Our 2011 annual meeting centered on the topic of government redesign. The article summarizes the panel discussion and the thoughts of our luncheon speaker - a former labor union organizer and executive, Silicon Valley CEO, and Assistant Secretary of Labor in the Clinton Administration charged with workforce innovation. September-October 2011 .
The politics and practice of redesigning government was the featured topic at MTA’s 85th Annual Meeting of Members held at the St. Paul River Centre on October 5th. Approximately 100 MTA members and guests heard thought-provoking perspectives on efforts to transform government service delivery and the challenges public sector workforce issues present in improving government productivity.
Following the MTA business session (see the “From the Director” column for more information), a distinguished group of individuals who have been working in the trenches on redesign took part in a panel discussion to provide their take on where Minnesota is and what the future might hold. Representative Carol McFarlane, Co-chair of the Minnesota House Redesign Caucus; Representative Keith Downey; Dane Smith, President of Growth and Justice; and Jim Mulder, former Association of Minnesota Counties and 2010 Independence Party candidate for lieutenant governor discussed several issues relevant in moving government redesign from concept to reality.
The panel discussed the full continuum of government redesign potential that exists, ranging from the adoption of continuous improvement processes to fundamental reform involving potentially radical changes to the methods, structures, and incentives surrounding government service delivery. Panel members agreed on two basic themes. First, government needs to invest more in performance monitoring and outcome based budgeting practices. Second, budget realities demand that we embark on these redesign efforts expeditiously.
The challenge, panelists noted, is that a fundamental transformation of government structures and programs face stronger political and ideological headwinds than the process improvement initiatives at the other end of the reform continuum. Panelists agreed that engaging government workers at all levels is critical to the success of any redesign plan. Yet the current government employment model – an area itself infused with politics and strong ideological opinions – is often itself a major implementation barrier.
Such
remarks proved an excellent segue
to the featured luncheon speaker, Marty Manley. As a former labor
union organizer and executive, Silicon Valley
CEO, and Assistant
Secretary of Labor in the Clinton Administration charged with
workforce innovation, Manley has worn the hats of labor, management,
and government in his unusual and distinguished career. His
perspective on government productivity improvement and its
relationship to public
workforce issues – “the
gorilla in the
room”–
was entertaining, informative, and often unconventional.
Productivity
improvement in government
is an imperative, not an option, Manley began, because government is
being buffeted by influential factors over which it
has no control.
In addition to our well-documented demographic challenges, economic
activity is increasingly disconnected from political boundaries
due
to cross border growth in trade, capital, and information flows.
Together these factors present government with a “tough
business
environment”
demanding investments in greater effectiveness and
efficiency. He described productivity improvement as a system
challenge comprised of three
elements: competition, innovation, and
talent. Government faces special system-related challenges in each of
these three areas.
With
respect to competition, Manley
argued that constructing competition in government involves much more
than just creating competitive bidding
structures for government
service delivery. It also requires constructs within government that
create a fertile field for competition to thrive.
Harkening back to
the earlier redesign panel, he emphasized the importance of creating
service delivery metrics and “keeping
score”
on government
outcomes. In addition, private interests within government, which
benefit from the status quo, must not be allowed to use their
political influence to undermine competition and potential
innovation. Arguing that public service demands abstinence from
partisanship, Manley
recommended pursuing state level equivalents of
the federal Hatch Act, which significantly restricts employees from
participating in partisan
political activity and extending it to
vendors, managers and other special interests receiving government
funds.
Manley
discussed several interesting
public sector examples of the second leg –
innovation –
many of
which revolved around government embracing information technology in
new and exciting ways. But again, he noted, government’s
primary
challenge is not to generate ideas –
those are often in abundant
supply. Rather, it is to create the systems and conditions within
government necessary for innovation to thrive and take
root. His list
of catalyzing forces for government innovation included “sunshine
partnerships”
with private industry in which best practices can be
transferred to public sector operations; mandatory sunset commissions
to force periodic
reevaluation of programs and service delivery; and
public reports on cost structures of programs –
what money is
actually spent on –
to flag issues and areas demanding attention.
The talent element revolves around a
critical and controversial issue: the freedom to replace employees.
According to Manley, if any organization is
serious about
rationalizing redundant operations, improving services, streamlining
processes, reorganizing, or just improving performance, it likely
needs to replace between 2-4% of employees each year. “Like
weeding
a garden,”
he noted, “neglect
the task and all is lost.”
Retention of poor performers not only precludes the hiring of better
performers, but their negative influence on working conditions and
operations
drives out top talent. Regular pruning also enables
governments to take new initiatives and accommodate needed skills
sets resulting from changing
technological and demographic realities.
Government needs to adapt regularly and often, and governments simply
cannot do it if managers cannot
replace people.
Manley continued by saying terminating employees should be easy but not cheap. He argued tenure and seniority based government employment protections should be removed in exchange for mandatory and relatively generous severance averaging 6 months of pay. Based on his experiences, a cost of severance line item in government budgets representing 1%-2% of payroll is both expensive and absolutely worth it. It forces managers to think very carefully about how to organize operations, who to bring in and who to counsel out, and makes governments reserve financially for severance so they can restructure and respond as needs change.
Each of these three productivity elements is profoundly affected by public sector unions and the constructs created by collective bargaining. Manley offered two provocative thoughts about the impact of public sector unions on the government productivity imperative.
First, he argued that is too easy to make unions the scapegoat for issues that are created as much, if not more, by management. Every labor-management agreement has two signatures, and blaming unions exclusively for contract provisions that hinder innovation, productivity improvement, or cost-efficient service delivery lets public sector managers and elected officials off the hook far too easily. Since management often places the highest priority on preserving labor stability and avoiding a strike, public sector officials will sign off too readily on contract terms that are really management malpractice. He argued that collective bargaining must be fully recognized for what it is – “a full contact sport” – and that a scarcity of strikes is a big indication that management is not being sufficiently aggressive. Failure to hold elected officials and managers accountable for their negotiated outcomes ensures taxpayers will get what they deserve.
Second, there is a critical need for union innovation. Unions, he said, have largely chosen politics and collective bargaining over service innovation and professionalism. Due to massive economic pressures and the math of budget deficits, what has worked so well in the past is not a recipe for future success.
Manley described some opportunities unions have to redefine their purpose and source of power in ways that support government productivity and innovation:
Transforming from the classic industrial union model into a professional association model will help secure both public support and higher earnings. But he also argues in many ways this transformation is not an option – the landscape is fundamentally changing. Public employee unions, he believes, will either adapt or risk going the way of many of their private sector brethren.
Can public employee unions innovate? Not easily, according to Manley, because the primary barrier is ideological. Unions are spiritually and historically attached to a legacy of labor solidarity that makes increasingly little sense in an information age. It is very difficult for any organization to rethink their purpose and redefine their mission. Power in public sector unions should stem not from collective action, but from the talent, commitment, and professionalism of individual members – which we would parenthetically note Minnesota has in abundant supply.