Innovative austerity management

Tom Overmans

doi:10.1108/jpbafm-04-2018-0035

Abstract

PurposeThe purpose of this paper is to uncover the right type of organizational slack for innovation. It examines how city managers conceive slack, and how they create slack to facilitate innovation while dealing with fiscal stress.Design/methodology/approachThe study is built around a comparative case study approach to uncover contrasts, similarities and patterns of slack-building for innovation in austere times. It relies on the experiences of 12 experienced city managers. Data are sought from elite interviews and one focus group.FindingsThe main finding is that innovation in the public sector does not benefit from slack in general, but from a specific type of slack. The evidence shows that useful slack for innovation is not so much about financial slack or HR slack, but about psychological slack.Research limitations/implicationsThis study adds to the literature that the key questions of slack research should not only focus on identifying the “right amount” of slack but also on identifying of the “right type” of slack.Practical implicationsPublic managers who want to deal with (fiscal) crises more innovatively might reconsider their perceptions of slack and its value. Rather than operating on a pure cost effectiveness paradigm, they should balance the costs of slack and its innovative abilities.Originality/valueThis paper highlights the social/psychological side of austerity management. It concludes that increasing the ability of public organizations to innovatively cope with fiscal stress is not so much about increasing predictive capacity or financial buffers, but about increasing the mental leeway of coworkers.

Highlights

Municipalities in the Netherlands have been coping with a fiscal crisis roughly between 2009 and 2016
Serious cuts were needed in the short run to restore the deficit, but at the same time the municipalities had to implement far-reaching youth and elderly care tasks that were decentralized from central government, deal with a fragmented political climate and an empowered society and ensure that the operation continued to run
I think that especially the policy elites need to understand what is happening out there, where the organization is heading for in the long run. [...] It is crucial that austerity is put in this perspective of tomorrow’s challenges. (R10)

Summary

Introduction

Municipalities in the Netherlands have been coping with a fiscal crisis roughly between 2009 and 2016. The preference for innovation to deal with the global financial crisis (GFC) is omnipresent (Kiefer et al, 2014). Innovation was considered as the ultimate solution to run municipalities different and better and cheaper (Overmans and Noordegraaf, 2014). It is often argued that slack is a vital catalyst for creative behavior and innovation Slack allows original thinking because it protects the organization from the uncertain success of innovative projects (Nohria and Gulati, 1996) and provides spare capacity for learning or deployment in crisis (Hood, 1991). Slack-rich organizations, in other words, can recover from crises more innovatively because they are in the possession of excess resources that can be allocated quickly to develop and implement breakthrough ideas

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Conclusion