Activity Based Management Drives Government Improvement | Article

Feet in LineHow do you renew your driver’s license?

Here in Texas, where the Outsourcing-Center is located, drivers wait in one line to get the proper paperwork. Then they wait in another line to get their photo taken. Then they wait in a third line to prove they have the required liability insurance and pay for the new license. Many Texas drivers are unhappy about this process because the queues look like they extend to the state line. (And Texas is a big state.)

At the same time, the Department has to have employees man each station. It can’t be fun spending all day dealing with surly people. Is this the best way for a government agency to do its job?

Arizona drivers, on the other hand, can renew their drivers’ licenses on the state’s Web site. The state digitized the photo when it was originally taken, eliminating the need for that activity. On-line payment takes seconds. There’s a huge gulf between taking a few minutes and renewing your license in the comfort of your home or office through your Web browser and wasting an hour standing in three slow moving lines.

Adrian Moore, director of privatization and government reform for the Reason Public Policy Institute, a think tank in Los Angeles, California, says the problem with government management is up until now they have had no economic incentive to examine and improve their processes. Unlike businesses, they have no angry customers telling them exactly what’s wrong with their business (and how much they hate standing in line.) “If your process takes too long or costs too much, the government agency doesn’t lose customers,” says Moore. Where else can you get a driver’s license?

Examining Each Step

Without marketplace data to chart a new course, government leaders are turning to activity based management (ABM) to help them. ABM is a process management tool that helps a government manager focus on the agency’s activities to determine if the department is performing them as efficiently as possible utilizing the fewest resources. “It’s one of the better tools for a government manager to improve the department’s processes,” Moore says.

The discipline is to break down every task into the steps that are required to complete it. Managers then question every step to see why they are doing things that way. Atomizing every move allows managers to spot ways to streamline their efforts. At each stage they can ask, “Is there a better way to get the job done?”

Moore describes a recent ABM review at the District of Columbia office which cuts and mails welfare checks each month. Since each check has to be processed through a commercial bank, consultants began analyzing the bank charges. The agency used three financial institutions; each had different check fees. It turns out the largest volume of checks were clearing through the most expensive bank.

When the consultants asked the department managers how they chose which checks cleared where, they reported there was no formal policy. That was how it was set up originally. The consultants suggested moving all the check clearing activities to the cheapest bank. This simple move saved the District of Columbia hundreds of thousands of dollars a year.

Putting Change In Gear

Outside forces are forcing the government sector to act more like its commercial counterparts. The taxpayers are getting tired of their antiquated ways of doing things. If the drivers in Arizona can renew their licenses on the Web, why can’t drivers in Texas? What’s so hard about digitizing a photo? Moore says taxpayer expectations are pushing government managers to react. That’s why they are now adopting ABM as their road map.

They know they have to change. But how? Moore says ABM is difficult for government agencies to perform internally. Most hire consultants to guide them through this process. “It’s ‘the forest through the trees’ aspect,” he says.
While ABM is a powerful tool, it is “no silver bullet.” Even more important is forceful leadership willing to perform any unpopular tasks required to implement the ABM findings. Sometimes outsourcing both the analysis and the implementation makes change easier for an agency used to doing things the same way for years.

Lessons from the Outsourcing Primer:

  • Taxpayer expectations are forcing government agencies to abandon their antiquated practices and act more like commercial enterprises.
  • Activity based management is a tool governments can use to improve their processes.
  • ABM requires the agency to break down every job into the specific steps and then analyze each step to look for ways to improve.
  • ABM is often difficult to implement internally. Outsourcing consultants are able to spot trouble spots faster.
  • Government agencies need strong leadership to implement ABM changes. Sometimes this job is better left to an outsourcer.


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