Coming Together, Breaking Apart

To consolidate or not to consolidate: a puzzling question.

We've always wondered if we could make a lot of money by becoming consolidation consultants to state and local government. We already know the advice we'd give. If we came across a city with a handful of consolidated agencies, we'd say, "Deconsolidate," and then they'd give us our check. If we were working with a city that had dozens of deconsolidated agencies, we'd say "Consolidate." Maybe we'd get a bonus for that one.

Truth is that of late, most blue-ribbon task forces and advisory panels have been urging cities, counties and states to take the latter route - consolidation. The idea is simple: By bringing agencies together, a government can cut back on the number of expensive officials necessary to lead, eliminate duplicative administrative tasks, ease communications and make services more readily available to citizens. "If the consolidation creates the opportunity to work across traditional boundaries," says Bob O'Neill, executive director of ICMA, "it can improve effectiveness, speed and flexibility."

But O'Neill and others warn that while consolidation may look like a panacea, when it's not done well, it can create giant governmental units that are perceived as insensitive, confusing, rule-bound and unwieldy. Back in November, Washington State Senator Pam Roach lambasted the performance of the Department of Social and Health Services in her state, saying it was "too big to be accountable." She planned to introduce legislation - first proposed about a dozen years ago - to split up the $19-billion-a-year agency into four "more manageable units."

Similarly, in Nebraska, long-time budget administrator Gerry Oligmueller watched as the Department of Social Services and the Department of Public Institutions blended into one big department in the mid 1990s. It sounded like a great idea at the time - a way to erase fragmented and sometimes competing practices. But, as Oligmueller told us, it significantly obscured what the huge organization did and created a Leviathan that was incomprehensible to the people it served. In 2007, the big agency was divvied up again. While its functions are still the responsibility of one executive leader, the public is now able to see much more clearly the individual entities that focus on specific needs.

All of which leads to a straightforward, if not simple, question: How much consolidation is too much? ICMA's O'Neill has some thoughts: Before implementing a consolidation, government leaders need to carefully plan ways to mitigate the natural disadvantages of great size, including a process-bound bureaucracy. "You need alignment around the mission," he says, "alignment around the values of the organization and alignment over how you're going to work together. My view is, the fewer the rules, the better the group can do." He believes that it's better if the organizational structure is based on a set of values and principles, rather than rules, regulations and procedures. "Typically, large departments fall apart because of a lack of alignment in mission and values."

In Fairfax County, Virginia, in the late 1990s, when O'Neill was the county executive, he oversaw a consolidation of the Department of Family Services, which incorporated four or five major activities that were previously separate. Getting the right leader for the newly merged department was key; it had to be someone who wouldn't be perceived as having a bias in favor of one unit or another.

Jim Chrisinger, now a consultant with Public Strategies Group, oversaw a major consolidation when he was a top-level manager in Iowa. He believes, as do a number of other students of consolidation, that leaders often make the mistake of looking at the move as an end in itself, motivated by the urge to save budget dollars. But if saving money is the sole goal, trouble often follows. Organizers can easily lose sight of the end-customers and the desired results. "Moving the boxes around is the last thing you do, not the first thing," he says, "The first thing you have to think about is the results you're trying to produce, and for whom. Most of these reorganizations are done for the perceived reduction in overhead and efficiency, without a real examination of what it is you're trying to do."

In Chrisinger's view, when Iowa consolidated human resources, information technology, general services and some financial functions into the Department of Administration, one of the early motivators certainly was curbing expenditures. But it wasn't "driven by people from the outside who just want to find a way to save money and don't care about how it happens and don't care about the nitty-gritty of making it happen." Iowa used a so-called enterprise-management approach in which agencies become customers that pay for the services they receive from the large Department of Administration. Ultimately, that means that the über-department is held accountable to smaller units, which are in turn held accountable by the people who use their services.

OK, so maybe our plans for becoming consolidation consultants were a little simplistic. Maybe we should become financial consultants, and tell people to buy low and sell high.

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