Sunday, March 11, 2012

Sunday Essay - language, social change & productivity improvement

In a comment on yesterday's post, Achieving management excellence in a constipated world, Evan wrote:

I think the reason we are stuck is that no one is articulating a vision of a way forward. The current debates have reverted to the old tired battle lines and no one is offering an alternative.

I am not so sure about vision, although I have argued that way myself. Thinking about it, the biggest problem in so much national debate in this country at least lies in our failure to articulate the why. Why should we improve productivity? Why should we raise education standards as defined by a narrow set of test results? To quote an old phrase, what's it all for?

If you look at the national policy discourse, you will see that it's generally set within very narrow frames. The idea of competition, of improving or at least maintaining positions relative to others, dominates. We need to improve educational standards as defined because we are falling behind certain countries. We need to improve productivity to increase or at least maintain living standards in the face of global competition. Industries suffering from the high Australian dollar need to innovate to survive.

To many Australians, these arguments seem sterile.

To the growing number of Australians living in insecurity, the language actually seems threatening. Will I be a victim of the next round of cuts?  Am I going to have to work harder just to survive? Is my enjoyment in work going to be further eroded? Then, too, a growing number of Australians have actually rejected the very premises on which the language is based.

Over on Regional Living Australia, my now sadly neglected life style blog, I traced many of the social and cultural changes that had been taking place. Movements such as slow food, localism, sea and tree change, life style downsizing to take just a few examples, have been working their slow way below the surface.

In some of my professional writing on Managing the Professional Services Firm, I looked at the impact of social and cultural change on firm operations. Why were young lawyers rejecting the concept of partnership? How did firms manage the increasing feminisation of the professions?  Why was chronic depression so pronounced among the professions?

These thing are all part of an overall pattern of change that has created a growing gap between the language of policy and politics and the changing realities of Australian life. Concepts such as efficiency and effectiveness don't cut the mustard any more.

In all the discussion on Australian universities, on competition and choice, the language of managerialism cannot disguise the fact that a growing number of staff and alumni really mourn the increasing loss of those things that they loved about academic life and indeed the institutions themselves. What's the point of all the changes if you have to lose the very things that you valued?

I happen to believe that improved productivity is critical to Australia's future, although it will be clear from yesterday's post that I reject the narrow definition of productivity improvement based on cost cutting. Why do I believe in productivity improvement? It all comes back to the ability to make choices.

We would all agree, I think, that there are many thing about Australia and Australian life that could be improved. We would also all agree that Australians should be able to make life style choices, that the freedom to choose is integral to the Australia we would like to see.

Improved productivity is not an end in itself, but a means to an end. It allows us to do new things, to make choices and, most importantly, it provides a degree of security in an insecure world.

The narrow debate on productivity improvement with its focus on competition and the maintenance of relativities conceals those facts. Worse, the narrow definition of productivity improvement in terms of the impact on a limited range of measurable statistical indicators twists the debate. Productivity as measured may improve, yet many if not most Australians may feel worse off.

Taking these points into account, I would argue that we have to do two things in considering productivity improvement.

The first is a broader discussion on just what we mean by productivity improvement. What is it? How do we measure it? How does it actually work itself out on the ground?

The second is a dialogue on the reasons why productivity improvement is important. What are the ends to be served?

All this may seem very abstract, so let me finish with an example.

Say you are working in an area providing a basic service to a certain group. As is so often the case, resource constraints mean that you cannot deliver all the things that you would like or that are needed. You have to get the best results you can from the limited resources you have. innovation and consequent productivity improvement are central to this.

At national level, productivity improvement is made up of the combination of all the individual actions at micro level. These may be difficult to measure properly. To continue the example I am using, the innovation may allow a service to be delivered a little faster with the same resources. Alternatively, you may get a little more of the service for the same resources, or some combination of the two. Productivity has clearly improved, although it may not appear in the aggregate statistics.

Now impose a budget cut delivered through an efficiency dividend, a staff freeze or simply action designed to slow the rate of spend. At macro level, the argument is that this will improve overall productivity by forcing increases in efficiency or by freeing up resources for use elsewhere in the economy. At micro level, the effect may be a simple reduction in the standard of service delivered, a reduction in innovation and in productivity. One is easily measurable, the other is not.

If you look at the example I have given, you can see why arguments about productivity fail.

