FatCratz

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?

Brought to you by the IT pros at your federal government

This is the way it works, people. You send me your stories--they might be silly, they might seem insignificant--and I post them here.

Here's a story I got today that shows how the government can screw up something as simple as getting a new office:

I work at a Federal agency that is notorious, to say the least, for having serious IT problems. Here's an example of how crazy things are. A colleague of mine, who had been the acting supervisor of her office for several months after her former boss was promoted, recently had the "acting" removed from her title and was made supervisor. She continued working in her cubicle for a while, but then finally decided to move all her stuff to the old supervisor's office. She got her phone line/voice mail moved, files, etc. 

There was just one problem: she also put in a request to have her computer (i.e., her access to network/shared drives, etc.) moved to the new office -- and it took over THREE WEEKS for the IT folks to finally get her all set up on the computer in her new office! In the meantime, she had to keep working at her computer in her old, otherwise empty cubicle, while jumping up and running to her new office whenever she heard her phone ring.  

Can you imagine this happening anywhere in the private sector -- an employee gets promoted and moved to a new office, and it takes the IT gang 3 weeks to set up her computer in the new office?

Veterans of government employment shrug our shoulders and roll our eyes. So what? That's the way government works. But people in the real world, people in the private sector, have no clue that this is business as usual for the FatCratz in DC. 

Social value of airing stories like these? Do we really want these people running our healthcare? Designing our automobiles?

And the 2009 winners are...

It's Public Service Recognition Week here in DC, which means public servants are renting tuxes and giving awards to each other. It's a lot like the Oscars, except there are no red carpets, no designer clothes, not everyone is beautiful, and the industry congratulating itself is not beloved by fans around the world. But other than that...

On Wednesday, the Service to America Medals were held (More on that later). Then last night, the "2009 Distinguished Executives and Professionals" of the Presidential Rank were honored. Senior Executives, whose pay ranges from $145,700 to $199,700, received bonuses as a result of the awards worth up to 35% of their salaries, or $29,140 to $69,895. Not bad for servants.

Bonuses are a useful way to incentivize performance, unless you work on Wall Street, in which case they are tantamount to theft. Seriously, though, there are some differences between bonuses in the public and private sector. One nice thing about government bonus programs is that once they are established, they can never go away. And, since the government isn't in the business of making money--just taking money--they can't by definition be tied to profitability. In other words, no matter what the economy does, no matter how much or how little the government is running a deficit, some government working is going to get some bonus every year. 

Unless it's 2009.

You see, last night was the ceremony for the 2009 awards. Apparently, the Office of Personnel Management was supposed to hold the ceremony in the fall, but inexplicably didn't get around to it.

It's somehow fitting that awards for excellence in government were handed out six months late.

Adrift in Arlington

On Sunday, a Washington Post reader wrote in to the paper seeking employment advice:

Arlington: I left a senior middle-management private-sector position a few months ago for a federal job. At this point, I feel that federal service is not for me, and I desire to get back to the private sector. What is the best way to discuss this with prospective employers?

A few months in, and Adrift in Arlington already knows federal service isn't for her?

I'm not surprised in the least. In fact, I wonder how many experience this kind of regret when moving from private to public sector employment. Obviously, it's not easy to reverse course quickly, and I'm sure most just grin and bear it and eventually acculturate themselves to the change.

The structures and incentives and red tape of the federal workplace can be a shock to the system for someone coming from the private sector. The Post columnist euphemistically calls this a "hierarchical or structured environment" in her response. She could just as easily have said "inefficient and mind-numbing."

Government Vs. Business

John Steele Gordon has a great piece on the differences between government and business, which gives seven reasons why government can't run a business. It's a brilliant summary of the public vs. private sector contrast that is the heart and soul of this blog. Well worth reading.

I have two favorites. First, government is a monopoly, and virtually never faces competition, thus voiding the most powerful force driving capitalism toward greater efficiency. Second, Government is regulated by government:

When "postalization" of the nation's phone system appeared imminent in 1917, Theodore Vail, the president of AT&T, admitted that his company was, effectively, a monopoly. But he noted that "all monopolies should be regulated. Government ownership would be an unregulated monopoly."

It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself.

Another great tidbit from this piece, for which I couldn't find the source:

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged. When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

Government Websites

There are a lot of good people working really hard to make e-gov work. Surely, this movement will pick up steam (or at least funding) in the Obama administration, which has committed itself to making government more technically savvy.

But a recent survey (original results here, large file) shows that government websites lag far behind the private sector, especially e-commerce sites.

"Government Web sites have gotten better, but the private sector sites have gotten better at a much faster pace," said Darrell West of the Brookings Institution, a Washington D.C. think tank. "The gap is still substantial." ... "There's no common navigational scheme. Every site looks different, so you always have to spend a minute or two seeing how that particular site works," West said. "And most of them don't have good search engines, so it's really hard to find what you need."

This is no surprise. The government isn't selling anything, so it isn't really all that crucial to their survival that you find the product you are looking for or get the information you need.

FatCratz and Accountability

One of the defining features of a FatCrat is a lack of accountability. One of the great frustrations of being an honest public servant is serving under, or alongside, or in supervision of, colleagues who don't fear recrimination for misconduct.

A lack of accountability is an unfortunate side effect of government bureaucracies. Political appointees, career civil servants, and private contractors all find themselves holding positions of public trust, with little or no checks on their power, or efficiency.

Why else would government employees sit at their desks openly playing solitaire on their computers?

Congratulations, Virginia Saunders

Virginia Saunders is 82 years old, she has worked for the Government Printing Office for 63 years. She has no plans to retire.

You can only admire the longevity and persistence of an individual who reports to the same duty station for over six decades. To put this in perspective, she has worked for the government longer than she was expected to live when she was born.

While sending along a hearty and sincere congratulations to Virginia, her long tenure is also an occasion to ask some hard questions about the dynamism of the government labor pool. Virginia Saunderses don't come along very often, but I venture to guess they are more common in government service than in the private sector. While more senior employees certainly bring added experience to the job, a private employer usually finds it in their best interest to incentivize retirement long before the eightieth birthday. One guesses that productivity peaks before age 82, and a more junior employee could both do Virginia's job for a lot less salary (she probably makes over $79,000 a year) AND take advantage of a fair bit of newer technology to do her work more efficiently.

Since Reagan lifted the requirement for mandatory retirement at 70, perhaps worried that he'd be forced into his own early retirement, there is presumably nothing keeping Virginia from coming in to work each day. And as long as she wants to, that is good for Virginia. I'm just not sure it's the best thing for you, her employer.