Productivity Politics: Gilding the Farthing

Author(s): Sharon L. Caudle

Source: Public Productivity Review, Vol. 11, No. 2 (Winter, 1987), pp. 39-51
Published by: Taylor & Francis, Ltd.
Stable URL: https://www.jstor.org/stable/3380429
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The federal government's most recent productivity
improvement efforts are examined in light of barriers to
excellence.

Productivity Politics:
Gilding the Farthing
Sharon L. Caudle

The realities of productivity expectations call to mind the lines from

II of H.M.S. Pinafore (quoted in Ullmann, 1980, p. 1):

Things are seldom what they seem,

Skim milk masquerades as cream

Storks turn out to be but logs,

Bulls are but inflated frogs

Gild the farthing if you will,
Yet it is a farthing still.

Productivity is seldom what it seems when tackled in the pub

arena. A multitude of factors influence public managers to gild the
ductivity farthing. They must show they are doing more with less ye
faced with uncertain measures of public management productivity,
of support and incentives for meaningful improvement, and somet
just the impossibility of getting much better.
At all governmental levels, many researchers (Downs and Lark
1986; Usilaner, 1981; Mann, 1980; and Poister, Hatry, Fisk, and Gre
1985) have found productivity obstacles such as:
M. Holzer and A. Halachmi (eds.). Public Productivity Review, no. 44.
San Francisco: Jossey-Bass, Winter 1987. 39

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40

? Fear that productivity measures would be misused in a political

environment
? Changing work activities and/or the availability of new tech?
nology that made measurement over time problematic
? Lack of appreciation of how productivity measures could help
the manager's work and internal resistance
? Rigid personnel procedures, salary structures, and strict admin?
istrative regulations
? Budgetary disincentives, arbitrary resource controls, and short-
term appropriations
? Complex organizational structures and fragmentation
? Poor top management skills and the turnover of appointed and
elected officials, resulting in either a shift to other program
efforts or simply a slowdown until the new officials are brought
up to speed
? Assumptions about poor public work-force performance and
the efficacy of private sector models
? Constituency pressures to rapidly produce and keep programs
no longer useful
? Productivity improvement program implementation problems.
Public productivity improvement programs require an organiza?
tional home, guaranteed funding, and internal and external support on a
continual basis. In a public setting diis is very difficult. Usilaner (1981)
argues that voters, reporters, and academicians normally do not judge a
manager's overall effectiveness and reputation on program administration
and managerial efficiency. Political values and policy decisions tend to
overpower productivity efforts. But the manager still is faced with what
productivity writers such as Balk (1984) see as very basic questions: Can
you prove you are running a cost-efficient and quality-effective operation?
Can you prove you are using the best techniques and most up-to-date
methods?

Efficiency?All That Is Needed?

And there is one odier question: Can you translate all of this into
numbers to prove your productivity gains over time? Many see produc?
tivity as simply another word for efficiency, which is relatively easily
measured. As Lord Kelvin wrote in 1883 (quoted in Lehrer, 1983, p. 25):

I often say that when you can measure what you are speak-
ing about and express it in numbers, you know something
about it; but when you cannot express it in numbers, your
knowledge is of a meagre and unsatisfactory kind; it may
be the beginning of knowledge, but you have scarcely, in

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 41

your thoughts, advanced to the stage of science, whatever

the matter may be.

Lord Kelvin espouses a difficult prescription of public managers

and what is at the heart of productivity politics: defining and measuring
public productivity. Management improvement analysts do not deal in
intangibles. Like Lord Kelvin, they need productivity demonstrated in
numbers. Otherwise, the public manager's productivity knowledge "is of
a meagre and unsatisfactory kind." Riggs and Felix's (1983, p. 61) "Creed
for Productivity Improvement" makes this clear.

To improve productivity you must manage.

To manage effectively, you must control.
To control consistently, you must measure.
To measure validly, you must define.
To define precisely, you must quantify.

