Econonsense –  perfect employers produce imperfect services

Econonsense – perfect employers produce imperfect services

by Eben Wilson
article from Monday 29, April, 2019

A GOOD FRIEND of mine has just resigned from a public service job.  In doing so, the organisation she worked for has lost a talent with a wealth of experience.

The reasons for leaving were nothing to do with the job.  She loved doing the work, and using her graduate skills; re-discovered and then honed over some years following a period as a mother of growing children. The straw that broke her was an out-of-the-blue requirement to do some practical training.  

In itself, the training was not onerous, but the unannounced need came at the end of a giant tussle to find out how to retain her qualifications to continue to work. That had led her through a maze of on-line tests and re-visits of previously learned practices. Not only was the new requirement unannounced but it involved learning things irrelevant to her work; lifting techniques, resuscitation, fire prevention and response, plus the inevitable diversity and gender issues. 

All this came at the end of a long career as a field worker where she had moved from full-time to flexi-time to reduced availability on a self-chosen zero hours basis. When she looked at her hours she discovered that over the last three months she was costing her employer more in training time than in time doing the job they were employing for. 

Now, there is nothing wrong with making a work-force as skilled as possible, there’s also a case to rub out prejudiced workplace cultures; but there is a point where the productivity costs outweigh the benefits.  The difficulty in our taxpayer funded industries is that they tend to become what are known as “machine cultures”; the administration of the workings of the organisation’s internal systems takes over any flexibility and fleetness of foot that generates high productivity.  This creeping sclerosis is made worse when entities become imbued with virtue-driven stances imposed from afar; gender, racial and other equalities are all good aspirations, but if we require that every company needs to adopt them in a specifically mandated way whatever their circumstances, we raise a cost barrier to efficient production that is more often than not unnecessary.  That makes us all poorer, and the more vulnerable poorer still. 

The key issue here is the incentives that hold in the tax-funded public sector. The executives of our centrally planned services attempt to be perfect employers; avoiding risks where possible, and making sure they are seen to be attuned to the virtues of the time signalled by the utopians of the legislature.  These days, they do this by contracting; generating a layer cake of sub-contracted providers for human resources, safety at work, training, communications and other elements of day-to-day work. As such, and due to sheer size, they often end up with five hands doing similar work; and as my friend found, referring workers with questions between each other in circular loops that get no-one anywhere.  It’s the human equivalent of the reading of each other’s memos in traditional bureaucracies; a focus on process that ignores results.  

Any large organisation will end up navel-gazing if it adopts goals that are not aligned and evaluated against the core objectives of its declared mission.  The economic issue here is the lack of pricing and profit (or, more correctly, loss) in the public sector.  When the seeking of internal goals is not priced, there is little incentive to avoid loss.  When there is no perceived loss from the departure of trained and experienced staff, and where taxpayers sit as the lender of last resort when those losses are realised, then a gradual deterioration of service begins; usually through rationing and certainly through a repeated reviews and reorganisations that cost a lot and lead to little other than a changed logo and a new promotional campaign. 

The answer to this conundrum is to arrange such institutions as plural, and if possible competing, entities. It is also to find ways of pushing prices into the market that they service, so that suppliers and customers share the value of such services when they use them. 

And yes, this also means accepting “postcode lotteries” at times; but this can be assuaged if customers have a geographic choice of suppliers and indeed, if they do, their choices will tend to smooth out differences between postcodes for basic common services. That’s why a supermarket in Wick tends to look like one in Falmouth. Conversely, it is also why opticians, ophthalmologists andoptometrists differentiate themselves as do the seven different types of dentists now that they have escaped the NHS. They serve different customers with differing needs by offering the non-commonalised services that they need. 

Of course, this approach is anathema to collectivists in government and trade unions who prefer to exercise power over the central plan; however rationed or badly administered the services become. They can always find an excuse to keep going in the way they always have, especially if the combined mantras of equality, safety and fairness can be called upon as necessary sine qua nonfor a common organisational approach.  Customers always suffer in these regimes. 

Scotland, under the control of a socialist government, suffers from a lack of free choice in its services. The public debate and the focus of the state is almost entirely on process; on becoming the perfect employer, not to serve customers, but to achieve other statist goals.  In return, natural incentives create a layer-cake of unproductive work and non-jobs for many. The more this approach is taken, the more Scotland will be reliant on transfers from the south of the UK to support its public deficits. 

It’s time this was changed, we need a concerted effort across education, health and social services to localise and pluralise provision. This would serve another valuable political purpose; the vote for Brexit in the less affluent areas of the UK was clearly a cry for more democratic control by the people of their government and the services it offers.  

This cry should not be aligned to party politics (we can see where that gets us in today’s parliamentary impasse); it’s about the foundation principles of policy. Policy makers need to find a way to offer a generous, pragmatic, civic liberalism that is at odds with the SNP and Labour economic statism – and Conservative statism too.   The liberal view of Jo Grimond comes to mind that we want volunteers for virtue, not conscripts; Scotland could lead here, we are small enough to design policies that put liberty before inclusivity and equality. Plurality and diversity in services would still allow participants in policy action to choose to be social, engaging inclusively and equally through their own free choices. The root of that political freedom, as always, comes from economic freedom that releases innovation and choice.

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