Fighting cutbacks: some issues for public sector administrators

Fighting cutbacks: some issues for public sector administrators

Abstract: Administrators of many publicly funded organizations are facing the need to implement cutbacks in the light of current budgetary restrictions. An alternative or supplementary course of action to making cuts is to resist them. This article examines four organizations - a Montreal university, a Montreal social service centre and two British health authorities - to see how they dealt with this issue of resistance.

Resisting cutbacks requires the use of political strategies which are effective in persuading funding agencies to increase or maintain budgets. The four case studies illustrate the components of a successful strategy in terms of identifying the relevant interest groups, building coalitions and creating legitimacy. In addition, the question of whether administrators should resist budget cuts is explored. The pitfalls of resistance that were encountered by the four organizations are identified, as are the advantages.

It is shown that while resistance is a viable option for many public administrators, it is no simple matter. Those contemplating this course of action need to be aware of the issues involved so that they can assess and enhance their chances of success, while minimizing any detrimental effects that resistance may have on the organization and its employees.

Sommairc : Les administrateurs de nombreux organismes finances par les fonds publics doivent proceder B des coupures budgktaires dkcoulant des mesures d’austkrite gouvernementales. Bvidemment, si I’on peut pratiquer des coupures, on peut kgalement s’y opposer. Le present article examine quatre organismes (deux organismes montrkalais, une universitb et un centre de services sociaux, et deux organismes britanniques oeuvrant dans le domaine de la s a n d ) pour voir comment ils ont rkussi B s’opposer aux coupures.

L’opposition aux coupures fait appel A des stratkgies politiques capables de convaincre les organismes de financement d’augmenter ou de maintenir les budgets. Ces quatre etudes de cas illustrent bien les composantes de toute stritkgie rkussie : dkfinir les groupes d’intCr&t pertinents, ktablir des coalitions et faire la preuve du bien-fond6 des revendications. L’auteur ktudie kgalement si les administrateurs devraient ou non s’opposer aux coupures budgktaires. I1 prhsente

The author is assistant professor of policy, Faculty of Management, McGill University.

CANADIAN PUBLIC ADMINISTRATION / ADMINISTRATION PUBLIQUE D U CANADA VOLUME 28, NO. 4 (WINTEWHIVER 1985), PP. 531-49.

CYNTHIA IIARDY

Ies nvantages et les d&s:ivantages qu‘ont constat& les quatre organismes lors de leur effort de rCsistance.

Si la rksistance aux coupures budgktnires est une option valable pour de nombreux administrateurs publics, il faut souligner que ce n’est pas chose facile. Ceux qui envisagent d’adopter line telle demarche doivent &tre au courant des questions implicjukes afin de bien pouvoir kvaluer leurs chances de succ&s, tout en rkduisant les effets nkgatifs que cette resistance pourrait avoir sur l’organisme et sur ses employes.

Administrators of publicly funded organizations who are confronted by budget cuts face different challenges to their private sector counterparts. One such difference concerns the question of resistance to cutbacks. Be- cause public sector institutions have cuts imposed on them by external bodies, they have the option of appealing to these bodies for more money. This can involve the use of political strategies against the government and competing institutions in attempts to win larger budgets.

Fighting budget cuts would seem, then, to be a sensible strategy for public administrators’ and their employees. This article takes a closer look at the issues involved, first by examining how such a fight can be made effective and secondly, by addressing the question of whether to fight. A study of retrenchment in four organizations is used to illustrate the issues.

The remainder of the article is as follows. First, the existing literature on the question of resistance to cutbacks is discussed. The details of the em- pirical study are then provided. This is followed by a discussion of the tasks associated with effective resistance. The question of whether to fight is then considered with reference to some of the pitfalls that are associated with this strategy and the benefits it can produce.

Resisting cutbacks Much of the literature on cutbacks in the public sector concerns their implementation and, in particular, the political nature of this p roces2 How-

l There is considerable controversy over the definition of public sector which will not be discussed here. The key issue, for the purpose of this paper, is whether the organization receives all or part of its budget from the public purse. The term “public sector” will be used interchangeably with “publicly funded.” 2 See, for example, R.D. Behn, “Closing the Massachusetts Public Training Schools,” Policy Science, 7 (1976), pp. 151-71, “How to Terminate a Public Policy,” Policy Analysis, 4 (1978), pp. 393-413, and “Leadership for Ciithack Management: The Use of Corporate Strategy,” Public Administration Reoiew, 40, no. 6 (1980), pp. 613-20; C. Brewer, “Termination: IIard Choices - Harder Questions,” PtrbZic Administration Reuiew, 38, no. 6 ( 1978). pp. 338-344; A.D. Classberg, “Organizational Responses to Municipal Budget Decreases,” ibid., pp. 325-32; W.H. Lambright and H.M. Sapolsky, “Terminating Federal Research and Developnient Programs,” Policy Sciences, 7 ( 1976), pp. 183-97; C.H. Levine, “More on Cutback Management: Hard Questions for Hard Times,” Public Adiriinistration Reoiew, 39, no, 2 (1979), pp. 179-83; and C.H. Levine,

532 CANADIAN PUBLIC ADMINISTRATION

FIGHTING CUTBACKS

ever, as Levine has pointed out, “Strategies for dealing with decline will be mixed bag of tactics intended either to resist or to smooth decline. The logic here is that no organization accedes to cuts with enthusiasm and will try to find a way to resist cuts.”:’

