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Management Fads That Make a Difference

New management tools are a dime a dozen and often just old strategies with fancy new names. But a few do make measurable differences.

David Kidd, Michelle Hamm, Tom McKeith
Paul Epstein calls it “the asphalt paradox.” It occurred to him while working in New York City government doing process improvement in the early 1970s. The city was trying to capture and describe cost savings and revenue increases stemming from the citywide initiative to become leaner, meaner and more productive. The paradox? Becoming more efficient can cost a city more money.

The asphalt paradox is just one wrinkle in today’s current wave of management strategies popping up nationally. It’s especially relevant today as more and more states and localities are counting on souped-up efficiency efforts to close persistent budget gaps. Meanwhile, the usual army of management consultants stands ready to hand governments the magic formula for paring government to its bare, affordable essentials.

New York City’s early efforts notwithstanding, it was probably the Total Quality Management (TQM) push in the late 1980s and early 1990s that launched the modern era of grafting private-sector management strategies onto the public sector. The goal: to make state and local government more effective.

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Teresa Hay-McMahon notes that she “still has the scars” from tangling with TQM while she was working as an administrator in the Iowa Department of Natural Resources in the early 1990s. TQM proved to be a cumbersome, process-driven approach to management reform that engendered more employee resentment than magnificent examples of increased public-sector productivity.

Whether it’s TQM, management by objectives or the balanced scorecard, state and local governments have proved to be both fertile and shaky ground on which to establish businesslike approaches to the public’s business. In some cases, management strategies have stuck; in others, they have come and gone like desert puddles.

But that’s not to say that veterans like Hay-McMahon have sworn off trying to apply private-sector-born management reforms to the public sector. To the contrary, Hay-McMahon is now president of the Iowa Lean Consortium -- a group of Iowa businesses and governments that employ Lean, which along with Six Sigma has surfaced as the most visible management trend in state and local government today. The two tactics have captured the interest of dozens of states, cities and counties, raising questions about what they actually do and how well they work.

Whenever a management regimen surfaces in a city or state, it arrives with the attendant question: Is this really new? In the case of Lean, which involves paring down processes to the bare essentials, or Six Sigma, which aims to reduce variation in any repeatable process, that question has pretty much been settled: Epstein, an early proponent of results-informed government, was doing some form of both 40 years ago in New York City. All these strategies have their roots in industrial quality and productivity improvements -- probably dating back to the invention of the wheel, but certainly taking tangible form as industrial production ramped up through the 1940s and 1950s.

“Often these efforts are actually not named anything that you or I would recognize,” says Ryan Chasey, who was director of quality for Fort Wayne, Ind., under Mayor Graham Richard. “Whenever someone says the name of their program and I ask what’s involved, a lot of times it’s a different name for the same thing.”

In the case of Mayor Richard, the program was a combination of Lean and Six Sigma concepts. His most famous and visible success was using both to cut the time it took the city to fill a pothole from days to hours, which brings us back to the asphalt paradox. What Paul Epstein figured out -- and which shouldn’t surprise anyone -- is that if you get much more efficient at things that involve material costs, like resurfacing roads, you may very well end up using lots more material. Over the course of a year, that can mean you’re spending more money, in this case on asphalt.

That has proved to be one of the pricklier issues around Lean and Six Sigma: How do you actually calculate either increased savings or enhanced revenues thanks to a new way of doing a particular piece of the public sector’s business? If you don’t have documented, verifiable improvements in process, and you can’t put a dollar value on those improvements, it’s even less likely that any given management regimen is going to survive when the newly elected executive takes over.

In Erie County, N.Y., for example, where former County Executive Chris Collins was making multimillion-dollar savings claims for Lean/Six Sigma (LSS) -- and also claiming it allowed the county to shed 900 employees virtually pain free -- incoming County Executive Mark Poloncarz summarily closed the program down, reapportioning the $116,000 salary that had gone to the county’s Six Sigma director in the process. Poloncarz contended that there were no verifiable gains from the practice. Poloncarz would arguably know: Before becoming Erie’s executive, he was the county’s comptroller.

