Prize Money for Bureaucrats

John Steele Gordon has a brilliant op-ed in the Wall Street Journal today (subscription required and worth every penny), that powerfully captures the essence of what FatCratz is all about. The piece is brilliant because it both nails the problem of government bureaucracy and offers a real-world solution.

First, the problem:

Bureaucrats, alas, are... highly disincentivized to increase efficiency and to innovate. In business a penny saved is a penny earned, the savings flowing directly to the all-important bottom line. But in a bureaucracy, a penny saved is a penny likely to be cut from next year's budget. And prestige in a bureaucracy comes not from profit but from the size of one's budget. So even accidental savings are likely to be suppressed with make-work.

And then the solution, admittedly outside the box, but not entirely unworkable:

Let's say the federal widget inspection office in Seattle comes up with a way to save a million dollars a year by changing the method it uses to inspect widgets. Why not give personnel in that office the first year's savings, distributing it according to a set formula akin to that of the Royal Navy's? A million dollars in "prize money" would certainly be an incentive to motivate even the most slothful government office to find new ways to do things.

This solution is doubly brilliant because it is introduced by a reference to Patrick O'Brian novels, which are near and dear to the FatCratz heart for their evocative portrayal of the dictum, "Power corrupts, and absolute power corrupts absolutely."

This solution could also be employed in the private sector, which in large companies often becomes stratified enough to resemble a government bureaucracy. By distributing the rewards of increased efficiency widely to the members of a large team instead of rewarding a handful of credit-hungry managers, it provides incentives to the entire team.

Any one have any examples of this model being used in business or government?

Comments

[True Religion Outlet]

Over the years, however, Horne grew disillusioned by the film industry, and how she was used in films. In addition, she was blacklisted by Hollywood during the 1950's because of her involvement in the civil rights movement, and because of her associations with civil rights activists such as Paul Robeson. She eventually went back to her roots, performing again in nightclubs, and focusing on her recording career.