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Chapter Summary

Osborne, David, and Ted Gaebler. 1992. Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector. Reading, MA: Addison-Wesley.

Chapter 5: Results-Oriented Government: Funding Outcomes, Not Inputs

The authors argue that governments have focused on inputs but ignored outcomes, words like accountability, performance, and results. Under traditional systems employees are likely to protect their jobs and pursue larger budgets, larger staffs, and more authority. The authors recommend results- or performance-oriented government, which call for new ways of measuring and rewarding outcomes in various fields, such as job training, vocational education, housing, highway construction, even courts.

Sunnyvale, California, is introduced as an example of a government that focuses on performance. Managers in that city measure the quantity, quality, and cost of every service they deliver in terms of four categories; goals, community condition indicators, objectives, and performance indicators. The switch to a new system has led to the elimination of many rules and budget line items. This system brought high productivity; smaller staff levels (35 to 45 percent), higher salaries, and lower costs.

The authors suggest several themes for result-oriented government:

  1. What gets measured gets done; after performance measures are established, people begin to ask the right questions, to redefine the problem, to diagnose that problem, and to think about organizational goals.
  2. If you don't measure results, you can't tell success from failure; when government lacks objective information, decisions depend largely on political considerations.
  3. If you cannot see success, you cannot reward it; by rewarding successful managers, Sunnyvale has increased its productivity.
  4. If you cannot reward success, you are probably rewarding failure; In practice, if you are failing , you qualify for aid. When the crime rate rises, we give the police more money.
  5. If you can't see success, you can't learn from it; unexpected success may be an important lesson to be learned.
  6. If you can't recognize failure, you can't correct it; no one outside the bureaucracy can tell if these agencies do anything worthwhile, because no one measures the results of their work.
  7. If you can demonstrate results, you can win public support; we can compare Florida Taxwatch with Florida DOT.

The authors suggest three approaches of performance measurement. First, use pay-for- performance systems to reward high-performing employees rather than traditional approaches such as Management By Objective (MBO). Second, manage for results rather than management by guesswork or MBO. Total quality management (TQM) is introduced as a key approach for this. Third, budget for results. Budget systems should fund outcomes rather than inputs. In order to achieve this, output (quantity) and outcome (quality) goals are defined to mission-driven budgets. In conclusion, a modern budget system must be not only mission-driven, decentralized, and result-oriented, but also customer-oriented (see Chapter 6).