Challenge my thinking – Part 1

My dad bought a very thought provoking book (actually he sent the money) for my birthday this year. It is Tom Peters’ Re-imagine. He starts the book ranting about the Dean of the Stanford University Business School, Robert Jaedicke. When Peters attended Stanford, Jaedicke was his accounting professor. In 2003, Jaedike was the chairman of the Enron Audit Committee and confessed to being clueless about “the truckload of peculiar transactions that brought the company down.” What strikes Peters is that his old “Prof” is “the last bastion of bean counting” and didn’t (or pretended to) see the poor practices within the firm.

Reading Peters book has me thinking again about the impact of similar activity in the public sector. First of all, I do not mean to convey concern about the accounting practices of the City of Concordia. I do continue to ask myself the question about what happens to local governments when people make stupid mistakes – planned or unplanned – that cause the question of bankruptcy to be discussed.

In the business world, bad decision making causes the businesses to go away or be purchased by other firms. Since different governments provide services that cannot or will not be performed by the private sector, these local governments more than likely won’t go away or be purchased by another local government with more efficient management controls and procedures. A more likely scenario would be a court appointing a custodian or “special master” to administer until things were straightened out.

My first job in Kansas, Baldwin City, was headed toward bankruptcy. The City Clerk had been using city fund for her personal benefit and was fired before I interview for the job. (She was later convicted and sentenced to 6 months probation.) My first eighteen months there were very stressful as we straightened up procedures and put financial affairs back in order. Every day we looked at the cash balance in the bank and every Council appropriation ordinance meant sending checks out as cash came in over the next two weeks until the next Council meeting.

Governments are not like private sector companies. Who would stand for the doors of the police or fire department to be chained shut? Who would stand for the water or waste water utility to stop working if the “parent company” closed? What more efficient organization would come in to “right the ship?” There is an expectation of continued service.

So what do you think?