To Do Or Not To Do

Guide for Agency and Business Managers:

Much That You Are Told Just Isn't True,

What You Are Not Told May Be Decisive.

On April 18 we wrote an article on the decision making process in government. We noted at the time that the great majority of our columns deal with specific situations, generally situations which have gone wrong, problems the authorities have failed to solve, or improper influence being exerted to shape a decision on an issue.

We asked our readers to let us know what they thought about such columns, and whether they wanted us to continue with that kind of analysis. We received no negative comments, and enough favorable ones, to justify our return to discussing some of the more practical aspects of public administration.

The question we ask first is: How do public officials make decisions on issues before them?

The beginning of the answer is that they usually do what they are told to do by their superiors in the chain of command, or they do what they have done previously on the same or similar occasions. There is a reporting relationship between public officials, more clearly specified in the uniformed services, but existing in all agencies. You know who your boss is, and so does your supervisor, right up to the Deputy Mayors who report to an elected official, the Mayor.

Sometimes, the formal chain of command does not reflect the realities of the situation in a particular agency. This can happen for a number of reasons. One is that a new person is appointed with different strengths or skills than those formally required. Rather than revise the organization chart and submit it to various staff agencies which may want to play with it, either to justify their existence or to throw their weight around, the wise commissioner, in his mind, conforms the chart to the new reality. This is inconsistent with Rule 31-N: "There is no such thing as a mental note." But it is in conformity with Rule 27-B, one of a handful of rules that originated directly with Mayor Bloomberg and therefore deserve particular adherence: "Beg forgiveness, not permission."

The potential conflict between caution and action is also reflected in the difference between the Nike rule and the Nancy rule. The Nike rule, known formally, as 8-J, is "Just do it." The Nancy rule, 9-J, is "Just say no." Since many passages in the Bible contradict each other, one should not be unduly upset at the variance in our Modern Mishna.

Of course, the essence of judgment comes in knowing when to follow 8-J, and when to obey 9-J. That is not a decision that can be made in advance, because it obviously depends on the fact situation one is facing, and the resources available to solve the problem. When a commissioner, or a general, or a private sector executive, is faced with an issue, it is usually the case that not all the facts which would bear on the decision are available - sometimes a relatively small part of the picture is clear, sometimes the situation in the field is hopelessly obscured, and the reaction by others to the decision may be difficult to predict.

In many cases, the information you have before you is tainted. Misleading statements or allegations may have been made by adherents of one side or the other, or occasionally by both sides. Often the answer is described in Rule 30-T: "The truth lies somewhere in between." Although that rule is usually true, it does not tell you just where the truth can be found.

It is also quite possible that people who work for you have their own interests in the matter, which conflict with each other's and possibly with yours. Staff members who want you to make a particular decision, for good reasons or bad, are likely to emphasize or exaggerate the data which favors their position, and deny, ignore or denigrate information which contradicts their views.

Sometimes misinformation, or disinformation as it is called when the false data is deliberately disseminated, is relied upon by the decision maker, who does not know that what he has been told is false or distorted. That's why it is important for the decision maker to know his people, and to have formed an opinion on their credibility. This can be done by asking them questions and evaluating their replies.

Here is an example: Ask someone a question which he cannot answer, either because he does not know the answer or because there is no answer. Does he guess at an answer? Does he dodge the question and say something irrelevant? Or does he answer wisely and admit that he just doesn't know? Much of the so-called skill of management comes down to judging people, their confidence and their credibility, and learning to what extent you can rely on them.

What is also required in making assumptions is a keen sense of what is likely to be true, and the ability to judge how close to plausibility what you have heard appears to be. That does not mean that the unlikely is impossible, but if data is totally inconsistent with one's expectations, one should start by examining the discrepancy. It is not yet a rule, but it has been said, particular with regard to Bernie Madoff: "If it's too good too be true, it is." Perhaps it should be 25-M.

In evaluating what someone tells you, it is sensible to provide some margin for puffery, self-protection and defense of one's staff. Hardly anyone tells the exact truth, and if someone does, you may have reason to be concerned that the gift of precise recollection will some day be turned against you.

