Proecting the front line won't save public services

Politicians who slash support budgets whilst ringfencing service delivery are making a big mistake, says Alastair Dryburgh

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Last Updated: 31 Aug 2010

The current political climate is providing a bumper crop of Really Bad Management Ideas. Like the notion that we can save pots of cash and maintain decent levels of public services by protecting 'front line' operations while cutting the 'back office'. This doesn't work, in the public or private sectors. Here's why...

It's bad for productivity: Sales is clearly a 'front line' function, so we protect it while cutting the back office. Who needs all those useless paper-pushers, frittering away their days sending out invoices, getting bills paid and making sure that purchasing is scheduled so that we can actually supply what we have sold?

It promotes flawed decision-making: Sometimes, the best way to protect the front line is to strengthen the back office. Take police officers, who notoriously used to spend half their time on paperwork when they could have been arresting criminals. So more civilians were recruited and the bobbies could get out more. Very sensible, but presumably about to be reversed.

The Leeson effect: Barings Bank was broken in the 1990s by rogue trader Nick Leeson's £800m losses. Contravening the basic principle any accountant is taught, Leeson could both trade and account for his trades, and so manipulate the figures to hide his losses. Why did Barings tolerate this flagrant breach of first principles? Because it didn't think a small operation in Singapore like Leeson's warranted the expense of a proper back office.

The fact is, effective organisations are a judicious mix of front line and back office activities. To promote a simple message of 'Front Office Good, Back Office Bad' is simply to substitute slogans for thought. Leave that to the politicians.

Alastair Dryburgh is chief contrarian at Akenhurst Consultants. Read more at www.dontyoubelieveitblog.com

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