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Gainsharing for efficiencies at scale

Aug. 4, 2014 - 09:58AM   |  
By SCOTT QUEHL   |   Comments
Scott Quehl leads Accenture Federal Services Strategic Government Efficiency offering. He formerly served as Chief Financial Officer and Assistant Secretary for Administration at the U.S. Department of Commerce.

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Efficiencies do not create themselves. Employees make them happen. The White House acknowledged the importance of workforce collaboration, creating an executive order that recognizes all federal employees can spark efficiency, innovation and productivity.

Employees have contributed to savings and better ways of delivering service in many areas of the federal government. The National Academy of Public Administration reports the U.S. Census has established an operational efficiency program to encourage employees to send efficiency proposals with associated resource requests to the top of the organization, to be evaluated against objective criteria. Employees have generated over 2,100 proposals, of which 113 have been funded, for estimated savings of $33 million since 2010.

Can employee-management collaboration on efficiencies go farther? Federal agencies manage vast global supply chains, process billions of payments, applications and claims, create products, and keep trains and vehicle fleets running on time. The time could be right to expand gainsharing for large scale efficiencies among government sponsored enterprises, performance-based organizations, or federal agencies with measurable inputs and outputs.

Gainsharing measures improvements in employee productivity compared to clear standards, and shares the resulting benefits with employees. Employee benefits can be monetary, with awards based on a percentage of base salary if employees meet or exceed set standards. Managers may also be rewarded based on production levels of both their units, and at the working group level, also factoring product timeliness and quality. This kind of system can be self-funding, saving more money than is awarded to existing employees based on their production.

There is also participative gainsharing in which agencies seek efficiencies that employees identify and then provide pay or benefits incentives, invest in the employees’ ideas for better tools and delivery methods, or both. The share of the gain to federal agencies and taxpayers can be redirected to offsetting budget cuts or expanding mission capability.

A Government Accountability Office study from September 1986 collected data on 18 Department of Defense gainsharing efforts. GAO found that all of them reported cost savings, with some installations also citing reduced amounts of sick leave, work backlogs and overtime costs, plus focused attention on barriers to greater productivity.

While not new, gainsharing’s scale and impact could be. An Accenture Labor Productivity Index benchmarks opportunities to improve productivity by reviewing hundreds of processes within commercial and public sector organizations. It has found that for certain functions, productivity increases of 15 percent to 35 percent can be achieved through efficiencies. This is a lot of gain to be shared for resource-strapped agencies, as the end of the two-year budget agreement comes into view.

To achieve these levels of efficiency, agencies should expect six- to 18-months of communication with employees and to gain their consensus and understanding of the differences between current and the best processes and standards. Then, standards also should be tailored to each functional area involved in production and shaped to fit what and how much is produced, as well as quality, training and other requirements. Metrics, training and time and attendance are important, as well as labor management systems to track employee activities and labor hours. While benefits should far exceed costs, some investment is needed in these areas, and in managers who help employees apply new approaches and monitor safety, quality and system integrity. Industrial engineering and other expertise can be used to achieve efficiencies, along with the innovations employees and their managers bring to the table.

Federal agencies do not lack motivation for efficiency, nor employees who know how to find it – they have plenty of both. It is up to agencies’ leadership to see their potential and harness it to achieve their goals.

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