Priority setting in government

Priority setting in government

Evaluation and Pmgram Ftff~~j~g,Vol. IS, pp. 3343, 1992 0349-7389192 $5.00 + .oo 1992 Pergamon Press Ltd. Printed in the USA. AlI rights reserved. ...

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Evaluation and Pmgram Ftff~~j~g,Vol. IS, pp. 3343, 1992

0349-7389192 $5.00 + .oo 1992 Pergamon Press Ltd.

Printed in the USA. AlI rights reserved.

PRIORITY SETTING IN GOVERNMENT Beyond the Magic Bullet MORRISROBERTBOSIN U.S. Food and Drug Administration,

Office of Planning and Evaluation

ABSTRACT Priority setting can be a painfulflrzddiv~~ve~r~cess, but it is a necessary acrivifv-particur irs times of resource scarcity. In this article, fhe issue is examined from the ~ers~cf~ve of pianners in the public sector. First, the causes of ambivalence in tackling priorities are examined. Second. roles are s~gg~edf~r agency pfarmers fo piay to redatce this ambivalence. Finaty, fhree different mode& for priority setting in the pubic sector are proposed- based on the premise that priorify-setting processes should be tailored to match the situation. ‘One size does not fit all. *

This paper is written from the perspective of planning practitioners who operate in a major federal regulatory agency. Those of us in the public sector who lived through the management reform eras of Program Planning Budgeting Systems (PPBS), Management by Objectives ([email protected], and zero-based budgeting (ZBB) were exposed to an interesting phjIosophy about priority setting. The advocates of these reforms readily assumed that a single prescribed approach applied in all federal settings (Caiden 1982). We soon learned, however, that there is no single, magic approach to priority setting. Planning staffs have had to diversify their approaches in order to survive and still provide a useful service to their administrators. Consider the following scenarios:

Joe T., a program manager at a state regulatory

agency, recently received a late Friday afternoon call concerning a rapidly escalating crisis over an oil spill that had just occurred on the Chesapeake Bay-an area whose marine resources his agency was responsible for managing. The incident required an immediate redeployment of the agency’s technicaf, managerial, and political resources. However, very little of the “patterned” planning information that was generated just 3 weeks previousiy as part of the Agency’s normal planning process was of much use to agency decision makers in this particular situation. Hank h/z. has just been appointed as administrator of a major old-line federal agency. He has some fairly specific ideas concerning where he would like to see the organization move in the future; but he also feels that it is necessary to have agency management go through a comprehensive and reflective assessment of current vs. future directions. He also is apprehensive about imposing his priorities on the current management regime, and he anticipates some lowkey but entrenched resistance.

Frank E, a planner on the staff of a defense agency in Washington D.C., has taken great pains over the past IO years to establish an orderly, systematic process by which agency managers can plan their defense priorities for the subsequent 18 months. The next planning cycle is about to begin, and all of the elements are in place-including appropriate planning guidance, seasoned planning contacts throughout the agency, and a well thought out schedule. He is fearful, however, that the priorities that will be arrived at through a rational, orderly planning process will once again be overridden by politics, and this will lead to further deterioration of his process’ credibility.

In each of the above three scenarios these people are grappling with the problems of priority setting in the public sector, but under very different circumstances. They all have an expectation of rather rough sailing as they engage the relevant decision makers. But they also know that priorities will have to be set in order to move their agencies forward. Priorities will help them deal

Requests for reprints shoufd be sent to Morris Robert Basin, Office of Planning and Evaluation, U.S. Food and Drug Administration, Washington, DC. 33

34

MORRIS ROBERT BOSIN

with their complex problems in an orderly fashion, and will give them a way to allocate increasingly scarce resources under pressure. This article makes three points: 1. Although the establishment of priorities is an acknowledged necessity, it can be a painful and divisive process. 2. Agency planners can play an important role in reducing the apprehension and at least part of the conflict associated with priority setting by designing appropriate planning processes. 3. Approaches to priority setting must be tailored to match the situation. One size does not fit all. We focus on priority setting from a somewhat different perspective than those found in much of the manDILEMMAS

OF PRIORITY

The establishment of priorities is an ambivalent enterprise for managers. It is necessary in order to organize the environment, to provide a blueprint for orderly aflocation of resources, and to send clear signals to outside constituencies that agency programs are being managed effectively. But, priority setting can also have significant adverse effects. First, ranking processes can influence managers to deemphasize important relationships between activities in order to determine their relative importance as separate entities. Second, the process of pitting one manager’s most critical needs against those of other managers can cause deep-seated conflicts to surface among participants-conflicts that are based on differences in underlying frames of reference and their associated values. Finally, negotiating about priorities, particularly among different levels in the bureaucracy, can create strains between political motivations and programmatic needs. Each of these disadvantages will be examined in grcat,er detail below. Need to Differentiate

agement literature. See, for example, Fernandes and Laberge (1986); Algie, Mallen, and Foster (1983); Cook, Golan, Kazakov, and Kress (1988); and Trachim (1989). These authors, for the most part, emphasize the technique of priority setting. Here, we address priority setting not only as a managerial technique, but as an integral part of the planning subculture of an organization. We attempt to get at the meaning of priority setting from the perspective of public officials who participate in these processes. In the sections that follow, we will describe the dilemmas that pubtic sector planners encounter in priority setting and suggest three approaches that can be utilized to deal with different kinds of priority-setting circumstances.

