RAND Roundtable

Reinventing Local Government

How Can Research Help?

Klitgaard: Mark, what do you see as the foremost issue facing local government in this new environment?

Winogrond: My candidate is bureaucratic rigidity. This seems to me to have two components--the rule-bound nature of the bureaucracy itself and the mind-sets of people who are drawn to civil service because it provides a staid, relatively risk-free environment. City government today is government by the book--a book written mainly in Washington and Sacramento. Instead of a statement of general principles, most city charters are operations manuals with page upon page of rules covering every conceivable situation that the bureaucrat may have to deal with in his working life. The Los Angeles city charter, for example, is a tome of almost 600 pages. And that reliance on rules is bred in the bone of most city workers.

Now, under the new order, we're being asked to do things for which there are no rules--programs that require us to evaluate options, make decisions take actions--and we're ill-prepared for it.

Strong: I'm currently working with others at RAND on a pilot project funded by the Irvine Foundation to help several large counties implement the new welfare reforms.

I find, too, that bureaucratic rigidity can be a problem. On one hand are county workers required to do everything by an established set of procedures. On the other are researchers who need flexibility in putting the results of their analyses to work. As you can imagine, the cultures are often at odds. We feel pressure sometimes to not rock the boat. But it would serve no one's interests if research entities like RAND became more bureaucratic.

Winogrond: Here's an example of the problem from my own office. We run an active affordable housing program in tandem with the HUD [Housing and Urban Development] program. Altogether, we manage hundreds of units. Under the old system, every aspect of the system was controlled from Washington. When HUD changed under this administration, we were faced with an enormous number of choices. Should we undertake more-active policing of the projects? Should we deny housing benefits to certain individuals or groups? Should we stop temporizing and take over the program, even though it means assuming responsibility for all the crises that plague housing projects around the country? For city officials, those are unfamiliar and intimidating choices. And pity the poor clerk who now has to make independent decisions instead of merely saying, "Hey, it's the rule."

Klitgaard: In sum, rapid devolution and decentralization have been accompanied by new decisionmaking challenges for which people are unprepared. Moreover, city workers, particularly those on the front line, are encumbered by rules and regulations that do not permit them freedom to change processes even if they want to.

The question we want to focus on is whether these are problems that research can help to solve. Ken, does this resemble the military logistics work you've been doing?

Girardini: We've seen many of the same difficulties. The "book" that people in logistics cite to insulate themselves from changes we have recommended is FAR--the federal acquisition regulations. There is something about those big, complex manuals that inspires dread in workers. Yet, the barriers to change posed by the FAR are often more imagined than real--the result, perhaps, of a local interpretation of a regulation rather than the regulation itself.

Winogrond: Maslow observed that pushing a worker beyond his comfort zone provokes a strong reaction, a sense that dire consequences are going to follow any departure from established routine.

Keltner: Before we get too fatalistic about why people go into public sector jobs, I'd like to remind you that 15 years ago in almost any corporation in America you would have found people like those in our bureaucracies. And if you go abroad today, to Germany or Britain, or to other advanced industrial countries like Korea or Japan, you'll find that the organizational cultures and the incentives in place all reinforce stability and job security.

The notion of reinventing government along the lines of private businesses is fairly new. We probably need to give it more time and study before we make these kinds of judgments.

Girardini: I agree. Ten years ago, American workers were being blamed for the problems in the U.S. auto industry, but the Japanese proved otherwise by successfully operating plants in this country with local labor. That--and quality and productivity improvements at Ford, GM and Chrysler--finally dispelled the myth of a sub-par U.S. workforce. Often the solution to low productivity is better management and building a consensus for change.

We were able to overcome the military's resistance to change by demonstrating with empirical data that there were high costs associated with doing business as usual. When the cold war ended, the strategic underpinning of DoD logistics had to be changed. During the Persian Gulf war, logistics did exactly what it was designed to do for a land war in Europe. It moved massive amounts of equipment to the theater in record time, including 25,000 unlabeled 40-foot containers--many of which were returned unopened at the end of the war.

If local government is in some disarray right now, it may be that no one has responsibility for looking at outcomes. And unlike a business, a public agency doesn't get clear warning signals from the marketplace if things are going wrong. Perhaps the first step is to assemble a group of department heads and show them as graphically as you can how badly askew the old process is.

