Proposals to make the public sector more efficient (part I)

The public sector and some notes on its efficiency – Part I

By: Ignacio Barros


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 agencies, but many other institutions have applied them without success and the vast majority have not even started down the road. Our experience advising governments in Peru, Colombia and several Central American countries 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 the 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 procedure for bidding and contracting bidders is cumbersome and discouraging.

Three work fronts

Every internal organizational efficiency project, whether in the public or private sector, focuses on improving or optimizing one or more of the following three central attributes of any business: its costs, the quality of the service or product it provides, and the customer service. serving customer. 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. Months ago, for example, SYNERGOS was commissioned by the Ministry of Economy and Finance of Peru to generate efficiency and savings in an institution public finance in its four largest spending accounts, excluding payroll. The results were extraordinary.

Increased operational effectiveness can free up employees in one area of ​​the organization to offer new or better services in other areas. Another 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 free 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

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.

iii. Customer service

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 own 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.

The perspectives that need to be developed in the public sector (*)

  • Customer Focus
  • End-to-end processes
  • Expose and solve problems
  • Develop a meritocratic culture

(*) It is part of our second installment; expect this article for the third week of February.