Transforming government in a new era

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Never before have governments and their workforces been asked to do so much, so fast. As a result, public-sector leaders are seeking transformational improvement in citizen services, policy outcomes, and regulation. But government transformation is hard to pull off in a context of fiscal challenges, public mistrust, and workforce fatigue. McKinsey’s recent survey of public-sector leaders finds that nearly 80 percent of major change efforts fall short of meeting their objectives. (see sidebar, “About this study”).

That makes it critical to pinpoint the common success factors of transformations that do deliver. Our survey finds that the success rate is triple among programs that apply the following five disciplines of government transformation identified in McKinsey’s previous research:

  • committed leadership
  • clear purpose and priorities
  • compelling communication
  • capability for change
  • cadence and coordination in delivery

Our new research shows that the impact of these “five Cs” is amplified by two cross-cutting imperatives: first, meaningful engagement of public-sector employees; and second, effective use of digital tools.

In leadership, there is now greater emphasis on compassion and care for employees’ well-being, while purpose and priorities need to be co-defined with teams and made meaningful to individuals. Digital tools and techniques can now drive more engaging communication, as well as better cadence and coordination in delivery. And today, capability for change is underpinned by powerful learning journeys for employees and an understanding of how data and analytics can help drive innovation.

Our latest analysis also shows that governments that consistently apply the five Cs with an explicit focus on employee engagement and digital technologies are more resilient to shocks—and are better able to adapt and evolve their change programs when faced with disruption.

To step up delivery and face the challenges of the future, governments can seek out ways to connect with their employees’ sense of purpose and harness digital tools to strengthen innovation, collaboration, and delivery.

Many governments are struggling to transform—and to engage their workforces

There are many examples of how the COVID-19 pandemic prompted far-reaching government transformations and brought out the best in the public sector. HMRC, the United Kingdom Tax and Customs Agency, needed to build technology and operational solutions rapidly during the pandemic—in one example, it worked in a partnership with a private-sector consortium to build and launch a national digital customs service in 12 weeks to enable Northern Ireland businesses to trade with both the Great Britain mainland and the European Union.1 The Australian Federal Government undertook the largest mobilization of staff in working memory with the redeployment of more than 2,000 public servants across the areas of greatest need during the pandemic.2 And numerous countries achieved impressive rates of vaccination in previously unimaginable timeframes.

However, our survey findings show that relatively few government transformation efforts achieve such breakthroughs. Of the change programs in our sample, 22 percent delivered their objectives fully and on time—virtually at the same rate as in our previous survey, when 20 percent of programs reported success (Exhibit 1). Our survey also found that transformation in the public sector is substantially less effective than in the private sector, where the success rate is around 30 percent.

Twenty-two percent of government transformations meet their objectives fully and on time.

Our survey went further to identify challenges that have been amplified by recent events. For example, three-quarters of respondents said employees were concerned about the nature of hybrid work, and more than 70 percent said they were facing labor shortages and skills mismatches between jobs and availability (Exhibit 2). Almost every respondent to the survey—94 percent—said they were experiencing at least one of these challenges. And less than a third were confident that they could handle these issues successfully.

Organizations are facing newly emerging challenges—employees are deeply concerned.

Many governments, like their counterparts in the private sector, are facing the Great Attrition, which could hamper governmental transformation efforts and broader organizational health. In Australia, for example, 35 percent of public-sector employees surveyed by McKinsey in 2022 said they were at least somewhat likely to quit their jobs in the next three to six months. The drivers of this disengagement include work that does not feel meaningful, lack of potential for career development, and leadership that fails to inspire.

How to drive change: Meaningfully engage employees and enable them with digital tools

In the light of these challenges, how can public-sector leaders give themselves the best chance of successfully driving positive change? The research finds that engaging employees is more important than ever. Public servants are searching for renewed purpose and meaning, better career-development opportunities, and more inspiration and care from their leaders.