In Fort Wayne, on the other hand, the multi-million-dollar savings claims for LSS have the blessing of the city’s Controller Pat Roller, who attributes savings both to increases in efficiency and reductions in staffing. She also thinks LSS has lots to do with the city’s 35 percent growth in both geographical size and population since 1999 -- even as it shed 10 percent of its employees.

Not only has LSS survived a mayoral transition in Fort Wayne, it also has survived with employees’ blessing, a rare thing for the average management trend. “There’s a big misconception with the whole union thing going on nationally that we don’t want to be part of helping the city save money,” says Jeremy Bush, president of the Fort Wayne firefighters union. Using LSS, he says, “the city looked at every way [the department] could save money, and firefighters were directly involved, after all we’re the ones who best understand how we operate.” His department even went as far as scoping out ways to save money on soap and toilet paper, says Bush.

Clearly, employee support is one key to a management trend’s survival. Part of why TQM came and went was that it involved putting together small labor-management teams to analyze procedures and processes and then make recommendations for improvement, recommendations that might or might not be adopted. Lean, say its supporters, involves everyone who has any piece of any process, and everyone in the chain of action is empowered to suggest changes to process in real time on the spot. Giving staff the power to make changes and do it virtually instantaneously makes Lean a far more satisfying way for employees to join in the hunt for efficiency, Iowa’s Hay-McMahon argues.

It’s also tough for seasoned management fad skeptics when they find that those who support Lean and Six Sigma tend not to be overly fanatical about the process -- plenty of public employees were put off by TQM’s almost cult-like feel and following. With LSS, though, “it’s not like it’s the greatest thing since sliced bread,” says Andrew Downs, who was Richard’s first-term chief of staff in Fort Wayne and now teaches political science at Indiana University-Purdue University Fort Wayne. “But by and large people saw the benefit of it.”

Even certified Six Sigma black belts concede that there are lots of ways for governments to become more efficient. Scott Sittig, who spent time applying his high-level Six Sigma knowledge to various operations in Erie County’s school district, credits Six Sigma with improvements ranging from mailroom efficiencies that netted tens of thousands of dollars in savings to million dollar savings in the district’s food service. “Lean and Six Sigma are two of the different ideologies, and they have merit,” Sittig says. At the same time, he also admits that “anyone just applying basic common sense to government operations can get a lot accomplished.”

There are other reasons why Lean, in particular, seems to have unusual staying power. In Iowa, for example, where Lean has survived three changes in administration, it has outside support from large companies based in Iowa, companies that make up the bulk of the Iowa Lean Consortium membership. “You have businesses telling the new administration that this is not about politics. It’s about doing government smarter,” says Hay-McMahon.

There’s also an inside component to a management trend’s survival that comes up consistently. Initially it might be helpful to have an outside consultant come in and help teach LSS -- oftentimes local businesses versed in the practice will do this for free. But it’s developing internal capacity that helps a seemingly transient management fad to become standard practice.

That’s certainly been the case in Iowa, where quality improvement has become an agency job title. “Five minutes ago my staff came in to talk about a request from the legislature on why it takes so long for service providers to get a waiver,” says Jeff Terrell, chief of the Bureau of Quality Improvement for the Iowa Department of Human Services. He and his staff mapped the process and found that there was a lot of waiting involved between steps. It didn’t take long to use LSS to streamline the process. “It’s a management tool that offers a different and visual way to make sense of each of the silos,” Terrell says. “You have people busting their humps to do their work, but they don’t see how it all fits together.”

Creating a culture that looks at processes in that more holistic, connected way has also been key to the survival of Lean in Fort Wayne, says Controller Roller. “It’s just embedded in the way we do business now. People have made it part of their daily work. If you see something that seems screwed up, you fix it.”

Brian Peteritas is a GOVERNING contributor.
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