From Australian CPA Magazine “Mean, lean reform” by Adam Awty updated: Wednesday, 25 August 2004
Adam Awty investigates the rapid financial reform agenda for Singapore’s public sector and speaks to accountant-general Chua Geok Wah FCPA.

The saying is that good things come in small packages, a saying that certainly holds true for Singapore where the pace of public sector financial management reform has hastened in recent years according to Chua Geok Wah, the Singaporean accountant-general.

‘We see financial reform as a continuous journey. The journey towards developing a more robust public service through better deployment of financial resources is a never-ending one,’ she says.
Chua Geok Wah FCPA was appointed accountant-general on 1 April 2000.

Comments by Lawrence Rosier
When you compare the accrual method of accounting to the cash method used by most states you find that there is a lot of creative accounting going on to balance state budgets. The primary difference between the two methods in matching state revenues with state expenses. The following may help to explain the Matching principle.

Matching principle From Wikipedia, the free encyclopedia
Matching principle is a cornerstone of accrual accounting together with the revenue recognition principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, expenses are recognized when obligations are (1) incurred (usually when goods are transferred or services rendered, e.g. sold), and (2) offset against recognized revenues, which were generated from those expenses (related on the cause-and-effect basis), no matter when cash is paid out. In cash accounting—in contrast—expenses are recognized when cash is paid out, no matter when obligations are incurred through transfer of goods or rendition of services: e.g., sale.

Prepaid expenses, such as worker wages or subcontractor fees paid out or promised, are not recognized as expenses (cost of goods sold), but as assets (deferred expenses), until the actual products are sold.
The matching principle allows better evaluation of actual profitability and performance (shows how much was spent to earn revenue), and reduces noise from timing mismatch between when costs are incurred and when revenue is realized.

See also https://www.cpaaustralia.com.au/cps/rde/xchg/SID-3F57FECB-CC789079/cpa/hs.xsl/2449_3178_ENA_HTML.htm

There are several states that are studying the use of Lean one of these is Georgia. This article suggests how this major streamlining reform of Georgia’s 152 boards, commissions, offices and departments may be approached.

Overview
We will start by getting the legislature and executive branches of the state government to commit to the Lean reforms. An extensive Lean training program will then be started. Next a high level lean team will be appointed to manage and steer the reforms. This is followed by the breakdown of the 152 organizations into functions. A function is identified by the products and services it produces. The personnel working within each function are organized into Functional Lean teams to study the process flows used to produce their product or service and determine the best method. The high level Lean Team will then logically group the 152 organizations into 5 to 10 high level Group organizations.

While all this is going on a separate Customer Relations Management (CRM) team is established to build a State Telephone 311 Portal. The state IT department will develop a Frequently Asked Question Database for each of the new High level Group organizations. This is done to aid the newly trained call takers in answering questions and providing services to the public. The CRM is not intended to supplant the States website services. Once the CRM is up and running further reforms will follow with each high level group organization being managed by a Steering Team. The new group Steering Teams will manage the activities of the new Functional Teams formed from the Functional Lean Teams.

Managing the Hype
Government Personnel as well as the public needs to be informed about the reorganization and consolidation changes that will be taking place. Vocal objections made to the public need to be responded to. Termination rules need to be in place for personnel that refuse to follow directives needed in making the reforms. Manage hype by emphasizing the positive aspects of the reform: “streamlining agencies for improved public services”, “employees will take an active role in improvements and in the management of government”; down play savings.

Establishing a culture of employee innovation through teams is one of the best ways to get an efficient operation with continuous improvement. Because the employee is close to the day to day operation he can detect problems sooner and has the opportunity to come up with an innovative solution before the problem is even known to management. This is an advantage over most bureaucratic organizations where it’s difficult to get employee innovation for three reasons. First employees are generally not asked to be innovative and are intimidated by the culture of the organization. Second if they do have a good idea it is generally ignored due to the competitive nature found at the work place. And the third reason is little or no responsibility is delegated to the employee for making improvements to their work processes. See my article 116.

Initiating the Lean Training
The first steps are to obtain agreement with HRM to provide Lean training personnel who will be Lean trainers for the high level Lean Teams and for others to be trained to fill the role of Facilitators for the Functional Lean Teams. Training of the Facilitators will include monitoring the organization and the election of a team leader for the Functional Lean Teams and training them in how to do Process Flow Charts (PFC). Selected Budgeting personnel will also be required to attend the training sessions in how to do the PFCs. Budgeting personnel will be required to analyze the PFCs determining required man-hour and other associated costs such as mileage for each process of the function.

Functional Breakdown
A Function is the name of a part of an organization that uses a unique set of processes to achieve a product or service that satisfies a specific public need. Processes are the steps required to achieve the desired product or service and are studied by the Functional Lean Team using a Process Flow Chart (PFC) to determine the best way to perform the function.

Because functions can precisely describe a task, breaking down the budget into functions simplifies the budgeting process. This allows functions to be easily excluded or included in the budget as a funded entity. To begin the process I would request all organizations to make a preliminary break down of their current budget into functions. This is done to prepare the way for identifying and organizing a function’s Lean Team.

There is also a benefit when consolidating government organizations. Functions identified as budgeted entities can easily be removed from one department and placed in another by moving the budget and the personnel performing the function.

After each of the functional Lean teams has been organized, elected its leader and is meeting once a week, monitored by a facilitator it will begin work on finding the best way to do their function. I have found that the most effective way for the Lean Team to make a PFC is to tape white butcher paper or brown wrapping paper around the conference room walls. After each Lean Team meeting the PFC can be easily rolled and put up at the next meeting. In order to maintain flexibility each process is written on 8 1/2x11in. paper and taped to the wall allowing for changes to be easily made. I would make two PFCs the first one is of the existing PFC and the second right under it the new improved method PFC. When the PFCs are completed and other improvements are known the budget analyst will review the PFCs to determine the cost savings from the new method. To do this the budget analyst will determine all associated costs for each process and enter the results into a spreadsheet. The total expenditures for the function become what I call the Funding Formula for the function. The budget for the function simply becomes the number of times that the function is expected to be performed in the budgeted year. Staffing is done from the calculated man-hours. The reason this can be easily estimated is that you cannot staff with less than a full person.

Role of the Budget Analyst
The Process Flow Charts done by the Lean teams provide a record of the costs associated with each Function. If a Function or one of its processes were to be removed all of its budget will also be removed. When the new and best method has been documented in the Process Flow Chart it is presented to the Group management. This is an important step which signifies Group management’s support and recognition of the Team’s accomplishments. Upon approval of the new method the Process Flow Chart is given over to the budget analyst to cost out the savings of the new method and to identify the proper staffing for the function. The budget analyst then documents the new method and its costs in a spread sheet which will provide input to the next budget. See my article 137.

The organization is now budgeted at the functional level. This I call bottoms up budgeting and when all the functions are totaled with the Steering Management costs you get the group level budget. This is the opposite of the old top down budget method for departments and agencies. See my article 113.

Consolidating the Many into the Manageable Few
To begin the reform a top level Lean study is initiated for the purpose of combining agency functions through similarity of their process flows developed by the Functional Lean Teams. The functions are grouped under new combined Group management names. This will reduce the number of boards and commissions significantly to about 5 or 10. We can now initiate the balancing of the work loads for each of these grouped sets of functions. What we are doing is planning the best solution or way of doing this set of functions for a period of time usually a week. Work load planning is a common Industrial Engineering technique found in industry.

How Work Load Planning works
All of the new Group management’s functions are grouped according to similarity of the processes done in each function. Note that each function takes a different length of time to complete. In planning the work load the back log in each group of functions is balanced out for the day or the week to keep the work load leveled. Employees are cross trained to do the processes in several of the group’s functions.

We know the employee time required to do each function by using the Lean flow process study for the function. The staffing base for each new agency is established by adding the hours required for each function and multiplying by the number of expected occurrences of the function for the year (from data obtained in past years). When all of the totaled hours are added the result is multiplied by 1.25 to allow for normal working conditions rated at 75% not 100%. The Staffing Base or the total number of employees doing the work in the Group is found by dividing the total hours rated at 75% by the number of hours normally worked in a year. This staffing base plus expenses incurred in the year is documented on a spread sheet for each of the agency’s functions. This becomes the budget for the function. The Total of all the function’s budgets plus the Group’s management costs equals the Group’s budget. The budgeting of functions places the budgeting process more under legislative control.

Building the CRM
The suggested reform of a State Centralized Portal using a 311 telephone number eliminates a significant amount of red tape. The 24 hour State Services Call Center can provide almost instant service to the public not just information. This portal eliminates the need for the public to search for a specific government organization and opens the way for the complete reorganization of the states services system. No longer requiring public interface, boards and commissions can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employee positions. See my articles 101, 102 and 154.

Finalizing the Organizational Reform
First the functional Lean Team becomes the Functional Management Team for each of the Group’s functions. Second many of the mid management levels between the Functional management and Group Management become redundant. Group Management now becomes a Group Steering Management Team which has the role of guiding and steering the organization while the Functional Management Team deals with the day to day operation of the functions. 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.

This reform brings a positive cultural change to the organization. Employees become members of Teams and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will have savings through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste.

What’s different?
The multilevel career path of the former bureaucracy is now reduced to one step from the Functional Management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the budget. Performance budgeting is no longer needed once the agency has been properly staffed because the functional teams monitor their own progress and if they start to fall behind they can take their own corrective action.

What are the benefits for Georgia’s State Government?
If the state of Georgia wanted to establish a four day week services would not decrease but actually increase from the 24/7 implementation of the CRM. The CRM 25 to 30 call takers would replace the more than 150 or more current call takers. Mid management in the boards and commissions could be reduced by more than 300. If the Steering Management and Functional Management Teams were to be implemented throughout the state government the minimum saving to Georgia is estimated to be $170 million to more than $500 million. See my articles 106 and 116.

