Week 11: Privatization, Reengineering, TQM
Lecture Notes
Introduction:
These three management strategies are often grouped under the
"Reinventing Government" movement. All are strategies to improve
government effectiveness. All are motivated to a great degree by the
"customer satisfaction" notion. Privatization, of course, is a
strategy for the public sector. The other two are business practices
that have been used with varying degrees of success in the public
sector. All three strategies reflect the interest within public
administration of applying private sector management practices.
Although reinventing government initiatives, including strategic
planning and performance measurement, have been adopted with
bi-partisan support, it is important to recognize the political
motivations that, at times, lie behind these initiatives. For
example, the internet reading on Governor Wilson's Council on
Economic Competitiveness included "regulatory streamlining" items
that could fall under the "reengineering" label yet clearly reflect
the political agenda of making California more friendly for business
development (e.g. less regulation).
1. Privatization
- good topic to read about right after our discussions of
performance measurement! When contracting out, defining outcomes
and measuring them become critical. Kettl's point is that this
becomes a major problem, and reason why practice deviates from
theory.
- Dilger, et. al. article says city officials are shifting away
from a focus on what govt should do toward a focus on how govt can
get things done more efficiently and effectively. According to
Moore, however, they should never stop thinking about what they
should do! I have listed this as a danger of privatization--see
below.
- privatization takes many shapes, ranging from large-scale
divestiture of a whole activity (railroad service) to contracting
goods or services
- contracts can be small (janitorial services) or large (some
states have contracted out prison services)
- some forms of privatization in addition to most common one of
contracting
- franchising: govt awards exclusive rights to a private firm
to provide a public service. Govt regulates fee charged by
private entity
- vouchers: school, food stamps, housing. Govt pays but does
not oversee production
- public/pivate partnerships
- theory of privatization:
- competition will reduce cost and improve quality
- goals of privatization:
- reduce cost
- deliver services more efficiently
- create more choices for consumers/citizens
- improve service effectiveness (service delivery closer to
people, in some cases of non-profit contracting)
- for some people goal is to reduce the size of
government
- in practice, competition is rare, especially in social
services
- public sector responsibilities do not shrink--they change
radically.
- this is one of the main points of the Kettl article
- relationships become complicated, because contractors become
part of the political system--not just an agent of the contracting
govt agency
- Dangers or challenges of privatization
- private monopoly--insufficient competition
- insufficient monitoring--unclear goals
- may not be able to quickly replace poor performing
contractor
- and if you do, you lose essential continuity (at least for
social services
- government agency staff lose touch with citizenry (since
contractors become the front line staff)
- lose social goals--equity, due process, democratic
accountability, shared values
- alienate unions--tremendous political opposition--need
political support before you begin
- lose expertise in govt
- locks in what you are doing; govt loses flexibility to
create public value beyond what is included in contracts
Some questions about privatization:
(1) Progressive reforms included getting private market and its
pernicious effects out of public service arena. Why are we now
reversing this through privatization?
(2) Why would govt-produced and delivered goods and services be
amenable to privatization? Market failure is main reason why certain
goods and services are in the public realm in the first place.
2. Re-engineering
- focuses on administrative processes
- can relate to issues of organizational structure (authority,
responsibility, accountability) or technology of the organization
(product and production processes) or administrative processes
(planning, budgeting, personnel, management information and
control)
- focus on efficiency and effectiveness
- usually takes goal/mission as set; focuses on means
- Moore (when we get to his later chapters) will interpret
reengineering as being open to redefining purposes, in line with
his view of political management involving continual search for
legitimacy. (For those of you who read my suggested questions for
the week, I apologize for referring to Moore, since we haven't
read those chapters yet.)
- Reengineering processes is especially important because, in
government, the process is often the product. Or, at least the
part of the product that is most easily recognized and
evaluated.
- Reengineering, done right, involves basic questioning of
processes. When done wrong, it involves things like automating
existing processes to do them more quickly (but you may not be
doing the right thing in the first place)
3. TQM
- TQM and reengineering are often discussed together.
- clearly they are related but have different roots in the
business literature
- both emphasize willingness to make basic changes in the way
organizations function
- although in practice, both are often attempted to be
implemented incrementally (proponents would claim those are not
pure examples of the techniques)
- one difference is reengineering seems consistent with
top-down, hierarchical management, just like strategic planning
can be if an organization's culture allows this
- but TQM is based on human relations theory (remember the
first challenge to classical organization theory) and stresses
that employees throughout the organization need to be empowered
and involved, AND CAN BE TRUSTED TO WORK TOWARD ORGANIZATIONAL
PURPOSES
- TQM is a management philosophy--not just a technique
- Many of the ideas we have discussed this semester can be found
in the TQM movement:
- emphasis on defining quality in terms of customer
needs
- importance of measurement of outcomes through use of
"benchmarks" (often comparing to similar organizations) as
basis for setting goals for improvement--a data driven
philosophy
- importance of teamwork and trust throughout the
organization
- decentralized decision making
- importance of share culture in support of the quality
philosophy
- Many of the problems and complexities we have talked about
pose constraints for implementing TQM in public sector:
- the problem of identifying customers
- the difficulty of identifying goals and measuring
outcomes
- "system" constraints that limit empowerment and use of
teams
- personnel turnover at executive levels
- One feature of TQM will be interesting to compare with our
discussion of civil service reform in two weeks:
- Deming (usually cited as founder of TQM) opposed individual
performance appraisals because they damage teamwork.
- TQM says that performance evaluation should be based on
group and organizational performance
- one of the ways to "drive out fear" (part of the TQM
mantra) is by not pitting employees against one another
- But, of course, a major criticism of civil service is that
bad performance is tolerated (even rewarded), people can't be
easily fired, etc. A major theme of civil service reform is
pay-for-performance plans and streamlined procedures for firing
and disciplining poor performers. We will return to this in two
weeks. Think about your position on this issue.
- TQM in California
- In 1993, the Governor signed Executive Order W-47-93 which
initiated a state quality program overseen by the Task Force on
Quality Government.
- The Task Force, comprised of top state officials, and
representatives of business, labor, and local government,
developed a strategic plan to instill quality management
principles throughout the executive branch. In addition, the
Executive Order created several TQM pilot projects.
- Since then, 26 state departments, boards, and commissions
have designated a Quality Coordinator and 43 have implemented
customer service mechanisms such as surveys or focus
groups.
Preview of Week 12: Leadership
- We will finish Moore's Creating Public Value
- Although this book is not about leadership, per se, we have
discussed how it is aimed at high level managers. Therefore, it
has a lot to offer on this topic
- We will read one article in the reader on implications of the
reinventing government movement for leaders
- We will have Cheryl Davis, director of Sacramento County
Department of Human Assistance (formerly welfare department) as a
guest speaker. She has guided a fundamental transformation of her
department to align it with new expectations of welfare reform.
This has obviously required leadership.
- discussion leaders: Jamie, Kolleen, Yvette, Mary Kay, David
- for you five: please think of a question for our speaker,
inspired by this week's readings, or any other topics covered
in the class that has implications for leadership. Keep in mind
her experience, and what you think she might have to offer
us.
- others: please submit the usual e-mail question based on the
readings