Resistance to cutbacks has been found to occur in business organizations,‘ but here it tends to be initiated and orchestrated by employees and unions, and directed against management. Resistance in publicly funded institutions is a slightly different and more complex process. Funding cuts in the public sector are imposed on organizations by external bodies, usually the government, rather than being determined by internally generated profit and loss. Public sector cuts are the result of political choices and pro- cesses. It is not the case that there is no money in the kitty but, rather, that the money from the kitty has gone elsewhere. As a result, while employees may oppose managerial decisions, they may also direct their actions against governments. They may even be joined in this by managers, a situation that rarely occurs in the business sector. So management may play an active role in fighting cuts. Furthermore, other interest groups may be involved to a greater degree than in business organizations : for example, client groups, local politicians, the public.“

This is not to say that individual managers in business do not contest their budgets, or that resource allocation is free from politics. However, in business budgets are more closely tied to quantitative performance figures, with bankruptcy acting as the bottom line. In the public sector resource allocation is considered to be far more political and rarely “rational.”

In the business world, of course, the focus is on output and efficiency. The judge of success is profitability. In government the focus is more complicated and un- certain. Considerations of efficiency have to be traded off against other considerations such :is equity, . . . political and legal feasibility, administrative capacity and so on. The judge of success is the electorate, which renders its verdict at the ballot box every few years.6

Because of this, administrators, employees and other groups have an option, if not a vested interest, in contesting funding allocations and trying to reduce cutbacks by using political strategies of their own.

These strategies involve attempts to establish the legitimacy of the organ-

I .S. Rubin, and G.G. Wolohojian, The Politics of Retrenchment ( Beverly Hills: Sage,

3 C.H. Levine, “Organizational Decline and Cutback Management,” Public Adminis- tration Review, 38, no. 4 (1978), pp. 319-20. 4 C. Hardy, “Responses to Organizational Closure,” lndrrstrial Relations Journal, 16, no. 1 (1985), pp. 16-24. 5 C. Hardy, Managing Orgunizational Closure (Aldershot, UK: Cower, 1985). 6 G. Renber, “Better Bureaucracies,” Policy Options, 3, no. 5 ( 1982), p. 11.

1981).

533 ADMINISTRATION PUBLIQUE DU CANADA

CYNTHIA HARDY

ization in the eyes of its external constituencies. This is particularly important in times of economic scarcity when the organization must justify its existence and create support if it is to have any chance of improving government funding.’ With funding cuts comprising a major part of many governments’ policies to deal with inflation and recession, administrators from a variety of areas of public service have had to address this issue. One such example is higher education: “It seems clear to me that a grave challenge is set before us: to accurately inform our public leadership of the value and potential contribution of our universities, so as to emphasize the worthiness of our total academic venture.”s

In addition to creating legitimacy, other measures can be employed to fight cuts, including joining or forming coalitions, making political threats and promises, lobbying government, attracting public support and mobiliz- ing alumni, clients and boards of governors.9 It is this type of political strategy that forms the focus of this study, with an examination of a number of public sector organizations faced with cutbacks and the political strategies that were used to deal with them.

The study The case studies reported here form part of a larger study, in which ten British and Canadian organizations spanning both public and private sectors, faced with cutbacks, were examined.1° The focus here is on four publicly funded institutions: two health authorities in the British National Health Service ( NHS); a Montreal social service agency; and a Montreal university.ll

Ville Marie ( V M ) Social Service Centre is part of the nationalized health care system in Quebec. The centre is effectively responsible for providing

7 See J. Dowling and J. Pfeffer, “Organizational Legitimacy: Social Values and Organ- izational Behaviour,” Pacific Sociological Reoiew, 18, no. 1 (1975), pp. 122-35; and J. Pfeffer and G.R. Salancik, The External Control of Organizations (New York: Harper & Row, 1978). See also J.L. Bower and Y. Doz, “Strategy Formulation: A Social and Political Process,” in D.E. Schendel and C.W. Hofer, eds., Strategic Man- agement (Boston: Little, Brown and Co., 1979); J. Child, “Commentary” in ibid.; I.C. Macmillan, “Commentary” in ibid.; and I.S. Rubin, “Decision-Making in a Declining Federal Agency: The Bureau of Health Planning (paper presented at the Academy of Management, New York, August 1982 ) . 8 J.T. Bernhard, “Crisis Management Applications in Higher Education” (paper presented at the Inter-American Organization for Higher Education, Salvador, Brazil, April 1983), p. 5. 9 T.D. Jick and V.V. Murray, “The Management of Hard Times: Budget Cutbacks in Public Sector Organizations,” Organization Studies, 3 ( 1982), pp. 141-69. 10 C. Hardy, Managing Organizational Closure: lnoesting in Retrenchment? ( McGill Working Paper, 1985). 11 The names of the two British case studies are disguised at the request of the managers concerned.