Supplement
CRM was originally installed by the city of Hampton Virginia in 2000 and more recently in San Francisco. The Steering and functional management concept was implemented at the McDonnell Douglas Missile Systems Co. in 1983 after my proposal was accepted and approved by Sanford McDonnell CEO of the McDonnell Douglas Corp. The implementation was warmly received by employees and remained in place for more than ten years until the company was disbanded and sold to Boeing in 1997.

Mending Safety Nets with Technology
How a nonprofit start-up turned a process full of vertical hurdles into a client-centric safety net.
By Feather O’Connor Houstoun | September 9, 2009

Feather O’Connor Houstoun
is president of the William Penn Foundation, which is dedicated to improving the quality of life in the Greater Philadelphia region.

As a recovering public official who worked across many different program areas, I’ve marveled at how often we rationalize the continuation of practices that should have been augmented or replaced by technological advances. Sometimes the reason for missing an opportunity to innovate is limited resources, but more often it’s failure to look at the problem from a different perspective.

A multi-sector partnership, consisting of a state government, the federal government, and a start-up nonprofit, has transformed this cumbersome inefficient system into a streamlined process. Thanks to this stunning breakthrough, eligible but non-participating seniors are drawn toward benefits that could make a significant difference in their quality of life.
The nonprofit start-up, Benefits Data Trust, is the hub of a new outreach and enrollment system that combines a multi-agency back-office innovation with the individual agencies’ need to qualify applicants separately for each program. By cross-referencing information from federal, state, and private databases and membership rolls, it identifies individuals likely to be eligible but who are not receiving benefits. It then uses direct-marketing strategies to inform them that they may be eligible, and finally, supports them through the application process, often submitting the application on their behalf.

This is an example of using a Relational Database to store in one place the identification and address of an elderly or impaired individual such that the database allows a single enrollment for the person for several agencies. Each agency would require that the applicant fill out the paper work for each agency.

The method described above has been around for about twenty years it replaces the siloed eligibility determination used in multiple agency application programs. It uses a single centralized client Identification relational database to store a clients ID and address which can then be used for the processing of several agencies’ application programs. I use the same idea as that in the above article in the same way as one of the relational databases in my recommendation for a State Centralized IT Relational Database Management System RDMS.

I use this ID relational database to store all of the States households as input to many application programs: Medicaid, Driver’s Licenses, Voter Registration ID etc. I have recommended that the State RDMS be developed by a state IT or several states and funded by the Federal Government’s Dept. of Homeland Security. The ID RD can be linked together as a part of a national ID RDMS for the REAL ID mandate.

See my Articles:
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services
Article 143. Examples of a Relational Database Management System
Article 144. Why States Lose Millions by Using Obsolete Computer Systems
Article 145. The Coming Revolution in Information Technology Systems

Many cost savings proposals fail to get implemented in bureaucratic government especially with strong government employee unions. Any improvement that gets its efficiency from reduced personnel has little chance of being implemented. This is why I advocate the replacement of the Bureaucratic Organization with a Management Steering Team and Functional Teams. The following steps describe the process for making this reform.

A. Getting Top Management Support
This is a critical step for without top management support this reform is going no place. In some cases the top manager may have to be replaced with a reform manager.

B. Lean Training
Lean training is widely given throughout the organization both to the top managers and lower level employees as well. The focus of Lean is on making the processes of the organization more efficient. Out side training consultants may have to be brought in to train the internal trainers in Lean methods. Value Stream Mapping is the primary useful Lean tool in government. Value stream mapping is a Lean manufacturing technique used to analyze the flow of materials and information required to bring a product or service to a consumer.

C. Organize Lean Teams
Organize Lean Teams where recognized process flows exist within the Agency both for high level cross functional process flows and low level process flows within a function. The high level Lean Teams are made up of personnel who actually work in cross functional management and the Functional Lean Teams are from the work place where the function’s processes are performed. The best people to do an analysis of processes is Lean trained employees who actually do the work whether this is a high level skilled team or employees just loading trucks it is up to the team to define the best practices for doing the job.

D. Lean Team Meetings
I recommend flexibility in meeting times for busy managers this may be one hour before work while they are fresh in the morning or the setting aside of an entire day during the week. In any case the Lean Management Team should meet at least one time a week. The first order of business is to get organized by electing a leader of the Team by secret ballot.

Functional Lean Teams may require the services of a Lean trained facilitator to assist in getting the team organized and electing its leader. I would suggest that these teams meet for at least one hour each week. I propose that the process flows be done by the team on a large Process Flow Chart taped to the wall of the conference room with each process taped to the wall chart. This provides a flexible way of making changes to the chart during its construction. The method should start with the current process flow and to that is added the improved process flow.

E. Top Managements Role
Top management’s role is to encourage the implementation of Lean by being supportive of the Teams. They should send representatives at times to the Team meetings showing complete management support.

F. Costing Out the New Lean Process Flow Method
A Lean trained budget analyst will cost-out the savings between the old method and the new method and identify the staffing and other budget costs associated with the new method. Once this is done the budget including the staffing is established for this set of processes. The new method with the savings is presented to top management.

The Process Flow Charts provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if a Function were to be removed all of its budget will also be removed.

What you have now is the real budget for doing the Agency Functions not that phony bloated budget that the Agency presents each year. True, you must add in the cost of managing the Agency but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). This is an example of Work Measurement in my experience in industry most unmeasured office areas are over staffed by 10% or more. Once you know what the real costs are for doing the Agencies work and top management is working closely with the Teams the government reform process can begin.

G. Replacing the Bureaucracy with Steering Management and Functional Management
First The Lean Management Team is combined with the new Steering Management Team headed by the Agencies top manager as team leader. The Steering Management Team has the role of guiding and steering the organization. Some but not all of mid management may become part of the Steering Management Team but most mid level managers between the Functional management and Steering Management will become redundant.

The Lean Team leaders in each function become the Functional Management Leaders of each of the Agencies functions. Functional Management deals with the day to day operation of the Agencies functions. Steering Management is responsible for guiding and setting the direction of Functional Management in “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.

H. Role of Support Services
Management Support service functions such as: Human Resources, Information Technology, Budgeting, Auditing, and Facilities become part of a Centralized Agency Support Organization. Each support service may have a single representative on the Steering Management Team.

So where do savings come from in this reform? If the Agency has never had Work Measurement performed and most have not, the minimum savings is at least 10% plus the savings from all the Lean activities this may be a minimum of 5% or more plus the reduction in management personnel which could be another 5% for a total of 20%. If this reform is done though out the entire State Government you can see that the savings become significant.

It’s the latest, buzziest trend in government management. Just don’t call it a fad. By Ken Miller |Governing Magazine May 21, 2009

Ken Miller is the founder of the Change and Innovation Agency and the author of Governing’s book We Don’t Make Widgets: Overcoming the Myths that Keep Government from Radically Improving. His Better, Faster, Cheaper blog covers government efficiency. E-mail him at ken@changeagents.info.

What exactly is Lean Government? It’s a mindset and a discipline to increase our capacity to do more good. There are four key steps:
1. Be clear about your purpose and bottom line. What good are you trying to create?
2. Know what customers want and what they value.
3. Build great widgets. Permits, child abuse investigation reports, substance abuse counseling programs, tax audits and so on.
4. Find a way to make the widgets better, faster and cheaper. Notice the sequence. To paraphrase Peter Drucker, the father of modern management, it does no good to make more efficient that which should not be made at all.

In these incredibly tough budget times, you would think government agencies would be working extra hard to find ways of doing things more efficiently. Unfortunately, leaders across the country are grabbing the same old playbook — hiring freezes, travel restrictions, delaying maintenance and so on.

That’s why the aftermath of this budget crisis is the perfect time to use the principles of Lean to radically rethink what we do and how we do it. We should use this time to help policy makers understand the potential of improving the operations of government. Will it succeed? If we can overcome our limiting beliefs, get past the language barrier and tap into people’s desire to make a difference, then we’ve got a real shot. In the meantime, I’m going to get my acid-washed jeans out of the dryer, put on my Snuggie and Twitter you about the progress.

Comments by Lawrence Rosier
This is an excellent article and I advocate the use of Lean by all Governments and I agree with the author’s objections to the Total Quality Managements approach to using quality tools for solving defects in widgets when this is not the problem in government.

In my own proposal for Lean Teams I emphasize the same analysis of processes that Lean uses to determine the best way to do a set of processes. Lean teams are actually management teams and working level teams. TQM has failed in many instances in bureaucratic government especially with a strong government employee union. Any recommendation either TQM or Lean that gets its efficiency from reduced personnel has little chance of being implemented. This why I advocate the major reform of government with the replacement of the bureaucratic form of organization with Management Steering teams and Functional teams. Both using Lean at the multi process high level and at the Functional team level in the work place.

The best people to do an analysis of processes is the employees who actually do the work whether this is a high level skilled team or employees just loading trucks it is up to the team to define the best practices for doing the job. I propose that this be done by the team on a large Process Flow Chart on a conference room wall. Once this is done a budget analyst can cost-out the savings between the old method and the new method and identify the staffing and other budget costs associated with the new method. Once this is done the budget including the staffing is established for this set of processes. I call this method Work Measurement where this not done i have found that over staffing can be as much as 10%.

Too often Lean is seen only as tool that top management uses for the development of high level processes but for day to day continuous improvement Toyota still uses the TQM teams to implement Lean at the work place level.
Governing Magazine The Promise of Going ‘Lean’

The Amateur Approach to Downsizing

Donald Rumsfeld provides us with a good example of what I call the amateur top down approach from my articles 92, 104 and 146. The method is a kind of knee jerk approach. You know that the organization is overstaffed and you guess at how many employees you can remove without shutting down operations. Note that this method does not provide a way of finding out where and the over staffing occurs and by how many personnel. This method generally involves across the board cuts which punishes the best managed areas by cutting into their capability to provide services and has no effect on real overstaffed areas. This is also one of the best incentives to overstaff a bureaucratic organization.