Versus Need to Integrate

To rank an organization’s activities is to risk deemphasizing the relationships among the activities for the sake of determining their relative importance as separate entities. In a sense, to set priorities is to temporarily suspend a belief in the connectedness of agency activities and programs. Setting priorities runs counter to the view that people, functions, and rewards received for doing a good job are all intertwined. To separate these factors for purposes of ranking parts of an organization is to lose focus of the organization in holistic terms. The following example from the U.S. Food and Drug Administration (FDA) illustrates the point. Several types of scientific reviews are necessary in order to approve a new drug application submitted by a company. These include chemical, pharmacological, and medical

SETTING

screens. All three reviews are necessary for FDA to obtain a complete picture of the drug’s safety and efficacy. Further, because there is often a high level of interaction between the reviewers, the information and insights generated by each review can affect each other. Yet, during a budget or planning cycle program, managers may well be asked to identify needs for more chemists, pharmacologists, and medical officers, in order of their importance. Because all three disciplines are competing for scarce funds, the importance of the interrelationship between disciplines could be undermined. Because the process of ranking activities involves clear winners and losers, many managers are reluctant to participate because it reduces the potential for cooperation between organizations. Priority setting tends to define organizations in terms of relative power, rather than indicating desired coordination on tasks. A police department may well sabotage its own plans for devising a coordinated plan to reduce traffic violations by rewarding its officers for individual performances rather than for their cooperation with other officers. This might occur in a situation in which effective control of speeders would be handled most effectively by a well coordinated communication system among precincts, but performance of employees continues to be ranked according to the number of apprehensions by individuals. Even attempts to avoid consciously favoring one program over another may have undesirable effects. The Gramm-Rudmann decision rule to sequester budgets if a deficit-reduction target is not met illustrates the point. Despite its attempt at even-handedness, sequestration policy has been criticized because, by applying a pro forma criterion, past inequities among programs are perpetuated. In an environment of bureaucratic politics, program managers often are reluctant to commit explic-

3.5

Priority Setting in ~~Y~rn~e~t

itly to certain priorities for fear of becoming vulnerable in lower priority areas. Hans TenDam (1986) puts it this way: “To put down on paper specific objectives or priorities, means to put down something with which your boss can strangle you. Especially in a bureaucratic political environment, this is sinning against the wisdom of keeping your options open.” In the years when Zero Base Budgeting was at its peak in the federal arena (197X30), agencies were asked to categorize all of their activities into “decision packages”- both base activities and those for which budget increases were being requested. Then all decision packages were to be ranked from most critical to least critical. Managers were extremely reluctant to rank any increase requests higher than base activities for fear of being requested to fund increase requests internally through reprogramming. Conflicts Between Frames of Reference Conflicts in priorities can surface differences in frames of reference and the values attached to those frames. Priority battles in public spending during the early 1960s illustrate this point. American public policy in the 1950s was dominated by corporate m~ageri~ and technological experts. Their frame of reference was economic efficiency. They felt that solutions to public problems should be patterned after the efficiency models used in the private sector. During the 196Os, however, the public sector became more activist. New policy makers were intent on uncovering heretofore hidden social, political, and environmental issues-problems whose solutions weren’t amenable to simply tr~splanting the private sector, economic-based solutions. (Wilson, 198Of Differences in opinion on spending priorities between defense and social programs were not resolvable simply through cost-benefit analysis, but involved questions of values-efficiency versus equity. Priority-setting techniques offered little solace to those who were struggling with value-based disagreements; instead, those processes were symbolic reminders of just how deep the rifts were. AGENCY

PLANNERS

CAN HELP

Priority-setting processes were viewed also as the vehicle by which rewards and punishments (in the form of dollars, territory, etc.) could be allocated to those who stood on the winning or losing sides of conflicts. Political Motivations Versus Programmatic Need A third worry of managers is that priority decisions made by an agency administrator will be motivated by the desire to remain in a position of power or influence by supporting the Administration~s positions, rather than supporting the legitimate long-term needs of programs. One manager confided: “Everyone knows that to have any chance for increased funding for my program this year, I will have to ‘fly’ my increase request under the banner of a politically hot topic.” Thus, there will be inadequate resources available to focus on less visible, but nonetheless important, activities. The latter may represent large, core functions of the Agency and help to keep it running smoothly. When FDA was in the midst of a highly visible action planning initiative in the mid-198Os, most external and internal communication was devoted to the few initiatives that were being highlighted continually - AIDS, new drug reviews, biotechnology, etc. A subsequent analysis by the planning staff revealed that the highly touted Action Plan represented less than a third of FDA’s activities. Many program managers were hesitant about participating “full bore” in what they perceived to be politically motivated exercises that: (1) could exclude their area of responsibility, or (2) if their area happened to be high on the political agenda, could attract the undesirable glare of public scrutiny. Because of ail the above concerns, it is understandable that managers may not be enthusiastic about parti~ipating in priority-setting exercises that they see as beyond their ability to influence. What roles, then, can agency planners play in helping agency administrators and managers to deal with the painful but necessary task of priority setting?

