Thursday, February 26, 2009

Cutback Planning

There are a great many companies, public agencies and not-for-profit organizations facing severe revenue shortfalls.  They  have to shrink their operations, find more efficient ways of doing what they do,  or identify new revenue sources.  Too often, their leaders fail to realize that they can use a consensus building approach -- one that emphasizes engagement, transparency, and accountability -- to accomplish these goals. 

A consensus building approach (1) involves all employees, managers and even clients in determining which objectives and responsibilities are most important; (2) uses performance metrics to determine what's working well and what's not; (3) clarifies the decisions that management must make and helps to justify its actions; (4) capitalizes on current challenges by figuring out how to expand and not just contract; and (5) emphasizes organizational learning. 

Engagement:  Cutbacks are demoralizing.  Employees who keep their jobs, are upset when co-workers are let go. If even you survive a round of budget cuts, you worry that you'll be next.  So, involving everyone in reviewing priorities, identifying critical assets and specifying cuts that will be least damaging, maintains solidarity and increases the legitimacy of the tough decisions that must be made. It helps to maintain morale after cuts have been made.  It's a lot easier to feel OK about keeping your job (while a friend loses his) if everyone has had a hand in evaluating the available options.  Management will still make the final decisions, but consulting widely is almost always worth the effort.  I'm not talking about creating a web site and asking for anonymous suggestions.  Rather, each work unit should be asked to meet, discuss and write down its suggestions: which activities (not people) ought to be retained or even expanded (as a way of generating new revenues), and which are less important.  Everyone should be required to list both, and explain why they take the position that they do. 

Transparency: When cutbacks have to be made, there's a tendency for management to circle the wagons. Lots of  "high level" meetings take place behind close doors and paranoia increases.  The consensus building approach, on the other hand,  calls for more transparency, more sharing of information, and most of all -- and an explicit enumeration of the performance metrics that will be used to evaluate performance.  If there is general agreement on what to measure and how to benchmark performance, final decisions about what and who to keep will seem much less arbitrary.  Transparency makes it easier to maintain morale and to keep working through difficult transitions. 

Accountability:  Many organizations are quick to allocate the same percentage cut across all units.  "Each division must take a 10% cut now, in order for us to live within the new quarterly (or annual) budget limits." But this minimizes the opportunity that a crisis creates to pursue reforms that may have been blocked in the past. Once everyone participates in defining the activities that ought to be retained and which can be cut, the next step should not be to spread the pain evenly.  Rather, incentives ought to be offered to any individual or group that can come up with a more efficient way of achieving a priority objective, or finding a new revenue stream. Each participant and each unit should be held accountable for doing all it can to reduce overall costs and increase revenues. A consensus building approach seeks to encourage joint problem solving, and disregards defensive arguments for maintaining the status quo.  

A consensus building approach assumes that mangers are not merely responsible for making tough choices.  Rather, CBA expects managers to engage everyone in thinking through priorities, imagining innovative ways of doing more with less or building on vital assets. CBA is as concerned about the attitudes and productivity of the workers who remain after cuts have been made as it is about making cuts. It is also as focused on revenue enhancement as it is on cost reduction.  

At the end of every round of cutbacks, organizations should review what they can learn from their experience, however painful. What might they do differently next time and why?  In light of what happened, can they identify organizational changes that will make engagement, transparency and accountability easier to achieve the next time around?


Tuesday, February 17, 2009

Adaptive Management

Most environmental advocates and planning professionals know that every effort to manage natural resources or deal with threats to public health and environmental sustainability ought to proceed on a step-by-step basis.  The systems involved are so complex that most efforts to "solve problems" are likely to have unanticipated results. Policy-makers act like they "understand the problem fully" and "know the best solution" when they pass legislation or adopt new regulations. Those of us most knowledgeable about the human-ecological systems involved, however,  realize that the complexity of these systems makes it impossible to anticipate what's going to happen with much certainly. There are just too many factors and too many interactions we don't understand.  So, an adaptive management approach is what is called for.  That is: take one modest step at a time; make a best approximation of what's causing the problem, choose an initial response that seems like it might help, monitor everything to determine what the impacts of the initial move are, and then make adjustments and try again. Plan on doing this repeatedly until everyone involved learns enough about the system involved to approximate the desired solution.

