Libs “dumbsized” one of the leanest civil services in North America

Libs “dumbsized” one of the leanest civil services in North America

Stephen Hume
Vancouver Sun

Saturday, January 19, 2002

Chuck Stoody, CP Photo / B.C. civil servants protest against the Liberal job cuts outside the Victoria Convention Centre on Thursday.

Premier Gordon Campbell believes his Alberta-style re-engineering will kickstart the economy, but he’s banking on a retro business strategy that’s already been dismissed as counterproductive by leading management thinkers.

“Dumbsizing” is what The Wall Street Journal has since called the once-celebrated theory that productivity can be increased by drastic workforce reductions.

The Liberal experiment launched Thursday in response to a fiscal crisis manufactured by a rash miscalculation will centralize power at the expense of small towns and the rural hinterland.

It puts a province that desperately needs stability to encourage investment on a discouraging collision course with labour, with aboriginals and with environmental groups.

Most interesting, however, is Campbell’s decision to make B.C.’s public service smaller than Idaho’s, a state that is one-quarter the size — both in population and area — and has less than one-tenth of B.C.’s economic activity. One of the least populous states — it ranks 42nd out of 50 — Idaho pays 24,194 public servants to serve a population of just over one million, supported by a gross state product that this year should be $9.5 billion US, which meant one civil servant for every 50 citizens.

Comparisons cannot be exact, of course, because different governments include different services and departments, but in general terms parallels can be drawn.

Under the Liberals, on a gross provincial product that even in these difficult economic times is expected to be $127 billion Cdn, about 23,000 public servants will provide services for a B.C. population of more than four million inhabiting a huge area four times the size of Idaho.

By comparison, Louisiana, which has a population just about the same as B.C.’s and occupies an area about one-eighth the size, has 99,500 civil servants supported by a gross state product of $128 billion US in 1999. It supports a ratio of one public servant for every 44 citizens.

It wouldn’t be fair to pick only states with low ratios, so let’s choose a couple of others. How about Texas? With tax-cutting U.S. President George W. Bush as governor, the oil-rich state — the gross state product there is expected to top $900 billion US by 2003 — maintained 264,331 people on the government payroll, a ratio of one civil servant for every 78 citizens.

In Oregon, where 3.2 million people generated a gross state product of just over $110 billion US in 1999 — somewhat better than B.C.’s performance — there are 43,000 government employees, or a ratio of one public servant for every 75 citizens.

Using this standard of comparison, how did B.C.’s bloated public service stack up? Well, for one thing, according to figures from B.C. Stats, the number of public employees has been declining steadily since 1987, both in real numbers and as a ratio of population. By 1998, B.C.’s public service was about 30 per cent smaller than it had been under Bill Vander Zalm.

Under the New Democrats, the civil service stabilized at about 34,000 government employees, or a ratio of one public servant for every 117 British Columbians.

Which suggests that before the Liberals went to work with their ideologically driven chainsaw, this province already had one of the leanest public administrations in North America.

Right next door in Washington state, where there are 5.8 million people and a gross state product of $209 billion US, about 100,000 people are on the state payroll, or a ratio of one civil servant for every 57 citizens. Here in B.C., however, where 11,700 jobs are to be liquidated, we will soon have a ratio of one public servant for every 178 citizens.

Sure, I know this vision of tiny government will be welcomed by some. But is this really the right strategy for a recession that’s already got 205,000 British Columbians out of work?

Finance Minister Gary Collins says making government smaller is necessary to revitalize the economy, but he’s reading from a management script written a decade ago — and if downsizing was once the rage among management theorists, these days it’s not so popular.

The Wall Street Journal called it “dumbsizing” when analysts concluded that the most significant effect is not fattening the bottom line, but diminishing the corporate intelligence quotient.

It’s a process that throws away smart young employees with the most potential for growth because they are down the seniority scales, has a corrosive effect on organizational culture for the survivors and generally winds up costing more money than it saves.

In a research paper analysing downsizing for the Academy of Organizational and Occupational Psychiatry in 1997, Howard Eisenberg likened it to a kind of corporate anorexia in which an organization becomes lean but at the expense of its fundamental health. “First the organization’s fat is depleted, then its muscle, and eventually even its brain power,” he warned.

The result is systematic loss of the organizational memory essential to increasing corporate productivity.

“Instead of making companies lean and mean, re-engineering more often makes them lean and lame,” he said. “Re-engineering negatively affects both a company’s bottom line and its future vitality.”

Even Stephen Roach, once the great Wall Street guru of downsizing, now says he was wrong, that any benefits are “highly debatable” and productivity gains are not assured.

In the business journal Executive Excellence, Wayne Baker found a parallel between downsizing and the medieval medical practice of bloodletting, in which physicians convinced themselves they were helping patients while all the evidence indicated they were killing them.

Others have compared it to a computer virus that degrades memory.

When smart young employees are dumped, demoralized senior survivors of largely similar age wind up occupying positions that underutilize their skills while overburdening them with work. Then, when they retire virtually en masse a few years later, all their collective wisdom is lost at once and there’s nobody in the promotion pipeline who has been mentored to replace them.

Study after study confirms the folly of hollowing out service-delivery organizations on the theory that more productivity can be achieved by fewer people. In fact, Eisenberg pointed out, surveys by the American Management Associations conducted every year since 1988 show that 66 per cent of companies downsizing had no productivity gains and 55 per cent failed to improve operating profits.

Another university study of Fortune 100 companies found that over a five-year period financial performance worsened because of downsizing.

Perhaps this Liberal plan will be the exception. Given the pain they’re inflicting, they’d better pray that it is. As the NDP discovered, we can be an unforgiving lot.

© Copyright2002 Vancouver Sun

(forwarded to me by Brishen)

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