Rudolph Giuliani takes office facing deep and serious problems with the way New York City is run. The city spends $31 billion a year—far more than any other U.S. city—but provides services that many New Yorkers find unsatisfactory. Staten Islands vote for leaving the city, nascent secession movements in other boroughs, and the approval of term limits for city officials show how great this citizen discontent is. Why is the city unable to provide acceptable services? The answer lies in the way city government is managed: it is locked in to a Byzantine system of management that undermines agency leadership, stifles innovation, hampers talented managers, demoralizes city workers, and shields everyone from accountability.
In theory, New York Citys charter sets forth a simple model of management: the mayor is responsible for the operations of city government. He appoints commissioners, who manage their agencies. If the commissioners do a bad job, the mayor can fire them; if the mayor does a bad job, the voters can vote him out of office.
The reality, as one might expect, is far more complex and less clear. Successive mayors have created an impervious layer of staff between themselves and agency heads. These “oversight” offices go by various names such as deputy mayor (of which there were six under Mayor David Dinkins), assistants to the deputy mayors, directors of mayoral offices, and heads of departments, such as the Department of Personnel, which control the resources an agency needs to function. These officials lack firsthand knowledge of the agencies they oversee and have no personal stake in their success. Supposedly created to ensure mayoral responsibility, the expansive city hall staff and powerful oversight agencies have produced the opposite effect. Mayoral authority has become so widely diffused that it is no longer possible to hold any person or office responsible for a particular decision or action. Moreover, city hall staff and oversight agencies gain power by stripping commissioners of the authority to manage their agencies. This becomes even more pronounced in time of crisis, particularly budget crisis, as the mayor and his staff take more direct control of the management of agencies.
Paradoxically, then, city government suffers from the worst aspects of both centralization of power and diffusion of authority. The authority to manage agencies is drawn into city hall and away from commissioners at the same time as responsibility for any given action is spread among oversight agencies. No matter what the problem, the mayor can point to some system in place and to multiple offices and agencies supposedly responsible. And commissioners lack the power to manage. Neither they nor the mayor can be held responsible for accomplishment of their assigned charter roles.
The problems with the citys management system are usually hidden from the public. In 1993, however, three unprecedented reports—on asbestos in the schools, the Parking Violations Bureau contracting scandal, and the Crown Heights disturbance of 1991—lifted the veil, revealing a series of errors associated with centrally controlled, top-heavy bureaucracies:
Inattention to basics. Workers in the schools know exactly what to do about asbestos—keep their buildings in good repair so that asbestos does not flake off water-damaged walls or shredded pipe insulation. But routine maintenance of school buildings has been so notoriously poor that in 1988 the State Legislature created the School Construction Authority to take over construction of new schools. Repairing old schools, however, remained the job of the Board of Education, which, with the city, continued to underfund regular maintenance and failed to supervise custodians adequately. Over the past four years, the backlog of school repair work orders has doubled to forty thousand.
Intrusion into agency management. The Parking Violations Bureau scandal was not a PVB scandal—it was a city hall scandal. Three city hall oversight agencies directed the ill-fated request for proposals to privatize much of the bureau and the subsequent negotiations with Lockheed Information Management Systems. Staff of the first deputy mayor, the Office of Management and Budget (whose director was fired in the aftermath of the report), and the Mayors Office of Operations took direct control of Parking Violations Bureau contract processes over the objection of the agency. The intrusion by a committee of city hall oversight agencies resulted in confused and potentially illegal shortcuts and favoritism.
Garbled instructions. During the Crown Heights disturbance, none of the top four city officials directly responsible set clear objectives that would have allowed commanders at the scene to act promptly on their own observations. Neither the mayor, first deputy mayor, deputy mayor for public safety, nor police commissioner took decisive action. The one high official who did act, the deputy mayor for intergovernmental relations, set up his own lines of communication with the rioters and worked independently of the police and others at city hall. Communications from the scene proliferated, but information arrived at city hall in a fragmented and confusing form. Police commanders and officers in Crown Heights did what bureaucrats usually do in such circumstances—they took no risks and waited for unambiguous orders. Officers remained immobilized until a direct command came down to do something else.
These problems were far from unique to the Dinkins administration. The growth of power at city hall dates back at least as far as the era of Mayor John V. Lindsay. Scholars of city government at that time and before treated the citys agencies as political powers that needed to be brought to heel and controlled by the mayor.
