McKinsey: Putting people at the heart of public-sector transformations

Transformation in government is a hugely complex undertaking. That makes it critical to get the people component right.

 
It is no easy matter to bring about major change in a large, complex organization—whichever sector it’s in. McKinsey research has found that 74 percent of private-sector transformation efforts fail to meet their objectives, while in the public sector, the failure rate is even higher, at 80 percent. In both sectors, people practices are a decisive factor, often making the difference between success and disappointment. Indeed, the five key success factors for government transformations all have a strong people component (Exhibit 1).

Rachna Gandhi, a former business executive who went on to lead the Australian government agency Service NSW, put it this way: “Transformations in government are not harder than in the private sector. There are certain unique factors in both, but the toughness factor is pretty similar. Both need to emphasize bringing people on the journey and creating an emotional investment.”

Paradoxically, the importance of people practices in transformations is both good and bad news for public-sector change leaders. On the one hand, governments’ public-service mission gives them a distinct advantage over private-sector peers when it comes to mobilizing people to live their values and achieve social outcomes. On the other, there is a lot of evidence that structures and cultures in government make them more change resistant than business organizations, reducing their overall organizational health and effectiveness.

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Putting people at the heart of public-sector transformations