Strong: The problem is not just about individual levels of perception. It's also about a system that hasn't rewarded risk-taking. We see a similar situation with welfare reform where a whole generation of eligibility workers has been judged on nothing more than the accuracy of their computer entries. Now suddenly they're in an environment that is at once very exciting--helping families move toward self sufficiency--and very threatening. Among other uncertainties, they don't know how they will be evaluated.

Girardini: We've found that performance measures are critical in shaping behavior. Often measurement systems are constructed along punitive lines, and that makes it easy for people to see how to avoid risk. What is needed is a system that encourages innovation by rewarding risk if it succeeds and not penalizing the innovator even when the gamble fails.

Strong: Yes, but establishing the right rewards is a tricky business. If Mark is right that people seek out certain kinds of jobs and are comfortable with different levels of responsibility and risk, then rewards have to be tailored to those personality traits. Finding out what goes on with so-called "street-level" bureaucrats--how they think about their jobs, how they perceive risk, what constitutes a reward--is one of the gaps that research can fill.

Keltner: Are accountability systems really what has driven the change in corporate America? Or did other forces have to be present to create the current, more flexible working environment? Think of Xerox or Chrysler or other companies that almost went out of business because of rigid, old-style workplaces.

Girardini: A new measurement system alone would not have helped Chrysler if it hadn't broken up the old project teams. Every functional manager--from the engine group to the transmission group to the frame group--would have gamed the new system and the innovations would have gone by the boards.

So the answer to your question is that incentives tied to a rational measurement system are important but not sufficient to bring about reform.

Winogrond: It may be important to separate this subject into two categories: The first is the world of rule-bound systems and people, with its relentless spawning of new regulations. The other is the world of value conflicts. For example, the manager of a HUD housing program under the old regime has been taught and believes that the greatest good is protecting the rights of the tenant. Overnight the system switches to a different value system in which the tenant is potentially one of the enemies of the new goal, which is to protect the larger community. The bureaucrat must now restructure the program to throw out some tenants who are dealing drugs, say, or beating their mates. If the bureaucrat can't make that switch fast enough, he or she becomes the obstacle to progress.

Keltner: Both of the issues you raise are pushing the boundaries of what we know about devolution and restructuring in a political context. The first category--the tyranny of regulations--could be regarded as an understandable, even rational response to society's tendency to hold government to a very high level of accountability. Thus, every time there is an accident, a new rule gets written to prevent its happening again. I don't think you can tackle that problem head-on, nor do I think research can help much given the current political environment.

The second category of problem has been the subject of countless studies. When large-scale organizational changes are in the offing, value conflicts are inevitable. They arise early and late in the process and must be planned for from the outset. Local government certainly needs to engage employees in the planning process so they won't be blindsided when the changes come. But even more important, the public must be involved--if for no other reason than that public resources will be spent.

Klitgaard: Restructuring seems like strong medicine for the ills of local government--perhaps too harsh given the patient's weakened condition. I think an institutional adjustment, not a structural overhaul, may be a better remedy.

To the extent local governments can better measure results (quality as well as quantity), get incentives to align with performance, and have citizens, bureaucrats and the private sector share that information, they create favorable dynamics of improvement. This should be possible without major restructuring.

The question is where does research fit into this agenda?

Keltner: If welfare reform is essentially a service delivery problem, as Ken suggests, counties will need help channeling services to a broader range of clients, with more diverse needs than in the past. Some of the beneficiaries will only get welfare payments, but others will need child care assistance, mental health care, job training and the like. Segmenting customer groups and figuring out different combinations of delivery strategies require data collection and analysis. These are clearly research problems.

Girardini: I see a parallel between the mass production process and the way government has been accustomed to delivering services. The administration of welfare used to be pretty straightforward--determine eligibility and cut a check. Now local government is being asked to develop a wide range of "products." If you're a busy bureaucrat, tending to day-to-day matters and worried about your budget, you don't have time to design new processes for such a fundamental shift. There's a role for research here.

Strong: Understanding the relationships of administrative processes and structures to outcomes is another gap that research can fill. One can't very well implement reforms without finding out how a person's job and job performance affect the end product. If you're trimming trees or paving streets, the bottom line is cost-effectiveness. Not so in making welfare reform work. Now counties have to figure out how to transform the behavior of an entire segment of the population.

Keltner: Research should be able to come up with ways for cities and counties to measure how effectively they are delivering services. But for some services, like helping welfare recipients find jobs, it's necessary to look three to five years down the road at how employable people are at that point.

