Municipal Productivity Improvements Are a Way of Life in Phoenix

by Marvin Andrews*

RODUCTIVITY and quality of service are very important to a public sector organization. Frequently, these days, one hears comments that P emphasize the difference between the public and private sectors, but

productivity and quality considerations can apply equally to the public and private sectors, including the element of competition, and improvements are possible in city or county government. It's happened in Phoenix.

Although Phoenix was incorporated over 100 years ago, it did not fully blossom as a city until after World War 11. With hundreds of square miles of desert and 110" temperatures, commercial air service and air conditioning were keys to growth. In fact, in 1940, the city had an area of only 9 square miles and a population of 65,000. At the present time it is the ninth largest city in the United States with a population of 870,000 and an area exceeding 375 square miles. That's about the same size area as New York City, but with a low population density. This magnitude of growth has required a concerted effort to manage the changes that have occurred in a planned and efficient manner. The city has 9,000 employees, bargains collectively with five unions, and has a $630-million annual budget.

he original motivation for the Phoenix productivity effort was probably T not much different from many other places. The city wanted a staff of professionals who could evaluate departmental work methods, with a view toward establishing work standards for many jobs which would provide an objective basis for determining staff levels as well as for work planning and control. At the height of the work measurement program in the mid ' ~ O S , over

*Marvin Andrews is city manager of Phoenix. This is based on his presentation at the National Conference on Government in Cincinnati, November 1985. Publication of this article is made possible in part by a grant from the Shell Companies Foundation.

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40 percent of all city jobs had work standards. Another major responsibility of this central staff of analysts was the in-depth evaluation and implementation of new technology.

As one example of this technology, over 10 years ago Phoenix started to mechanize garbage collection; by the late ' ~ O S , the process was implemented throughout the city. The typical three-person crew was reduced to a one- person operation, with trash collected twice a week by vehicles that have mechanized lifting and dumping capabilities. The city provides the trash con- tainers. The technology and improved processes in the sanitation area alone have resulted in savings of over $40 million.

Technology in Phoenix also means computer-assisted dispatch. All fire and police vehicles are equipped with mobile digital terminals. Screen displays in fire apparatus tell the engineer the routing to the fire, the location of the hydrants, the floor layout of the building, and in many buildings the locations of hazardous material or handicapped occupants. In the police vehicles, the use of computers has just about eliminated voice communication and its re- lated problems in dispatch and inquiry situations, including overloaded radio channels. This year, field patrolmen's reports will be computerized.

he initial focus of the productivity effort was an industrial engineering- T based approach with a central staff of analysts. Although there were many successes and achievements, the city took a hard look at these ap- proaches in 1977. The mayor and the city manager jointly appointed a citizens productivity advisory committee to make recommendations for improvement in the program. This group was composed of individuals who either had a major line management responsibility or were accountable for productivity efforts in their own organizations. Local businesses such as Motorola, Grey- hound, Valley National Bank and Arizona Public Service, and Arizona State University were represented on this committee. The members interviewed city supervisors and employees at all levels, reviewed past records and ac- complishments, and developed recommendations in 1978 which provided the basis for a broadening and redirection of the productivity effort.

The citizen committee, in general, was complimentary about most of the city's efforts, but saw a need for increased participation by city employees, improvements in communications throughout the organization, and increased responsibility and accountability for departmental efforts. These recommen- dations provided a momentum to move ahead on plans that had been previ- ously discussed as well as to develop some new approaches to increase em- ployee involvement. Following are some of the major components of the MayJune 1986

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present program that provide the basis for some successes and a foundation for future efforts:

In 1978, a major organizational development program was launched to assess the organization’s climate and assist departments in establishing goals and objectives for improvement. Several extensive employee atti- tude surveys have been conducted, as well as an annual survey of man- agement personnel on various organizational characteristics. As a result, committees have been established to respond to the needs identified by rank and file employees as well as management. Many changes have occurred as a result of these surveys, and a significant movement towards a more participative climate has been documented. At the same time, the city instituted a pay-for-performance compensation plan for top executives and middle managers. In this program, pay in- creases from 4 to 16 percent are provided, based on individual perfor- mance. This was, and is, a major departure from traditional salary set- ting in government. A major indicator for all managers in this program is productivity improvement. Departments submit semi-annual reports which are reviewed through a peer evaluation process. What’s interesting about this process is that what a department may indicate as a significant improvement may be rejected by the review committee as a routine man- agement practice. Not only does this mechanism provide an opportunity for sharing productivity improvement ideas among departments but it also provides a measurement of the relative impact of some of these department efforts. Last year, for example, $15 million was identified as cost savings as a result of these department improvements. Contracting for services or privatization is another part of the process. Phoenix officials feel very strongly that they have an obligation to pro- vide needed municipal services to citizens in the most economical, yet effective, manner. The approach is quite innovative and has received much national recognition, including a case study by the National Pro- ductivity Center in Houston and articles in Reader’s Digest, Nation’s Business, Inc. and Fortune. The city is constantly looking for ways to contain costs and maintain services. It has introduced competition to the government process, and is ready, willing and able to compete with pri- vate business. Now, when a service is being considered for contracting, the appropriate city department bids on the job in competition with pri- vate companies. The department’s bid is prepared by the city auditor, who reports directly to the city manager, and it remains sealed (even the department head does not have access to the figures) until all bids are received. This process puts many departments in a very competitive cli- mate. They know that if they cannot perform and function efficiently, they may lose their operation to the private sector. Department man- agers, along with employees and unions, have concluded that they must

