Improving Government Efficiency

Well-run businesses focus continually on cutting costs.  Unfortunately, there is little incentive in government to become more efficient.  In fact, the incentive for department heads is to spend every penny of their budget so they prove they need it the following year.  Joanna wants to change this mindset in Anne Arundel County by introducing the Open Book Management principles that worked well for her in the corporate world.  

In Open Book Management, a company is divided into profit centers and employees are given responsibility for increasing their center's profitability.  Detailed information on costs and revenues are shared with all personnel so they can identify promising opportunities to cut waste.  If a center succeeds in increasing its profitability, its employees are paid substantial bonuses.

Joanna plans to partner with employees in each county department to identify and implement cost savings through options like redoing websites to eliminate the need for  IT consultants, reducing vehicular use and cutting unnecessary positions.   If a department is able to permanently save $1 million in costs, bonuses for some portion of this savings, say $150,000, would be paid to all employees in the department at the end of the year.  The next year, the department's budget starts $1 million lower and employees look for the next cost savings opportunities.  After several years of this process, we should have a much more efficient government as well as empowered employees.

Employee groups that Joanna has spoken with have been very supportive of implementing Open Book Management principles in the county.  For example, a group of firefighters told Joanna that they had approached their Fire Chief in early 2009 with three pages of cost savings ideas.  Amazingly, every one of these ideas were rejected, including a proposal that could have saved $135,000 per year by changing to a less expensive shirt for firefighters.  

In today's time of tough budget problems, we need to get serious about cutting costs.  If done right, rewarding employees for finding and implementing permanent cost savings should dramatically improve the efficiency of our county government, thus allowing our tax dollars to accomplish more.