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A word to the new super ministry: How to avoid a disappointing marriage

Wellington is abuzz with news of the super ministry, which was unveiled last week and will have major implications for a large number of public servants.

Some leaders in the science system have commented about the implications of the Ministry of Science and Innovation being bundled into the new Ministry of Business, Innovation and Employment. Professor Shaun Hendy, who is President of the New Zealand Association of Scientists, said the merger could have major benefits on the economic development front, but may marginalise important environmental and health research that didn’t have an immediate economic outcome.

In a press release he is quoted as saying:

“We know that more scientific research is needed to grow industry, manufacturing and exports. But large components of the science system are concerned with the broader view, such as environmental and health science research, areas that do not often deliver an immediate payoff but which can be immensely valuable over longer time frames. Further change such as this is likely to add more uncertainty to funding structures and to science career paths, especially for younger scientists”.

The Prime Minister’s Chief Science Advisor, Sir Peter Gluckman, also weighed in, saying:

“This reorganisation highlights the role that science and science-based innovation can play in a country’s development, be it through direct impact on greater productivity from enhanced services, advanced manufacturing and the primary industries, or indirectly through greater environmental sustainability and social development.

“It will be important that the new Ministry continues to give focus to the broader ways in which science advances New Zealand and I have no doubt that will indeed be the case.”

He points out also that the grouping of science, skills and economic development under one roof is not uncommon overseas. Indeed, the UK’s Department of Business, Innovation and Skills was formed in 2009 as the result of a merger, one of several the coalition government has undertaken there in a drive to reduce national debt. Australia’s Department of Industry, Innovation, Research, Science and Tertiary Education came into being officially just a few months ago. If anything stands out as unique about the merger here is that it did not include tertiary education.

It is too early to tell if these major science-business mergers in the public sector have worked particularly well, but there’s plenty of evidence to suggest that mergers in general are tricky to get right. This merger study Disappointing Marriage: A Study of the Gains from Merger is often cited, though looks at the the private sector.  In anticipation of a large amount of public sector merger activity, Grant Thorton and the Guardian newspaper in 2010 commissioned a survey of 600 directors and senior managers to gauge attitudes in the public sector towards mergers. In the report’s intro the authors note:

While few precedents exist and little practical guidance on successful implementation is available, there is copious evidence that reorganisation and restructuring often result in failure. This is not a problem unique to the public sector. Indeed, a review of the literature shows that between 50-80% of private sector mergers disappoint, with many destroying shareholder value.

Gramt Thornton’s advice for a successful public sector merger…

Plan – ensure that the appropriate people, skills and plans are in place, available to support implementation. Seek specialist advice (legal, financial) when appropriate to avoid any unintended consequences and costly mistakes.

•Cost – consider the full cost of implementation and ensure that a budget has been agreed and is in place before implementation begins.

• People – focus on the integration of organisational cultures and ways of working, as well keeping staff and other stakeholders informed throughout the process.

• Leadership – take the tough decisions early, making sure that the leadership team is in place to take ownership of the process and that clear incentives are in place for management to deliver change.

• Benefits – be clear about the benefits, risks, and timescales of change.

Some of the survey results from the report give an insight into the perceptions of mergers in the public sector and what leaders in the sector see as the desired and realistic outcomes of mergers.

merger fig 1

merger fig 2merger fig 3A fair amount of cynicism then in the higher ranks of public departments about the potential for positive change from merging Government departments, which may well say more about human nature than the merits of creating super ministries.

This post originally appeared on Sciblogs.


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