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find ways to become more competitive. This became evident in 1984 when the garbage collection contract expired in one part of the city and the sanitation division submitted the low bid to win back the service contract it had lost five years earlier. The city division did it by studying and improving on the operating systems of the private contractor and by close cooperation between management and employees. This system is being expanded to street landscape maintenance, pothole patching, street sweeping, and so on. The employee suggestion program is another element in which Phoenix takes great pride. Last year, employee ideas resulted in savings of $1.2 million. Last year the city won an award from the National Association of Suggestion Systems for the fifth consecutive year for the highest sav- ings per employee among all cities, counties and states in the United States and Canada. Over one-third of employee ideas in 1984 were im- plemented, and many of these had a significant impact on city opera- tions. Although something as relatively simple as an employee sugges- tion program produces tangible results, relatively few governments have done this. In addition to the traditional focus on blue collar jobs, Phoenix has initi- ated many efforts to improve office/clerical productivity. One of these activities is a productivity group called SHARE, “Secretaries Helping Administrators Realize Expectations,” a title decided on by the secre- taries. This group is involved with such things as quality control for office supplies, design of forms, office procedures, secretarial/clerical development, formats for workshops, etc., to improve the operation of the clerical function throughout the city. “Partnership” is the name given to quality circles in the city. This tech- nique is operating experimentally in two departments until officials get a better handle on its wider potential. There are now about 15 employee groups meeting regularly to look at ways to improve their jobs and re- duce city costs. In addition to small analytical staffs in some larger departments, pmductivity/employee development activity has been centralized in a new function called the value management resource office. This office is a merger of the training and employee development group formerly in the personnel department, and the operations analysis employees who were previously in the management and budget department. This group functions out of the city manager’s office as a team of internal consul- tants who combine industrial engineering and behavioral science skills. The staff assists city departments with diagnostic, behavioral and analyt- ical services, conducts the attitude survey, coordinates the suggestion program, and publishes a monthly productivity newsletter.

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By having analysts and trainers in the same office, the city can send out an interdisciplinary team to assist a department with complex problems. Frequently, a department will identify a symptom of a problem, such as a work flow bottleneck, and assume this is a technical problem. Many times the team diagnosis indicates that a “people” problem is also present and behavioral changes and retraining are necessary. Self-criticism and evaluation are an important part of the productivity process. In addition to creating a general environment to encourage openness and constructive criticism of policies and operations, two re- treats per year are held for executive staff to review city performance and develop closer relationships. In the last seven years, major task forces of executives reviewed budgetary practices, personnel procedures, fleet management operations, promotional practices, and so on. No organiza- tional activity is immune from this scrutiny and no “punches are held back” in the criticism of these activities. Operating department heads want to be held accountable for their organizations, but this cannot be done if city systems, in which they have no control, remain static and unresponsive. As a result of some initial changes recommended by the budget task force and continuing refinement by management and budget staff, Phoenix was identified as having the number one municipal budget system in the nation last year by the Government Finance Officers Asso- ciation. One of the city’s newer ventures is called the excellence in local govern- ment program, attended by 120 managers, patterned after the factors identified by Peters and Waterman in their book, In Search of Excel- lence. Management “think tanks” are being established as a process for continually providing new ideas on how to run the city. As part of this overall effort, another committee is developing a “hit list” of adminis- trative regulations that add to the bureaucratic “red tape” that frustrates many line managers. Another group of 25 middle management volun- teers has formed a think tank on innovation.

unning a city is similar to running a multi-company corporation. The R difference is that citizen input and preference are critical in the demo- cratic process. As a result, a municipal government can never be run “just like a business.” Most departments, such as police, fire, water, aviation, etc., have objectives and services which make them unique. On the one hand, the city would like to cultivate and develop an entrepreneurial spirit in these de- partments to enable them to run their “businesses” independently. To that extent, most major decisions have been decentralized to the departments so they will have the autonomy to function more effectively. On the other hand,

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officials must be responsive to the citizens and their desires and must require teamwork among departments to be effective. Change is, and must be, a way of life in Phoenix due to its rapid growth. Through necessity, the city has developed a change-oriented philosophy and an approach that allow us to respond successfully to the changing environment while maintaining a unity of purpose and organization.

There is great change taking place in local government, and the practices outlined here can work in the public sector. There is an increased need for a team effort in the community to improve public sector productivity. Phoenix has relied heavily on its network of relationships with other organizations, public and private, to keep in tune with what is going on and in picking and choosing those practices that best meet the city's needs and that seem to offer the best potential for success.

Quality of service and a positive attitude toward change and innovation are the critical components in the Phoenix program. Department managers feel very strongly about the need to maintain or improve that quality of service. Especially in these times when the likelihood of a tax increase is remote, the city has had to finance many service levels through productivity increases. Productivity improvement allows Phoenix to maintain the quality of service, reduces costs of operation, and provides an important challenge and opportu- nity for the work force.

The rapid growth of the '60s and early '70s made practical an industrial engineering approach to the productivity problem. However, the changing needs of workers and the desires for responsiveness by citizens have made the active involvement of the entire work force a mandate for continued success. For that reason, organizational development, employee involvement and re- sponsiveness to change have been combined with operations analysis. The most important goal now is to convince all employees to accept improvement as part of their daily routine.

Every city has three major resources which can be tapped for productivity- the concern and knowledge of its business community, the concern and tal- ents of its employees, and the concern and active involvement of its citizens. The success of the Phoenix program stems largely from the use of all of these resources.

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