Business Techniques in Troubled Times

Turnaround professionals have the business techniques to turn around our out of control federalgovernment (see News Flash: The Federal Government is “Out of Control”), but the government we have today is missing some key elements to make those techniques effective (see Turnaround Techniques for “Out of Control” Government). Finding those missing ingredients is not so hard. The real challenge is electing enough officeholders with the will to put them in place!

Here is a turnaround plan that provides the missing elements:

1. A Vision consistent with the values of most citizens, and fitting the competencies of the federal government:

• Equal opportunity to succeed without undue government interference in our lives.
• Preference for relying on individual responsibility and market forces to achieve desirable outcomes, with government action (subsidies and favoritism) being the last resort, not the first.
• A society marked by economic growth based on effort, innovation, and competition; equal opportunity; respect for the individual; a safety net for the truly poor; and a government limited to doing what it does best and living within its means.

2. Clear goals for the elements of the Vision. Examples include:

• Percentage decline in government regulations
• Government spending as a percentage of its receipts

-  Note: a 30% spending cut is needed to match receipts in 2012.

• Government spending as a percentage of GDP
• Unemployment and inflation percentages
• GDP growth rate
• Percentage of government spending dedicated to redistribution and subsidies
• Others consistent with the Vision

3. Strategy designed to achieve the Vision and Goals – in writing to enable public progress review

Process: The Strategy would be published 100 days after the Presidential election; the budget would be submitted to Congress 60 days later; annual State of the Union speeches would be supplemented by a written progress report on achieving this initial strategy and goals.

Given the Vision proposed above, some obvious Strategy elements are suggested below:

• Provide healthcare, social security and welfare only to the truly poor: 15 to 20% of the population. For the rest, tax credits for private healthcare insurance would decline with income.
• End subsidies and other “state aid” to corporations
• Privatize government operations, introducing competition to provide such services wherever possible. For the Post office, see Turning Around the Post Office (USPS) Requires Privatization. Proceeds from asset sales would be used to pay off debt.
• Federal workforce: freeze wages, benefits, and headcount; require partial payments by employees to pensions and healthcare; introduce bonus incentive system for above average performance on strategic activities only.
• Defer overhaul of the tax code until the effects of other strategic activities can be seen. Only then can the revenue goal be determined – perhaps no new revenue will be needed. Once tax overhaul begins, all other strategic activities will halt.

4. Motivation Tools

Once there is a clear strategy to work toward, motivation will shift from pleasing the boss (re-election) to achieving that Vision and strategy, if it is inspirational. Those government employees who contribute the most deserve to be rewarded the most, if the goal is not equal outcomes but equal opportunity. Revising Civil Service rules to enable performance bonuses for achieving strategic annual objectives would introduce incentives for excellence to the federal workforce.

5. Manager for Implementation

In other organizations, the CEO is responsible for Vision, Strategy, and external relations. Often, there is a COO responsible for operations. The President is the CEO of the federal government. He or she is also the COO, with more than 20 direct reports including 15 cabinet departments plus those in the “Office of the President”. We elect Presidents for their vision (CEO), not for their executive management skills (COO). Yet their duties require them to coordinate operations over a huge span of control. The advisory role of the Office of Management and Budget does not solve this problem.

The above Strategy places even more importance on Operations, due to the fundamental changes it calls for. Who will make these happen within the Executive Branch? Perhaps there is a role for a COO supervising the operational functions of the Cabinet departments, while the Cabinet secretaries supervise the policy functions of their departments. Such a COO would drive privatization, asset sales, reorganization, and workforce initiatives such as headcount freeze, compensation, benefits, and incentives. He or she would be the one to “control the checkbook.”

Are these effective turnaround techniques for an out of control government, i.e., if implemented, would they work?

Tom Gray is a management consultant focused on small business and telecom and a Certified Turnaround Professional (CTP). He can be reached at 630-512-0406 or tgray@tom-gray.com. For information on the scope of Tom’s activities, see www.tom-gray.com

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