Building trust through fiscal efficiency in government

Canada’s public sector faces growing pressure to make its programs and operations more financially sustainable. The size of the federal civil service has surged,¹ yet citizens haven’t always perceived corresponding improvements in service delivery. An aging Canadian population and rising service demands are further straining government budgets, while new geopolitical complexities require nimble responses to immediate priorities.

Blanket cuts to resources—human or otherwise—may seem like an expedient solution. But this approach will disrupt the delivery of critical services without addressing underlying inefficiencies or making sure resources are allocated to high-priority programs that deliver value to citizens. It also hinders the implementation of technology and process improvements by removing the capacity to enact change.

Baselining and creating more accurate measurements to assess the alignment between resources, government priorities and program outcomes will help overcome these challenges. It will also help identify opportunities to enhance productivity, reallocate resources and reduce costs in a targeted manner using evidence-based decisions. After all, you can’t change what you can’t measure.

This approach will help foster a culture of continuous improvement within government bodies—promoting forward-looking thinking on how to sustainably deliver more value to citizens by making it possible to compare organizations and measure change. 

Moreover, a baseline rooted in accurate data helps government bodies create the transparency needed to build public trust. It lets government bodies celebrate successes publicly and identify areas for improvement with confidence. This shows citizens that their governments are focused on what matters—helping build trust that protects and empowers their purpose.

Dynamic resource reallocation is crucial for achieving priorities, yet many organizations—both inside and outside the public sector—lack the agility to move financial investments and people between projects and business units. For example, in our recent Annual Global CEO Survey, more than half of Canadian private-sector respondents told us that they reallocate 10% or less of financial and human resources from year to year. Yet our global results show active reallocation of people, in particular, is associated with better financial outcomes. This highlights the importance for public-sector organizations to reallocate resources to where they have the most impact, enhancing their financial sustainability by delivering on their priorities.

We’ve developed a new evidence-based framework for government and public-sector organizations to rapidly establish a baseline, create efficiencies and allocate resources to strategic priorities. It draws on tested government and public-sector practices from across our global network and incorporates our specializations in technology strategy and transformation, finance, risk assurance and digital operations.

It’s underpinned by three pillars:

An effective and accurate baseline measurement lets government leaders understand their costs in terms of value delivered, rather than simply by business line or departmental grouping. This starts with understanding spend and resource allocation with a performance measurement and productivity lens.

Against this backdrop, collecting both quantitative and qualitative data helps create a comprehensive view of current performance. It opens opportunities to visualize a baseline of costs and resources, clarifying how money, effort and employees are deployed.

This initial profile of costs and performance can be developed with publicly available information, accelerating the baselining process. Through data collection templates and facilitated activities, governments can build and validate this data, creating a foundation for productivity enhancements and cost reductions.

Starting with a top-down data analysis of baseline data lets government leaders rank order their spending and identify large cost areas with potential savings. This exercise can also help you find opportunities to reallocate resources from lower-priority activities to higher-priority ones, increasing alignment with strategic objectives and the outcomes that matter most to citizens and stakeholders.

A bottom-up analysis complements this process. It dives deeper into the data to form hypotheses and identify areas needing further information. For example, if a particular function’s spending appears relatively high, a process analysis can reveal where efficiencies can be gained. By generating greater insights into government operations, this approach helps reallocate resources to sustain, enhance or transform services based on their alignment with strategic objectives and core mandates. It also helps government leaders consider future citizen demands, such as increased access to digital services, and incorporate the associated costs into their planning models.

After first establishing a baseline and then analyzing the data to create a roadmap of initiatives, the next step is to bridge the gap between strategy and execution. This involves making sure the right people are in the right roles, supported by effective processes and technology. By focusing on benefits realization, leaders can better develop timelines and roadmaps to achieve the desired outcomes, maintaining discipline and clarity on the value they aim to deliver.

Achieving these desired outcomes may require rethinking legacy operating and service delivery models. This can include using alternative delivery models such as managed services, which help streamline operations and automate business processes. This approach can also foster a culture of continuous improvement. Managed services providers offer the tools and expertise needed to track results and identify ongoing efficiencies. This helps organizations sustain improvements over the long term, allowing them to focus on strategic priorities and delivering value to citizens.

Throughout the process, clear and consistent communication helps employees understand that the goal is better alignment between resources and priorities, rather than just cost-cutting. This can also help close a gap we found in our Global Workforce Hopes and Fears Survey 2024: just 49% of Canadian government and public-sector employees told us their work is strongly or moderately aligned with their organization’s long-term goals and objectives. By emphasizing the reallocation of resources and the resulting cost savings, organizations can foster a positive outlook and support for their initiatives.

With the right structure, culture and technologies, government and public-sector organizations can continue to transform in ways that help build trust and deliver sustained outcomes. Trust is paramount to the continued success of government operations. And trust is based on transparency—transparency of intent against priorities, transparency of progress and, often, transparency of resource allocation.

We’ve also seen employees’ engagement increase when their work is aligned with overall strategy. This helps employees see the impact of their efforts, understand how they’re measured and focus on more meaningful tasks. Additionally, aligning resources with priorities while streamlining operations enhances an organization’s financial sustainability and resilience, creating the flexibility to anticipate and meet new demands as they arise.

This is a critical moment for government and public-sector organizations to build greater public trust. By transparently demonstrating they’re using resources efficiently and aligning those resources to high-priority programs, government leaders can show they’re doing what’s right—and doing it well—on the issues that matter most to citizens.