The American work place always has placed a high value on effi?
ciency. The whole framework of Frederick Taylor's scientific management
movement was based on efficiency criteria, and its legacy is with us still.
The early beginnings of formal public administration were nurtured in
the first twenty-five years of this century, when scientific management
was so strongly championed in the private sector. Not surprisingly, the
influence of scientific management was very strong during this founding
period. Public administration giants such as Leonard White, W F. Wil-
loughby, Luther Gulick, and L. Urwick set forth principles founded on
efficiency values for organization and administration of the public sector.
Gulick (1937, p. 192) summarizes the potential power and priority
of efficiency over other values: 'In the science of administration, whether
public or private, the basic 'good' is efficiency. The fundamental objective
of the science of administration is the accomplishment of the work in
hand with the least expenditure of manpower and materials. Efficiency is
thus axiom number one in the value scale of administration." This con?
cept of efficiency has as its basis the best use of resources to accompli
the work of government.
In time, of course, odiers cautioned that efficiency, particularly
that word began to change in meaning, perhaps should not be the pa
mount value. Dimock (1936, p. 133) was one of the first to challenge th
philosophy in the public arena, saying that public administration
"more than a lifeless pawn. It plans, it contrives, it philosophizes, it ed
cates, it builds for the community as a whole." The fact remains, how
ever, that efficiency in administration and management still is a centr
value in public management circles.
The problem is that efficiency can be measured readily if the aim

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42

of the measurement is inputs and outputs, but public sector productivity

in providing public service may not lend itself solely to efficiency mea?
sures. Part of the problem is understanding what productivity means.
McGowan (1984, p. 177) says that "we are often speaking on different
wave lengths?using 'efficiency' when we mean 'effectiveness' or 'service
quality' or 'productivity.'" Buntz (1981), writing about human service
productivity improvement, says that productivity involves economic, qual?
ity, effectiveness, political, and social values?all of which involve differ?
ent performance evaluations. In his view, efficiency requires measuring
outputs and inputs. Service effectiveness requires measuring program
results. Service quality requires measuring an agency's responsiveness to
clients' needs. Finally, equity requires looking at service distribution.
Under this framework, public managers should look at the public as
customers of the products of public management.
The public manager's problem is finding the balance when prod?
ucts (outcomes) are not easily valued in a quantifiable way. A good exam?
ple is research or policy analysis: How should efficiency, effectiveness,
and quality be measured in the context of public sector productivity?
Frequently, effectiveness, quality, and equity are simply not included in
the public sector productivity equation. Productivity indexes, says Heaton
(1977), surface where output is easy to measure. When measurement is
difficult, productivity analysis moves to the processes of assigning work
to facilities and people. One example Heaton uses is that of health care
utilization studies. If the process is not standardized, the analysis moves
to measuring organizational resources, such as the number of cases to
caseworkers. This scheme of measuring die process misses the point as to
whether the casework is any good. Heaton's is a valuable point to keep
in mind in government. Since government is so heavily involved in pro?
cess, the production process is blurred into product/service measures and
does not really focus on program results.
Using the production process for productivity measurement can
lead to numbers game playing for accountability and resource justifica-
tion. What those numbers mean in terms of organizational impact and
perhaps personal position are of serious concern to public managers. At
the extreme, they deal with influence, power, and adverse outcomes: If I
as a public manager reduce my staff or the amount of functions I now
manage, will I lose my own grade level or influence in the organization?
What will happen to promotional opportunities for my staff? If I change
service delivery with the anticipation of productivity gains and it doesn't
work as planned, what will happen to me? If I budget on the basis of
expected productivity gains, and the projections are off, what is the real-
istic potential for "shortfall" funding? What happens when my manager
leaves and the new one doesn't want to go through with the productivity
plans; who will pay for the change in course?

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 43

Without budgetary or individual performance incentives or pro?

tections, most public managers gingerly approach productivity efforts.
Managers end up playing the productivity numbers game. They do a
Herculean job on MBOs, performance ratings, and reorganization studies.
Management expert Douglas Yates (1985) says they may try to "stone-
wall" proposed changes, solemnly accept new systems, and then give
them only lip service or do more creative game playing, underestimating
performance goals for the coming year so it is easy to do far better than
projected.

