Is the Most Efficient Office in the World Run by the United States Government?!

The search for better economic policy.
July 31 2013 5:43 AM

The Most Efficient Office in the World

It’s run by the United States government. We’re not kidding.

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As with any divisional manager, Hoffman has a lifeline for resources at the organization’s headquarters, in this case the State Department in Washington. He receives visits from his supervisors at the State Department and the regional passport headquarters in Portsmouth, N.H., who evaluate him based on performance metrics like cost savings and the rate at which passport applications are processed.

Applying for passport renewal at the Hudson Street Passport Office.
Applying for passport renewal at the Hudson Street passport office

Photo by Lisa Larson-Walker/Slate

But Hoffman also has a great deal of discretion in how the place is run: the layout of the various waiting rooms, the particular queues that move people through the application process (Hoffman has chosen four: one for appointments, one for walk-ins, a special-requests line, and one for applicants with complicated cases), and the color of the walls (they’re currently a dull institutional blue; he’s planning on painting them a cheerier yellow). And it’s his job to motivate and manage his workforce. He promotes high-performing agents and disciplines—or in extreme instances even fires—lower-performing ones. (Yes, while it isn’t easy, it is in fact possible to fire federal employees.) He’s been given enough autonomy within the context of a federal bureaucracy to make the passport experience in New York terrible or fantastic, and he’s achieved the latter. Hoffman, a modest and unassuming mid-level bureaucrat with a fondness for baseball memorabilia (a bat and a row of balls have pride of place in display cases behind his desk), has just done a great job of using his power to make the office run really well.  

This isn’t to say that the passport office is the happiest place on Earth. During the summer rush, when we visited, the waiting areas featured row upon row of unsmiling applicants waiting for their numbers to come up. The only happiness came from three young girls running around in the hallway who Hoffman told in a friendly but direct way as we passed, “Stop it now and find your parents.” Of course, no one goes to the passport office for the fun of it. Customers want to be in and out as fast as possible, and that’s what Hoffman gives them—efficiency. When we went into our meeting with Hoffman, the overflow waiting area was full. When we came out 30 minutes later, it was nearly empty.

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The success story of New York’s passport office tracks with a study recently released by a pair of economists at University College London, Imran Rasul and Daniel Rogger, who looked at the effectiveness of Nigerian government departments. They found that autonomy—in this case, whether project managers have the discretion and resources to do their jobs without approval from higher-ups—is a critical predictor of whether projects get done and whether they’re done well. For Hoffman to design a passport office that works for New York—and to manage the process well—he can’t be overruled by a one-size-fits-all approach that’s dictated from Washington or New Hampshire.

Rasul and Rogger also found that incentives—rewards for getting projects done well and done on time—tend to backfire in the Nigerian bureaucracy, and there’s no reason to think that the country is unique in this regard. It’s a helpful reminder that managing in government involves a different set of constraints and objectives than you find in corporations: A company wants to maximize profits, which can be a lot easier to measure than the complicated, multifaceted, hard-to-evaluate jobs that often fall into the laps of governments, for whom it can be difficult or impossible to design incentives that will actually accomplish the intended goal. (It’s not entirely easy in a corporate context either.)

The typical vision of government bureaucracy is not a flattering one. We assume that faceless bureaucrats will make our lives resemble some version of Terry Gilliam’s Brazil. But with people like Hoffman around, that's not the case. So the question—whether you make cement or passports—is where to find more Hoffmans.

That won’t be easy, partly because there aren’t many Hoffmans around, whether in government or industry, and governments and many nonprofits face a special challenge in recruiting talent. Hoffman doesn’t earn as much as a starting MBA consultant at McKinsey. That’s changed in some quarters: There are many university presidents who are paid millions, and nonprofit hospital execs can earn as much as their for-profit counterparts. The Singapore government has taken the same approach to running bureaucracy. In 2012 the prime minister took home more than $1.7 million.

But Hoffman is content with his 30-year career in government. He’s served his country and has no interest in becoming, say, a regional manager for Costco or Wal-Mart. If we can’t pay him and other outstanding public-sector managers the salary that’s commensurate with the social value they’re creating, we should at least give them the recognition they deserve. Perhaps in the process we could imbue the much-maligned title of government manager with the respect that will attract the next generation’s finest to a life of public service.

Ray Fisman is a professor of economics at the Columbia Business School and co-author of The Org: The Underlying Logic of the Office. Follow him on Twitter.

Tim Sullivan is the editorial director of Harvard Business Review Press. Follow him on Twitter.

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