TO ALLEVUTE

Agency level planners are positioned uniquely in the org~izational setting. Although they seldom have direct line authority, planners often find themselves at critical crossroads where they can exert a strong influence in making necessary priority-setting activities more palatable to participants. Each of these crossroads were referred to in the previous section on dilemmas of priority setting. At the first crossroad -differentiation versus integration-planners clearly feel a conflict because they are purveyors of the organization’s “gestalt,” but also must justify the Agency’s various component activities. Plan-

PRIORITY-SETTING

DILEMMAS

ners often find themselves responsible for developing documents and presentations that demonstrate a strong, integrated agency effort. However, they also must be prepared to dissect total planning efforts in order to explain return on the taxpayer’s investment for each specific element of the organization. Planners can help to satisfy both the needs for synthesis and analysis by: (1) fostering a climate that is conducive to long-range, strategic planning, and (2) establishing an information base that can furnish costeffectiveness data to support priority-setting endeavors. A durable strategic framework can provide contextual

36

MORRIS ROBERT BOSIN

stabifity for the Agency and can serve as a backdrop against which changing priorities can be evaluated. Planners need the ability to answer the question: “What happens to the integrity of overall agency and program directions when short-run priorities are altered?” However, in order to develop both the strategy and the information base, planners need to invest time to build the understanding and rapport with the agency’s program managers and to garner the support of the agency director and his/her top management team. Time is necessary to build and reinforce a common planning culture-one that acknowledges “we’re all in this situation together.” Such common understanding will provide a fertile seed ground for generating fruitful planning products when the need arises. At a second crossroads -conflicts between frames of reference-agency planners perform a valuable function when they establish processes for identifying and resolving conflicts among competing priority schemes at different organizational levels. Planners are responsible for staging and managing processes within which conflicting priorities can be resolved. If not resolved, processes at least can allow sufficient debate to enhance understanding of, and respect for, different viewpoints. Planners can be powerful influences in tempering such disputes in several ways. Because they are usually the designated designers and caretakers of the agency’s planning process, they often have control of the agenda at key decision meetings, and of the documents that support these meetings. They can influence who gets invited to meetings and the amount of “air time” allocated to participants. Even more important, they control the focus of communications about priorities. A carefully crafted priority decision meeting can divert discussion away from issues that most likely will resuft in further divisiveness among participants and fix attention on those differences in priorities that stand a chance for reasonable compromise. The third crossroad that planners face is the attempt to balance political and programmatic priorities. Here, agency planners, as representatives of the agency administrator, play a critical role by performing a linking function between program managers on the inside and interests on the outside (e.g., the Administration, Congress, industry, public interest groups, etc.). In this role, planners first must recognize that there are competing priorities, but that it is perhaps more important that the reasons for the conflicts are often based on differences in values. Administrators constantly attempt to orchestrate among values of equality, efficiency, liberty, and political responsiveness. Even within an agency program, different values must be weighed in setting priorities. To illustrate with FDA once more, a new drug review program is expected to satisfy several conflicting goals simultaneo~s1~. From

an eq~af~ty standpoint, this may mean that every citizen that is affected by a new drug should be given an equal opportunity to participate fully in the approval process. But, from an efficiency perspective, the U.S. citizen should expect the most economical allocation of their tax money, hence, a more streamlined review process. From the Iiberty point of view, companies who develop new drugs should be allowed to operate with minimum government intervention. Finally, if the program is to be ~~~~t~~a~~y responsive, it will have to assure delivery of a safe and effective therapy to the right patient (which takes time), but also to serve the needs of the producing industry (which are to maximize profit). Planners play articulation and translation roles as they mediate between the outside political agenda and the priorities perceived as mandatory by program managers within the agency. An example of how these roles are played is provided by the Administration’s push for deregulation in the 1980s. Despite whatever feeling about protecting the public interest may have been held privately by regulators within agencies such as the Environmental Protection Agency, the Occupational Safety and Health Administration, the Federal Trade commission, and the FDA, rulemaking was considered to be low priority by the Administration. Agency planners had to translate Administration wishes by designing and running processes that reflected a limited number of regulatory priorities, but they also had to articulate agency concerns by preserving high priority regulations that were needed to run effective internal programs. Although the number of documents published by FDA in the Federal Register dropped from 1,246 in 1970 to only 630 in 1988, planners did hetp program managers to push through the highest priority regulations (e;g., infant formula testing requirements, tamperresistant packaging, and a new approval process for drugs to treat life-threatening illnesses, etc.). Planners, in their role as process designers and facilitators, can help to recast the political versus programmatic priority debate. Instead of being a “we versus they” scenario, it is instructive to realize that priorities considered as “political” and short-lived by internal managers seldom appear suddenly from nowhere. More often, they are long-standing concerns felt by particular constituency groups that have become urgent and more widely supported among an agency’s constituency because events have reached crisis proportions. Planners can help to reduce program managers’ angst toward what they may see as politically “expedient” actions on the part of upper management. This can be accomplished by helping program managers to stretch their visions of current programs in order to anticipate and address constituency concerns before they appear on a political “short list.” Of course, all cruciaf issues cannot