“Five Ways to Downsize Government” By: Donald H. Rumsfeld
Published In: Heartland Perspectives Publication Date: August 4, 1995
Publisher: The Heartland Institute

Eliminate Bureaucracy
Congress should move swiftly to cut management and get personnel costs under control. It is guaranteed that there are more managers and more staff in the federal government than are needed. In less than seven months, Scott Paper Company eliminated 11,200 people, one-third of its workforce. The company cut 71 percent of the headquarters staff, 50 percent of management, and 20 percent of the hourly employees. If the national government is as overstaffed as was Scott Paper, some 140,000 government managers could be cut immediately, saving taxpayers billions of dollars.

The Secret Approach to Downsizing

I call this the secret approach because it is used secretly by major downsizing Management Consulting firms among them a firm which I was trained by, Alexander Proudfoot of Chicago. The primary method they use is called Short Interval Scheduling. After time-studying both shop and office functions (Work Measurement) a reporting system called Short Interval Scheduling is implemented. The Short Interval Scheduling reports made to management guarantees that production and services will not be interrupted and if there is a problem management will know about it within a few hours. In some of my articles I have called this method the Cost and Schedule approach. See my Article 12.

The following is a detailed example of my personal experience using Alexander Proudfoot techniques. This is an example is of a company wide downsizing operation made by Alexander Proudfoot. The client company was Clark Equipment at the Battle Creek, Michigan plant. Clark Equipment is a well-known forklift manufacturer. The company was under heavy competition from Japanese competitors using TQM and had to resort to extreme measures to survive. My assignment was in the Production Control Department and was to analyze the function, “servicing the manufacturing assembly line”. Several forklift drivers were involved in the transporting of parts on a timely basis to the manufacturing areas either to and from individual milling machines or directly to the assembly line of a particular forklift product.

My approach was to time study all the activities necessary to the servicing of the forklift production line. I followed and timed each forklift driver into the storage yards and counted the number of parts loaded on each pallet for each trip making sure that I had missed nothing. The number of parts to be loaded on the pallets was specified by the Production Control Planning System. My job was to be sure that the pallets were fully loaded or contained all of the parts required. At the assembly line the pallets of parts were placed near the assembly line so that they could be easily moved to the assembly line worker as needed. The study of the manufacturing areas took me about two weeks.

Now let’s do the data analysis. I needed to determine what “Product” was being produced by the Function. This appears to be difficult but what you must do is to break down all of the processes observed and find its smallest element. In other words this element or a multiple of it can be found in all the processes being performed in doing this function. Since all processes involved a forklift I found that the shortest process was when a forklift moved a pallet from its dropped location near the assembly line to the assembly line. I called this process a “forklift move” and the name of the element became “Move”, which I determined to be one minute long. This was very convenient because the entire analysis was done in minutes. If the Product “Move” had been five minutes long you would simply divide the total time for each process by five to get the number of move elements. Since each pallet moved had parts on it for more than one forklift and since I had counted and recorded the number of parts on all of the pallets we can analyze each pallet to determine if more than one part is required for each forklift. Adding the total time for the forklift driver to go to the storage area count the number of parts needed put them on a particular pallet and bring the pallet to the assembly area gives us the time to the drop-off place near the assembly line. To that we add the one minute required for a second forklift driver to bring the pallet from the staging area to the assembly line worker. We divide this total time by the number of parts moved (adjusted for the number of parts required per forklift). This process is repeated for all the pallets. When added together we know the total time spent in servicing this particular forklift product’s production line.

We cannot assume that all work will be performed at the standard 100% rate so we assume the actual rate is closer to 75% for staffing which adds 25% more time to the total. Multiplying this total adjusted time to service one forklift product by the current production rate (forklifts per month) gives us the adjusted time spent by all the forklift drivers for the month. When we convert the time in minutes to hours and divide this by the standard hours worked per month by a forklift driver we arrive at the total number of forklift drivers required at this particular production rate.
Given the total adjusted time to service one forklift product we can calculate Staffing levels for any manufacturing rate. It was also determined that since all the forklift products contained nearly the same number of parts the analysis could be used for all of the companies forklift products made on this particular production line.

Now let’s review the actual results of this analysis. During the study I stayed focused on the processes being performed and the time actually being spent. But since the analysis was being done in the cold of winter I noticed that every time I stopped by one of the four or five warming huts five or six people would get up and leave. Since I had no idea what these people were supposed to be doing I paid little attention to them. The results were shocking to the Clark Company senior management when they discovered that the actual number of employees required could be reduced by sixty a more than 50% reduction. The annual savings adjusted for today’s dollars amounted to more than one million dollars. If I had not conducted the study myself I probably would not have believed the results. After the removal of the redundant employees the Short interval Scheduling reporting was implemented.

So what’s wrong with this method of downsizing? Nothing if the plant is in danger of shutting its doors and quick solution must be had. But the method destroys employee morale by such severe measures and may create a permanent problem with unions resulting in ill will lasting for years. The Short Interval Scheduling reporting system forcibly maintains employee productivity. The costs are high in that there is little or no employee innovation for continuous improvement to the work methods. Note that this approach is used by Alexander Proudfoot through out the plant and in the office areas. It’s a real killer for morale and employee innovation. This is a very expensive operation because Management Consultants receive a substantial fee for their efforts.

The Lean and Work Measurement Method

The objective of the amateur method was simply to reduce personnel mostly likely to meet a short fall in the budget. The objective of the Management Consulting secret method is simply to downsize to known level determined by Work Measurement and to maintain production and service levels using the Short Interval Scheduling reporting system.

The objective of the Lean and Work Measurement method is to replace the 19th century bureaucratic structure found in industry and government with a downsized streamlined 21st century organization with fewer levels of management that encourages innovation by empowering both management and employees. To do this I recommend the adoption and use of the best techniques from business and government.

Bureaucratic Organizations have a reputation for resisting change but it is difficult for them to reject a method that brings innovation to the organization. That method adapted from industry is Lean. Value Stream Mapping is the primary useful Lean tool in government. Value stream mapping is a lean manufacturing technique used to analyze the flow of materials and information to bring a product or service to a consumer. Lean brings innovation to high level cross functional processes and to lower level functions. The low level Lean Teams meet once a week to discuss how to improve the processes that they use in their daily work. Their activities bring continuous improvement to the methods used in doing their job. A Lean Team objective is to study their job Function by making a Process Flow Chart of the current job processes followed by a second Process Flow Chart of the improved method. A budget analyst costs out the new method to determine the cost savings and the Team presents these savings to top management of the Organization. See my Article 137. Role of Lean Facilitator and Budget Analyst.

Top management’s role is to encourage the implementation of Lean both at the high and at the functional level. They should send representatives to Team meetings showing complete management support. Each functional Lean Team elects it own leader to chair the meetings and over see the making of the Process Flow Charts. The Top Management must support the Lean implementation or they should be replaced.

The Process Flow Charts provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if a Function were to be removed all of its budget will also be removed.
What you have now is the real budget for doing the Functions not that phony bloated budget that the Organization presents each year. True, you must add in the cost of managing the Organization but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). In my experience in industry most unmeasured office areas are over staffed by 10% or more.

Once you know what the real costs are for doing the Organization’s work and top management is working closely with the Teams the reform process can begin. First the functional Team leaders become the Functional Management of the Organization. Second most of the mid management levels between the Functional management and top management become redundant. Top management now assumes the role of a Steering Management Team. Some but not all of mid management may become part of the Steering Management Team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Organization’s functions. 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.

What’s different? The multilevel career path is now one step from the Functional management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the organization’s budget. This method requires little investment by the organization by redirecting training efforts to this implementation. See my articles: 103,104,106,119,132,135 and 137.

Lawrence Rosier’s most significant achievement was the proposal and acceptance by Sanford McDonnell CEO of McDonnell Douglas Corp. in 1983 of a modification to the company’s Quality of Work Life (QWL) implementation. The modification replaced the existing bureaucratic organization with a two tier organization consisting of Steering Management and Functional Management for the McDonnell Douglas Missile Systems Co. This management style was enthusiastically received by employees and was used successfully for over ten years until the sale of the company to Boeing in the late 1990’s. In 2005 he came up with his method of building on to the QWL implementation by replacing it with Lean and using Process Flow Charts to determine Work Measurement and a Staffing Base necessary for downsizing. The QWL team’s name was unfortunately confusing in 1983 has been renamed the Lean Team which better describes what they actually do.

Atlanta’s four-day workweek has unexpected results.
By John O’Leary from Governing.com September 2, 2009

…Like many cities, Atlanta was facing a big projected revenue shortfall, between $60 million and $80 million. To generate savings, Mayor Shirley Franklin chose to institute a furlough program. Starting in December 2008, all municipal employees (except certain public safety workers) were shifted from 40 hours per week to 36 and began working four days per week, nine hours per day. Cost savings were generated through a commensurate 10 percent decrease in pay, as well as additional savings from decreased energy usage in municipal buildings.

In late June, with the support of Mayor Franklin, the city council voted 8-7 to increase city property taxes by more than 40 percent. In light of this tax hike, officials chose to discontinue the reduced work schedule.The furlough programs were mostly ended at the beginning of July, and Atlanta’s employees are back to the old nine-to-five.

Let’s take another look at what is going on here city employees working 36 hours per week still produce the same as when they worked 40 hours per week. This proves that the city is at least over staffed by 10%. I have stated in numerous articles that where Work Measurement is not used there exists at least 10% over staffing. But since the city of Atlanta does not do Work Measurement over staffing is most likely more than 10%.

My recommendations for Mayor Franklin is to continue the 36 hour work week, repeal the 40% increase in city property taxes and implement the following reforms to the city of Atlanta government.

I recommend two major reform initiatives one is the streamlining of service to the public. You can reduce their number of offices by the implantation of a Customer Relations Management 311 telephone portal and give 24/7 service to the public. Read how Hampton Virginia did this in my Article 101. The Hampton Virginia Innovation Story and Article 154. Streamlining Iowa Boards and Commissions Using Lean and More. See also other articles: 102 and 141.