FIGHTING CUTBACKS

social services to the anglophone population of Montreal. In 1981 the provincial government announced a funding cut of 11 per cent which represented a reduction of more than $2 million in the annual budget. VM had anticipated budget cuts for some time, but had been unaware of the exact magnitude. To prepare for this, three scenarios had been worked out, representing cuts of 8, 10 and 12 per cent. In July 1981 VM received notification from the Ministry of Social Affairs of the exact cut, and a request for a plan of how it was to be implemented. At first the board of governors attempted to resist these reductions, and passed a resolution to avoid cuts in direct services, concentrating instead on cuts in administration. On 8 September a public meeting was held by the board, inviting community and client groups to voice their opinions of VM and the proposed budget. The media were also invited. The general consensus of this meeting was that the agency should refuse to accept the cuts. On 10 September the board decided against submitting the plan to implement cuts of $2.3 million compiled by their managers, and instead submitted a plan which incorporated a reduction of only $248,601 in administrative overhead. In this they were formally supported by the Clinical Staff Advisory Committee ( CSAC, a staff-management committee), and informaIIy by most managers, union officials and employees.

The alternative plan which was submitted to the minister listed a number of explanations for the refusal to comply with ministry directives. The scenarios worked out earlier by management had indicated that the 11 per cent cut would result in a loss of eighty-four posts and would prevent VM from providing the services which, under its mission, it was obliged to offer. The support from the community indicated that these services were indeed needed. vhi also questioned some of the assumptions that underlay the ministry’s calculation of the budget. It argued that its mission to provide services to anglophones outside its assigned territories had been ignored and, consequently, its target population was considerably larger than that assumed and financed by the ministry.

A meeting was set up between the minister and representatives of VM, but to no avail. A press release from the chairman of VM’S board on 14 October stated that the minister was unresponsive to VM’S request for additional funds, and was still demanding an 11 per cent cut. On October 27 the board submitted a new plan complying with this demand. During November and December this plan was implemented. The necessary actions had already been worked out by senior management, and divisional managers were left to put them into effect. The resulting lay-offs and bumping’? were all completed by December 24, 1981.

12 An individual whose post is closed has the right to “bump” less senior employees. The individual’s first move is to bunip the person with least seniority in that centre of activity. This person niay then bump the next individual with less seniority in other

535 ADMINISTRATION PUALIQUE DU CANADA

CYNTHIA HARDY

McGill university is one of the oldest Canadian universities, established in 1821. Today it is large research institution catering for more than twenty thousand students, five thousand of whom are in graduate programs. More than thirteen hundred professors teach in twelve faculties, as well as schools and teaching hospitals. McGill is one of the largest employers in Montreal, with a total staff of more than seven thousand, and is responsible for a budget of more than $230 million.

McGill receives more than three-quarters of its operating revenue from the Quebec government. Budgetary compressions occurred gradually during the 1970s when cost increases exceeded the funding increases provided by the provincial government and tuition fees were frozen. This situation was exacerbated when, in 1981, the provincial government proposed cuts that would remove more than 30 per cent of the budget for all Quebec universities. The total effect of these compressions is significant for McGill. Between 197718 and 198415 the budget increased by 45 per cent. How- ever, the amount necessary to sustain the same level of activity and meet salary increases and non-salary inflation would have been 89 per cent. This $44 million shortfall was met by reducing expenditure ($34.9 million), not paying salary increases ( $7.1 million) and a deficit of $2.3 million (figures from the McGill Reporter, 20 June, 1984). This has meant a cut of more than 40 per cent in the operating budget over the last eight years.

Recently, a study was conducted into the historical funding base of the Quebec universities. The formula used to allocate resources between the universities appears to penalize those universities already established in the 1960s when the formula was devised, and further discriminates against institutions that have a large proportion of graduate students. Thus, according to this report, McGill is considered to be “underfunded.” The government has indicated that since no additional resources are available to correct this situation some of the resources of the “overfunded institutions may have to be reallocated. This has resulted in a flurry of reports from all the universities trying to either demonstrate their case for more funds or protesting proposed decreases in budgets. So far, the situation is unresolved and no major reallocation of resources has occurred.

Midville is a health district covering a rapidly expanding market town of the same name and surrounding villages in one of the midlands counties of England.13 It is part of a larger Area Health Authority ( A H A ) called Midshire which covers the entire county. In April 1977 Midville managers recommended that Withybrook hospital be closed. Withybrook was a small

centres of activity. The process is repeated until the person with the least seniority loses his/her job. There are sonic constraints: it must be the same job title and in the same liargaining unit. 13 The situation described here refers to the situation following the 1974 reorganiza- tion of the NHS.


FIGHTING CUTBACKS

cottage hospital some ten miles from Midville; it had originalIy treated TB

patients but, with the virtual eradication of the disease, had turned to chest patients and “cold surgery (varicose veins, vasectomies, and so on). The AHA’S policy of concentrating services in the district general hospital ( DGH)

in Midville would have brought about Withybrook’s eventual demise. However, the closure was brought forward to save an estimated 2340,000 that was badly needed at a time of financial constraint.

The health region, which was responsible for a number of AHAS, had always been one of the richer regions in the NHS and had, hitherto, attracted funds. When the Resource Allocation Party (RAWP) devised a formula for a more equal distribution of funds in the NHS, it had involved taking money away from the richer regions. The problem from Midshire’s point of view was that they considered themselves an uiiderfunded area within the region, by as much as ;El million per annum. With the loss of money through RAWP and the general economic stringencies imposed by government expenditure cuts, Midshire’s small slice was coming from an even smaller pie. This situation was exacerbated by Midshire’s obligation to cater for 50 per cent of the population of a nearby town until its own hospital facilities were completed.

