The Renewal of the Public Sector

The Renewal of the Public Sector by Steven Kelman Liberals, the political commentator William Schneider once remarked, joke about the telephone company, while conservatives joke about the post office. Conservatives must be getting more laughs these days. Americans appear to believe that giving any job to government dooms it to being poorly performed.

Yet, paradoxically, you risk a polite yawn if you say to someone that improving the operating performance of public agencies ought to be a priority. When Michael Dukakis talked about governmental competence, journalists and commentators smelled "technocracy." Voters were indifferent. Who's ahead in the latest horse race always seems far more exciting than mere matters of administration.

How we run public services, however, should not interest only the few of us who are enamored of spreadsheets or green eyeshades. Everyday services shape the citizen's image of government. Government, for many, is what happened the last time they renewed a driver's license. Government is how long it took their letter to Aunt Mary to arrive. Government is pothole repair and snow removal. It is getting a question answered by the IRS. It is how accurate the morning weather forecast proves to be. In more glamorous and controversial areas such as education and foreign affairs, the conceptual design of policies often seems more important than the performance of the government organizations involved. But even here, organizational performance is very important, not the least because one thing we have a right to expect from well-functioning organizations is innovative policy. People who want government to do more ought to be especially concerned about whether government performs well. No serious advocate of a positive role for government can any longer ignore the challenge of the renewal of the public sector.

The challenge of international competition in the past decade has set off much probing about the organization of production in the private sector. We are beginning to have a similar discussion of public sector excellence. Critics within the business world have questioned traditional management practices, arguing for new ways to improve quality and foster innovation. They have warned companies against regarding employees as enemies rather than resources and against establishing procedures that require every new idea to go through an elaborate clearance process. Public organizations exhibit these same problems, often in a more extreme form. Distrust of public employees runs rampant. Tangles of rules and clearances discourage innovation and lead public employees to believe they have done their jobs as long as they have adhered to the rules. The renewal of the public sector will require a sharp break with these ways of doing public business.

Under the rubric of the renewal of the public sector I include three broad themes. The most obvious, because the most discussed, is cost reduction and efficiency. Two other themes deserve equal attention: improving the quality of services and opening up channels of innovation to enable agencies to correct inadequacies and adapt to an evolving environment.

But is the renewal of the public sector a utopian enterprise? According to one prominent strand of conservative argument, poor performance by government agencies simply reflects their monopoly position, which shields them from penalty if they waste money or ill-treat the public. Monopoly allegedly allows public officials to enjoy the best of all profits, namely "a quiet life," in the famous phrase of the British economist J.R. Hicks. Or, as E.S. Savas, an advocate of privatization, puts it, government monopolies subject citizens "to endless exploitation and victimization" because "so-called public servants have a captive market and little incentive to heed their putative customers." Reform from within, in this view, is impossible; the only solution is to abandon public responsibility for certain services or to use public funds to pay competing private suppliers.

This approach, writing off government as hopeless, underestimates the potential for renewal from within public organizations. Examples of innovation and improvement, however, are readily at hand. The county where I live, for example, recently reorganized its jury selection system so that those called as potential jurors are liable for service on only one day: if they are not selected for a jury on that day, their obligation is completed, and if selected, they need serve for only one trial. The subway I ride to work every day recently started dispensing tokens in rolls of ten, dramatically reducing my wait in line. The tunnel I use to drive to the airport began several years ago collecting a double toll on the way back from the airport rather than two single tolls each way, thus eliminating toll booth lines that were especially frustrating if one had a plane to catch. My state's Registry of Motor Vehicles now allows me to renew my auto registration by mail. Partly as a result, lines at the registry have declined dramatically. When I last renewed my license, the entire process, including taking my picture and preparing my plastic laminate license, took nine minutes.

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In my work at an academic institution that trains people for public service, I come across many similar examples. With funding from the Ford Foundation, the Kennedy School of Government at Harvard presents ten awards annually to innovative state or local government programs. Promising candidates are plentiful. One winner was a Vermont program to give people in small communities easier access to books not in their own local public libraries by creating an on-line computer system including card catalogues from all of the state's public libraries as well as some major national research collections. A Kentucky program engages parents who are high school dropouts, along with their pre-school children, in both joint and separate educational activities; the program has markedly improved the children's skills and enabled many of the parents to pass a high school equivalency exam. In Dallas, Texas, the Park and Recreation Department has organized many team sports and recreational activities through the night for the sake of people who work late shifts. Yet another winner was a system in Rochester, New York, that puts pictures of homes in a videodisc catalogue to enable homeowners to compare their tax assessments with those of other homeowners to ensure theirs are equitable. A system in Long Beach, California, allows computerized receipt, scheduling, and follow-up of citizen requests to city agencies for such services as repair of street lights. As a result, the percentage of jobs completed by the time promised has risen from 60 to 90 percent.