The objective of the second reform is to replace the 19th century bureaucratic structure of the Atlanta city government with a downsized streamlined 21st century organization with fewer levels of management that encourages innovation by empowering both management and employees. This method requires little investment by the city but the redirecting of training efforts for the implementation of Lean Teams. The method uses Work Measurement to establish a staffing base for the city’s functions. See details of how to do this in my articles: 103,104,106,119,132,135 and 137.

With State Governors encouraging employees and the public to come up with savings suggestions and with the formation of a Government Reform Committee what should be the governor’s next steps.

Example Step 1. State Centralized Pubic Service Portal
For example the Government Reform Committee has managed to consolidate more than one hundred Commissions and Agencies into fifty. But there is a problem all those Commissions and Agencies were originally separated so that the public could easily find the office providing the service they needed. The solution is to build a Customer Relations Management (CRM) state telephone portal where the public can call a 311 number (similar to a 911 call) to get the services they need. A customer call is answered by a call taker, logged-in, then directed to one of several expertise areas for service. Each expertise call taker is specially trained for giving service to some part of the fifty Commissions and Agencies. The call takers are assisted by a customer log-in Relational Database (RD) and several Frequently Asked Question RDs. The FAQs with answers are collected from each Commission and Agency and loaded into the FAQ RDs. The CRM gives 24/7 service to the public while reducing the number of employees answering service phones by more than one hundred. See Articles: 101, 102 and 141.

Example Step 2. State Centralized Government Services
The idea for states is to combine all government support services into a centralized state Shared Services Department (SSD). Within the SSD organization is: Purchasing, Information Technology, Janitorial Services, Waste Management, Travel and expense, and others. The RDs that support the services should eventually be developed as a part of a state Centralized IT Data Center as in Example Step 5. See also Article 142.

Example Step 3. Decision for Major State Government Reform or Downsizing by Lay-offs
The governor must decide with his staff and the Government reform Committee whether or not to pursue major state government reform or resort to the standard method of downsizing by layoffs. Announcing that layoffs are coming can cause a number of problems. Personnel that know that layoffs are coming may perform poorly on the job while others with special skills may seek employment elsewhere. And another big problem the state does know where to make the cuts. These problems all lead to poor service to the public. Even employee furloughs cause interruptions in public services. See Article 146.

Should the decision be made for major state government reform the following steps are best taken:

Example Step 4. Implement Total Quality Management
Announce publicly the new direction of the state government to form Total Quality Management Teams and support this with a new state employee policy statement.

Example of a state employee policy statement:
Our dedication to principles of simplicity, innovation, and public trust has made us one of the most forward looking states in the nation. We are committed to achieving public service leadership by living our values and embracing strong principles.

Teamwork and Synergy:
We achieve synergy through the skills and ideas of all participants. Through collaboration, we strive for win/win solutions to issues and problems. Personal success is realized through team achievements.
See Articles 116.

I have recommended that reforms begin with the implementation of Total Quality Management (TQM). This reform brings a positive cultural change to the organization. Employees become members of Work Improvement Teams (eventually self directed teams) and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will save $ millions through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste.

The implementation of TQM is followed by the use of Work Measurement to set staffing levels using Process Flow Charts. And this is followed by replacing the current organization with a two tier form of government based on Steering Management and Functional management. See my articles 103, 104, 132, 135, 136, 137 and 146.

Example Step 5. Managing State Resources by a state IT Centralized Data Center
Most states have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data with another. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs.

This step obviously requires significant funding but the returns far out weight the investment. Note I suggested that the RDBMS be developed by one or more state IT departments, funded by the Federal Government and given to the states to facilitate a complete integrated system. The Federal Government’s Dept. of Homeland Security could tap into the system for a national driver’s license database.
See Articles 84, 120, 138, 143 144 and 145.

The following article from Stateline gives one of the best overviews of how states are coping with the current recession. It highlights the problem of where to make cuts but offers no solution But I do in my comments.

Budget cuts test state personnel policies
By Christine Vestal, Stateline.org Staff Writer August 27, 2009

Forced to dramatically cut payrolls, some states are finding low-cost ways to boost employee morale, even as they struggle to maintain basic human resource functions such as training, recruiting, hiring and regular performance reviews.

In 2009, more than 800,000 state employees were affected by budget cuts – mostly through unpaid days off, or furloughs. Hundreds of workers were laid off and thousands of positions were left unfilled, putting additional stress on those left behind. For the fiscal year that began July 1, states already have announced payroll cuts affecting at least a million workers and the numbers are expected to spiral even higher.
Despite these pressures, the Pew Center on the States is urging state policymakers to find creative ways to ramp up proven personnel practices so that shrinking state workforces have the support they need to continue to deliver quality government services.

Comments by Lawrence Rosier
The key message is that states do not know where to make cuts in personnel and still maintain government services. The reason they do not know is that they have not implemented Work Measurement in their government organizations. Once Work Measurement has been implemented they will know what Departments and Agencies are over staffed and how many personnel are needed to maintain government services. This is where precision cuts have an advantage over across the board cuts. Across the board cuts harms areas where government services are under staffed and has little to no effect on other bloated areas of the bureaucracy.

I have recommended that reforms begin with the implementation of Lean Teams. This reform brings a positive cultural change to the organization. There is a high level management Lean Team which focuses its studies on the high level processes of the organization and low level functional Lean Teams. Employees become members of Lean Teams (eventually self directed teams) and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will save $ millions through increased efficiency both now and in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste. This is followed by the use of Work Measurement to set staffing levels using Process Flow Charts. And this is followed by replacing the current organization with a two tier form of government based on Steering Management and Functional management. See my articles 103, 104, 106, 147,148, 149, 151 and 152.

I became aware of the failure of my Company’s computer systems in 1986. While on the staff of the Vice President of Manufacturing I was asked to look at the problems with the company’s aging IBM computer systems. I did this in an unusual way over the objection of our IT manager I put up a wall chart of blank paper and had the “users” of the systems tape their part of the system on the wall. Each user added their application programs and showed where the data needed to run the application program came from. After a few days all of the users had put up their part of the system. The result was astounding for the next week all of the departments of the company had a chance to view the wall chart. What was discovered was that there was very little integration between application programs most were standalone with data being keyed in by hand with the application producing a printed report. One major fault was the passing of a 3x5 card of items required for manufacturing to purchasing personnel to enter into the purchasing application program. Our fix for the problem was to program entirely new applications with separate relational databases called a Relational Database Management System (RDMS). The project failed when the IBM data processing personnel refused to help program the new system. The revolution has been a long time coming since me and others have known for more than twenty years how to fix this problem.

More and more people are using the internet query methods made popular by Google and others allowing the easy search of Relational Databases throughout the world. They will demand that IT Managers stop this insane practice of continuing the development of obsolete computer systems. The failure to manage state resources in all areas but especially in welfare and Medicaid is costing states $billions. Most state computer systems are incredibly obsolete with information silos, duplicated data and inability to share information leaving the state vulnerable to open fraud.

Systems integration is achieved when separate databases for storing data are created using the Structured Query Language (SQL) database language. This allows IBM, Digital Equipment and other Vendors using SQL to access the databases. The process works this way when an application program needs to retrieve or store data it uses an SQL request to find data or store data it needs in separate relational databases. This is the similar to the relational database structure used by Google on the Internet and allows queries to be made easily without having to write a program for the query.

Most of the public including government and academics still are not aware of the problem. They seam to be unaware that the programming skills used in the obsolete systems are no longer needed for the new RDMS. The following is one example where academics are concerned about the loss of competent IT workers when the real problem is how to get competent RDMS workers and what to do with obsolete IT workers. In short “they just don’t get it”.

Dusty Data By Katherine Barrett & Richard Greene
Governing Magazine August 20, 2009
How to hang on to IT staff? Very few states, counties or cities want competent IT workers to leave their jobs. Although the recession may have led to some loosening of the job market, once a technology expert is familiar with the workings of a particular entity, she’s worth her weight in gold-sheathed silicon. Enter the University of Arkansas, where professors Margaret Reid and Myria Allen, along with colleagues at Baylor University and Florida State University, have some answers. In a presentation they’ve put together, the academics offer some keys to hanging on to these cherished employees. Among their suggestions: Help employees avoid becoming exhausted from overwork; provide an environment that is conducive to continual learning and change; make sure they work for knowledgeable managers; and provide the chance to receive cross-training. The absence of these elements is responsible for a big chunk of IT turnover.

So why is a revolution required to get the new RDMS? The revolution is in the State IT Departments after all you can not expect someone worth their weight in gold-sheathed silicon to give up their powerful knowledge for a new system that makes them redundant.

What is needed is for one state to develop or lead the development of the nearly 50 application programs and 30 relational databases to run the state’s Centralized IT Systems. And since the new software can be universally used on many different computer vendor platforms once it is developed it can be replicated on most other state computer platforms. I have recommended that the federal government pay for the development of this state computer system and then make it freely available to all states for their implementation. See my articles 120, 138, 143 and 144.

Most states have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data with another. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs.

First example: in the obsolete system a resident of a state can have his name and address stored in every application’s data that he has come in contact with. That is in: the state vehicle records, the state income tax records, the voter registration records, unemployment records, state higher education records, criminal justice system records, and others. If the person moves to a new address all of these records are obsolete and need to be updated. This where the cost of maintaining the obsolete systems is much more than the single address data found in the new (RDBMS).

The logic of what should go into a State Centralized Data Center’s new relational databases is not always straight forward. But for this example the first relational database (RD) created I would name the “Resident Household RD”. This RD would contain the unique identifiers of a resident of the state: the name, the address, the age, a physical description (height, hair color), driver’s license, social security number, a picture and the finger prints of the person. If the person is not a US citizen the country of origin should be noted. All the state’s application programs when seeking the name and address of a resident would query this RD first to retrieve the data.

