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Living beyond our means

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The May 23, 2011 issue of Time magazine presented data on the national debt of 10 major economies. The presentation by Josh Sanburn includes an assessment of the risk of each country defaulting on its national debt,  based on Moody’s credit ratings, which seem to be based first on the portion of debt held outside the country and second on the size of the debt compared to the country’s Gross Domestic Product (GDP). Japan and the United States are the only two of the ten countries not in Europe.

The level of debt combined with the significant foreign ownership, except in Japan, of that debt may indicate a tendency for these Westernized economies and cultures to live beyond our means. As individual nations, we have increasingly chosen to spend more than we earn or produce. At some point, this becomes unsustainable. When the United States may reach that point has been a subject of debate in recent weeks as the U.S. Congress considered, and has now chosen, to raise the debt ceiling.

Reports that the debate has simply been political grandstanding are disturbing. The issue is serious and significant. Resolution is feasible.

The United States and other nations can reduce current spending levels, a decision which is politically challenging in an era of near-perpetual campaigning for national and local elected office. The alternative most discussed is raising taxes to bring budgets more in balance, another politically dicey proposition. A third alternative, which receives little attention, is to raise GDP. The lack of attention may result from the difficulty in achieving this.

Raising GDP requires increased production, which requires increased demand and increased disposable income at a macro level, which, on average, requires the same at the personal level. The months, now years, since the fanfare-accompanied stimulus packages in many of these same economies suggests that legislators and their staffs know how to write legislation but know very little about job creation. They know how to create public-private work programs and how to buoy failing companies until those companies regain sustainability, but seem to know little about stimulating innovation, creation of sustainable jobs, and growing GDP.

Elected representatives in the United States and elsewhere seemingly need a wakeup call in the form of a dose of reality. Leadership does not require legislation or legislative expertise, but effective legislation seems to require leadership. Regardless of ideology, philosophy, or party affiliation, if the current course is unsustainable, then somebody needs to change something. Academically and pragmatically, leaders are agents of change; maintaing the status quo requires no leadership. In representative forms of government, citizens elect other citizens to lead the community or nation in the right direction. All elected representatives assume the role of change agent. The direction and scope of the change is the significant variable.

If we, whoever we may be, do not like our current direction or it’s consequences, we need leadership. We do not need rhetoric or politics or slogans or grandstanding. We need change, feasible, sustainable change. We need leaders who define and collaborate and negotiate a new direction that most of us can accept, if not embrace. Then, those of us who elected people to positions of leadership need to follow, to let our leaders lead, and to hold them accountable to lead as we elected them to do.

Insurance Fiscal and Banking Services Productivity and Cycle Time Improvement

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A program to improve productivity and fiscal integrity for the Department of Fiscal Services of a state’s worker’s compensation insurance fund. The Cash and Banking Services Manager and the Fiscal Services Manager were the primary contacts for this engagement. 

Project Overview

The charter for this engagement included a variety of deliverables: 

  • Development of a process flow chart documenting all banking and cash manage­ment activities of the Home Office Departments.
  • Creation of desk level procedures for all Banking Services positions and activities.
  • Automation of two related, but separate, systems within Banking:  Stop Payments and Cancellations and Unclaimed Property.
  • Implementation of a new data base system for managing Un­claimed Property, Stop Payments, and Cancellations.
  • Automation of the annual escheatage to the State Controller.
  • Streamlining of Banking processes in preparation for the desired installation of a network of personal computers.
  • Conversion of Bank Reconciliation-related spreadsheets from one obsolete format to Lotus 1-2-3 and, later, to Microsoft Excel.
  • Significant hands-on training in the new systems, processes, and procedures.

 The objective was to improve the client’s banking-related processes. The scope included all areas of bank reconciliation, stop payments and cancellations, escheatage of unclaimed property to the State Controller, and communications with the twenty-four field offices, the Home Office Departments, and the three primary banks. 

Project Results

The development of the process flow chart(s) and the desk level procedures was critical to the immediate and future automation efforts. They served as a basis for not only training current and future staff but also for identifying process improvement opportu­nities, including automation. The flow chart and the procedures were each updated as changes were implemented during the project. 

The automation and streamlining efforts were directed at minimizing redundant data entry, eliminating keying errors, automating report creation, and enabling reconciliation of banking documents with general ledger documents. These areas included:

  • converting spreadsheet formats to data base formats to enable on-line status of stopped, cancelled, and unclaimed items;
  • develop­ing detailed archive systems which could be main­tained to provide an audit trail;
  • coordinating with the two primary banks so that the client could be provided banking data via FTP rather than on paper (to eliminate manual keying and reduce cycle time by 67%);
  • generating bank transmittals from the systems’ new data bases rather than relying on manual preparation of these transmit­tals (reducing the cycle time from days to minutes and eliminating several days monthly of manual labor); and
  • creating a annual magnetic tape transmittal of Unclaimed Property to the State Controller’s Office from the new Unclaimed Property system rather than relying on the State Controller’s system (which required re-keying of data with an associated cost of several man-weeks annually).

