A Model of Government Efficiency (Not a Typo)

(Photo: sean hobson)

Ray Fisman and Tim Sullivan use the example of New York City’s surprisingly efficient passport office to explore an interesting question: “Why do some government offices perform well and others poorly, even when they’re providing the same services and working with comparable resources?” Fisman and Sullivan think it’s all about the management:

There’s an emerging body of research that chalks up these productivity gaps to the all-too-human ways that different companies (and divisions within a single organization) are managed. The fact that management matters—a lot—shouldn’t come as a shock to anyone who has ever worked under a good manager and also a bad one: Good managers coach, listen, support, and make their employees feel like they’re making progress. Bad ones don’t—often in uniquely horrible ways. And if this is true at for-profit companies, why wouldn’t it be true for branches of the government?

At the Hudson Street New York Passport Office, the management is Michael Hoffman:

But Hoffman also has a great deal of discretion in how the place is run: the layout of the various waiting rooms, the particular queues that move people through the application process (Hoffman has chosen four: one for appointments, one for walk-ins, a special-requests line, and one for applicants with complicated cases), and the color of the walls (they’re currently a dull institutional blue; he’s planning on painting them a cheerier yellow). And it’s his job to motivate and manage his workforce. He promotes high-performing agents and disciplines—or in extreme instances even fires—lower-performing ones. (Yes, while it isn’t easy, it is in fact possible to fire federal employees.) He’s been given enough autonomy within the context of a federal bureaucracy to make the passport experience in New York terrible or fantastic, and he’s achieved the latter. Hoffman, a modest and unassuming mid-level bureaucrat with a fondness for baseball memorabilia (a bat and a row of balls have pride of place in display cases behind his desk), has just done a great job of using his power to make the office run really well.

Related: a Q&A with Fisman and Sullivan on their book The Org: The Underlying Logic of the Office.

Eric M. Jones

One might ask whether plain democracy would work in management. Usually the workers understand who would make the best bosses.

Mike B

This is why the pay for CEO's and other management types have skyrocketed in recent years. It's not a conspiracy, they simply have a real effect on the performance of the entire company especially since modern communications allow them to make more decisions. Back in the 50's any sufficiently complex organization would need layers and layers of middle managers to get just about any task done. Now a CEO can analyze just about any small group or office and send off some e-mails to fix problems.

Steve Nations

I hope Mr. Hoffman gets promoted soon. There are plenty of other government agencies that could use his help.

Julien Couvreur

While I am glad that some government bureaucrats care enough to try and improve their service by certain metrics, this is a very limited and static definition of efficiency.
Also it shows lack of appreciation of the role of entrepreneurs and competition.

Consider for example whether this manager has incentives to cut costs and save money?
Or is his budget captured from taxpayers and mostly allocated by political methods?

Does he have incentives to make good long-term investment and decisions?
Or is his job more-or-less secure regardless of market share and demand?

Feedback cards are good. But does he have feedback from demonstrated choice of customers choosing his service over eager competitors?
Or does he have a captive customer base who will come not matter what his reputation?

If a customer found a major complaint, would they have reasons to believe that he might punish them by asking a buddy in some other agency to audit the troublemaker?

Is he limited to providing the service as defined by his superiors?
Or does he get to innovate and re-define his service and shift the paradigm?
Could he acquire other passport offices, some other government services, or some businesses which he believes he could combine with his existing service?

In short, do you think an occasional motivated manager is sufficient to make the USPS behave and evolve like Fedex?


B. Andersen

You seem to be insinuating that the private sector would be able to improve efficiency and out-innovate government passport offices? You suggest that this manager, although reportedly improving the experience of all customers, needs to start to trim fat, work tighter budgets, make long term investments(?), turn profit and consolidate services.

Your final point that USPS needs to behave like Fedex may have a lot of merit; however, your overall argument, which seems to say that no matter if there are motivated bureaucrats working in gov't offices, the private sector will always, naturally out-perform government run services should be subject to a lot of scrutiny.

I think the one of the most important issues in how we judge how well government services are run, versus how we think private business performs is HOW we are evaluating their effectiveness.

For instance, you seem to be coming from a perspective that says this manager should be running his office like it's a private, for-profit business because you believe that this is how services evolve, improve and move forward. Thus, you would probably extend your criteria of successful for-profit business to other government services (like you have for passport offices). Government run services will always fail this test, in your eyes.

Although, we must consider an alternative perspective. Perhaps a passport office, or even a DMV, is not the kind of institution that we, as a society, should want to be run as a for-profit venture. Government runs many services (not well in every case, I agree with you) that we don't want going to free market. Passports is a perfect example. Therefore, it doesn't make logical sense to say the private sector will outperform, or better evolve to improve service, or even to use the criteria for a successful private sector business to evaluate government services.

Your points about the ability of government bureaucracy to innovate are very relevant and I think gov't DOES need to examine how certain services are delivered.


Julien Couvreur

Thanks for the thoughtful reply.
I feel you got my argument, but I was not suggesting that government agencies should mimic private businesses (trim fat, tighten budget, etc). Those behaviors are superficial.
The real difference lies in incentives (or lack thereof). Without incentives, we lose the benefits which we have come to appreciate from competitive and voluntary providers (innovation, higher efficiency, lower costs, dynamic competitive landscape). The notion of "efficiency" discussed in the article pales in comparison (it's limited and static).

"Passports is a perfect example [of service which we don't want going to the free-market]."

The problem passports try to solve is to provide "proof of identity" (some verifiers would like to verify some individuals, and the individuals would like to prove themselves to the verifiers).
Why do you think that this problem can only be solved in a single way (passport) and by a monopoly (government), rather than competitive solutions?
Also, why should this service be subsidized by taxpayers rather than by those who are consuming and benefiting from the service?

Arguably, this service (providing proof of identity) already has different providers beyond a single government monopoly.
First, there is no a world-wide passport provider, but rather competing governments (but you have to be a citizen to be allowed as a customer to that provider).
Second, there are alternatives within countries (ID badges by companies, credit card companies, background check services, letters of recommendations, referral, various membership and credit cards, etc.). There are many places which check your identity and they use diverse means to achieve that goal. Passports are only one of them.
Each solution or substitute offers a unique trade-off (features, quality, security, costs) which may be fit to different solutions.

"Government runs many services that we don’t want going to free market. "

It depends what you mean by "we". I personally don't think there are any.
That's why I tried to make a case which highlights how competition drives innovation and dynamic changes, as opposed to monopoly and static efficiency goals.

"the most important issues [...] is HOW we are evaluating their effectiveness."

My comment was assuming that effectiveness is best evaluated by voluntary customers ;-)
When your customers are trapped in a tax-funded monopoly (ie. not voluntary customers), there are predictable negative effects (which I highlighted)

By the way, I recommend Bruce Schneier's talk about the identification service ( http://www.youtube.com/watch?v=dy4VJP-lZpA ). He explains the different use cases and sub-systems involved: ID card, database, issuance procedure, verification procedure, etc


Steve Miller

TransGov (http://transgov.org) proposes two reforms to make government efficient, which work in the same ways as rules imposed on the private sector.