Second example: the state Voter Registration application program would query the Resident Household RD first when updating a resident’s voting status. The voting status of the resident would then be processed in the state’s Voter Registration’s application program and stored under the residents name in the state “Voter Registration RD”. Note that this is one of the best opportunities to process a change of address along with the annual driver’s license renewal application.

Third example: a resident applying for Medicaid assistance would need to identify himself by first filling out an application in a state Medicaid office. If the applicant should supply any piece of information on their application form that is different from that in the Resident Household RD they could be arrested for attempted fraud. If the interview is done on the phone to the state Customer Relations Management service and the applicant is suspected of committing fraud. The applicant should be directed to the nearest state office to fill out an application form and upon the submission of the false information be arrested on the spot. If the applicant submits a valid request the information is entered into the Medicaid application program, processed and saved to the Medicaid RD.

Fourth example: a resident applying to Homeland Security for disaster aid could be quickly identified by accessing the Resident Household RD. If the applicant submits a valid request the information is entered into the Homeland Security application program processed and saved to the Homeland Security RD. Disaster aid could be awarded in some cases on the spot rather than six months later.

Note that in each example the application program is completely separated from the RD. This system is much more cost effective not only because the data storage is smaller but also because the application programs can be run on any vendor computer and the computer can be upgraded with out having to rewrite the application or the RD software.
So why don’t all the states use the RDMS? Cost is the reason, none of the current application programs and their attached databases can be used they must be scrapped and replaced by the new system.

In 2005 the Federal Government i.e. Homeland Security put an unfunded mandate requirement on the states to comply with the Real ID system by linking each state’s driver’s License databases into a nation wide system. This initiative has failed because each state has its own unique proprietary Drivers License application programs resulting in a virtual impossibility to link these to a Federal system. With the Resident Household RD implementations in each state the Real ID initiative becomes a possibility. But this is only one part of a state’s RDMS. This is why I have recommended that the Federal Government pay for the development of all of the new state Application Programs and RDs. I am aware of two states Washington and Colorado that are interested in the development of a Centralized RDBMS. They should combine their efforts with funding from the Federal Government in the development of a Centralized RDBMS which could then be made available to the rest of the states. Each state would implement the new systems by bringing up the new application programs and RDs on their new updated computers in a Centralized Data Center facility. The data from the old systems would then be copied into the new RDs and after all tests are completed the old system is then shut down.

See the following articles:
Article 46. Why some Computer System Implementations Fail.
Article 84. The Failure to Manage State Resources due to Obsolete Computer System
Article 102. Government Reform of California Agencies and Commissions
Article 106. Where do the Government Reform Savings Come From?
Article 118. Examples of Cooperative Innovation
Article 119. Not Just Another Grass Roots Movement to Reform Government
Article 120. Collaborative Innovation between States and Federal Government
Article 138. State Information Technology Centralized Data Centers
Article 142. Huge Savings from State Centralized Services

I advocate that state governments adopt the best management practices found in private business and government. One the best I have found is that put into operation 10 years ago by the Boeing Company the Shared Services Group (SSG) headed by its President Tom Copes. The mission of Shared Services is to “enable Boeing competitiveness by providing effective services at an affordable cost”.

The idea for states is to combine all support services into a centralized state Shared Services Department (SSD). Within the SSD organization is: Purchasing, Information Technology, Janitorial Services, Waste Management, Travel and expense, and others.

One way that Boeing’s SSG improves the bottom line is through economies of scale, such as the leverage it has in purchasing of support equipment and supplies. That extensive list ranges from office supplies and computers to janitorial services, tools and safety glasses. By establishing standards and consolidating purchasing contracts SSG saved Boeing more than $750 million in 2007. The improvement in the quality of its support services is one of its goals. An approach by SSG is the use of a value stream mapping technique to gain end user perspectives and make improvement to its processes.
SSG uses Lean + tools through-out its organization to achieve productivity and total cost improvements.

To Gain more insight on Lean + I recommend the following explanation and a list of Lean + tools at:
Throughput Solutions Lean Manufacturing website: http://www.tpslean.com.

From the Throughput Solutions website:
Self-Directed Work Teams
Through the natural evolution of the Lean work environment, associates begin to work more as interdependent teams in order to accomplish area and company goals. When this begins, it is time to support the transition to a self-directed workforce, capable of managing their own areas with greatly reduced supervision and oversight. Self-Directed Work Teams, to a large degree, voluntarily interact with internal customers and suppliers to improve area effectiveness and effectively deal with area issues.
Implementation: Once you’re ready to begin formalizing Self-Directed Work Teams, we take eligible teams through a series of team-building exercises geared toward increasing trust, cooperation, communication, and responsibility for self and others. This is a truly incredible and powerful process that results in personal and group change to allow for a very rapid, but consistent evolution of the team.

Teams quickly learn to function at a basic level, determining simple things like who reorders consumables, how to adjust schedules, and resolving minor area issues. Later, team development may include providing input on hiring, discipline, advanced area troubleshooting, and production scheduling (within the area). Effective self-directed work teams yield highly competent and capable employees with a genuine investment in area and company success.

The Self Directed Work Teams are the same as my recommended Work Improvement Teams (WIT). To understand how these teams are to be used let’s examine Purchasing as an example.

The first thing to do is to break Purchasing into its logical functions. The purchasing of tools and supplies appears to be a logical function because the processes are different from the purchase of personal computers which is another function. Similar items may use the same processes as that used for computers such as copying machines and printers. The point is that each function has a unique set of processes and these determine what a function is, not what is being purchased. Although the Lean + Tools should be used where they apply I recommend Process Flow Charts for determining the function’s staffing base.

The self directed work team follows my recommendation for the elected WIT leaders to take over the management of the Function. Along with my further recommendation for Steering Management.
Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Agencies functions. 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.

All the functions found in a centralized state Shared Services Department (SSD) should be dealt with in a similar manor like in the above Purchasing example.

See the following articles:
Article 21. Centralized Purchasing- The Best Way to Balance State Budgets
Article 22. Functional Restructuring of State Government rather than Departmental Restructuring.
Article 28. Making Centralized Purchasing Work using Aggressive Negotiation
Article 46. Why some Computer System Implementations Fail.
Article 47. Changing the Workplace Environment to get Innovation.
Article 49. Practices that Encourage Teamwork and Continuous Improvement.
Article 50. Implementing Work Improvement Teams With Government Employee Unions.
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government
Article 104. Down Sizing State Government the Easy and Safe Way
Article 106. Where do the Government Reform Savings Come From?
Article 137. Role of TQM Facilitator and Budget Analyst
Article 138. State Information Technology Centralized Data Centers

State Centralized Data Centers is one of two major government reforms which I have recommended the other is the reform of bureaucratic government. This is coming to fruition in the new Washington state data center being built in Olympia. But there may be some problems.

From The Olympian August 4, 2009
Rep. Reuven Carlyle, a Seattle Democrat and software entrepreneur, says the state is making a mistake with the data-center portion of the project, which accounts for $180 million of the $255 million project cost. Carlyle said it ignores the biggest problem, the state’s aging pieces of information technology that do not have the ability to talk to each other.

Carlyle is correct if this project does not upgrade the states information technology (computers and software) allowing for the ability to talk to each other then this project is one huge boondoggle. The answer is in making computers and software independent. Software should be easily integrated with other software and able to run on any off-the-shelf computer. This allows for the flexibility of upgrading to a newer faster computer from any supplier without having to rewrite all of the software which runs on the current computer.

The Problem and a Solution:
Most states have been developing or purchasing stand alone application programs which store their own data internally. When it becomes necessary to link one application with another a special linking program has to be developed so that an application program can share data with another. This obsolete system is more costly to maintain than a Relational Database Management System (RDBMS) using SQL (Structured Query Language). A RDMS has a different architecture, an application program does not store its data within itself but rather stores its data in separate relational databases (RDs). All application programs in the system can access any of the relational databases (RDs) as it needs data for running its application. This means that the amount of stored data in a RDBMS is significantly less since it is not duplicated over and over as it is in the old application programs. If the state of Washington is not using the above architecture or one of similar capability then it is indeed making a $180 million mistake.

Since this software can be universally used on many different computer platforms once it is developed it can be transported to any state computer platform. I have recommended that the federal government pay for the development of this state computer system and then make it freely available to all states for their implementation.

So why would the federal government want to do this?
Homeland Security is trying to find a way to link all of the state’s motor vehicle registration databases through a program called the Real ID. On the surface this appears to be nearly impossible task since nearly all of these databases have been developed as proprietary systems. The answer is to have the federal government fund the development of the software application program for a state motor vehicle Relational Database (RD) and give the software to each of the states. Each state would then load the new RD with the motor vehicle data from their old proprietary database. Since the state RDs are easily linked this would provide a giant national motor vehicle RD which could be easily accessed by law enforcement and Homeland Security. It is an easy step up to having the Federal Government fund a state to develop all the Application Programs and RDs of a completely integrated state computer system. The system could then be made available to all of the states. See my Article 120. Collaborative Innovation between States and Federal Government.

There are two Lean implementations the first is the normal high level management Lean Team and the second is the Lean teams at the organizations functional level. It is the second implementation which this article addresses.

The roles of Facilitator and Budget Analyst play a very important part in the implementation of Lean Teams at the functional level. This role is different from the normal implementation of Lean which is at the management level of the organization. This implementation of Lean starts the same but ends in the transformation of the organization from the 19th century bureaucratic structure with a downsized streamlined 21st century organization with fewer levels of management that encourages innovation by empowering both management and employees.

The implementation of Lean Teams begins with an agency’s development of a new Mission Statement reflecting the change in the organizations goals and policies incorporating the Lean philosophy of process quality. This step should reflect the input of as many of the agency’s personnel as possible with open discussions of what the new direction of the agency should be. See the example of this in my Article 116.

