Flattening Bureaucracy

Jonathan Walters

Governing, March 1996

Four Years ago, Iowa's Government decided it was going to become lean and mean. The decision was bipartisan. A Democratically controlled legislature and a Republican governor, Terry E. Branstad, agreed that it was time to go after that much maligned, yet ill- defined, public-administration monster: bureaucratic bloat. It was time, all agreed, for a foray into the lair of mid-level management, that infamous repository of rule-addled, control-hungry paper-pushers credited these days with little more than ensuring administrative inertia and an overstuffed payroll.

Under legislation passed in 1992, Iowa department heads were handed a specific mandate: By July 1, 1993, increase the ratio of front line workers to supervisors (known in the personnel-management business as "span of control") by 50 percent. And exactly one year later, reduce aggregate layers of management by at least 50 percent. Iowa's performance on flattening front has been mixed. Some department heads now sit atop organizational charts that have been significantly squashed; other department heads, however, have used the Zen of their own bloated bureaucracies to keep reform at bay. When asked directly about the mixed performance of his appointees, Governor Branstad says, " This takes perseverance and consistency. You have to continue to stay with it until staff figures out that you're dead serious about it. Eventually they either get with the program or decide to look for another job." Mixed reviews notwithstanding, the Iowa effort was in the vanguard of a campaign since the late 1980s. Oregon Governor Barbara Roberts made increasing span-of-control ratios a priority while she was in office. In 1994, California Governor Pete Wilson ordered bureaucracy to shed 10 percent of what he viewed as managerial lard. And cities from Indianapolis to Hampton, Virginia, have embraced the sizzling corporate view that the key to organizational success is to flatten, flatten, flatten.

Yet while the private sector has laid off massive numbers of mid-level managers in its headlong drive to de-layer, the state and local government approach has so far been decidedly less aggressive. And its clear that most governments have been getting into the game for the wrong reason: For all the talk of sharpening organizational efficiency, it has been budget crises that have driven most government flattening efforts.

Nevertheless, governments everywhere are taking the oath to flatten, and judging by the talk at least, it's open season on middle managers.

Cutting middle managers simply for the sake of cutting them makes no sense, of coarse. And there are certain operations in government that clearly call for smaller span-of-control ratios. Small field offices, for example, may quite sensibly have just one supervisor and only a couple front-line employees. But the merit in the view that government suffers generally from serious bureaucratic bulge is indisputable. Anecdotally, the evidence that a huge source of delay and frustration in government performance lies in burgeoning layers of deputies and bureau chiefs, assistant deputies and assistant bureau chiefs - and the rules they create and cultivate - is easy to come by.

When asked why the grass wasn't getting cut on certain stretches of Massachusetts highway, Frank Borges, a former front-line highway maintenance employee, always has a ready answer: Because management wouldn't allow him to order the mower parts he needed and have them shipped overnight to the maintenance shed. His managers insisted on going through the bid process, with the attendant paperwork and a lengthy list of sign-offs. The net effect was pretty easy to predict: Mower parts that were needed in June didn't arrive until September.

But long grass is one of the more benign consequences of such managerial inefficiency. In New York City, there is abundant evidence that it was out-of-touch, unaccountable bureaucracies that failed to act on repeated warnings from front-line staff that 6-year-old Elisa Izquierdo was in trouble. Her mother is now facing murder charges in the girl's death.

The incident set off a remarkable game of what New York magazine aptly described as "bureaucratic keep away," with declarations of innocence and televised shoulder-shrugs reverberating up and down both the family court and child welfare chains of command.

The typical impact of bloat isn' t of course, so dramatic But organizational charts and personnel figures bear out what people such as Frank Borges accuse government of. A study in the early 1980s of the span-of-control ratio for three large departments in Utah, notes public sector compensation consultant Jim Fox, uncovered "all sorts of one-to-one reporting" - that is , a manager supervising only a single front-line employee. The average ratios, Fox found, were between 1-to-3 and 1-to-5, typical for government, but well below the private sectors average of around 1-to-10.

