Culture change in times of budget cuts

The consequences were significant. The municipality could not absorb such a drop in funding. Politicians were forced to make fundamental choices. What level of service could still be offered — and to which target groups? The municipal council endorsed the proposal from the mayor and aldermen to focus more strongly on people with only a short distance from the labour market. Inevitably, that meant not everyone receiving benefits would continue to receive support. Some would retain their benefits but no longer receive guidance. Those with care needs would continue to be supported.

For many employees who worked daily with vulnerable citizens, this felt like a profound loss. How do you sustain people’s sense of purpose and pride in their work under those conditions? At the same time, the political ambition for moving people into employment was raised: the outflow to work was expected to more than double. All this meant major changes in the organisation’s structure, methods and deployment of staff.

In this article I describe how, as an executive team, we worked within this context — taking the political decisions as our starting point — not only to achieve results, but also to bring about a shift in organisational culture: a change in both mindset and behaviour. We wanted to increase the organisation’s focus on results, while also encouraging employees to be more vocal, take ownership and feel responsible for the changes underway. But how do you achieve that in a complex and politically sensitive environment? How do you turn necessity into opportunity?

What Is the culture like?

Before we could build change, we first had to understand where we were starting from. What characterised our organisation’s culture at that moment?

What stood out immediately was the deep commitment of our colleagues. That commitment was precious — a strength we had no intention of losing. When a crisis called for everyone to roll up their sleeves, people delivered their best work. And we would need that same faith in our chosen direction and solutions to make change happen.

We also saw some clear areas for improvement. Our focus on results was not as strong as it could be. Interim outcomes were discussed monthly in a collective meeting of managers, but the analysis tended to remain rather general. Outliers — departments performing markedly better or worse — were only briefly examined. Agreements for improvement were often made collectively: whoever the shoe fits, wear it. Whether that actually happened was too uncertain. And what was the real influence of the executive board on these results?

At the same time, our performance was under close political scrutiny. It formed part of the municipal budget and accountability cycle to the mayor, aldermen and council — a pressure that was felt throughout the organisation.

I also encountered an organisation in which open communication was scarce. The executive board itself initiated most of the change and innovation. That included advising the politicians on how to respond to the cuts, for instance by focusing the remaining reintegration budget on those most likely to find work. The potential knowledge and skills of employees were mainly used to execute ongoing processes. Staff therefore felt little incentive to contribute to innovation.

What was striking — and worrying — was the sense of insecurity about speaking up. Many employees were hesitant to voice criticism. Old stories circulated about reprimands and disciplinary measures. There was a shared belief that criticising decisions was risky. The distance in power between management and the work floor was large and hindered open dialogue.

After taking up my role, I often found myself asking: how do you reach people in such a context? How can the executive team contribute to operational results? As a new board, we were convinced that increasing employees’ confidence to speak up and involving them more actively was essential — not only to bring about change, but also to improve our service to citizens: fewer complaints, more tailored support. Confidence and engagement were also vital to sustain job satisfaction and teamwork. Reducing the sense of psychological insecurity was therefore not just an item on the agenda — it became a precondition for all further change.

What we did

1. Co-designing and delivering change: working groups, the ‘Saw Table’, and a clear decision-making process

Once the national government’s cuts and their impact on our services became clear, we had just four months left to adjust our operations. The first reduction — amounting to tens of millions of euros — would take effect on 1 January of the new year. Despite this time pressure, we chose to issue an open invitation to all staff to take part in working groups that would design measures around three main themes. We believed the transformation could not succeed without a sense of ownership among employees. The three themes, aligned with the new political direction, were:

• Increasing the outflow of benefit recipients who were (almost) ready for the labour market;
• Reducing inflow: better determining who was entitled to support, and shortening the route to work for those who could be placed in employment directly;
• Strengthening the monitoring and enforcement of benefit entitlements and supporting benefit recipients to move into work, ensuring the limited budget was spent lawfully and effectively.

Beforehand, we explained to all employees how this process would work — from designing new approaches to final implementation decisions:

• All proposals developed by the working groups would first be submitted to a Zaagtafel (Saw Table) — a panel of seasoned employees who had witnessed many change initiatives come and go. Their explicit task was to scrutinise the proposals without restraint, to “saw them down to the ground” where necessary.
• Each proposal, together with its rationale and the Saw Table’s commentary, would then go to the executive board, which decided which measures to adopt and submitted these to the responsible alderman. The alderman would then determine which proposals required political approval from other aldermen, the mayor and council.

What did this deliver? Three hundred employees took part in the working groups, producing around a hundred measures in total. These were categorised by their timeframe: implementation either by January first or within one to two years, in line with the phasing of the national budget cuts. The vast majority of the measures were accepted by both the administrative and political leadership.

Support for the package within the organisation was strong, even though the measures themselves were painful and meant reducing support for some benefit recipients. The broad involvement in the design process felt like a clear break with the past.

The implemented changes also led to a follow-up intervention. Each quarter, the executive board now visited different parts of the organisation. In meetings with around a hundred employees, we discussed political developments and shifts in policy and finance, both national and local. We shared the dilemmas we faced as a leadership team and discussed the expected impact of upcoming measures. By making space for questions and reflections — not just policy — the board became more visible and approachable.

At the end of the first year, we achieved an outflow to work 20% above our target — nearly three times higher than when we still had the full reintegration budget. Across the organisation, this was felt as a major success.

But there were also setbacks. The budget savings target — tens of millions of euros — was exceeded by a wide margin. Politicians were displeased, arguing that this money could have been spent on supporting jobseekers. We were placed under financial supervision.