Strong: I think that researchers have to become better partners with local government. Instead of doing academically oriented research and hoping it filters out to people like Mark, we need to go in at the ground floor and find out what their needs and concerns are. That is the only way we can help them understand how what they do every day affects the outcomes of their efforts.

Keltner: RAND has decades of intellectual capital to draw on for this kind of problem. Our health people have developed a tool for measuring the processes of medical care. They can show whether a hospitalized patient is receiving good care or poor care, and estimate how that will affect the patient's chances of survival. This is a research tool--you can't take it with you to the hospital and calculate your chances of dying--but it is being used to develop specific guidelines for physicians to follow in treating stroke and heart attack victims, for example. And that is a very powerful, immediately practical application of research.

Klitgaard: Debra is right, however, that academic research frequently occurs on too remote a policy level. We and our university and government colleagues have been doing cost-benefit analyses of job training programs for 30 years. The problem with these traditional studies is that we often learn things that are politically unpopular because they don't fit with prevailing ideologies and that are not connected to the decisions that bureaucrats actually have to make. They address questions like "Should you have manpower training programs for auto mechanics that are run by government contractors or should you use on-the-job training in a private firm?" Or "Is a mother with a child under five employable?" The answers are not helpful to an official in local government who needs to know how to run a better office or make the customer feel more empowered to go out and get a job.

Girardini: We sometimes use a business strategy that no one would mistake for in-depth research. The research team and the client put their heads together and come up with a bunch of ideas--obvious cases--for making quick improvement. It's usually easy to go into any organization and cherry pick those cases. The problem is that 99 percent of the work is in the implementation.

The five of us right now could probably come up with 10 good ideas for improving local government and more if we talked with the folks on the front line. But could we find a mechanism in any of the city and county agencies that would enable us to create a cross-functional team? Or would we find a cluster of functional stovepipes, one going down here to mental health services, one there to job placement and so on?

Strong: There needs to be a lot more focus on what happens between the design of a program and the outcome. Just knowing that it was implemented the way you thought it should be is almost meaningless.

Klitgaard: It's remarkable how often antipoverty programs--locally or at any other level--have unforeseen consequences. Perhaps that's because the bureaucracies through which we are intervening in people's lives use incentives that are misaligned with the hoped-for outcomes--ones that inadvertently reward cheating or inefficiency, for example. So we can promulgate well-intended policies endlessly but the bureaucracy is failing.

I wonder if too much of our research has been focused on optimum policies and allocation of resources and not enough on the organizational economics of the institutions through which these policies are being carried out.

Girardini: If you're going to do this kind of research, it's absolutely necessary to conduct it at a nitty-gritty level. The only way to know whether the policy you are trying to implement will have the effect intended or one never anticipated is to become technically literate about the client's product and processes. Only then can you design appropriate outcome measures and feedback mechanisms.

Klitgaard: If you were invited, do you think you could go into an agency like Mark's and with this approach help them rationalize their service delivery?

Girardini: Yes, but not without spending time gaining knowledge of the organization and its processes--and time is money. It took us substantial time and resources before we could successfully effect change in military logistics.

Winogrond: I think research could have an enormous impact in overcoming bureaucratic paralysis. For the most part, local government agencies recognize their problems and want to change. But the people who should be leading the charge are afraid of failing; they don't want to be pioneers. That's not surprising, given that the purpose of municipal government is to keep the town stable.

However, if research can provide information to help bring clarity to their decisions, perhaps they could overcome their timidity. If studies showed that other communities' experiments with incentive-based systems were successful or at least led to improvement--in getting people off welfare, for example, or in making land-use decisions--it could be a strong impetus for change. As it is, there's a black hole out there where information should be.

Klitgaard: I've been struck lately by how little cost-benefit analysis has been done of huge, important issues. Take the national performance review. With great fanfare, the administration reviewed the whole U.S. government, department by department, and instituted reforms--or said they did. Yet we don't really know what it accomplished because no one has undertaken a rigorous evaluation.

Even the scores of "success stories" about communities here and abroad that are published each year by respectable academic institutions are little more than descriptions.

Thus all of these experiments are going on--decentralization, incentive-based regulation, public-private partnerships--yet without any systematic evaluations. Would those kinds of studies be worthwhile for a research organization like RAND to undertake?

Winogrond: Evaluations of those new models?

Klitgaard: Yes, but saying more than that they are all terrible or all good. Studies are needed that employ appropriate outcome measures so that when you've evaluated an experiment, you can give some guidance to the agency in terms of best practice.

