Running government like a business

Government portfolios and ministries have been under pressure to significantly reduce their budgets without reducing their staffs. Portfolio of Internal and External Affairs Chief Officer Franz Manderson told attendees of the annual Cayman Islands Society of Human Resource Professionals conference that his organisation was able to do just that, reports Alan Markoff.
The global economic crisis has affected all businesses in the Cayman Islands and the Civil Service is no different. With the country in severe budget difficulties, there has been pressure for government ministries to cut expenses.  Only a few, however, have succeeded in significantly cutting costs.  One entities that did was the Portfolio of Internal and External Affairs, which succeeded in reducing its budget a full 30 per cent.
Speaking at the Cayman Islands Society of Human Resource Professionals annual conference in June, Portfolio of Internal and External Affairs Chief Officer Franz Manderson said the economic downturn had affected Cayman in a very real way.
“Everyone says when the US sneezes, we get a cold,” he said. “I think we have pneumonia at the moment.”
Manderson said his portfolio looked to reduce its budget by increasing efficiencies and reducing costs. Payroll costs made up 71 per cent of the portfolio’s $75.35 million expenditure during the 2009/2010 budget year, so it was easy to see where reductions were needed. However, because many of the departments under the Portfolio of Internal and External Affairs deal with safety or security – like the Police and Fire Services, the Prison Service, the Immigration Department, Emergency Communications 911 and Hazard Management – staff reductions are not easy.
“There are not a lot of areas we can cut from,” Manderson said. “We have to look at making our manpower and the services we provide much more efficient.
To do this, Manderson looked at the private sector.
“We try to run the organisation like a business,” he said, acknowledging that is not always possible.
To improve efficiencies, the portfolio focused on four strategies: making use of new technologies; improving the accuracy and timeliness of information; better decision making and accountability; and improving performance management.
New technologies
As part of the e-government initiative, the Portfolio of Internal and External Affairs looked at ways of making use of new technologies to increase efficiencies.
One technology system it decided on implementing is video conferencing for remand prisoners.  Remand prisoners have to appear in court every seven days, creating a labour-intensive daily operation for Prison Service in getting the prisoners to and from the court.  By using video conferencing technology, remand prisoners will stay at the prison for their court appearance, significantly reducing not only the labour cost, but risk to the community.  It is hoped video conferencing will become a reality within a few months.
Another technology that is already being used by the portfolio as a cost-saving measure is the electronic monitoring of low-risk offenders. If used as an alternative to prison, this measure can save on the considerable amount of money it takes to keep inmates at Northward Prison, Mr. Manderson said. In addition, people on bail can be tagged with an electronic monitoring device, making them less likely to commit further crimes. 
The devices can also monitor people on court-mandated curfews, relieving the police of the time-consuming duty.  Instead, at no extra cost, the Emergency Communications 911 personnel can carry out the monitoring.
Closed circuit television surveillance is another big plan of the portfolio for using technology.  Although it comes with significant capital investment costs, it will help the police become more effective because in preventing and detecting crime.  It will also improve evidence and information gathering, helping the Legal Department as well.
Manderson said GPS systems will be used in emergency vehicles. He said this technology would improve fleet management by providing vehicle location information and identifying under/over-utilisation of vehicles as well as personnel.
“We feel it’s a tremendous resource,” he said. “For instance, the Police Commissioner will know where his vehicles are and where they’ve been.”
Using advance telecommunication technology is another way the portfolio found to save money.  Introducing a voice over Internet protocol system, allowing long distance telephone calls to be made over the Internet, saved money.  The portfolio also consolidated all of its departmental telecommunications, saving 30 per cent in costs through better bargaining power with suppliers.
“One department saved $10,000 per month,” Manderson said.
In addition, the portfolio has made efforts to control telephone usage and imposed charges for private calls made by staff.
Running like a business
To run the portfolio like a business, Manderson has stressed the improvement of information systems, better decisions and more accountability. He noted that there had been a lot of discussion about the lateness of audited government financial accounts, something that is not an issue in the portfolio.
“As a manager, I need timely information to make better informed decisions,” he said. “My chief financial officer provides me with a monthly financial statement within five days of the end of the month.”
In addition, all of the 800 portfolio staff completes monthly time sheets so Manderson knows what tasks they have performed.
“I know how much each of the services that I am responsible to deliver costs, and the revenue generated,” he said, adding that he had to invoice the deputy governor monthly for the services delivered before the portfolio received payment.
Other changes made throughout the civil service have helped improve performance management, including performance agreements for all staff.
“Staff should be held accountable for the work they do,” Manderson said. “All government employees are part of the performance management scheme specified by law.”
The four components of the scheme include clear performance expectations, as defined in the performance agreements; regular feedback to staff through informal and formal discussions; comparing expected performance with actual performance through assessments; and providing performance awards, a provision that has been delayed by the current budget crisis.
Other efficiencies
Cost-cutting measures have also been part of the portfolio’s attempt to reduce costs.
“Prison labour is used extensively to reduce costs of the prison,” Manderson said.
When a new building was constructed at Northward Prison recently, prison labour was used for every facet of the building except for architectural drawings, Manderson said.
“There are no architects in prison,” he said with a laugh. “I hope it stays that way.”
Prisoners also keep a garden to help provide their food.  Manderson said it only cost $5 per day for food and clothing for each prisoner.
Contrary to some accounts, Manderson said Northward Prison is nothing like a hotel.  He showed slides of the prison cells, which were just small with basic beds and a toilet. 
Manderson said he had just outlined a sample of the efficiency initiatives within the portfolio, and that there were many others as well.  Combined, he said the initiatives resulted in projected a 30 per cent budget expenditure savings for the 2010/2011 financial year.


Portfolio of Internal and External Affairs Chief Officer Franz Manderson, left, with Deputy Chief Officer Eric Bush and Portfolio of the Civil Service Chief Officer Gloria McField-Nixon at the Cayman Islands Society of Human Resource Professional annual conference in June