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Evaluating the effects of implementing total quality management on improving organizational quality in Colorado State government

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Evaluating the effects of implementing total quality management on improving organizational quality in Colorado State government
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Al-humedhi, Abdulrahman H
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English
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xv, 323 leaves : illustrations ; 29 cm

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Total quality management -- Colorado ( lcsh )
Politics and government ( fast )
Total quality management ( fast )
Politics and government -- Colorado ( lcsh )
Colorado ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Bibliography:
Includes bibliographical references (leaves 308-323).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Doctor of Philosophy, Public Administration.
General Note:
School of Public Affairs
Statement of Responsibility:
by Abdulrahman H. Al-humedhi.

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|University of Colorado Denver
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Auraria Library
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ocm30656496
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Full Text
EVALUATING THE EFFECTS OF IMPLEMENTING TOTAL QUALITY MANAGEMENT
ON IMPROVING ORGANIZATIONAL QUALITY IN COLORADO STATE GOVERNMENT
by
Abdulrahman H. Al-humedhi
B.A., King Saud University, 1984
M.P.A., The American University, 1988
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
Public Administration
1993


1993 by Abdulrahman H. Al-humedhi
All rights reserved.


This thesis for the Doctor of Philosophy in Public Administration
degree by
Abdulrahman H. Al-humedhi
has been approved for the
Graduate School of Public Affairs
by
Linda M. deLeon
Hm. 22. / 1993
Date


Al-humedhi, Abdulrahman H. (Ph.D., Public Administration)
Evaluating the Effects of Implementing Total Quality Management on
Improving Organizational Quality on Colorado State Government
Thesis directed by Assistant Professor Linda M. deLeon.
ABSTRACT
Colorado state government has been implementing Total Quality
Management (TQM) since the spring of 1989 to improve the quality of
state services. This study explores the theoretical and practical
nature of TQM within the broader framework of productivity
improvement, describes its components and application to the public
sector, and evaluates its effects on improving organizational
quality in Colorado state government.
Appropriate literature was reviewed, pertinent state
government documents were examined, and a questionnaire instrument
to measure employees perceptions of quality improvement was
developed based on the Malcolm Baldrige National Quality Award. The
survey was sent to a random sample of 600 employees representing
both treatment and control groups. A response rate of 68.3 percent
was achieved. Employees within the treatment group were selected
from 13 agencies that have reached a mature stage of TQM
implementation. Employees within the control group were selected
from another 13 comparable agencies that have not implemented TQM.
IV


A rigorous matching process was employed to minimize differences
between each treatment agency and its corresponding matched control.
The survey results indicate that, only in some areas, has
quality improved in Colorado state agencies that have applied the
principles of TQM. While Recognizable improvement is observed in
the categories of overall organizational quality, leadership
commitment, and customer satisfaction, no improvement at all is seen
in the domains of information and analysis and strategic quality
planning. Also, only modest improvement is noticed in the areas of
human resources utilization, quality assurance of products and
services, and quality results.
The recommendations of this study deal with the opportunity
for Colorado state administrators to refine their initiative of TQM
implementation, and for future research to redefine and
reconceptualize the theory of TQM when applied to government
organizations.
This abstract accurately represents the content of the candidates
thesis. I recommend its publication.
Signed
Linda M. deLeon
v


DEDICATION
This work is dedicated with full respect and appreciation to
my father, Hamad bin Abdullah Al-humedhi (bless his soul), who
passed away during my graduate studies at the American University.
My father gave me a love of learning and discovering, confidence in
my abilities to succeed, and encouragement to grow. May God rest
his soul in heaven.


ACKNOWLEDGEMENT
I wish to acknowledge the many individuals whose cooperation,
assistance and support made this work possible. Above all, thanks
to Allah, the Almighty God, for his innumerable blessings and
guidance. Second, I am deeply grateful to my family for their
continuous encouragement, support, and patience. The endless love,
prayers and patience of my mother, Monirah, will be forever
appreciated. An absolute indebtedness goes to my brother, Mohammed,
for his immeasurable compassion, support and inspiration which made
it feasible to complete my doctoral degree.
My deepest gratitude and thanks go to my thesis director, Dr.
Linda deLeon, for her dedicated interest and constant guidance
throughout the course of this dissertation, especially in times when
I doubted this study would ever be completed. I would especially
like to thank Dr. Sam Overman for his continuous guidance and
encouragement throughout my study at the University of Colorado at
Denver. He has been a good friend and mentor. Sincere thanks and
appreciation are extended to the other committee members Dr. Peter
deLeon, Dr. Van Johnston, and Dr. Kathy Boyd for their
professional counseling and constructive feedback.
I wish to acknowledge my indebtedness to Mr. Vernon Arnold for
his support and assistance while professionally editing this
dissertation. Particular thanks go to Mr. Jerry Davies for his
VII


effort in making it easy for me to approach state agencies. I am
also grateful to Marianne and Stephanie Jackson for their assistance
in typing this manuscript.
Finally, I am deeply indebted to the government of Saudi
Arabia for granting me a scholarship to study in the United States
and for making my graduate studies possible.
viii


CONTENTS
CHAPTER
1. INTRODUCTION ................................................ 1
Why Productivity and Quality Improvement?....................1
Statement of the Problem ................................... 5
Objectives of the Study.....................................12
Significance of the Study...................................13
Limitations of the Study....................................15
Organization of the Study...................................17
2. LITERATURE REVIEW PART I...................................19
Introduction .............................................. 19
Productivity .............................................. 20
Quality and Productivity Connection.....................20
Historical Perspective ................................ 22
The Concept of Productivity.............................23
Productivity Trends.....................................31
The Significance of Productivity ...................... 40
Productivity Improvement in the Public Sector...............45
Conceptual Problem of Public Productivity...............52
The Meaning of Public Productivity .................... 57
Productivity Improvement Approaches in the Public Sector 62
Technological and Information Approaches .............. 64
Training and Development Approaches.....................68
Market-Driven Approaches .............................. 70
ix


Financial and Budgetary Approaches .................... 73
Participative Management Approaches.....................75
Motivational Approaches............................... 77
Potential Barriers to Improving Public Productivity .... 79
Environmental Factors...................................80
Political Factors.......................................80
Administrative Factors ................................ 81
Personal Factors ...................................... 83
Summary ....................................................83
3. LITERATURE REVIEW PART II...................................85
Introduction .............................................. 85
Total Quality Management .................................. 86
Definition of Total Quality Management .................... 87
The Principles of Total Quality Management ................ 93
Customer Focus ........................................ 94
Continuous Improvement ................................ 95
Prevention versus Inspection .......................... 98
Fact-Based Decision Making ............................ 99
Employee Empowerment and Teamwork......................100
Cooperation versus Competition ....................... 101
What Is New and Different About TQM ...................... 103
Implementation of Total Quality Management ............... 105
Planning...............................................109
Assessment.............................................114
Implementation ....................................... 117
x


Institutionalization ................................. 124
Potential Impediments to Implementing TQM in the
Public Sector............................................. 126
Conceptual Difficulty Regarding the Notion of
the Customer...........................................127
Dependence on the Manufacturing Model..................129
Civil Service Restrictions ........................... 131
Insufficient Technical Expertise ..................... 132
Negative Perceptions ................................. 133
Transferability of TQM to Government ..................... 133
Summary....................................................138
4. RESEARCH METHODOLOGY....................................... 139
Introduction ............................................. 139
Hypotheses Formulation ................................... 139
Research Hypotheses................................. . 144
Research Design............................................147
Questionnaire Logic and Design .......................... 157
Pretesting the Survey Instrument ..................... 161
Validity...............................................162
Reliability............................................163
The Sample.................................................164
Units of Analysis......................................167
Generalizability ..................................... 167
Data Collection............................................168
The Procedure..........................................168
Response Rate..........................................171
XI


Data Analysis............................................172
5. RESEARCH FINDINGS ......................................... 174
Comparison between Treatment and Control Groups..........175
The Order of All Agencies (Treatment and Control)
Participating in the Study...............................182
Comparison of Matched Agencies .......................... 191
Analysis of Demographic Variables with Regard to
Treatment and Control for Overall Organizational
Quality Responses........................................196
Employment Position..................................198
Age..................................................199
Gender...............................................202
Education............................................203
Years of Work with the Agency........................205
Implications and Explanations of Findings................207
Treatment And Control Groups Comparison..............207
The Order of All Agencies............................212
Comparison of Matched Agencies ...................... 214
Demographic Variables................................215
6. CONCLUSIONS AND RECOMMENDATIONS ........................... 221
Introduction ............................................ 221
Conclusions..............................................221
Recommendations for Colorado State Officials ............ 230
Recommendations for Further Research .................... 237
Summary..................................................240
xii


APPENDIX
A. The Malcolm Baldrige National Quality Award of 1991 . 250
B. The Questionnaire Instrument...........................299
C. A Letter Legitimizing the Study........................304
D. Internal Memorandum Assuring the Confidentiality of
Responses..............................................306
BIBLIOGRAPHY...................................................308
xiii


FIGURES
Figure
2.1 Deming Chain Reaction of Quality ............................ 21
2.2 Modification of Deming Chain Reaction ....................... 21
2.3 Historical Growth in Labor Productivity ..................... 33
2.4 International Labor Productivity Levels ..................... 34
2.5 Relative Product Quality Comparison between Japan
and the West .................................................39
2.6 Government Expenditures, by Level of Government, 1947-90 . 48
4.1 The Instruments Seven Point Likert Scale .................. 159
5.1 Comparison between Means of Treatment and
Control Groups (All Employees Comparison) .................. 177
5.2 Means of the Matched Agencies for Overall
Organizational Quality ..................................... 192
5.3 Treatment and Control Means for Three Levels of
Employment Position ........................................ 198
5.4 Treatment and Control Means for Five Levels of Age .... 200
5.5 Treatment and Control Means for Male and Female
Respondents..................................................202
5.6 Treatment and Control Means for Four Levels of Education . 204
5.7 Treatment and Control Means for Five Levels of Years of
Experience with the Agency ................................. 206
xiv


TABLES
Table
2.1 International Labor Productivity (GDP/Employee,
Purchasing Power Parity) ................................... 34
2.2 General Systems Estimated Impact of Total Quality
Implementation on the Gross National Product (GNP) .......... 37
2.3 Importance of Quality.........................................39
2.4 Quality Perception .......................................... 40
4.1 All Treatment and Control Agencies and the
Four Matching Variables ................................... 151
4.2 Items of the Questionnaire Used to Measure
Each Category of Organizational Quality ................ 158
5.1 Means, Standard Deviation, and t-test Comparison
Between the Treatment and Control Groups ................. 176
5.2 Agencies in Ascending Order of Their Mean
Scores for All Variables....................................184
5.3 Run Test Results for the Randomness of
Treatment and Control Agencies ............................ 185
5.4 Spearman Correlation Coefficients for Rank
Order of Agencies by Variables..............................186
5.5 Rank Ordering of Means Scores (Variables by Agency) ... 188
5.6 Summary Contingency Table of Rank Ordering of
Variable Mean Scores........................................189
5.7 Sample Size, Mean, and Standard Deviation for
Overall Organizational Quality for Matched Agencies ... 192
5.8 t-tests and Level of Significance for Matched
Agency Comparisons ........................................ 193
5.9 Summary of Comparison of the 22 Matched Agencies
Using t-tests and SNK Multiple Comparisons ................ 194
5.10 Demographic Variables, Their Levels, and Sample Sizes . . 197
xv


