Leading through a fiscal nightmare: Part one

| March 17, 2014 | 0 Comments

By Rick Ginsberg and Karen D. Multon

Times are tough.

What often gets lost as the news about budget woes mounts is that people just like you and me are responsible for identifying and implementing the specific cuts.1 It isn’t easy for leaders, even when they are distant from those being affected. Note the words of Lee Iacocca as he described the pain associated with making cuts when Chrysler was facing bankruptcy in the late 1970s:

“But our struggle had its dark side. To cut expenses, we had to fire a lot of people. It was like a war: we won, but my son didn’t come back. There was a lot of agony. People were getting destroyed, taking their kids out of college, drinking, getting divorced. Overall, we preserved the company, but only at an enormous personal expense for a great many human beings.”2

Paucity of available research on leading through fiscal crises

Research offers only minimal guidance to leaders facing harsh budgets. Two lines of inquiry provide some insights for dealing with difficult economic conditions. First, cutback leadership or management, popularised in a recession in the late 1970s and early 1980s, and recent, related, practitioner-oriented articles, offer recipes for managing decline. But many studies in both periods suggest that leaders are ill-equipped for handling difficult economic situations.

Second, crisis management research deals with major crises and tragedies like the mad cow disease scare, the terrorist attacks of 9/11, hurricanes/tsunamis, and other crises that caused significant damage and pain. Such studies analyse factors designed to minimise the effects of a crisis. Crises are often broken down into phases to assist with devising remedies. But here again, the lack of formal preparation for leaders in dealing with crises is a concern.

All this research highlights the importance of maintaining staff morale to keep organisations on track despite difficult circumstances. Little attention, however, focuses on how leaders are affected by guiding an organisation through difficult times. Given the centrality of leadership for school success, leader morale and effectiveness in tough times can’t be overemphasised.

Effect of economic downturn on school heads

Our work examined how principals and superintendents3 deal with and are affected by a significant economic downturn. We surveyed 93 principals from one large upper-midwest metropolitan area and 100 superintendents from four states across the country. Follow-up interviews were conducted with selected leaders. Our survey included both forced-choice and open-ended questions.

We learned that over a two-year period in 2009 and 2010, principals reported total budget cuts of 12.83%, with superintendents reporting 10.64%. In terms of satisfaction measures, both principals and superintendents reported high levels of satisfaction. On a scale from 1 (very low) to 7 (very high), principals reported their enjoyment with their position at 6.33, with superintendents reporting at 6.34. Regarding satisfaction with their performance, principals rated it as 5.77, and superintendents rated it at 5.96. On the other hand, both principals (3.19) and superintendents (3.62) reported weaker levels of satisfaction with their personal time.

On a series of health-related questions, both principals and superintendents reported that their health was between average and somewhat better than average for their age. But the healthrelated news wasn’t all positive. Regarding the impact of budget cuts on physical health (1= gotten much worse, 5 = gotten much better), principals’ mean responses were at 2.49, with superintendents at 2.36.

Indeed, more than 50% of both groups indicated that their health had gotten worse due to budget cuts, and on another health-related question, both groups indicated that they worry about their health.

A series of survey questions focused on the effect of budget cuts on workplace issues. The least impacted issues, with principals less affected than superintendents for each factor, were as follows:

  • employee to employee relations
  • your relations with employees
  • your job satisfaction
  • conflict levels in work setting.

The issues that experienced the greatest impact due to budget cuts, with superintendents experiencing greater impact than principals on every issue, included:

  • challenges faced as leaders
  • efforts to implement innovation
  • services offered
  • morale of faculty and staff.

Far-reaching effects

Thus, our data offered some differing findings. Principals and superintendents get satisfaction from their work, they’re satisfied with their job performance and, to a large degree, workplace relations don’t appear to have broken down due to budget cuts. At the same time, however, several disturbing findings emerged in reaction to the large budget cuts reported. Principals and superintendents have serious concerns about their personal time (for leisure, relaxation and personal life), their physical health has been negatively impacted, they worry about their health, and cuts have created significant challenges in areas like making innovative reforms, services offered, and overall faculty and staff morale.

We were particularly interested in understanding what we labelled as the disturbing findings. While job satisfaction remains strong and workplace employee relations appear unaffected by dealing with budget cuts, we were interested in the immediate effects of these disturbing findings and the potential long-term impact of leading in a down economy. Given that the financial outlook remains grim for the near future, we’re concerned about the cumulative impact that ongoing stress related to budget cuts may have. We fear that the continuing financial strain on leadership may potentially compound the disturbing findings we identified. A series of open-ended questions and follow-up interviews provided some insight into these issues.

A new normal

One over-arching theme emerged that characterised the disturbing findings. Borrowing from McNamee’s book (2002),4 we named this theme ‘Trying to Find the New Normal’, referring to the concept of a new normal that’s been created due to the economic stress that pervades our culture. ABC News, for example, reported that “the worst financial crisis since the Great Depression and the ensuing recession have forced Americans to change their lives in large ways and small. It’s a world of ‘new normals’ with more belt-tightening, less income.”5 Similarly, CBS News reported that “the new normal is an expression, and a condition, we may have to get used to… or so many economists are now telling us”.6

For principals and superintendents, the new normal affects their job in very stressful ways they never anticipated. Many feel that the good work they had done for years is being tossed aside as efforts to just stay afloat dominate. One principal described it this way:

“It is very hard to keep the herd moving in the same direction with less and less support and with the prospect of tougher working conditions in a time when our accountability and scrutiny is at an all-time high. Morale is low in the area of hope for the future. I cannot stress the fact enough that our staff gives their all… but I think we are all feeling like we are rearranging deck chairs on the Titanic. We feel like our ship is sinking, but we are going to do all that we can until it does.”

We found that the components of the new normal differed slightly for principals and superintendents. For principals, the key factors included: 1) doing more with less; 2) all cuts impact students and teachers; 3) tornadoes of negativity; and 4) concerns about stress. For superintendents, the new normal meant: 1) living in a survival mode; 2) disappointment with the territorial nature of some staff and attitude of policymakers; 3) loss of joy for the job; and 4) concerns about stress with a real need to wear a ‘happy face’.

References:

1. Budget cuts continue to affect US schools and colleges. See, for example: Oliff, P. and Leachman, M. (2011) ‘New school year brings steep cuts in state funding for schools.’ Available at: http://www.cbpp.org/cms/? fa=view&id=1214 and Covert, B. (2013) ‘Sequestration nation: Back to school with budget cuts.’ Available at: http://thinkprogress.org/economy/ 2013/08/27/2535771/school-budget-cuts-sequestration/.

2. Iacocca, L. (1984) Iacocca: An Autobiography. New York: Bantam Books.

3. In education in the United States, a superintendent of schools, also known in many states as a chief school administrator, is a person who has executive oversight and administrative powers, usually within an educational entity or organisation. (Source: http://en.wikipedia.org/wiki/Superintendent_(education).)

4. McNamee, R. (2002) The New Normal: Great Opportunities in a Time of Great Risk. New York: Penguin.

5. Gomstyn, A. (2009) ‘Finance: Americans adapt to the new normal.’ ABC News. Available at: abcnews.go.com/Business/Economy/story?id=7827032.

6. Teichner, M. (2010) ‘The new normal: What to expect of our economy.’ CBS News. Available at: www.cbsnews.com/stories/2010/09/26/sunday/ main6901893.shtml.

Category: Autumn 2014

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