On a sleepy summer day two weeks ago, Winnipeg's City Council quietly instructed its staff to prepare a report on the "Indianapolis Model" of managed competition. Can our elected officials break out of the box of old thinking?
You know that box well if you live in Manitoba. It confines our governments to running things in only one way. It says that public service levels need never be defined and their costs never measured. It's the same box that treats government employees like unreasoning ciphers in a highly regulated, time-serving civil service environment. Some refer to this dysfunctional arrangement as the Bulgarian Post Office model. It's why too many of our public services have a reputation for high costs and mediocrity.
So why the interest in the Indianapolis model?
It's a sophisticated, up-and-coming service delivery system beginning to sweep local government south of the border. It succeeds by creating a framework for measuring and rewarding performance.
Formally defined, managed competition is a process in which public service employees are allowed to compete with private firms for the right to provide public services. It differs from complete privatization, or contracting out, because it does not assume that the private sector can provide services more efficiently than city employees.
The secret behind the model's success is the ability of public employees and managers to challenge and redesign existing systems through new work procedures, flatter organization structures and new technology. The process involves teamwork and, more critically, a new, co-operative approach to labour-management relations.
Winnipeggers heard the Indianapolis story firsthand from an Indiana union leader speaking to a Frontier Centre audience in May. A lot of people think city workers will get massacred in a competitive model, but Stephan Fantauzzo, Executive Director of Council 62, American Federation of State, County, Municipal Employees demonstrates otherwise.
His members faced the annihilation of their work units through full-scale privatization pushed by a smart, tough-as-nails mayor. Fantauzzo's union decided to play ball by helping redesign the workplace to dramatically increase the productivity of city workers. Services are up while costs are down. Union employment in core city activities has actually increased. Fantauzzo's members have seen pay increases of 6% a year through a gain sharing system that gives workers 25% of savings they achieve in the competitive model, the highest rate of public sector pay increase in the U.S. Meanwhile the city achieved hundreds of millions of dollars worth of efficiencies and invested more than a billion in rebuilding infrastructure and roads. Indianapolis, no surprise, booms today, with a thriving downtown and a record two percent unemployment.
Fantauzzo is a new breed of union leader. Smart and visionary, with none of the ideological ballast that so weighs down his Canadian counterparts, he is a practical, bottom-line guy with no tolerance for mediocrity in service delivery. When Fantauzzo's members had to price all the inefficiencies of their city's very own Bulgarian post office model into their bids, they realized they were like a one-legged man in a butt-kicking contest. They could never survive against the competition. Hence, the unions drove the reforms from within. And won big.
Winnipeg still needs to be realistic about the Indianapolis story. About 4,500 city workers supply services in Indianapolis, population 870,000. Here, over twice the staff service a city with 40% less people. While service levels are probably higher in Winnipeg, these numbers clearly show that staff levels need to come down if our own city workers want to compete in a productivity-oriented system like managed competition.
Anyway, it is encouraging that our council is considering a practical high performance model for city services that sits on the frontier of public policy.