Cost cutting?

Imagine Jeffery Immelt, Steve Jobs, or Richard Branson issuing an edict that asks their legion of employees to submit ideas for cost cutting.  Let’s say they receive thousands of suggestions and then open the suggestions to their peers for voting. Then the creator of the winning idea gets a photo-op with the CEO. And yet, their idea isn’t implemented, but is merely submitted for inclusion in the next fiscal year’s budget.
This is exactly what is happening with the federal government.  For the second consecutive year, federal workers can participate in a program called the SAVE Award (and in the finest tradition of no-acronym-left-behind, SAVE stands for “Securing Americans’ Value and Efficiency”).  The program is “a process through which every government worker can submit their ideas for how their agency can save money and perform better.” 

The winner of the program wins a meeting with the president and his or her idea will be included in the FY2012 budget. A whopping 38,000 submissions have come in. On the surface, this seems like a great idea. Why not solicit the underappreciated rank-and-file to send in their thoughts? 

Maybe because it creates a culture counter to cost cutting, undermines basic process improvement principles, and violates the Catholic Social Teaching principle of subsidiarity.

The federal government has no lack of opportunities for improvement.  In fact, many of the laws, rules, regulations, policies and procedures are oriented around “creating a culture of performance.”  The Government Performance Reform Act, the CFO Act, the CIO Act, and the Paperwork Elimination Act are just a few that roll off the top of my head.  Many government solicitations are laden with words requesting “best practices,” “Lean Six-Sigma expertise,” Balanced Score Card, strategy maps, and other commercially standard practices.

Instead, with this program, the taxpayers get:

• Endless layers of approval at ever-increasing levels – Subsidiarity?  Hardly.  This “contest” encourages self-aggrandizement masked as cost cutting in order to garner executive level attention.  The direct managers are undermined; executives responsible for their agencies are undermined.  The men and women responsible for operational implementation are unable to affect performance improvement due to endless review cycles, approvals, and bureaucratic wrangling. 

  Performance improvement is breaking down the component parts of achieving a goal, a mission or an outcome.  Those that are closest to the opportunity should have the latitude, authority and accountability to change it. But that’s not the case here. They’re not even voted on by those that have direct performance accountability for the mission.  It’s now become a beauty contest that judges the best pig wearing the best lipstick.

• A focus on cost cutting, which ignores the strategic imperative  – What if someone came and said, “eliminate such-and-such agency,” and what if they were able to demonstrate tremendous savings in doing so? That would be good, right?

  One sure-fire way to cut costs is to eliminate the enormous rat’s nest of duplicated processes, or those agencies created to sate political outrage. And what about all those underperforming agencies?  Gone too.  But, let’s also imagine the scorn for the person who actually recommends those things.

• Incentives that don’t motivate change – This SAVE Award should review efficiencies vis-à-vis the mission of the agencies in question and reward behavior.  However, this award promotes an idea that will occur sometime in the future (subject to the next FY’s budget) with only promises of change. Sound familiar?

  I believe the program should award those leaders, managers, and operators who create and sustain a culture of continuous improvement.  In other words, those that are able to achieve sustained excellence. 

Process improvement should be everyone’s job and cost cutting should be its derivative, not a cause célèbre. Unfortunately, operational excellence in government, while desperately needed, is the last things this award will promote.