Transforming Public Sector Institutions
From WHAT to WHAT&HOW: The Center of Excellence in Finance (CEF) supports capacity development for finance officials in South East Europe through learning. In this quest we believe in personal and institutional transformation. I’m often asked to talk about this mission and I make the case through my story and the story of the CEF - the institution I lead and helped transform.
I joined the CEF in 2005. As a training institution working with ministries of finance and central banks we organized about 30 workshops per year. All were very highly evaluated and appreciated, focused on technical knowledge of pubic financial management (PFM) and central banking. We could have not competed with practitioners that had contents knowledge, the knowledge of WHAT, so our role was to be administrators.
But we observed HOW lecturing experts delivered workshops. This was mostly ex-cathedra. Participants to a large extend stayed passive in their learning. There was very little connection among them or with lecturing experts. We asked ourselves why this was the case. More we thought about it, more we realized we needed to transform how we worked.
We needed to change our approach from aiming to be experts in public financial management and central banking (focus on WHAT) to becoming experts in learning on the topic of public financial management and central banking (focus on HOW). We needed to become facilitators of learning.
It took us several more years to internalize that we are the experts on learning - in PFM and central banking. Besides having knowledge on technical expertise (WHAT), we need to be in control of learning process in an activity (HOW). We need to have good knowledge of methodologies, tools and approaches of learning and knowledge management.
We looked for knowledge and in 2014 we connected to World Bank’s Community of Practice focusing on knowledge hubs. In the past five years we focused to become a knowledge hub building on three blocks: (a) systems and processes; (b) institutional physical environment; (c) psychological safety.
Knowledge hub building block 1: Systems and processes of learning
Within our mid-term development strategy, we in 2014 clearly defined our vision and mission. We then identified our knowledge gap. It is important that we captured where we have knowledge and where we lack it or where knowledge is kept with individuals.
Then we identified steps we have to take to get where we want to be. These steps we packaged in distinct activities that we call change projects. Activities may be external training, an introduction of a new IT system, introduction of a new process, or an Internal Knowledge Sharing (IKS) activity.
Learning and knowledge sharing are crucial source of value creation. We have learnt through our own experience that the ability to share knowledge as well as how to do it is not something that will happen without a clear plan for it. It did not happen in our institution and I can have reasonable assurance this will also be the case for other institutions. An institution has to have systems and processes in place to support effective learning and knowledge management.
Knowledge hub building block 2: Physical environment for work and learning
Pretty much at the same time we started to understand that—besides focusing on systems and processes--we also have to strengthen our focus to how people feel when they work and learn. This is to help them open up and be ready to consider transformation.
We decided to use architecture to soften our environment. We hired an architect specialized in architectural design of kindergartens and schools to help us design our classrooms, office space, and also virtual learning spaces. Unconventional? Maybe. But you should not be surprised. Physical environment has important effect on how people feel, how they connect, learn and share knowledge.
Knowledge hub building block 3: Psychological safety
It is important how people feel. This is why we also have to look into how safe they feel to question how things are done, communicate their views, and accept opposite views. Institution needs change in mentality, attitude and behavior in order to start creating a knowledge sharing organizational culture.
Getting the organizational culture (including values and behavior) “right” for knowledge management is typically most important and yet most difficult challenge. The concepts of respect and trust come at the forefront here.
At this time about half of our staff went through personal one-on-one coaching process, including me—twice. We worked with a number of different coaches that have different backgrounds, ranging from a psychologist, an anthropologist, and an economist, and even a former priest. In order for people to open up and consider change, they have to feel safe. They also have to know they can rely on each other.
And, the CEF is today a different institution than in 2005 – with a lot of generated knowledge and personal and team transformations that has contributed to innovations and our growth.
Therefore, to transform institutions, one should not focus only on technical knowledge one institution should have – that is the WHAT. In case of ministries of finance, these are for instance fiscal policy, tax policy and similar. These policies are exhibited though a number of laws and regulations that ministries of finance produce, like Public Finance Act, Value Added Tax Act, Fiscal Rule Act, etc.
One should also focus on HOW individuals, teams and institutions connect and develop capacity. This is how they learn and how they share knowledge. Effective learning and knowledge sharing must be based on a strategic vision on how an institution develop its most important asset – people.
Institutions should pay attention to (a) developing HR strategy; (b) having HR development focus; (c) HR working with heads of institutions.
For public sector institutions that are driven by demands of external world for legislation, a reflection internally to their systems and processes that support knowledge management may not seem priority. But it is absolutely needed. As well as it is to pay attention to an enabling environment, be it physical through architecture or psychological through organizational culture.
My story does not end here. So, what’s next for us you may ask.
I recently read Brené Brown’s book. She says for people to dare to lead, they have to be brave and work with their whole hearts. Only brave, wholehearted people will be able to transform their institutions into learning organizations/knowledge hubs. Only such institutions will dare to lead the needed transformation of themselves and support transformation of countries.