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Management Ideas from Mayor Tony Williams – and My Thoughts On Same

I attended the DC Chamber of Commerce Annual Lunch yesterday as a guest of my client, Medstar Health. It’s like the DC business community version of Lollapalooza with the floor of the Washington Hilton being the moshpit. (Hilton is a client as well, working with them on the Old Post Office Pavilion redevelopment competition).

My former boss and the person that influenced my management philosophy the most, Tony Williams, had some great remarks at the gathering around how government can deliver the highest value to its residents and businesses.

In fact, I had been thinking lately about how we have roughly 35,000 employees in the District but they never are really engaged in the strategy for moving the city forward. In the private sector, employees are at the forefront of creating and driving change. But lately, the employees of the District have not been engaged-or empowered-to help create a first class government serving businesses and residents alike.

Williams identified some specific concepts for government-for managers and employees-that we should strive for in the delivery of services to help create a more efficient enterprise.

1). Develop nimble response mechanisms. As part of the Williams Administration, we introduced a system for tackling basic services, such as requesting street lamp replacement and pothole patching. Governments must demonstrate that they can get the job done not only to keep residents satisfied, but to compete for new residents.

And with the advent of Twitter, I think we need to continue to develop technology to serve citizens–we should develop or seek out solutions that incorporate Twitter requests into the District’s service delivery request system–automatically. That is, when someone tweets a “streetlight lamp is out at x location” that tweet gets routed into the service delivery que.

2). Avoid across the board budget cuts. Williams rightfully points out that we must avoid across the board budget cuts. This seems like an obvious piece of advice, but governments too often take the easy way out and say “let’s cut 3% across the board” instead of diving into each agency and each agency program to determine what’s working/what’s not/what fits into our strategic objectives and what doesn’t. This will be even more important as federal budget cuts begin to hit the states and the District of Columbia.

3). Engaging employees in change/invest in people. As I noted above, in the private sector–where i operate–employees are routinely engaged in the process of developing ideas for implementation—for change. In fact, this next generation of employees are even more motivated to perform well if engaged. Governments must begin to engage their front line workers in this conversation. Managers must take the time to meet with and discuss their vision for their agency and incorporate the many good ideas their employees have. Moreover, as Williams noted, we must invest in our people. Technology, new processes for doing old tasks are being born every day. We need to provide our workers the tools they need to get the job done-and done well.

4) Create high performance culture. One of the points Mayor Williams made which I couldn’t agree with more is that we don’t allow/encourage government workers to take risks. In fact, we punish them. In the private sector it is the exact opposite-I ask my employees every day to take risks. It’s through the risk taking and trying new ideas that we create this high performing delivery mechanism and culture. The reams of regulations and laws that govern employee behavior is stifling the governments ability to perform at the highest level, resulting in just basic service delivery. Managers need to change the culture and encourage risk taking, so employees are truly empowered to try new ideas-fail along the way-and learn and grow. This keeps employees engaged and makes them part of the solution of creating a 21st century government that is serving the evolving needs of residents and businesses.

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Summer Youth Employment Program: Should be Year Round

In a post recently, I argued that for the District to truly compete in our regional economy, we need to create a climate for businesses to grow and thrive. First, we need to get them to move into the District and create the careers our young people need and deserve.

Second, as part of any corporate tax incentive program, we should set aside a portion of the taxes generate to support our youth, in the form of an extension of the District’s Summer Youth Employment Program. While the summer youth program is very helpful, it doesn’t create the long term benefits that it could. The District could incentivize these youth by saying: if you excel and exceed expectations during the summer, the District will ensure that you have a part-time job during the school year. The government can set aside 10% of any tax increment generated by virtue of new companies moving into the District and target business segments–Information Tech, Health Care, Energy, Service sector-and use that revenue to support youth in these part time jobs during the year. This will ensure that we continue to prepare our young people for careers in business sectors that the District is targeting to grow and provide much needed skilled labor to these companies. Finally, corporations that receive tax incentives to move here are incentivized further to hire local residents and work with us to prepare our young people for the workforce.

We must begin to think strategically about how we tie incentives to careers and how we attract companies to DC that will provide employment opportunities to our residents–today and in the future.

