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Emerging Models of Leadership: PBOs and Tri-Sector Leaders

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Published: 17 Dec 2013

Usman W. Chohan is a consultant with the World Bank Institute in the field of Social Accountability, and is pursuing an MBA at Desautels with a concentration in Strategy and Leadership.

Introduction

In recent times, daunting challenges have afflicted the private sector, the public sector, and civil society simultaneously. The 2008 crisis has shown that new perspectives must be sought in tackling the problems of a global economy that are paradoxically both increasingly dispersed and increasingly intertwined. The “Crisis of Capitalism”, as it has been termed, is that in its current form, our global economy has inadequately addressed instability, inequality, and negative economic externalities, which in turn breed a host of problems unemployment, resource scarcity, and an untenable fiscal burden; all this culminates in a trust deficit towards institutions (Nye 2012).

As complexities continually grow in the contemporary economy, more holistic remedies must be concocted that bind the main pillars of society. In this regard, scholars such as Joseph Nye, Nick Lovegrove, and Johan Kaminsky are postulating the idea of Tri-Sector Leadership, which transcends the various ambits of society, namely: the private sector, the public sector, and the civil society. In other words, the leaders which are most desirable today are those whose vision and whose experience transcend one particular sector to harmonize with other sectors, thereby channeling the leader’s dynamism towards a broader horizon.

This fundamental argument that future leaders must adopt a holistic perspective has been endorsed by leading organizations across the three ambits, including McKinsey, Harvard University, and IBM (Kaminsky 2013). Such leaders are urgently needed to bridge gaps between business, government, and civil society, through shared experiences, a shared language, shared aspirations, shared incentives, and shared evaluation metrics (Lovegrove 2013).

The Benefits of Tri-Sector Leadership

Work by Lovegrove and Thomas (2013), Nye (2012), and Kaminsky (2013) helps to outline the salient benefits of enlightened tri-sector leadership.

Firstly, such leaders can reconcile competing motives, both internally in their minds, and externally towards other stakeholders. They possess a sense of purpose and see their challenges as a composite large canvas on which to work. Lovegrove and Thomas thereore observe that “Tri-sector leaders find ways to pursue overlapping and potentially conflicting professional goals.”

Secondly, such leaders hone skills that are transferable across fields, finding applicability in seemingly divergent contexts. For business leaders, the skills may include astute allocation of resources, while for government leaders it might involve bringing competing interests together for the common good, and still yet for civil society it may involve leveraging the creative mindset to develop unconventional solutions to complex problems (Lovegrove and Thomas 2013).

Thirdly, tri-sector leaders present a mindset that can both synthesize divergent ideas and discriminate between them. They can see parallels between areas but also create analytical frameworks to distinguish between them depending on the exigencies of the situation.

Fourthly, such leaders can forge alliances between different sectors and attract the brightest minds to work under them from divergent fields, thereby forging congruence between seemingly incongruent teams. As Lovegrove and Thomas observe, tri-sector leaders can “build leadership teams and to convene the diverse groups that can address and resolve knotty tri-sector issues.”

Statement of Purpose

With this perspective in mind, the pressing question that naturally arises is Where can we foster such leaders? In other words, what jobs can serve to mould tri-sector leaders? and what avenues exist to nurture tri-sector leadership?

I wish to argue that Parliamentary Budget Offices (PBOs) provide a fertile ground for nurturing tri-sector leaders who can go on to successfully serve the leadership deficit that today hampers the resolution of pressing global problems.  By defining its tri-sector purpose, elaborating on its tri-sector mandate, and observing its benefits for cultivating tri-sector leadership, I aim to endorse the PBO as an institution which holds great promise as a beacon in a time of greater complexity and crisis.

PBOs

A Parliamentary Budget Office is an institution that is publicly funded and staffed by non-elected professionals who provide unbiased and non-partisan analysis, oversight, guidance, and advice on key issues that affect the government budget (Staddon 2010).  A PBO’s scope is therefore rather broad, as its “analysis” can extend across many disciplines - which thereby exposes PBO staff to a wide spectrum of preponderant themes and policy issues. This multidisciplinary approach reflects a core tenet of tri-sector leadership.

The United States founded the Congressional Budget Office (CBO) in 1975 following the need for greater budget scrutiny in wake of the Nixon administration’s (1969-1974) engagement of certain controversial budget-related policy issues (Khan 2013). Globally, however, proposals for budget offices grew following a series of papers in the 1990’s that pushed the idea of adopting an institutional model similar to that of the independent Central Bank (Calmfors and Wren-Lewis 2009).  In 2001, Uganda became the first Commonwealth parliament to pass legislation establishing a PBO via the Budget Act. Kenya followed in 2007 with a similar office, while South Africa set up a PBO in 2010 to support the parliamentary Finance and Appropriations committees. Other notable PBO initiatives have included the United Kingdom, Sweden, Hungary, Canada, Nigeria, and Australia. What is of interest here for tri-sector leadership is that both developing (Kenya, Uganda, South Africa) and developed countries (Australia, the United States, Canada) have such offices, thereby allowing for developing talent irrespective of the level of national economic development.

According to Sahir Khan, Assistant Parliamentary Budget Officer of Canada, there are two major drivers for the growth of PBOs today. Firstly, there is a growth in PBOs that is attributable to a general decline in the level of trust in the public sphere, creating a demand for greater transparency to fill the void created by this trust deficit - the very same problem raised by scholars such as Joseph Nye when expounding on the need for tri-sector leaders.

