$90k-a-day for Consulting? Depends What You Are Buying.

Tories hire $90,000-a-day consultant to cut spending

The above headline appeared in the Globe & Mail on September 20, 2011. Understandably, the reaction by members of parliament and the public has been swift and vocal. Clearly, many people find the Government’s decision to engage consultants in this critical task as offensive.

But really, should anyone be surprised? Let’s deconstruct the issue a little—

There’s a perception that spending such a large amount to “reduce costs” seems, at first blush, to be a contradiction. The story, as it has been structured, appears to have been deliberately provocative, and implies that such fees are outrageously exorbitant. This is hardly the case given that any top-tier consulting firm will regularly charge anywhere from $2,000 to $3,000 per day for senior staff, plus travel and related costs.

If you do the math, the fees would suggest a consulting team of around 40 people.

Is it conceivable that a review of strategy and operations of the size and scope of the federal government justifies a team of 40 people working full-time until March 31^st, 2012?

Probably.

To be sure, without greater transparency about the terms of reference that set out the goals and deliverables of the consulting resources being contracted, we are left to our own devices to understand the situation.

Here’s my take on the thinking that might have gone into the decision to contract a team of senior management consultants:

1. The Public Service is inadequately equipped to direct this government-wide challenge. For sure, reviewing departmental analysis and providing ministers with recommendations on which cuts to make is clearly a very large job that needs to be done in a relatively short time.
   
   However, there are two Secretariat groups that provide ongoing support for expenditure management and planning and priorities.  These are highly skilled people with intimate knowledge of the subject matter. Year after year they review department requests and package the analysis used by ministers to make decisions. Their expertise and process knowledge is deep, and it is unthinkable that they will not be involved in the “packaging” of the decisions the Ministers of the Board will make.
2. There’s a real need to augment the resources of the Secretariat, and to advise Ministers on fine tuning the recommendations of Departments prior to bringing them to the Board—maybe. A small, integrated team, devoted to advice on the cuts, can provide assurance of consistent standards, and, perhaps, a perception of greater fairness in the process.
3. There is a perception by Ministers that the Public Service can’t be trusted to be “objective” about tough spending decisions.
   
   There may be some truth to this as long-term staff of every organization, whether private or public, are invariably biased by their past experiences. But so too are the consultants being brought in. And, more importantly, Canada has a strong reputation among Western democracies for having a professional, objective, and disciplined Public Service.
4. A related issue might include the desire to counter the “tribalism” that has already reared its head during the strategic and operating reviews. This occurs when one group blames another for past expenditure growth, thus eliminating any potential collaboration to identify innovative solutions or more effective ways of achieving results.  This can happen with head office vs. field operations, military vs. civilian staff, etc.
5. There’s a desire by the new MAJORITY Government to create the perception of applying “strong business decision-making” to their PS cuts. This may be particularly helpful in areas where the cuts will be broadly unpopular with the general public—and there are bound to be some of those.
   
   Being able to point to “the best private sector advice” will be useful to the Government in future damage control situations. That is, that their decisions are based on sound business analysis, and not on political ideology.

However, the bigger issue within this entire debate is not being addressed.

Commenters on both sides of the discussion have been hyper-focused on the numbers: $4 billion in annual savings, 5% to 10% budget cuts, $90,000 per day.  These yardstick indicators are clearly critical in understanding and measuring where it is that we need to get to, and how well we are progressing.  But making the decision to cut is easy; making it actually work is the hard part—and that can only be done within the Public Service.

My concern—and I suspect it is the concern of our professional Public Service—is that with all the emphasis on making the cuts, the creative effort of enhancing the capabilities of a reduced public service gets put aside.

In short, how many members of the $90,000 per day consulting team are working on the “people issues” that will invariably accompany these cutbacks?

If the critical issues of innovation and employee engagement are not addressed, the quality of the services delivered to Canadians will decline.

I suspect that this is a growing concern of many other Canadians as well.

If you have not already read our series on SOR, you may find these posts relevant:

Strategic and Operating Reviews: We Can't Agree to Disagree
Strategic and Operating Reviews Part 2: Alignment and Failure
Strategic and Operating Reviews Part 3: Change and Failure
Strategic and Operating Reviews Part 4: A Framework for Success