Winogrond: That's important, but here's what would mean even more to me. Help my agency internalize the methodology so that we can do the analyses ourselves in the future.

Here's an example of an area where we need our own ongoing research capability. Culver City is one of the biggest players in the entertainment industry--especially in the hot new field of digitized postproduction work--special effects, for short. We keep up a full court press all year trying to wrest this business from our competitors--Santa Monica, Beverly Hills, West Hollywood, Glendale, Burbank, Pasadena--and we have the lion's share of it. But we can't answer the simple question: How much does Culver City realize from this industry? And we're not alone. Notwithstanding all the hype about how the entertainment industry is driving Los Angeles' economic recovery, not a single one of the municipalities I've mentioned has analyzed or quantified the amount of money it gets from these coveted businesses.

Strong: Building a capacity for conducting analyses is important. It's the difference between giving a man a fish and teaching him to fish. You wouldn't have to have RAND come around every five years to solve your latest problem.

Girardini: In my experience, transferring these kinds of analytical skills is the biggest challenge of all, bigger even than implementing changes in policy or processes. Our efforts to transfer capabilities to the client for diagnostic analyses and for mining their own data bases have not been particularly successful. The problem may be that the needed skills are missing or simply that an agency within the organization can't be found to accept the additional responsibility.

Winogrond: Your orientation is a world different from ours. You think if you can't precisely quantify the success of a program, it means something is wrong and you go back to square one and try to fix the process. But local governments don't operate that way. They just ditch that effort and go on to the next problem, the next program.

Strong: Maybe some things can't be quantified.

Winogrond: Some can't. How do you measure zoning success? Sure, if the council doesn't get thrown out of office, that's one measure, but it's not a very helpful one. So I'd say that there are some problems planners should shun because even the best models are going to yield ephemeral results.

Klitgaard: Don't be too quick to throw out that baby. Bangalore, India, is one of those success stories I mentioned. A local foundation, with some help from outside development experts, set out to develop report cards for the city's major services--telephone, sewers, streets and so on. The experimenters realized that no one measure was going to be perfect, so they tackled the problem from a variety of perspectives. They created citizen focus groups, sent their own people out to try to obtain services--a little like a Consumer Reports' sting--and conducted client surveys. Then they analyzed the information, compiled it in digestible form, publicized it, and presented each chief minister with a report card. This brought howls of protests from agencies with low grades, but it also brought great political pressure for improvement.

The lesson is that performance measures do not have to be rigorously quantified to be useful. The report cards in this case were compiled from soft data but of a special kind. Because the information was gathered from a broad range of people with a stake in the outcome--experts, if you will, on what constitutes quality service--it became a guide to best practice.

Developing measures of quality is obviously not enough in itself. To create the dynamics of improvement, the information must be in a form that is easy to grasp and it must be shared with the public. Finally, and perhaps most important, the right incentive structure must be in place. But when all those things come together, you see real improvement.

Strong: My hope is that research organizations like RAND will be able to form strategic partnerships with local government. One of the things that enabled Ken to spend a year persuading the military that they had to change was the existence of a long-term, trusting relationship. We need to establish that kind of ongoing arrangement with local government instead of the role we are often invited to play of outside consultant. Technical assistance aimed at the quick fix has its place, but it is not one RAND is comfortable with. It is not what we do best.

Girardini: I agree, but it brings me back to that pesky question: Where is the money going to come from? The kind of long-standing relationship RAND has with the military is different from the one it has had with its civilian clients. Also, funding on the domestic side often comes from foundations or other third parties that want broadly applicable results not solutions to specific, rather narrowly defined problems.

Strong: The funding problem is a kind of market failure--no individual government can pay the cost to find the information that would benefit all of them. Through the pilot project I mentioned, we are trying to develop a new kind of model. A foundation has provided the seed money, and, because the counties like what they see, a couple of them have come up with additional money to do follow-on work. Also, we've formed relationships with several community groups that are committed to helping the poor. If we're successful in developing these coalitions, the counties will be able to afford us and we can enter into longer-term partnerships with them. I hope this will serve as a useful model for the future--a partnership of funding, research and technical assistance in which foundations and local governments will invest as well.

Keltner: I'm sure we all agree that developing measurement systems and data collection instruments is a job for research and one that RAND can do well. We also seem to agree that designing a system is only half the battle, the other half is implementing it. What baffles me in these organizational change efforts is why, given that there is so much known about what leads to success, the principles are consistently ignored.

