One way would be to identify key indicators of performance excellence. One indicator would be productivity, which many organizations include in their Baldrige applications. The following chart, from an article in Mother Jones, shows that productivity in the U.S. has improved by 80% since 1979. According to NationMaster.com, the U.S. ranks second in overall productivity behind only Luxembourg.

Some of that is due to automation and technology, but it’s also because Americans are working harder. Forty percent of professional men and 23% of middle-income men work more than 50 hours a week. In a healthy society, one would expect that the people responsible for improving productivity—and working longer and harder to do it—would benefit from their efforts. Not in the United States. As the blue line on the chart shows, average overall wages increased about 3% in 30 years. As Mother Jones reports, “If the median household income had kept pace with the economy since 1970, it would now be nearly $92,000, not $50,000.”

The red line on the chart shows where some of the value of our productivity increase has gone. More is going for corporate profits, which are up 20% in 20 years. As the blue line on the chart and our high unemployment rate indicate, tax cuts for the rich and tax breaks for businesses do nothing to improve the employment or wage picture for 99% of Americans.

A healthy society would promote the best interests of all of its citizens, not just its richest. It would aspire to have the best education and healthcare in the world, not just the most expensive. It would recognize that the demand for products and services cannot grow if the ability to pay for them doesn’t grow.

The Baldrige model provides a systems perspective of organizations. Based on results, the U.S. education and healthcare systems are broken, as is our political system. As is our approach to capitalism. Without a shared systems perspective and consensus on how to move forward, none of these systems will improve.

Perhaps I’m missing something here. How would you measure our society’s performance? And how are we doing?

I wrote about Berwick’s nomination on April 19^th, pointing out that the immediate past president of the American Medical Association said that he “is widely known and well respected for his visionary efforts that focus on optimizing the quality and safety of patient care.” According to USA Today, his “nomination was immediately hailed as a brilliant choice by policy experts from across the ideological spectrum.”

The Centers for Medicare and Medicaid have not had a permanent administrator since October 2006. Obama nominated the perfect person to fix this problem while addressing a much bigger one: how to deliver high-quality patient care for less. Berwick’s Baldrige and healthcare background provide an unusual systems perspective for tackling an issue that is critical to the country and to all Americans.

Kudos to Obama for finding the right person and for making the recess appointment that puts him to work.

For those keeping score of Baldrige people in high positions, we now have Berwick at Medicare and Medicaid; Terry Holliday, former superintendent of Baldrige Award-winning Iredell-Statesville Schools, now commissioner of education for Kentucky; and E. David Spong, CEO of two Boeing divisions that won the Baldrige Award, now president-elect of the American Society for Quality.

Do you know of any others?

Jeffrey Smith came to Santa Clara County to help close a $230 million deficit. He implemented hoshin kanri (policy deployment), which some moronic union official described as “some airy-fairy thing.” Many of the people responsible for doing the planning ignored him and a number of department heads submitted budgets the old way, according to a story on MercuryNews.com (“Santa Clara County new executive’s strategy has fans, skeptics,” Julia Prodis Sulek, May 14, 2010).

Smith has taken a county hospital from the threat of losing $300 million in funding because of a pattern of violence to a national award for patient safety. He’s a former doctor, lawyer, and hospital administrator and he understands that the same old, same old just won’t work anymore.

“We can no longer rely on old processes and procedures,” he says. “My job is to enable the organization to make the dramatic changes, which will be difficult.”

Hoshin kanri, popularized by Toyota, helps an organization focus on a shared vision and goals and involves people in developing strategic and action plans to achieve those goals. I worked with Zytec in 1991 when it won the Baldrige Award and one of the reasons it won was its robust hoshin kanri process.

One of Smith’s responsibilities is the county’s Valley Medical Center, which faces budget problems. Seven of the county’s eight clinics are not accepting new patients because they are overloaded. Smith wants to help people solve the problems that will improve efficiency.

“The key is to unburden people,” he says. “The way to do that is to give them the tools to manage change and give them the time to actually solve problems.”

We wish him luck. One of his actions that upset people was to dismiss a $20 million Deloitte audit of Valley Med that his predecessor had approved. Instead, he had a $100,000 assessment of the hospital. Now, we can only hope he used the Baldrige Criteria for that assessment.

To read more about strategic planning and effective government, click on these articles:

• The City as a Baldrige System
• Transforming Politics
• Serving Citizens Better
• 10 Critical Questions: Strategic Planning
• Alignment and Integration

In the article, I warned about a likely Republican effort to block the nomination, which would have nothing to do with Berwick and everything to do with partisan politics. Well, no sooner had I posted the article than the Republican Policy Committee prepared a memo denigrating Berwick. You can read the memo and its refutation on Think Progress, but here is a key passage:

Donald Berwick…has a history of support for government rationing of health care resources on cost grounds. He has spoken favorably about Britain’s National Institute for Health and Clinical Excellence (NICE), which denies patients access to life-saving treatments the National Health Service (NHS) deems too expensive. The American people should have their eyes open to the ramifications of NICE-style rationing in the United States as part of Democrats’ brave new health care world.

In reality, Berwick supports less intensive, less invasive, and less expensive healthcare if it is more effective than the most aggressive care. In the Republican world, that equates to denying patients life-saving treatment.