CHAPTER ONE
INTRODUCTION
Whv Productivity and Quality Improvement?
Productivity is essential for raising standards of living,
enhancing national competitiveness, and improving quality of life.
As a sizable and growing segment of the national economy, the public
sector is a significant factor both in the nations current economic
position and also in its prospects for advancement. A productive
nation depends upon productive government. However, given the size
and economic importance of the public sector, there is little
evidence that government productivity is improving.
The political and economic context of the 1970s and 1980s
reflected citizen demands for tax reductions, decreases in public
sector spending, and cutback management philosophies. These demands
have placed public administration practitioners in the 1990s under
tremendous pressure to improve government productivity and quality.
Governments provision of services and the fiscal climate
appear to have come full circle since the expansionist era of the
1960s. The fiscal stress and rising costs of service provision
during the 1970s caused some governments, most notably New York
City, to waiver on the verge of bankruptcy (Morley, 1986). Rising
public dissatisfaction with levels of taxation viewed to be
1


excessive and levels of service perceived to be deficient generated
the phenomenon Known as the "taxpayer revolt" that began with
Proposition 13 in California in 1978. Citizens require government
officials to set tax ceilings on the amount of taxes levied and
limits on spending public dollars. The primary query hence becomes
whether governments at all levels can carry out their tasks as well
as meet emerging demands out of increasingly scarce resources. The
dilemma is sharp. Government must continue performing its functions
without raising taxes or reducing service provision since these two
options are politically undesirable. Thus, the most appropriate
method for dealing with the current fiscal crisis is to improve
public productivity and quality.
Public administration has entered this decade under heavy
attack for its presumed lack of productivity. This has added still
another dimension to the significance of improved government
productivity and quality. At the present time, the cacophony of
voices raised in criticism of government performance has become more
insistent (Dalton and Dalton, 1988). Citizen confidence in
government has reached a low level. Almost every major study on the
topic indicates that government is no longer responsive to the
legitimate needs of the populace (Kettl, 1990; Garment, 1991; Osborn
and Gaebler, 1992). The effect of citizens low confidence in
government has been aptly recognized by Clifford:
The history of the rise and fall of great nations
discloses that their decline was not due to the lack of
power or influence abroad, but to the loss of confidence
2


of their own people at home confident in their
government., (in Alsaud, 1986:22).
Citizens perceptions that government is wasteful,
inefficient, ineffective, and unresponsive can change for the better
when it is seen that public managers have improved the productivity
and quality of their organizations.
Bureaucratic rigidities combined with citizen demands for
increased services, reduced taxes, and low confidence in government
performance have created a milieu of frustration for both the
service recipient and the service provider (Ammons, 1984). High
frustration shared by many public employees has spurred the exodus
of a top-quality workforce from government agencies. With a poor
reputation for productivity and quality, the public sector faces the
challenge of attracting and retaining highly qualified personnel
(Carr and Littman, 1990; Cohen and Brand, 1993). Enhancing
government performance, however, can provide public administrators
with a great sense of professionalism and pride in their jobs,
allowing public sector organizations to attract and retain a bright,
competitive workforce.
In 1988, the Gallup organization conducted a survey for the
American Society for Quality Control to assess consumers
perceptions of government services (Carr and Littman, 1990: 9-12).
The survey demonstrates that one-third of respondents feel
government services should be contracted out to the private sector.
Government is currently under intense pressure to privatize services
3


and contract with private entities providing more efficient,
effective, quality services. Accordingly, the public sector
increasingly finds itself being pushed into direct competition with
private firms (Osborne and Gaebler, 1992). With fierce competition
from the business sector to provide lower-cost services, public
managers should realize that the survival of many governmental
functions does depend on improved productivity and quality.
Total Quality Management is one of the most recent approaches
to productivity improvement, one that is increasingly being adopted
in the public sector. The proponents of quality management contend
that applying the principles of TQM can reduce the costs of
organizational operations by more than 30 percent (Edosomwan, 1987;
Juran, 1988; Oakland, 1989; Fortuna, 1990a; Carr and Littman, 1990).
The reduction in organizational costs translates into a productivity
improvement by more than 30 percent.
TQM is an anticipatory management system encouraging employees
to be boundary-spanning agents. Similar to Gawthrops network Y
organizations, TQM is teleologically oriented, holistically
designed, temporally based, and horizontally structured (Gawthrop,
1984). Productivity and quality improvement and customer
satisfaction are the end objectives of TQM. Systematic involvement
of all individuals affected by the design of work processes and
generation of products/servlces is its direction. Evolutionary
integration of management thought of the past, present, and future
4


is its character. Employees empowerment to improve work processes,
products, and services is its unifying theme.
The purpose of this study is to explore this new management
system, to describe its components, and to evaluate its effects on
improving organizational quality in Colorado state government.
Statement of the Problem
Total Quality Management represents one of the most current
approaches in the evolution of thought about efforts to improve
organizational productivity. Systematic effort to implement TQM in
Colorado state government began in the spring of 1989. The
initiative in Colorado was a result of a recommendation from the
Governors Commission on Government Productivity which felt that TQM
could greatly improve the quality of state services.
In view of the impending need for additional revenues which
culminated in the passage of Amendment 1 in 1992, constitutional
limits on the power of state and local politicians to raise taxes
and spend public dollars, and his public commitment to a high level
of productivity in state government, Governor Roy Romer, with the
support of legislative leaders, created the Colorado Commission on
Government Productivity. To this commission, the Governor appointed
nine prominent Colorado business executives, four members of his
cabinet, four legislators, and a representative of labor. The
mission of this 18-member body was to "create a public/private
5


partnership, applying the highest principles of business management
to effect new levels of operating effectiveness and productivity in
Colorado state government" (Commission on Government Productivity,
1989: i). The specific mandate of the Commission on Government
Productivity was to analyze the various government departments,
elected offices, and make recommendations aimed at achieving the
following goals: increased efficiency and effectiveness in each
government function; new techniques to strengthen accountability;
long-term strategic planning in the budget-forecasting process; an
incentive system; and improvement in the quality of services for
each government function.
Full Implementation of Total Quality Management in Colorado
state government was one of the major recommendations suggested by
the Commission: "Building upon existing programs, Colorado state
government should begin implementing a comprehensive quality
management program to positively improve productivity and impact
culture" (in Adams, 1991: 237). The Malcolm Baldrige National
Quality Award criteria and guidelines were further recommended to be
used as a road map to provide direction and to measure progress in
quality improvement (Commission on Government Productivity in the
State of Colorado, 1991:1). The Malcolm Baldrige National Quality
Award consists of seven categories: leadership; information and
analysis; strategic quality planning; human resource utilization;
6


quality assurance of products and services; quality results; and
customer satisfaction.
The established vision of Colorado state government derived
from the philosophy of TQM is:
We strive to become a customer-focu^ad state government
in which employees and managers work together to
implement the principles of service quality, to exceed
customer expectations by providing excellent products
and services, and to utilize their inherent skills of
creativity and innovation in order to generate positive
change in state government by continuously improving
state systems and processes (The Total Quality
Management Initiative in Colorado State Government
(hereinafter abbreviated as TQMI in CSG], 1992:1).
The mission statement of TQM program in Colorado state
government is to continuously improve service to customers of State
agencies through a structured process that will recognize the
talents of all employees and enhance productivity and quality*
(Total Quality Management in Colorado State Government, The
Governor's Strategic Plan [hereinafter abbreviated as TQM/GSP],
1991:1).
The desired benefits the state is hoping to achieve from
implementing TQM include: a decrease in cost of services through
reduced waste, reduced rework, and reduced duplication of effort;
improved service leading to customer satisfaction; a process
designed to meet state customers changing needs; improved
communication; increased employee involvement and a motivated
workforce; improved morale, employee relations, and lowered employee
7


turnover; and improved management/employee relations (TQM/GSP,
1991:1).
The fundamental concepts of TQM that have formed the basis for
the development of the state quality improvement actions are as
follows: senior management involvement; teamwork (empowerment in
decision making at all levels); goal setting and performance
evaluation, customer focus (both internal and external); defect and
error prevention; continuous work systems improvement; data-based
decision making; long-range thinking; ongoing training and employee
development; and communication of quality requirements to suppliers
(TQM/GSP, 1991:2).
The implementation method of TQM utilized by the state is a
unit-by-unit approach in which cabinet-level departments implement
TQM on a pilot basis in an agency, bureau, or smaller unit. Within
the broader framework of the unit-by-unit approach, three styles of
TQM application have been adopted. They are the action model, the
climate improvement model, and the strategic planning model (TQMI in
CSG, 1992: 1-2). The strategy for implementing quality management
in the state has been predicated upon the following premises:
voluntary participation; development of interpersonal skills and
team building more than the analytical skills and techniques; go
slow, experiment and be flexible; central guidance, but not control
(Total Quality Management in Colorado State Government, Progress
Report [hereinafter abbreviated as TQM/PR] 1991:6-7). Responsibility
8


for guiding implementation of TQM has been assigned to three cabinet
members: the director of the Office of State Planning and
Budgeting, the executive director of the Department of Personnel,
and the executive director of the Commission on Higher Education
(Adams, 1991).
The primary focus of this study is to explore the concept of
TQM, to describe its components, and to evaluate the effects of
implementing TQM on improving organizational quality in Colorado
state government. Since a baseline measure of organizational
quality was not taken prior to TQM implementation, the researcher
will make use of a non-equivalent control group, Colorado state
government agencies that have not adopted TQM, in order to assess
accurately the impacts of TQM on quality improvement in state
agencies that have implemented TQM (i.e., the treatment group).
TQM effects will be evaluated based on the method of quality
management assessment, in which the current procedures of ensuring
quality in TQM organizations will be compared to that of non-TQM
agencies. The approach of quality management assessment revolves
around measuring employees perceptions of the quality of their
organizations. Typically, the quality management assessment is
utilized prior to any other methods of evaluating quality
improvement efforts. Measuring the effects of implementing TQM on
improving the quality of state agencies will be based on the seven
categories of the Malcolm Baldrige National Quality Award. The
9


Baldrige award criteria will be adapted to public sector
organizations during the pretest stage of the questionnaire
instrument. Employees will be asked to identify these criteria that
have no relevance to government agencies so that they can be
excluded from the survey. Quality improvement will be determined
based on a random sample of 300 employees selected from the
treatment group and another 300 employees randomly selected from the
control group.
Accordingly, taking the individual employee as the unit of
analysis, this dissertation focuses on one primary and seven
secondary research questions. The primary research question is
stated as follows:
To what extent has overall organization quality improved
in state agencies that have implemented TQM?
Overall organizational quality is measured by all seven
Baldrige variables: leadership, information and analysis, strategic
quality planning, human resource utilization, quality assurance of
products and services, quality results, and customer satisfaction.
The above primary research question generates seven secondary
research questions:
1. To what extent has leadership commitment to creating and sus-
taining clear and visible quality values improved in state
agencies that have applied TQM methods?
10


2. To what extent has the scope, validity, and use of informa-
tion and analysis improved in state agencies that have im-
plemented TQM?
3. To what extent has the use of strategic quality planning im-
proved in state agencies that have employed TQM techniques?
4. To what extent has the utilization of human resource im-
proved in state agencies that have implemented TQM?
5. To what extent has the process of assuring quality products
and services improved in state agencies that have utilized
the principles of TQM?
6. To what extent has quality results improved in state agen-
cies that have adopted the fundamentals of TQM?
7. To what extent has customer satisfaction improved in state
agencies that have implemented TQM?
In addition to these research questions, more in-depth
analysis will be conducted at the agency level to determine the
effect of TQM implementation. Twenty-six agencies have been
selected to participate in the study, of which 13 are in the
treatment group and 13 are controls. Furthermore, at the agency
level, another examination will be undertaken to determine the
efficacy of the matching process. Finally, diagnosis will be
performed to ascertain the relationships between the demographic
variables (employment position, age, gender, education, and years of
11


work experience with the agency) and the overall organizational
quality.
Objectives of the Study
This study is undertaken with the intention of serving three
major objectives.
The first objective is to explore the construct of TQM in
relation to the broader conceptual framework of productivity
improvement. As a new management system, TQM will be investigated
from the perspective of the larger theoretical structure of
productivity improvement. It is anticipated that this type of
inquiry will bring order and continuity to the notion of TQM and
advance it epistemologically as well as phenomenologically.
The second objective is to describe the various components and
apparatus of TQM with specific reference to government
organizations. TQM will be thoroughly described to identify
elements of convergence and divergence from the accumulated
knowledge of public sector productivity improvement. Description of
TQM implementation and conceptual strengths and weaknesses of
transferring TQM to the public sector will be presented.
The third principal objective is to evaluate the effects of
TQM application on improving government productivity and quality.
The TQM initiative in Colorado state government has been selected to
serve this objective. Evaluating the impacts of TQM implementation
12


on enhancing public productivity and quality will be conducted at
the level of quality management assessment. It is hoped that this
kind of evaluation will determine the accomplishments and positive
effects gained by adopting TQM principles that can be further
investigated and transmitted to other public sector organizations.
Significance of the Study
This study derives its significance from the objectives it is
designed to achieve. TQM is a newly emerging managerial concept
that needs to be systematically explored, described and evaluated as
it relates to the particular characteristics of government.
Although there is quite a bit of current literature available
on TQM philosophy and techniques, only a very limited and fragmented
amount of that literature is devoted to the public sector. Burstein
and Sedlak (1988) present only preliminary descriptions of the
current federal quality improvement effort with scant examination of
the concept of TQM. While Carr and Littman (1990) provide more
extensive coverage of TQM, their analyses are heavily qualitative
and narrative. Demouy (1990) studies TQM only with specific
reference to the health care sector. Lythgoe (1990) conducts a
formative evaluation of the Defense Departments application of TQM.
Wagenheim and Reurink (1991) focus solely on the customer service
element of TQM. Hyde wrote several articles: (1991a) challenging
public administration theorists and public managers to move beyond
13


