By: Ignacio Barros
Introduction.-
In the last three decades, leaders of public institutions in various countries around the world have sought ways to reduce waste through operational improvement programs inspired by Lean or Six Sigma. The classic techniques to eliminate waste, variability and inflexibility have been used successfully in some public institutions, but many others have applied them without success and the vast majority have not even started down the road. Our experience advising governments in various Central American countries, Colombia and Peru has shown us that there is much to be done on almost all fronts of public affairs and that the bureaucratic obstacles, which are the same ones that the efficiency project is intended to correct, They are the ones that prevent said project from generating all the potential for improvement that it could and, even more, in many cases they prevent the improvement project from starting in the best conditions, since the process of bidding and contracting bidders is cumbersome and discouraging.
Three work fronts.-
Many of the internal organizational efficiency projects, whether in the public or private sector, focus on improving or optimizing one or more of the following three core attributes of the business: its costs, the quality of the service or product it provides, and the level customer service. Let’s look at these three elements from the perspective of the public sector.
i. Costs:
Persuading people to embark on a journey where the last stop may be their own removal is not easy. But while internal improvement projects can reduce the number of jobs, the ultimate goal is to make the remaining ones more productive. There are countries whose legislation prevents the dismissal of employees in public institutions. Some time ago, we were contracted by the Peruvian Ministry of Economy and Finance to generate efficiency and savings in a Peruvian public financial institution (specifically Banco de la Nación) in its four largest expense accounts, excluding payroll. The results were very positive and showed us that, even without touching the personnel account, there is a lot of room for maneuver and many opportunities to capitalize benefits in accounts such as logistics expenses, services, contracts, overtime, travel expenses, among others.
Increased operational effectiveness can free up employees in one area of the organization to offer new or better services in other areas. One example: In Germany, the state government of Berlin, which is prohibited by law from laying off its workers, took an innovative approach: people no longer needed in an area were placed in work groups (pools) where they could be selected for new assignments in others. And the most interesting thing is that, in accounting terms, the cost of this released pool no longer affects the financial statements of the efficient organization but rather forms part of a new state entity with fresh resources to be used in new projects of the same institution that released or in other state entities. In this way, efficiency is rewarded and the worker is not punished.
ii. Quality of service:
The central problem of the quality of work in the public sector is that the final customer who consumes its products or services has no alternative, since in the majority of cases public services are monopolies. And on the other hand, there are so many users of the service that the discomfort is diluted and it is more difficult to “punish” the public institution that provides it. In the private sector it is simpler: if the consumer does not like your product, you disappear as a company. Point. That said, the best way to increase quality in the public sector goes through a meritocratic issue, in which employees who do their job better are rewarded with promotions and bonuses. And to be absolutely objective with these awards, and not lend themselves to internal favoritism, what must be done is to generate very precise indicators with which performance is monitored. Each indicator must have a starting point, showing the initial situation from which it is intended to improve, and a desired objective. Each section of improvement towards the desired objective has an economic or promotional value. These indicators are documented and then audited by impartial, internal or external entities. In this way, goal-oriented work and measurement culture are encouraged. The Scandinavian countries are champions in the implementation of these mechanisms.
iii. Customer Support:
As in the private sector, a public institution has internal clients, who are all areas of the internal value chain, and external clients, who are all users of public services. Both aspects must be monitored with indicators, using the same logic described in the previous paragraph. Each employee is individually evaluated for the service he provides to his internal customer. And the evaluation of the external client is measured as a team, since there is no single “owner” of said final client. The results are measured as a group for the production line, and the head of the line is measured individually.
In principle, the satisfaction of a client occurs when he receives his product or service on time and complete. To measure that there is nothing better than the OTIF. The OTIF is a performance indicator of the logistics industry that reflects the percentage of shipments that arrive on time (on time), with the correct product and the quantity requested, and at the place indicated by the client (in full). In recent years, correct invoicing has also been added, that is, that the office comes with the documentation, physical or electronic, in the form that the client and current legislation require.
… keep going.
We will send you the second part of this article in 2 days.