and fulfil their mission of serving the public more effectively.

Public sector agencies play a vital role in societal well-being, driving scientific innovation and economic growth and providing security and hope during times of crisis. The professionalism and dedication of civil servants are critical in these efforts, touching nearly every aspect of daily life and significantly impacting the quality and longevity of citizens' lives, their livelihoods, and community resilience.

However, the challenges facing these committed professionals are mounting.

Declining trust in government, demands for fiscal efficiency, rapid technological changes, political polarisation, and geopolitical tensions are just some of the hurdles that complicate the delivery of public services. The urgent need for sustainable and inclusive growth places further strain on these agencies as they strive to meet the rising public expectations for better customer service and more timely and budget-conscious technology and infrastructure projects.

Despite these obstacles, some public sector organisations are making meaningful strides. By adopting new technologies and management approaches and encouraging effective collaborations with the private sector, these agencies are beginning to deliver services more efficiently and effectively. For instance, improving customer service has proven to boost public trust immensely; in the United States, it has been found that every percentage-point increase in customer satisfaction with a federal agency boosts trust in that agency by as much as two percentage points.

There is also a substantial opportunity for productivity improvement within government operations. Estimates suggest that there could be a productivity improvement opportunity ranging from 725 billion dollars to 765 billion dollars in the U.S. government alone, which could translate to roughly 2,000 dollars for every American citizen. If governments worldwide were to enhance their productivity to match that of their most improved peers, global productivity could potentially increase by up to 3.5 trillion dollars.

Innovation is another area where governments can make a profound impact. They can catalyse sustainable economic growth by adopting an investor mindset and partnering with the private sector. For example, the U.S. government's collaboration with private payers to create markets like Medicare Advantage and initiatives like the Inflation Reduction Act (IRA) help de-risk investments in social goods.

Despite some progress in service delivery, many government services still fall short of public expectations. In the United States, Americans rank state and federal government services below those provided by airlines, banks, and car insurers. Satisfied government service users are nine times more likely than others to trust the providing agency and believe it is achieving its mission. Conversely, dissatisfied users are twice as likely to seek help multiple times, increasing costs and time for agencies.

The private sector often sets the benchmark for customer service, and public agencies could learn much from this sector. Focusing on the customer journey could enhance service delivery considerably. Establishing a link to value, such as reducing wait times or improving access, and identifying opportunities to reimagine the user journey are essential steps in this process. Leveraging technology can be a game changer, although governments have historically underinvested in this area. Research conducted with Oxford Global Projects indicates that only one in 200 IT projects in the public sector deliver their intended benefits on time and within budget.

Yet, measuring productivity in the public sector can be challenging since traditional metrics of inputs and outputs used in the private sector do not always apply. Nonetheless, capturing cost efficiency, quality outcomes, and service throughput can spur productivity improvements. Apart from policymaking, other governmental functions like finance, purchasing, technology, and talent management could be leveraged more effectively to pursue efficiency and improve outcomes.

The COVID-19 pandemic demonstrated the potential for governments to enhance their productivity, with public expenditures reaching historic highs as a share of GDP during the crisis. This has created an environment ripe for productivity improvements across government departments and agencies. Our recent research uncovered seven productivity levers, ranging from digital transformation and organisational optimisation to innovative sourcing and managing customer demand through self-service options.

However, transformations in government productivity often require a comprehensive approach, and our experience indicates that only a small fraction of public sector transformations meet their objectives. To capture new opportunities, governments may need to break free from institutional habits that limit transparency and favour incrementalism. Successful transformations depend on setting bold goals, mobilising the best talent to drive initiatives, fostering smart risk-taking, and investing in the right tools and systems.

Sustainable and inclusive economic growth provides the resources needed to address today's pressing challenges. Governments are crucial in creating environments that support private sector success and equitable competition. Recent legislative actions such as the CHIPS and Science Act in the United States and the European Chips Act in the European Union reflect a renewed focus on industrial strategy, supporting key industries to secure competitive advantages and manage transitions like that of energy more effectively.

To successfully navigate this evolving terrain, government leaders might benefit from adopting more of an investor mindset, which can help balance competitive conditions for businesses and foster environments conducive to growth and innovation. Direct consultations with stakeholders should inform this approach to effectively guide decision-making and investment strategies. The skills required of modern civil servants are expanding.

Beyond traditional policy design, today’s government workers need proficiency in managing large organisations and leading complex transformational programs, often underpinned by technology. Given the ongoing public sector talent shortage and the digital skills gap, governments must adapt their workforce strategies to meet these demands. This involves refreshing the employee value proposition, implementing strategic workforce plans, and promoting a more inclusive and diverse organisational culture.

PUBLISHED ON May 02,2024 [ VOL 25 , NO 1253]

By Scott Blackburn ( a senior partner of McKinsey & Company (Washington DC) ) , Andrew Pickergill ( a senior partner (Toronto) ) and Jorg Schubert ( a partner of McKinsey & Company in (Dubai) )

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