Priority Setting in e~vernment be anticipated; and to the extent they cannot, some tension between unplanned political and planned programmatic priorities will always exist. From the perspective of program managers, planners must be respectful of the “information engine” that drives day-to-day program priorities, because it is the same engine that supports priority setting at all levels in the agency and in all types of scenarios. The control of information that supports agency priorities resides with the program managers. Thus, much of the de facto influence over setting and implementing agency priorities rests with those who are closest to the programs. An agency’s internal programmatic priorities reflect a high level of individual diversity, creativity, and awareness of what is required to carry out the agency’s mission. If agency planners are insensitive to the priority needs of program managers and don’t achieve a reasonable balante between the political and the programmatic, then THREE PRIUR~Y-JETTING

they are in danger of “killing the goose that lays the golden egg.” As this section has indicated, planners can play severa1 useful roles in helping their agencies address the critical but often uncomfortable task of setting priorities. But, perhaps the most critical talent that planners can offer is to tailor priority-setting approaches to match the situation at hand. There must be recognition that priority setting cannot be a monolithic process. One doesn’t drag out the same hammer to “drive home’” all size nails. To do so would be frivolous and wasteful in an era when resources of all types (financial, managerid, and time) are scarce. Approaches should be tailored to match the particular situation, with the intent of safeguarding managers’ resources, adhering to program requirements, and still being responsive to a changing political world. In the next section three different approaches are explained.

APPROACHES: MATCHING THE SITUATION

The Eskimos have something in excess of 20 different terms for the concept of “snow.” There is one term to describe softly falling dry snow, another for wind driven snow, a third for snow that continues for extended periods of time, etc. Each term is necessary to the Eskimo because different conditions can mean completely different kinds of environmental effects on his/her daily life. They call for widely varying adjustments in routines. Planners must, likewise, recognize that priority setting has many different meanings in their particular culture. Factors that cause the priority-setting design to vary include: I. The triggering event, for example, what is the particular push behind setting priorities in any given instance? Is there a budget squeeze, a safety emergency, or is it simply the time of year that the agency sets priorities? 2. The time available to establish the priorities. 3. The kinds of decisions the priorities support, once they are established, for example, dollar allocations, policy decisions, or early warning of impending crises. The status of factors such as the above hetps agency planners determine the kind of priority-setting scenario that would be most appropriate to design and implement . Based on such considerations, three prototypical scenarios are described below. They are referred to as: * Comprehensive sweeps * Crisis or opportunity events l Institutionalized revisits

37

Each scenario has a completely different meaning for planners and managers. In fact, it would not be surprising to expect different answers to the same questions, depending upon the scenario being enacted. Table 1 compares the three priority-setting scenarios in terms of several key criteria. Before describing the scenarios in detail, it is important to recognize the interdependence among the different models. Agencies-as well as programs within the agency-will be required to utilize all three models of priority setting to serve three very necessary functions, Comprehensive sweeps are employed to reassess broad program directions strategically. Inst~tution~iz~ revisits are condutted to maintain stability and keep the agency or program on its intended course, And crisis/opportunity priority setting is intended to respond quickly to outside (or even inside) shocks. In the following paragraphs we examine each of the scenarios in greater detail. Comprehensive Sweeps targe-scale planning efforts that involve all or most of the agency’s activities and engage the participation of the entire management hierarchy are resource-intensive and usually highly visibie to the outside world. The intent of the comprehensive sweep is for the agency to conduct a thorough assessment of current and future directions, determine the cost of pursuing each direction, establish priorities, and implement the most desirable ones (Wilson 1980). Comprehensive sweeps are aligned closely with the concept of comprehensive rational planning advocated by such authors as Lilienfeld (19781, Bell (1973), Dye (1972), and Kaplan (1968).

38 TABLE

COMPARATlVE

Model Characteristics

f

ANALYSIS OF PRIORITY+3XllNG

MODELS

Crisis/Opportunities Decision Processes

Comprehensive Sweeps

Institutionalized Revisits

Examples

Comprehensive needs assessment Action pkmriing Zero based budg~~~g

AlDS epidemics Product tampering New feg~s~tfve/r~u~~on

Proposed accomplishments Extemat priority setting F&Id work pfanning

SCOpe

Agen~~j~e

SeJecFedagency

A~ncy~de

Time frame

fnte~e~~t~

Short term
f year to 3 8 monfhs

Intensity and ~~~~~~biii~ af resource usage

Very intense and retativefy unpredictabb

Heavy, unpredi~ta~~~, but focused on specific area of challenge

Heavy but predjc~bie

Regularity

Nonroutine

Nonroutine

Highly routinized

Prsdominant values

Reflection Change hnovation

Responsiveness Risk reduction Timeliness

Stability tncrementalism Security

f 5 8 rn~~tbs~

year

areas

Varjes- A~n~~wjde processes are quite pa~~~~~ve~ center or f~eJd-s~~i~~ processes are tess ~~~~pati~e

Triggerirrg event

Wide sear& for ~nfa~~~~~; intensive analysis may be necessary to meet specific proceess needs