This led to another intervention: bringing financial management fully in line with the new policy. We invested heavily in this effort. Financial control and accountability were placed more firmly with departmental managers. Culturally, this was a major shift: as a manager, you are also responsible for the money. That requires ownership. A few years later, forecasting both results and expenditure had become one of the organisation’s strongest capabilities.

An important cultural goal — to increase employees’ confidence to speak up and for that to be valued — had been achieved, though still sporadically at that stage.

2. Embedding confidence in speaking up, dialogue and focus on results

We wanted to strengthen our focus on results in a lasting way, and to make employees’ confidence and open dialogue — which go hand in hand with that — a permanent part of our culture. We aimed for two tangible shifts:

• Greater individual responsibility among departmental managers for their own results, with more time for direct, in-depth conversations between them and the executive board;
• Sustainable use of all employees’ experience, knowledge and skills to continually improve our services, results and job satisfaction.

To that end, we introduced four interventions: the Performance Dialogue, Appreciative Inquiry, Lean, and a High Absence Approach.

Performance dialogue

From then on, the executive board and departmental managers met one-to-one each month to discuss performance — a process we called the Performance Dialogue. The previous collective monthly meeting across all departments was discontinued. Crucially, in these one-to-one dialogues, the greatest value was placed on inquiry and conversation. The key question was not just whether a target had been met, but why. If a manager was on track, we asked: Why is it going well? Because if you understand the secret of success, you can apply that knowledge more widely. And if a target was not yet met, the questions were: Why is it going this way? What is your analysis? What interventions will you use? Who can help you?

This intervention delivered results. After four to six months, we saw marked improvement. The process of hypothesis-building, testing and dialogue meant that increasingly complex puzzles were being solved. Results came from trying things out, reflecting and making step-by-step progress. Departmental managers developed an inquisitive, confident and result-focused attitude. They became more open about what worked and what didn’t. They began consulting and helping one another, feeding collective learning and leading to targeted improvements. The approach spread throughout the organisation: performing, learning and improving became a single integrated practice.

Because all board members took part in these sixteen monthly dialogues, the unity of focus and tone within the executive team also grew. We learned a great deal about work processes across the organisation as a whole.

Appreciative Inquiry

This second embedding intervention was proposed by staff members who had trained in the method. In short, Appreciative Inquiry focuses on enhancing people’s positive qualities and talents, rather than on their shortcomings. In an organisation devoted to supporting people into work, the focus often lay on jobseekers’ limitations. That created a blind spot for the talents they did have.

Using Appreciative Inquiry, staff achieved remarkable results — helping people with a long distance from the labour market find work unexpectedly quickly. We therefore gave more employees the opportunity to adopt this way of thinking. It was crucial that at least a significant minority used the approach, to prevent early adopters from being isolated as “odd ones out” within their teams.

Lean

Together with a group of pioneers, we explored organisation-wide change methods at other organisations that relied heavily on participation. The key criterion for us was whether our own staff would support such an approach. Ultimately, alongside Appreciative Inquiry, we adopted Lean, after observing it in action during visits to several organisations with our departmental managers. They were enthusiastic.

Over the next three years, all departments trained in Lean thinking and practice. As in the Performance Dialogue, the focus was on setting goals, monitoring progress (performance), analysing together (learning) and taking targeted action (improvement). Often this took the form of short weekly cycles: each week began with a week start meeting, where teams discussed actions, results and analyses. Employees led these sessions, identified improvements and took ownership of actions.

The result was that the culture change deepened to the level of individual employees. Everyone could suggest improvements and take responsibility. The language changed too — people started using process terminology such as processes, steps and chains. Learning and improving became second nature. Collaboration also evolved: employees became more confident, cooperative and results oriented. The organisation shifted from a traditional hierarchy to a connected network of people, goals, performance and continuous improvement.

High absence approach

The essence of this approach was to decouple illness from absence. Not feeling well did not automatically mean full absence from work. With respect for people’s situations and health issues, open — but not indulgent — conversations were held: What can you still do? Under what conditions? Over time, sickness absence fell significantly. Employees reported applying what they had learned in these conversations positively in their own guidance sessions with benefit recipients on their path to work.

What we learned

1. Engagement requires a different kind of decision-making

Confidence and dialogue can only grow if you let go of traditional ways of designing and deciding.

2. Creating value for citizens requires different internal relationships

Our organisation exists to serve citizens. They form both the start and the end of our chain of work. It is their experience that determines whether we are truly of value. Our mission is to help people into employment, so that they can become economically independent. The Performance Dialogue works precisely because it puts curiosity and inquiry at its heart. It encourages experimentation and reflection. And because we speak to one another one-to-one, employees and managers take ownership of their results, while the executive team creates the conditions for them to succeed.

3. Leading horizontally — Three essential tasks for senior managers

Leadership is a form of service, not command. Hierarchy often gets in the way. Being accessible enables employees to speak up about what is missing or not working. Alongside deciding and creating the right conditions, there is a third essential task for senior leaders: to give active attention to project leaders, managers and teams — to see whether the conditions really suffice.

In my experience, change rarely starts with perfect conditions. Something is always lacking — time, mandate, capacity, insight. Reality is stubborn. Those gaps must be recognised and addressed so people can move forward. Inevitably, dilemmas and differences of opinion arise that staff find difficult to raise with senior leaders but that nonetheless paralyse the work process. That is why a different tone and leadership role are required: asking questions, sharing intentions, and making trade-offs visible. You want people to bring their dilemmas to you, so that you can make a decision and enable the work to continue.

In short: narrate your behaviour. If you do not make your reasoning explicit, you remain unreadable — both as a person and as a manager.