The federal government’s most effective leaders can find big opportunities in the recent budget cuts to advance their agency’s mission, according to new findings from Booz Allen Hamilton (NYSE: BAH).

The findings come as President Obama releases a proposed budget for FY2013 challenging government agencies to cut costs.

By researching the lessons learned from past government downsizing and through a series of recent workshops with current and former government executives, Booz Allen identified seven common practices that the most successful public-sector leaders are using to improve effectiveness and efficiency despite major budget cuts.

The practices are detailed in Booz Allen’s new report, Effectiveness and Efficiency: Seven Leadership Practices for Meeting the Mission Challenge in an Era of Declining Budgets. The report draws on lessons gleaned from a series of workshops with current and former federal executives; research on the lessons learned from past budget cutting efforts; and a study of leadership failures and successes in large-scale, strategic government changes. The report describes what government leaders have done to help their agencies see budget cuts as an overall strategic opportunity to advance their mission.

“Today’s budget realities provide a catalyst and opportunity to drive innovation and improve overall agency effectiveness,” said Booz Allen Executive Vice President Pat Peck. “These shared managerial practices can help agency leaders meet today’s challenges head-on to achieve results and create a more efficient, effective government for the 21st Century.”

The Seven Leadership Practices for Meeting the Mission Challenge in an Era of Declining Budgets

• Know Your Agency’s Mission and Capabilities. Understanding your agency’s changing mission and responsibilities as well its strengths and weaknesses can help you can set a clearer vision for change. For example, after 9/11, many agencies took on new roles. And while the overall mission of some agencies may not have changed, many have been given additional responsibilities, such as for cybersecurity, disaster recovery, or regulating economic activity. Agency priorities should match the mission.
• Reassess Your Stakeholders’ Needs. Things change fast in this connected, globalized world. As leaders engage their stakeholders, they should make sure they are working with the right people and using the right tools to gauge their changing demands and evolving needs.
• Align Your Budget—and Budget Cuts—with Your Mission. When cutting, understanding what is not critical is just as important as understanding what is. Prioritizing resources and mission requirements—from top to bottom—is essential.
• Be Bold: Take High Impact Steps. Make hard choices and avoid across-the-board cuts that minimize short-term pain but do not improve effectiveness or achieve sustainable savings. “Smart cuts” will position the agency to complete its mission in the future. They also help prevent a devastating cycle of small cuts that weakens the entire enterprise.
• Spend Money to Save Money. Maintaining effectiveness with fewer resources requires some increase in investments to gain efficiencies. For example, consolidation may call for an agency to build new facilities or renovate old ones. This requires up-front investment but provides a solid downstream return in savings and performance. The same is true for moving to a shared services model, expanding telework, and other activities that improve effectiveness and efficiency.
• Institutionalize Efficiency. Adopt formal processes and provide incentives to make efficiency a systematic and aggressive activity within your agency. To institutionalize efficiency, agencies must create organizational, process, and cultural mechanisms that support this goal on an ongoing basis.
• Make Fact-Based Decisions. Implement aggressive information gathering, robust analytics, and rigorous performance measures to improve the quality of your decisions. This is about more than data collection. Successful leaders ensure that every dollar spent on data produces meaningful returns in terms of speed and effectiveness.

Booz Allen developed a firm-wide approach to addressing organizational efficiency and effectiveness that focuses on strategic analysis, core missions, and an institutionalized approach to efficiencies to help clients do the most important things, and do them very well, in a budget-constrained environment. The seven managerial practices outlined above work together within Booz Allen’s Enterprise Effectiveness and Efficiency (E3) © framework, which recognizes the need to balance cuts with an eye toward maintaining mission effectiveness.

“The budget crisis presents agency leaders with difficult choices but also an unprecedented opportunity to realign organizational structures, improve operations, modernize technology, and optimize human capital,” said Booz Allen Senior Vice President Ted Sniffin. “It’s no longer a question of doing ‘more with less’ or even ‘less with less.’ Agencies now must perform their missions ‘well with less.’”

“To continue enhancing their missions in these trying times, agencies must effectively leverage enabling tools and technologies, and leveraging technology requires effective and decisive leadership,” said Booz Allen Vice President Michael Isman. “Agencies must balance short-term budget realities with long-term efficiencies and mission advancement.”

Effectiveness and Efficiency: Seven Leadership Practices for Meeting the Mission Challenge in an Era of Declining Budgets is the first in a series of reports by Booz Allen Hamilton that address the leadership, human capital, and technological challenges and opportunities associated with achieving enterprise effectiveness and efficiency in this resource-constrained era.

About Booz Allen Hamilton

Booz Allen Hamilton is a leading provider of management and technology consulting services to the US government in defense, intelligence, and civil markets, and to major corporations, institutions, and not-for-profit organizations. Booz Allen is headquartered in McLean, Virginia, employs more than 25,000 people, and had revenue of $5.59 billion for the 12 months ended March 31, 2011. (NYSE: BAH)