Outsourcing gets caught in bureaucratic red tape.
A recurring theme of this column has been that the rationales for HRO go well beyond cost savings and grow deeper year by year. This summer, the City of Chicago provided yet another reason why recruitment process outsourcing is a good idea–because it helps avoid all criticisms about patronage-based hiring.
Since 1973, the City of Chicago has operated under a legal requirement–known as the Shakman Decree–that it cannot make politics a factor in the hiring, firing, promotion, or transfer for the vast majority of city employees. Think for a minute about the vagueness of the word politics when you consider how difficult it is to operate under this decree. Must it be election politics or can office politics apply? And since when is it possible to completely divorce government from politics?
Imagine inheriting a traditional political machine and now having to take all politics out of the equation. The city was an old fashioned one-stop shop for its own services. It employed its own janitorial services. It maintained tow trucks and owned dozens of parking lots. Need something shipped from one city office location to another? You would have to use a city-owned truck and a city-employed trucker. Now take these tens of thousands of employees and demand that none of the hiring and firing decisions may be touched by “politics.”
When Mayor Richard M. Daley was first elected in 1989, he saw this vast edifice of bureaucracy and legal straitjackets and decided it was time that the city got back to core competencies. The mayor began a process-by-process overhaul of city government, outsourcing dozens of functions that were costing taxpayers money and making the day-to-day operations of Chicago unwieldy.
But in politics, there is always a backlash, and this one took on a new name: pinstripe patronage. The argument was that Mayor Daley was circumventing the Shakman Decree by taking government hiring out of city hands and using the power of government contracting to advance and protect his own power. Opponents of the mayor decried the way unions were being hurt by privatization. They scrutinized campaign contributions, and most recently, they found a series of violations in the way some city programs were operated, touching off a federal probe. During the past several years, the citys momentum for outsourcing has slowed and some city services, mostly for political reasons, have been brought back in-house.
Just to prove that you can’t win by caving to your opposition, now the mayor’s office is being investigated by federal authorities for violating the Shakman Decree and favoring campaign workers for city positions. Damned if you do or don’t. The mayor’s office is now under siege both for outsourcing and insourcing, with every step it takes examined under a microscope.
Whether some city-run or privatized services were tainted by corruption is for the courts and the Chicago voters to decide. But one thing is clear to any informed observer of the city’s outsourcing efforts–the mayor had it right the first time.
Privatization saved city taxpayers millions of dollars and vastly improved city services. Are there political risks to outsourcing? Certainly. But as the Mayor’s office has learned all too keenly, there are equal or even greater risks if you don’t outsource. Critics are critics and they will find a way to pick fault one way or another. Therefore, it is best to go with the course you know is right.
Fortunately for the City of Chicago, Mayor Daley now recognizes that taking his foot off the accelerator was a mistake. In the wake of the recent Shakman Decree allegations, the mayor announced that the city plans to create an independent board to oversee all of its hiring. While this board isn’t technically an outsourcing partner, it will be so similar in scope to a shared-services organization that the difference will be purely semantic.
According to a July 20, 2005, Chicago Sun-Times report, Mayor Daley has been pushing his staff since May to come up with forward-looking, aggressive proposals. One unnamed Daley advisor was quoted as saying, “This is going to stun people. Hes through nibbling at the margins.”
Mayor Daley’s experience is a good lesson for all managers. Once youve determined that outsourcing is the right thing to do, go full speed ahead. After all, would you rather defend a bold new course with proven results or a system you never wanted in the first place?