Viewpoint: Five strategies to boost government efficiency
Three years into the worst economic conditions since the Great Depression, local government leaders have no doubt recognized that the tired mantra of “cutting the fat from operations” no longer applies. They are instead faced with “cutting the muscle needed least” while still achieving “more with less.”
While there may not be any easy answers, below are five strategies that can help elected officials and agency managers meet today’s economic challenges.
1. Inventory and evaluate services
Elected officials and department heads need to fully understand the scope and complexity of services that the locality or agency actually performs. The traditional budget process often does not provide a clear understanding of services being performed and often fails to deliver the insights necessary to meaningfully improve and transform operations. Working with agency managers and front-line supervisors to inventory services helps to identify areas of non-mandated, non-core services, as well as where performance is lacking, or not being measured at all. The service inventory should be a rapid, three- to four-month initiative aimed at high-impact areas, the results of which should identify strategic opportunities for improving service performance and efficiency.
2. Define strategy and measure performance
While many public officials may claim to understand their “mandate” upon entering office, some have taken the extra step of surveying their constituents to focus on the outcomes and services that are most critical to them. That can facilitate the difficult decisions around which services deserve investment and which do not.
Public officials can then work with agency managers to craft an operations strategy that better reflects the needs of taxpayers and defines the outputs that can best satisfy those needs. Performance measures can be defined for each outcome to guide continuous improvement and communicate to constituents the tangible benefits they receive.
Performance measures are most effective when they are specific, focused and aligned with desired outcomes. Fewer and simpler measures can translate into more actionable guidelines and minimize the burden of activity tracking. When measures are defined and monitored, there is an objective measure to gauge whether improvement efforts are succeeding.
3. Understand the cost of accomplishments
The traditional budget process is often limited to evaluating what resources a service has “consumed” instead of what a service has “accomplished.” The traditional focus on resource accountability must be balanced with an “output-focused” measurement of service costs to identify where investments are succeeding and where they are not. Examples include defining the full cost of a service per constituent served, lane-mile paved or other unit of service accomplishment. To improve overall taxpayer value, cost savings opportunities should be viewed through a lens that balances service efficiency with service quality.
4. Challenge agency operating models
Local government operating models often reflect the organization, processes and technology that have been in place for decades, but may consume more resources than are available today. When public officials and department heads re-think their operating models from the constituents’ perspective, they could uncover transformative opportunities to save money and be more effective. Though cost savings may be the initial goal, improved customer satisfaction can often be the result.
5. Create a competitive environment for services
Local governments often do not face explicit competition for the right to provide services, which creates a myth of inefficient public service delivery. Cities and counties can use public-private competition to put that myth to the test, and challenge agency managers and front-line employees to show that they are the most efficient and effective providers. The key to successful public-private competition is a keen focus on creating a level playing field for public and private competitors, and properly qualifying private competitors to protect public interest.
Short of full competition, many concepts can institutionalize the forces for continuous improvement. Competitive concepts such as employee “gain-sharing” can incentivize employees to improve services by providing a direct monetary award for their efforts. Agency-level “gain-sharing” also can stop the “use-it-or-lose-it” budgetary environment by rewarding under-budget agencies with resources.
The five strategies above can help identify efficiencies and cost savings when many public officials and agency managers may feel as though there is nothing left to eliminate, reduce or outsource, and the prospect of doing “more with less” seems almost intellectually dishonest and practically impossible. With effective implementation, the strategies represent a set of powerful tools that elected officials and agency managers can employ to transform operations and regain fiscal balance. At their core, they are about understanding, delivering and improving value from the standpoint of the taxpayer, who are the true “owners” and “benefactors” of local government services.
William Zizic is a manager in KPMG Advisory’s Business Effectiveness group, and can be reached at wzizic@kpmg.com. Jeffrey Wong is a managing director in KPMG Advisory’s Business Effectiveness group and can be reached at jeffreywong@kpmg.com.The views and opinions are those of the author and do not necessarily represent the views and opinions of KPMG LLP.
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