Today, successful leaders of transformation engage employees around the larger purpose of their work, link that purpose to day-to-day activities, and give people autonomy in initiative design. As one former leader of a large services delivery department put it, “because the culture and values of our organization were about helping people, I conveyed constantly, consistently, and meaningfully to people that the changes underway were about helping people—because of this connection, people went above and beyond to deliver.”

It is particularly striking, at a time when many public servants are experiencing fatigue and burnout, that a focus on mental wellness has become one of the strongest markers of successful transformations. In recent years, there has been a surge in research and investment into how employers and leaders can support this priority. Key actions that leading employers (both public and private) are taking include use of better assessments of employee stress, promoting open discussions and clear processes to support mental wellness, and broadening mental health coverage for workforces.3Addressing employee burnout: Are you solving the right problem?” McKinsey, May 27, 2022.

The other shift relates to the use of digital tools and enablers. The most successful government transformations are much more likely to use real-time data than other programs (Exhibit 3), and to deploy cutting-edge digital tools such as hybrid work platforms to strengthen their collaboration, communication, and decision making. These can improve the speed and effectiveness of decision making, according to ministers and public servants. As Noureddine Boutayeb, Morocco’s former minister of interior, put it, “Speed matters more than ever. We no longer talk about changes that take years, we talk about months or even less.”

What differentiates successful from unsuccessful transformations is the focus on employee engagement and use of real-time data.

A senior civil servant who served in the governor’s office in a US state noted: “The use of real-time intelligence was dramatically accelerated by the COVID-19 challenge. We established a COVID-19 collaboration cell across our state government agencies, and we also included outside stakeholders from the state’s healthcare system. This approach enabled transparency on information and a common operating picture to drive decisions.”

The evolving themes of employee engagement and digital enablement are common to all the enduring five Cs of successful transformations: committed leadership, clear purpose and priorities, compelling communication, capability for change, and cadence and coordination in delivery. Today, as in our 2018 report, our research finds that government transformations are three times more likely to succeed when all the five Cs are applied (Exhibit 4). They are seen as universal—each being a key driver of transformation successes regardless of the geography, trigger, scope, or structure of the change effort.

Embedding the five Cs more than triples the likelihood of success in government transformations.

Our survey, along with our interviews with government leaders from around the world, highlights the key people-centric and digital interventions that make a difference in government transformations—in each of the five Cs.

Committed leadership: Leading with empathy, humility, and adaptability

Previous research has made it clear that the most successful transformations are driven by extraordinary leaders who make personal and professional commitments to achieve the targeted outcomes. Our new research underscores this finding and adds an extra dimension: committed leaders who displayed compassion, care, and adaptability were the most important factor for ensuring successful transformations and for ensuring that those transformations are resilient to future shocks.

General Sir Nicholas Carter, former chief of the UK defence staff, said in an interview with McKinsey, “To have an effect as a transformational leader, it’s so important that you care for and motivate those that you’re leading … you’ve got to have empathy and humility.” Often, this kind of leadership needs to be shaped through in-depth development programs. In the UK military, he told us, this involved “the creation of an army leadership center, a leadership doctrine, and a whole philosophy of trying to get people to look downwards rather than upwards.”

Role-modeling behavior changes can be crucial, as can be effective resource allocation to support the implementation of change program initiatives to avoid workforce fatigue and burnout. As David Thodey, former chair of the Independent Review of the Australian Public Service, told us, “We need to stare into the challenges of working in the public service and understand our future needs—and then be willing to fund and invest in that change.” Our survey found that allocating enough people to get the job done was an action 1.9 times more prevalent in successful transformations than in their unsuccessful counterparts.

Clear purpose and priorities: Shared definition of success and making change meaningful to the people delivering it

Successful transformations have crystal-clear purpose and priorities, which translate into a few measurable outcomes. During the pandemic response, clearly articulated purpose helped to galvanize government response. Kristina Murrin CBE, former director of implementation at Number 10 Downing Street in the UK Government, told us, “I focus heavily on purpose—and we managed to get people to just do extraordinary things during the COVID-19 period because it mattered.”