In 1961, the city charter placed the Bureau of the Budget under the mayors control; it had previously reported to the entire Board of Estimate. The charter had also taken major operational responsibilities, such as street and highway construction and maintenance, away from the borough presidents and given them to the mayor. Mayor Lindsays most prominent structural reform—the assembling of related agencies into a so-called superagency under a single administrator—was part of the attempt to bring the citys operational agencies more firmly under the control of city hall.
These efforts achieved partial success, but the zenith of centralization—which joined control of the budget and management in a single city hall office—came with the budget crisis of the mid-1970s. In 1974 Mayor Abraham Beame issued an executive order creating a Division of Management within the Bureau of the Budget. The next year, the City Council, by local law, changed the name of the bureau to the Office of Management and Budget and at the same time eliminated the Office of the City Administrator, which had been established in an important 1953 charter reform. The city administrator was to have been the mayors chief managerial assistant, supervising and coordinating the work of the agencies. But Mayor Robert F. Wagner declined to put the Bureau of the Budget under the city administrator, resulting in a continuing jurisdictional struggle. With the 1970s budget crisis, controlling the budget rather than managing for better service delivery became the ascendant goal. In awarding a victorious “M” for management to what became OMB, the City Council merely recognized the shift that had already occurred.
Another indication of the centralization of power in city hall has been the phenomenal growth in the mayoral staff. In 1959, Mayor Wagner had only 12 assistants, supported by 45 other employees, for a total city hall staff of 57. Today the Mayors Office employs more than a thousand people—not including the five hundred OMB workers, whose predecessor agency was not under the mayor in 1959.
The growth reflects an appropriation of agency management functions by city hall staff. This is the antithesis of what the mayor needs to discharge his responsibility under the charter. In their still vital 1960 volume, Governing New York City, Wallace Sayre and Herbert Kaufman set forth a more appropriate vision of what city hall staff should do: “[The] help most needed by mayors is in its essence political help and advice, supplied by persons sensitive to and sensible about the mayors full dimensional role in the citys political contest, aware of the subtleties of strategy in the timing and boldness, the caution, or the finality with which the mayor uses, for his purposes of leadership, the resources of his office. It is the political help (in the broadest sense of the word political), rather than managerial assistance, that the mayor most needs.”
If the city is to deliver the kind of services its citizens need and demand, the mayor must leave agency management to his commissioners and hold them directly accountable for their work. On his own, without any new legislation, the mayor could break the stranglehold that city hall staff and oversight offices have over commissioners and their agencies, by taking the following five steps:
1. Restore management responsibilities to the agencies, leaving city hall in charge of the budget.
It has become an annual ritual for the director of OMB to walk into city hall and declare a budget crisis. To bring the budget into balance, OMB calls for immediate and painful cuts, a freeze on hiring, and tough controls by which OMB exercises even more power over city government. OMBs concern with fiscal integrity is appropriate for a budget agency, but it also means that management reform as a mayoral priority flies out the window—as it has for the seven years since the stock market crash of October 1987.
OMB, the preeminent city hall staff agency, asserts its authority through rules rigidly controlling agency expenditures, management, and innovation. In self-defense, virtually all commissioners mislead OMB regularly, requesting more money than they will need in the expectation that their funding will be cut. These equivocations often mean the difference between success and failure. OMB officials, not blind to this strategy, develop an intense professional skepticism about all agency budget requests. The bilateral lack of candor results in highly destructive internal wars. Former OMB director Philip Michaels caustic description of transportation commissioner Lucius Riccio, and vice versa, during the Parking Violations Bureau scandal are unusual only in that the two officials went public with their feud. Such disputes are daily events, and city hall views them as further proof of the need to control agencies and their commissioners.
The managers of city agencies have one undeniable advantage over city hall—they have a personal stake in successfully carrying out their mission. This is not a small matter; managers desire to succeed is the basic building block for improving city services. City hall staffers prefer success too, but they perversely tend to view an agency that identifies too closely with its mission as disloyal. An agency head who takes his mission too seriously is seen as a special pleader captured by the bureaucracy.
Mayors Koch and Dinkins both relied on the Office of Operations, an oversight agency reporting directly to the first deputy mayor, to plan, coordinate, and oversee the management of city agencies. Operations, with a staff of about 160, has brought about some important management initiatives, but its organizational flaws limit its ability to ensure effective management. Operations serves as city halls whip to the agencies as often as it acts as an advocate on their behalf. Moreover, since Operations does not directly approve budget requests or management initiatives, it suffers from a fatal disadvantage against the all-powerful OMB. Operations can plan and suggest, but OMB ultimately decides. And even when Operations functions well, it takes a top-down approach. Relying on a city hall oversight staff to think for the agencies is a formula for failure.