These attributes are difficult to quantify, and they vary from person to person and often depend on relatively extraneous factors: time, mood, hunger, thirst, temperature (rooms used to interrogate prisoners, for example, can be heated or cooled in order to make the prisoner less comfortable). A great deal can be done legitimately, far short of waterboarding, to induce people to be more accurate in their recollections of past events.

That is why it is so important, in running an agency, to get to know your people as individuals, and not just the handful that immediately surround you and cater to you. Talk to people when you see them, sometimes ask them questions as to what they are doing. It is too easy for a commissioner to act like a monarch, the master of all he surveys, the direct emisssary of His Majesty the Mayor (regardless of who is mayor). Such an official often unconsciously limits his conversation to people who serve at his pleasure, urgently desire his good will, and are unwilling to say or do anything which they believe carries with it the risk of jeopardizing their relationship with their master.

It has not quite jelled into a rule, but I believe that the higher up one gets on the food chain, the less likely one is to be told the truth. To take the most grotesque example, which Nazi official would be likely to tell Hitler that Germany was losing the war? To a lesser degree, this principle applies around the office.

How to deal with this situation? First, select people you can trust, preferably through shared experience. If you do not have that authority, which is often the case, test the people to find out whether they are truthful and trustworthy. Second, encourage open discussion and full disclosure on their part. Praise those who speak frankly, and express some displeasure at reports which strike you as exaggerated, self-serving or unlikely to be true. Let your staff see that you value truth and accountability, and make modest disclosure of your own past experiences and reverses. You do not have to be a mystery person like a Freudian psychiatrist. Be as normal as you can manage.

These simple admonitions may seem manifest to some of you. However, they are not intuitive for most people. It is much easier, in a meeting situation, to accept whatever someone says, rather than challenge it. Silence, often interpreted as acquiescence, makes the meeting go more smoothly, and avoids hurt feelings which can mutate into negative words and actions. Moreover, if you speak up, whatever you say can be potentially interpreted as hostile to a group with which the target identifies, whether it be one realted to ancestry, religion, nationality, gender or sexual orientation.

Part of the decadence of today's social order is that too many people see themselves as representatives of a group or tribe, rather than as individuals responsible for their own decisions and their own conduct. Supervisors feel compelled to adopt the same values, because they know that any decision they make, especially on personnel, is subject to review, and they may be accused of retribution or racism or anything that can be fitted into a counterclaim.

Unfortunately, to report or act against misconduct means that one often puts oneself at risk of retaliation, under cover of the law. In the past, we have generallly interpreted retaliation to acts by officialdom to punish employees for union activity or for making complaints to the authorities. Retaliation by employees can also be a motive for aggressive actions against supervisors for doing their jobs faithfully. The result is that fewer disciplinary actions are taken and more dereliction of duty is countenanced. Who wants trouble?

We see this problem in social service programs and in Medicare and Medicaid. Desirable programs are abused by corrupt service providers. The protections of due process make it difficult to prevent dishonesty and fraud. In these circumstances, as in so many areas involving government, the law is on the side of the crooks. In part this is because law enforcement is restrained by due process, as it should be, however those who violate the law are unconcerned with statutory inhibitions. They simply take what they can get. They are beating the system.

The most prevalent vice among public employees, however, is not corruption but idleness. When a particular task is completed, people often do nothing until the next task is assigned. One can always volunteer when one's own work is done, but new employees who do that soon learn from their seniors what the work habits are in a particular unit. Sometimes they are good and sometimes they are bad.

Over time, just as water seeks its own level, the rate of activity approaches the lowest common denominator of the units involved. The late Senator Daniel Patrick Moynihan wrote of "defining deviancy down". That is sadly the norm in areas of the public work force.

In some agencies, and with regard to some tasks, the work to be done is strictly defined. A motorman, for example, must drive his train from one end of the line to another, no matter what his disposition may be on any morning. Sanitation employees have a route to cover, which they can do well or poorly, but can get in trouble if they do not complete. Letter carriers have precise locations to reach and exact tasks to perform. The time they save by doing their jobs quickly is usually regarded as their own.