Welcome Aboard, Lord Kelvin

This review indicates there are problems in public sector produc?

tivity measurement, particularly if the sole criterion is efficiency. These
problems are certainly not neglected in the extensive literature on pro?
ductivity. Yet when the Reagan administration launched the latest federal
government productivity program in 1985, there was little concern with
measurement problems or the other problems with productivity politics.
What public managers will do with the program policies in practice is
not yet known, but in the policies lie the seeds of self-destruction.
On June 18, 1985, Edwin Meese, then chairman pro-tempore of
the White House Domestic Council, sent President Reagan a decision
memorandum that asked formal approval of the newest management
improvement productivity program. The memorandum declared that the
new program would define productivity as "the efficiency with which
resources are used to produce and deliver a government service or product
at specified levels of quality and timeliness." The choice of words sug?
gested that the administration's values and overall productivity intent
was founded on efficiency.
The productivity program's goals were twofold, according to the
decision memorandum: a 20 percent productivity increase by 1992 and
Congressional passage of administration-sponsored management improve?
ment legislation that would not interfere with the administration's pro?
ductivity efforts. The 20 percent target would match that expected in the
private sector from 1985 to 1992?a 3 percent annual improvement times
seven years.
The Reagan productivity program was another major reform in
the effort to improve public sector efficiency and performance that goes
back at least a century. Twenty years ago, efforts under the Kennedy
administration led to productivity handbooks and measurement systems.
In the early 1970s, the National Commission on Productivity gained lim?
ited national attention, followed by variations of national productivity
offices.
Under the Carter administration, productivity efforts were again a

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44

central theme. The Office of Personnel Management and various agen?

cies, particularly the Department of Defense, promoted approaches such
as management by objectives and quality circles. These efforts were given
high visibility by the Carter administration. The zero based budgeting
approach in particular attempted to make a fundamental change in the
way program operations were viewed and funded, certainly with produc?
tivity a part of the equation.
However, these efforts fell apart in most agencies when the
national political agenda moved to other more pressing issues such as
the state of the economy. The change in administration also put produc?
tivity initiatives on hold as career managers waited for the new initiatives
of incoming politically appointed managers of the Reagan administra?
tion. The impetus for the Reagan version of productivity efforts came
late in the first term, following the efforts of the Grace Commission and
the Reform '88 developments.
The 1985 Reagan administration productivity improvement pro?
gram built on the recommendations of the Grace Commission and
Reform '88. In setting out the overall productivity aims, the Management
of the United States Government, Fiscal Year 1986 (Office of Management
and Budget, 1986a) highlighted five strategies: to control the growth of
government, identify and prevent fraud and waste, improve individual
agency management, develop governmentwide management systems, and
improve agency delivery systems.
The administration promised an executive order in early 1986 that
would lead to an efficient, cost-effective, and businesslike government. In
Management of the United States Government, Fiscal Year 1987 (Office of
Management and Budget, 1987), the administration highlighted its goals.
Productivity improvement in the delivery of public goods and services
was seen as the next phase in the evolution of the initial Reform '88
efforts. The administration expected routine administrative services to
continue to improve but saw the productivity improvement program as
extending those earlier internal management lessons to the much larger
playing field or program operations and delivery.
By September 1985 the Office of Management and Budget (OMB)
had prepared the draft presidential order and OMB bulletin providing
extensive specific procedures on implementation. This material was cir-
culated for agency comment that same month. Clearly, efficient criteria
and ease of measurement were key. Agencies were told in the draft mem?
orandum to concentrate on selected areas for productivity improvement,
those that were (1) process or production oriented; (2) largely repetitive
and routine, with consistent, definable and quantifiable outputs or end
results; (3) supported or could be supported with meaningful productivity
measurement systems; (4) of a significant public impact; (5) commercial-
type activities; and (6) already the target of productivity improvements.

