A
Management Engineering
State-Level Real Property Services
by
Jesse
W. Brogan, President
The Management Upgrade Shop
Management engineering is the application of basic efficiency engineering to the art and science of gaining through the efforts of an organization. It is appropriate as technical support for senior managers, and results in working rules and principles that will put the senior leader in more-effective charge of organizational performance. It opens the door to a new level of performance-based management.
This is an emerging
field, not one well published and practiced.
First applications can have remarkable effect.
This paper describes
an opportunity for Governors, Legislators, and other senior leaders of state
governments. It is an opportunity to do
what management engineering supports, picking up the reigns of leadership in more
effective ways.
Basics
Management
engineering is the application of basic industrial engineering (efficiency
expertise) to the art and science of gaining performance through
organizations. Management engineering
provides the government leader with working tools, and with technical support
for their application. Engineering does
not do application; it provides the working tools that managers can use to
accomplish their own individually-selected purposes.
Engineering
approaches the State as a business, much like any other corporate
business. Instead of profit, it has the purpose
of governance, with the voting public as both its customers and investors. It survives as any other business, by
providing return on investment to those who fund its operations.
The three general
functions that operate any business enterprise are: 1. gathering inputs, 2. converting inputs into outputs, and 3. distributing outputs to those outside the
organization. For the state, this is
gathering revenue (fees, licenses, taxes), converting these into public
services, and distributing the same to members of the public.
Leaders can use engineered
tools (understandings) to accomplish efficiency in operations. Engineering provides perspective to structure
our working knowledge and to make it more effective. These tools implement a new level of
performance management; and they put a leader more in charge of performance.
The Executive and
legislative branches of government provide management functions. The legislative effort provides assignment
and tracking. The executive effort
provides execution and direct management.
Both are subject to improvement in effect through management engineering
applications.
Management Engineering Basics
Management
engineering defines management as the work that a manager does to gain results
through others. This sees management as
an active and artistic application.
Management engineering provides technical/professional support to the
manager who, as a practical artist, has something to gain.
The functional purpose
for any organization is defined by inputs and outputs; it is converting its
resources into goods and services that are delivered to those who pay the bill. Engineered metrics for the organization are
the whole-value-produced and the cost-of-running-the-business while value is
produced. Internal business elements are
valued by their contribution to the whole-value and whole-cost noted for the larger
organization. By this, every element
within the organization can be manageable, and have performance metrics.
Engineering also
recognizes that there are only two types of elements in the efficient
organization. The first takes part in
directly converting resources into products and services that are delivered to
those outside the organization. The
second delivers internal support; it generates internal products and services
for consumption by others within the organization. Any organizational element that does neither
of these functions can be removed through reorganization with a saving in
resources consumed, and no reduction in performance.
As a final basic,
Brogan’s Rule is based on the relation between customers and businesses. Customers have the final value determination
on all products, and buy only what has sufficient value to them that they will
pay the price. The Rule: Receivers
determine the value of both internal and external products and services.
A Practical Application
Management
engineering has not previously been applied to state government, and the
importance of the systems that gather state income has not been fully
realized. Accordingly, there is a
substantial opportunity for current state leaders to step into more-effective
management, demonstrating their leadership in ways that will be hard to match
once management engineering is more-generally available.
Real-property
management provides a remarkable area of potential benefit. Our land management systems have been passed
down to us from antiquity, and do not have foundation in either management or
efficiency. Applying management, with
the aid of management engineering approach, can increase the value being
generated for the public while decreasing the cost incurred by the public.
There
is an efficiency-warning marker that is seen in current real-property
efforts. John Q. Public needs to hire
professional services to effectively perform every-day interaction with his
government (which is supposed to be supporting him).
In specific – title
to real property is a major source of taxation.
The State has value in attaching tax responsibility to land; and in managing
a system of effective land-use/tax-base records. In management engineering terms, this is part
of the effort for collecting organizational income.
The recording system
also serves as a product for John Q. Public.
In the current system, the rendering of this product is unmanaged; there
is no measurable way to distinguish “acceptable” service from that which is
not. The system managers are not
responsible for providing much of anything to senior management.
Even
as the Federal Government manages the identification of
Value Analysis
Management
engineering efforts commonly begin with value analysis, which is a study of the
value an organization generates in some specific effort and the cost of
generating that value.
The State works with
real property records as a basis for taxation, which serves the critical
purpose of gaining operating income (Gaining income as the first of the three
necessary functional requirements of any organization). The value received by the State will be
support for real-property taxation that will be honored by those who are
taxed.
One
concern is that this work is now performed by counties as the elements of the
state that are most proximate to the property.
This makes just as much sense as having the states determine the
personal income-tax base for the Federal Government.
It
is not good to allow a separate institution, with its own more local purpose
and leadership, to take responsibility for the State’s life line. If anything, the Counties should receive the
benefit of the State’s property tracking system.
