In industry the traditional organization was a bureaucracy made up of company personnel and a union for shop personnel. This type of organization was dominant until the mid 1980’s when Japanese methods of quality improvement began to be replicated mainly in the union shops. Industry has traditionally concentrated its efforts for improving efficiency on the union shops and ignored the need for innovation among company personnel. The Japanese quality improvement methods became widely accepted in industry as a standard for all of its organization by the early 1990’s. The result has been a moderating effect making the entire company more efficient and therefore more competitive.

As an example before Japanese quality practices were introduced we had a thriving steel industry in the Ohio valley. The Union’s short sighted demands for superior wages and benefits and a practice called “feather bedding” (forcing the company to hire unnecessary union employees) diverted funds needed for capital improvements. The result was that foreign steel producers with modernized plants drove the US steel industry out of business leaving us with the Rust Belt in the Ohio valley.

This lesson is important to government in that a bureaucracy and employee unions cannot be driven out of business by competition. They are needed, such as they are, by the public. This leaves no alternative except reform or privatization. When a government organization becomes so inefficient and unresponsive that it can be replaced by a profit based organization it is truly in need of reform. Neither bureaucracies nor employee unions have had a conducive environment for innovation. In industry however I have found that union members welcome the implementation of the WIT because for the first time they are able to contribute to finding the best way to do their job. The adding of unneeded union personnel has not been a problem even though it may be the policy of union management.

A problem that may be a setback for getting the desired savings is in the strength of the government employees union specifically its seniority rules. Most of the savings come from the reduction of management personnel. A problem may occur if the more senior
management chooses to fight the reforms while younger management embrace the reforms. This may be a situation where early retirement is required. An alternative is to have the legislature pass laws negating the seniority rule which will allow reformers to choose the best managers.

I have recommended 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.