Managing Cutbacks at the Department of Social and Health Services

This is a highly versatile, rich case about a state social service agency executive facing major budget cutbacks who effectively uses negotiation and collaboration to build consensus for change instead of resorting primarily to direct executive authority. As the new Secretary of Washington State's largest agency, the Department of Social and Health Services (DSHS), Alan Gibbs must act quickly to plan and implement massive budget cuts in response to President Reagan's "new federalism." Instead of staking out a fixed policy position from the top of the agency's hierarchy, Gibbs develops an inclusive planning and decision making process by building strong working relationships with internal state constituencies (legislators, the Governor, DSHS staff) and external players (the media, community organizations, and citizens). The strategic budget process Gibbs put in place survives more than a decade later and has been adopted by many agencies locally and elsewhere.

The A case highlights Gibbs' approach to strategy analysis, development, and implementation, while enhancing student understanding of how the terms of the state budgeting process are altered by changing political circumstances. The B case provokes interesting class discussion about executive credibility, focusing specifically on how Gibbs' strategy for public hearings about the cutbacks reinforces his earlier efforts to build trust in his ability to lead DSHS. Students gain a lot of insight into the role of an agency leader in resolving a crisis and demonstrating strategic leadership in the face of pressure and change.