How Agencies Can Maximize Year-End Spending

It’s an all too familiar problem: The budget cycle requires that federal agencies and departments obligate all budgeted monies by September 30 to avoid a reallocation or reduction of their budget the following year. It is therefore in leaders’ best interests to make sure their entire budget is deployed efficiently and effectively.

July through September often finds those with spending authority looking for optimal ways to invest. One 2019 study of federal spending patterns found that Q4 spending averages 25% higher than earlier quarters, a difference equaling approximately $144 billion per year. An earlier piece of research identified 4.9 times more federal agency spending in the final week of the fiscal year than in a typical week at any other time.

With significant directional changes underway, including commitments and expectations related to climate, infrastructure, health, digital, and education, how should federal leaders invest available funds before year end?

The most important investment federal leaders can make right now is in their people. But the window for this investment to yield its greatest benefit is rapidly closing. As we approach the end of a bruising pandemic, federal employees are exhausted. A recent popular New York Times article named “languishing” as the dominant emotion of 2021. But with an ambitious new administration making sweeping and often profound changes to government priorities, federal employees must again step up and meet the moment. Department and agency leaders are on the hook to deliver substantial results in 2022 with new programs, quantifiably better outcomes, and improved customer service.

Investing in employees today is essential to meeting 2022 goals as well as the objectives set in this administration’s first term. Doing the same a year from now will be too late in terms of both employee wellbeing and priority results. The pace of change is growing exponentially. While the pandemic and a year of social unrest have accelerated change, this trend has been on an upward trajectory with no plateau in sight. None of us can predict what the next surprise will be, but we can prepare to respond better and be change-capable.

What kinds of investment will have the greatest impact? First, those that boost people’s sense of wellbeing, engagement, purpose, and optimism. Second, those that help people and organizations more confidently, rapidly, and innovatively deliver on their most ambitious objectives. At the intersection of the two are:

• Targeted skill building. Investing in individuals’ skills and knowledge sends a signal that employees are valued, supported, and progressing toward an even brighter future. Specialized expertise will depend on the agency, but capabilities related to digital transformation, customer service, and leading change will be valuable everywhere. Leaders should consider a wider range of capability-building experiences, from traditional training and strategic job rotations to facilitating involvement in key change initiatives. Projects structured to develop specific skills, while also leaving plenty of room for innovation, experimentation, and collaboration, are especially effective. They should be focused on accelerating the delivery of measurable results and engaging broad-based support for the larger change effort.
• Intentional organization and culture. Federal agencies—like organizations everywhere—are grappling with the normalization of telework and its implications for every aspect of workflow and leadership. Many are highlighting the need to design organizations that work better for customers and employees alike. But for government organizations, other issues exacerbate the urgent need to rethink and rebuild. Based on data collected since 1958, Pew Research finds Americans’ trust in government near all-time lows, with under 25% believing that Washington will “do what is right.” Similarly, a 2020 Forrester study showed the federal government’s customer experience score lagging 10 points behind the private sector average and lower than any other industry grouping. Using this historically fluid moment as an opportunity to build more agile, citizen-centric organizations and cultures will pay dividends in terms of employee satisfaction, customer service, and public trust.

As federal leaders consider how best to deploy their budgets from now through September, virtually any investment in strategically targeted capability building or improved organizational culture and design will bring leaders much closer to mission objectives. For greatest impact, combine the two: invest in creating a strong cadre of leaders at every level. Change leadership at all levels is the critical ingredient. It will allow an agency to confidently pivot where needed and deliver programs and results in an evolving environment, while creating an organization that positively engages employees and supports customers. The best way to build change-capable leaders is through a structured combination of leadership development or training and supported work on real change initiatives. This “real life” imperative will yield an accelerated return on year-end investment.

Fiscal 2022 is just around the corner, with its attendant opportunities and challenges. By investing wisely today, federal leaders can position their agencies and departments for greatest success.

Martha Kesler is a director at the change management and strategy execution firm Kotter, where she manages the federal portfolio. Katy Paul-Chowdhury is an affiliate at Kotter. The authors can be reached at martha.kesler@kotterinc.com and katy.paul-chowdhury@kotterinc.com.