Some employees, like firefighters, work in response to specific requests. The level of coverage is measured by the time it takes, after the alarm is sounded, to reach the site of the fire. Consideration of the cost-benefit ratio of additional fire houses is clouded by the emotional factor that longer response times may lead to the loss of life. That, plus the strength of the firefighters' union, the desire of communities for visible protection, the presence of a fire station as a safe haven on a block, and the presence of strong males who could protect the public, contribute to intense public resistance to closing firehouses. We have about 218 firehouses in the city, many built a century ago when most houses were built with wood, which, as we know, burns.

As in many areas of human activity, laws with noble purposes are twisted by wrongdoers and their lawyers to protect bad behavior and discourage actions which would be helpful to the purpose the agency was created to accomplish. To some, the government of the City of New York is a giant pinata, and the object of their efforts is to extract as much of its contents as possible for themselves.

The defense of the city treasury is itself expensive, and takes funds away from direct service delivery. Yet it is essential to protect the city from even further spoliation than it already suffers. People do not guard public funds as zealously as they protect their own. The Soviet Union made that discovery when it forced Russian peasants into collective farms, which never produced as much as the individual farmers were able to grow on their own small plots. Millions of people starved to death in the Stalin area, in part as a result of this misjudgment of individual motivation.

The secret of good government, or sound management, is to have individual desires and ambitions coincide with, rather than oppose, benefit for the general public. Too often in our structures the opposite is true, and in those situations the public usually loses out, because no state is powerful enough to imprison everyone, and if the power were there, who would be left to do the work? It is easier for tyrants to prohibit certain activities than to compel them, although even Prohibition proved extremely difficult to enforce.

There are many variables in all these situations, far more than we could name. Certain principles of human behavior can be identified. We are certain there are others, of equivalent importance, and we seek them. Here are six:

1. People act in what they believe to be their own interest, even though in many situations they are mistaken.

2. People tend to defend their relatives, friends and neighbors against external authorities, if they have the opportunity to do so.

3. People often do not believe the words of elected and appointed officials, because frequently they have turned out to be false.

4. People resent wealth and success in others which they feel to be undeserved, based on connections rather than merit.

5. People want their children to do well, and will make some sacrifices to achieve that purpose.

6. People have a sense of fairness, and do not like others who attain or retain power by violating common standards of decency.

Suggestions as to other principles of behavior are invited from our readers, and may be added to the list.

Anyone with particular knowledge of how these principles apply to the operation of public agencies is encouraged to share thoughts and observations with us. You may write anonymous, pseudonymously, initially or under your own name. Your wishes will, of course, be respected.

It Can't Happen Here

McMahon Says Mayor

Is Liberal on Pensions,

He Likes 401(K) Plans

Mayor Bloomberg's proposals to reduce the cost of pensions for city employees came under fire today not only from public employee unions, city government's perennial adversary in matters of wages and pensions, but from a conservative analyst as well.

E.J. McMahon, who writes op-eds for the New York Post and articles for other publications, complains that the mayor's goals are too modest. He wants New York City to switch from defined benefit plans to defined contribution plans. That would be a complete reversal of current pension policies, and would require amending the New York State Constitution.

Under "defined benefits", if you work for the city, enroll in the pension plan, and subsequently retire, you will receive a defined percentage of your wages as a pension. The percentage increases for each year of the employee's service. In Tier One, the most generous plan for regular employees, the percentage was 2.2% per year for the first 25 years on the payroll, and 1.7% per year for years 26 and upward. The plan is weighted to encourage, but not require, retirement after 25 years, because the rate of increase declines by 28% after the first quarter century. The deadline for enrolling in Tier One was June 30, 1973, over thirty-seven years ago. It was followed by Tier Two and a series of less generous formulas because of recurring financial crises faced by city government.