The facilitators are selected from the current training staff and the budget analysts are selected from the budgeting staff. The facilitators and budget analysts are given special training in Lean and analysis of Flow Process Charts. When the training is completed a facilitator and a budget analyst are selected to work together as a team in identifying each of the organization’s Functions. A Function is a standalone budgeted entity which produces a product or performs some service for the public. Each Function will have its own Lean Team made up of all the personnel who work in the Function.

The facilitator will organize the Lean Team and provide training at the it’s weekly meetings. At the first meeting the Team will elect its own leader. Subsequent meetings will involve finding the best way to do the work of the Function through the development of a Process Flow Chart. The budget analyst will assist the Team in the development of the process Flow Chart. When the new and best method has been documented in the Process Flow Chart it is presented to the top management. This is an important step which signifies top management’s support and recognition of the Team’s accomplishments. Upon approval of the new method the Process Flow Chart is given over to the budget analyst to cost out the savings of the new method and to identify the proper staffing for the function. The budget analyst then documents the new method and its costs in a spread sheet which will provide input to the next budget.

It is important to understand what is actually happening in the agency during this process. First the top management must support the Lean implementation in the development of the new mission statement, the training of the facilitators and budget analysts and the organization and recognition of the Team’s accomplishments. Support from much of the rest of the organization’s personnel may be negative but this can be ignored for the time being. You can think of this process as the facilitator and budget analyst team reaching into the organization and pulling out (identifying) a function and its personnel. The key here is that the team interviews workers in the function to find out the names of those who actually work in the function. This saves some time later when personnel who find that they do not have a functional job may be assigned to a function. This is a little like musical chairs for those who do not work on a function may find themselves redundant.

At the same time when functions and their personnel are being identified the facilitator and budget analyst will meet once a week with top management to coordinate the implementation at the functional level.

The management level Lean Team is the beginning of what will eventually become the Steering Management Team and Functional teams become the Functional Management for each function.

All that remains now is to identify the support functions and their personnel who support the agency. Now is time to decide how to organize support organizations. Human Resources, Facilities, Information Technology and Purchasing should have only a single representative as a coordinator on the Steering Management Team. These functions should be centralized in state government.

Now we turn our attention to all those left in the organization those deemed as redundant. Under the current difficult budgeting time these personnel will be laid off. In better times they could be retrained for new jobs. In any case we now know what the proper staffing should be for each function and unless the work actually changes the staffing should not change. See my article 106. for the minimum savings for each state.

Please note the analysis of Process Flow Charts are not as straight forward as I have presented. The difficulty occurs when the amount time to do a process is the same or varies each time it is done. When the time is the same the method is easily calculated but when the process varies as most do, other special methods must be invoked.

Each of the function’s processes must be examined to determine which are varying and by how much. Those that vary no more than 10% should be averaged (from historical data) and treated the same as a non-varying function. But if the function varies significantly for example a process which varies as much as 100% involves decision making and should be approached as a decision making process. This involves breaking the decision making process down into parts those that are common repeatable decisions which can be assigned a time allowance and the part which is unpredictable. This smaller part of the decision is estimated and the total is summed for the proper staffing. The goal is to establish a staffing base for the Function’s budget. You should not make something difficult out of this process just because you are unable to get the exact number of hours required for the process. The reason is you are staffing with the work of a full time person. The establishment of a staffing base may sound difficult but I think that it is not beyond the capabilities of a budget analyst. See my articles 121 and 122.

See also the following Articles:
Article 19. Assumptions in work Measurement for Staffing
Article 20. Approaches for Different Types of Organizations
Article 21. Centralized Purchasing- The Best Way to Balance State Budgets
Article 22. Functional Restructuring of State Government rather than Departmental Restructuring.
Article 23. The Relationship between Needs, Functions, Funding Formulas, and Performance Budgeting
Article 24. Establishing a Funding Formula for Performance Budgeting.
Article 28. Making Centralized Purchasing Work using Aggressive Negotiation
Article 29. Rethinking Performance Budgeting
Article 30. Example of Current Versus Proposed Performance Budgeting
Article 32. How to Bring a Bureaucracy under Control
Article 42. Declaring War on Bureaucratic Complexity
Article 62. Enhanced Auditing a Tool for Government Reform
Article 64. Getting Efficient Government Through Enhanced Auditing
Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government
Article 104. Down Sizing State Government the Easy and Safe Way
Article 106. Where do the Government Reform Savings Come From?
Article 113. Private Versus Public Budgeting Practices
Article 116. Private Industry Example of Lean Teams
Article 117. Overcoming Bureaucratic Resistance to Government Reform
Article 121. Setting Standards and developing a Staffing Base
Article 122. How to get Efficiency in Making Decisions

To keep government simple you must answer the following questions.

What does the public want their government to do?
The main tool for managing this process is Budgeting For Outcomes (BFO).

A good way to respond to this is to conduct a citizenry survey to find out what the people want done and how much they are willing to pay for having it done. Have them prioritize their responses in their vision of the importance of each item and their willingness to spend the states revenues on it, starting with the most important item down to the least important item.

How do we use this information given to us by the public?
The analysis gives what the public wants done by item and a priority for the states revenues to be spent on each item. Note that this is a combination of the Public’s Needs and the public’s Wants or desires. Needs should be found near the top of the list and Wants further down the list. Next you spread the states revenues down the list based on real costs as far as the budget will go. Those items near the bottom of the list will not be funded because there are no funds for them.

How do we determine the real cost for each item?
First identify the Function that will provide the requested item or service to the public. A Function is composed of a set of processes that leads to a budgeted outcome or service to the public. Functions are funded entities similar to the items identified by the public but better defined in that a Function produces one output where as the item identified by the public may include several Functions. Functions are budgeted items incorporating all the employee staffing and expenses necessary to deliver the item or level of service requested by the public. The advantage of funding Functions over Departments is that they are uniquely described such that they and all of their funding can be moved to a different organization or be completely removed from the budget if the Function is no longer needed. An estimate of the cost of each Function based on past budgetary costs may be used to speed the budgetary process until more accurate budget cost data can be developed.

How do we manage this process of governing and keep it simple?
First we should develop a single unifying Mission Statement one that brings together the public with those that will perform the Functions. The Mission Statement sets a goal to which all can subscribe and provides a rallying cry for the entity be it city or state. Sub goals set out the important things that the entity stands for and wants to emphasize.
For a more detailed understanding of Mission Statement development I recommend the following articles:
Article 101. The Hampton Virginia Innovation Story
Article 116. Private Industry Example of Total Quality Management

Management of the entity should be as simple as possible yet capable of managing its resources. The best way to do this is through a Steering Committee whose leader is either appointed, elected by the public or by the other members of the Committee. Steering Committees manage from one to several related Functional Management Teams as well as supporting groups such as human resources and budget personnel. Each Functional Management Team is self-managed with its leader being elected by the working members of the Function.

Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Agencies functions. 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.

What should Functional Management do to improve work tasks?
The main tool for starting this process is the implementation of Lean with its philosophy of continuous improvement in the Function’s processes. Then we develop the best method of performing the Function cost it out and properly staff the Function while providing a direct input to the Budget. This completes the task we started by costing out each item identified by the public in the Budgeting for Outcomes (BFO) process.

What’s different? The multilevel career path is now one step from the Functional Management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the Agency’s budget.

The best way to improve a Function’s operation is to have personnel who currently do the same or nearly the same Function develop the Function on a Process Flow Chart. And the best way to do this is to create a detailed Processes Flow Chart on long sheets of wrapping paper or butcher paper taped to the conference room walls. The long sheets can be taken down and rolled at the end of each meeting. Each process is created on 8 ½ x 11 sheets and taped to the wall allowing changes and corrections to be made to the wall as the method proceeds. After discussions an improvements to the process are agreed upon by the team a second Process Flow Chart is added to the wall chart showing the improved method.

The reason for doing this is to show the costs and the time to perform each of the processes in the improved method. But in the interests of improving quality the time to perform the new processes may actually be longer than the old method. If some way of getting the improved quality can not be found while reducing costs the method is still presented to Steering Management by Function management (a Lean Team) for approval as the improved processes to be used by the Function. If approved the method is documented and given to a budget analyst for costing-out the processes. The method now becomes the standard method of performing the Function and can be duplicated everywhere the Function is done in government.

Costing-out each Function provides a known way that the jobs should be done and by tallying staffing costs and expenses for each process on a spread sheet a Funding Formula is developed. And by multiplying the number of times that a Function’s processes (the Funding Formula) are expected to be repeated in the coming year the data can be used to directly calculate the budget for the Function.

Some Functions may have processes which vary in time to complete and do not lend themselves easily to the Funding Formula method. In those cases I would examine the processes that are varying and collect data over time. If the processes do not vary over 20% I would staff for the average time to do the varying processes. Any extra required time should be absorbed by overtime. Productivity reporting should not be done where you encounter varying processes because a stable base for a standard does not exist instead a measurement of effectiveness may be more helpful. One should always follow the rule to reduce the measurements made to their simplest while getting the management data needed for managing the Function and no more. See Article 121. Setting Standards and developing a Staffing Base

Another way to simplify government is the centralization of state Information Technology by building an integrated Relational Database Management system. This streamlines government through the elimination of obsolete and redundant agencies and in combining agencies. When these two approaches are used together through a state centralized 311 telephone portal such as Customer Relationship Management (CRM) you can eliminate a significant amount of Red Tape and provide on-the-spot service to the public. The solution provides instant information to the government employee interfacing with the public through Relational Databases. See articles:
Article 84. The Failure to Manage State Resources due to Obsolete Computer System
Article 101. The Hampton Virginia Innovation Story
Article 102. Government Reform of California Agencies and Commissions
Article 120. Collaborative Innovation between States and Federal Government

Other related articles on simplifying government:
Article 42. Declaring War on Bureaucratic Complexity
Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government
Article 106. Where do the Government Reform Savings Come From?
Article 113. Private Versus Public Budgeting Practices
Article 119. Not Just Another Grass Roots Movement to Reform Government

Reprint of Stateline’s excellent article on innovative cooperation: “States team up to save in tight times” By Daniel C. Vock, stateline.org staff writer, April 3, 2009.

