Beginning as a reform movement in the 1990s that encouraged governments to act and operate like the private sector, benchmarking is quickly becoming the standard for resource allocation and management decisions among local governments. As resources continue to diminish and obligations increase, public agencies are seeking out best practices from others to determine how to operate more efficiently. By identifying jurisdictions with similar demographics, socioeconomic status, geography, crime rate, organizational values and goals, local governments can compare their own service delivery and resource allocation decisions with their counterparts to determine areas of weakness and ways to improve.
Many cities and counties that have implemented benchmarking have gleaned new, valuable best practices from peer cities, resulting in greater efficiency, effectiveness and cost savings. However, public agencies should use caution when attempting to apply benchmarking as the preferred or only way to analyze resource allocation decisions.
Police departments often use peer city benchmarks to allocate staff. Agencies compare data such as response times, arrest rates and crime rates to determine whether to hire more officers or assign them to other tasks. However, most benchmarking surveys do not effectively control for the numerous factors that may influence those rates, making it difficult to draw direct comparisons.
Using benchmarks to establish compensation policies also can be problematic. In 2002, San Rafael, Calif., set a goal to have the highest paid workers in Marin County or to be $1 above the average of 10 similar cities in the Bay Area. While San Rafael could have the highest paid workers in the county, it may not meet the second goal, raising wages even higher. As other regional cities compared themselves against the artificially high wages, they found themselves arbitrarily raising salaries. Lydia Romero, assistant to the city manager in San Rafael, says while the city was facing a structural deficit, the benchmarking of wages required it to increase salaries while simultaneously slashing budgets and cutting services to the public. That created an artificial wage scale.
In spite of some less-than-desirable outcomes, benchmarking appears to contribute to effective government management in some instances. However, cities and counties should consider using additional measures to offset the limitations of benchmarking by using internal analysis and setting internal targets that take into account the unique features of the specific agency. Agencies should work with managers and elected officials to develop internal benchmarks that reflect the goals of the agency, jurisdiction and residents.
Agencies also need to closely analyze the many local factors that affect a given agency or department’s performance. For example, to determine effective police staffing levels, cities should use all available internal data, such as calls for service or type of calls, to determine proper workload distribution rather than simply relying exclusively on comparative data. Analysis on that scale requires significant investment of time and effort. However, with the information, local government leaders can make more effective use of their shrinking resource pools.
The authors are budget policy analyst for Jefferson County, Colo., and analyst for the Santa Cruz, Calif., Police Department, respectively.