A clue to keep employees happier during budget-cut times

I recently attended the annual meeting of the Academy of Management, the association of professors (mostly at business schools) who study organizations. I heard an interesting paper which, although the data comes from the UK national government, is quite relevant to people thinking about how US federal employees will deal with the looming tight budget environment in government.

The authors – Tina Kiefer and Jean Hartley of the Warwick Business School, Neal Conway of Birkbeck College, and Rob Briner of the University of Bath –conducted a survey of various elements of job satisfaction, employee engagement, and how oriented the employee is to providing good service. By coincidence, in the middle of conducting the survey the new British Conservative government announced budget cuts averaging 25 percent over four years. (Remember that in Britain’s parliamentary government, when the Prime Minister announces a policy like this, it is pretty much automatically passed by the majority in Parliament, which is always the same political party or coalition as the Prime Minister.) This coincidence about the announcement allowed them to compare the attitudes of respondents who answered the survey before the budget cut announcements and afterwards, which is neat. With the announcement, they decided also to conduct a follow-up survey 6 months later asking many of the same questions, allowing some comparisons after the budget cut announcements had sunk in and begun to be implemented.

Some of the findings in the study will hardly come as a surprise to federal employees or managers, but one particular revelation might. And it has practical implications for managing in tough budget times.

The employees who answered the survey after the government announcement showed lower job satisfaction than those answering before the announcement (though there were no differences in engagement or service delivery attitudes.)

What was especially interesting in the paper, though, was another set of questions that asked respondents, both in the original survey and six months later, about the presence at their workplace of various kinds of change initiatives. In categorizing the 25-odd change initiatives they asked about, the authors distinguish between efficiency-related changes (which they define as those “with a main focus on reducing costs or restructuring processes”) and innovation-related changes (which they define as those “introducing new practices or processes”). They then compared the change in the presence of these change initiatives over the six-month period with changes in employee attitudes over the same time. They found that when efficiency-type changes went up over the period, employee job satisfaction, employee engagement and service delivery attitudes all declined. A closer look suggests that this was not so surprising, because most of the reported changes characterized as “efficiency” changes involved increases in voluntary or compulsory staff cutbacks and service delivery cutbacks.

However, the authors also found that increases in innovation-related changes were accompanied by increases over the six-month period in job satisfaction and employee engagement (though not in service delivery attitudes). This despite the general negative climate the budget cuts created.

This is a fascinating research finding and suggests a path forward for federal managers during a period of tight budgets. I would add that the innovation-related changes government organizations can carry out may also decrease costs and thus improve efficiency (bang for the budgetary buck) – indeed, one criticism I have of the paper is the use of the phrase “efficiency changes” to describe what in fact is just simple cost cutting without any real changes at all, such as getting rid of staff or cutting back services. The real distinction should not be between “efficiency” and “innovation” but between changes that actually seek to help government work better and cost less on the one hand, and the simple meat cleaver of staff or service cutbacks on the other.