Squeeze Maximum Value Out of ARRA Funds, Step One: Process Improvement
Source: The Federal Manager – Summer 2010 Issue
By: Ron Wince, Guidon Performance Solutions
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Remember that guilty-pleasure game show “Supermarket Sweep” where competing contestants raced wildly down supermarket aisles tossing as many products as possible into their grocery carts before the buzzer went off? It is a safe bet that many state and federal executives can relate to that frenzied feeling, having to get the most value out of their stimulus allocation before the American Recovery and Reinvestment Act’s (ARRA), P.L. 111-5, timer goes off. The President’s pledge that ARRA spending will be transparent and accountable adds to the pressure. In other words, because every decision they make will likely be scrutinized, state and federal managers must make sure spending is planned strategically and monitored carefully while also balancing the need for speed. To survive in this perfect storm, new approaches may be needed to help state and federal government employees successfully meet the requirements.
The good news is that while this is a time of great stress, it is also a time of even greater opportunity. The ARRA is not only a stimulus to “create new jobs and save existing ones, spur economic activity and invest in long-term growth, and foster unprecedented levels of accountability and transparency in government spending,” but its stipulations make it an ideal time to redesign processes to increase efficiency and save constituents, a.k.a. taxpayers, thousands or possibly millions of dollars. It is a perfect time to take a page from the playbooks from some of the most profitable, efficient, and respected global companies.
A recent McKinsey & Company report suggested the federal government alone could save up to $134 billion a year by increasing government productivity gains to match those of the private sector. By simply applying the same tools and methods that have proven successful (and expected) in the private sector, such as performance management and talent development, the government can achieve results rarely seen in the public sector. Lean Six Sigma alone has proven to deliver improvements in throughput of as much as 75 percent and error reductions of more than 50 percent in a few short days. Furthermore, whatever new technology, processes and management practices deployed now are an investment in the future; changes such as these will yield benefits now and for many years to come.
Lean Six Sigma in the Private Sector
Lean Six Sigma merges two processes initially developed to improve manufacturing systems. Lean refers to principles, tools and methods to eliminate waste and improve the flow of processes. Government agencies, like many commercial organizations, are primarily a service operation. Lean tools and techniques are a proven and effective way to speed up every part of service operations while reducing time and effort. Lean principles focus on the elimination of any activity that does not create value for the end customer. In government that means the taxpayer. Therefore, any process step or consumption of resources that does not create value for the taxpayer is wasteful, and that waste should be eliminated. Sigma is short for Six Sigma, a highly mathematical and analytical approach to removing variation to ensure customers experience 99.99966 percent error-free services or products.
For one government agency, Lean Six Sigma was deployed to increase productivity and lessen the cost and turnaround time it took to process permits. Within a few short weeks the government agency was able to: 1) slice process steps in half; 2) reduce decision points from 20 to 14; 3) trim down physical hand-offs by 76 percent; and, 4) shave 85 percent off the work content. These types of dramatic Lean Six Sigma results are being realized by both federal and state government agencies throughout the country.
Government vs. Private Sector Challenges
While there are many similarities between work processes in the private and public sectors, the public sector’s unique challenges merit recognition. The election cycle, term limits, legislative controls, and human resource structures are four significant differences. Additionally, one must recognize that revenue is not usually tied to employee effort/work output and for the most part, customer satisfaction is less critical – customers cannot go elsewhere for government services, unless they move. These challenges do not, however, hamper success realized by government entities that embrace Lean Six Sigma. The same Lean Six Sigma tools and methods can address challenges in public sector offices to:
- Reduce the time it takes to provide services to constituents.
- Better communicate expectations and requirements to staff members.
- Streamline processes that deliver maximum value while consuming the fewest resources and money. Simplifying processes to their core value allows existing staffing levels to meet the ARRA requirements and keep the focus on value-added priorities.
- Remove or reduce decision making processes which lead to bottlenecks and subsequent processing delays. This means empowering lower level managers to make routine decisions and whenever possible eliminating duplicate decision points.
- Use available technology to improve performance, establish uniform metrics and provide transparency and accountability. The importance of demonstrating transparency while correcting actions cannot be overstated.