Secondly, there has been a significant shift in public expectations, for as the public today is conditioned to receiving more information, they are driven to make choices about who they want to believe (2013). In a similar vein, Sahir Khan has stated that the power of PBOs lies in taking the understanding of major issues “from that of a one-datapoint universe to a two-datapoint universe”.

To better understand the tri-sector nature of the Parliamentary Budget Office, we can contextualize its mandate in three ways; The PBO is therefore an institution which (1) brings financial acumen (private sector) to (2) a government setting (public setting), in order to (3) empower civil society. As the following figure illustrates:

We can examine specific examples to see how the PBO itself represents this trinity of perspectives, and therefore how it inculcates these perspectives into its staff, who then embody these perspectives as future leaders.

1 - Financial Acumen (Private Sector)

The PBO encourages successful people from the private sector to join its staff and bring their financial expertise to the service of the office. The primary use of the financial knowledge will be in analyzing the annual budget of the country (or sub-national entity) to which the PBO is associated.

Example 1: Sahir Khan

Sahir Khan is the Assistant Parliamentary Budget Officer in Canada’s PBO. He is responsible for leading the scrutiny of proposed government expenditure and in providing this analysis to parliamentarians to aid their deliberations. However, he brings a rich private sector experience to the PBO. Previously, Sahir was a turnaround and restructuring specialist having joined the public sector in 2004 from New York-based RKG Osnos Partners, LLC, where he was a Managing Director. He also worked with Deloitte Consulting’s New York office and has led turnarounds in manufacturing, technology, real estate and consumer products. His education is also from a business-oriented standpoint, Sahir has a B.Comm. from Queen’s University and an MBA (finance) from Columbia University. This private-sector experience and business acumen has allowed Sahir to bring the best practices from private sector, such as strong financial discipline, meticulous project management, rigorous performance measurement, and parsimonious cost savings; and put them to use in analyzing the pertinent issues facing Canada’s budget.

Example 2: Tolga Yalkin

Tolga Yalkin is a Financial Advisor-Analyst on the Expenditure and Revenue Analysis team. His analytical work focuses on defence and criminal justice costing. In addition, he provides strategic and policy advice. Prior to joining the Office of the Parliamentary Budget Officer, he practiced as a solicitor in banking and financial regulation, held academic appointments at various international universities.

The relevant experience from the private sector that these PBO staff members helps them to add a non-partisan and impartial orientation to their analysis that is based on sound economic principles and intellectual rigor. Their work helps to serve the public sector, specifically the legislative branch of government, in policy making debates and in legislative oversight, as shall be explained below.

2 - Public Sector

The PBO is an “institution for an institution” because its purpose is to serve the Parliament in its three core functions: representation (of constituents), legislation, and oversight functions. From this exposure to parliamentary proceedings, the PBO staff receive exposure to deft management of differing stakeholders which is part-and-parcel of parliamentary life. Therefore, managing stakeholders is a core-competency that they develop, in-line with Lovegrove’s and Nye’s works arguing that tri-sector leaders are adept at reconciling divergent interests.

The PBO’s mandate of studying the budget involves them raising questions about government policies and - falling short of the word criticizing - inspecting the value and cost of such policies. In the case of Canada, this has included two success stories. Firstly, the PBO’s assiduous analysis of Canada’s procurement of F-35 jets led them to forecast a $30 billion expenditure for the project, double what the government had stated, and the PBO was subsequently vindicated for its robust analytical work. Secondly, the PBO found the cost of Canadian participation in the Afghanistan war to be significantly higher than previously expected, thereby raising questions about the worth of the endeavour to Canada. What such experiences do to PBO staff is train them to challenge the status quo, and to defend their point of view with robust analytical arguments. This outspoken quality helps to enrich their candidacy as potential tri-sector leaders.

In analyzing the budget and in studying the monetary feasibility of government projects, what the PBO is attempting to do is increase transparency and accountability of parliament, so that civil society can be more engaged in the oversight function, once it is more informed about the nature of policies, particularly those pertaining to the budget. The completion of the tri-sector leader’s trinity, therefore, is found in the engagement with civil society, as is described below.

Civil Society

A PBOs main service is to parliament, but the greater cause that the PBO is serving is civil society as a whole, by enhancing the level of transparency and accountability in parliamentary functions. All of the PBO analysis made available to the public for its scrutiny, so that civil society is brought into the fold of decision-making. For example, the Congressional Budget Office in the United States writes its reports on the debt-ceiling issue so as to make it accessible not only to Congress but also to the general public. PBO staff, therefore, are strongly oriented towards a transparent and accountable process, thereby positioning them to address the prevalent trust deficit of institutions that scholars of tri-sector leadership identify as being a pervasive handicap that needs to be remedied.

Additionally, the PBO experience teaches its staff the ability to optimize resources and conduct copious amounts of analysis in spite of capacity limitations, a trait descriptive of nonprofit organizations which often need to accomplish large projects on small budgets. The Canadian PBO has managed to accomplish its mandate despite having limited resources due to three factors. Firstly, it is not indebted to a predetermined outcome, increasing its intellectual rigor; this speaks to tri-sector leaders who challenge the status quo and take principled stances. Secondly, it leverages top experts from around the world and goes to great lengths to solicit the expertise of the very best in the field wherever they may be; which relates to the argument that tri-sector leaders attract the brightest minds and forge seemingly unusual teams with diverse skillsets (Khan 2013). Thirdly, due to the independent and non-monetary nature of their analytical work, they often manage to get assistance gratis from independent entities, which is a direct reflection of the civil society ambit where many activities may be of a primarily non-monetary nature.

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