A Management Engineering Opportunity

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 U.S. citizens and their income through using social security numbers, so the states can manage real-property tracking services to maintain its land as a taxing base for all levels of Government.

 

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 United States.  Change will require legislation that effectively replaces the common-law foundation for real property management.  It is time that this happens, as both the nature of government and of property ownership has changed substantially from the time when our current approach was appropriate.

 

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 Opportunity

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.