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 45

The draft OMB bulletin stated that productivity improvement

would be gauged by three measures: the ratio of inputs over outputs,
quality of the product or service, and timeliness of its delivery or comple-
tion. There was not an apparent mention of "rewards" for efficiency or
other incentives for productivity improvement on the part of public
managers.
Agency comments (dated September through November 1985) o
the draft bulletin were mixed, although most voiced cautious to stro
support for the administration's plans. In total, seventeen executive ag
cies commented. One said the new program was heartening since
appeared that the productivity program, instead of focusing on proce
would concentrate on results. The commentor felt that agencies wou
be free to design their own productivity efforts and be responsible
productive outcomes.
Many others grappled with crucial pragmatic concerns: How th
program would operate, what past productivity program lessons taugh
and how the program would tie in with other management initiative
Many were mindful of their long history of dealing with central agen
requirements and previous ineffective, duplicative, and other flaw
"improvement" programs, as shown by the following comments:

It is also important to consider the relationship between

this new program and its reporting process and those
required by OMB Circulars A-76, A-117, A-123, A-127,
Reform '88, and implementation of the Grace Commission
recommendations. There is a potential for duplication in
the planning process and a risk that incompatible plans
may be developed.

The bulletin and policy should acknowledge the different

missions and operations of agencies [that cannot be pri-
vatized]. . . . We suggest guidelines . . . which permit mea?
surement of agency accomplishments based on improved
services, efficiency, and cost savings . . . through improved
program management, to partially offset a lack of opportu?
nities for private sector conversions. . . . Program reauthor-
izations and appropriations may sharply affect or even
invalidate a particular productivity improvement within an
agency. . . . We are concerned about the seemingly arbitrary
nature of a 20% goal which does not appear to take into
account the productivity gains agencies may already have
achieved under Reform '88. . . . It should be acknowledged
that a concerted effort to improve productivity over a period
of years is likely to lead to improvement increases of lesser

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46

magnitude. As an organization becomes more efficient, the

opportunities for significant improvement become fewer
and more incremental.

We are all aware of numerous existing efforts [to improve

Government productivity and to ferret out inefficiency and
waste in Government agencies]. (None, in our experience,
is probably so effective as tough scrutiny of program-opera-
tion budgets.) . . . Some parts of the proposed Executive
Order . . . would instruct agencies to do what [we are]
doing, and any well managed agency should be doing,
already. If an agency is not doing them now, new instruc-
tions to perform what are, after all, basic management
functions seem unlikely to solve the problem. . . . When
will we ever learn diat tough, strong, decentralized man?
agement and productivity incentives?not ever more cen-
tralized bureaucratic controls and paperwork?are the best
means to more effective and efficient Government?

The 20% productivity increase goal may be unrealistic. Was

it arrived at simply multiplying the private sector rate of 3%
by seven years? The 3% rate is probably questionable in the
first place. . . . How does this reporting process relate to the
Management by Objectives program due to take effect in
1986? It seems like a duplication of effort.

Not surprisingly, the comments reflected unease with a new initi?

ative that seemingly downplayed the politics of productivity improve?
ment in the public sector: the impact of appropriations, the bureaucratic
structure needed to put the program in place, and the questionable
performance measures agencies would find themselves held to. In late
February 1986, the White House issued Executive Order 12552 (February
25, 1986) and OMB Bulletin 86-8 (Office of Management and Budget,
1986b). Incorporating some changes but not substantially different from
the original drafts, the issuances were very specific in their policies and
means. The order set specific productivity goals and executive branch
head responsibilities.

Section 1. There is hereby established a government-wide

program to improve the quality, timeliness, and efficiency
of services provided by the Federal government. The goal of
the program shall be to improve the quality and timeliness
of service to the public, and to achieve a 20 percent pro?
ductivity increase in appropriate functions by 1991. Each

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 47

Executive department and agency will be responsible for

contributing to the achievement of this goal.

Section 3. The head of each Executive department and

agency shall (a) Use die agency's planning process to review
current functions, develop agency goals and objectives for
improvement in services, and identify those functions which
offer the most significant opportunity for major gains in
quality, timeliness, and efficiency. (b) Develop and submit
annually to the Office of Management and Budget a pro?
ductivity plan.

