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Tuesday, January 4, 2011

FLATTENING GOVERNMENT

People in the Capital are only now beginning to realize the size of the federal government is too massive and thereby contributing to our deficit. The president has ordered wage freezes to which I say, "So what?" as it is only a temporary solution. Even the president's debt reduction commission has come to the realization the government is simply too big. To illustrate, from the commission's "Moment of Truth" report: "Washington needs to learn to do more with less, using fewer resources to accomplish existing goals without risking a decline in essential government services." The report goes on to suggest trimming the government's work force by 10% and budget by 15%. No doubt this will save money, but it is only a guess as to how much to trim. I contend they could trim as much as 25% or more of the work force and still provide adequate government service.

First, you have to recognize the federal government is a perfect example of Parkinson's Law whereby "Work expands so as to fill the time available for its completion." I tend to see Air Force One as an example of this. True, it is an opulent icon of our country, but is the extravagance really worth it? According to U.S. military estimates, the total operating cost to fly Air Force One is $181,757 per hour. I'm told this does not include other travel expenses, such as maintaining backup aircraft and helicopters, or transporting the president's motorcade. Undeniably, this is more expensive than the days of the old Boeing 707s, but then again there were fewer people involved. As Air Force One got bigger, Parkinson's Law kicked in and the president's entourage grew radically. If the plane was smaller, fewer people would obviously accompany the president.

Air Force One is but one small example. All three branches of government are undoubtedly bloated. How much though? We can only guess. Unlike a commercial enterprise, government is rarely, if ever, trimmed of fat.

Back in the 1990's Jack Welch embarked on a program to flatten corporate behemoth General Electric to rid the company of waste and get it to operate on a leaner and more productive level. One by one he patiently waded through the many divisions of G.E. and flattened them down to size thereby earning him the nickname "Neutron Jack."

Welch used a "three purge" approach to flatten each division. The first purge was used to eliminate the dead wood everyone knew existed and were glad to rid themselves of. However, in the second pass, everyone began to feel the pinch as some clerical staff members were eliminated, thereby forcing managers to devise imaginative ways to accomplish the work without such assistance. The third purge was the hardest as key people were eliminated or forced to retire, but it was Welch's intent to find out what exactly made the division work and only by flattening it could this become apparent. Now, with a leaner and meaner operation in place, Welch could vividly see what was working profitably and what wasn't thereby allowing him to make informed strategic decisions about the company.

Basically, Welch's approach tackled Parkinson's Law head on, something that has not happened at the federal government level. It has been speculated that Welch's tactics were based on Russian dictator Joseph Stalin who executed bloody purges in his country multiple times in the 1930's. One by one, Stalin purged each government and political body methodically, using the Army as his muscle. Not surprising, the Army was purged last using Stalin's secret police. This happened not just once, but twice. Although Stalin's motives were entirely different than Welch's, his tactics didn't go unnoticed.

Bottom-line, having the debt reduction commission suggest the federal government should be trimmed by 10% is plain and simply a wild guess and not based on any credible facts. Only a purge approach a la Welch (and not Stalin) would tell us just how fat our government truly is.

Keep the Faith!

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Tim Bryce is a writer and the Managing Director of M. Bryce & Associates (MBA) of Palm Harbor, Florida and has over 30 years of experience in the management consulting field. He can be reached at timb001@phmainstreet.com

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