One of the age-old arguments made by business leaders turned candidates is that government should be run more like a business. Often this is a conclusion reached by a series of (somewhat) logical steps: Unlike when a business fails, government service failures do not result in them going away. Often, the proposed correction requires spending more money. This, therefore, leads to a government that is inefficient, wasteful, and too costly, and for that reason it must be “run like a business.”
Local governments arrived at this year’s budget table in pretty bad shape. Sales tax collections are down and some property tax collections are also down because of accelerated depreciation of equipment in the manufacturing sector. Commissioners and council members staring down both of these barrels then look up and see who’s holding the gun: school boards demanding more money, and state legislators piling on more mandates. Having adopted some cost-saving measures and facing voters weary of property tax increases, local officials would be wise to be creative.
One tool beginning to take hold in many communities is performance management. At the conceptual level, performance management marries many of the driving forces of business with the need to maintain (and often improve) government services. Essentially, performance management requires accountability at budget time. When staff members make their annual budget presentations taxpayers rarely hear local elected officials ask why localities are funding departments whose performance cannot be measured.
When faced with the opportunity to determine budget needs based on performance, managers and employees alike grimace with fear. But it is possible that in such an environment, stellar employees can be rewarded, new ideas can be recognized, efficiencies can emerge, and taxpayers can have more access to how things are being done.
First, to be successful, managers and elected officials alike need to be supportive of the concept. Then the public and staff need to be involved. For instance, public surveys can gauge how various local departments are viewed from a service-delivery standpoint. Managers can look at their largest expenditures in more creative, cross-departmental ways. Mission statements can be adopted. (If you want to have fun, ask any local- government manager, or even elected official, what their mission statement is. Most have no idea.)
Once officials achieve that level of involvement, they can adopt objectives, look at what outcomes they want to measure and, over time, make other large and small adjustments that will bring about some level of efficiency and possibly create monetary savings.
In Honolulu, city leaders discovered that using wireless water meters allowed a single employee to read thousands of water meters a day without leaving a city vehicle. This saved nine full-time employee positions. (Charlotte is implementing this program, and hopes to improve billing accuracy as well.) In San Diego, transferring part of the city attorney budget to the police department ($7 million) was an incentive for the police leadership to change policies to lower the lawsuit liability. Why? Any savings could be kept and used at the department’s discretion.
Combining back (and front) office functions, using information technology for citizen services and procurement, merging city-county functions, and improving customer service are all within the realm of possibility with performance management techniques.
Simply applying business models to government doesn’t work. But applying the methodology that drives businesses within the government can work exceedingly well. Some savings and improvements will not be realized right away and some will take a strong vision to implement. But as with all change, patience and time are required.
A secondary, but equally important, component of this methodology is that local governments can create far more transparency, allowing citizens to see and understand where the money is going. When the public can fully view what is going on and understand it, elected bodies have essentially begun the process of restoring trust. In North Carolina, this is a golden opportunity for towns and counties of any size.