Friday Night Feedback - Why can't government run like a private business?

The thought of “why can’t government run like a business” comes across my mind every so often. I was in the Air Force, and was able to observe the budget process up front and center. I was even in on a “shopping spree” near the end of the fiscal year. I also saw wasteful spending nearly across the board. Most of the waste was in the way we had to buy supplies and replacement items.

There were a few times where someone would come up with a new process or item that would save a decent amount of money for the military. This resulted from a program that rewarded people with a “bonus” based on a percentage of the savings estimated. This was a good thing and gave us an incentive to look for ways to save.

I started to look at why the budget process for all departments seem to push for wasteful spending, yet it’s possible to have a program within governmental departments that gives incentive to save money. The government budget process is one where at the beginning of the fiscal year, a certain amount of money is set for each department. This money then has to last all 12 months until the next fiscal year. This means the incentive is to only buy essentials at the beginning of the year and then scrape by to save for the “just in case situation”. At the end of the year, the money that is left over has to be spent, because if you have to return money, your new budget will be cut by that much. This incentive is terrible.

I propose to make a small change in this incentive. Why not make an incentive like private business has? A bonus at the end of the year based on performance. So how would this work?

The concept is actually pretty simple. Change the budget process in which each department can keep any extra monies left over, and roll it into the next years budget. This would start to build a “just in case situation” cushion the following years. The incentive comes by issuing a bonus to department employees based on how much money was saved over the budgeted amount. For example, if 10% is saved, then a certain bonus amount is given out, say mid December. If more is saved then a higher bonus is given. This simple incentive would have everyone looking for ways to save. I would also empower department heads the ability to let deadweight employees go (fired). A recent survey found federal government employees were more likely to die on the job than to be fired. That would change.

So I ask myself again, why can’t government be run like a business? With this kind of simple change, at least simple to me, it would be possible. It would work to freeze department budgets instead of the usual increase. It would also improve performance and efficiency at the same time increasing pay to employees. Yes I do know it wouldn’t be completely simple to implement, but I’m sure with the right people it could be possible.

Your thoughts / feedback?