At the same that percentages were held flat or decreasing, some pensions were increasing because of numerous "sweeteners" - bills adopted by the New York State legislature providing additional benefits to various categories of employees - giving others the opportunity to buy into the plan, and adding coverage to specified groups at the behest of lobbyists for union locals. What was taken away with one hand could be restored by the other, and the outcome was a high percentage of endorsements of incumbents by labor unions. Rule 21-O explains the obvious: "One hand washes the other." I learned that ancient maxim from the late Mary Perot Nichols, city editor of the Village Voice in its early years, the 1960's.

The pension system came to grief with the sharp decline in the stock market in late 2008, which also led to the collapse of the Madoff pyramid scheme. People withdrew their money from Madoff to cover losses on their portfolios of stocks which were considered legitimate but whose values were in part based on misjudgments, not the same as, but comparable to the fictions that Madoff concocted to conceal his peculation.

Their failing stocks did, however, actually exist. In another distinction, no government agency deemed Madoff too big to fail. Settlements of hundreds of millions of dollars have been paid by banks which knew or should have known that the junk they were selling was not too different from Madoff's fictional inventory.

The relationship this has with the pension funds is that government is responsible for the pension funds earning enough to fulfill their obligations to retirees, present and future. If the pension funds, of whom State Comptroller Tom DiNapoli is the sole trustee, do not earn sufficient money on their investments, government must make up the balance. The worse economic conditions are, the larger the deficit will be and the greater the sum that will be required to make the fund whole.

Mayor Bloomberg said Wednesday in the State of the City address that New York City paid $1.5 billion for pensions in 2001, and now over $7 billion is projected for pension expenses in 2011. The rate of increase is described as unsustainable, and indeed it is. Even if the rate of increase declines, as it must, the sum of money needed to subsidize the pension fund is likely to continue to climb.

McMahon, a conservative analyst and frequent author on city and state financial problems, wants the city to switch to a defined benefits system, in which the employee gets back only what he has put in, plus interest, dividends and whatever increase may have come through rising prices. Although this would control the city's costs, the pensioners are left to dine, eat, skimp or starve, depending on the vagaries of stock prices and whatever benefits are received through social security and Medicare (if they are over 65). Defined contributions are particularly vulnerable to inflation; money that is paid in during early years is more valuable than it is when it is taken out many years later.

McMahon believes Bloomberg erred by not demanding defined contributions. In theory, the argument can be justified in terms of the city's inability to pay more. In today's world, we believe a decent retirement income is justified after a lifetime of work, and to rely on the stock and bond market to provide the necessities of life has a Dickensian attitude we find difficult to accept in the 21st Century. On the other hand, defined contributions work well in other jurisdictions, and the expense can be alleviated by requiring employee contributions.

The fact that there does not appear to be the remotest chance of such a plan being enacted is not sufficient to disqualify the proposal as an option. The Legislature will have to be pressed hard to enact any pension reform over the anticipated objections of their major funders: public employee unions and their political action committees. Hopefully, Mayor Koch, who was recruited for the task by Mayor Bloomberg, may be of assistance in helping win public support for modifications of the existing system, which imposes burdens on the many for, in some cases, the unjust enrichment of the few.

Pensions are a dry and dusty subject, unless you receive or desire one. People reasonably fear the loss or diminution of benefits they have always considered their due. The area will require considerable scrutiny and, preferably, a bi-partisan approach if one can be attained. There are undoubtedly abuses of the system which should be corrected, and it will be interesting to see if legislative leaders can persuade union leaders to accept any modifications of existing law, even to correct the most serious iniquities and abuses in existing procedures, such as excessive overtime and fraudulent disability claims, which have been approved wholesale.

First in Albany, we shall see what happens to the budget that Governor Cuomo will propose February 1. Then there is ethics reform, which is a no-cost item, at least to the State. It may cost certain legislators plenty. Don't forget redistricting, which if done honestly will imperil some sitting ducks who may, if justice is done, be rendered lame.

Some legislators may be in particular need of the pensions we are discussing, but with the Constitutional bar to impairing previously granted rights, their own benefits will not be impacted, even if their day-to-day living expenses are provided in state facilities.