Our latest findings bring an important new dimension: the most consequential action to support the success of transformations is now ensuring that purpose is translated into individual meaning. This can involve co-designing the organization’s purpose with employees, and then linking their incentives to it. Our survey finds that programs that align individual incentives to purpose are nearly twice as likely to succeed as other transformation efforts.

A recent example of co-designing purpose can be seen in a large US government department. Through a series of working sessions, employees explored the organization’s imperatives and desired shifts. Together employees crafted an overarching purpose statement that translated into a series of focus areas and ultimately a series of tangible metrics for success.

Sarah Webber, COO of the state of Arizona in the United States, described the value of employees owning purpose, not only in delivering government transformations but in retention: “Besides just resources, for people to keep showing up to work you have to provide purpose: allowing folks to feel that they can make that impact and take control of that, is critical.”

Compelling communication: Harnessing digital tools to engage and listen

A compelling future vision, communicated to teams by visible leaders, is a key component of successful transformations. Our latest survey underlines the importance of engaging employees’ hearts and minds—the communication of a meaningful change story by senior leaders across their organization is an action 1.5 times more prevalent in successful transformations.

However, methods of communicating are increasingly disrupted by new patterns of work and digital delivery. Communication must now be omni-directional and multi-channel: new digital tools give leaders new ways to communicate with employees, but also open up new mechanisms to listen and demonstrate authenticity. As one former head of a major government financial agency emphasized: “You’re most successful if you’re listening, if you can authenticate your mission with staff. I was a leader that used Twitter—it allowed me to give a little bit of myself and to listen.”

Today’s most effective government transformation programs are deploying digital tools in imaginative ways, both to communicate progress and to generate support. In the German federal government’s drive to digitize public services, for example, the transformation team created a digitization-laboratory demonstration that allowed citizens, journalists, and public servants to experience the new approach. It also invited ministers to take part in user tests of digital prototypes.4Digital public services: How to achieve fast transformation at scale,” McKinsey, July 15, 2020.

Our survey respondents confirmed the importance of compelling communication. “Engaging employees more through two-way communication” and “focusing more on engaging the front line” were two of the top three actions that leaders of unsuccessful transformations wished they had focused on more (Exhibit 5).

In hindsight, leaders of unsuccessful transformations would have set clear targets and focused more on communication.

Capability for change: Building adaptive, digitally enabled talent

Successful transformations actively invest in building public servants’ talents with the skills needed to deliver change, and to respond to the unexpected. These include capabilities in digital and data analytics as well as adaptive leadership—defined by Ronald Heifetz of the Harvard Kennedy School as “the practice of mobilizing people to tackle tough challenges and thrive.”5

Many governments are investing to create unique learning experiences and journeys—development opportunities that cannot be accessed elsewhere and that cultivate these essential capacities. Her Excellency Huda AlHashimi, the United Arab Emirates’ deputy minister of cabinet affairs for strategic affairs put it this way: “Training’s not the right word. It’s changing the mindset and providing the right methodologies and tools to employees at all levels. The main thing is that we are asking them to constantly learn. And this constantly learning is critical.”

Consider the example of Namyangju, a city in South Korea, that launched an initiative to train all its staff on the use of a smart-city platform to drive operations. Led by the mayor, the program of employee training and education supported multiple innovative new projects on citizen convenience and efficiency via improved data collection and analysis.6

Finally, our survey shows that the staffing of transformation programs can itself be a powerful engine for capability building. The most effective transformations assign high-potential employees or managers to lead the change: those who do so are 1.5 times more effective than those who don’t.