Local management made a formal recommendation to the AHA for the closure of the hospital. The AHA consists of a chairperson, appointed by the Regional Health Authority ( RHA) , and between eighteen and thirty-three members, including one consultant, one general practitioner, one nominee from the local university, one trade unionist, two health service employees, a number of lay members, and members from the local council, who make up at least one-third. The AHA is the decision-making body for that particular area - it responds to and votes on recommendations from its managers.

In the event of a closure the usual procedure is for management to make its proposal to the AHA and, if affirmed, produce a consultative document which is circulated to unions, the Community Health Council ( CHC) , local authorities, staff associations and advisory committees. These groups are expected to make comments on the proposed closure, which should be taken into account by the AHA when making its final decision. The view of the CHC is particularly significant. There is one CHC in each district to represent the interests of the patients. If the CHC objects to a proposed closure and submits an alternative plan, and the AHA still wishes to proceed, the decision has to be passed up to the regional level. If the region will not accept the CHC’S proposals it must seek the approval of the minister before it can go ahead with the closure. Thus, the CHC has a formal mechanism whereby it can register its objections, In some cases closures have been overturncd at the ministerial level. This is particularly true of the mid- seventies when a number of hospital occupations were organized by coalitions of doctors, nurses and ancillary workers to prevent planned closures.


CYNTHIA HARDY

As a result, some closures were delayed or revoked, since ministers, sensitive to such actions, were reluctant to approve them. If, on the other hand, the CHC agrees to a closure, the AHA can go ahead with it.

In the case of Midville the initial recommendation was accepted by the AHA and the consultative document released in July 1977. In August there was formal notice of the proposed closure which the CHC decided to oppose. In December the AHA reaffirmed its decision to proceed but, because of the CHC’S actions, was forced to pass the matter up to the regional level. The region supported the AHA, and the matter was passed up again to the minister who, in March 1979, accepted the proposal. The matter was not fin- ished, however, until September of that year when the new government, which had come into office in May and had reserved the right to reconsider the issue, finally gave its approval.

Northville is an AHA in a large, industrialized city in the north of Eng- land. In the mid-seventies a proposal to close Maine Road maternity hospital was made. Maine Road had been a candidate for closure since the 1960s simply because it was an old hospital. During the 1970s it became clear that Northville had an over-provision of maternity beds: a fall in the birth rate coupled with a move of people out of the inner city area, where Maine Road was situated, had resulted in falling bed occupancy. Apart from a prestige maternity unit in the city, which enjoyed a very good reputation both inside and outside the city, the three remaining maternity units - Maine Road and maternity wards at two general hospitals - were a11 working at around 50 per cent of capacity.

There was then, according to management, a need to rationalize maternity services. This general commitment to the principle of rationalization was turned into a specific plan to close Maine Road. In 1976 initial sound- ings of the plan met with the approval of the AHA. In September a consultative document was released, proposing the closure over two years, during which time maternity facilities at the two general hospitals would be improved to meet any increase in demand.

Concern was immediately expressed by a number of groups at this plan: staff‘ at Maine Road set up an action committee to stop the closure. They wrote to doctors, lobbied MPS, appeared on television and radio, spoke at a local trades council meeting, contacted the press and presented the chair- inan of the AHA with a petition of ten thousand signatures opposing the closure. The action committee was linked with the two CHCS that covered the area and which were also opposed to the closure. The National Union of Public Employees ( NUPE ) , representing ancillary workers, expressed “serious concern” at the proposal, arguing that the birth rate would rise again and the facilities at Maine Road would be needed.

Despite this furore management pressed on and in March 1977 issued a supplement to the consultative document bringing the closure forward.


FIGHTING CUTBACKS

This, according to management, was necessitated by the estimated annual deficit of 6: 1 million. This document also mentioned, for the first time, the alternative of closing the wards at the two general hospitals and retaining Maine Road. This option was dismissed, however, on the basis that the savings associated with the closure of a complete hospital would be 32500,000 a year greater and in keeping with the government’s policy to integrate specialist units into DGHS with all their back-up facilities.

This supplement caused a further impetus in the opposition movement. The local media continued to report on the issue, and there was a well- attended public meeting in May, at which a consultant obstetrician spoke against the closure. Both CHCS restated their position and the unions continued to oppose it.

A special meeting of the AHA was called in July 1977 to consider the closure. Fifteen members (out of twenty-six) attended but only nine voted - five to four in favour of the closure. The opposition continued. A letter from the consultant obstetrician at Maine Road argued that the hospital should be retained because it was such a good specialist unit. An outburst of indignation arose from the staff at the hospital about the low turnout at the AHA meeting.

On 23 August another meeting of the AHA was called. Only fourteen members attended but thirteen voted, and the decision was nine to four in favour of retaining Maine Road and closing the maternity wards at the two general hospitals. These were eventually closed the following year.

How to resist effectively Resisting budget cuts is rarely an easy task: it requires an effective strategy. This section discusses some of the things that can be done to mount an effective resistance campaign.

Identify interest groups Public sector organizations tend to have more external influencers and constituencies than does the typical business, Public scrutiny and accountability further complicate this situation.l” As a result, the number of groups with an interest in budget cuts can be large. Individuals wishing to initiate resistance have to learn to identify these and establish whether they are sympathetic to thcir cause or not.