TQM philosophy to operational practicality; (1992a) describing the
complexity of the customer notion in government; and (1992b)
analyzing the problems inherent in integrating TQM into a public
sector organization. Sensenbrenner (1991) documents the quality
improvements Madison, Wisconsin has achieved with the implementation
of TQM. Swiss (1992) writes on the subject of adapting TQM to
government. Bonser (1992) discusses TQM exclusively from the focal
point of education. Milakovich (1992) describes the evolution of
TQM in the public sector in view of the previous productivity
improvement efforts. Durant and Wilson-Gentry (1992) examine TQM
based on the contingency theory in which situations most amenable to
TQM interventions in government have been identified. Osborne and
Gaebler (1992) largely build their model of the entrepreneurial
government on the principles of TQM. Cohen and Brand (1993)
describe TQM in government based on the practitioner point of view
with intentional disregard for a scholarly inquiry.
These studies and others lack any systematic treatment of the
concept of TQM in the public sector. Each piece discusses TQM
either from a judgmental perspective, lacking scientific rigor, or
from a parochial frame of reference. Clearly, there is a gap in the
literature that needs to be filled with regard to providing
scholarly as well as comprehensive research in the subject of TQM in
government. This dissertation would be the first to investigate in
a comprehensive context the construct of TQM, its application to the
14


public sector, and its effects on improving productivity and quality
in government organizations.
This dissertation should benefit public managers in its
attempt to explore the theoretical and practical nature of TQM, to
describe its components and applications to the public sector, and
to evaluate its effects on enhancing government productivity and
quality. This study will add to that of other theorists and
practitioners whose work is important in developing approaches to
improve public productivity.
Limitations of the Study
Unlike natural science, in which the researcher can control
most of the significant elements of his/her experiment, social
science is not conducted in closed laboratories but rather in a
dynamic environment. This fact compels the social science researcher
to accept less-than-ideal knowledge creation. From this
perspective, it can be acknowledged that this study has four
limitations.
First, since TQM is a newly emerging concept, the researcher
encountered the difficulty of presenting a coherent framework drawn
from disjointed and fragmented sources. Concepts and ideas have
been extracted from such diverse perspectives as engineering,
business, and government. Complete exploration of TQM may not be
possible given the lack of an orderly literature.
15


Second, in describing a phenomenon as complex as Total Quality
Management, the individual runs the risks of both commission and
omission. Individual bias of over- or under-description of certain
elements of productivity and quality improvement may have been
committed in this research.
Third, since TQM implementation in Colorado state government
began before the initiation of this study, randomly assigning
agencies to treatment or control groups was not possible. Instead
of randomization, the researcher had to resort to a less rigorous
process of matching control agencies with treatment agencies.
Fourth, the type of quality evaluation emphasized in this
study is quality management assessment, in which the current methods
of ensuring quality reflected by employees perceptions in TQM
organizations was compared to that of non-TQM agencies. Although
quality management assessment revolving around measuring quality
improvement through employees perceptions is considered to be the
first method utilized before conducting any other quality assessment
techniques (such as organizational culture, cost of quality and
customer survey), employees perceptions may not reflect real
quality improvement and are susceptible to the Hawthorne effect.
Favorability of perceptions may be influenced by the attention given
to employees during the implementation of TQM.
16


Organization of the Study
This dissertation has been organized and developed in the
following fashion:
Chapter One presented an introduction to the importance of
productivity and quality improvement, followed by the statement of
the problem, the objectives of the study, the significance of the
study, and limitations of the study.
Chapter Two reviews the literature of productivity improvement
as it relates to the public sector with specific reference to the
concept of quality. The goal of this chapter is to examine the
primary productivity and quality theories, concepts, and issues that
have evolved prior to the existence of TQM.
Chapter Three investigates the accumulated knowledge regarding
the theory of TQM with particular focus on its application to the
public sector. Both Chapters Two and Three are designed primarily
to serve the research objectives of exploring and describing the
newly emerging concept of TQM.
Chapter Four describes the research methodology utilized,
including the formulation and operationalization of the primary and
secondary research hypotheses, the research design, the
questionnaire logic, the selected sample, and the method for
collecting and analyzing data.
Chapter Five describes and explains the research findings
based on the formulated research hypotheses. Chapters Four and Five
17


are designed primarily to serve the research objective of evaluating
the effects of implementing TQM on improving organizational quality
in Colorado state government.
Chapter Six provides conclusions, recommendations, and
suggestions for further study. This chapter ends with a summary
describing the contributions TQM and this study have made to the
field of public administration.
18


CHAPTER TWO
LITERATURE REVIEW PART I
Introduction
Since Total Quality Management has originated from the broader
conceptual framework of productivity improvement, analyses of the
productivity improvement literature should place TQM in its proper
context. Such analyses will cover the major developments of the
field of productivity improvement as it relates to the public sector
with specific reference to the concept of quality. Accordingly, the
objective of this chapter is to explain analytically the primary
productivity and quality theories, concepts, and notions that have
evolved prior to the existence of TQM.
This chapter is divided into two main sections. The first
section discusses the dynamics of productivity in general covering
the relationship between quality and productivity, the historical
perspective of productivity, the meaning of productivity, trends of
productivity, and the significance of productivity. The second
section analyzes productivity improvement with specific reference to
the public sector. It reviews the rising interest in public
productivity, the conceptual problem of public productivity, the
meaning of public productivity, productivity improvement approaches
in government, and potential barriers to improving government
productivity.
19


Productivity
Conceptually, productivity is a simple idea. It is the
relationship between the output of an organization and its inputs.
Productivity can be measured by dividing the outputs by the inputs.
Broadly speaking, productivity is a systems concept; it can apply to
diverse entities, ranging from an individual to an organization,
industry, or national economy. Productivity can be improved by
utilizing resources efficiently, accomplishing the intended
objective effectively, and producing quality outputs.
Quality and Productivity Connection
Most quality management scholars subscribe to the notion that
quality and productivity are directly and inseparably connected
(Adam, Hershauer, and Ruch, 1981; Deming 1986; Walton, 1986;
Edosomwan, 1987; Hradesky 1988; Aguayo, 1990; Richards and Robson,
1990). The experience over the past decade in transforming
productivity improvement into quality/productivity reflects that of
the many intellectuals and practitioners who have come to realize
the close productivity-quality nexus (Burstein and Sedlack, 1988).
In fact, the term "qualitivity is increasingly used,
attesting to the Inseparable relationship between quality and
productivity (Clemmer and Sheehy, 1992:19). This relationship is
best explained by Deming (1986: 3), through his model of chain
reaction of quality. Depicted in Figure 2.1, the model suggests
that as quality improves, costs go down leading to productivity
20


increases; thereby the firm captures the market,
and creates more Jobs.
stays in business
Figure 2.1: Dening Chain Reaction of Quality
Milakovich (1992) indicates that a modified model of Deming
chain reaction can be applied to public sector agencies. As shown
in Figure 2.2, the Milakovich model proposes that when quality
improves, costs decrease, resulting in higher productivity, and this
in turn improves customer satisfaction.
Figure 2.2: Modification of Oeming Chain Reaction
So urea: Milakovich, Michael E., 1998 Total Quality Management Far Public Service Pmduaivity Improvement' Public Produdivitv Handbook.
Mark Holier, Ed. New York: Marcel Oekkar, Inc., P. 579.
21


Consistent with these two models, there seems to be an evident
consensus among academicians to treat TQM within the purview of
productivity improvement framework (Burstein and Sedlack, 1988;
Hyde, 1991b; Denhardt, 1991; Milakovich, 1992).
Historical Perspective
If the concept of productivity means the production of wealth,
the goods and services that sustain our lives (Fitch, 1982), then it
is very difficult to imagine a society so ancient or primitive that
had not been concerned with production. Likewise, if productivity
is perceived in its broadest sense as the need to raise production
or the desire to augment the acquisition of resources, then the
concept is certainly very old (Martin, 1990).
Around 5000 B.C., the Sumerians, Assyrians, and other Old
Testament tribes utilized sets of sophisticated techniques and
wisdom exemplified by divisions of labor to oversee and increase
production (Gladden, 1972). Between 4000 to 2000 B.C., the
Egyptians developed a strict coordination of the economic efforts of
the entire population to provide for each individual and for the
community as a whole the highest possible degree of prosperity
(Lepawsky, 1949). Around 1800 B.C., the Babylonian code of
Hammurabi established essential requirements for enhancing
production, such as responsibility specifications and minimum wage
(George, 1968). Approximately 500 B.C., the Chinese constructed a
system of centralized authority and control over production while at
22


the same time maintaining a high degree of discipline with the
application of Confucius' code of ethics (Herson, 1942).
Ancient problems with production and the effects that those
problems had on civilization have been the subjects of scholarly
studies. William Durant (1935:259) utilized the concept of
productivity as the universal theme of his meta-history analysis
concluding that a nation is born stoic and dies epicurean. Nash
(1969:8) indicated that one of the reasons for the downfall of Egypt
after 1100 B.C. was the decreasing efficiency of their
administrative system as ecclesiastic-administrators practiced
crass and rigid religious formalism instead of adaptive
administrative practices.
As the ancients' experience shows, adequate levels of
production can be maintained without necessarily using the most
efficient tools and procedures. This means that while production
and productivity are related, they are not the same thing. Hence,
defining productivity as production is not useful.
The Concept of Productivity
Systematic treatment of the concept of productivity, as we
know it today, is of surprisingly recent origin. The term
originated at the end of the nineteenth century both in the Larousse
(1875) and Littre (1883) dictionaries (Bouckaert, 1992:16).
Although notions such as efficiency and economy were used earlier by
renowned economists such as Quesnay and Smith both in 1776,
23


methodical inquiry into the concept is a product of the twentieth
century.
Reviewing the literature of productivity improvement reveals a
general agreement among scholars on how to define productivity.
This consensus is reflected in Edosomwans chronological
classification of productivity definitions and measures offered by
researchers and practitioners from 1776 to 1985 (1987:4-7).
Building on Edosomwans classification as well as on the most recent
literature of productivity improvement, one can identify and define
the fundamental elements of the concept of productivity. They are
three: efficiency, effectiveness, and quality.
First, the classic definition of productivity and the most
commonly used is simply the ratio of outputs to inputs
(output/input) in any productive unit (Fitch, 1982; Bialek, 1986;
Belcher, 1987). Productivity here is defined in a narrow sense as
efficiency. This definition focuses mainly on the micro-level
functioning of the productive unit in which greater emphasis is
directed inward to its own operations in order to determine whether
it is producing a reasonable amount of outputs for each dollar spent
(Sink, 1985; Epstein, 1992). The element of efficiency is the most
commonly used component of the productivity concept, since it deals
with the most visible, tangible, and measurable aspects of the
activity of generating goods and services.
24


Productivity as a function of efficiency can be improved if
any of the following conditions are made to exist (Sink, 1985: 26):
A = Output increases; input decreases 2£-
B = Output increases;input remains constant -2-^
C = Output increases; input increases, but at a lower rate y-p
D = Output remains constant; input decreases fT
E = Output decreases; input decreases,
but at a more rapid rate t*
The second basic element of the productivity concept is
effectiveness. In this usage, productivity has been defined as the
measure of how well resources are combined together and utilized for
accomplishing a set of specific, desirable results (Mali, 1978;
Bain, 1982; Mundel, 1963). Unlike efficiency, which looks into the
internal operations of the productive unit, effectiveness looks
outward to determine the level of achievements and effects of
outputs on society. Even though efficiency and effectiveness are
related, they represent different aspects of the construct of
productivity. While efficiency is related to resource utilization,
effectiveness is related to performance. Effectiveness measures how
well the productive unit achieves a set of predetermined goals.
Accomplishing a set of results is by far the most significant
element of the productivity concept, because without a set of
25


results there is no productivity (Mali, 1978: 6). Certainly,
producing valueless or unwanted outputs would be not only a waste of
resources, but also detrimental to society. Therefore, productive
units must both be efficient and "do things right, and they must be
effective and do the right things (Kopelman 1986: 4).
Inherent within the element of effectiveness is the existence
of predetermined goals to be accomplished. The measure becomes
dynamic when a comparison is made between the intended goals and
what has been actually attained. Thus, productivity as a function
of effectiveness can be improved when achieving the highest
desirable outcomes while consuming the least amount of resources.
While the efficiency side of productivity is concerned largely with
the micro-level operation of the productive unit, the effectiveness
element is preoccupied mainly with the macro-level (Hayes, 1985;
Epstein, 1992). Efficiency is a measure of the systems performance
that focuses on the input side. Effectiveness, on the other hand,
is a measure of the systems performance which focuses on the output
side (Sink, 1985).
The third and the most recent element to be incorporated in
the concept of productivity is quality. Quality experts such as
Deming, Juran, Feigenbaum, Crosby, Ishikawa and Taguchi have
consistently advanced the argument that quality is a quintessential
to productivity. The contention is simply stated: improvement in the
quality of any productive unit reduces the costs of its operation,
26


and this in turn results in higher productivity (Deming, 1986;
Walton, 1986; Aguayo, 1990; Shetty and Buehler, 1991).
Productivity as a function of quality has been defined as
conformance to requirements (Adam, Hershauer, and Ruch, 1981; Crosby
1984; Hutchins, 1991). Quality focuses on both the micro and
macro-level operations of the productive unit. When the emphasis is
on the micro-level, quality is the degree to which the production
process or service generation conforms to a set of predetermined
requirements so that poor quality outputs can be reduced or
eliminated. Feigenbaum (1979: 5) estimated that poor quality could
represent about 15 to 40 percent of the plants productive capacity.
Poor quality resulting from not doing things right the first time
constitutes the costs of quality, which is the costs of
non-conformance to requirements or the costs of doing things wrong.
It has been estimated that while the U.S. private firms typically
have a cost of quality in the range of 20 to 40 percent of sales
price, the costs of quality in some public sector organizations are
over 30 percent of the appropriated budget (Carr and Littman, 1990:
10-11).
Quality costs are those various classifications of costs that
are related to identifying, verifying, averting, producing,
maintaining, and repairing outputs (products and services) that do
not conform to requirements (Edosomwan, 1987: 14). There seems to
be an agreement among quality scholars to classifying quality costs
27


into four categories (Edosomwan, 1987; Juran, 1988; Oakland, 1989;
Fortuna, 1990a; Carr and Littman, 1990; Hand, 1992). These are the
following:
1. Prevention Costs. These costs are associated with the de-
sign, implementation, and maintenance of a quality system
capable of anticipating and preventing quality problems be-
fore they occur. These include preventing errors, rejects,
scrap, and waste. Also included in this category are qual-
ity education and training, quality planning, quality assur
ance functions, and process control activities. Such costs
are directed towards the prevention of non-conformance to
requirements.
2. Appraisal Costs. These costs are associated with inspect-
ing, evaluating, testing, and auditing products/services,
components and purchased materials to assure conformance to
quality standards.
3. Internal Failure Costs. These costs are associated with de
fective products/services and materials that fail to reach
designed quality standards and discovered before delivery
to the customer. This category includes the costs of redo-
ing work, repair, scrap, reinspection, downgrading, retest-
ing, defects discarded, delays, process losses, and other
forms of waste.
28