The required plan was to include agency productivity goals and

objectives, to target priorities for the first year, to describe actions result?
ing in more efficient and responsive operations and services, and to show
how quality, timeliness, and efficiency would be measured. Agency heads
had discretion to decide which functions could be revamped for major,
immediate gains in quality, timeliness, and efficiency. Each year the
agency would assess its progress against the productivity plan, docu-
menting productivity gains and cost savings. Significantly, the order
placed personal responsibility for the program with agency managers
and employees in Section 3f, telling department and agency heads to
"inform agency managers and employees that they are expected to be
responsible for improvements in the quality, timeliness, and efficiency
of services."
Despite including goals of quality and timeliness, in actual prac?
tice the final OMB bulletin recalled the theories of Lord Kelvin. Earlier
bulletin drafts included indicators for timeliness and quality separate
from an output/input efficiency ratio. But the OMB reporting form
included in the February bulletin perhaps told the real story of what
productivity program would look like in practice.
The bulletin required agencies to report output and input costs
that OMB could track in a data base. Outputs were defined as the
number of final products or services produced; inputs were the costs o
resources (such as employees or automation) used to produce the o
puts. The measurement of productivity simply used efficiency indicato
the only measures captured in an OMB automated data base that woul
ultimately be used for monitoring and integration with the budget pr
cess. Quality and timeliness were restricted to a narrative entry. In pr
tical terms, they would not be critical for OMB's productivity progr
evaluations.
In sum, efficiency, tied to output gains and cost savings, was at
the heart of the final productivity policy. The new emphasis seeming
conflicted with the words of OMB's then-associate director for manag

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48

ment Carole Dineen (1985, p. 1), who said, "[Productivity] must be

viewed as a triad of quality, timeliness, and efficiency. Delivery of pro?
gram services to our ultimate concerns?the public?must not only be
cost-effective but timely and of high quality."

Practice Versus Symbolic Policy

The symbolic policy rhetoric espouses a comprehensive approach

to all facets of productivity, with an expected improvement in public ser?
vice at all levels. However, in actual practice, the picture looks much
different. The approach speaks to cost savings and efficiency. Managers
are not provided widi any incentives to implement the program in a
spirit consistent widi the symbolic policy. And, perhaps more important,
the new productivity improvement program looks like, feels like, and
sounds like earlier productivity approaches in other administrations.
Experienced public managers no doubt recalled the history of
PPBS and ZBB and MBO in other administrations. The earlier efforts
and their notable lack of success and loss of productivity credibility c
ated at best a skeptical group of public managers to greet the Reag
initiative. The lack of incentives created a climate for game playing,
"papering the process" so agencies would not get hurt if and when p
ductivity cost reductions were tied directly to the budget process.
The language of the order and bulletin underscored the problem
of public sector productivity improvement?the debates between ef
ciency, effectiveness, and service equity; between quantity and quali
over measurement methods; and the expectations that productivity h
the capability to constantly increase. Providing simplistic prescriptio
and mandates, the federal productivity improvement program seemin
ignored the complexity of productivity concepts in the public arena.
It is very likely that productivity politics will be the major factor,
as was the case in die earlier efforts. Much of the politics involve t
cost-cutting approach. While the argument is made that public serv
delivery can be more efficient and effective, the reality of the budget pr
cess is the prime motivator here. Cost cutting underlies the hard choi
the federal deficit almost mandates. Paradoxically, cost cutting will m
assuredly strike at the productivity program, too, delaying or killing any
real productivity efforts.
As in most efforts to gauge productivity in service organization
employee expenses wind up as the main means of measuring produc
tivity gains. The February 1986 OMB bulletin exhorts agencies to u
privatization, technological enhancements (automation, labor-sav
devices), structural and organizational streamlining (consolidating fu
tions and offices, reducing overhead), methods and processes improv
ment (improving work flow, quality control), and human resou

