Learning from crisis and returning to growth by means of leadership development within the Public sector: the Irish experience" Presentation to DISPA, Rome Dr Brian Cawley Director General, IPA Institute of Public Administration | Lansdowne Road | Dublin 4 | Ireland | Ph |

Evolution of Economic Strategy Post-war insular, protectionist approach led to stagnation Radical policies initiated in late 50’s led to export-led growth policy Leading to the development of a modern economy heavily oriented towards service sector- pharma, tech, finance Attracting Multinationals to Ireland

 Low corporation tax  Access to EU markets and role of EU membership  High education attainment levels and ready supply of highly qualified workforce  Role of Irish emigrants, particularly in US  Focus on niche areas in technology, pharmaceuticals, healthcare and now biotech, software (gaming), green technologies  Alignment of academic research and education with this strategy Foundations of the ‘Celtic Tiger economy’

Economic Crisis  Solid sustainable growth replaced by ‘housing bubble’  Narrowing of tax base  Bank insolvency and fiscal collapse  EU/IMF/ECB bailout with €64bn injection to banks  Rapid growth replaced by contraction of economy (10% each year from )  From full employment to 15% unemployment  International factors, but also national factors © IPA4

5 This crisis was not unique in our public administration “Public unease stems not just from the failure itself, but from a feeling that collectively we do not learn from failure, leaving us not only as poor but as puzzled as before” What do we learn from Official Reviews?

© IPA6 “International developments, however, did not in themselves cause the crisis though they helped precipitate it. The problems causing the crisis as well as the scale of it were the result of domestic Irish decisions and actions”. (Nyberg 2011: ii).

Early Warning signs ignored “the Ministry of Finance should have adapted its advice in tone and urgency after a number of years of fiscal complacency.. it should have shown more initiative in making these points” © IPA7

GROUPTHINK “ Why did so many professionally adept Irish bankers and public servants (as well as politicians, entrepreneurs, experts, media and households) simultaneously come to make assessments and decisions that have later proven seriously unsound in a number of ways ? Groupthink occurs when people adapt to the beliefs and views of others without real intellectual conviction. A consensus forms without serious consideration of consequences or alternatives, often under overt or imaginary social pressure.” (Nyberg 8) © IPA8

Silencing of Contrary Views/Avoiding Conflict “people indicated to us that contrarian views were both difficult to maintain during the long boom and unhealthy to present to boards or superiors. A number of people stated that had they implemented or consistently supported contrarian policies they may ultimately have lost their jobs, positions, or reputations. ” (Nyberg 2011: iii). © IPA9

10 ‘Quick Fix ‘ Solutions “ Over the years the accumulation of successive incremental fixes in response to minor and major technical, administrative, and management problems in the systems daily operations has resulted in a technically deficient, managerially uncoordinated, inefficient and excessively resourced system” incremental

Reform, including public sector reform, has for decades emphasised technical, but not adaptive, change “ The public sector modernization project in Ireland was widely supported in principle from the early to mid- 1990s on. But its implementation was limited on all the conventional measures. It was stronger on symbolic areas such as customer service statements than on real substantive change.” © IPA11

Systemic nature of Public Administration “the nature of systemic banking crises rarely allows blame and responsibility to be confidently allocated. Systemic financial crises, like the recent Irish one, require a great number of institutions, enterprises and individuals to simultaneously follow unsound policies or practices ” © IPA12

Multiple agencies- who takes responsibility? “the view was expressed to the Commission that it was not the primary responsibility of the Central Bank to evaluate possible problems in domestic financial markets emanating from the behaviour of individual institutions”(Nyberg 66). © IPA13

The failure to adapt was a failure of leadership “The current crisis raises questions about leadership and adaptation on the part of Irish public administration. There is a need to address problems related to culture and change that require solutions that must come from outside the current repertoire. “ © IPA14

Different approach and Emphasis  Leadership is about promoting adaptation in complex systems  Requires a tolerance for conflict and ‘distress’  Achieving a better balance between risk and reward  Relationship is fundamental (and had been neglected) © IPA15

Leadership Development -Objective  To build a community of practice and learning at the most senior levels of public service that shares a common framework, common principles, and shared understanding of how leadership challenges are identified, framed, and tackled © IPA16

Key principles of programme design  Real Problems, Real People, Real Outcomes  Case in Point pedagogy  Discovering Authentic Leadership  The role of Purpose © IPA17

Leadership Programme 5 years on  Over 300 senior public servants to date  Almost 100% of those at Permanent Secretary level  Big demand for programme  Tracking of progress on challenges  International groups © IPA18

© IPA19 Training and Development such as the Leadership Challenge Programme help us learn from the past, to adapt and build new capacity in the system and create the conditions for growth

Return to Growth?  Difficult choices have been made-cuts in pay, numbers, tackling strong interest groups, changes to working hours/patterns  First ‘post austerity’ budget in 2014  4% growth predicted for 2014 year and coming years  Consumer confidence highest for 7 years © IPA20