In the face of such distortions, we need to show our support for Dr. Berwick. Please contact your Senators and Representative and tell them that Dr. Berwick is uniquely qualified to lead the Centers for Medicare and Medicaid. We need more Baldrige people leading government efforts to improve healthcare.

Bureaucracy Detector Test

Rate the following on a scale of 1 (not at all) to 7 (often):

1. ____ To what extent do agencies in your jurisdiction feel accountable for following rules, regulations, and procedures prescribed in law or policy?
2. ____ To what extent do agencies in your jurisdiction feel accountable for producing measurable outcomes for people?
3. ____ To what extent to agencies in your jurisdiction encounter rules or procedures that impair their ability to perform?
4. ____ To what extent are agencies in your jurisdiction allowed to interpret the application of a rule or law themselves, as opposed to having someone in another agency responsible for enforcing the rule or law make the interpretation?
5. ____ To what extent do agencies in your jurisdiction spend time or money to comply with rules, laws, or reporting requirements that they feel are a waste of time?
6. ____ To what extent do the people in agencies responsible for enforcing administrative rules and regulations understand the work in a frontline agency and what is important to the success of the frontline agency in meeting the needs of those that agency serves?

Scoring

For the odd numbered questions, enter the sum of the three numbers here: ____. For the even numbered questions add the three numbers, subtract the total from 21, and enter the result here: ____. Total these two numbers to arrive at your Bureaucracy Detector Test Score: _____.

Scoring Key:

25-42   You are not a performance-based organization

20-25   There is potential in adopting performance-based concepts for your jurisdiction.

15-20   Worth exploring performance-based concepts

10-15   You are well on your way to being a performance-based organization

< 10     You are in performance government heaven

To read more about improving performance in government, click on these articles:

• Advice for the Country’s First CPO
• Federal Government OFIs
• The City as a Baldrige System
• Serving Citizens Better

In “Obama’s efficiency expert” (Fortune, Jia Lynn Yang, December 29, 2009), Zients observed, “What President Obama has done with the chief performance officer title is say, ‘Management matters.’” In recent testimony before the Senate Budget Committee, he said, “The test of a performance management system is whether it is used…the current approach fails this test.”

I think the test of a performance management system is how effective it is. Whether it is used is a test of leadership, which also happens to be when management matters.

I have some advice for CPO Zients: Instruct every department and agency of the federal government to integrate the Baldrige model. Demand annual Baldrige assessments. Implement strategic and action planning processes to address the opportunities for improvement. Track and post every unit’s scores. By the time Obama leaves office in seven years, you will have institutionalized the best performance management system available throughout the federal government.

To make your job easier, the Baldrige program is run by the National Institute of Standards and Technology—a federal agency! And the Baldrige program is open to all government entities.

In fact, a federal agency won the Baldrige Award in 2009: the Department of Veterans Affairs – Cooperative Studies Program Clinical Research Pharmacy Coordinating Center. If you’re looking for smarter and more cost effective, consider the Center’s results:

• Revenue per employee of $221,000 in 2008
• An agile matrix management system and interlocking committee structure creates a learning organization
• A Federal Executive Board Employer of Choice in 2008 and 2009
• 100% of customers claimed good-to-excellent overall satisfaction with the Center in 2009

Mr. Zients has an impressive background as a management consultant and CEO and I’m sure he has experience with what works and what doesn’t, but if he’s unfamiliar with Baldrige or if he’s intent on short-term, piecemeal solutions, he will fail. The federal government as a system is broken. It needs to integrate a proven management system to become more effective and efficient.

The Baldrige model is perfectly positioned to do just that.

McKinsey and Government Executive magazine recently surveyed more than 500 federal employees from dozens of agencies about key elements of organizational performance and compared the results to private-sector benchmarks. You can read a summary of the survey here. On the positive side, the survey found that federal employees are more motivated than private-sector employees, better understand the direction their organizations are going, and are more supportive of their organizations’ cultures and values.

As for opportunities for improvement (OFIs):

• 29% agree that they are consulted on issues the affect them (compared to 40% in the private sector)
• 34% agree that they operate in an open and trusting environment (49% in private sector)
• 34% agree that they are encouraged to provide honest feedback to people within the agencies (48% in private sector)
• 29% agree that managers provide helpful coaching to develop senior management capabilities (41% in private sector)
• 22% believe their agencies recruit top talent from outside (32% in private sector)
• 38% agree that their agencies hold challenging reviews to evaluate performance against plans (56% in private sector)
• 55% agree that they have clear explanations of what has to be achieved in their jobs (68% in private sector)

The survey results show a lot of room for improvement, both in the federal government and in the private sector. While the private sector may look good by comparison, the survey suggests that roughly half of the private organizations covered by the survey fail at the basic elements of organizational performance.

The Baldrige model promotes systematic and effective processes in all of these areas:

• A performance management system that supports high-performance work, employee engagement, clear expectations, and reviews of performance to plan
• A culture characterized by open communication and engaged employees
• Work process management that values employee input
• Employee development that includes coaching and mentoring
• Recruiting and retaining people with the skills and competencies the organization needs

As the VA Cooperative Studies Program has demonstrated, a government organization can integrate the Baldrige model to achieve performance excellence in all of these areas.

To learn more, read:

• The U.S. Army and Baldrige
• Serving Citizens Better
• How to Integrate Baldrige
• 10 Critical Questions