Limited info~tion availabie; must be stream&& to meet short-term deadlines

Abundant jnfo~~on is readily avaitabfe because infor~tio~ systems have been established to support the pracctsses, but information may not suppart new decision needs

Major Watersheds (e.g., new admirristration, agency head, serious criticisms of agency)

Short-term shocks (e.g.! health crisis, legisletive opportunities)

Scheduled time of year

Attempt to balance neerfsl opportunities for major change with rna~nt~na~e of stabb state

Attempt to establish ar reestablish ~ufi~br~~rn once the system has been shocked

Emphasis on stability through gradual change

High

High

Low

The genesis of the comprehensive sweep is often entrepreneurial, where an individual or small group of individuals develops a close personal identification with the idea, These entrepreneurs may originate from within or outside of the agency, and at times outside of the public sector ~~ogeth~r. Both management By Objectives (MBO) and Zero-Base Budgeting (ZEB) are examples of comprehensive sweeps that affected the entire Executive I&an& in the 1970s and 1980s and that were generated by individuals outside of governrn~~~~(Trucker, 1954; Pyhhr, 1973, respectively). Although those two processes were approached somewhat differently, the cornerstone of both was to determine the relative importance of agency activities. Virtually all federal agencies were involved in the government-wide comprehensive sweeps associated with PPBS, MBO, and ZBB. But in addition to these, several agencies have initiated sweeps of their own. An informal survey of six federal agencies-one from Trea-

sury, one from Health & Human Services, one from EPA, two from Interior, and one from Gommercerevealed that four of these organizations designed and implemented comprehensive, resource-intensive priority-setting systems during the f980s. Each of these approaches required anywhere from 1 to 24 years to complete. Action Planning at FDA in 1984-86 was an example of a camprehensive sweep initiated by an irzside en&epren~s, Dr. Frank Young, newly named Commissioner in 1984, initiated the development of an Action Plan as virtually his first act in office. (Young and Norris, 1988). The first step in the action planning process, as described by Dir. Young, was to identify the agency’s highest priorities. it became a highly visible enterprise and was very closely associated with the Young regime. In the early years of action planning, the process was well publicized in the press, in speeches given by Dr. Young, and in Congressional hearings.

Comprehensive sweeps may be triggered by any one of a number of events. An incoming administration may institute a new government-wide management reform as evidence that it will set serious priorities about haw the t,axpayer’s dollar is spent, The Carter Administration iatroduced Zero-Base Budgeting in this manner during 1977. Comprehensive sweeps also may be triggered when an agency is going tkrougk rapid change and/or questioning of basic assumptions. The fnternal Revenue Service j~~~~a~eda comprehensive prjor~t~~s~ttir~~ process in 19$4 when a new Commissioner was recruited from the private sector. He was intent on changing the Agency’s image from slow moving and conservative to more proactive, He began his regime by implementing an agencywide priority-setting process. He contract.ed with outside futurists to survey IRS managers on desired future directions, and then commissioned special studies to assess how IRS’ external ~vjronm~nt rn~~~~tbe changing. Based on these assessments, senior managers ~d~nt~f~ed four desired strategic directions for the agency. Stemming from the four directions, tempts were formed and d~~~~~ped 55 planning initiatives to be undertaken over the subsequent 5 to 10 years. Each initiative then was assigned to an official who translated it to a 2- to 3-year plan The entire planning and priority-setting process took about 18 months to complete and utilize many agency resources (IRS, 1984). A comprehensive reassessment of needs and priorities also may occur simply because top ~l~~a~~rn~nt in the agency recognizes tkat such a process is reqnired perriodicafly. FDA recent& conducted suck an initiative. This project, entitled A Cuxnpr~h~~s~v~ Needs Assessment, involved afl parts of FDA, and resutted in a cost out of the Agency’s most important resource needs over the next 7 years. Comprehensive sweeps tend to have $ bandwagon effect, Participants in the process are subject to a momentum that is infectious. When these sweeps are in vogue they become the language of the realm! Comprehensive sweeps offer the promise of thoroughness_ No program wiXiescape e~~~nat~on_ Tke ~xp~at~o~ is one of an a~~~~~c~~~~housec~e~~ng_~~ Reality* however> often has fahen short of e~p~tat~ons. The ~rna~er~ of ckange can be created more quick$ tkan actual change in programs, Orre top U.S. Department of Agriculture official, for example, summed up that Agency’s initial experience witk ZBB. He said: “Some butterflies were caught -no elephants stopped!” An evaluation of the state of Georgia% experience with ZBB revealed that there was no evidence that any major shift in resource allocation had resulted from utilization of the ZBB system, (Minmier, 1975). Because com~rekens~v~ sweeps are so exkaustiveand ~xkaus~ng -they cannot be repeated each year, at feast not at the “original strength” Tkis is why planners