The pendulum has swung too far in favor of oversight management, particularly oversight management that resides in the office primarily concerned with agency budgets. In order to restore managerial zeal, the mayor should direct OMB to concentrate on the budget and demand that commissioners take personal responsibility for the management of their agencies.
2. Thin out city hall.
The mayors cabinet should include top commissioners who have actual responsibility for city services. Today the mayor relies on a palace guard of deputy mayors, mini-mayors, and city hall officials who lack direct knowledge of agency management needs, do not actually operate anything, and have no personal stake in the success of the agencies they oversee. City hall is laced with small, specialized offices, some of which are plainly political (such as the Office of Latino Affairs and Office of Jewish Community Affairs), while others coordinate substantive matters cutting across several agencies (Office of Environmental Coordination, Office of Construction). The proliferation of these offices is not always pernicious. What is pernicious is the way in which these city hall officials separate the mayor from the commissioners and their agencies. The mayor, as commander-in-chief, needs a regular flow of information and advice from his commissioners, the generals in the field. Layers of city hall officialdom cut off the flow of information and insulate the mayor from the facts.
City hall jobs inevitably become the focus of a new mayors supporters when it comes time for them to collect on political debts. But because city hall plays only an indirect role in delivering services, the performance of city government is ultimately determined by the agencies and their commissioners. The mayor needs to create a city hall structure that draws commissioners into its inner circle, not one that walls them out.
The proper work of city hall staff falls into three major categories: controlling the budget, coordinating programs that involve multiple agencies, and responding to crises. Almost everything else in government can be better performed by agency leadership and city workers. The mayor should recognize this, remove the city hall staff from operational decisions of agencies, and insist that commissioners be responsible for agency results. A small city hall staff offering “sensitive and sensible” political counsel, as Sayre and Kaufman called for, will serve the mayor best.
Past mayors have had some success in dealing with this problem. Though Mayor Lindsays superagencies represented an effort to centralize city government, Lindsay did rely on their administrators like a cabinet—in sharp contrast with Mayor Dinkins, whose cabinet consisted of six deputy mayors. Mayor Koch frequently went around his deputies, often to their dismay. For example, he used his monthly town meetings to collect information directly from the public. These meetings took place in each of the citys community boards, usually in public school auditoriums, and were often attended by five hundred or more people. Mayor Koch lined up as many as thirty of his commissioners along a front dais, and took questions from citizens for ninety minutes. When a complaint arose about a particular agency, Koch asked the commissioner for an explanation on the spot. In his direct fashion, Koch ordered solutions that ranged from changes of policy to promises to investigate and report back. These meetings had a political function, of course, but they also closed the information loop between citizen, commissioner, and mayor.
3. Give agency heads control over the resources they need to fulfill their missions.
Without this authority, they cannot be held responsible for their performance.
Agency heads must obtain prior approval from oversight agencies for many of their actions. OMB has such power over many contracts, hiring decisions, and expenditures; numerous other mayoral offices have similar authority. This authority is vested in city hall in the name of preventing corruption in city agencies, controlling the budget, and similar concerns. But in almost all cases these issues could be addressed just as well by auditing decisions after the fact—an approach that would not entail the time and opportunity cost or the loss of responsibility occasioned by multiple sign-offs.
Aside from OMB, the two most important agencies controlling resources for an operating agency are the Department of Personnel and the Department of General Services. Personnel has authority over hiring and allotting managers job titles, work assignments, and salaries. General Services is the quartermaster of government—it assigns office space, handles most procurement, and is the only agency authorized to lease or purchase real estate for city offices. These two service agencies are the hidden, invisible powerhouses whose actions often mean the difference between success and failure.
Despite their importance, the two agencies often languish with inadequate staffs and limp leadership; on occasion they have become political dumping grounds. They are generally not involved in the early planning stages of major decisions. Their rules and precedents silently undermine change and anchor city government in generations of traditions, prejudices, and rationalizations. No matter how hard an operating agency head swims, he may never keep his head above the cascading rules and decisions of these mayoral agencies.
