|
Mark
Twain liked to observe that the sound and fury of a
gathering storm could be misleading. "The
thunder makes all the noise," pointed out
America's first master of the sound bite, "but
the lightening does all the work."
And
so it is with regard to the Governor's Commission on
Efficiency and Effectiveness, which Gov. Mark R.
Warner charged with looking "at what services
our elected representatives have decided government
should provide" and whether "government is
providing those services in the most effective and
consumer-oriented way." More directly,
Commission members led by former governor L. Douglas
Wilder, chairman, and Capital One CEO Nigel Morris,
vice chairman, are asking what should state
government do and why? The questions take on new
gravity today as Governor Warner tells the Senate
Finance and House Appropriations and Finance
Committees that Virginia faces a revenue shortfall
in its budget that could well exceed $1 billion.
The
Commission may not issue its final report until
December, but ongoing, sometimes contentious
discussions among commission members signal that
real issues
are involved. Chairman Wilder has used his forceful
personality and leadership of the key
"organizational structure" study group to
elevate one of the Commission's charges – ways to
streamline and consolidate state agencies and
programs – to prime objective. He has argued that
current revenue shortfalls demand immediate cuts to
state government spending. Counterbalancing this
power of one are all the other commissioners, who
have focused more energy on the governor’s
injunction to rationalize the lines of business that
state government undertakes and to streamline
operations with new technology and management tools
for the long-term.
With
his flair for the dramatic, Wilder has hinted at or
discussed throughout the Commission's proceedings a
list of state government changes he has been
compiling for a decade. "There have been many
unfounded reports of recommendations we haven't
made," he commented in the early days of the
Commission. Then, through a letter to Governor
Warner a couple of weeks ago, he released a personal
list of proposed changes, including privatizing the
263 ABC liquor stores in Virginia and eliminating
the secretariats of technology and administration.
His fellow commissioners responded by treating the
Wilder list as "founded
reports of recommendations we haven't made.”
Sen.
Walter Stosch, R-Henrico, an accountant by trade,
chairman of the Senate General Laws Committee and a
senior member of the Senate Finance Committee, has
counseled the media that the commission has not
reviewed agencies or criteria to evaluate those
agencies, much less done the analysis of savings or
benefits to be achieved by cutting or merging them.
In an early August meeting that media
representatives characterized as
"raucous," differences boiled over.
Commission members made it clear they preferred to
develop broad recommendations for managing state
government rather than advocate specific cuts in
agencies, departments and positions. Wilder
abstained from voting for that approach and vowed to
ask Governor Warner directly whether he expected
recommendations on specific cuts.
Wilder's
list did raise serious questions that need to be
answered before the Commission submits its
recommendations. A structure such as ABC, which
dates back to a 1934 monopoly and licensing system
used by Quebec, certainly could use a new look. The
sale of liquor store properties would produce a
one-time influx of cash for the state. But it also
would be worthwhile to understand whether gaining a
lump sum up front can be justified given the loss of
an annual revenue stream from state store profits,
about $41.6 million in FY2001.
At
the top of the list of questions for Wilder,
however, is how the Secretary of Technology's CIO
functions will be better managed under a different
secretariat.
Consultants
KPMG told the Commission in July that "the lack
of integration of services across the various
agencies is inconsistent with fundamental business
practices," that there is "duplication
among administrative processes and information
systems" and that there is "inadequate
management information for strategic, statewide
decision-making." (KPMG also assured the panel
that the Commonwealth compares favorably to other
states in these inconsistencies. Whew, thank
goodness.)
Since
1996, state government has spent over $560 million
to replace or implement independent administrative
systems. Worse yet, state agencies' strategic plans
call for implementing 13 more financial management
systems, three different payroll systems and three
different human resource management systems over the
next two years. Eliminating
duplication of administrative information systems,
KPMG said, would save $100 million a year.
Eliminating
overlaps in payroll, accounts payable and non-tax
revenue collection (licenses, permits and fees)
might save $14 million a year, while trimming
duplication in warehouse and distribution centers,
regional and local office leases, training programs,
business and professional licensing and printing
could save another $17 million annually. The full
Commission is likely to recommend combining data
center operations, servers, mainframes, management
and help-desk functions in the short term and more
outsourcing in the longer term.
"State
government has done well where there are
short-lived, small projects and programs,"
Senator Stosch suggested early in the hearings,
"but not where there are large projects,
long-range assets, complex or time-extended
transactions." That is where the private sector
members of the Commission have concentrated most of
their work.
Utilizing
his strategic planning skills to set out the roadmap
for delivering a meaningful executive summary report
to the Governor in September, Vice Chairman Morris
urged his colleagues to identify changes with
"longevity and consistency" that would
engender a "culture of change" in state
government. Focus, he said. Challenge sacred cows.
Use fact-based analysis. Involve stakeholders. Plan
for continuity in implementation. And enroll top
leadership in execution. A realistic goal, he
suggested, would be to submit two to four
recommendations with a high probability of being
implemented quickly through policy decisions or
executive orders, and three to six recommendations
with a very high probability of being implemented
longer term.
Catalogue
retailer Bill Crutchfield from Charlottesville took
that advice seriously and helped his study group
nail state government's organizational culture with
five problem points.
-
There
is no uniform set of core values that transcend
administrations.
-
The
culture of state government does not promote a
merit-based management system.
-
The
culture does not promote accountability.
-
The
culture resists change at all costs.
-
The
culture does not embrace long-term thinking.
Crutchfield
put a proposal on the table for a new "Office
of Management Excellence" to tackle these
problems.
"The
challenge is similar to a corporation that has built
or acquired many companies, but not integrated its
operations," said former Proxicom founder and
Dimension Data executive Raul Fernandez.
"The
essential change is for state government to respond
faster and more productively," added former
Landmark Communications executive John O. "Dubby"
Wynne.
Other
private-sector members at the August meeting
insisted the Commission do more than rearrange the
deck chairs. The management practices group, for
example, suggests a comprehensive new
"management agenda" for the Commonwealth
that includes strategic management of human capital,
competitive outsourcing, improved financial
performance, expanded e-government and integrated
budget and performance criteria as government-wide
initiatives.
These
innovative private executives, carefully recruited
by Governor Warner, feel comfortable recommending
bold, cross-cutting initiatives that slash across
heavily defended program silos of state government.
Most have had to apply such practices to their own
businesses in the last two years of economic
uncertainty. What Wilder counseled them in his
thunderous manner last week was to appreciate the
reasons, some purposeful, some imagined, that
sustain government duplications, even if modern
management principles don't recognize them. These
intangibles feed inertia, Wilder argued, and respond
only to forceful action such as cutting and
consolidation.
For
their part, public officials can become so familiar
with existing organizations, problems and politics
that alternative solutions just don’t register.
But apart from Wilder, the public members of the
Commission, from former Senate Finance Committee
Chairman Hunter Andrews and former Prince William
Board Chairman Kathleen Seefeldt to Walter Stosch
and Del. Michele McQuigg, R-Prince William, seem to
have embraced the innovative, pragmatic, systemic
approach counseled by their private sector
counterparts.
The
Commission's final report in December undoubtedly
will reflect both thunder and lightening, if only
because Governor Warner and the General Assembly
will need some new navigational aids to steer
Virginia government through the budget storm in
FY2003. Whether there is any long term impact will
be a function of how many General Assembly members
can buck their own organizational culture and set a
new management agenda loose across all state
government operations.
--
August
19, 2002
|