The governors of Minnesota and Wisconsin still like to spar over their interstate sports rivalries, but the recession is pushing them to team up in delivering some basic state services to save taxpayers on both sides of their border up to $10 million to start.

In Minnesota, school districts already purchase equipment through the state or through one of nine regional cooperatives, first created in the 1970s. One, the Northwest Service Cooperative, for instance, works with 43 school districts and organizes food programs, negotiates contracts for office supplies, trains local school staffers on how to comply with federal workplace-safety laws and sells 54,000 health insurance contracts a year.

For more information see my articles:
Article 21. Centralized Purchasing- The Best Way to Balance State Budgets and Article 28. Centralized Purchasing- Making Centralized Purchasing Work using Aggressive Negotiation.
For even more purchasing clout try joining a national purchasing organization see:
UScommunities.

Lean is known mostly as the Japanese management method that enabled Honda and Toyota to take market share from American auto manufacturers using superior quality. State education because of its many facets and problems is an even better application of Lean Teams than the automotive industry. Many state educators would ague that they are already doing Lean. That is probably true as a stated goal but Lean puts massive focus on education including: parents as teachers, community and business involvement with extra focus on the classroom where it counts.

Begin by forming a variation of the Lean Team. I would call it by a more relevant name such as Classroom Quality Team (CQT). Each curriculum area English, history life Sciences and others would have their own CQT. The CQT would meet as required more often at the start of the semester and maybe once a month later. The CQTs are qualified to determine their own curriculum eliminating the need for a curriculum coordinator. While we are doing this we may as well eliminate the paperwork that the coordinators do. We should keep the measures used for student progress they determine success and failure not only of the student but of the entire system. A Key element for maintaining teaching quality is the support given to inexperienced teachers through the CQT. Experienced teachers should submit their best lesson plans to the CQT for review and documentation as a standard set of lesson plans to be shared with new teachers. This solves a critical problem for new teachers who don’t have the time or the experience to develop their own lesson plans. The CQT would continually evaluate and improve their teaching methods in relation to student achievement.

Now let’s talk about parental involvement first I am not talking about parents who support school sports. This is good thing but most parents don’t get involved until they can be entertained. High school is too late even grade school is not soon enough. We know that learning starts at birth and maybe even before. We also know that the fastest learning for a child is in his brain development years from birth to two or three years old. This is the age where the parents critically affect the education of the child. If we are going to address TQM of education this is where we should begin. A Parents As Teachers organization is the minimum that should be done. This program and other early efforts is a critical part of TQM and must not be ignored. This all occurs before kindergarten. After students start grade school is the time to get tough on parents. Get them to pledge to shut off the TV for a couple of hours each evening and sit down with their kids for study time. There is no way that this activity should be avoided it will soon become a daily routine to be followed through high school.

The next critical area is in class sizes especially in the first two years of elementary school where students are learning to read. Individual attention to each student is vital to learning to read therefore there should not be more than a dozen students in each class.

The next area of effort should be in the teaching of students to write. The only way for students learn to write is to write. The problem is that an English teacher needs to read, correct mistakes and evaluate each paper a job not possible when it should occur on a daily basis. Reduced class size would help but a teacher’s aid may be of more help.

Open the school’s libraries and gyms on Saturdays and staff it with community volunteers. Open the school at night for Parent’s As Teachers meetings and Adult Education classes. Make the school the center of the community involvement in public education. Have the parents pledge to shut off the TV set for two hours of study time each night before school.

I am convinced that if we concentrate our education efforts in the above areas many of the later problems in high school will be solved.

For more information see the following:
Article 69. Ideas for Child Rearing that the State can Do
Article 107. Saving the Cost of Foreign Speaking Child Education
Article 111. Example of a Lean Team in the Classroom

Government Reform savings as presented in this website comes as a result of several implementations. First Lean provides a vehicle for generating dollar savings and quality improvement over time through improvement of the processes used and or the service delivered. These savings deliver real value in reduced tax dollar expenditure and in better service to the public. It is difficult to determine just how much savings is going to be found or even when it’s going to be found but it is known that it can make a significant difference. The Japanese company Sony soon after WWII made cheap paper and plastic toys and sales in general of Japanese products in the US were thought to be junk. To counter this stigma Japanese industry developed Total Quality Management and now Lean and you see the results today in Sony, Honda and Toyota. While American automotive manufactures thought that TQM was some kind of gimmick the Japanese were gradually using quality to gain market share. Now all the automotive manufacturers are using Lean a new tool which is very effective in determining the best processes.

The second key area for savings is in Work Measurement where the work performed by each Function is measured and standards set. The result is the known number of hours required to do each Function which also determines the staffing required. I use a general rule of thumb to define “over staffing” as 10% of the work force in all areas where work measurement is not done. I have also found that this over staffing number may be significantly higher than 10%. One of the main reasons for this is that work assignments are usually made to individual employees regardless of the actual time required to do the job. This means that one employee may have a task that occupies 90% and another just 30% of his time. These inequalities show up during the process of Work Measurement. This problem goes away when a Lean Team is assigned these tasks because the Team has responsibility for finding the best way to get the task completed with no time lost.

The third area where staffing is reduced is during the final Government Reform process of changing from a Bureaucratic hierarchically structured organization to a Steering Managed and Functional Managed two level organization. In this process all middle managers become redundant eliminating the Bureaucratic hierarchical structure of government.

If you have thought carefully about what you have just read you may have already guessed that over-staffing may be very significant. I offer this experience: in my first two weeks working for the Management Consulting firm Alexander Proudfoot of Chicago. While doing Work Measurement at a client company in Michigan their management was blown away by the discovery that 60 employees out of 110 were found by me to be redundant. This was in the Production Control area when at that time most companies measured only their production lines but not other areas of the plant. See my articles 103,104,105 and 113.

The savings from over staffing is in addition to savings from combining and streamlining government through implementation of centralized Relational Data Bases. They can eliminate much government red tape in the management of agency interface with the public. See my articles 101, 102, 118, 120 and 123.

Supplement:
The following is the minimum expected savings from my recommendations for each state based on state payroll data from the US census bureau.

Alabama $90,900,000
Alaska 22,730,000
Arizona 117,060,000
Arkansas 48,080,000
California 950,690,000
Colorado 102,980,000
Connecticut 85,790,000
Delaware 19,940,000
Florida 328,260,000
Georgia 170,400,000
Hawaii 28,790,000
Idaho 25,770,000
Illinois 259,020,000
Indiana 112,260,000
Iowa 64,850,000
Kansas 60,030,000
Kentucky 73,780,000
Louisiana 81,200,000
Maine 25,240,000
Maryland 132,100,000
Massachusetts 146,030,000
Michigan 198,640,000
Minnesota 112,630,000
Mississippi 54,130,000
Missouri 101,220,000
Montana 17,760,000
Nebraska 38,330,000
Nevada 49,390,000
New Hampshire 25,220,000
New Jersey 250,760,000
New Mexico 41,420,000
New York 569,110,000
North Carolina 181,290,000
North Dakota 13,680,000
Ohio 229,060,000
Oklahoma 65,110,000
Oregon 73,620,000
Pennsylvania 227,170,000
Rhode Island 23,910,000
South Carolina 79,000,000
South Dakota 13,060,000
Tennessee 104,000,000
Texas 449,690,000
Utah 46,190,000
Vermont 14,240,000
Virginia 162,330,000
Washington 149,470,000
West Virginia 30,300,000
Wisconsin 108,420,000
Wyoming 16,500,000

Lean a concept developed and implemented in industry is directly applicable to state health care organizations. The entire health care organization’s Lean approach is to inspire health care workers and the public to participate in bringing a renewed interest in the states health and senior services by focusing on raising the level of quality and public awareness of health practices.

One of the first efforts is to develop an all inclusive Mission Statement. Mission statements are not easy to develop but the difficulty can be somewhat eased by developing a proposed list of accomplishments which the organization thinks it can achieve. Then try to boil these down into a single goal statement which includes all stake holders as well as the general public. Remember that volunteer workers can be a significant asset to the state. This is where the “role of state health care” is defined a necessary step given the limitation of state resources. Many states have differing roles especially in the area of Medicare Management.

This was the “inspiring” portion of the approach the next step is in bringing innovation in health care through Lean Teams which I would rename to something more relevant such as: Health Quality Teams (HQT). A facilitator trains and guides each HQT as it elects its own leader. The goal is to “empower” health care workers in each function to develop ways of improving the health care processes and raise the level of health care quality in their function.

The team should review the current processes used by the function. The best way to do this is to create a Processes Flow Chart on long sheets of wrapping paper or butcher paper taped to the conference room walls. The long sheets can be taken down and rolled at the end of each meeting. Each process is created on 8 ½ x 11 sheets and taped to the wall allowing changes and corrections to be made to the wall as the method proceeds. After discussions an improvements to the process are agreed upon by the team a second Process Flow Chart is added to the wall chart showing the improved method. The reason for doing this is to show the costs and the time to perform each of the processes in the improved method. In the interests of improving quality the time to perform the new processes may actually be longer than the old method. If some way of getting the improved quality can not be found while reducing costs the method is still presented to top management for approval as the improved processes to be used by the function. If approved the method is documented and given to a budget analyst for costing-out the processes.

Note that there is a closer relationship developing between top management and the HQT functional teams. The empowerment of HQTs inspires them do more innovation and to continuously improve the function’s processes. The second phase of government reform begins by making the HQT leaders the leaders of Functional Management teams. Top management becomes the Steering Management team. The lower level managers at this point become redundant however some may be required as part of the Steering Management team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the functions. 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.

The goal is to reduce bureaucracy by removing layers of management while putting more functional employees to work thus improving health services. The overall difficulty is in finding the best balance of choices for what should be done with what can be done with limited resources.
For more information see: Article 8. Work Place Continuous Improvement. Article 49. Practices that Encourage Teamwork and Continuous Improvement.