One of the first things to do is to establish whether the administration is united in its desire to resist cuts. Large business organizations are charac- terized by a separation between ownership and management, but the former is often so dispersed that it is rare for “accountability to the share- holder” to have any great force. As a result, managers hold most of the

14 H.G. Rainey, R.W. RackoR and C.H. Levine, “Coinparing Public and Private Or- ganizations,” Public Administration Reuiew, 36 1976, pp. 233-44.


CYNTHIA HARDY

decision-making power. In the public sector managerial functions are often more clearly divided between some sort of board and management. Usually, the board has ultimate decision-making power, although it may not choose to exercise it: Midville AHA was considered to be supportive of its managers; the board of governors a t McGill has a tradition of deferring to the administration on budgets, and senate in decisions concerning academic matters. In other situations, however, the board may play a far more active role: at Ville Marie it orchestrated the resistance to the cuts, with managerial support; a t Northville, the AHA voted explicitly against managerial recommendations. In situations such as these it may be unclear as to exactly who holds the power.

Another complication is that whereas shareholders are supposedly united by the profit motive, public boards consist of people from a variety of back- grounds with their own constituencies and interests. This is particularly evident in the NHS, where board members represent such diverse constituencies as employees, unions, professionals, patientslclients, community groups and local politicians. The position of individual board members will vary according to their commitments to and dependency on these constituencies. For example, the councillors on Northville AHA were considered particularly sensitive to public opinion. This was because there was a balance of power in the local government, and councillors were keen to support public causes which would win them electoral votes. Those favouring resistance have to be aware of the motivations of board members and the influence of other groups over them.

Because of the potential power and diversity of the board and the complex relationship between it and management, anyone seeking to initiate resistance will have to examine closely the views of the administration. A united administration, with both board and management supporting resistance, is obviously more likely to be effective in preventing cuts than one which is divided. The position of external interest groups also has to be ascertained to see whether they are likely to support resistance. At North- ville the resistance involved a coalition of key doctors, nurses, other employees, the unions, the CHC and local councillors, all of whom secured the support of the media.

There may be supporters of resistance in the various levels of the bureaucracy, and even in the government. Local politicians with constituencies in the area may take a different stand to the cabinet minister responsible for the portfolio. The position of the government may change: a government coming up to an election may act differently than one recently returned with a large majority, regardless of its stated policies. Midville illustrates this point. The formal objection by the CHC passed the decision up to the minister, a member of a Conservative government that had been recently elected on the basis of a cost-conscious manifesto. The support for the deci-


FIGHTING CUTBACKS

sion to close the hospital was in keeping with that. Over time, however, this position changed and the Conservatives started to favour small community hospitals, like the one that was to be closed. Had the issue arisen later the outcome might have been very different, even though the government was continuing to restrict public funding.

Because the plethora of interest groups is so much more complex in the public sector, any attempt to resist cuts must commence with an appraisal of these groups and their positions, A variety of combinations can occur: the board, or its equivalent, may be instrumental in challenging cuts, with or without managerial support; various other groups may be involved; and even governments may act differently in particular cases than their stated policies would indicate.

Building coalitions Identifying interest groups and their agendas allows those favouring resistance to build effective coalitions. Choices have to be made as to which groups should be included to help further the cause, and which should be confined to a less visible role. Obviously those with power and influence should be included. One such group in the case of the hospital closures was the doctors; because of their perceived expertise they had considerable influence on both the AHA and the public:

It is difficult to challenge their view as laymen ( CHC secretary).

In the case of Northville, those doctors who were visible opposed the closure and were instrumental in the case for retention:

The fact that a senior consultant obstetrician was speaking for the retention of hlaine Road went a long way towards the campaign’s success (manager) .

Doctors a t Midville in contrast, did not oppose the decision.

It was the medics who killed that hospital ( CIIC secretary).

Other groups may be powerful because of their numbers. In the NHS, local councillors make up one-third of the AHA membership so that

if they decide to turn up in force they can reverse any decision (AHA member).

Some groups might have to be excluded if they are considered likely to alienate rather than create support. Opposition groups at Northville decided not to openly affiliate themselves with the unions:

I didn’t want the CHC to get involved with the unions. . . , I wanted to make sure that I looked at it from the view of the patients ( CHC secretary).

As a result, the unions, while supportive of the campaign, kept a low profile:

541 ADMINISTRATION PURLIQUE DU CANADA

CYNTHIA HARDY

If we had fought it our way, I think we would have lost the sympathy of the general public (shop stcward) . In other cases, union involvement may be an advantage, as at Ville Marie, where they were an active part of the resistance.

Another dwision that has to be taken concerns whether thc institution invokes the support of similar organizations or pleads on its own behalf. Ville Marie chose to act alone, Some argucd that Montrkal Mktropolitan (hihi), the social service agency representing the francophonc population, would add additional power and weight to the arguments. Others felt MM

was insufficiently sympathctic, and perceived Ville Marie as privilcged “fat cats”:

Cooperation tends to Iil-eiik down because everyone is competing for their share of the same pie within the region of Montreal ( m a n a g e r ) .