4. External Failure Costs. These costs are associated with de-
fective products/services detected after delivery to the
customer. Examples of these costs include repairs, han-
dling customer complaints, reports, warranty claims, prod-
uct liability, returns, adjustments, and litigation and
other claims.
The other side of the quality construct is its emphasis on the
macro-level operations of the productive unit. In this case,
quality is the degree to which outputs (products and services)
conform to the requirements and expectations of the customer so that
customer satisfaction can be achieved. Similar somewhat to the
element of effectiveness, quality in its macro-level emphasis refers
to the degree to which outputs fulfill customers' needs and
expectations. Quality becomes what the customer perceives
(Feigenbaum, 1S83). When customers are satisfied, one can assume
that the productive unit is generating quality products or services.
While the measurement of quality at the micro-level is
objective and straightforward, measuring quality at the macro-level
is subjective and complex. Customers' needs, desires, satisfaction,
and dissatisfaction are intangible and are very difficult to
quantify. Deming (1986) argues that the cost of not producing
quality is unknown and unknowable since no one knows exactly the
cost of a dissatisfied customer. Market research conducted by Ford
Motor Company revealed that a satisfied customer tells on average
29


eight individuals the good news about the product/service, but a
dissatisfied customer tells on average more than twenty individuals
of the problem associated with the product/service purchased
(Aguayo, 1990: 14).
However, despite these measurement difficulties, it has been
suggested that quality to both the micro and macro levels is closely
related. Oakland (1989: 53) contends that there is a direct
relationship between quality costs and the productive units ability
to meet customers requirements and expectations. As quality costs
decrease, the productive units ability to satisfy customers
increase. Likewise, as quality costs go up, customer satisfaction
goes down.
Productivity as a measure of quality can be improved with the
applications of the principles of Total Quality Management. Quality
experts maintain that an organization with a well-run TQM system can
reduce its quality costs to less than 3 percent of sales or budget,
which is spent on the prevention and appraisal activities necessary
to make certain that the organization is maintaining its standards
of excellence (Crosby, 1979; Carr and Littman, 1990). In addition,
applying TQM philosophy and tools can greatly improve customer
satisfaction (Feigenbaum, 1983; Tribus, 1984; Deming, 1986; Juran,
1989).
Based on the three basic elements of productivity -
efficiency, effectiveness, and quality a well-integrated
30


definition of the concept of productivity can be developed.
Productivity is a measure of how well resources are utilized, how
well performance achieves the intended goals, and how well the
requirements of both the productive unit and the customer are
fulfilled.
Productivity Trends
Productivity is of overriding concern to economists,
politicians, community leaders, and public administrationists
because productivity growth is perceived as the main force for
bringing jobs, vitality, and prosperity. At the individual level,
it is the key to increasing the standard of living. At the firm
level, it is seen as the means for reducing costs, improving
profits, competitive position, and customer satisfaction. At the
industry level as in government, it is perceived as an essential
element for balancing budgets, releasing more resources, and
improving the quality of work life. At the national level,
productivity growth is regarded as the key to increasing real
national wealth.
Concerns with productivity in the United States have been
heightened specifically since the mid-1960s, when productivity
growth rates started to decline. Prior to the mid-1960s, labor
productivity growth in the U.S. was concrete and consistent. From
the end of World War II until 1965, national labor productivity
increased to an average of 3.0 percent a year. A decline in
31


productivity growth rate became apparent after 1965, however, and
the record for the 1970s showed a further erosion averaging 0.9
percent a year. The trend reached its lowest in the 1978-1982
period, when labor productivity decreased by an annual average of
0.2 percent. After 1982 until the present time, productivity growth
has experienced a comeback with an average annual rate of 0.9
percent (Bain, 1982; Belcher, 1987; Economic Report of the
President, 1992).
Figure 2.3 identifies three historical epochs related to the
trends in labor productivity in the U.S. private business sector:
from 1889 to 1937, when productivity growth averaged 1.9 percent a
year; from 1937 to 1973, when productivity grew 3.0 percent a year;
and the period since 1973, when productivity growth averaged 0.9
percent a year.
32


Figure 2.3 Historical Growth in Labor Productivity
Index 1929=100 (ratio scale)
500
300
200
100
90
30
Sotfca Economic Report of the President 1992. Counol of Economic Advisers, Washington, D.C.: The U.S. Government Printing Ortoe, P. 91.
Examining Figure 2.3, one can extrapolate factors that might
have influenced trends in labor productivity. The widespread use of
more advanced technologies during the Industrial Revolution could
have caused the productivity growth of 1.9 percent from 1889 to
1937. The U.S. triumph, coupled with the devastation of Europe and
Japan after World War II, leading to massive conversion of wartime
technologies and factories for peacetime use might have contributed
to the productivity growth of 3.0 percent from 1937 to 1973. And
the surge of energy prices in 1973 might have affected the decline
to a growth rate of only 0.9 percent since 1973.
Although the U.S., in absolute terms, remains the most
productive country in the world having the highest level of gross
33


domestic product (GDP) per employed person, its labor productivity
growth rate since the mid-1960s has been exceeded by virtually every
industrialized nation in the world (Belcher, 1987: 5). Applying the
most conventional labor productivity statistics, both Table 2.1 and
Figure 2.4 exhibit that while the U.S. has the highest level of
labor productivity in the world, it has the slowest productivity
growth among industrialized nations.
Table 2.1: International Labor Productivity (GDP/Employee, Purchasing Power Parity)
Country 1990 Level (U.S. 100) Hypothetical Relathn Levels*
Average % Growth 1979-90 £000 2005
United Stales 100.0 0.9 100 100
Canada 93.0 1.0 94 94
Fran ob 89.7 2.1 101 107
Italy 88.4 1.9 98 102
Geimany 79.1 1.4 63 85
United Kingdom 71.2 1.5 76 78
Japan 76.9 2.9 94 103
Korea 43.3 5.3 66 82
* Using 1979-90 Growth Rates
SourceAmeriean Productivity & Quality Center, 1992. Perspectives 92 Houston: AP&QC, P. 17.
Figure 2.4: International Labor Productivity Levels
Source: American Productivity & Quality Center, 1992. Perspedivea '92 Houston: AP&QC.P.17.
34


Both Table 2.1 and Figure 2.4 show that the U.S. has the
highest labor productivity in 1990 among major nations. But,
between 1979 to 1990, the U.S. has the slowest productivity growth
rate among this group with an annual average of 0.9 percent. During
the same period, Korea has the fastest productivity growth rate with
an average of 5.3 per year. Given the current levels of performance
and using these historical productivity improvement rates, it is
hypothesized that the U.S. will be overtaken by France before the
year 2000 and by Italy and Japan before the year 2005. Naturally,
there is no compelling reason to assume that the productivity growth
rates in the U.S. will continue the same, but it is the only
starting assumption available. Unless both the public and private
sectors take proper, decisive, and prompt actions aimed at improving
the U.S. productivity growth rate in the 1990s, the persistent
erosion of the U.S. productivity will have enormous adverse
implications for the nations standard of living, inflation,
unemployment, and quality of life.
During the last two decades, there has been a great deal of
research attempting to identify the causal determinants of
productivity growth in the U.S. and, more recently, of its
deceleration. Many causes have been alleged for the U.S.s
productivity difficulties. Those having strong historical bases and
the most commonly cited by economists include: declining capital
investment rate per worker, diminishing level of innovation and
35


technological advances, decreasing rates of improvement in the skill
levels of the labor force, and declining expenditures for research
and development. Other causes might include: increasing government
regulations and attendant bureaucratic strongholds on industry,
rising energy costs, declining the ratio of products industries to
service organizations, growing public sector, and expanding internal
inefficiencies and substandard managerial practices (Bently and
Hansen, 1980; White House Conference on Productivity, 1984;
Kopelman, 1986; Belcher, 1987; Economic Report of the President,
1992).
Currently, however, some scholars would suggest that one of
the most significant causes of the deteriorating rate of
productivity growth in the U.S. is the declining level of quality
(Deming, 1986; Crosby, 1986; Juran 1989; Feigenbaum, 1990). Armand
Feigenbaum estimated that the gross national product (GNP) of the
U.S. in 1990 lost a potential increase of approximately 7.0 percent
because of a persistent decline in quality in both private and
public sector organizations. He further estimated through the index
of quality improvement potential (QIP) that nearly $300 billion a
year could be saved for the nation if all private and public
organizations in the U.S. adopt the principles of Total Quality
Management (in Hamson, 1990: 54-56). Table 2.2 displays how
improving quality through the application of TQM in both private and
public organizations can lead to a savings of $290.76 billion for
36


the nation, which approximates a 7.0 percent enhancement in
productivity growth measured in 1990 GNP terms.
Table 22: General Systems' Estimated Impact ol Total Quality Implementation on the Gross National Product (GNP)
A B c D
Billions of 1982$ % of Total Quality Cost as a % of GNP Value % of Total Quality Cost Reduction Billions of$ Enhancement
Personal Consumption 15% 50% S31.B9
Durable Goods $ 4522 10% 66% 60.50
Non-Durable Goods 916.7 20% 33% 87.63
Services 1,327.7
Gross Private Investment
Fixed Investment
Non-res idenlial Structures 120.0 20% 33% 7.92
Producers Durable 15% 50% 29.27
Equipment 390.3 20% 33% 12.44
Residential 1B8.5
Chances in Business Imnntories 219 1S% 50% 1.64
Not Exeorfe of Goods and Services -52.5 15% 50% 3.94
Government Purchases of Goods and Services
Federal
National Defense 256.5 15% 50% 19.24
Non-defense 80.6 20% 33% 5.32
State and Local Gcvn't 469.3 20% 33% 30.97
Totals $4,144.2 $290.76
AbGNP Values B a % of A C % of B D-AjiSiC
Source: Hamson, Ned, 1990. TQM Can Save Nearly $300 Billicn tor Nation.' Journal far Quality and Participabor (PecBmbert P.S5.
Concerns with quality erosion in the U.S. prompted the
American Society for Quality Control in 1980 to conduct a survey
using 10,000 questionnaires mailed to American households to
determine the opinions of the heads of household regarding the
quality of the products and services produced in the U.S. Several
significant findings can be drawn from the 71 percent response rate.
According to the study, individuals who were better educated, with
higher income, and between the ages of 25 and 49 held the most
37


negative perceptions about the quality of American products and
services. Since this group of people hold the most important
purchasing power, they strongly shape future buying decisions. The
study revealed that 36.5 percent of the respondents ranked the
quality of automobiles "low" or very low, while Just 17.6 percent
ranked it high" or very high. Also, 33 percent and 16.7 percent
of respondents thought that toys/games and household appliances
respectively were of low or very low quality. Services rendered
by financial institutions were ranked by 17.2 of respondents to be
of low or very low quality (Edosomwan, 1987: 23-25). The
results of this study indicate that quality deserves significant
attention if there is a genuine desire to improve productivity.
Juran (1981: 16) demonstrated his perception of the relative
quality of products and services produced by the West, including the
U.S., and those produced by Japan. As exhibited in Figure 2.5,
since 1950 quality improvement in the West has been extremely slow,
and beginning in 1970 quality improvement rate started to decline.
On the other hand, Japan has the most concrete and consistent
quality improvement rate, and since 1972 Japan has the world-leading
edge in quality.
38


