The human component: Helping employees adapt to more competitive operations
In the United States, local government is estimated to be a $600 billion-a-year business, and the cost of providing municipal utility services such as solid waste handling and water and wastewater treatment is a large part of that total. Given the cost of these services, local governments are constantly challenged to protect the fiscal and environmental health of their localities while keeping taxes down.
Becoming more operationally efficient as a public entity is no longer optional. Public officials are demanding it, and private service providers are presenting extremely attractive alternatives that only add to the pressure on public service providers to improve. To meet this challenge, many cities are considering options ranging from the sale of assets, to privatization, to some form of more efficient operations by staff members.
When public service leaders accept the challenge of becoming more efficient and maintaining municipal control, their course of action includes change. Many leaders focus on changes in operational processes, automation and technology. Their emphasis is on achieving cost savings on the operational side of providing a public service. Unfortunately, this is a short-sighted approach that will ultimately fail to achieve the gains desired.
Focus on people
A potentially more successful approach to designing more competitive operations involves addressing human as well as structural issues – the “people issues” associated with successful change operations.
“High-velocity partnering” is the first step in preparing the project team for its task. A foundation for project success is built by ensuring that all members of the project team have a clear and common understanding of their purpose and are willing to work cooperatively to identify and implement those changes that will enhance an organization’s level of competitiveness.
Indeed, high-velocity partnering has generated interesting results. In one West Coast water utility, for example, the first partnering session began in typical fashion – management on one side of the table and union representatives on the other, each doubtful that the other cared about anything other than its own best interests.
But after both sides openly and continuously examined common issues, needs and benefits, a transition in attitudes and behavior occurred.
At the outset, one of the two municipal unions feared that the city was seeking to dislodge the organization. Union representatives objected strenuously to the city’s desire to educate workers about the change initiative in the union’s newsletter.
The session’s moderator himself was candid, more than once telling a union leader that if the union refused to moderate its position on a certain issue, this would certainly result in union jobs being lost. He challenged statements made by both sides.
Among other things, the city and its two unions needed to discuss wage scales, working hours, job descriptions and how to protect certain jobs from being eliminated. Eventually, the two sides agreed to jointly inform employees of the latest developments.
The union agreed that its newsletter could serve as one medium. Other vehicles included pay envelope “stuffers” and a telephone hotline that enabled employees to call and leave a recorded message with a question that would be answered within 24 hours. Face-to-face meetings, jointly attended by city management and union representatives, also helped.
By the time the process was completed, one union president recommended that this partnering approach be used on other public service enhancement projects – clear evidence of participants’ satisfaction with the process.
Setting the pace
Perhaps just as crucial as substantive communication of the coming changes is ensuring that the pace will truly be worthy of the designation high-velocity partnering.
The change is high-velocity because in private-public competition, there is usually a definite deadline for the submission of proposals, and managers do not control the schedule for the RFP process.
These projects often require a pace that practically leaves skid marks. Team members must begin fast and continuously pick up speed, sharing an unwavering sense of urgency.
It is not unusual for the entire transformation, from the old way of doing things to the new paradigm spurred by privatization, to take a year or less. Union or municipal leaders who think they are “ahead of the curve” by delving into new management philosophies and privatization trends before these developments affect them had best not linger too long, or the change will be upon them before they know it.
To generate this urgent pace and maintain it, team members must be prepared to break some rules. This requires identifying and examining existing paradigms with a focus on inventing the future as opposed to simply redesigning the past. In other words, the organization’s team members (managers, plant supervisors, and operating engineers as well as rank-and-file employees), are asked to look beyond incremental change – beyond modifying what already exists.
Michael Hammer, co-author of “Re-Engineering the Corporation,” sums it up this way: “Unless we recognize and break away from the outdated rules and fundamental assumptions that underlie operations. . . we are merely rearranging the deck chairs on the Titanic.”
Another author, Steven Covey, writer of “The Seven Habits of Highly Effective People,” echoes the same sentiments: “Until we drop unwarranted assumptions about people, processes, technology and products, we can’t expect to bring about lasting improvements in our organizations.”
This is also sometimes referred to as “thinking outside the box.” For public utilities and other branches of local government, redesigning operations and pricing them competitively requires analysis of the following areas: the organizational culture and structure; technology interfaces; work flow and job design; operation policies and procedures; and adoption of worker incentives. Incentives can include gainsharing and simple praise given by supervisors to employees.
The Charlotte-Mecklenburg (N.C.) Utility Department (CMUD), which instituted radical changes that enabled it to defeat private bidders and retain control of its water and wastewater operations, serves as an example of an organization that successfully redesigned its operations. Among other successful endeavors, CMUD implemented gainsharing, paying out bonuses averaging about $3,750 per employee in one recent year.