- Establish cross-functional teams to lessen the “silo factor” and reap the benefits of differing perspectives from government workers with different job responsibilities.
Stuck in the Muck No More
Several federal and state agencies have embraced and greatly benefited from Lean Six Sigma. They have experienced first-hand how business-as-usual can be transformed into dynamic results-driven processes. When Stephen Chu became Secretary of Energy, he learned that the department was authorized by Congress four years earlier to provide approximately $80 billion in loan guarantees for various public and private sector energy initiatives. Imagine his surprise and dismay when he found out that, although the appropriation from Congress had been handed off years ago, none of the loan guarantees had yet made it to any end users. Chu was told it would take at least another year for the funds to be dispersed. The delay, he was told, was due in part to laborious process steps – one can only imagine the cost to taxpayers in time and money. In response, Chu charged his team to apply Lean Six Sigma methods to make sure funds would get to deserving constituents within 90 days and they did. The ultimate lesson learned from the Department of Energy story is that if processes get in the way, money will not be the answer to government woes.
In June 2009, McKinsey’s Maia Hansen and John Stoner released a report entitled, A Leaner Public Sector, showcasing two other successful public sector Lean Six Sigma results. In the first, the U.S. Government Accountability Office was charged with shortening its security-clearance process – backlogs were costing the government an estimated $1 billion per year. After rigorous analysis of its current processes, dissecting each step to see if it added value, the team was able to reduce the time of security clearance procedures from 446 days to 40 days, more than 90 percent! The report also highlighted a government policy-development division in Canada which was suffering from across-theboard variation in the execution of process steps. Lean Six Sigma changes led to a 10 percent improvement in the division’s overall efficiency.
One more Lean Six Sigma public sector example. Several years ago, Stephen P. Lisauskas made a bold decision to apply Lean Six Sigma methodologies to help save a city, Springfield, Massachusetts, mired in financial and administrative chaos. Across practically every level of government, multiple process layers were getting in the way of delivering value to taxpayers. For example, it took 28 manual steps to approve a purchase order in the school department, and each purchase order then took several weeks or more to work its way to approval. After determining how to measure current processes and applying Lean Six Sigma strategies, Lisauskas (former Director of the Springfield Financial Control Board) and his team were able to remove waste from processes and improve outcomes, saving Springfield $96 million over five years.
Making Government a Lean Mean Performing Machine
While every government agency has different needs and goals when it comes to deploying Lean Six Sigma methodologies, there are several strategies and applications that are central to all Lean Six Sigma undertakings. They include, but are not limited to:
- Inspiring key staff members across different departments to bring their skills and perspectives to the table and providing the time, tools and opportunity to participate in the improvement process.
- Leadership buy-in, ongoing stewardship and visible commitment to empowering employees.
- Rapid process analysis, breaking down processes into their fundamental steps, and then identifying waste and variation. Redesigning processes to be waste free and repeatable.
- Executing intensive 4-5 day Sigma Kaizen events proven to change the way they view the organization and their jobs while delivering significant improvement within days rather than weeks.
Everyone Wins: The American Public, Employees, Government Leaders, Budgets
Within a surprisingly short period of time, a typical government agency or department will see jaw-dropping results with Lean Six Sigma including a dramatic reduction in the number of decisions made, electronic and physical hand-offs, delays between steps, and loop-backs, among other efficiencies. Who could find fault with improving services to taxpayers, eliminating unnecessary processes (while speeding up others) and reducing costs? There is no downside to fixing broken processes. With the ARRA currently underway, it is time to make improving day-to-day business in government a priority. The rewards will be ongoing and the changes will keep on giving.
Ron Wince, President and Chief Executive Officer of Guidon Performance Solutions, has nearly two decades of experience leading performance improvement and cultural transformations within government, financial services, retail, health care organizations. Ron has a track record of helping local, state and federal agencies do more with less through the application of LeanSigma. He has been instrumental in aiding government leaders and their organizations dramatically improve service to constituents, deploy new policies and reduce costs. Ron’s clients have included San Diego County, California, City of Mesa, Arizona, State of Iowa, State of Idaho, State of Vermont and State of Wyoming. For more information about Guidon Performance Solutions visit: www.guidonps.com.
All contents © 2010 The Federal Manager. All Rights Reserved.
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