At macro level, they are expressed in terms of generalities. Of course we all want the NSW Government to be more efficient, to improve productivity. But what does this actually mean? How will we be better off?

At micro level, the practical impact may be counter productive. We may or may not get broader gains, but we have no way of properly assessing and aggregating the losses in productivity that may occur at program level.

I accept that some of these arguments are difficult to articulate. However, I would argue that we need a different type of discussion if we are to turn the need for productivity improvement into a real discourse.    


Winton Bates said...

Some very important points, Jim.

I think you are on the right track when you say that the kind of productivity change we should be seeking should be about choice. There is not much point in trying to get orchestras to play faster.

However, I think some of the problems you allude to are specific to the public sector. When you don't have market disciplines how are you going to promote efficiency without reort to things like efficiency dividends?

I wonder what kinds of information systems would arise in a competitive education market to enable parents to make informed choices about education of their kids.

Jim Belshaw said...

Starting with your last point and working back, Winton.

We already have a competitive education market in that parents have choices depending on how much they are prepared to pay, just what schools or universities their kids can get into. There is also a proliferation of information sources and a great range of marketing and product material.

Turning to efficiency.

I am not a great believer anymore in efficiency as a concept. Good performance in public and private sectors comes from people who care. Efficiency is a narrow and even misleading concept. Often, it actually detracts from performance.

The question of market disciplines is an interesting one. It's a very macro concept, applying to the organisation as a whole. It says very little about performance at a unit level. Even at a macro level, an organisation may be efficient and fail, a less efficient organisation may succeed.

Winton Bates said...

It seems to me that we can all have opinions about good and bad management, but if you don't have a market test, the only test you have is politics. Is the ability of a bureaucracy to attract political support a good measure of the quality of management?

Jim Belshaw said...

I don't think that I accept that, Winton. I also think that I would argue your point about opinions on management.

My problem in part is that there is a gap between my experience as a manager and consultant in public, private and not for profit sectors and the way the arguments are commonly expressed. I cannot see a clear nexus between the general arguments about the positive effects of competition or the negative effects of non-competition and actual management behaviour. It just doesn't seem to work that way.

I need to think this through further and to respond in a more targeted way.

Evan said...

I entirely agree with the article Jim.

Re market disciplines - these usually have to do with money and companies - what they have to do with people's lives is a bit trickier.

I am sure we need a debate on the goals we wish to pursue. The way that economic growth and work have become good things in themselves I find disturbing.

For a book that makes the point about needing to discuss the ends in education see The Sabre Tooth Curriculum. I think it was written in the 1930's - his point was that the debate in education couldn't go forward because people wouldn't say what people were being educated for. (I don't think things have changed much in the time since). It's a fun book.

Anonymous said...

Jim I tend to agree with Winton's 'no market test' comment.

With the greatest respect for all the worker bees, they operate in a climate of no responsibility. I am certain that the individuals are just as capable and willing as their private sector counterparts, but in the end result, failure means nothing, whereas to fail in the private sector goes as deep as bankruptcy, let alone loss of job, and maybe continuing legal/credit stigma.

I don't mean moving sideways to the unattached list, or just never being promoted; I mean out on the street, hoping for further gainful employment, ever again, failure.

The Public Service is the epitome of 'moral hazard' writ large. No concept of failure ever entertained; just move on, hopefully something learned, dreadfully sorry for your losses. We've learned a lot (at your expense).

Wish I'd had that luxury, even just once, in several misadventures. Aymever comes to mind here - for which I admire your spirit, and empathise with the result.


Jim Belshaw said...

How interesting, kvd, and how wrong. Things just don't work like that in either public or private sector. Very precisely, they may but in most cases do not.

Over a third of the staff where I now work are temps, on secondment or contractors. They have no security. My sister in law has just been retrenched from a not for profit.

I am going to have to write something on this, but not tonight. I feel that some undergrowth needs to be cleared.

Anonymous said...

"Over a third of the staff where I now work are temps, on secondment or contractors. They have no security. My sister in law has just been retrenched from a not for profit."

Perfect (real world) definition of the "efficiency dividend". I am very sorry, but not surprised.

I am left wondering how the PS heads bite their tongues any time that is mentioned. Year on year...


Jim Belshaw said...

Will try to write that post, kvd.