condud suck affairs periodically, rather than on an annual basis * The results can be useful for the agency, and offer some fresh insights not raised previously. But, behind every comprehensive sweep there is usuahy not only a great dear af commitment by the entrepreneur(s) who ckampion tke approach, but also a strong desire to see snccess and claim victory. Tkis tendency often is baIanced by others in the agency wko may adopt more of a “wait and see” attitude about the ~rn~~~d~~~success, ft is not entirely unexpected, for e~arn~~~~to have planning offices ia the various agency co~~p~~~~~organizations respond rather conservatively XQrequests for planning information needed to support agency-wide entrepreneurial priority-setting efforts. Where possible, participants are likely to utilize existing data and rationale in response to a bold new effort, ratker than beginning each new priority setting exercise as a total “rethink,‘” Agency p~a~~jng staffs skonrd reco~~~~e at tke oufset of comprehensive sweeps that tkeir controI may be quite fimited in deciding whether such processes wilf be initiated (e.g., when pressure mounts from outside sources suck as Congress, GMB, etc., to do so}. However, tailoring the design of the process to meetspecific agency needs is the responsibility of the planning staff, That staff also sets the tone for implementation, Planners fram organizational components will take informal cues from a central pianning staff concerning how seriously they should take any part&jar comprehensive prorate-setting effort. G&is or ~p~or~nn~~~ Events Planners often find themselves faced with situations in which urgent priority decisions are necessary. These may be triggered by a variety of events, iacluding: Fiscal crises within the Executive Branch, for example, short-fuse budget-cutting exercises to meet Gramm-Rudmann targets. Crises that directly affect the agency’s primary canstituencies, for example, the f9g7 Product, TL-rmpering incidents ~~~~tated an ~rn~d~ate reassessing of staff resources in FDA ?~~~d~~~sof opportunity tba# present tke~~se~~es to agency m~iagers, for example, Co~~r~~siu~~ initiatives that propose new mandates an&or additional funds, but that also require a quick reappraisal of agency priorities. The above events share several characteristics. First, they each require quick and relevant responses by the agency in order to respond to the threat or capitalize on the opportunity, One of the less visible jobs of an agency pfanning staff is to ensure than an adequate cornrnn~~~~o~ network has been ~t~b~~sked witkin the organ~~~t~~~ tkat links together phmners and ~r~g~rn

managers in each of the organ~~t~onal components. This is necessary because without the investment in communication prior to the occurrence of the shortterm threat or opportunity, the planning staff will be unable to obtain a coordinated and meaningful response from all parts af the agency. Priorities in emergency situations may have to be established with considerably less information than in more routinized priority-setting scenarios. It is important to note that ~omp~hensive info~a~io~ bases that reIate agency inputs to outputs in an orderiy manner (the ZBB workload factors for example) are of limited utility in attempts to deal with crisis situations. For exampie, when FDA was faced with the possibility of tainted grapes from Chile in 1989, the Commissioner had to take action quickly and deploy a substantial portion of the field enforcement staff to the iaspection of imported grapes, The circumstances were unpredictable. No one knew if cyanide would be found in the next hundred, thousand, hundred thousand grapes . . . or ever, Further, when new op~~uniti~ are presented to an agency for major shifts in direction, such as the case with prospective new le~slation* eomprehe~sive, standard cosf;s systems are of little use because they describe a stable state rather than an organinization undergoing change. The level of public visibility surrounding the crisis priority-setting scenario is almost always quite highprompted by the multiple constituencies that. could stand to benefit or lose as a result of the priorities that the agency sets. This prompts the agency to proceed with extreme caution in communicating their priorities to the public. As the AIDS epidemic worsened, and FDA top managers began to reassess how priorities were established in the new drug approval process, such deliberations were carried out in the full glare of media publicity and protestors marching outside of Agency Offices. The public nature of the priority-setting procedure influenced the agency to manage and to monitor very carefully explanations of how they were responding to concerns of the AIDS advocacy groups, while at the same time safeguarding the interests of the patients. Finally, the organization often feels a lack of controI during a crisis or opportunity priority-setting situation. The or~a~~zatio~ seems to be carried along on the tide of unfolding current events. Priorities in this situation are predomi~~tly responsive to changes in the outside environment, rather than decisions that shape that environment, Ackoff refers to this difference as being reactive as opposed to preactive (anticipating and adjusting to one’s environment) or proactive (attempting to shape the future of one’s environment). (Ackoff, 1974) Both comprehensive sweeps and ~risis~~~~ortunity events tend to be revolutiona~ rather than evctlutianary in nature, They shock the organization. If the shock