The Public also receives
some real property management services.
The first value received by the Public will be ownership security, which
now involves buying separate insurance. Public
service should also reasonably include security in transfer of real property
ownership, a function that owners also must now buy from third party experts.
The
cost of real property transactions for the public now includes the use of
private insurers, real-estate agents and attorneys. This is a burden that the current method of
management now puts upon those who it is supposed to be supporting. It represents dollars that should be going
into the operation of the State as it sees to its own purposes and supports its
citizens.
Management Analysis
For efficient
operation, the State real-estate effort is to generate more value for the
public than the cost of generating that value.
Our first challenge
is at the level of definition; “What is the state effort to gain for the public
through the operation of the real-estate management system?”
The unfortunate
answer is that the current system is not designed to give the public anything. It was developed as a means of identifying a tax
base to support long-ago governments that did not have to answer to those who
were governed. Any benefit to the public
was incidental. From the standpoint of engineering,
the State has nothing to gain through its present real-estate management
efforts. With nothing to gain through
those doing the work, it is outside even the definition of management.
The State assumes
performance management by going beyond our legacy property systems and focusing
on the value that the State is supposed to be providing for its own operation
and for its public. A system designed to
serve these purposes will not only generate new value; but will establish a
possibility for remarkably more effective performance management.
NOTE: The current system is implemented through peripheral
legislation; but is built upon legal concepts that go back before the
Value in Public Service
A primary function
will be to settle title to real property; and this function will be logically
accomplished through identifying ownership in terms of tax-liability. The law that implements this should probably
use tax records as the primary document for quieting title. From the standpoint of the State, tax
liability and ownership should be a single issue; the State needs to know its
own resource base.
I
might suggest that unchallenged records of payment of taxes on a piece of
property for ten consecutive years “entitles” the current tax-paying owner to recognition
as the in-fact owner. That entitlement should
be secure; challenges should only have effect when they pass through the state
courts, and are found to take priority over State legislation.
A
second issue to address is transfer of property by act of law, as with
estates. This should be taken out of the
control of common-law rules, and entered into the legislation, so that the
courts and its officers are relieved of ministerial duties. Regular transfer should be by clerical action
in the State’s real-property management system, with the courts available for
handling exceptions. The owner might,
for example, be permitted to enter into a conditional deed that would pass
real-property ownership upon his or her death without need to go through probate. This conditional deed, being a State-level
record, would be a superior document to provisions of a last will as to any
distribution of real property.
The
transfer of land should not be subject to value-based state taxes as it does
not increase the cost of rendering government services to the public, but it
still might have a transaction charge based on the cost of performing the work
associated with recording the transfer.
The effort to settle
title for all property may take some time, and will have cost, even with new
legislation that makes the ownership-taxation link. There will also be a need to manage
exceptions (someone shows up with a colonial land grant), and probably a
corresponding need for funding to support exception efforts. The result will be a firm and manageable
ownership database designed to support real-property taxation.
Customer service for
property owners is a bit more complicated, as it is to be based on value as
seen by the public/landowners.
NOTE: The fixing of ownership is going to
effectively put the title insurance industry out of business. The State will become the guarantor for real
property ownership. Those buying and
selling real estate will no longer need to purchase separate title insurance.
Customer service
will also be served by applying another general principle of efficiency in
management. Internal support groups exist
only to provide support. The support has
value determined by receivers, and the receivers will be land owners. The service and support that they need
includes the transfer of property. There
is no reason that the State, as a primary beneficiary of real property
ownership, should not actively perform property transfers for its public. This is the forum in which taxation
responsibilities should be firmly established.
The document for today’s
transfer of real property is a deed, approached as a private contract. The State service should involve the State as
a third party to all real-property transfers.
The transfer of ownership/tax-responsibility should be performed at cost
with a fee for a “special support service,” or at public expense as a “general
support service using tax dollars.” Approaching
real-property management as a State service makes this not only possible, but
highly desirable.
NOTE: The “deeds” will be state documents, not
private ones. Excepting signatures, the
State will fill out its own paperwork, assuring that the information is correct
for the purpose of establishing ownership and tax responsibility. Under the same logic, leases will not affect
tax status, and would remain private matters.
Leases and leans against property might still be recorded as a general
and convenient public service, but these would not become state real-property
documents.
NOTE: This will substantially change the nature and
purpose for real estate agencies.
Dealings with financial institutions and owner-insurance groups will
remain, but the actual transfer will become a matter accomplished by the State
as part of its own operation. The money
expended on private agents will drop accordingly. That money will become available through
taxation or transaction fees to support the State’s real-estate management effort.
This
affects a substantial area of law, and there are legal practitioners who make
their living by providing high-end real-property services that will no longer
be required. Simplifying State services,
and assuring their value, has wide ranging effect.