Figure 2.5
Relative Product Quality Comparison between Japan and the West
___THE WEST
____JAPAN
Source: Jurarv Joseph M.. 1981. "Produd Quality A Presentation for the Waa.* Management Review (June/Juty) P. 16.
Another two interesting surveys have shown U.S. problems with
quality in comparison to Japan. Table 2.3 shows that Japanese firms
for the most part are applying the principles of quality management
more than U.S. and German companies.
Table 2.3: Importance of Quality
Quality Indicator Japan % of Responding Companies U.S. Qetmanv
Customer Satisfaction Important in Strategic Planning Prooess 95 78 73
Competitor Comparison Important in Strategic Planning Prooess 92 82 61
Frequent Use of Cyde Time Analysis 54 80 47
More than 25% ol Employees on Quality Teams 36 49 20
Frequent Use of Process Simplification 82 47 34
Source: American ProduOivity & Quality Center, 1992. .-erepedh/ea 92 Houston: AP&QC, P. 10.
Similarly, Table 2.4 demonstrates the perception of customers
from different countries regarding the quality of their own and
foreign products. The American customers appear to have the lowest
39


perception of their own products compared to the Japanese and
Germans opinions of their own products.
Table 2.4: Quality Perception
* Rated by Consumers from: U.S. Products of Japan Germany
U.S. ^ 46 34
Japan 17 ' -73 32
Germany 26 51 "^"**69
Awrage of Two Foreign Countries 22 49 33
* fercert giving 6.0 or 10 rating on a 10 point tab
Source: American Productivity & Quality Center, 1092. Peapetiives>92 Houston: AP&OC, P. 10.
The aforementioned studies seem to support the argument that
an inseparable relationship exists between quality and productivity.
As quality improves, productivity growth rate increases, and as
quality declines, productivity growth rate decreases. Based on the
few available longitudinal studies on quality trends in the U.S.,
there seems to be some validity to the hypothesis that quality and
productivity are directly correlated. Observing simultaneously
quality and productivity trends in the U.S., one finds a visible
tendency between them to move in the same direction. Since the mid-
1960s, both productivity and quality improvement rates in the U.S.
have been declining.
The Significance of Productivity
Academics in general and economists in particular have
extensively debated the importance of productivity on the economy.
Consensus seems to emerge among economists that productivity growth
is related to standard of living, inflation, unemployment, and
40


quality of life (Bain, 1982; Fitch, 1982; White House Conference on
Productivity, 1984; Kopelman, 1986; Economic Report of the
President, 1992). Kopelman contends that the connection between
productivity growth and "numerous desiderata (a higher standard of
living, lower inflation, reduced unemployment, greater leisure,
etc.) is inexorable, regardless of the economic system (1986: 9).
Real income. A crucial factor to each workers well-being and
to a nations affluence is productivity growth. An enhancement in
the national standard of living, commonly measured as output per
person, is contingent upon three elements: a higher percentage of
the population employed, an increase in average hours worked, and a
greater productivity growth.
The relationship between productivity growth and higher
standard of living was observed during the early years of this
century by Frederick W. Taylor.
There is fully twenty times the output per man now than
there was three hundred years ago. That marks the
increase in the real wealth of the world; that marks the
increase in the happiness of the world, that gives us
the opportunity for shorter hours, for better education,
for amusement, for art, for music, for everything that
is worthwhile in this world -goes right straight back to
this increase in the output of the individual...from
what does the progress the world has made come? Simply
from the increase in the output of the individual all
over the world (1963: 31).
In the Economic Report of the President (1992), one finds the
case for the relationship between productivity and standard of
living stated very clearly.
41


Even a modest annual growth rate in productivity,
compared over a long time, can make a very large
difference. Growth of 2 percent maintained over 50
years would generate an increase in annual output per
worker from the current level $45,918 to $123,592 in
todays dollars lEconomic Report of the President.
1992: 90).
Inflation. High price inflation, measured by the annual rate
of change in the consumer price index (CPI), has numerous negative
implications on any economy. In recent years, many countries have
sought to reduce inflation by following tight monetary policies.
Yet, manipulating interest rates provides only temporary solutions
to the menace of the ever-rising cost of living.
Many economists believe that the most effective course of
action for reducing inflation is to increase the productivity growth
rate. Burton Malkiel (1979) explains the relationship between
productivity and inflation in the following manner:
Indeed, the slowdown in productivity growth may well
have contributed to our current stagflation condition.
If labor groups have become accustomed to, and thus
insist on, increases in real wages larger than the
present growth in productivity, their living standards
will increase only at the expense of others. Only
productivity growth can provide the increases in real
output per person that make possible overall gains in
real living standards. Without such growth, the
resulting struggle over income shares leads directly to
inflation (1979: 82).
Unemployment. The effects of productivity growth on reducing
unemployment have been discussed by several scholars (Fitch, 1982;
Kopelman, 1986). As productivity improves, business profitability
increases, providing there is no offsetting increase in variable
42


cost per unit. Profits stimulate industries to expand their
investments leading to creation of more jobs. Kopleman (1986: 9)
indicated that because of declining productivity growth, the iron
and steel industry in the U.S. between 1970 and 1981 lost 40,000
jobs.
A decline in productivity adversely impacts national
competitiveness through decreased net exports and increased net
imports causing unemployment rate to rise. Business Week depicted
this situation succinctly:
U.S. industrys loss of competitiveness over the past
two decades has been nothing short of an economic
disaster...The decline in position in the 1970s alone
amounted to some $125 billion in lost production and a
loss of at least two million jobs (in Fitch 1982: 14).
Quality of Life. John W. Kendrick (1977) asserts that in
addition to raising the standard of living, productivity growth
permits alternative utilizations of all means of production:
leisure in place of labor, consumption instead of capital formation,
and conservation of natural resources instead of depletion.
Productivity growth concedes the transference of wealth to
assure that human needs are fulfilled. This is in some degree
manifested in the U.S., the most productive nation in the world, as
one observes that expenditures on social programs have increased
from $62 billion in 1970 to $766.8 billion in 1993 (Budget of the
U.S, Government, 1993: 15).
43


It should be recognized that productivity provides better
education, widespread public health care, income redistribution
programs, environmental protection, and a variety of other programs
that are easily financed out of the yields of productivity growth.
In an economy with growing productivity rate, an increase in
expenditures on social programs can be paid for completely out of
the annual gains in national output contributed by productivity.
Therefore, it is no wonder that the worlds poorer nations with slow
productivity records still are far behind in meeting their peoples
needs (Baumal, Blackman, and Wolff, 1989).
A productive society has been characterized by the following
elements: the availability of an environment conducive to saving,
investment, innovation, and creativity; the ability to live within
its means and not to tax and spend the product of todays labor
without considering tomorrows needs; promotion of a spirit of
adventure and entrepreneurship; encouragement of individuals and
institutions to work together toward achieving the goal of a better
life for all; recognition of the need to mitigate the losses that
some may experience when others gain; and finally recognition of the
sovereignty of consumers by maintaining efficient market forces and
producing quality products and services that embody productivity
enhancing techniques and technologies (White House Conference on
Productivity, 1984: 15).
44


Productivity Improvement In the Public Sector
Having examined the crucial role of productivity in the
economy of a society at all levels, now we will turn our analysis to
the dynamics and significance of productivity in the public sector.
Reviewing productivity literature, one finds that little is known
about public sector productivity in general or that of state and
local governments in particular. Most studies of aggregate
productivity ignore the public sector. When gross national product
(GNP) data are calculated, for instance, public sector output is
simply valued at input costs. By this measure, government
productivity is assumed to be essentially unchanging with no
possibility for improvement or decline. Hatry and Fisk (1971)
reflected this situation as they stated the following:
The main thing to be said about the productivity of
local governments in the United States is that little is
known about it. Little factual data is currently
available to show the current level of productivity of
local governments in the United States or to indicate
whether it has been rising or falling, and to what
rates. Escalating costs and escalating urban problems
suggest it has been falling; however, the nation has
little in the way of hard facts to go on (1971: vii).
A major reason for neglecting the public sector on a national
productivity basis is the difficulty in measuring its outputs (Ross
and Burkhead, 1974; Ammons, 1984). The absence of direct pricing
for government outputs has resulted in adopting the practice of
estimating output as the cost of input. Direct prices are not
usually charged for most goods and services provided by public
45


sector agencies due to the nature of their "publicness. John L.
Mikesell (1986: 3) has explained the publicness dimension as being
comprised of two elements: failure of exclusion and nonexhaustion
or nonrivalry. Failure of exclusion means that there is no
mechanism for preventing people from receiving the service even
though they have not paid for it. Nonexhaustion or nonrivalry means
that one persons use of the service does not preclude others from
simultaneous full use of the same service.
In contrast to the private sector whose outputs of goods and
services can be identified as consumers either purchase them or do
not and measured by the price criterion, public sector outputs
neither are as easy to identify nor to quantify. For example, no
direct pricing exists to assist policy analysts in deciding whether
police services are efficient or effective or considered to be
satisfactory by the public. Because of these measurement
difficulties, most people perceive the public sector to be
inherently less efficient than the private sector (Hayes, 1977).
Interest in productivity of the public sector begin to rise by
the 1970s (Kelly, 1988). This is evident by the increasing number
of studies and publications investigating the emerging concept of
public productivity. Many scholars have identified several major
reasons leading to the increasing concern about public sector
productivity (Keane, 1980; Neugarten, 1981; Morley, 1986).
46


First, public sector rapid growth in the national economy has
been perceived as a principal catalyst for the increasing interest
in improving public productivity. The budget expressed in terms of
current dollars (at existing price levels without controlling for
inflation) is one of the most reliable measures of the growing size
of the public sector. Over the past 200 years, the federal budget
has experienced a dramatic growth. While the first budget was
around $7 million in 1790 dollars, in FY 1988, expenditures were
over $1 trillion, about 150,000 times greater (LeLoup, 1988: 35).
The General Accounting Office (GAO) (1987: 4-5) reports that state
and local government spending increased by more than 600 percent
from the mid-1950s to the mid-1970s because of population increases,
rising public service demands, rising costs, and increasing
governmental involvement in welfare and regulation. Expressed as a
percentage of gross national product (GNP), the growing size of
public sector expenditures is vividly observed. Public spending at
all levels of government federal, state, and local increased
from 18 percent of GNP in 1947 to 35 percent in 1988. Figure 2.6
shows that federal spending grew from 13 percent of GNP in 1947 to
24 percent in 1988. Likewise, state and local governments
expenditures increased during the same period from 6 percent of GNP
to around 11 percent.
47


Figure 2.6:
Governmental Expenditures, by Level of Government,1947-90
Percent of GNP
Source: Eoonomic Report of the Preaidant 1991. Council of Economic Advisers, Washington, D.C.: The U.S. Government Printing Office, P. 379
Second, the growing tension between taxpayers and government
has been cited as a main cause for increasing interest in improving
public productivity. The "taxpayer revolt" epitomized by the
passage of Proposition-13-type in California in 1978 has focused
attention on the rising spending of government, the size of public
sector employment, and the level of wages and benefits. Tax
ceilings not only restrict the amount of taxes levied at the state
level, but also make it politically difficult for local governments
to raise taxes and fees in order to offset deteriorating tax bases
and rising costs of service provision. As of the 1978, due to
continual citizen pressure for tax relief, nine states had imposed
tax ceilings on their localities (Keane, 1980). On November 3rd,
1992, Colorado voters approved The Taxpayers Bill of Rights
48