is great enough, real change &es occur. But quite often the organization resists major overhaul by having built-in “shock absorbers” of a sort, which serve as defense mechanisms. Stories to the outside world that create the impression af change are one such type of mechanism. Argysis (1977), Ashby (1976), and Beer (1981) refer to these as mechanisms of “ultrastability,‘” which enable ~r~a~~~atjons to cushion shocks from the outside and survive in essentially their original configuration. Occasionally, however, a crisis situation can mobilize sufficient energies from outside of the organization to produce long-overdue reform in the systemreform that can have major impact for many years to come. {Wilson, 1982). Within NASA, for example, the Challenger crisis has been of sufficient magnitude that it appears to have altered permanently not only the agency’s programmatic priorities in space missians, but also the process by which those programmatic priorities are set and the degree of Congressional oversight, Beyond the comprehensive sweeps and crisis/opportunity events, there are recurring priority-setting routines operating in most agencies- In the next section, we examine briefly two of these priority-setting schemes within FDA. Institutionalized Revisits of Priorities These are processes that are ingrained into the Agency’s planning subculture and may exist in parallel with both comprehension sweeps and crisis priority systems. FDA has had a stable planning regime for the past 19 years. During this time, planners within the agency have grown acclimated to priority-setting processes that are repeated each year. This re~t~tion reinforces their standing as perm~ent components of the Agency’s planning milieu, Two such routines are the Proposed Accomplishments process, and the External Priority Setting process. Proposed Accomplishments serve as an entre to the annual budget cycle. Each year all program managers in FDA are asked to identify their top priorities for increased resources. Program managers are also asked to identify their priorities for resource reductions, if such a decision were to become necessary. Once program managers have identified their priorities, FDA’s Policy Board (equivalent to the Board of Directors) determines an overall set of agency-wide priorities - p~i~~Iarly forresource increases. External Priority Setting involves a dialogue with FDA’s various constituencies, including industry, health professionals, consumers, and states. Although the particular dialogue may vary somewhat from year ta year, the essential question remains the same. What should FDA’s highest priorities be? The results of constituent dialogues are summarized and presented to FDA managers: this information is coordinated with the Agency% own assessment of its resource priorities {Proposed Ac~omplis~e~ts) in order to arrive at a final set of bud-

get priorities for the agency. FDA then recommends its

priorities ta the next level in the Executive Branch. Bath proposed accomplishment and external priority setting are familiar to agency planners who have developed a high level of procedural competence in the performance of the routines. As a result, these institutio~~li~~ priority-searing processes also have the advantage of operating more effici~~~~~ than either corn~~~b~~si~e sweeps or crisis~op~rt~~it~ processes. ~r~~~j~~i~~a~ *?scripts” have been Learned, developed, and refined to support the i~stit~t~~~~lized processes (Poole, 1984). Institutionalized priority setting fosters close camaraderie between centralized planning staffs and program offices who furnish input and help guide their respective organizations in an almost rituahstic participation ceremony. There is a shared organizational culture between planner and program manager who participate in the same process year after year. Com~rebe~i~~e sweeps and crisis”~r~~~~e~processes either encourage the organization to adapt to a changing external environmeni or perhaps proactively shape that environment. To i&r&rate, by at Ieast considering bold alternatives to the status quo, zero-base budgeting, by its very name, encouraged agencies to reassess its priorities from the ground up, Na current activity was to be left unquestioned. Institutionalized priority-setting processes, on the other hand, tend to stabilize and reinforce directions that management is already embarked upon. The priorities established within the normal federal budget cycle usuaffy entertain only incr~~entaI changes in the way an 0~~~~2~~~~~ &es bwirsess, A R&sit

To The I~~r~~~~f~~

Smnarias

With an appreciation of three ~r~o~it~s~~ti~g models, let us briefly revisit three public officials who, at the beginning of this paper, were beset with some prioritysetting dilemmas. How can the models discussed here, and the role of agency planners, shed light on their situations? I&al1 that Frank F. is Iiving with a fear that his orderly ~ri~rit~~setting process wifl be overcome by the politics of the moment, Frank may need to recugnize that the i~v~~en~ in time he spent in b~ldi~ a stabfe process for his agency XZR~a durable planning cuff me was well worth his effort. His process stabilizes agency d~~is~~~-making, but will have to be sufficiently open and flexible to accommodate legitimate political agendas -priorities that may very well shift at short notice. Institutionalized priority setting processes such as Frank% cannot and should not be expected to bear the burden of sudden change. However, if the institutional process is designed soundly, it can furnish the basic building blocks of program ~~ormatio~ that wilXenabIe the Agency Zo respond to the current po&icaI hndscape. Prank also mu& devefop his capability as an

agency planner to translate program plans and priorities {when plausible) into meanings that will be understandable to those higher in the Executive Branch, Congress, and elsewhere as being compatible with current political objectives. And what of Joe, who is dealing with the oil spill on the Chesapeake Bay? His situation obviously fails within the crisis~up~rtuni#y Peoria-settiu~ model, It should not be surprising to Joe that i~forrna~io~ generated from institutionalized priority-setting processes wifI be of ~irn~~eduse to him in his current situation. He may have to make resource allocation decisions based on little or no current data that are relevant to today’s situation. And this may be a source of great frustration to him, Joe is dealing with a situation that could result in either little ~~a1change in his organization’s overall strategies or major change. The outcome depends upon the pub&5 ~er~~~~io~ of the degree of risk resuhing from the spill and the credibility of U~tories” his agency teIfs to the outside warId concerning the eff~~ive~~s of their response to the oil spill. If the stories do their job, they act as buffers to maintain the agency in a stable state. If the stories are not convincing, a rational, orderly priority-setting process probably will not prevent Joe’s agency from being subjected to major criticism and perhaps even overhaul. For future reference, Joe may want to consider the possibility of working toward a durable and well-publicized strategic planning framework for his agency-in advance of crises. This woufd provide a seeand @pe.of shock absorber to protect the agency. While not providing specific answers in emergency sit~a~io~s~ a strategic framework may very well raise the c~~f~d~~c~ levels of those who can exert strong influences on the Agency’s fortunes. It sends a signal that the subject agency is able to respond effectively to crises, while still retaining a strategic sense of where they are and where they are going as an organization. Finally, let us reconsider Hank M.‘s position as newly appointed agency administrator. He, perhaps, is faced with the most ~~rpl~~g p~ori~y-satiny dilemma of the three. Ia the language of our models, Hank is anticipating the initiation of a reprehensive sweep. He is probably eurrect in thinking that there wilI be ~~~r~nched resistance to Itew ways of looking at the agency. As the new agency head, he will find that it will be easier for him to commit a great portion of the agency resources in the priority-setting effort than to effectuate actuaf change. Hank also will have to realize that he and his planning staff will be asked to articulate among priorities those identified as being critical by his agency’s key interest groups, and those selected by his own program managers as being consistent with the long-term mission, values, and directions of the Agency. Hank wilI

