Advice on getting competitive
(for the private sector too)
by Robert DeLoach,
Director of Public Works for Pomona
The time has come to recognize that Public Works, traditionally a municipal government function, is actually a business. Aside from public safety functions such as police and fire protection, no other 'business' impacts the general populace more directly, or serves as many needs. We need to learn to operate as a business, or face what so many in private enterprise are faced with today - bankruptcy. Either we become cost-effective, or the citizens we serve are going to foreclose on us. Quite literally we are facing the fact that unless we change the way we operate, much of what we do may be done more efficiently by the private sector. If we don't become competitive, Public Works departments will be put out of business.
Top level management and city councils are asking - or being asked by their constituents - to turn over services to the private sector which have traditionally been publicly provided. Privatization is in vogue right now. Bruce Herschensohn, candidate for the U.S. Senate, was quoted in California Republic Magazine as saying, "The private sector is better equipped and able to handle the problems government can only hope to deal with. Government must run like a business."
Governing magazine states, "Critics of government argue that privatized services would not only be less costly, but also more customer-oriented than those provided by government because of increased flexibility and the reduction of political and bureaucratic red tape." No sector of public service is free from the speculation of takeover by the private sector: street sweeping, street maintenance, engineering, planning and building services are all under scrutiny for privatization.
What created this urge to privatize? First of all, we need to realize that this shift was not created by our recent recessionary economy, although the downturn has certainly spurred it on. The move to privatization has several roots. An increasing impatience with government inefficiency and red tape is one. A general trend toward corporate downsizing, doing more with less, is another. This relates to the profit motive, the goal of saving and returning monies to the general fund. And the specter of future economic uncertainty underlies the move to streamline, downsize, and conserve. The demand for government to operate as a business has never been greater!
What are we to do? It's time to turn around that old adage, "What government can do, private business can do better!" We should begin to think in terms of service delivery, profit and loss reduction, quality control, improved efficiency, and customer service.
Unfortunately, agencies face natural stumbling blocks to putting these ideals into practice. The government requires loss of work days due to labor-negotiated and government-protected days off, expensive training, and fringe benefits. (Did you know that sick leave and vacation leave is approximately 75% greater for public employees than it is in the private sector?) High overhead and strict safety regulations also run up costs in government.
How do we develop the sense of 'need to produce' that exists in the private sector? How do we sell ourselves as competitive with the private sector? These are hard questions that require serious thought. My suggestions:
- Be realistic. Acknowledge that the public sector and, more specifically, Public Works, is being looked at for possible sale to the outside. If necessary, you must be prepared to change the way you are currently operating. The private sector is not always the cheapest way to go, but it is getting a hard look as an alternative to publicly supplied services. We can influence how the decision-makers look at the situation.
- Know your operation and be honest with yourself. It's difficult to gauge whether you are capable of competing, or whether a contractor really is capable of doing your job better, without first conducting a thorough analysis of your own service delivery. Take a good, close, unprejudiced look at each and every segment of your operation. Start with a look in the mirror. What you see there could require you to make some tough, demanding changes. At the very least you will gain an understanding of what to expect from a contractor.
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Don't use the excuse, "...but it's been done this way for umpteen years!" Don't be afraid of making changes if they're warranted. On the other hand, don't make changes just for change's sake. If it's working well, don't change it - use it and build on it.
- Be flexible - capable of change. Be innovative; try new approaches. Create for yourself a reputation as an innovative manager who will do whatever it takes to make the system work for those it exists to serve. City councils don't like dealing with those who just give all the reasons why something can't be done. Stand up and say, "It's difficult, but let me work on it and see how it can be done."
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Listen to others and be willing to try their suggestions. Instill a sense of pride in team members; pride of ownership in the operation and equipment, and a sense that their contribution of effort and ideas is important.
- Look beyond the dollars and cents. If you can provide the service at a slightly higher cost than the private sector, there may still be justification for keeping the service - such as quality, customer service, reliability, availability. On the other hand, this also works the other way. For example, the city of Pomona accepted a bid from a private contractor to maintain traffic signals at a cost nearly equal to the city's in-house cost. However, analysis showed that the contractor was prepared to supply almost four times more service than the city was providing for that dollar amount. Clearly, changes had to be made to remain competitive. We had to consider the city of Pomona as a business operation: Would the corporation carry the losses of one of its divisions if there was an alternative which guaranteed an increase in production or decrease in operational expense? I doubt it.
- Compete! Stay in the ring. If you are under direction to prepare for privatization, create an opportunity to compete along with the contractor for the right to provide the service. In 1983, the city of Phoenix decided to contract out its refuse collection. The Public Works director approached the council, asking, "If I can put a winning bid together to supply this service, will you allow me to keep it?" The first year, his Public Works division was awarded the contract for only one of the city's four service districts and was forced to lay off a large segment of its staff and sell surplus equipment. But the department learned to compete, to keep costs at a minimum and make a profit, and to provide the highest level of service - in short, to function like a private enterprise. Now, in 1993, Public Works provides service to all areas of the city, through competitive bidding. The sanitation division is the only city service that has not become more expensive to operate over the last ten years.
- Commit for the long haul. We are in business to provide a service today, and to provide the same, if not better, service tomorrow. Don't become complacent and take on the role of the 'stereotypical government worker.' Follow the example of the L.A. Raiders in developing team pride and effort. Everywhere in the Raiders organization, you'll find this slogan: Commitment to Excellence. It is posted prominently at practice facilities and in locker rooms. It appears on their letterhead and envelopes. The slogan is a part of daily life for each and every member of the organization from top to bottom. Whether you adopt the Raiders' slogan or develop an approach of your own, make excellence your primary commitment.
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