Efficiency savings and failure demand
Whilst Liam is briefly away from an internet connection in Bangladesh, I'll talk for a while about matters closer to home.
With the Pre-budget report on its way this week, there's plenty of talk from politicians and commentators about how we're going to save money and get debt under control. Good old "efficiency savings" got another outing yesterday, with Gordon Brown pointing to at least £1.3 billion that could be saved over four years.
Is he right? God knows. Anyone who has any dealings with the public sector (that's all of us then) won't need telling that there are some pretty inefficient public sector services out there. My public sector friends never tire of telling me about inefficiencies in their particular part of the sector. So you can see why, if you're sat on top of the pile as Prime Minister, that you'd make greater efficiency a priority.
I'm interested in considering the incentives people have for being more efficient, against continuing to be inefficient. This is where one of my favourite ideas, failure demand, comes in. I've written about it before so won't go on, but the basic idea is that a lot of apparent demand in a system tends to come from mistakes – people not being dealt with properly first time round.
I'd encourage you to think about your recent interactions with public services. Was any of the demand that you created actually failure demand? Where you weren't dealt with properly straight away, so had to phone back, email again, or go to an office again? I've got two examples in my life from the last 7 days alone.
My question is whether there is a disincentive to become more efficient in the public sector. What will happen if you tackle failure demand, particularly at a time when the State is looking to cut costs? You won't get rewarded – certainly not with a bonus. They'll realise that fewer people are needed to administer your particular system, and they'll make you redundant. So what does the rational person do? Stick with the inefficient system, which is helping to keep you in a job.
I know that's a rather bleak view of humanity, but I think it's a realistic view. I also accept that inefficiency isn't just about individual decisions to "be inefficient". But I also don't accept the argument that it's all "the system's fault", and that all public sector workers are heroic selfless individuals.
So what do you do to solve this problem - if you agree with my analysis? I think first of all you acknowledge the issue. You are honest about the reasons why efficiency savings never happen at the scale that they are expected. And then, to be frank, I'm not sure what you do. In theory you reconnect your staff with the social purpose of their service, and create a culture in society where we all acknowledge the part each of us plays in helping the State to spend our money more wisely. As I say, that's the theory. What will happen in reality? We shall see. I can't say I'm feeling that hopeful.
Interesting post, Rob, and we all get frustrated with inefficiencies in public services. But we all get frustrated when anything doesn’t work as we want it to, when we want it to. That’s why people swear at their computers all the time.
A couple of thoughts. First, that public services are probably no less or more efficient that all organisations. My most recent experience was with Adobe, to try and install a software upgrade. It took four separate interactions with customer services to resolve a problem that should have taken five minutes, and each time I received a message saying ‘we have closed your case as we believe we have dealt with your issue’. What kind of efficiency is that? Their system, though, might log it as efficient because it closed my case quickly. It rather depends on what you’re measuring.
But efficiency isn’t the only measure of effective work. I’m currently being inefficient by engaging with your blog post rather than doing whatever else I’d told myself I should be doing right now. Is my work worse or less informed or less creative as a result, or might I actually benefit from taking a bit of time out to engage with someone else’s ideas?
Maybe we should actually demand of all public servants that they have a degree of creative inefficiency in every working day. The service might actually be better as a result.
I might write more about this. Now would that be an efficient use of my time or not?
Good points Julian. I’d certainly agree that there are plenty of private sector inefficient systems out there. My original post from a year back points to an article which talks about inefficiencies in private sector systems (exactly the kind of thing you mention here) and also in public sector systems.
I’m no big fan of choice, but choice does come into it here. I’ll probably avoid Adobe given your experience, as I’ll avoid my current broadband provider when I eventually move house. But I can’t avoid most of the public services that I come into contact with. And I help to pay for them. So, sadly and rightly, they come under more scrutiny. Plenty of that scrutiny is unfair, and a good amount no doubt counts the wrong things, as you suggest. But I’m fed up of a debate where public sector bashers are met with public sector hero rhetoric. Make people redundant on one side. Protect jobs on the other. As you suggest in your tweet, better quality is what we should be focusing on. Which is why the failure demand idea interests me. No magic wand, but at least it gets us talking about what’s not working for the people who should be served.
And yes, thanks for making me more inefficient. No, I mean it, thanks!
I agree with this post as I often do, I think the problem at the moment with looming public efficiency savings is that things will get worse. As public sector managers strive to take on more work for there teams ( much of it stolen from others) in a dramatic attempt to prove that there bit of the Public Service is more worthy/efficent/ productive delete as appropriate, they actually become more ineficent increasing the disconect between front line public servents and the people they serve