Strong: One reason--perhaps the biggest reason--is that the people who have to implement the changes are often ignored in the development of strategies and performance measures.

Keltner: That's the typical pattern, whether in the public or the private sector. Suppose a company is trying to develop materials for opening a new market, but instead of going to the people in the unit that will be responsible for coming up with the new product, they call in outside "experts." Leaving out of the loop the very people who are going to do the work makes no sense and stirs up tremendous resentment. So when the change comes, their impulse is to sabotage it.

Winogrond: Leadership is also vital. If there are no managers who can inspire the troops, then quantitative tracking mechanisms and benchmarks are going to be viewed as punitive, or worse, meaningless. It's like Dilbert's world, where the bosses invent inane exercises just to torment employees and to make themselves feel important.

Klitgaard: I'd like to propose a modest experiment to be held under RAND's auspices and offer my graduate students to run it. I think it would be an excellent learning experience for them and very helpful to any local government officials who cared to participate. The goal is to help middle- and top-level managers create measurement and incentive systems that are appropriate to their circumstances.

It's a fairly simple exercise and not expensive to conduct. We give the participants case studies from a variety of settings. After they've chewed over the materials for awhile, we show them how others solved their measurement and incentive problems. By the end of the second day, after considering several of these success stories, we come to their own case. In my experience with such exercises in many different countries, the process of considering how others solve seemingly intractable problems seems to energize and empower the managers to an extent that is quite remarkable. They come up with more creative answers than I could ever devise, even if I spent the time Ken spends with his clients, because they know their own situations inside and out.

Winogrond: I urge you to think not just about specific research projects, but about creating an L.A.-based institute for the improvement of local government. It would fill a great need, particularly because Los Angeles, unlike other major cities, has nothing remotely like it. Consider that there are 200 to 300 municipal jurisdictions in Greater Los Angeles alone--all in need of help. The things you learn would be useful to the nation, because the issues we're struggling with are common to counties and municipalities everywhere, or soon will be.

As for funding, there are many foundations, philanthropies, wealthy corporations and individuals in the area committed to the betterment of Los Angeles--and some of them are bound to respond supportively to the idea of a partnership along the lines you seek.

The Panelists Kenneth J. Girardini is an operations research analyst in RAND's resource management department. Currently, he is leading a project to streamline Army logistics by the introduction of modern business strategies. Drawing on his experience in the automotive industry, Girardini works with clients to design, evaluate and implement improvements in logistics policies, processes, and incentives. He also serves as an informal consultant to RAND colleagues working on nonmilitary problems that involve process improvements--such as improving the quality of health care services. Brent Keltner is a political scientist specializing in improving the performance of both public- and private-sector organizations through organizational redesign, the development of effective performance incentives, and improved skills training. He received the 1997 RAND President's Award for his role in mounting a series of workshops on organizational innovation that brought RAND researchers together with private-sector managers and university-based researchers to explore ways of improving RAND's own organizational performance. Keltner's work on local governments includes an evaluation of the City of South Gate's restructuring experiment. Robert Klitgaard is dean of the RAND Graduate School and the RGS's Ford distinguished professor of international development and security. He has served on the economics faculties of Harvard, Yale and the University of Natal, Durban, South Africa. A consultant to international agencies such as the World Bank and the International Monetary Fund, he has served as an advisor to many governments on economic strategy and institutional reform. Klitgaard is the author of many books and articles including the best-seller, Tropical Gangsters. He has a long-standing research interest in the problems of local government. Debra A. Strong is a policy analyst with broad experience in state and local policy issues. She is currently co-leader of a project that is providing analytical assistance to California counties and communities on welfare reform. In this capacity, she interacts daily with local government officials and community representatives to implement such provisions of the new welfare laws as welfare-to-work, child care and job training. She is also part of a RAND team conducting a policy gaming exercise to help decision makers understand the long-term effects of alternative welfare strategies. Strong is pursuing a Ph.D. in policy analysis at the RAND Graduate School. Mark Winogrond is director of community development and assistant executive director of the Culver City (California) Redevelopment Agency. He is responsible for all planning, housing, redevelopment, economic development and building activities for Culver City, as well as major capital projects. From 1985­1990, he directed the department of community development of the newly incorporated City of West Hollywood, where the city's general plan won the 1989 California American Planning Association award as the best comprehensive planning project in California. He has also served as a city planner with the law firms of Munger, Tolles & Olson and Paul, Hastings, Janofsky & Walker.