Reducing resistance to change
Invariably, when operations are redesigned to make an organization more efficient and competitive, change is not optional but mandatory, since the local governing body usually looks upon privatization as an alternative with a great deal of potential.
A “reaction-to-change” inventory has been developed to assist municipal managers in understanding their typical response to change. Many employees have consistently stated that “all managers involved in public-private competition should be trained to manage change effectively.”
Change management training attempts to help members of the team realign their thinking and accept several new and uncomfortable realities.
In almost every instance of public-private competition, there is no time to waste on subtle resistance, trivial issues or thoughts of victimhood.
Nor can resistance manifest itself through desperate attempts to hang on to old procedures or paradigms. This is true for any public sector managers involved in a similar situation.
One way to look at change – a perspective managers ought to impart to their employees – is that it can elicit many positive results such as greater energy and innovation.
It is clear that under circumstances requiring significant organizational enhancement, leaders must accept their roles as change agents, and consequently take several actions critical to the management of the human side of change. These include:
1) openly taking ownership of changes in operational methods that are required to be competitive;
2) looking for ways to generate employee commitment;
3) remaining tolerant of others’ mistakes during the change initiative;
4) communicating continuously with staff;
5) maintaining a sense of humor, especially during difficult times; and
6) managing the stress associated with implementing changes. The first step toward managing stress is recognizing that it exists.
Unfortunately, some public managers do not understand that employees experience psychological reactions to even well-planned changes, and that they must manage these inevitable reactions, which often are viewed as resistance.
Privatization or restructuring resulting from private competition can lead to consequences such as shift changes, occasional overtime and transfers to different jobs at other locations. These in turn can throw car pools, child care arrangements and even a person’s sleep patterns into turmoil. Employees who are preoccupied with adjusting to changes in their personal lives wrought by changes at the workplace can end up less productive without a supportive and understanding management.
It is up to municipal managers to recognize the existence of these problems and to steer workers into employee assistance programs or toward other available resources if their emotional or physical health is threatened or if financial or other problems beset them.
William Bridges, one of the leading experts in the management of change, refers to these psychological reactions as the “transition.” It is the transition, not the change itself, that people fight against. They resist the risk of failure and/or loss of identity associated with substantial organizational change.
Managing both sides of change is not an either/or situation. Poorly-planned or implemented changes create painful transitions for affected employees, while unmanaged transition makes change less likely to be successful.
Trust and commitment
By managing the human side of change while implementing public service improvements, leaders can reap several benefits: Major change initiatives are more likely to be sustained, avoiding the “program-of-the-month” syndrome; trust and commitment with front-line employees is built; and resistance to operational changes is reduced by managing the emotions and stress associated with the transitional phase of change.
Another lesson for management is that public employees, in both unionized and non-union environments, consistently seek to support improvement initiatives, but cite lack of employee involvement in determining improvement strategies and poor communication as major barriers.
An often overlooked principle is that those closest to a work process tend to understand it and should be consulted when changes in the process are considered. Naturally, all employees’ input cannot be used when improving operations, but employees can be asked, “What do you think?” It is often stated that the key to success in real estate is location, location, location. In organizational improvement, the key is communication, communication, communication.
Ignorance is not bliss
Employees want to be informed when significant change is planned. Organizations have been most successful when they have developed communication plans that answer questions such as:
* What is the change?
* Is it necessary?
* How will it be implemented?
* How will it affect me?
* What can I expect?
* When will the change occur?
* Who are the key players?
* Who can I turn to for help? and
* How will I be trained?
Over-communication is good, but as changes are implemented, leaders should go so far as to get into the trenches and actually look for bad news.
For their part, employees, should be asked whether changes are generating the results anticipated.
Too, they ought to be given the opportunity to describe difficulties encountered. This demonstrates management’s commitment while reducing the stress and resistance associated with change.
Deciding not to commit to the degree of organizational and managerial change required to become competitive can be a fatal error.
Economist John Kenneth Galbraith said it this way: “Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everybody gets busy on the proof.”
It is clear, therefore, that public sector managers must demonstrate leadership during change initiatives.
Leaders make things happen by defining future needs as well as opportunities (i.e. displaying vision); by mobilizing and inspiring others to action; and by instilling purpose, urgency and higher levels of performance.
In today’s environment of public-private competition, these are crucial steps in initiating and mastering both sides of change.
For additional information on privatization concepts and initiatives, contact:
* The Alliance for Redesigning Government, 1120 G Street NW, Suite 850, Washington, DC20005;(202)347-3190; http://192.156.133.18/-Alliance/casesrei.htm The non-partisan group is part of the congressionally chartered National Academy of Public Administration.
* The Privatization Council, 1101 Connecticut Ave. NW, Suite 700, Washington, DC 20036; (202) 857-1142;
http://www.friends-partners.org/oldfriends/ccsi/csusa/pubaffrs/privtize.htm
The council of public officials and business people seeks to promote privatization.