Cadence and coordination in delivery: Agility in transformation

Akin to a rowing team with a coxswain calling a regular rhythm of progress, effective transformations have highly collaborative teams and a central point of coordination. For example, our survey found that dedicated central teams charged with coordinating all change-related activities were 1.5 times more prevalent in successful transformations. Programs that harness dynamic digital tools—such as live dashboards—are also more likely to achieve effective coordination.

Many government transformations coordinate across multiple government agencies using agile approaches such as cross-functional teams. As the COVID-19 pandemic showed, governments can be very effective at cross-agency coordination during crises—but this is challenging to maintain beyond the immediate emergency.

One leader who has marshalled such cross-government coordination is G. Edward DeSeve, who oversaw several government-wide agile efforts. He reflected, “We had to use agile techniques along the way with a lot of customer involvement, a lot of teams, a lot of deadlines, and things like that.” This, he told us, was key to the program achieving results according to an aggressive schedule.

An increasingly common feature of successful transformations is the use of simulation planning and piloting of initiatives before they are scaled up. This was the approach followed in the digital transformation of Canada’s social services. John Knubley, the former deputy minister of innovation, science and economic development of Canada, told us, “Social services needed to be much more digital and accessible, but they didn’t do it all at once—they tested and piloted, and then they kept their long-term goals in mind when scaling.”

Building resilience to the challenges of the future

One of the clearest lessons of the COVID-19 pandemic, according to our survey, is that it is very difficult for governments to anticipate how future changes might impact on their priorities and change programs. Indeed, increasing global uncertainty driven by pandemic risks, cyber incidents, and unforeseen events underline the importance of building resilience as a core business of government (Exhibit 6).

Global uncertainty is growing, requiring increasing resilience.

Many governments recognize that they need to build resilience to external shocks and uncertain futures—and our research offers insights on how they might do so.

Even given the COVID-19 pandemic, government transformation programs that embedded the five disciplines set out in this article experienced greater resilience than those that did not. Importantly, our survey also suggests that consistent application of these transformation disciplines can improve organizational resilience against a broader set of challenges such as supply-chain disruptions, price increases, and labor shortages (Exhibit 7).

Transformations that consistently apply the five Cs will likely be more resilient to global challenges.

Of the five Cs, committed leadership was the most important factor in predicting resilience. We defined one in five of the transformation programs in our study as “very resilient”—and among those, 72 percent applied the discipline of committed leadership.

To promote resilience, government leaders can cultivate an “adaptive mindset”—in themselves and their teams—by recognizing that complex and changing environments will require repeated iteration and problem solving in both policy and delivery. Adaptiveness can help move people from simply enduring a challenge to thriving beyond it.7Future proof: Solving the ‘adaptability paradox’ for the long term,” McKinsey, August 2, 2021.

As Douglas Millican, chief executive of Scottish Water, observed, this investment can create a virtuous cycle: “Investing heavily in leadership development drives employee engagement, which gets people on board to deliver great performance.”

The leaders interviewed emphasized that such actions not only support successful transformations, but also improve organizational health and employee engagement across government. As David Thodey put it: “There are many challenges. But if you create a great place for people to work, if you are purpose driven, and the quality of the work you do is impactful, and people are valued for who they are—if all these attributes are present, then it will be a great place to work—and in that environment, people don’t leave easily.”

Faced with the disruptions of COVID-19, many governments found ways to unlock new capabilities—such as digital tools and real-time data—that today can position them to drive the next transformations of public services. Many public servants are in need of reconnecting and re-energizing after two years of navigating the pandemic. Governments that succeed in engaging their people in meaningful change efforts, and bring real care to their mental well-being, can galvanize their organizations to tackle their societies’ most pressing challenges.

Governments’ experiences of COVID-19 have underlined just how important it is for public-sector change programs to inspire their workforces with compelling purpose, nurture adaptive leadership, and focus their efforts on building the capabilities of the future. Governments that can “bottle the best” lessons of recent years—and focus with renewed vigor on supporting talented public servants—will be better placed to deliver the quality services that citizens require, and the innovations that a fast-changing world demands.

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