How Much? Why You Need To Know The Cost Of Austerity.

'How much does it cost' must be one of the most used phrases in business, spanning both the public and private sectors. In fact, it's a standard question we seem to constantly face in all walks of life. And for very good reason.

With all the current austerity measures going on at the moment, and with public services across the UK needing to reduce their spending, it is more important than ever to be able to answer this question clearly and concisely.

When we talk about costs, it's important we don't just talk about numbers – it's also about value. I'd urge you to demonstrate this wherever you can. There are many sources of performance data available and you should seek to identify the value your service is offering in comparison with others, as well as the absolute cost.

As a manager within the public sector, you will, I'm sure, already have a really good picture of the costs of your own service. You will have an annual budget and I am sure you monitor your expenditure against that budget regularly. You will also have a clear picture of what organisational costs are added to your direct service costs. I am thinking here of things like IT costs, central management and professional costs, as well as strategic costs and overheads.

The extent to which organisations devolve and monitor those costs at individual service level varies enormously. Some public sector organisations have delegated budgets down to service level; others are content to have service level costs monitored by individual managers but leave organisational and structural costs unallocated.

For the purposes of the CHERISH process, you need to make great efforts to understand all the costs that make up your overall cost. If you truly want the public to cherish you, they will expect you to be open and honest with them about both what you do and how much that costs. If you are not clear about both of those things or you are not confident that your costs are accurate, people will be right to question why they should listen to you and, consequently, whether they should care about your service.

So, what do you need to do?

Well, the first thing is to understand is that CHERISH is a two-way street – it relies on you and the public trusting each other and being honest with each other. And it's about you as a public service manager being clear about your 'offer'. For some public sector organisations, openness on actual costs may prove to be difficult at first. Many organisations may not want their managers to question the direct, organisational or structural costs. They may also not want their managers to share that information with the public.

However the demands of the New Public Sector will mean that such views must change. We are facing expectations on the part of the public for much greater understanding of what they are paying for, and government, in its turn, will question costs that do not demonstrably and directly contribute to the delivery of service outcomes. What questions do you ask yourself when you are making purchasing decisions in your own life?

So what you need to do is to develop clarity of understanding about your costs, reduce them once you have a true picture of them, and encourage your organisation to be more transparent about those costs. Simple? Maybe not, but I'll be sharing how you can do this over the next few weeks. You can also find out more at the link below.