When state governments have serious budget short falls the governor may set up a blue ribbon panel to review all high level state activities to find a less expensive way of doing the same activity or see if it can be eliminated. Governor Arnold Schwarzenegger of California has done this his blue ribbon panel called the California Performance Review (CPR) at: http://cpr.ca.gov/report/ has identified 279 issues where changes can be made saving the state $32 billion. Many states over the last few years have been developing Performance Budgeting systems to assess the performance of budgeted items. I highly commend these efforts but you will notice that these activities are all high-level state activities. It is true that they are necessary and must be pursued for a significant amount of waste and misuse of tax dollars can be avoided.

I recommend that this high level approach be done along with low level efficiency implementations at the work-place where you will find thousands of state employees muddling through their jobs with little thought or direction as to how to do the job efficiently. Private businesses use this dual approach to obtain productivity gains where high level activities are always costed out to obtain the most cost effective method and low level productivity initiatives such as work measurement has been the standard way of doing business since Henry Ford. Insurance companies have been measuring office productivity since the 1940’s yet low level productivity has never taken hold in government. In the 1980’s Japanese quality imitatives were introduced to American industry, which enabled workers more freedom in making decisions and contribute to improving the quality and efficiency their jobs.

I maintain that if State Governments were to pursue both the high level strategy and adopt the low level productivity initiates it would spell the end of privatization efforts because private business would simply not be able to compete with a well managed government organization. This is why most privatization efforts in our public schools fail. Our public school teachers are among the most dedicated productive government employees that we have. For more information see Article 18. “Work measurement in State Government is Rare and Ignored”.

State governments should implement the two productivity methods which I recommend (“Work Improvement Teams” or “Cost and Schedule”) and integrate these with their Performance Budgeting systems. This would provide seamless efficiency from the work place right up to the state budget.

I further recommend that the bureaucratic form of government be replaced by a two tier Steering and Functional Management organization. Top management has the role of guiding and steering the Department while Functional management deals with the day to day operation of the Function. Steering Management is responsible for telling Functional Management What to do but not How to do it. This is a loose-tight organization with Steering firmly in control of the budget leaving Functional Management free to determine how best to do the job. Those in industry will recognize this as straight from the book “In Search of Excellence- Lessons from America’s Best-Run Companies” by Thomas J. Peters and Robert H. Waterman Jr., Harper and Row, New York, 1982.

To implement the above recommendations I would start by changing the budgeting method to budget Functions and not Departments or Agencies. Then implement Total Quality Management (TQM) that is the Work Improvement Teams (WIT) emphasizing innovation in the work place. The WITs should be in place for some months before a budget analyst costs out their Process Flow Charts. Reorganization into Steering and Functional Management should be done last.

Emphasize getting innovation and a more responsive government not cost savings or other results, measure results. Don’t publicly discuss savings up front it will make the process of reform more difficult.