The new mayor should assign his best managers to head these two backbone agencies. He should direct them to clean house, delegate to them all the authority allowed by law, and hold them responsible for meeting the deadlines and needs of operating agencies—not the reverse.
4. Reform policies that prevent commissioners from building a superior managerial staff within their agencies.
City government today is like an army without sergeants. It has great generals and terrific recruits, but a paucity of leadership at the work level. Every administration says it will improve managerial recruiting and training. The Dinkins administration initiated a number of important management training programs, but they still are not enough. The mayor should make the care and retention of good city managers a top priority in every agency.
Especially important is the development of a superior engineering corps. New Yorks bridges, water system, road and highway system, and buildings reflect the citys prior history as the center of spectacular civil engineering. Today the city fails to attract and train the new generation of engineers and engineering managers needed to maintain that legacy. The deterioration of much of the citys infrastructure can be blamed directly on the failure to maintain its engineering corps.
The failure to develop managers within the city system is caused by a number of problems endemic in public management. Expenditures to support managers—such items as paid release time and travel for training, professional society dues, hiring motivational or executive leadership experts, establishment of an elite managerial group, and improving office conditions and equipment—may be seen as wasteful by a critical public. Yet these and other programs are routine for many well-managed corporations, and have proven their worth.
Most high-level city jobs offer competitive salaries, or at least a high potential for job satisfaction. But money is still a motivator, particularly if linked to recognition. In 1989, Mayor Koch established a program to reward superior performance by managers with a cash bonus. A commissioner would award $500 or $1,000 to a manager immediately after a successful effort, preferably the next week or even the next day. Koch required written guidelines and pre-award review by an official outside the agency. In the Department of Transportation, we gave one round of awards, at informal ceremonies in front of each managers colleagues. Feelings of pride and accomplishment washed over the room. But no other agency took advantage of the program, and it died.
City managers fear punishment for failure but anticipate little recognition for success. Almost all the city managers I know can recite a personal story in which they were denied a benefit or suffered an insult because of the personnel system. City managers are investigated by inspector generals, audited by politically motivated outsiders, and reported on by usually unsympathetic media. They live with conflict-of-interest rules far stricter than those found in private industry. They cannot control most of their work environment, their budgets, their assignments, or the measures of success imposed upon them. These unique working conditions call for more intensive training rather than less, and for sustained positive reinforcement.
City government still attracts top-flight candidates who are the equal of those in any private corporation. A sustained investment in these people will pay dividends for decades to come.
5. Reinforce the natural pride city workers take in performing civic work.
The art of mayoral leadership lies in projecting a vision that is clear enough to allow the lowest-level employee to understand how his work fits into the overall plan. When city hall fails to enunciate clear policies, is confused, or misunderstands actual field conditions, the bureaucracies hunker down and wait for inescapable orders. They cannot afford the risk of being second-guessed and blamed for actions initiated on their own.
The manner in which the mayor sets up and runs city hall instantly sends a message to tens of thousands of city workers, who have unfailingly accurate antennae for the nuances of management. These workers sense when the mayor will back their commissioners initiatives and when he will not. A management system that works against initiatives and innovations within the agencies cannot hope to improve services.
As chief executive officer, the mayor has to concern himself with worker morale just as much as any company head. One only has to attend an agency awards ceremony to sense how important recognition is—and how demoralizing the lack of positive reinforcement can be. Business management books consistently advise strong reward programs and direct contact between upper management and workers. What works well for private business works even better for government, which cannot fall back on direct monetary rewards for many jobs.
City workers I know were embarrassed by reports on the Crown Heights disturbance, asbestos in the schools, and the Parking Violations Bureau fiasco. They cannot defend such failures and grow doubtful about continuing with the city. They are sometimes asked by others why they stay with their jobs. If you are so smart, the questioners seem to say, why are you still with the government? These workers want government to be better, to be professional, to be efficient, and to be respected. Reform of city government depends upon their loyalty and energy. Any plan to bring the budget into line or to improve services must begin with a management scheme that reinforces the best instincts of the people who carry out the program.
The strategies that are most likely to succeed are those that focus first on city managers and workers. These strategies place rely far more on commissioners and their agencies and less on city hall staff and oversight agencies. They reverse a nearly continuous trend over the last forty years in which the city hall staff and oversight agencies have grown in importance, size, and power at the expense of the agencies that actually do the work of government. By reversing that trend, the mayor can take the first step toward successful reform of city government, laying the foundation for the kind of management that will lead to a balanced budget and better government services.