Of course, for an adaptive management approach to work, all the relevant parties (especially those with the most at stake) need to be involved -- helping to diagnose the scope of the problem, assisting in the selection of the initial actions to take, specifying what can and should be learned from the monitoring efforts, reviewing the real-time output of whatever monitoring is done, interpreting the findings together with the others involved, and sharing responsibility for making successive rounds of adjustments.  Adaptive management requires ongoing consensus building.  Unless all the relevant parties agree on what to do at each step and what's happening along the way, policy-makers and experts will just zig-zag from one strongly held view to another depending on who has the most money and energy to invest in lobbying.  It would make so much more sense if all the parties committed ahead of time to a process of shared learning through jointly managed experimentation.  Such efforts are best facilitated by professional neutrals.  They have to be designed collaboratively from the outset.

Consider the case of the recently released report of the special court created to review the claims that childhood vaccines cause autism.  The three "special masters" determined that there was insufficient scientific evidence to substantiate the claims in the law suits that motivated this review.  In the end, though,  the people who were upset in the first place were not convinced by the special court's conclusions.  Instead, why not invite representatives of all the groups involved to work together to formulate whatever analyses of existing data (or the design of a new study) everyone agrees would be dispositive? Why not involve all the relevant stakeholders in selecting a panel of experts to guide such studies or such a review?  Why not subject the preliminary findings produced by the jointly selected experts to review before the panel makes its findings public?  We might even have approached the current effort to formulate a Stimulus Package in this way.  The economy is too complex to know what will and won't work.  So, why not talk about first steps (rather than what will "solve the problem," what will be measured and how, what benchmarks all "sides" agree to use to gauge progress, and what the membership of a bipartisan panel should be to monitor preliminary results and suggest the next round of adjustments? In the Consensus Building Handbook (Sage, 1999) my colleagues and I outline what we consider to be best practices when it comes to joint fact finding and a consensus building approach to adaptive management. 

Monday, February 9, 2009

Governing Communities of Faith

One response I often get to the idea of a taking a consensus building approach to governance is that it won't work because people with conflicting values and interests can't possibly reach agreement through informal conversation. The only way to settle their differences (peacefully), or so the argument goes,  is to let the majority rule.  While I don't agree, what possible reason, then, could there be for communities-of-faith (i.e. groups associated with particular temples, parishes, or churches) to operate by majority voting?  They are, by definition, groups that share common values and interests.

I am part of one community-of-faith that used to spend far too much time bickering about budget allocations, hiring, and management of our religious programs and building.  While religious events were inspirational and all-embracing, our annual meetings at which budgets had to be set and general policies made, were painful.  In fact, people stopped coming. The same people who couldn't be more considerate of their co-religionists at Sabbath services, behaved like the most cynical and power-hungry state legislators or municipal town meeting members when it was time for annual meetings. In my Congregation, several hundred families meet for the better part of the afternoon to make policy, hiring and budget decisions. For many years, they almost always got tangled up in the logistics of parliamentary procedure  -- with its seconding of motions, formal amendments, votes to move the question, etc.   Along with a small group that couldn't stand it any more, I proposed that we adopt a consensus building approach (CBA) to governing ourselves.  We re-wrote our by-laws (which, by state and federal law, we must have) to substitute the key elements of CBA as our operating manual.   We actually used Robert's Rules to vote out Robert's Rules (at least for a three year trial period).  Annual meetings are now run very differently.  Pre-meetings are used to ensure wide-spread involvement in generating proposals and draft budgets. A facilitator guides the annual meeting discussion.  Instead of formal debate, we have collaborative problem-solving.  We search for ways of making sure that we meet almost everyone's interests. We never settle for a bare majority when with a little more work we can usually reach an informed consensus. While we are not quite as demanding as Quaker meeting (which will remain in conversation until everyone has had their say and everyone is in agreement), members now come away feeling proud about how we govern ourselves.

For more on CBA see Breaking Robert's Rules: The New Way to Run Your Meeting, Build Consensus and Get Results (Oxford, 2006) with modified versions in Chinese, Japanese, Russian, Portuguese, Dutch (forthcoming) and French (forthcoming).  Or, see the web site