In any event, Vhl’S stand against the cuts was made on its own bchalf and without the activc cooperation of MM. Some argue that such an isola- tionist policy was sclf-dcfcating: first because alone VM lackcd the power to put efl’ectivc pressiire on thc government, whereas a coalition with MM

would have strengthcncd them; and secondly, becausc: the dcfencc of a relatively small anglophone institution in a francophone province, repre- scnting what is pcrccbivcd to be a relatively privileged sector of thc population, lacks political fcasibility:

Yoii’re fighting a losing battle - there’s no wiy they’re going to exempt an anglophone agency m i d :illo\v all the fl-ancophone agencies to absorb their cuts (niiinager) . \’hi might have hcwi morc cffective in its fight against the cuts if it had actively solicited thc support of h m i and broadened the issue to a more politically acceptable concern regarding the funding of all social welfare agencies.

McGill Univcmity i n the past has tended to act jointly with other universities, through the Confcrcnce of Rectors and Principals of Quebec ( CREPUQ), which rcyrescnts all the univcrsities in the province, to argue its case to government. EIowcver, thcb recent changes in funding mcthods proposed b y the govcrnmcwt will, if brought into effect, likely involve redis- tributing funds lwtwwn the universities. In other words, taking money from some institutions and giving it to othcrs. This has put the universities, including McGill, in a difficult position. On the one hand, they are arguing for increased resources for the higher education system as a wholc; on the other hand, if that moncy is not forthcoming, they will need to justify the funding nccds of thcir particular institution which could bc in direct com- petition with thosc of the other universities. This coiild have thc effect of reducing coopcmtion and pitting the universities against cach other, pos- sibly reducing their power and chances of success.


FIGHTING CUTBACKS

Create I eg it i macy Support from potential coalition members is not automatic, it has to be cultivated. The key here is to create legitimacy for the organization and its mission in the eyes of the various groups. This often necessitates quite different strategies to be directed at each group.

Public support can be attracted through the media and public meetings. It seems that emotional rather than clinical arguments are more effective here.

Once you make it a technical question you lose the public . . , you don’t talk about per capitas (hoard member at Ville Mar ie ) .

People form parochial attachments. They have an emotionil and not a clinical view (cansrtfiant at Northoilk),

Achieving public support can produce other gains. I t is a powerful political weapon a t both national and local levels, as at Northville where the local councillors were influenced by public opinion. Because they represented one-third of the AHA mcmbership they were a key factor in saving the hospital.

I t is also important to recognize which arguments are legitimate and which are not. In the public sector financial reasons are rarely considered an acceptable basis on which to curtail services. At Midville, managers were careful to secure medical approval for the closure so that, while much-needed cost-saving would be one result, there were no medical grounds on which to contest the closure. At Northville, in contrast, management arguments proposing the closure of Maine Road as a way to save money were not considered legitimate. I t was deemed unacceptable to deprive the community of medical services on the grounds of finance alone.

Our union is always opposed to closure on financial grounds - they probably put too much weight on finance (union official).

In addition, management failed to secure medical approval for the closure. In fact, the vocal medical opinion opposed the closure on the grounds that it was too good a maternity hospital to be closed.

Any claim for increased resources directed at the government will have to be accompanied by rational argumentation and quantitative data to support the case. While political arguments and public sentiment provide some influence, political decisions are a t least validated with reference to the “facts” in that the data are marshalled to justify the outcome.15 In addition, such data may bc needed to cultivate support among other groups.

15 A. Fox, “Indiistrial Relations: A Social Critique of Pluralist Ideology,” in J. Child, ed., M a n and Orgunization (London: Allen ti Unwin, 1973); C. Majone, “The Uses of Policy Analysis,” in The Firture and the Past: Essays on Programs (Russel Sage Founda- tion, 1977) ; A. J. Meltsner, “Political Feasibility and Policy Analysis,” Public Adminis- tration Reoietu, 36 ( Nov./Dec. 1972), pp. 859-67; P. Sabatier, “The Acquisitional


CYNTHIA HARDY

Ville Marie’s attempt to resist the cutbacks was undermined by its in- ability to play the numbers game.

When you sit down to argue the budget you argue numbers. We didn’t have those numbers . . , we’d sit down at budget-arguing time with very little data to prove our point. We knew we were getting shortchanged but we couldn’t substantiate that with quantifiable data (board member).

Learning from experience, Ville Marie now has

a position paper that is really well documented with good solid arguments that we didn’t have before (board member).

This has helped Ville Marie secure support from the francophone agency in terms of general funding cuts.

At the time [of the funding cuts] MM viewed Ville Marie as privileged because of the ministi y’s breakdown of statistics, and we couldn’t prove differently. Only when we came lip with this precise information and could establish more con- crete arguments, more valid arguments, did they become more sympathetic (hoard mcmhcr).

There is, however, another threat to VM’S existence and that is the government plan to increase the number of local community centres. An increase in these could result in the transfer of one-third of VM’S personnel and radi- cally change the mandate of thc agency. VM’S concentrated efforts to demonstrate the legitimacy of its arguments has bought them time, and at least persuaded the government to re-evaluate the issue.

Similar attempts to demonstrate legitimacy have occurred in the higher education sector. Publications and press releases from CREPUQ repeatedly draw attention to the negative effect of the cutbacks on higher education generally: by pointing out by how much spending has been reduced; how this compares with earlier years; how education is bearing more than its fair share of expenditure cuts; how that translates into the reduced amount spent on each student. However, as was mentioned earlier, there is now an onus on demonstrating the effects of funding cuts on the individual institution and the different universities have made submissions to the government arguing for the need for morc resources in the case of the underfunded universities, and the need to at least maintain funding levels in the supposedly overfunded institutions. In this regard, McGill’s submission may be inadequate, consisting of only eight pages of text, while the Universite de Montrkal ( also defined as underfunded) submitted thirty-four pages, and fifty-four pages of appendices with considerable documentation and tables “proving” their arguments.