(Amendment 1), imposing constitutional limits on the power of state
and local politicians to raise taxes and spend public dollars. Many
local governments across the U.S. have Proposition-13 type referenda
enacted. Also, at the federal level, several proposed constitutional
amendments in Congress to limit government spending have been
introduced (i.e., the Gramm-Rudman-Hollings mandatory deficit
reduction plan).
The underlying themes behind the "taxpayer revolt are to
bring bureaucracy back under control and to strengthen the publics
ability to hold public officials accountable. Taxpayers
increasingly feel that they are not getting their moneys worth from
the services provided by government. Yet, the ever-rising demand
for more services, the rising costs of service provision, and the
declining revenues created a fiscal crisis exemplified by a national
debt of more than $4 trillion. This fiscal stress has produced a
precarious situation encountered by public managers. In. order for
government to meet properly the challenges of these financial
constraints, public officials have to select one or more of the
following options: (1) increase revenues through raising taxes; (2)
curtail service provision; (3) expand the quantity and quality of
services provided with existing resources (Morley, 1986: 4). The
first two options are the least desirable from a political
perspective, since they have adverse effects on citizens.
Therefore, the most viable course of action for dealing with the
49


fiscal crisis is to increase the quantity and quality of services
provided with existing resources. This preferred alternative
reflects the popular notion of doing more with less.
Third, despite the lack of conclusive evidence, there exists a
wide belief that government productivity growth is far behind the
already declining productivity rate of the private sector. The
Committee for Economic Development (CED) (1976) states that there is
little evidence that productivity in the public sector is keeping
pace with productivity in the private sector. The CED contends that
comparisons of similar services provided by the private sector
reveal lower service quality and higher expenses in the public
sector. It further suggests that the quality and efficiency of
government services have not increased as fast as have their costs.
In a similar vein, Bradford, Malt, and Oates (1969) found that local
governments had not been able to offset the rising costs of inputs,
mainly manpower, by increasing the efficiency of these inputs
through cost-saving advances in methods of production. They argued
that improvements in quality of output had occurred but, if
anything, they had stimulated rather than reduced levels of public
spending (1969: 188-189).
It is possible to correlate the perceived inefficiency of
government to factors inherent in public sector agencies that
militate against productivity. It is clear that government has no
force comparable to the profit motive prevailing in the private
50


sector to reduce costs. On the contrary, some have argued that one
element of achievement for most public officials and their
bureaucracies, which in most cases are monopolies, is their ability
to maximize budgets, staff, and range of activities (Niskanen,
1991). It has also been argued that the line-item budget and civil
service rules, originally established as tools to protect against
mismanagement and favoritism, have retrograded into systems for
protecting mediocrity and the status quo (Osborne and Gaebler, 1992).
Fourth, rising interest in public productivity has been
attributed to the widening gap between citizens expectations and
perceptions of government services (Fried, 1976; Committee for
Economic Development, 1976; Ladd, Carl, and Everett, 1983; Kettl,
1990). Concern about productivity and the evidence of its current
status is influenced primarily by what the public expects and feels
they are receiving from government. Almost every major survey on
the topic indicates that a vast majority of American people believe
that they are not getting their moneys worth from the taxes they
pay.
The gap between citizens expectations and perceptions of
government translates into diminishing confidence and trust.
Citizen confidence in the U.S. public sector has reached a low level
in the 1980s. In 1988, the Gallup Organization conducted a survey
for the American Society for Quality Control to evaluate consumers
perceptions of government services. The survey reveals that only 1
51


in 11 Americans believes that government does a very satisfactory
job in providing quality services. Only 13 percent feel that the
federal government is managed effectively, and just a few more feel
the same about state and local governments. Almost half of the
survey respondents stated that governments should make more efforts
to improve, but a third have given up hope of government and
demanded that government services be turned over to the private
sector (Carr and Littman, 1990: 9-10).
Productivity improvement becomes essential for reducing costs,
increasing efficiency, effectiveness, and quality. This
consequently can transform into enhancing citizens trust and
confidence in their government. It seems pertinent to conclude this
section with the contention that because government spends public
money, it has a higher moral responsibility towards citizens than
any other sectors of the economy to improve its productivity.
Hence, it becomes clear that government productivity takes on
greater significance than that of the private sector.
Conceptual Problem of Public Productivity
Even compared to the complexity of delimiting the concept of
productivity in general, defining productivity in the public sector
is far more problematic. Van B. Cleveland (1979) questions whether
the concept of efficiency can mean the same thing when applied to
both private and public sectors. He argues that since economists
traditionally have used the term efficiency in a way that ties it
52


to the utilitarian theory in which value is entirely subjective, the
application of the construct of efficiency to government is quite
dubious. Based on the utilitarian notion of value, individual
utilities are non-comparable, non-commensurable, and totally
subjective. Given these assumptions, the utilitarian view asserts
that no objective criteria for allocating social benefits, goods,
and services can be determined by any entity external to the
Individual himself/herself (including government) that will
distribute scarce resources efficiently for the purpose of achieving
the greatest good for the greatest number of people. Only by
transacting in a freely competitive market can individual
satisfaction be maximized with prices reflecting actual costs,
benefits, marginal utilities, disutilities, and trade-offs (Kelly,
1988: 7).
It is obvious that the public sector does not represent a
freely competitive market, and individuals do not independently
select specific public goods. Lineberry (1977) contends that almost
all public goods and services are not delivered to individuals, but
to collective units such as families, firms, neighborhoods,
municipalities, states, and regions, which are the negotiators of
public goods and services. He further argues that most individuals
do not pay for public goods on the basis of marginal utilities or
costs. Most taxes are paid independently of receiving particular
public goods and services.
53


Given the stark differences between the individual consumer
and the public client, and due to the inherent differences between
the private and public sectors typified by non-exclusion,
non-rivalry, lack of direct pricing, lack of profit motive, lack of
a freely competitive market, intangibility of services, and
multiplicity of objectives it becomes evident that while
efficiency, effectiveness, and quality converge readily in the
business sector, they do not converge so readily in government.
In the private sector, competition and market forces compel
businesses to operate simultaneously efficiently and effectively so
that they can provide the goods the customer demands at prices
consumers are willing to pay. However, because market forces and
competition do not usually affect the public sector, the
relationship between efficiency and effectiveness are more tenuous
(Mark, 1981: 23). A government agency may be inefficient in running
its internal operation, but may be completely effective in achieving
its goals. For instance, a police department might be corrupt and
wasteful, but if the citizenry demand more police and are willing to
pay for more policing, it will be effective in meeting the public
need (Burkhead and Hennigan, 1978). However, sometimes a public
sector agency might be highly efficient, but completely ineffective
in maximizing satisfaction for the subjective demands of the public.
Frequently in a democratic society, a public bureau is commissioned
to provide goods or services that are not desired, needed or
54


ft
preferred by the majority, but rather are essential to the minority
such as the poor and the elderly.
Similarly, transferring the private sector notion of quality
without regard to the uniqueness of government can create conceptual
confusion. In the business sector, the meaning of the construct of
quality is very clear. It is often an observable part of the
finished product and is monitored in the quality control phase of
production. If quality is not observable, as in most private sector
service provision, its degree of goodness or badness is reflected in
sales (Morley, 1986). Quality attributes and variables may be of
several types: (1) time-oriented (serviceability, reliability, and
maintainability); (2) sensory (color, taste, beauty, appearance, and
others); (3) structural (including frequency, weight, length, and
viscosity); (4) commercial (warranty); and (5) behavioral and
ethical (fairness, honesty, courtesy, and so on) (Edosomwan, 1987:
9).
Yet, because of two features idiosyncratic to the public
sector, the applicability of the private sector notion of quality to
government becomes problematic. The first feature is that the
public sector mostly provides services that are often intangible and
not divisible into discrete units. They cannot always be packaged
in which citizens can easily identify their quality characteristics.
For example, it is quite misleading and even rather meaningless to
divide the output of education into a number of units. What is a
55


unit of education? Is it a number of classes taken? Is it the
number of hours spent in class? Is it the amount of knowledge
transmitted to students? Is it the number of students graduated?
The second feature is that government outputs are usually consumed
the moment they are produced and delivered. Production and
consumption are almost simultaneous. There is no product to be
measured only the service output. Services generally are not
stored so that they can be checked for quality standards; they
perish upon creation (Adam, Hershauer, and Ruch, 1981; Kelly, 1988).
Given the conceptual and measurement difficulties, some have
contended that the transfer of productivity as a dominant value to
the public sector is questionable (Kelly, 1988). Hence, it is
suggested that for the construct of productivity to be viable in
government, it must be developed from the framework of its
uniqueness. It must take into consideration the peculiar
characteristics of the public sector such as non-exclusion,
non-rivalry, etc. It also must cover the fundamental principles of
governance such as equality, fairness, and merit.
56


The Meaning of Public Productivity
Concurrent with the conceptual problem of applying the private
sectors notion of productivity to government is the widespread
disagreement on how to define productivity in the public sector.
There seems to exist a language barrier among academics themselves
and between them and practitioners on the meaning of public
productivity. Holzer and Halachmi (1988) have identified 305 terms
associated with concept of public productivity. Burkhead and
Hennigan (1978) argue that without conceptual delimitation,
government productivity becomes an empty notion.
A review of the expanding literature indicates that
productivity is characterized as related to or defined
by the following terms: efficiency, effectiveness, cost
savings, program evaluation, work measurement, employee
incentives, management effectiveness, input-output
analysis, work standards, and the political/social
environment...Productivity improvement in government is
obviously a virtue worth pursuing. But sometimes it
becomes an empty phrase that embraces almost any change
for the better in a federal, state, or local
government program (1978: 34).
Robert E. Quinn (1978) expressed similar sentiment as he
writes:
One of the biggest problems facing the public
productivity movement is the assumption that everyone
shares a common definition of the term productivity.
The assumption is false. The authors who write about
productivity discuss it from perspectives rooted in such
diverse subject areas as measurement, labor relations,
training and development, management, budget, and
finance...Productivity tends to be intertwined with the
concept of efficiency, savings, cutbacks, measurement,
effectiveness, and performance. The result is
considerable confusion (1978: 41).
57


Nevertheless, despite the lack of a single, precise,
agreed-upon definition of public productivity, there are several
fundamental elements that consistently emerge In one shape or
another within the diverse definitions. Similar to the private
sector productivity concept, these elements are efficiency,
effectiveness, and quality. In their rigorous study, Ammons and
King (1983) concluded from their survey of 400 chief local
government administrators with 80 percent response rate that out of
the twelve definitions proposed, the three which most closely
capture the essence of serious public productivity definition were
efficiency, effectiveness, and quality. Likewise, Hatry and Fisk
(1992) argue that efficiency, effectiveness, and service quality are
the most crucial elements that must be included in any attempt to
define and measure productivity in the public sector.
The simplest definition of public productivity and the most
commonly used in current literature is associated with the notion of
efficiency. Productivity is the relationship between outputs and
inputs, expressed as a ratio (output divided by input). Public
productivity here is defined in economic terms as the attempt to
maximize outputs in relation to inputs. In general, economists call
this dimension of productivity technical efficiency, in which
efficiency is measured by the ratio of products/services generated
to resources consumed. Hatry and Fisk (1992) indicate that
58


technical efficiency is by far the most common approach used by
those public agencies that release their productivity records.
It has been suggested that if public administrators are to be
able to develop a logically consistent operational measure that will
lead to productivity improvement, public productivity must be
defined in a more narrow, precise, and simple concept as efficiency
(Hayward, 1976; Quinn, 1978; Hatry, 1978; Burkhead and Hennigan,
1978). Accordingly, a police department will be considered
efficient if it maximizes the number of arrests with the least
amount of resources consumed.
Effectiveness, however, is associated with the degree to which
the intended goals are achieved. It has been claimed that since
government services are not as final an output as products in the
private sector, but are provided to attain some desired social goal
or consequence, effectiveness takes on higher importance in the
construct of public productivity (Morley, 1986). For instance,
streets are repaired to maintain public safety, garbage is collected
to preserve public health and attractiveness, and criminals are
arrested to restore peace and harmony.
In their definition of public productivity, Downs and Larkey
(1986) separated the notion of managerial efficiency from economic
efficiency. While managerial efficiency compares the ratio of
inputs to outputs of a public bureau, economic efficiency measures
the effect of government agencies outputs on the society at large.
59


Economic efficiency Is a term used to describe the concept of
effectiveness. Proponents of the element of effectiveness emphasize
that we should not concern ourselves only with doing the thing right
in terms of efficiency but also with doing the right thing in terms
of achieving the desired objectives.
Recognizing the difficulties in measuring the consequences
intended or occurring as a result of direct outputs, some have
suggested the use of proxies to indicate the effects of government
outputs (Ross and Burkhead, 1974). Proxies such as test scores,
crime rates, unemployment rates, homeless rates, and mortality rates
are measures of effectiveness for some public sector organizations.
Quality is the most recent element to be incorporated into the
concept of public productivity. Prior to reaching its current high
status, quality has been treated in the literature as part of
effectiveness. Quality in the public sector refers to how well
public bureaucracy is responsive to the valid needs and requirements
of citizens (Garvin, 1988). In other words, it is a measure of how
well government conforms to the requirements and the needs of the
public. Quality is evaluated primarily by customer satisfaction.
Three elements can be identified which influence the level of
customer satisfaction: (1) the intrinsic value of the
product/service provided such as right output, consistency of
output, timely delivery, reliability, durability, serviceability,
performance, convenience, and safety (Garvin, 1988; Carr and
60