Hard times can end up being a blessing in disguise as new solutions and different approaches lead to greater efficiency and prosperity.Weld County, C olo., found that out after passage of Amendment One, an initiative that put the clamps on local governments by limiting taxation and spending in a growing state.
After Amendment One, when it came time for county commissioners to make the hard decisions about extracting funds from existing operations to fund future programs and services, data processing and computerization stuck out like a sore thumb.
The Weld County Criminal Justice Information System had been transferred to the police department computer in Greeley, reducing the county’s mainframe processing requirements by more than one-third. The result, a decreased need for processing resources, left the county overstaffed, with high computing maintenance costs.
To remedy the situation, commissioners considered three alternatives: downsizing internally, eliminating in-house computing in favor of a service bureau and contracting with a specialist who could direct a technology transformation.
“We knew we could downsize our computing ourselves,” says Don Warden, county director of finance and administration. “But we had no way to ensure a successful outcome. Our philosophy was, if we couldn’t do it as well and less expensively than a private sector firm, we ought to rely on the experts.”
The county chose Systems & Computer Technology, Malvern, Pa., as its outsourcing partner.
The public/private partnership has switched to a more cost-effective open systems/distributed computing setup, using mid-range platforms in an economical yet powerful client/server configuration.
This new environment enables the county to implement advanced technologies, such as a relational database management system, thereby speeding and simplifying access to information and placing control of critical data in the hands of front-line staff.
“There are a lot of technology changes on the horizon, from GIS to document imaging,” Warden says. “As we move toward these and other computing objectives, we know that this partnership will enable us to implement these technologies painlessly and cost-effectively.”
At the beginning of the 10-year contract, 28 former county employees were retained to handle the county’s IS duties.
After three months, their ranks were reduced to 24, and gradually, through attrition, to the present 19 employees. The employees now work for the vendor.
The partnership affects the county’s entire IS and data processing operations, including the treasurer’s and clerk’s offices, public safety, payroll, elections, engineering, social services and public health.
Last fall, the county extended the contract for five years with added responsibilities, including development of a GIS.
Under the outsourcing arrangement, Weld County has realized a decrease in its annual data processing costs, from $2.1 million to about $1.4 million. “That savings has allowed us to improve other services to our constituents,” Warden says.
While many cities seem to think of privatization only in terms of big ticket, long-term contracts – operation of a wastewater treatment plant, for example – Hoffman Estates, Ill., population 50,000, takes a much broader perspective.
The village government will not go so far as to privatize itself out of existence, but to a casual observer it may seem headed in that direction. For more than 10 years – since well before privatization was in vogue – the village has outsourced a much wider range of services than is typical, according to Village Manager Peter Burchard.
Several high-cost functions have been handed over to the private sector. One-year contract amounts include $165,000 for sidewalk and curb maintenance; $73,024 for cleaning/janitorial work in village buildings; $63,000 for street sweeping; and $25,025 for paving.
In addition, private firms print the village newsletter and annual report, enforce codes, cater the annual employee dinner, tow illegally parked vehicles, put down pavement traffic markings, do vehicle collision repairs, convert paper records to microfilm, maintain radio and telecommunications equipment and handle pest control.
All together, the village has privatization contracts or arrangements with more than 50 vendors covering over 100 services, activities or items.
Through privatization, the village saves money by having fewer employees on its payroll as well as by avoiding the purchase of certain equipment. “We found that in many cases, specialized training or equipment were needed (to perform certain services),” says Trustee Rich Cochran. “There was also the liability issue.”
Hoffman Estates’ privatization penchant has also spurred greater efficiency in the services the village has retained. Indeed, an Illinois software firm’s benchmarking study ranked the Equipment Services Division first in the nation among municipal fleet departments.
Additionally, no massive layoffs or drastic downsizings were needed. Instead, the village has allowed its workforce to downsize gradually through attrition. Cochran estimates this has enabled the village to save about $225,000 per year in salary costs.
And one of the most telling signs of privatization’s benefits, Burchard says, is that while the village has gained more than 10,000 people in the past decade, its property tax rate has actually declined 20 percent during that time period.
The Georgia Institute of Technology is sponsoring “Creating the Future Downtown,” a program designed to help city planners and other community leaders explore ways to diversify and strengthen their downtowns by turning them into unique commercial centers. The program takes participants through the processes of vision development, business plan preparation and market analysis.
Scheduled for Oct. 16-17 in Atlanta and Oct. 23-24 in Chicago, the program costs $495. For more information, contact the Distance Learning, Continuing Education and Outreach center at Georgia Tech, (404) 894-2547; via e-mail: [email protected]; or via web site: http://www.conted.gatech.edu.I