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Public sector turnarounds -- dramatic improvements in weak agencies -- have become common in recent years. In many states, not just Massachusetts, customer service at motor vehicle registration offices has improved significantly Computerization, registration renewals by mail, and other changes, such as locating offices in shopping malls, have all contributed to better service. To replace old city maps, many previously hidebound local zoning, road, planning, and police departments have cooperated to create unified, computerized geographical information systems showing, for example, water and gas lines and storage sites for hazardous materials. The systems help alert fire departments to the presence of flammable chemicals and enable road departments to plan street repairs more effectively.

The monopoly provision argument assumes that public organizations have no ways to call forth good performance from employees other than the incentives typically available to private firms. This view ignores the role that the larger and -- I do not hesitate to use the word -- nobler purposes of many public endeavors can play in spurring employees to better performance. For example, the vast majority of people in our society who risk their lives on behalf of others in the regular course of their jobs are government employees -- police officers, fire fighters, soldiers, foreign service officers. Certainly not every public employee is motivated by saintly purposes, nor does every government agency have a large public purpose. But where public purpose draws people into government in the first place, it should be nurtured and consciously be made part of a strategy for public management, not dismissed as something for snickers or sarcasm.

The monopoly provision critique is also simply incorrect in asserting that a lack of competition allows government organizations to lead quiet lives. Managers in government organization inhabit fishbowls, not cocoons. They are fair game for investigative reporters, television news spotlight teams, interest groups, politicians, and a bevy of auditors and overseers. Public officials may get many rewards from their work, but these days a quiet life is ordinarily not one of them.

The problem is the nature of the accountability. Government organizations get attention when they do something scandalous rather than when they perform well. "Scandal" may be bribes, kickbacks, or other malfeasance. It may be a horror story of a bureaucrat somewhere who has harassed a small businessman to bankruptcy, of a patient at a VA hospital who died after being administered a recalled drug, or of a friend of a government official who got special treatment.

This attention, however, often affects government agencies in counterproductive ways. To minimize scandal, jobs are encumbered with rules. Statutes enacted by the legislature, regulations adopted by overhead agencies and oversight organizations, and procedures set by the agency's own executives tell employees exactly what they can and cannot do. But when employees in any organization are denied the discretion that could produce misbehavior, they lose the discretion that could produce outstanding achievement.

The recognition that government organizations, unlike monopolists, are subject to severe outside pressures suggests an alternative to the monopoly provider account. In this alternative view, government organizations fail to achieve excellence because we never designed them to achieve it. We sought instead to guarantee equitable treatment of citizens, to avoid corruption, and to control the use of public funds. To adapt a phrase from Michael Barzelay, we have insisted on a "bureaucratic paradigm" of public management, "bureaucratic" in the sense that it puts a premium on the traditional bureaucratic virtues of regularity and impartiality. Achieving a renewal of the public sector is not necessarily utopian. We could make it happen. Doing so, however, requires that we who put pressure on government organizations from the outside -- Congress, the media, and citizens in general -- change what we ask of government. And that in turn requires us to develop a new paradigm for a well-functioning government organization. In this alternative view, government performance problems grow not out of inevitable features of public provision but from a conceptual failure.

The "bureaucratic paradigm" has its origins in the mixture of pride and cynicism that underlies our attitudes toward government. The prideful view of government holds it to a high standard of probity in the belief that government, because of its very publicness, should set a good example. But the rules that govern public organizations also stem from a worry that, left on their own, government officials will not live up to high standards but will instead lord over and steal from us. Not trusting government employees, we fear giving them discretion and treat them, in effect, as an enemy rather than a resource.

A rule-based approach to the management of the public sector was arguably acceptable in an era when government action involved mostly straightforward tasks such as the accurate collection of statistics or the correct determination of veterans' pensions. In that era, good performance could be taken more for granted, and an emphasis on economy, equity, and integrity was all that was required. But the world has changed. Many government tasks have now become more complex or experimental, and citizens have developed new and higher expectations.