More than eleven states have already cut state funds to education and more states will do the same. I ask this question. Why would anyone increase class sizes by laying-off teachers and keep a bloated Bureaucratic State Government?

The state of Missouri is an exception Governor Jay Nixon is cutting bureaucrats and sparing cuts to public education. From Missouri Governor Jay Nixon’s State of the State address January 27, 2009:
“To tackle the budget challenges we face in FY 10, we are embarking on an unprecedented initiative to make government leaner and more efficient. To bring about this needed reduction, my budget eliminates or cuts 50 programs. Many bureaucratic positions will be consolidated or eliminated altogether. Hundreds of additional positions that are currently unoccupied will not be filled.

In total, my FY 10 budget proposes the elimination of more than 1,300 positions. We will cut nearly $200 million from overhead by eliminating these positions and cutting bureaucracy. After just two weeks in office, we are proposing the smallest state bureaucracy that Missouri has seen in a decade. The reduction I am proposing today represents the largest single reduction in the state’s bureaucracy in modern history.
And because Missourians will get a government that’s smarter and more efficient, most families will not see changes in the services they count on.”

We will need to wait and see if this is just a bureaucratic personnel reduction or a new commitment to eliminate the bureaucratic form of government. Just cutting bureaucratic personnel will help fix the current budget shortfall but it will not be a permanent change because bureaucracies will simply replace the personnel when there is a budget surplus. A second problem becomes apparent when bureaucratic staff is cut. The tendency is to cut the most recently hired first, the people actually doing the function’s work and not supervisory personnel. This threatens the capability to meet current workloads.

The key to the successful reduction of state government is in establishing standards something rarely done in government. In industry the establishment of a standard through Work Measurement is a necessary part of operations and of staff reductions. The standard establishes a staffing floor insuring that the essential service being provided by the function will not be impaired or reduced. The standard also provides a base for measuring the effectiveness and the efficiency of the organization in accomplishing its tasks. Without this reporting mechanism the remaining staff employees may simply cease doing their jobs jeopardizing the service provided. See the following: Article 5. Government Bureaucracies and Document Turn-Around Time.

I have found that The Missouri Department of Transportation (MODOT) has set some standards. One of these is in measuring the function “Highway Stripping”. This is an example of what I call the Cost and Schedule method using time-study to do Work Measurement and set the standard for the function. But in the more people oriented service areas of government Missouri has not yet introduced Work Measurement.

The estimate of staff reductions of 1,300 positions in Missouri government is a bold move by Governor Nixon and can be successfully accomplished. But this number is an estimate and may be somewhat less than the actual number established through Work Measurement. The downside is that the estimated cuts in staffing may be done in the wrong functions jeopardizing services. And without base standards Performance Measurement of the function’s accomplishments may not be valid leaving the state’s functions subject to work slow downs resulting in reduced services to the public.

I recommend that reforms begin with the implementation of Lean. This reform brings a positive cultural change to the organization. Employees become members of Teams and are motivated by empowering them to improve their jobs through innovation. By bringing innovation and continuous improvement to the government’s processes the state will save $ millions through increased efficiency in the future. The reform amounts to a win win situation for government union employees as well as the tax payers of the state by employee empowerment and by ending bureaucratic waste. I have further recommended that after implementing Lean Teams that standards be set using Process Flow Charts. This is followed by replacing the current organization with a two tier form of government based on Steering Management and Functional management. See Article 103. Reforming Bureaucratic Government the Subtle way by Bringing Innovation to Government.

I suggest that Missouri Governor Jay Nixon has boldly stepped out in front of other states and has the opportunity to lead the way in State Government Reform. The elimination of the bureaucratic form of government could make Missouri a model for other state reform efforts.

Bureaucratic Agencies have a reputation for resisting change but it is difficult for them to reject a method that brings innovation to the organization. That method adapted from industry is Lean. Lean brings innovation to the lower level of the Bureaucracy through Teams. The Teams meet once a week to discuss how to improve the processes that they use in their daily work. Their activities bring continuous improvement to the methods used in doing their job. A Team objective is to study their job Function by making a Process Flow Chart of the current job processes followed by a second Process Flow Chart of the improved method. A budget analyst costs out the new method to determine the cost savings and the Team presents these savings to top management of the Agency.

Top management’s role is to encourage the implementation of Lean by being supportive of the Teams. They should send representatives to the Team meetings showing complete management support. Each Team elects it own leader to chair the meetings and over see the making of the Process Flow Charts. The Agencies Top Management must support the Lean implementation or they should be replaced.

The Process Flow Charts provide a record of the costs associated with each process. If a process were to be eliminated all of its costs are also eliminated. A Process Flow Chart is done for each Function and if a Function were to be removed all of its budget will also be removed.

Did I say Budget? What you have now is the real budget for doing the Agency Functions not that phony bloated budget that the Agency presents each year. True, you must add in the cost of managing the Agency but now for the first time you know what that cost is. This is a bottom-up budget with actual costs for doing the work known. All other costs are for management and fluff (which can be significant). In my experience in industry most unmeasured office areas are over staffed by 10% or more.

Once you know what the real costs are for doing the Agencies work and top management is working closely with the Teams. The government reform process can begin. First the Team leaders become the Functional Management of the Agency. Second all the mid management levels between the Functional management and top management become redundant. Top management now assumes the role of a Steering Management Team. Some but not all of mid management may become part of the Steering Management Team. Steering Management has the role of guiding and steering the organization while Functional Management deals with the day to day operation of the Agencies functions. 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.

What’s different? The multilevel career path is now one step from the Functional management Teams to the Steering Management Team. Gone are the hundreds of hours of endless manipulation of employee evaluations. Gone also is the endless bickering and negotiation over the Agencie’s budget. Staff reductions occur more at the management level and less at the bottom of the Agency. The normal approach is to lay off the most recently hired employees.

For more information see: Article 11. Adaptation of Manufacturing Quality Improvement Techniques to Achieve Efficient Government Article 20.Approaches for Different Types of Organizations
Article 23. The Relationship Between Needs, Functions, Funding Formulas and Performance Budgeting and Article 42. Declaring War on Bureaucratic Complexity

The following is a suggestion for managing the hundreds of agencies, boards and commissions in California’s state government. Currently the California Online Agency Directory aides the public in finding the particular organization they are looking for to provide a specific service such as: answering a question, making a request or filling out an application. Now all public queries can be handled through a centralized state 311 telephone number. The 24 hour State Services Call Center can provide almost instant service to the public. This portal eliminates the need for the public to search for a specific government organization. This allows for the complete reorganization of the California services system. No longer requiring public interface, commissions and agencies can be consolidated into a much more responsive and efficient organizations resulting in the elimination of many management and public interface employees positions.

An online record of the customer’s call history documents the request and the resolution of each query by the Call Taker. Each Call Taker is trained for a specific group of agencies and boards and is supported by several databases one being a Frequently Asked Question FAQ database. Call Takers answer questions, respond to requests and fill out online applications. The State Services Call Center is staffed based on the number of calls received. Call Takers are members of Work Improvement Teams (WIT) for continuous improvement and is the Functional Management. Steering Management is the significantly reduced former agency or Board management.

This is the solution for getting rid of bureaucratic red tape by providing instant information to the government employee interfacing with the public. Expanding the concept of Customer Relationship Management (CRM) we can eliminate the bulk of the constraining rules and red tape found in all bureaucracies. This is accomplished through the use of a “Google like” query system; a modern Relational Database Management system (RDBM) using SQL (Structured Query Language). It allows the employee to query the information he needs from the database providing instant service to the public thus eliminating the constraining rules and paperwork which we identify as red tape.

From: Article 101. The Hampton Virginia Innovation Story
“Much has been written about Customer Relationship Management (CRM) and call center technologies. Web self-service, call centers, 311, kiosks and similar customer-service-oriented systems continue to build momentum. Fueled by demand for improved service, governments around the globe have accomplished a great deal in a short time.

It follows then, that one government can bring in participants from other levels of government or other political subdivisions that share a common interest in the community served, saving taxpayers the trouble of navigating a bureaucracy that extends beyond the boundaries of geography, political subdivision or level of government.”

Se the following articles for updates to this article:
Article 154. Streamlining Iowa Boards and Commissions Using Lean and More
Article 156. Getting the most out of Lean as used in Government
Article 157. Using Lean to Balance Agency work Loads

That Giant sucking action that Ross Perot warned us about is starting to gather full speed. Manufacturing jobs are being lost in increasing numbers to other countries; especially China and Mexico while service and intellectual jobs are being lost to India. These Jobs that formed the basis of middle class America will soon be gone. While it is somewhat easier to reverse the process for intellectual jobs it is nearly impossible for manufacturing jobs. Trade unions and government leaders have failed to understand a basic economic concept: the Principle of Economic Self Interest and its meaning in the current global economy.

Another way of looking at outsourcing is in the name of Free Trade which in itself is entirely desirable as long it is negotiated fairly. Reciprocal trade agreements should lead to an equitable balance of payments between the two countries. The problem is in thinking that Free Trade means that there shouldn’t be any restrictions.

WHAT TO DO?
Focus on Employee innovation for increased productivity and job satisfaction.
-Share organization success through employee innovation.
-Make small employee teams responsible for the success of the work they do.
-Develop a culture of continuous improvement through small innovative steps.
-Reform management structure into employee teams.
-Measure results.

The failure to manage state resources in all areas but especially in welfare and Medicaid is costing states billions. Most state computer systems are incredibly obsolete with information silos, duplicated data and inability to share information leaving the state vulnerable to open fraud.

For information on Medicaid Management and computer systems see:
The excellent article “Medicaid Management Makeover” by William D. Eggers in Governing Magazine and the following from Management Consulting Forum.
Article 46. Why some Computer System Implementations Fail.
Article 79. Getting our Arms Around the Medicaid Problem
See also Article 101. The Hampton Virginia Innovation Story,
Article 102. Government Reform of California Agencies and Commissions and Article 120. Collaborative Innovation between States and Federal Government