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How can DC compete for companies that create careers–not just jobs?

We all saw today that Ted Leonsis and Steve Case have raised a $450 million fund to invest in Washington, DC area start-up companies. This is great development for the region. The two business leaders and their investors should be applauded for recognizing that there is a need to fill and it’s right here in DC.

So it was perfect timing that this morning I was at my client, the Entertainment Software Association–the video game industry-where they were holding their annual meeting with their strategists/advocates from around the country.

This won’t surprise anyone familiar with DC: all of the major video game companies are located elsewhere. They are either in Austin, or Miami or Salt Lake City or Los Angeles. In short, they are in places where the local and state governments are working aggressively to court and incent them to move there. DC has major universities; a very smart workforce; culture and art to attract workers. These workers in turn buy houses; go out to eat; and yes, perhaps take in a Caps/Wizards game.

But in my conversations with some of the major video game makers, they don’t even think of Washington, DC. Why? Even with the White House and Capitol nearby.

1. Corp Tax rates are too high. Other states have developed incentive packages to bring these companies here. Our corp tax rate of 9.95 percent is almost twice as high as the 6% tax rate across the river in VA . If we were to reduce our special education costs of $200 million a year to $150 million, we would be able to reduce our corp tax rate and stimulate job growth in growing sectors of the economy and create jobs and careers right here in DC for DC residents.

2. Reduce Capital Gains tax rate. I know that as a Democrat this is almost considered heresy to dare suggest reducing the capital gains tax rate. But the facts are simple: venture capital firms–who invest in start-ups and the start-ups themselves–will not headquarter here when Period. Since DC cannot tax income at its source; has a height-limit on buildings, thereby foregoing massive new tax revenue, we need to be creative as a city in order to compete for companies that are creating the kind of jobs that we want. Our long term capital gains tax rate is again close to double that of Maryland and third higher than VA, according to the American Council for Capital Formation Report, 2008. We can complain that we shouldn’t reduce this tax; that it’s unfair, etc. But if we want to begin to create real careers in growing sectors-like Information Technology, Health, Energy, and Video Games, then we should step up to the plate and begin to compete in a serious way.

3) Create mini-empowerment zones. The District should set aside some fallow land it owns and literally give it away to firms that want to build and create jobs there. We should zero out taxes for a period of time and offer employment tax credits; housing tax credits to the workers who work at these firms and want to buy in the District and encourage a high-tech company to come and plant the flag here. The jobs these create will allow us to generate tax revenue that we can then put back into the general fund and provide for our residents who need our help. In essence, preserve the safety net. We can’t preserve it by continuing to spend $92 million a year on special education transportation; or wasting $30 million on failed IT projects. We need to think smarter and encourage our leaders to do the same. President Clinton created Empowerment Zones across the country. We need to replicate them in some parts of DC. People who go to college here and grow up here want to stay here. And where young people who take these jobs want to live is right here in DC–not in Reston or Ashburn, VA. But if we don’t take action here–and soon–Living Social may not have a choice and will flee for that place where Wegman’s calls home.

And the

DC government gives developers tax abatements; TIF’s; and other subsidies to build hotels, for example–as we should.

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Wal-Mart

It appears that Wal-Mart is poised to open 6 stores in DC. , I think we should do everything we can as a city to attract retailers and other businesses who will create jobs, offer products to our residents, and help the city generate much needed tax revenue.

But we should not equate Wal-Mart jobs with careers. These are not careers. While they are good jobs, city leaders should continue to help residents with developing CAREERS in health care, technology, construction/engineering. As a city, we must use training dollars effectively and fill the gap between available careers and developing those skills needed to help our residents build a career.

I don’t agree with those that believe Wal-Mart is evil. I am certainly sensitive to the argument that Wal-Mart can be an impediment to growing our small businesses and that is why I frankly am a bit surprised and concerned about having 6 Wal-Mart’s that will serve a population of 600,000 people. Or perhaps they’ve announced 6 with the expectation they will “give back” 3–a negotiating tactic that makes some sense. That through either protest/deals falling through, etc., they will have only 3 Wal-Mart’s in the District.

Or perhaps Wal-Mart knows something that the rest of us don’t.