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These changes have created a crisis for the bureaucratic paradigm. Its devotion to rules produces horror stories that arise from situations where the rules are applied inappropriately or when the rules themselves no longer work because of changing circumstances. Rule-boundedness may discourage scandal, but it also suppresses innovation and the distinctiveness that can produce excellence. It discourages people in government from going "out of their way" to do a good job. And, perhaps worst of all, the bureaucratic paradigm directs our attention exclusively to the virtues of regularity and impartiality, at the expense of the virtue of quality service to the citizen.

The bureaucratic paradigm locks the public sector into the state of the art of management practice from about the turn of the century. No organization should view its employees as enemies and shirkers who must ceaselessly be supervised lest they loaf and steal. Their creativity and commitment are a resource for better performance, especially in service delivery, which often requires direct contact between employee and customer.

Instead of our bureaucratic paradigm, Barzelay proposes that we adopt a "ser- vice management paradigm" that would emphasize excellence of service, broadly conceived, as the goal of public organizations. If one wishes to encourage innovation and flexibility and to nurture the abilities and commitment of managers and employees, a successful service management paradigm will almost certainly require less reliance on rules, and more emphasis on discretion, judgment, and creativity.

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Better performance in the public sector requires not that we cease to hold public organizations accountable, but rather that we use different standards of accountability. At the simplest level, we need to insist on good service with the same persistence we currently pursue corruption. We especially need to develop concrete performance indicators to measure the results of public services, from keeping the streets clean to providing visitors to national parks with a rewarding experience.

The "bottom line" may spur good performance in business chiefly because it encourages such an emphasis on results. Profits are only one such measure that businesses use, and therefore the lack of a profit standard in the public sector should not necessarily be regarded as fatal. In a private firm, a production manager's performance objectives for a given year might include producing 500,000 units of a new part at a certain cost per unit or reducing inventory costs by 5 percent without an increase in downtime attributable to stockouts. A salesman may be measured by sales volume.

The public sector can usefully follow this example. For public organizations, performance measures serve several goals simultaneously. They promote accountability for substantive results rather than for observing the rules. They allow managers and employees greater freedom of initiative and encourage innovation in deciding how to achieve the organization's goals. Indeed, they are a precondition for a move away from excessive reliance on rules towards greater leeway for judgment, since we are unlikely to deemphasize process unless we can hold public officials accountable for results. Performance measures even provide an alternative method for discouraging corruption, since jobs filled or contracts awarded based on corrupt motives will likely hurt an organization's efforts to achieve its substantive goals.

Of course, performance measures do have limitations. Critics point out that acceptable measures are often hard to develop, given the many, sometimes vague, and often conflicting (as well as conflict-provoking) goals that government organizations serve. The economist Burton Weisbrod argues that many activities end up in the public sector precisely because of the difficulty of measuring performance. A somewhat different line of criticism points to the unintended consequences of performance measures in distorting organizational priorities, when the measures do not accurately capture all the important goals.

Though these criticisms have some merit, they ought not to inhibit us from attempting to measure performance at all. Do we need to figure out how to quantify performance at the Department of State before we develop performance measures in areas where the goals and results are less elusive? Many good measures are readily available, ranging from simple but inclusive statistics, such as overall customer satisfaction as disclosed in surveys, to specific indicators such as the turnaround time to get an application for some benefit approved. Government organizations are, in fact, already beginning to use both kinds of measures. The Boston-area transit authority both tracks customer satisfaction through marketing surveys and measures fleet downtime due to vehicles out of commission. The Taxpayer Assistance Service at IRS measures both the proportion of callers who get busy signals and the proportion of taxpayer questions answered properly.

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Better performance, particularly greater receptivity to innovation, also requires a move away from the plodding, document-everything approach that the bureaucratic paradigm encourages. Examining the Ford Foundation program winners, Olivia Golden showed that almost all the projects had advanced by "groping along," with the "ready, fire, aim" strategy advocated by Tom Peters and Robert Waterman in In Search of Excellence. Rather than trying to plan every detail of the new program from the start, successful programs began with one small innovation, got the system going, and then developed improvements based on experience.

