Sunday, May 31, 2009

Consolidations - bigger is not always better!

Having lived through consolidations in government, I think that leaders have to re-evaluate the efficacy of such actions. As we look at the current state of the economy; ask yourselves, is bigger really better? Was it better to have AIG so big that it could not fail? Is it better to have GM so large that it can't function in the down economy? Was it wise to split AT&T into multiple companies a few decades ago?

It seems like every time there is a financial crunch in government or business, administrators react by insisting on larger organizations. The argument is always the same; by consolidating operations, we all become stronger. I want to be diplomatic in my response; but I think I need to say, bull shit! While leaders of institutions are well intentioned when devising new, larger organizations, they need to fully comprehend the consequences. Administrators need to look beyond quarterly results, annual results and even bi-annual results. True leaders need to look at a longer time horizon; perhaps decades. I'll go as far as saying, bigger is almost never better!

I lived and supported a reorganization that consolidated environmental functions within the State of Rhode Island. In the late 1970's, the Department of Natural Resources was combined with the environmental regulatory functions housed within the Department of Health. The new agency was named the Department of Environmental Management (DEM). The arguments all seemed to make sense and the leaders behind the change were the most dedicated professional I have ever known. In retrospect, the change was disastrous.

In the new agency, financial pressures did not disappear. Over time, fiscal issues took an exhausting toll on one side of the agency. The new DEM, when faced with mandates from the EPA and others, struggled to find resources to accommodate the needs of everyone. The consequence of the merger resulted in the draining of financial and personnel resources from the natural resource areas and shifted those resources to the environmental regulatory areas. In 1986, I became the chief of the forestry agency that had 65 full time positions, coupled with dozens of part time summer positions. When I retired in 2005; a retirement fostered by the frustration of dealing with management needs, I had 29 full time positions. Today, my successor has only 17 full time positions. Responsibilities have been amended, but the public generally requires the same service.

This is not the end of the story. When I retired in 2005, the DEM had roughly the same total number of employees as when I started as chief. Emphasis and power changed the allocation of resources. The legislature, fed up with the regulatory burdens imposed on businesses and citizens, continually limited the financial resources of the department. The natural resource areas; the white hat side of the department, was devastated by the continual shifting of money and personnel towards the other side of the agency. The regulatory areas; the black hat side of the department, kept on growing and growing at the expense of natural resources.

Today, natural resources areas at DEM have been decimated, eviscerated, castrated and left to struggle with an almost impossible job. I feel for the employees that are trying to do their best for the people of Rhode Island. Rhode Island is not better off because of the shifting financial dynamics within the larger, "more powerful" agency. The larger agency has lost status in the eyes of the legislature and the struggle to correct the lack of fairness will take generations.

Bigger is not better!

Tomorrow, I will discuss another pending reorganization that will have lasting negative consequences for years to come. This story will involve the consolidation of two colleges at the University of Massachusetts.


1 comment:

  1. Thanks for saying this. It's about time somebody did!!