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 49

improvements (selection procedures, position management) to achieve

productivity improvement.
Many of these directives interfere with the very real problems of
dealing with reorganization constraints, personnel requirements, current
legal restrictions, and the lead time needed to make major changes. With
resource restrictions, it is unlikely much can be done with technological
enhancements, the greatest long-term impact on labor savings. Only if
agencies make the conscious effort in the next several years to support
technological efforts and increase funding from a shrinking or stable
total resource pie can there be real labor-saving gains and sustained or
improved service delivery. And, Congressionally mandated reductions,
such as those under Section 2901 under P.L. 98-473 that affected manage?
ment and professional services, consulting services, and other special
efforts, further downgrade important productivity improvement strate?
gies. The limitations on administrative expenses and similar accounts
under the Gramm-Rudman-Hollings deficit reduction measures further
cripple any productivity measures in this and upcoming fiscal years.
In a broader context, the Reagan administration is jumping on
board a cost-cutting program at a time when the private sector is seriously
assessing changes needed in rules, incentives, management practices, and
job structure to improve corporate productivity.
Some researchers (Garvin, 1984; Sherman, 1986) are finding that
the private sector's more recent productivity approaches stress perfor?
mance and quality, not dollar savings. New, sophisticated productivity
measures and concepts are being tried out that do not focus on cost
cutting. Skinner (1986) believes the private sector is taking a harder look
at productivity programs and measurement because cost cutting runs
counter to restoring competitive vitality. While competitive vitality is not
the major goal in the public arena, Skinner's arguments appear to make
sense when used in die context of public service operations and delivery.
Skinner argues that concentrating on direct labor efficiency, which
the federal sector effort is doing, sidetracks attention from production
systems. Conventional productivity and cost-cutting approaches ignore
other ways to compete: quality, reliable delivery, customer service, and
efficient capital development. Skinner assails the logic of productivity
programs that assume competitive position is lost on grounds of higher
costs best recovered by installing cost-reduction programs. Quality can
get lost in a low-cost goal environment.
To break out of this mind set, Skinner argues that companies
should analyze their production function and devise a manufacturing
strategy: what to make and what to buy, capacity levels needed, plant
sizes and numbers, plant locations, equipment and process technology
choices, production and inventory control systems, quality control sys?
tems, cost and other information systems, work-force management poli-

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50

cies, and organizational structure. Adopting new process technology and

hiring managers with a wider set of objectives than efficiency and cost go
hand in hand with die strategy.
Tantalizingly, the federal productivity improvement plan contains
possibilities for some of these efforts. Shorn of conventional productivity
targets and cost-reduction measurements and armed with managerial
incentives and frontal attacks to deal with productivity politics, a much
different program might find success. Measures to reduce the budget
should not deal productivity programs across-the-board cuts. Managers
should be given budgetary incentives or performance standard bonuses
that reward productivity improvement in terms of efficiency, quality, and
timeliness. Productivity should be part of agency strategic planning, not
an add-on component that is long on rhetoric and short on real efforts.
While the Reagan administration has embodied all of the right symbolic
words in its policies and public statements, the actuality is that proce?
dures result in much different productivity practices.
Public management should speak to excellence in doing the gov?
ernment's business. Perhaps public managers need a productivity creed
that speaks to performance and not to the narrowness of efficiency mea?
sures and cost cutting. A good model might begin with that of Truett
Airhart (quoted in Bearman, Guynap, and Milesvski, 1985, p. 371):

If you increase the quality of your process, such as reduc?

ing or eliminating defects, then you automatically increase
productivity. If you bring in new technologies, you often
increase productivity. When you eliminate the unnecessary
processes and systems, you increase productivity. When you
create simpler ways of doing it, you increase productivity.
When you make more useful products and better use of
your time, you increase productivity. When you create new
products and services, you are adding to the value of your
company and society, and increasing productivity.

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Sharon L. Caudle is assistant professor in public

administration at Auburn University and research coordinator
of the university*s Center for Governmental Services. She is
the author of numerous articles on public management and
has extensive practitioner as well as research experience.

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