need to design into his prioriiy-setting prucess specific provisions for entertaining input from both external and internal sources. He also will need to realize that it will not be possible for a comprehensive rethink of priorities to occur on an annual basis. It simply would require too exhaustive an effort. The Agency would have to find a suitable balance between time spent in reassessing priorities and time spent in implementing them. Hank can expect his comprehensive sweep to be in the direct glare of media publicity. His own managers may feel unusual pressure frum the outside because of great expectations to “deliver” on their priorities. In fact, Hank may experience a direct correlation between the degree of outside expectations for substantive rethinking and change and the amount of resistance to change mounted by his own people. The end result of Hank’s comprehensive sweep could take several possible forms: First (and perhaps most likely), the end product could represent a staged performance for outside audiences-a presentation of newly rethought priorities for public &onsum~tion without

substantive change taking place. Second (and perhaps least likely), the comprehensive sweep could trigger wholesale directional changes for the organization. This is not apt to occur* however, unless large-scale crises (e.g., AIDS, the Gulf War, etc.) are forcing the change in priorities. A third possible outcome is that the comprehensive sweep, while garnering a lot of public attention and utilizing large levels of resources, may have caused some degree of directional reassessment by Hank’s top m~agement team. The change may not be massive or immediate, but the exercise may have planted some seeds for change that could very likely occur sometime downstream. This last type of outcome most closely approximates the experience with comprehensive sweeps at FDA. Hank has discretion in deciding how far he wants to steer the priority-setting exercise in the direction of performance versus genuine realignment. But he would do well to enlist the knowledge and experience of his planning staff, regardless of the course of action he decides upon.

This paper has described many of the dilemmas associated with priority setting in the public sector; shown how agency planners can help to ame1iorat.e these dilemmas; and provided a comparative analysis of three priority setting approaches public sector agencies need to employ in order to maintain stability, adapt to longterm shifts in the environment, and respond to shortterm crises or opportunities_ Planners muse be astute enough to recognize differences in the situation that presents itself (e.g., triggering events, time avaifable, and degree of public vis~bi~ty). Based on that recognition, different prioritysetting scenarios must be initiated. Priority setting in the public sector is necessary, but seldom an easy task. The triggering events t,hat influence agencies to rethink priorities are many and varied - new Administration philosophy, economic or health crises, serious questioning of an agency’s mission, or even the reoccurrence of an annual budget cycle. To one degree or another, these triggering events disrupt the equilibrium of the o~ganjzat~on_ This de~tab~Ii~at~~~ is felt in different ways. As we have seen, the process of setting priorities - particularly new ones-can destroy existing context, bring basic value conflicts to the fore, and be used for poiitically short-sighted goals, rather than allowing program managers to serve the public interest by doing what they’ve learned to do well. One role far planners is to utilize priority-setting approaches in a way that wifl bring the organization back into equilibrium, or help to maintain that equilibrium. However, it is critical to select the appropriate prioritysetting system. The three systems discussed in this

paper - i~ti~~tio~~ized revisits, crisis events, and cornprehensive sweeps -perform different but necessary functions. Institutionalized revisits maintain the ongoing stability of the organization. They act much like the autonomic system in the human body, which mslintains respiration, blood flow, etc., within reasonable parameters (Beer, 1981). Information on standard refationships between an organization’s inputs and outputs is quite useful when setting priorities in a stabilitymaint~ning environment. But the information becomes inappropr~aie in a crisis, or when major change is being ~ontempiat~d~ The crisis priority system enables the organization to respond to emergencies, much as the human body calls on adrenalin to push it into overdrive. Finally, the comprehensive sweep, if it is effective, gives the organization the ability to establish priorities if major directional change is being considered. The human system parallel to the comprehensive sweep would be cerebrum functions that override and direct both autonomic and emergency systems. Human organisms use different priority-setting me&anisms and different information to support those priority decisions, depending upon whether we are maintaining a normal heart rhythm, avoiding a speeding truck, or deciding whether to embark on a career change. Organizations have similar categories of choice. Planners need to: (1) recognize that priority setting invoives all three systems-not just one, (2) assist their agencies in maintaining multisystem potential, and (3) help the agency to make the appropriate choice 8s the situation arises,

Priority

Setting

in Government

43

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