Utilization of Technical Inforniation b y Administrative Agencies,” Administrative Science Quarterly, 23 ( 1978), pp. 396-417; and C.H. Weiss and M.J. Bucuvalas, Social Science Research and Decision-Making ( New York: Columbia University Press, 1980).


FIGHTING CUTBACKS

This section has examined some of the requirements of effective resistance. This is a political strategy, involving the creation of legitimacy, building of coalitions and nurturing of support. It requires

savoire faire and knowledge of dealing with the mechanisms of the bureaucracy. . . . You have to participate in the system and all the informal lobbying that goes on (Ville Marie board member).

It would seem to be a sensible strategy to pursue, assuming that the op- ponents of the cutbacks are able to meet the requirements discussed here. The decision of whether to resist is not, however, as simple as it sounds. There are a number of pitfalls of which individuals need to be aware. On the other hand, there are some advantages. The following section discusses this question of whether to resist in more detail.

Whether to resist Resistance can create problems, particularly if resources are not increased and the cuts still have to be implemented. These are discussed below.

The pitfalls of resistance One effect resistance has is that it increases uncertainty, simply because the campaign may be successful in reducing or avoiding cuts. Until the outcome is known, this uncertainty can be counter-productive; not knowing may be more uncomfortable than knowing the worst. Moreover, organizations that delay the cuts while the resistance campaign is being mounted can find themselves ultimately faced with larger cuts in order to balance the budget. Ville Marie tried to circumvent this by planning a variety of cutback scenarios in the event the budget was reduced. This caused some probIems in that employees were distrustful of management’s actions.

At the same time the board had a firm position that they weren’t going to make cuts, management was busy piling LIP how cuts were going to be made. There was a public stone-walling at the same time as we were working away on how YOU go and do it. That caused distrust from the staff who felt that the process was going on anyway, even though, officially, it was not (manager).

If an organization is to cultivate support, it will have to paint the worst picture regarding the impact of cutbacks. This in itself can create considerable uncertainty. For example, at Ville Marie projections of eighty-four lost posts were made. However, when the cutbacks were eventually implemented, only twenty-two people lost their jobs.

Further uncertainty acompanies the question of how far to go in resisting cuts. Had Ville Marie continued to refuse to implement the funding cuts, they would have run the risk of being placed in trusteeship.

I thought it was good that someone took a stand but a t the same time I didn’t know what it would do. We were afraid that if they [the board members] all


CYNTHIA HARDY

resigned we’d be placed into trusteeship, and people were more afraid of trusteeship (emp2oyee).

The board eventually decided to comply with the minister’s demand for a cutback plan.

If we hadn’t presented a plan we would have had one imposed which would have been worse (board member).

Not everybody was in agreement with this.

It’s not up to us to execute this kind of policy [make cuts]. The opposing argument was that the trustees would do it and the English would lose control of an English institution. I could never understand that argument - what could they do that was worse than what we were doing to ourselves (board member).

The government expects you to scream and yell. The board should have refused to cut. Many of us were ready to accept trusteeship. . . . we compromise and compromise until there’s nothing left (union representative).

Another problem concerns the compromises that are made in an attempt to present a united front to the government. At Ville Marie it was felt that the public stand could only succeed if unions, staff, management and board acted in accord. This placed a severe strain on the union representatives who, while supporting actions which might prevent the cuts, were worried that they were being excluded from the process of deciding where the cuts would be made. This placed the unions in an awkward position:

The unions couldn’t attack the hypothetical plans on cutbacks without discredit- ing the organization which was fighting to minimize cuts. So they weren’t able to operationalize their part of the strategy until later on when cuts became a reality. . . . The union wasn’t stupid and they realized they were being manipu- lated but they had no choice: their interests were really VM’S interests and they couldn’t get to the second level of their strategy which was in terms of getting to that management process of how cuts were structured within the centre (board member).

Linked with this is the issue of the union members: whether they are prepared to take the necessary steps for effective resistance, which can sometimes involve taking industrial action. While some parts of the public sector in both Canada and Britain are highly unionized and militant, other parts are not. Professionals in universities and the health care system, for example, are often loath to take industrial action.

They [the membership] will stick their necks out but when the axe is coming down they’ll pull it back in quickly. They might lose a few hairs but that’s about all (Ville Marie un’ion representative).

In the event that resistance proves ineffective, unions and their members may find themselves blamed.


FIGHTING CUTBACKS

From my point of view, they [the unions] didn’t do as much as they could have done. , . . They had the most power to fight cutbacks (Ville Marie manager).

Finally, there is the question of whether the effort is worth it. Northville provides an example of successful resistance: the hospital in question was retained. Elsewhere, however, the picture is different: Midville’s CHC failed to prevent the closure; Quebec universities have so far had limited success in improving their budgets; Ville Marie had to sustain an 11 per cent cut. Opinion there is divided as to the value of resistance.

I hypothesize that had we not done what we did the cuts would have been worse (board member at Ville Marie).

[It was] schizophrenic and not terribly helpful. I don’t think anyone on the outside paid much attention to them, certainly not in terms of the budget figures which came down (Ville Marie manager).