The causes of middle-manager bloat aren't hard to uncover. Under traditional civil service systems, the only real way to reward an employee who has bumped up against the top pay grade in a front-line classification is to kick him or her up into management. And system-wide, there is a perverse incentive to layer up, say compensation experts, because upper-level supervisors are often rewarded for the number of employees beneath them as well as for the complexity of the organizations they oversee. "There's an unwritten code," says Fox, "that to get more money you have to have a bigger department and more complex responsibilities, so you build up the people and the organization below you."

Politics, naturally, also plays a role. Appointed department heads frequently will bring in a layer of their own people to slather over the layer of upper-level career managers already there So that the chief elected executive's will will be done. Perversely, this particular brand of layering often has the opposite effect.

The problem of bureaucratic bloat has for some time now been listed high on the litany of culprits in the perpetual crime of government inefficiency. In its 1993 report Hard Truths / Tough choices, the National Commission on the State and Inca' Public Service singled out layer-cake organizations for specific criticism "The Commission believes that most agencies can cut their management layers significantly.... The cuts should improve accountability and save money. while allowing most agencies to shift personnel dollars to the front line."

It is that focus on the front line that is key to the theory of flattening, and the theory goes like this: A major repository of organizational wisdom, grit and energy lies in the front line. It needs to be tapped, freed from pesky, over-the-shoulder nit picking managers, most of whom are completely out of touch with the real-world function and needs of the organization they are supposed to be helping run. The other major goal of de-layering is to get front-line workers closer to top-level management Eliminating managerial layers, the theory goes, leads to a nimbler organization as the front line tips off upper management to changing organizational needs to which management can quickly respond Ultimately, the idea is to create an organization that is supremely sensitive and responsive to its customers by making the front line a frequently consulted barometer of changing demand as well as a full partner in designing and honing strategies for meeting that demand.

Not surprisingly. however, the prime driver behind pancaking government departments isn't any epiphany over the innate value of front-line workers, nor is it even the expressed recognition that leaner bureaucracies are better at delivering services. If that were the case, bureaucracies nationwide would have de-layered them-selves years ago. Rather, the prime driver has been what usually drives government reform (and private sector for that matter): money, or more to the point, the lack of it. Salaries are a huge part of government costs, running anywhere between 50 and 80 percent of operational budgets. Where better to cut than the fatter salaries residing in mid-level management? If the consequences of the cuts are a leaner and meaner organization, that's good, too.

And the potential dollar savings can't be dismissed. In another de-layering study he worked on, Jim Fox calculated that three Colorado agencies (administration, parks and health) could save 5 to 7 percent of their operating budgets by boosting span-of-control ratios to private sector levels. Translated into dollars, the annual savings rang up to between $20 million and $25 million.

It was the promise of those sorts of savings that prompted California Governor Fete Wilson and the legislature to gin up a round of mid-level management cuts in 1994. The calculation was that to achieve certain budget savings, departments would have to whack about 10 percent of their managers. Those agencies that had flattened prior to the directive were given retroactive credit (for example, he state parks department had already significantly down sized mid-level management due to budget cuts). But other agencies were ordered to comply. when some departments complained that such cutting for cutting's sake didn't make Sense for them, the legislature politely con-ceded the point and told the agencies they didn't have to cut managers, that they could figure out some other way to achieve the savings, just so long as the budget goals were met.

In the end, state agencies on average managed to cut about 7 percent of their mid-level managers, says David Tirapelle, director of the California Department of Personnel Administration. They made up the final 3 percent-worth of savings through other cuts.

In Iowa, the initial inspirational for cutting bureaucratic layers was the same as in California, to save money. "I would have to admit that the cost-saving issue is what first drove our effort," Says Phil Wise, a Democratic representative in the Iowa legislature and a leader of the flattening effort in the early 1990s. But as Wise started getting into the management theory behind de-layering, he says, it all made sense. "Constituents complain to Us about government, that the bureaucracy hasn't been responsive to them. Well, instead of bashing and bad-mouthing government we decided to do things to make government more user-friendly. The way to do that was clear: Give front-line staff more authority and reduce layers of management between the front line and the top. In other words, flatten.

