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Friday, September 10, 2004

Blowing Up the Boxes

So that’s what Arnöld meant! He’s not going to explode the dull little organization chart boxes that house California’s state bureaucrats. He’s going to inflate them, to puff them up full of warm air. "OK now ... vun, two, zhree ... Inhale! und blooooooww. Inhale! und blooooooww."

How else can we understand the reorganization plan that has emerged from der Gövernor’s Performance Review? That plan basically takes the messy tangle of the state organization chart, draws eleven gigantic new boxes (with nice, rounded edges) and dumps all the old boxes into one or the other of the new boxes. See the results for yourself:

Ugly Old Chart ....vs..... Nice New Chart

Just think of the opportunities for chaos, power grabbing and executive infighting that this shuffle will create!

The proposal is embellished with the usual inspirational platitudes:

But beneath the cosmetic clichés, the Review expresses only the blinkered ideology of the corporate wing of the Republican party -- as tho some Dr. Frankenstein had transplanted Pete Wilson’s brain into Arnold Schwarzenegger’s body.*

The Review evaluates State government as tho it were a profit-seeking business ripe for takeover or leveraged buyout.

"Governor Schwarzenegger called for a line-by-line audit of the state’s fiscal operation... CPR created an audit team to perform such a review in accordance with Generally Accepted Government Audit Standards (GAGAS) [ed. GAGA - how appropriate!]. California’s condition, for this audit, was viewed as if it were a business entity being acquired."

Naturally the Review finds government inefficient. It makes no profit, so fails the test of the bottom line. But this is a false comparison. Although governments share some characteristics with business corporations -- both are bureaucracies:

"an organizational structure characterized by regularized procedure, division of responsibility, hierarchy, and impersonal relationships"

that co-ordinate internally through commands and procedures, rather than markets -- there are crucial differences. Government agencies do not sell, but tax and regulate. We expect officials to be fair, not captives of the highest bidder. And while bankruptcy is the fate of failed corporations, no one with any sense at all would advocate a Chapter Seven liquidation for civil society.

In his eponymous study Bureaucracy (1989), Harvard Professor James Q. Wilson categorized government agencies based on whether outputs (what the workers do day to day) and the outcomes (the results produced by the outputs) can or cannot be directly observed. In "production" agencies, like the DMV, both outputs and outcomes can be measured. In "procedural" agencies, like mental hospitals, the managers may know what the workers are doing, but it's not easy to tell what difference it makes. "Craft" agencies (eg. the Forest Service, or perhaps CalTrans) achieve measurable results from technical specialists who operate independently, and in "coping" agencies (police, schools, prisons, etc.) the workers can’t be monitored all the time and the results resist measurement. Different types of agencies have different organizational cultures, and require different approaches to management.

The Review folks understand none of this. They seem to think that all state workers are window cashiers at the DMV. Fortunately, at least one questioner in the current round of hearings on the Performance Review knows the score. Here's what Joe Jelincic, who works for PERS and is President of the State Employees' labor union, asked at the San Jose hearing on August 27th:

"And how do you calculate a performance measurement for something like teaching prisoners, who are not going to be out of prison for ten years, and so we won't see the outcomes for ten years, and how do you incorporate those?"(p. 60)

In response, Performance Review Team Leader Denzil Verado just babbled:
"The idea of focusing on a performance management system is that you are focusing on the result and the outcome. Whether it's the prison system, and they do have an outcome. Once the core programs are identified, measurement systems are set up, and then the outcomes and results of those programs can be effectively looked at and the dialogue should be around that. Not necessarily numbers of people incarcerated, but what is the job of the prison and how accurately are they doing it."

"Performance budget systems are focusing on the results, not just the number of output, but what is the customer satisfaction? What is the administration's satisfaction with it? What are the surveys showing? Those results and the end results are the critical piece of the performance management system, not sheer output."

How can anyone know how "accurately" a jailer does his job? What does a jailer learn from a survey of prisoner satisfaction? Professor Tax offers 10 points extra credit to anyone who can find a coherent answer lurking in Dr. Verado's testimony

Mr. Jelincic was unrelenting. He also asked (p. 94)

"For a performance measurement to work, you have to have an agreement on what it is you're measuring. And how do you develop performance measurements for outcomes, not just outputs?"

The response from Mr. Hinton of the "California Council for Excellence" (a non-profit outfit that sells quality award motivational training plus golf tournaments at pleasant coastside resorts) was to dodge the question and talk about customer lines at the DMV -- the classic production agency. But over half of all state employees work in colleges or prisons. They don't "produce". They cope. How do you measure and quantify "learning to be a citizen in a democracy"? Or even "learning how to talk nice to a probation officer"? Ask yourself whether a high number of arrests means that a police agency is doing a good job of catching criminals, or a poor job of deterring crime? Who are the "customers" of the California Highway Patrol? Of the California Supreme Court? As a Brookings Institute report on the early mistakes of the Federal "reinventing government" movement noted (p. 28)

"It is the job of many government agencies to get citizens to do what they may not want to do, from obeying the speed limit to complying with customs regulations. The lack of choice about the buyer-seller relationship, coupled with the regulatory and sometimes punitive nature of the relationship, strains the customer model to the breaking point."

The Performance Review seems to have been written by folks so rigid in their ideology that they cannot learn from experience. As a result, they urge Californians to make the same mistakes that the Federal Government made a decade earlier when "reinventing government" was in vogue. That same Brookings report summarizes what went wrong back then (pp. 11-12):

"Private-sector advice, however, often proved counter productive: the public sector has tended to embrace private-sector reforms just as they have been proven unworkable in private companies. Following the lead of private-sector firms that sought to improve productivity by downsizing, the NPR sought to downsize the federal government as well. However, private "reengineers" quickly discovered that radical surgery and downsizing rarely proved the right fix. Management reform, rather, requires good managers to manage well."

"Elected officials, pressed everywhere for magical answers to tough resource problems, have cast a wide net for magic cures. Management gurus have often been ready to provide quick answers, allegedly tested in the heat of private-sector markets and ready to solve public puzzles. As Micklethwait and Wooldridge note, 'politicians have demanded that the theorists achieve all sorts of impossible feats: cut expenditure while improving services, or boost morale while slashing work forces. The more unscrupulous theorists have played on these self-contradictory fantasies by overselling their products. Private markets rarely work just as the management books suggest. The "lessons" distilled from them often work poorly for very long in other companies and rarely fit the complex environment, culture, and constitutional setting of public organizations.'"

So will "blowing up the boxes" make our state government better and cheaper at the same time? Don't bet on it.

Sad to say, it's not a new story. Almost 2000 years ago, when the Roman Emperors ruled all the known world, one of the earliest novelists -- a man who lost his life serving as "Minister of Fine Arts" for the mad Nero -- observed:

"We trained hard, but it seemed that every time we were beginning to form up into teams, we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency and demoralization." Petronius Arbiter, @ 60 A.D., but see

At least there will be more government jobs for Performance Reviewers.

* Note: It could have been worse. Suppose the creature had Arnold Schwarzenegger's brain in Pete Wilson's body.






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