Results included the ability to balance unclaimed property items to general ledger accounts; a foundation for future implementation of a local area network and for magnetic transfer of data between the client and its banks; and more timely reconciliation of bank accounts and production of banking-related reports.

Creation and review of written procedures resulted in significant operational changes for improved control, efficiency, and effec­tiveness. 

The most immediate impact was in the area of fiscal integrity. However, the automation and streamlining allowed Fiscal Services management to implement and consider area staffing reductions of almost twenty percent with a budgeted dollar impact of approximate­ly $150,000 annually.

Followers leading following leaders

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An article by Omar Waraich, Mark Benjamin, Massimo Calabresi, and Mark Thompson in the May 23, 2011 issue of Time, on the topic of U.S.-Pakistan relations included a provocative quote. The authors quoted Pakistani Prime Minister Yousuf Raza Gilani, a person elected to a position of leadership in Pakistan, as follows: “If public opinion is against [the U.S.], then I cannot resist it to stand with [the U.S.]. I have to go with public opinion.”

In the above quote, the leader seems to be following. When the leader becomes follower, the follower becomes leader. The Prime Minister, admittedly out of context, seems to be saying that his opinion makes no difference. While I believe that leaders in many contexts forego their self interests for the good of the people they serve, disregarding one’s personal opinion to align with public opinion gives the appearance of concern with re-election rather than direction.

Leaders should be mindful of public opinion and not simply or necessarily give into public opinion. Leaders should take people where they need to go and not simply or necessarily where they want to go. Leaders need to make hard decisions about necessary change, changes which may require people to think about the past, the present, and the future in new ways with new consequences. Leaders need to help people embrace a vision for a future different from the present and the past. Leaders who fail to do these basic elements of leadership may be seen as poor leaders.

A leader who embraces prevailing public opinion, who tries to govern and legislate in parallel with public opinion polls, is abdicating leadership. When a leader defers to public opinion, the public effectively is leading and paying the elected representative to follow. When followers are leading the leaders, who are following rather than leading, the people may lack both a rudder and a keel.

County Office of the Medical Examiner

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The Medical Examiner provides pathology services within the county. The project’s goal was to develop and implement specific recommen­dations for productivity improvement. A primary objective was conservation of cash during a time of revenue shortfalls and budget reductions. National accreditation requirements provided perspec­tive.

Work flows and task definitions were established for all department employees. Work schedules for professional staff were analyzed for possible coverage issues. Benchmarking of departmental performance and methods was done with the San Diego County (CA) Office of the Medical Examiner. Staff also analyzed organizational structure and span of control issues.

A staffing model based on measurable work volumes enabled staffing adjustments in both the office administra­tion and the forensic assistant group (where adjustment occurred on all three shifts). An analysis of supervisory span of control revealed an opportunity to improve span of control from 4.25 to 5.67 through the con­solidation of two supervisory positions in the administrative area. A detailed task analysis provided an audit-worthy basis for a new fee structure, increasing potential departmental revenues. Implemented recommenda­tions reduced net county expenditures per unit of service provided.

County Department of Environmental Services

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During a four-month productivity improvement program for the Department of Environmen­tal Services of a major Western U.S. county, the Organizational Development staff received individual coaching and training in work measurement, supervisory span of control, and in proven techniques for work simplification and methods improvement. Similar training on an individual and classroom basis was provided to the managers and supervisors within the Divisions of Environmen­tal Health, Air Pollution Control, and Water and Waste Management. 

 Department Overview

 Environmen­tal Services inspects and licenses food establishments, promotes travel reduction through ride-sharing and similar programs, monitors air quality, attempts to control vector populations, and manages water quality and waste disposal in the county. The Department is organized into four operating entities:  the Division of Environ­mental Health, the Division of Water and Waste Manage­ment, the Bureau of Vector Control, and the Air Pollution Control Division. 

Project Overview

The primary focus was to establish baselines or benchmarks from which improvement could emanate. Organizational structure was assessed from a functional and span of control perspective. Statistical Process Control techniques were introduced to allow Environmental Health personnel to identify improvement opportuni­ties. Focus Groups were used to identify strategies for addressing customer complaints and other issues. Coaching in the development of strategic plans was provided. All activities and processes were scrutinized as to necessity, time requirements, and frequencies. Key Volume Indicators were established to provide management with tools for staffing based on measurable work volumes for major process­es.

Using various flow charting and functional analysis tech­niques, opportunities were identified to reduce cycle time for permitting of air pollution sources. The combined result of the various analytical techniques used by the project team in conjunc­tion with the staffs of the three Divisions was increased productivity, reduced cycle times, and improved customer service.