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The Sixth Virtual Round Table on Strategy Execution in the Public Sector

Turner, in collaboration with Flevum, is organizing a series of roundtable discussions on Strategy Execution in the Public sector—and the much-discussed relationships between politics, policy, and implementation. Each session features a different case study or perspective. The sessions are practical, digital, brief, and accessible. The sessions have received positive feedback and are highly valued by public sector leaders: “At these roundtables, we engage in strategic thinking about execution in the public sector.”

Business Management Dilemmas in Restructuring. Case Study: Customs – Tax Authority.

Reason

In early 2020, the decision was made to separate Customs and the Benefits Division from the Tax and Customs Administration. What business management dilemmas did Customs face during the implementation of this strategy?

Context

When Nanette van Schelven made the move from the IND to Customs four and a half years ago, it was a remarkable appointment. Never before had a Customs executive come from outside the Tax and Customs Administration, of which Customs had always been a part.

The new Director-General immediately faced a professional challenge following the decision by Finance Minister Wopke Hoekstra in early 2020 to separate Customs from the Benefits Department. Unusual? To the general public, the agency has always had a strong identity of its own. Seventy-five percent of the Dutch population doesn’t even know that Customs was traditionally part of the Tax and Customs Administration.

The Customs Service’s relatively independent position proved very useful. Although the organization had its own staff and various departments, the service was still dependent on several shared service organizations—such as IT, HR, and information services. Although Customs had its own Director-General, she had no decision-making authority over those shared service organizations. That was the most difficult aspect regarding the IV-voortbrenging, the department responsible for information provision.

Business Management Issues

Van Schelven had to deal with a wide range of issues.

  1. Establishing the process for coordinating with political leaders and policymakers. As a result of the separation, Customs became an independent negotiating partner for the parent ministry for the first time. Previously, everything went through the Tax and Customs Administration. This meant that new contacts had to be established.
  2. Setting up your own strategic planning process. Whereas Customs was previously addressed in the Tax and Customs Administration’s multi-year plan, the agency must now draw up its own separate multi-year plan. This also means that the agency is taking on a more political role: whereas Customs previously drafted perhaps six memos per year for the ministry, it now drafts 140 per year.
  3. The accelerated implementation of the “critical” support processes. In the case of Customs, the focus is on providing information. Unlike the Tax Authority, Customs is very much focused on Europe, due to its role in monitoring the external borders. Brexit also brought an enormous workload upon the organization, which grew from 80 million to 700 million declarations per year within just a few years. A great deal is demanded of the IT department: if the system goes down, everything comes to a standstill, with major consequences for trade and the national treasury. Customs therefore needed its own IT infrastructure, its own applications, its own domain, its own finance and control functions, and its own staff.

Dilemmas

During the divestiture and while dealing with business management issues, Van Schelven encountered a variety of dilemmas.

  1. How do you balance speed with the fundamental implementation of customs-specific requirements? There was a high degree of dependence on the Tax and Customs Administration, but Customs had entirely different requirements. For example, Customs operates 24/7, while the Tax and Customs Administration’s facilities department closes at 5:00 p.m. on Friday afternoons. The Tax and Customs Administration’s shared service organizations are focused on the Tax and Customs Administration’s administrative processes, not those of Customs. This means making tough choices.
  2. How do you balance retaining employees with attracting and developing new skills? During the restructuring, Customs had to deal with Brexit, COVID-19, and the departure of a large number of employees who had reached retirement age. In short, a completely different dynamic emerged. Van Schelven therefore made it a top priority to recruit new staff, preferably with skills different from those already on hand.
  3. How do you maintain control when managing others? The management structure needs to be defined more clearly. In theory, the directors-general of the decentralized services and the secretaries-general at the ministries have the same status. “But, given the number of people involved, I am sometimes managed through a three-way chain (i.e., politics-policy-implementation), and other times through the chain of command,” says Van Schelven. This could be made clearer, especially since, although Customs falls under the Ministry of Finance, it effectively has nine ministries as its clients for its tasks.

Lessons Learned

  • Make sure you define a final goal instead of keeping all options open.
  • Understand the core mission and core competencies of your implementing organization, and use that as a foundation to guide Strategy Execution within the politics–policy–implementation framework.
  • Try to keep it as small as possible, even when faced with major challenges.

The most important task Van Schelven saw before her was figuring out how she could ensure that Customs truly stood on its own two feet. She always kept that ultimate goal in mind. To that end, she kept the steps as small as possible, even when faced with major challenges. The separation meant much more than simply appointing three directors-general: they are three separate organizations, each with different responsibilities. It is no coincidence that Van Schelven herself still maintains an office in Rotterdam, close to one of Customs’ most important operations, rather than in The Hague.

“Customs used to be a niche area; now it’s our core business, and that brings a different dynamic,” says Van Schelven. “We’re still figuring out which organizational structure suits us best. There’s a lot to be gained in the area of shared service organizations—for example, regarding the question of who gets which budget, as well as in terms of management. Customs isn’t politically interesting at all, and I’d like to keep it that way. After all, the restructuring process benefits from a calm environment.”

Ms. Nanette van Schelven, Director General of Customs

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