Littman, 1990; Epstein, 1992); (2) the behavioral disposition of
service providers such as responsiveness, courtesy, empathy, and
credibility (Zeithaml, Berry, and Parasuraman, 1990); and (3) the
attitudinal orientation of customers such as customer perceptions of
the total service organization, customer expectations of service
quality, and customer feelings of fulfillment or grievance (Adam,
Hershauer, and Ruch, 1981; Milakovich, 1992).
While quality measurement in a manufacturing product
environment is straightforward, measuring quality in the public
sector is much more difficult. Assessing the quality of government
services does not lend itself to objective analysis. Because of the
many characteristics peculiar to government, quality measurement
involves a great deal of judgment and subjectivity.
However, the concept of Total Quality Management permits a
more complex and sophisticated approach to quality measurement in
government. TQM advocates a quality measurement of the entire
service organization in which customer satisfaction constitutes only
one element of the construct of quality. TQM contends that one must
not only be concerned with the quality of the delivered service and
the satisfaction that goes with it, but also with the quality of the
total operation that generates the service. Systematic treatment of
the concept of TQM will be presented in the next chapter.
Emanating from the philosophy of TQM is the Malcolm Baldrige
National Quality Award, the most comprehensive and vigorous measure
61


of quality for both product and service organizations. The Baldrige
award assesses quality along seven categories: leadership,
information and analysis, strategic quality planning, human resource
utilization, quality assurance of products and services, quality
results, and customer satisfaction. Asserting the Baldrige awards
general applicability to the public sector is the fact that it has
been replicated by two governmental awards: The Federal Quality
Improvement Prototype Award and The Presidents Award for Quality
and Productivity Improvement. Based on TQM theory the Baldrige
award possesses the capacity not only to assist public sector
agencies in finding out whether or not they are generating quality
services, but also to suggest explanations why they are producing or
not producing quality outputs.
Productivity Improvement Approaches in the Public Sector
Typically, the chief objective of studying productivity is to
improve it. There exists an astonishing number of approaches and
methods designed to improve public productivity. The scope of the
accumulated knowledge concerning public productivity improvement is
recorded by Public Sector Productivity, a resource guide which lists
1000 recent sources including 200 books, 400 articles, 100 reports,
200 periodicals, 100 organizations, and the varied sources of
knowledge of productivity improvement methods (Holzer and Halachmi,
1988). The myriad public productivity improvement approaches can be
62


attributed to several factors Including the multidisciplinary nature
of the field of public administration, the diversity of public
sector organizations, and the varied sources of knowledge of
productivity improvement methods. Marc Holzer (1992) depicts this
state of affairs as he writes:
A public sector productivity improvement program is
drawn from a broad menu" which may include advanced
techniques for the management of budgeting, finance,
personnel, planning, measurement, evaluation, and
decision making. That menu offers selections ranging
from measures of efficiency to those of performance;
from computerization to robotics; from collective
bargaining to joint labor-management cooperation; from
money as an incentive to recognition as an incentive;
from investments in equipment to those in people; from
training to management education; from information
feedback to information networks; from contracting out
to contracting in; from productivity knowledge to new
means of financing productive investments (1992: 1).
However, despite the difficulty in constructing a monolithic
or universal model comprising all possible approaches to improving
public productivity, some have attempted to contrive general
classifications of productivity improvement methods (Ammons,
1983: 50-57; Alsaud, 1986: 136-161; Hyde, 1991b: 376-380). While
such classifications are beneficial for the purpose of taxonomic
analysis, they can be easily criticized for individual selection
biases in terms of commission and omission.
Perhaps, what is more important is not the sheer number of
productivity improvement methods, but the degree to which a
productivity program can be approached systematically. There are
many ways to approach productivity improvement programs. A typical
63


step-by-step process of applying a productivity technique requires
adaptation to a specific organizational context. Holzer (1992)
suggests ten steps for public agencies to follow in order to
increase the possibility of success. These steps are conceptualized
as follows:
1. Clarify goals and obtain support.
2. Locate models.
3. Identify promising areas.
4. Build a team.
5. Plan the project.
6. Collect program data.
7. Modify project plans.
8. Expect problems.
9. Implement improvement actions.
10. Evaluate and publicize results (1992: 2-3).
Recognizing the difficulty in including all possible
productivity improvement approaches which constitute voluminous
literature, it is the intent of this study to discuss only the most
significant methods of public productivity improvement. Those
techniques will be analyzed within the framework of six categories:
Technological and Information Approaches
It has been estimated that capital investment and
technological innovations are responsible for more than 60 percent
of the productivity improvement in industry (Joint Financial
Management Improvement Program, 1976: 22).
Despite the lack of analogous data concerning the public
sector, there is every reason to believe that technological
advances, particularly computer-based systems, provide great
potential for improving government productivity. The major part of
64


all recent public productivity gains stems from computer technology.
Computer applications have engendered a real revolution in handling
the enormous amounts of paperwork (Swiss, 1991).
Although microcomputer systems application in public agencies
still lags behind that in private organizations, the growth rate of
implementing all types of computer systems in government has been
phenomenal. A 1982 study conducted for the International City
Management Association (ICMA) discovered that only 13 percent of
respondent local governments were then utilizing microcomputers
(Sacco and Ostrowski, 1991). Yet, a similar study completed by
Ostrowski, Gardner, and Motawi in 1985 for the Government Finance
Officers Association (GFOA) found that nearly 90 percent of
respondent local governments were using microcomputers (Ostrowski,
Gardner, and Motawi, 1986). At the federal level, over 20,000
mainframe and minicomputers were used by federal civilian agencies
in 1985 (Denhardt, 1991). Also, it was estimated that the number of
PCs or microcomputers to be in service by the end of 1986 was
400,000, a growth rate of nearly 1,000 PCs per day (Sacco and
Ostrowski, 1991).
Given the multiplicity of technological innovations
implemented in the public sector that range from new forms of
sanitation trucks to large high pressure hoses used by fire
departments, the bulk of scientific research has been devoted to the
relationship between computer technology and public productivity
65