While Iowa has probably had more success de-layering than any other state, success there has been short of overwhelming According to a personnel department scorecard, 24 of the state's 28 executive branch departments had increased span-of-control ratios by the July 1993 deadline. However, the increase was only 13 percent, well short of the 50 percent mandate. From July 1991 to July 1994, management layers were reduced 21 percent, again well short of the 50 percent goal. Iowa's director of personnel, Linda Hanson, argues that since those dead-lines progress has continued, particularly in the area of span of control which she Says was closing in on a 40 percent increase by July 1994.

It's a number that both legislative and some administration officials say they wonder about, however, given that the data on which they are based are provided by the departments themselves. There is ample evidence that not all bureaucracies in Iowa have yielded easily to the notion that flatter is better.

In fact, the response of Iowa departments to the de-layering effort was about par for the course, thinks Clint Davis, a 25-year veteran of Iowa state government arid who consulted for the state personnel department to other departments on how to de-layer. "This has been my experience with these kinds of reforms always: Some departments get with the program and do there best. Some give it lip service. Others act as though it never happened." while a number of departments, from public health to revenue and finance, embraced both the spirit and letter of the law, others chose instead to engage in an aggressive game of what is best described as "hide the manager"

But there is no doubt that some Iowa departments have transformed themselves dramatically. The personnel department, appropriately enough, has gone through an extensive de-layering, one that pushed span-of-control ratios up from 1-to-7 in 1991 to 1-to-14 in 1994. Today, according to Hanson, the department's ratio is 1-to-23 impressive even by private-sector standards.

As a first step in the personnel department's reorganization, for example, Hanson took 13 supervisory positions (bureau chiefs and first-line supervisors) and flattened them into three supervisory "facilitators" overseeing three relatively egalitarian teams in the broad areas of program administration and development, pro-gram delivery services, and information services and records management. The mid-level managers who were de-layered were assigned new responsibilities of a more hands-on nature.

No former supervisor's pay was cut (that (was one of the terms of the de-layering effort, but as current staff leave, those sub-supervisory positions will be refilled at lower salaries). Maintaining pay levels helped blunt the blow. But going from boss to relative equal can be tough, especially for that famously endangered species: the middle-aged white male mid-level manager.

"I've been around a long time, and I can adjust to changes," says Dick Andrews. who has worked for Iowa government for 20 years and whose job changed from keeper to troubleshooter as he was de-layered out of the Iowa personnel department's management team. "Some in the department had some difficulties because they liked authority and they liked having everyone go through them."

Previously, Andrews' job had been to make all the calls on the tougher workers' compensation cases. But now that he's a free-floating problem-solver, his front line has been trained to make most of the decisions that he used to make. "If it's a real tough case, claim processors come to me," says Andrews, "but basically they're now calling the shots."

Andrews says he's happy with his new role, and that the new, flat organization is more efficient. It is also more fail-safe. "Before, I didn't have a backup person If something happened to me, it was all on my head. Now it's spread out. People have been cross-trained. This outfit should be able to function just fine no matter who might be out."

But finding managers willing to actually take on a new role as facilitator, coach. Cheerleader, champion, roadblock-buster or whatever, and who will embrace the idea of actually letting the grunts start designing systems and making policy and purchasing decisions, isn't easy. Typically it takes a committed department head willing to force change to achieve a truly flat organization that values the energy and ingenuity of its line staff.

Part of management's reluctance to change is, typically, due to no better reason than that flatter organizations are what organized labor has been arguing in favor of for years. "Helpless, hopeless, hapless, useless bureaucrats," is how one state-level American Federation of State, County and Municipal Employees enjoys describing the mid-level managers in his state.

But ironically, some of die most genuine and impressive de-layering occurring today has come about through what would traditionally be viewed as a decidedly labor-unfriendly initiative: competitive contracting. De-layering and empowering front-line workers ended up being an unintended but central consequences.

For example, when Indianapolis Mayor Stephen Goldsmith announced that he would be putting all of the cities highway work up for bid, he expected a fight with his unions. It was a logical expectation. Many unions to this day go on high knee jerk negative alert when the whole topic of competitive contracting comes up. But Goldsmith's union, AFSCME Council 62, agreed to go along - on one condition: that it would be allowed to shed some middle-manager overhead.

