Today the public sector operates in an environment of shrinking budgets. That was certainly apparent in the latest federal budget proposal released this week and the new realities for federal spending agency officials now find themselves.

To meet budget caps and reduction targets, Congress, the White House, and federal departments often use across-the-board percentage reductions. This blunt instrument achieves broad goals without prescribing the specific activities to take the reduction.

Across-the-board reductions provide government executives some flexibility in how to absorb reductions within their activities but the options are difficult. The stakes are high for how government executives distribute reductions. Organizational morale, recruitment, and retention can be positively or negatively impacted by the approach taken on reductions.

The organization’s mission hangs in the balance as well. In a zero-sum game, all of the approaches must achieve the reduction goal but each has advantages and disadvantages from an executive’s perspective, as a recent report from the Partnership for Public Service argued persuasively. Still some broad-based strategies may inflict disproportionate harm on agencies.

First, there is the “peanut-butter-spread” or “salami-slice” approaches. A department can take the directed percentage reduction and apply the same percentage to each of its components. Components can use the same approach on its activities. The formulaic approach is the least controversial for a government executive. Every activity suffers equally.

The disadvantage is it does not distinguish between high and low priority activities. It risks slowing progress on everything.

Second, a reduction approach focuses on overhead. It aims to avoid reductions to core mission areas and federal staff. Since overhead is not always integral to the mission, e.g. printing and contract support, trimming overhead rarely faces internal opposition.

The challenge is the total savings potential is often limited. Many organizations have already trimmed overhead. Plus, when civilian pay and operations represent the largest portions of budgets, the savings harvested from overhead are often insufficient to meet significant across-the-board reductions.

Third, an organization can protect the salaries of staff while cutting everything else. Prioritizing staff, of course, is a popular approach for a government executive to take. The trade-off is in accomplishing the mission and the public interest. If all aspects of operations are reduced, the public interest suffers with staff becoming idle without programs and mission to work.

Finally, an organization can develop a prioritization framework to cut lowest priority sub-programs and activity first and protect priority mission areas.

The first difficult step is for leadership to set priorities across the organization. It is controversial indeed to prioritize and accusations of favoritism are unavoidable.

Also, the prioritization framework handcuffs executives by pointing directly at the activities and staff to cut. The development of rigorous, defensible prioritization criteria, however, best serves the public interest by focusing scarce resources on priority activities.

There is no way of knowing when the reductions will end. Sequestration of over $900 billion of defense and non-defense discretionary spending looms on the horizon for the public sector beginning in January 2013.

Executives would be wise to consider the relative merits of how to approach budget reductions and apply across-the-board reductions while working to satisfy priority missions.

James Windle is a federal employee who has worked for executive branch agencies, the Executive Office of the President, and Congress. The views and opinions of the writer are his solely and independent from the United States Government