The monopoly provision argument regards efforts to improve the quality of public performance as utopian because they run up against incentives inherent in monopoly production. My argument has been that a renewal of the public sector can occur if outside overseers begin to hold government organizations accountable for their overall results more than simply for honesty and equitable treatment. That, however, sounds simpler to achieve than it really is. Scandals are more dramatic and easier for the public to understand. Evaluating people for substantive results requires trumpeting their achievements, not just excoriating their failures. But the media seldom like to spend much time on good news, typically denigrated by journalists as "fluff" and flackery. So the call to emphasize overall quality of performance, seemingly so uncontroversial, may prove to be utopian as well.

I have no certain strategy, but I do have several suggestions for reorienting attitudes. Public agencies can influence through their own efforts the relative balance of outside concern between excellence and scandal-avoidance. The very act of developing performance measures calls attention to substantive performance as an important dimension of accountability. A government organization thus has the ability to influence the agenda and the content of the political debate over the organization's behavior by serving up to the political system measures of its substantive performance. Organizations might normally not be inclined to do this, except that the alternative may be worse, namely the destructive and morale-shattering focus on scandal alone. Second, efforts to emphasize quality of performance should begin with relatively uncontroversial services such as Social Security customer assistance, motor vehicles registration and licensing, weather forecasting, and national parks. Lessons learned from successes in these areas can then be applied to the more difficult areas where the substantive goals are difficult to specify or are controversial, as well as to government functions that primarily involve regulation rather than service provision.

Improvements in services have wider significance. A poor opinion of uncontroversial, uncomplicated government services comprises a significant part of the popular distrust of the public sector. Low quality in everyday government services seems less excusable than the failure in alleviating hard-core poverty, an obviously stubborn problem. By contrast, good performance in everyday services seems so eminently within our reach.

Improvements in uncontroversial service delivery areas are also an appropriate first priority because elected officials and the media have more incentive in these areas to worry about, and hence pay attention to, the quality of substantive performance, and not just scandal and malfeasance. Since these services affect the public directly, improved performance will be something voters can easily understand. It is even possible that the public's impression of the quality of government performance has declined so sharply that accounts of good performance in everyday services can take on the "man bites dog" character that journalists demand. The New York Times recently devoted virtually an entire page to an article about winners of an award for excellent performance by career civil servants in New York City The article, which described the achievements of each winner, seemed to say, "Believe it or not, these people are New York City bureaucrats!"

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What about government organizations whose results are more difficult to measure? In some agencies where goals are vague, as in the foreign service, measurement may well be infeasible. For schools or welfare offices, on the other hand, performance is measurable, but the goals the organizations should be seeking to achieve are controversial. Should welfare offices worry more about providing good client service or about detecting welfare fraud? Should schools concentrate more on nurturing the outstanding student or saving the poor one? In such cases, I would suggest, following my colleague Mark Moore, that organizations develop and publicize multiple performance measures along the various dimensions that the political system might choose to evaluate their performance. Let welfare offices publish measures of both client satisfaction and fraud detection. Let schools say how well they've done both for bright students and disadvantaged ones. If the political system is able to give the organizations course-correction guidance based on multiple performance measures, so much the better. But even if not, the very publication of such information will tend to redirect some of the political debate toward substantive goals. It will also give managers performance measures they can use to encourage results along dimensions these organizations might determine themselves to be most appropriate.

The next piece of advice is that we should seek to fight corruption in ways that do less harm to the substantive performance of government. Currently we wage the fight against corruption indirectly by establishing procedures and by attempting to restrict administrative discretion. I yield to nobody in my contempt for corruption. Unfortunately, however, the knee-jerk response to corruption scandals tends to be to tighten the noose around government organizations even further. That was the immediate reaction to the scandals at the Department of Housing and Urban Development. The press and reformers immediately began calling for Congress to amend the relevant statute to eliminate agency discretion in grant awards.

Responding to corruption by increasing bureaucratic rules unwisely hampers the conscientious officials trying to do a good job and, even more important, hurts the citizens who suffer from the poorer performance that results from the shackles of bureaucracy. Corruption should be fought vigorously. But it should be fought directly, using the panoply of criminal investigative techniques for white-collar crime as well as other methods used by reporters and congressional staff. We should be hard on corruption without using methods that worsen the substantive quality of government performance.

Finally, and perhaps most fundamentally, a crucial part of any strategy for the renewal of the public sector must be intellectual. The case must be made that the maze of rules, clearances, and limits on discretion and judgment that comprise the bureaucratic paradigm exact a terrible toll. Seeking to root out corruption by tightening the noose of supervision and suspicion comes at a cost. If we are to begin changing the public sector, we need to argue that the cost is too high.

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