Opposition can backfire, alienating the government and perhaps jeopardiz- ing future relations, and losing public support.

I think the confrontational approach is counterproductive . . . the taxpayer gets turned off - professors are no longer regarded as professionals but as syndicalists (administrator at McGill) ,

The benefits of resistance There are some benefits to be derived from making a stand on budget cuts. First, the legitimacy that is created for the organization and its mission in the eyes of the public, and the attention that is drawn to the damage done by funding restrictions, can help to protect the institution in the longer term.

I think it [resistance] highlighted some of the government’s policies as being very destructive forces in the social and health sector, and it made people conscious of what we do. We’ve never had so much publicity as we had then (Ville Marie manager),

Furthermore, the education that occurs via the marshalling of data can change future government policies. At VM the campaign “certainly set the minister thinking a bit” (manager). The campaign of Quebec universities to change the historical basis of their funding has a t least resulted in a study of the matter by the ministry.

If cuts can be reduced or delayed the organization buys some time to find access to other sources of funding. Miles and Cameron refer to these delaying tactics as domain defence.lG The legitimacy of the existing mission of the enterprise is defended, allowing the examination of other solutions

16 Cliffs, N.J.: Prentice Hall, 1982).

R.H. Miles and K.S. Cameron, Co@n Nails and Corporate Strategies (Englewood


CYNTHIA HARDY

such as increased market penetration ( domain offence ) and diversification (domain creation). These strategies were observed in the tobacco industry when it was first threatened by health concerns. Cameron has since applied the model to higher education.’7 In this case, political lobbying is used to buy time and allow new techniques to be used to attract students and increase enrolment or solicit funds from private sources.

Another reason why resistance to cutbacks is important for managers and administrators concerns the symbolic effect of such an effort. Managers and administrators who fight cuts will be viewed as having a commitment to the organization, its employees and its clients. This is particularly important for managerial credibility and may, ironically, help the subsequent implementation of cuts if employees feel their managers did all they could to prevent them. At VM despite the trauma of the cuts, relations between managers and employees have, if anything, improved and consultation increased.

I was impressed, I must say, by the way the unions handled it, and cooperated and worked very cIosely with us to make sure the effect of the bumping was minimal (managcr) .

That’s something we’ve worked out due to the cuts - we worked an arrange- ment for a [joint committee] where any type of issue and the unions have to be involved. It’s part of an agreement - all the unions plus management. In the future hopefully that will work (union representative),

If resistance is going to occur from other quarters anyway, managers have to seriously consider whether they ought not to join it. At Northville resistance ended up being directed against management and when the AHA

supported the opposition, managers found themselves having to do a 180- degree turn, with their credibility severely compromised.

There are, then, a number of advantages associated with the strategy of resistance; not least the very real possibility of avoiding or reducing cutbacks.

Conclusions This article has examined political strategies to resist cuts, arguing that they are viable options for individuals wishing to resist cuts and represent a course of action that managers and administrators should seriously consider. Notwithstanding this, however, there are some pitfalls associated with this approach. Managers have to be aware of these if they are to make an intelligent choice concerning the decision to resist, and avoid the associated problems.

In terms of the organizations in the study, VM made a valiant effort to

K. Cameron, “Strategic Responses to Conditions of Decline: Higher Education and 17 the Private Sector,” Journal of Higher Education, 54 ( 1983), pp. 359-80.


FIGHTING CUTBACKS

resist the funding cuts. In so doing, some problems arose concerning the relationship bctween management and unions, although these were resolved during the remainder of the cutback process. Some people have wondered whether the stand against the cuts was worth it. On the whole, however, the feeling appears to be that the board, the unions and management were right to do whatever they could. Some misjudgment may have been made in not soliciting the support of the larger francophone agency, although current attcmpts to prevent the movement of services and personnel to local community centres are still being organized on the basis of protecting the English-speaking community. However, VM now has the active support of the English rights group, Alliance Quebec, and can bene- fit from that. In addition, VM has undoubtedly learnt the value of marshalling adequate data to defend its position, and is much more sophisticated in this regard.

At Midville the opposition campaign presented some problems for management, notably in delaying the closure. However, management was able to handle the closure without alienating the CHC, unions or employees. Moreover, it was able to use the CHC’S stand to illustrate the need for increased funding.

The situation at Northvillc was quite different, since it developed into a fight between the opposition groups and management, with the AHA ultimately deciding not to support its own managers. This, and the about-face on the decision concerning h4aine Road, severely compromised management’s credibility and resulted in allegations of mismanagement.

McGill has, perhaps, experienced the worst of its budget cuts, although compressions continue. The funding issue between the universities is unresolved, and it remains to be seen whether McGill will be effective in demonstrating its case for more money.

The context of this discussion has been the publicly funded institution because, it was argued, funding cuts are imposed from the outside. This is not, however, to preclude it as a strategy for private enterprise. We have already seen its use in the tobacco industry. A similar tactic was employed by Chrysler in its bail-out bid which was highly successful: the bid for legitimacy ( domain defence) provided money from government and bankers which staved off bankruptcy long enough for an effective strategy of domain offence to produce increased sales and revenues. Other com- panies faced with layoffs and plant closures have adopted similar tactics. In summary, the issue of resisting cutbacks is relevant to both public and private sectors.


Fighting cutbacks: some issues for public sector administrators

Documents

Transcript of Fighting cutbacks: some issues for public sector administrators