One-time
This is a one time
opportunity, the first application of industrial engineering to the operation
of a state effort to gain performance for the benefit of the public. The application is new, and will probably
result in a fairly-permanent new service to the public for which originators
can take credit
The obvious increase
in value to the public promotes cooperation among even the most challenging of
personal opponents. Nobody wants to be
seen as opposing a remarkable and obvious value for an organization’s
customers, even if they might challenge the source. It is likely that active support can be
enlisted from others throughout state government.
A Managed Process for Accomplishment
Knowledge of where
value is most likely to be enhanced is just one aspect of management
engineering. There is also how-to
knowledge for the processes that will be both efficient and effective in
assuring the result.
The engineered
process for this type of action is “assignment.” It is founded on applying an investment logic
based on a valuable result to obtain, and on an expectation of what it is going
to cost to obtain it.
The Engineered Assignment Process recognizes five essentials:
The product - used to define “success” for the
performance effort.
The Assignee - someone who will be accountable for
achieving that success.
Negotiation – where Assignee and Assignor agree on process
and resources.
Implementation – where the negotiated agreement is put into
effect.
Management – where performance is tracked to successful
completion.
This managed assignment
process has two levels of application for State assumption of real property
management. The first is fulfillment of
the purposes discussed above for the real-property management system. This involves assignments made to provide
services to the State as an institution, and to the public. The second is implementation of the
change. This is assignment to a specific
state employee to accomplish the change, with sufficient authority granted over
State resources to reasonably assure successful performance. Both involve internal commitment of resources
to accomplish public purposes. The first
generates a substantial public benefit; the second is part of the cost of
generating that benefit. With this
approach, both efforts will be manageable.
The first step is
the most difficult of the five, establishing the productive result to
assign. This productive result must be
in terms sufficient to distinguish success from failure. The Assignor must have some pre-defined
result that they are to accomplish as the output from Assignee efforts.
For the purpose of
such a change as that envisioned, the first product will be a plan of action to
accomplish a new property management system.
That plan will be the first specific deliverable, and will (as a
minimum) outline the change effort in sufficient detail to assure its
accomplishment when the planned resources are provided.
This is the key to
management over the change process. This
plan will become the tasking document for a follow-on assignment to “make it
happen” according to the plan. That
assignment will be the larger investment, and will be manageable in the sense
of fulfilling the plan that is developed in the first effort.
Identification of
the person who will first establish the working plan, and then have to
implement it, will be a general management task. The person should be selected based on an
expectation of being able to fulfill both purposes. It should be a senior manager who has skills
in public service.
Once the person is
identified and the first-plan product is adequately defined, then the process
of negotiation can begin. The purpose of
negotiation in the engineered process is to establish the equivalent of an
internal contract where the Assignee agrees to generate a result if a planned
resource base is provided, and the Assignor agrees to provide the resources
based on the expectation of performance.
Negotiation may
involve both Assignee and Assignor gaining an understanding of process, so that
there is a meeting of minds on the potential for accomplishment and the adequacy
of planned resources that reasonably assure that same accomplishment. It will include a refinement of the concept
of the productive result to be generated to include any management feedback
products that will be needed to support an assurance that the performance of
assigned process is continuing acceptably.
It will include the understanding that future situational changes may
threaten the performance, opening the door for exception-level management by
the Assignor.
Once the plan is
developed under this first assignment, that plan becomes a tool for making the
second assignment – the one that implements the change that will establish the
State-level service. That change will
have to involve new legislation, and major interaction with county governments
that now handle much of our real-property management efforts. It probably should include some interaction
with groups like the Maryland Bar, real-estate agent organizations, and title
insurers. It should have coordinating
contact with state judicial groups.
The effort may have
to draft law in support of legislators.
It may have to address transfer of workers from county employment to
state employment. It may require
coordination with county governments if these are to support the state
employees who will then provide property assurance and transfer services for
citizens (supporting both state and county taxation efforts).
The effort will have
to include sufficient resources to establish the communication of benefit to
the public and to those in the state legislature who will support the
change. This plan for supporting communication
will have to be addressed as part of the product, and will become an item for
negotiation.
NOTE: It might be that key legislators should be
included in the tasking process at the negotiation phase. This will better assure cooperative efforts,
and more accurately plan the timeliness and costs for preparation of
legislative products.
When the negotiation
is complete, then the assignment is a turn-key effort to activate the
manager. Assignment will involve the
commitment of resources in accord with the plan, and promise of future
commitments in accord with that plan.
Management, of
course, is assured by following the performance plan. The result will be a well-planned and
effective government action leading to increased delivery of value to citizens.
This is a local
application of management engineering.
For more information on management engineering as an emerging specialty,
visit the Management Engineering Newsletter website: http://MgtEngNews.home.att.net.