"It was real de-layering, says Steve Fantauzzo, executive director of Council 62 in Indianapolis. "In return for having front-line employees accept additional responsibilities we eliminated a number of foreman positions." Fantauzzo's front line now operates in more cross-trained, self-directed teams, and they have been winning city contracts ever since.

In Massachusetts, it was also a move to competitive bidding for highway contracts that led to a similar result. initially, highway department management did consult with front-line staff on how much to bid for the work and the department did win a number of contracts, says Frank Borges, who is now secretary and treasurer for the Service Employees International Union Local 285 in Boston.

But once the contracts had been won, performance fell apart. "Our managers wanted us to do the work in the same old way," Says Horges. When the highway department's top management threatened to pull the contracts for lack of performance, "I told them they might as well," Borges Says.

That candid suggestion certainly got upper management's attention, and, quickly. But instead of pulling the contracts, top management invited the union in for a talk. It was a natural move. As part of the overall effort to make his organization more efficient, then highway Superintendent James J. Kerasiotes (now the state's secretary of transportation) had pared down the layers of management beneath him and had instituted an open-door policy for front-line workers with a serious beef.

In the meeting, Borges was blunt "I told him our management was sabotaging us. Not because they wanted us to look bad but because they were clueless as to how to operate. We'd go to management and say, "Hey, we have five guys retiring we need to hire some people and we need to hire them today, and personnel say, "Yeah, well, it's going to take six months.'"

The earful from his front line was enough. Kerasiotes removed the entire lot of offending managers, and he did it on the spot. "After that the first year turned into a success," says Borges, "and we've won the contracts fir the next two years."

The Massachusetts and Indianapolis parables are dicey ones for labor, however. Does Borges resent the act that it took the threat of competitive concentrating to change the system? "Unions need to change just like everyone else," he says. But the corollary also has to occur, he adds. Management has to change. too. "Ask the workers," says Borges "They'll tell you how to get the job done."

And train them, adds Indianapolis' Fantauzzo. If one key benefit of de-layering is a more flexible and self-directed style of work then front-line employees need to be trained in the new administrative and technical ground they're being asked to cover.

Training is now a high priority in Hampton, Virginia, which started its de- layering in response to a budget crisis back in the mid-1980s. The city has emerged as a model of svelte management and an example of a local government that is way ahead of any state in tile slimness sweepstakes. The city has a whole host of self-directed work teams up and running in areas of government as disparate as parks and personnel. But training is key, says Tharon Greene, director of human resources for the city. "We have fewer people and just as much work so you need multi-skilled, cross-trained people to provide an array of one-stop services."

Besides beefing up training budgets, other support systems have to change as well if there is to be organic support for de-layering, In Iowa, the state has developed a new "executive officer series" in its job classifications for front-line workers. Their pay goes up, but they continue to man the front line. In Montana, another state looking at de-layering, the personnel office is investigating whether the pay system rewards top management "for the number of underlings they have," says the state's personnel director, Mark Cress.

Getting more money for training or pursuing fundamental reform of pay systems won't happen anywhere without a fight, of course. But those fights won't be anything compared with the fight to keep government flat once it has been de-layered. As any habitual dieter can tell you, once the pounds are off, keeping them off is the hardest part.

Bloat-busters everywhere recognize the culprit; that secretive process of good-times hiring and promotions that put the fat on in the first place, fat that will continue to build up until the next fiscal crisis.

In Iowa, some say the backsliding has already started. One state official says he has noticed "creeping increases" in the number of mid-level managers being reported by some state departments "It's disheartening" he says.

Representative Wise thinks some of the steam has gone out of the de-layering effort over the past couple of years, and he blames Governor Branstad. "He could have 100 percent implementation and cooperation by ordering it. All he has to do is tell the person he gave the job to, 'I want this and if you don't implement, I'll replace you.' "

At the moment, it's not a step that Branstad seems ready to take, though he seems well aware that Iowa's de-layering effort has stopped short of complete success. "It's not perfect," Branstad admits. "It's an ongoing effort."

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