The Management of Hard Times: Budget Cutbacks in Public Sector Organizations

Writing on organizational change to date has been implicitly predicated on an assump tion of organizations either growing or remaining stable in size and resources. However, the most likely future for most organizations, especially those in the public sector, is one of cutback and decline. The major changes such organizations face are those related to how to survive on less money. On this particular matter, comparatively little is known though interest is, perhaps understandably, starting to grow among organization theor ists and, to a much lesser extent, among organization researchers.

The present article reviews the existing literature on organizational decline in public sector organizations. It makes a conceptual distinction between (a) the strategic deci sion responses regarding what to cut, if one must cut. and how to prevent having to make further cuts, and (b) the behavioural responses within the organization to the cuts that are made. A second major distinction is made between the 'objective' conditions of funding reductions and the way they are perceived and interpreted by the dominant coalition in the focal organizations. A number of influences related to the organization's environment, internal design, key personality differences, and other variables are identified and discussed in terms of their influence on these subjective interpretations of reality. Finally, a few thoughts are offered on: (a) the as yet completely unstudied question of the long-term effects of repeated cutbacks and (b) the problems of undertak ing research in the whole area of organizational decline.