(Krasmer and King, 1980; Carson, 1983; Callsta, 1985; Sacco and
Ostrowski, 1991). Several methods of managing information systems
or computer applications can be identified.
Administrative support systems. These encompass systems that
aid public administrators to better manage internal fiscal
operations and clerical and other administrative tasks. Internal
fiscal management systems Integrate the systematic collection,
handling, and transmission of data on the current and anticipated
funds flow on the agency and on current personnel status by
departments. These systems can improve productivity by furnishing
managers with more accurate and up-to-date information regarding
personnel and financial position, so that effective planning and
budgeting can be carried out. Furthermore, such systems enable an
organization to monitor effectively its financial operations
resulting in efficient allocation of resources, more rigorous
analysis of expenditure patterns, active release of more money for
short-term investment, and prevention of fraud and corruption with
public money (Kraemer and King, 1980).
Office automation systems. Word processing, data entry/file
management systems, communications, graphics, and desktop publishing
are common forms of office automation. These systems have their
highest contribution to improving public productivity in agencies
that produce a substantial amount of reports like the General
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Accounting Office (GAO), or Office of Management and Budget (0MB)
(Kraemer and King, 1980; Sacco and Ostrowski, 1991).
Database management systems. These are powerful technological
innovations designed to create and handle immense systems of files
which can run as an integrated whole. Using such systems allows
public administrators to explore and analyze data from
multidimensional perspectives. Databases provide the greatest
potential for productivity improvement in agencies in which data
must be analyzed in different ways, such as police departments
(crime-incidence analysis), planning agencies (demographic
analysis), and budgeting bureaus (economic forecasting) (Kraemer and
King, 1980; Sacco and Ostrowski, 1991).
Expert systems. These are considered to be one of the first
practical products of the discipline of artificial intelligence.
They are software packages that mimic the decision-making processes
adopted by human experts in a specific field. Expert systems employ
decision heuristics (logical rules) and information to select the
best possible decision given incomplete data and uncertainty.
Typically, they contain question/solution sets of data that assist
the user to reach the optimum alternative by logically identifying
information provided by human experts in a particular field and
recommending options to utilize the data to bring solutions to
problems. Expert systems have the greatest potential for
productivity improvement in areas where technical knowledge is
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required including resource allocation, problem diagnosis,
scheduling, management of complexity, and decision support. They
are used to varying degrees in NASA, the Department of Defense, the
Environmental Protection Agency, the Department of Agriculture, and
some state and local governments (Denhardt, 1991; Sacco and
Ostrowski, 1991).
Training and Development Approaches
With the swift changes in technologies, nature of work, and
work force demographics, workers skills and knowledge become
rapidly obsolete. Goldstein and Gilliam (1990) have estimated that
since engineering technology is changing so quickly, half of what is
learned in school is considered obsolete within five years of
graduation. The importance of improving employees skills
associated with the introduction of new technologies has been
acknowledged by developing a formula for technology management: for
every five dollars spent on hardware, fifteen dollars must be spent
on software, and eighty dollars must be spent on orgware, training
and development (Denhardt, 1991: 276).
In 1980, it has been estimated that public and private
organizations spent more than $30 billion for employee training and
development almost half the amount spent on all higher education
(Kopelman, 1986: 108-109). Because most government operations are
labor-intensive, productivity gains will depend heavily on improving
the skills and knowledge of employees. Several training and
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development methods assumed to enhance public productivity can be
identified as follows:
On-the-job training. One of the most widely used training
techniques in government involves assigning trainees to experienced
employees or supervisors for on-the-job training. The main
objective of this training method is to learn by observation and
imitation of effective job performance. Controlled assignments,
reading, and group sessions are its major components. Controlled
assignments refer to systematic job rotation associated with
internship. If an employee learns by doing, planned diversification
of work experience becomes one of the more effective methods of
development. Reading includes instructional and policy materials,
handbooks, procedure manuals, or periodic bulletins. Group sessions
consist of periodic staff meetings, formal lectures, discussion
group, group-project technique, conference method, and
group-diagnostic processes (Stahl, 1983: 292-294).
Programmed instruction. This training technique is
distinguished by five principles: specific learning objectives;
logically ordered modules; self-speed learning interactive response
allowing the evaluation of understanding; and tabulated results.
Program instruction has been used to train employees to perform
various tasks such as machine operation, customer relations, and
supervision. Saving time is the major advantage of utilizing this
particular training method. An average employee can be taught the
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same information as by other methods in about one-third the time
(Kopelman, 1966).
Organization development (OP). This method is an integrated
process that looks at total organizational deficiencies and attempts
to solve them in a systematic manner. French and Bell have defined
OD as:
... a long-range effort to improve an organizations
problem-solving and renewal processes, particularly
through a more effective and collaborative management of
organization culture with special emphasis on the
culture of formal work teams with the assistance of a
change agent, or catalyst, and the use of the theory and
technology of applied behavior science, including action
research (in Luthans, 1989: 599).
Even though the origin of OD has been traced to laboratory or
training group techniques sometimes referred to as sensitivity
training or T-groups (T for training), it incorporates within its
scope grid training, surveys of group behavior, team building,
problem-solving sessions, and transactional analysis (Stahl, 1983;
Luthans, 1989). As an instrument for change and development of
human resources, organizational development is a powerful training
tool designed to instill into employees a sense of flexibility and
creativity, hence leading to improved organizational performance.
Market-Driven Approaches
The monopolistic nature of most government agencies is often
mentioned as a major factor militating against productivity
improvement. More specifically, the monopolistic character of most
public sector organizations has generated serious attacks on the
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entire fabric of government. Examples of such attacks are the
following: the growth of government is out of control resulting in
excessive intrusion into the private lives and entities; the
government provision of goods and services is inherently inefficient
and ineffective; bureaucrats and public bureaucracies are out of
touch with the citizenry and are not responsive to their needs; and
government consumes a major portion of the available scarce
resources and thereby endangers economic growth (Jennings, 1991).
In an effort to deal with the negative aspects of monopolistic
government, an influential theory in the field of public
administration called public choice has emerged. Based on
utilitarianism and the American liberal tradition, the public choice
theory promotes the free individual choice, maximization of
individual utility, and cooperation in those instances that require
collective action (Harmon and Mayer, 1986: 244). A freely
competitive market seems the only viable schema within which these
principles can materialize (Buchanan and Tullock, 1962; Ostrom,
1974). Emanating from the public choice theory are two major
approaches to improving public productivity.
Privatization. In the broadest sense, privatization refers to
the removal of government from any involvement in the provision of
services, and the returning of government operations and property to
the private sector. It is assumed that returning government
operations and assets to the private sector can achieve the
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objective of increasing government productivity. The concept of
privatization is invariably predicated upon the hypothesis that the
private sector is more efficient and effective than the public
sector.
Privatization consists of three basic forms: sale of
government assets (divestiture), private financing of public
projects (infrastructure financing), and private provision of
services (contract, franchise, and voucher) (Seader, 1986). Thus,
because privatization provides a choice of services based on a
competitive market, it is contended that it is the key to improving
the productivity of public agencies, public programs, and public
services (Savas, 1987).
User charges. Because of both public choice rationale and
declining revenues, user charges have been widely utilized in the
public sector. User charges have been defined by the Bureau of
Census as:
Amounts received from the public for performance of
specific services benefiting the person charged and from
sales of commodities and services ... including fees,
toll charges, tuition, and other reimbursement for
current services, rent and sales incident to the
performance of particular government functions, and
gross income of commercial-type activities (parking
lots, school lunch programs, and the like) (in Mikesell,
1986: 371).
User charges are based on the assumption that some public
goods and services can provide private benefits, and such benefits
can be only enjoyed by those individuals who pay for the service.
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Hence, user charges can improve both the efficiency of government
resource allocation and equity of distributing public service costs.
Financial and Budgetary Approaches
Financial and budgetary processes are essential for allocating
government resources, controlling operations, and managing service
delivery. Operating within the scope of management systems, budgets
are fashioned to accomplish a mixture of values, including
productivity improvement. Any approach to budgeting is designed to
serve at least three different goals: planning, management, and
control (Schick, 1987). Planning is related to establishing
organizational objectives and developing strategies to achieve these
objectives. Management refers to the structure of organizational
capabilities and the development of personnel and resources
necessary for translating the approved goals and objectives into
action. Control involves the obligatory process by which public
officials follow the established policies and procedures. More
important is the fact that budgets are the most powerful decision
making tools for selecting the most efficient and effective resource
allocation choices. Besides line-item and performance budgeting,
two other budgetary approaches designed to increase public
productivity can be distinguished.
Planning-programming-budgeting systems (PPBS). Developed by
the Rand Corporation in 1960, PPBS was applied first at the
Department of Defense under Secretary Robert McNamara to improve the
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quality of decision making and budget planning for national security
policy. It is an attempt to connect planning; systems analysis,
program evaluation, effectiveness measures, multiyear projection,
and budgeting in a single construct. As a policy-choice tool, PPBS
allocates resources based on program goals and makes decisions on
the basis of quantitative comparisons of costs and benefits.
Designed to improve rationality, PPBS possesses five main
characteristics: specifying goals and objectives, assigning
alternative means for achieving objectives, analyzing costs and
benefits of alternative means, selecting the most beneficial
alternative, and programming all work towards the achievement of
objectives (Lewis, 1988). PPBS contribution to public productivity
centers on its emphasis on overall effectiveness of programs or
policies (Schick, 1987).
Zero-based budgeting (ZBB). Developed by Peter Phyrr for
Texas Instruments and later for the State of Georgia, ZBB became
Jimmy Carters promise for effective government (LeLoup, 1988). ZBB
requires that the funding of any existing or new program be
justified, without regard to previous levels. It strips away the
last years level and begins the analysis of fund requirements at a
level below that of the previous fiscal year. This level could
start with zero, a minimum level, or designated program level, such
as 50 or 75 percent of previous years budget. ZBB involves four
basic steps: agencies must identify decision units; managers must
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formulate prioritized decision packages including different levels
of appropriations requests; ranking of decision packages; and
choosing the higher priority decision packages. Zero-based
budgeting can positively impact productivity by its continual
evaluation of program efficiency and effectiveness throughout the
budget-operating year and by its systematic challenge to the
incremental arrangement.
Participative Management Approaches
Most human relations proponents would agree that participatory
management methods have positive effects on productivity.
Participation allows more effective utilization of human resources.
The quality of service outcome will enhance when all employees are
provided with the opportunity to engage actively in key managerial
processes affecting their job related matters. Several participative
methods designed to improve government productivity can be
identified.
Management by objectives (MBO). This concept was popularized
by Peter Drucker in 1954. MBO is a highly participatory approach to
setting clear and measurable objectives for the entire organization.
MBO has been referred to by a variety of labels: management by
results, performance-planning evaluation, work planning and review,
and participative goal settings. Management by objectives
emphasizes results rather than processes and stresses the importance
of participation and responsibility by the lower-level employees in
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establishing objectives and planning how to achieve them.
Generally, MBO consists of four components: establishing
performance goals and objectives, developing plans (including mutual
agreements between managers and employees on resource needs,
targets, completion dates of the set objectives), periodic
performance monitoring and evaluation, and annual performance
appraisal.
Quality circles (QC). Originated in Japan in the early 1960s,
primarily to improve product quality, quality circles are one of the
most popular forms of job participation. A QC is a small group of
employees sharing the same area of responsibility who voluntarily
meet on a regular basis (usually an hour a week) in an effort to
identify, analyze, and develop solutions for a range of work-related
problems. Quality, efficiency, and effectiveness are typically the
main subjects of discussion. QCs are in some ways very different
from conventional participatory methods with respect to the
following factors: the selection of issues and projects is left to
the group; the group as a whole analyzes and solves problems;
training is provided for all group members; and recognition is given
to the entire group (Kopelman, 1986: 131).
Quality of work life (QWL). In recent years, much attention
has been devoted to the concept of QWL. Even though a number of
different types of interventions have been classified under the
rubric of QWL, including job design, job enrichment, flextime,
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gainsharing pay plans, on-site or near-site child care and employee
assistance programs, QWL programs are usually more far-reaching in
scope. Typically, QWL is perceived as a management philosophy that
promotes the dignity of all workers, that provides employees with
structured opportunities to become actively involved in the process
of identifying and solving problems towards the achievement of
organizational as well as personal goals, and that enhances the
physical and emotional well-being of employees (Kopelman, 1986;
Bruce and Olshfski, 1992).
Motivational Approaches
Incentive systems are predicated upon motivational theories.
They are one of the oldest and most widely used productivity
improvement methods in the private sector. Incentive approaches
provide employees with rewards in return for accomplishment of
specific objectives. The provision of rewards is purported to
motivate employees to improve their performance. At first, money
was thought to be the only incentive that could stimulate people to
be productive epitomized by the philosophy of scientific management.
However, in later times, nonmonetary incentives including security,
self-esteem, and growth and recognition were perceived to be
effective strategies for motivation expressed by the movement of
human relations. Maslow, Herzberg, and Alderfer are among the first
scholars who accentuated the importance of nonmonetary Incentives to
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productivity improvement. Accordingly, two major motivational
approaches to improving public productivity can be identified.
Monetary Incentives. They exert a tremendous influence on
individual and group behavior, as employees generally behave in ways
that they believe will maximize rewards and minimize punishment.
Monetary incentives are designed to fulfill the extrinsic needs of
the employee. Although most personnel systems in government
agencies follow merit requirements in determining which employees
receive larger and smaller raises, there are several other types of
monetary incentives that reward outstanding performance. These
incentives include: performance bonuses (one-time monetary rewards
based on extraordinary performance); piecework bonuses (a specified
amount of money for each unit of output produced); suggestion awards
(money provided to employees who make specific suggestions that lead
to cost reduction or productivity improvement); behavioral awards
(monetary incentives offered to encourage specific behaviors such as
good attendance and excellent safety); and group gainsharing plans
(a monetary award provided for a group of employees based on savings
generated by the group) (Denhardt, 1991: 283-284).
Nonmonetary incentives. In recent years, the substance of
motivation theories has focused attention on the so called higher
level needs or motives, in the form of esteem needs and
self-actualization (Maslow, 1943); responsibility, recognition,
achievement, and advancement (Herzberg, 1966); and growth and
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personal development (Alderfer, 1972). These motivational
nonmonetary incentives are designed to meet the intrinsic needs of
the employee. Although they do not provide financial rewards, they
are efficacious methods for motivating employees to improve their
performance. Nonmonetary incentives can take a variety of forms
including: employee recognition (i.e., employee of the month),
responsibility enhancement (i.e., job redesign, job rotation, job
enrichment, and job expansion), and employee growth (i.e., employee
education and training programs, and career development) (Belcher,
1987; Roberts, 1992). These nonmonetary incentives help generate
internal stimuli that motivate employees to make more significant
contributions to the achievement of organizational and personal
goals.
Potential Barriers to Improving Public Productivity
A review of the public productivity literature reveals the
existence of some obstacles that restrict the ability of
public administrators to improve the productivity of their
organizations. Several scholars have attempted to identify and
analyze factors having potential impediments to public productivity
improvement (Greiner and Hatry, 1978; Drucker, 1980; Usilane, 1981;
Alsaud, 1986: 161-168; Ammons, 1992). The following are the major
potential barriers to improving productivity in government.
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Environmental Factors
The monopolistic nature of government, with its captive
audience of consumers, has been cited as a dominant disincentive
for productivity improvement. The absence of market pressures means
that public agencies are not driven by competition to be more
innovative or productive. It has been argued that since government
agencies function as "unregulated monopolies, they tend to behave
accordingly (Savas, 1987: 79). In a freely competitive market
environment, enterprises with a high degree of efficiency,
effectiveness, quality, innovation, and cost-reduction will be
rewarded with greater profits. Inefficient, ineffective and
wasteful businesses will be punished with diminishing market share
and possible bankruptcy. Thus, as long as public sector
organizations operate under the absence of market pressures and
enjoy the luxury of monopoly status, they lack a fundamental motive
to be highly productive and responsive.
Political Factors
The political milieu within which public sector agencies
function may operate to constrain endeavors to improve productivity.
Government decisions are usually guided more by political factors
than by productivity considerations. The measure of success of a
government organization and its leaders is based on the favorable
public opinions the organization enjoys, and the re-election or
re-appointment prospects of its leaders. Because most top
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government executives are aware of their own political mortality,
they tend to focus on social issues whose effects can be felt in a
short period of time. Hence, productivity improvement programs
whose outcomes are typically predicated on a long-term basis lack
the political appeal and power of policy issues. Moreover,
government agencies are established to carry multiple and often
conflicting objectives. Professional associations, client alliance,
employee groups, unions, community leagues, and service regulators
all form powerful interest groups that present demands other than
efficiency and productivity. Goals such as equity, fairness, and
responsiveness are often given political priority (Ammons, 1992:
121).
Administrative Factors
Generally, administrative systems in the public sector are
described by bureaucratic rigidity and fragmented authority. The
founders of the administrative arrangements in government have
rarely assigned efficiency and productivity to the highest of their
concerns. Multiplicity of structures has been placed over
government agencies in order to control bureaucracy, limit
opportunities for malfeasance, and assure a system of checks and
balances (Ammons, 1992: 129).
Civil service rules and regulations, intended to maintain
equal treatment and prevent problems of nepotism and discrimination
in public employment, have often degenerated into rigid regulations
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that militate against productivity improvement. The lengthy process
of hiring and requirements of position classification systems can
preclude public sector agencies from acquiring the best talents and
make it extremely difficult to implement certain types of
productivity programs such as job redesign and job enrichment.
Financial rules and regulations designed to maintain control
and limit corruption have not only thwarted productivity
improvement, but also have generated perverse reward systems. It is
indeed ironic that financial procedures reward department heads who
are able to maximize their budgets and staff with additional
resources for the next fiscal year and punish managers who are able
to minimize the resources needed to continue operating effectively
with reducing their departments appropriation for the upcoming
fiscal year.
Legal restrictions in the form of legislative actions,
judicial rulings, employee contracts, federal wage and hour laws,
equal employment opportunity (EEO) requirements, and
intergovernmental grants provisions all can impose burdensome
constraints on attempts to improve productivity. With minimum
considerations for efficiency, effectiveness, and quality, these
legal restrictions have usurped the power of decision-making from
public administrators to ensure the fulfillment of such principles
as due process of law, civil rights laws, and service equality.
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Personal Factors
Confusion over the meaning and ramifications of public
productivity improvement has created in the minds of government
employees an erroneous association with the time-and-motion studies
calling for greater efficiency and faster work. This can be
construed to mean Job speedups, layoffs, and worker exploitation
resulting in high employee resistance (Neugarten, 1981: IV-10). It
is highly unlikely that a productivity improvement program will work
if employees choose to resist. It is suggested that the
bureaucratic structure of most public sector agencies discourages
entrepreneurial actions and encourages employees to adopt the
behavior of risk avoidance. Szanton observes that it is a familiar
truth in ... government that if you do the job the old way and
something goes wrong, that is an act of God; but if you do it a new
way and something goes wrong, it is your neck (in Ammons, 1992:
133).
Summary
Any systematic treatment of Total Quality Management must be
grounded on the framework of productivity improvement theories. The
term "qualitivity is increasingly used, attesting to the
inseparable relationship between quality and productivity. In
addition to efficiency and effectiveness, quality is the most recent
element to be incorporated in the concept of productivity. Tracing
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productivity and quality trends in the U.S., one finds an apparent
tendency for the two to move in the same direction. As quality
improves, the productivity growth rate increases, and as quality
declines, the productivity growth rate decreases. Productivity
improvement has been reported to affect positively the standard of
living, inflation, unemployment, and quality of life.
Reviewing the productivity literature, one finds that little
is known about public sector productivity in general and that of
state and local governments in particular. Most studies of
aggregate productivity ignore the public sector. When gross
national product data are calculated, public sector output is simply
valued at input costs. A major reason for neglecting the public
sector on a national productivity basis is the difficulty in
measuring its outputs. Given the significance of improving
productivity in government, a conceptual problem of transferring the
private sector productivity measures to government has been
described.
Despite the difficulty in contriving a monolithic model
comprising all possible approaches to improving public productivity,
analyses of the most significant government productivity improvement
methods have been presented. Finally, potential barriers to
improving public productivity have been examined.
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CHAPTER THREE
LITERATURE REVIEW PART II
Introduction
The aim of this chapter is to review the literature regarding
the concept of TQM with specific reference to its application to the
public sector. As with the development of most new concepts, there
was some difficulty creating a coherent framework drawn from
disjointed and fragmented sources. Constructs and arguments
included in this chapter have been extracted from such diverse
perspectives as engineering, business and government.
Most if not all TQM principles have originated from the
conventional theories of productivity improvement discussed in the
previous chapter. The customer focus is an outgrowth of the
market-driven mechanisms for improving productivity. Fact-based
decision making in the form of statistical process control, cause
and effect diagrams, flow charts, Shewhart cycle, and Pareto charts
emanate from the technological and information approaches. Both
employee empowerment and cooperation are made possible by
productivity enhancement notions of participative management.
Therefore, it can be said that TQM is a combination of concepts
drawn from the evolution of thought pertaining to productivity
improvement.
85