Tanaka on County's discredited covid bonus plan: "This is not how you create a vibrant workforce"

Greg Tanaka, Palo Alto Councilmember and candidate for US Congress for Silicon Valley, provides a business leader's perspective on the roundly-criticized County Supervisors' Bonus for Bureaucrats program, and emphasizes the importance of aligning workplace incentives with an enterprise's mission and goals.

Opp Now: The County Supervisors' Bonuspalooza, in which they took federal funds to line the wallets of all county employees, has met with withering criticism from all across the local political spectrum. How did they go so far wrong?

Greg Tanaka: The fundamental issue is that there was no alignment of incentives with the bonus. It was not tied to individual performance. If you were a true hero who put your life on the line, or if you just stayed at home messing with spreadsheets, you got paid the same. There is no incentive for individuals to perform at a high level in the county because they can just get a free ride on other people's performance.

This is not how you create a vibrant workforce or economy. This is not how you attract and retain the best people.

Opp Now: County CEO Jeff Smith, in a confused defense of the program, said there's no way to distinguish between workers who incurred a lot of risk and were on the front line, and people who stayed home attending Zoom meetings. How can that be true? This feels like a middle school track meet where everybody gets First Place. Or, in Smith's language, everyone at the county is a hero.

GT: In the private sector, especially in startups, there is a big push to create complete alignment of incentives: everybody wants the enterprise to succeed, and understand their individual role in making that happen. That's why, in a startup, you often receive small amounts of salary,and instead get paid in equity. This is true up and down the organization, from the janitor to CEO: everyone is focused on company success.

But in government, everybody gets paid roughly the same regardless of how well the government performs, or how well people perform individually. Instead of a vibrant, performance-based environment, you get stultified bureaucracy and group think. This does not develop the best people. I don't doubt that many county employees deserved a hero bonus. But to say everybody deserved one diminishes what the real heroes did,and boggles credulity.

ON:What is it about public sector management that leads to such weird, unbusinesslike decision making?

GT: In government, they have an entitlement culture: government has a market monopoly for its “business”, so there's no competition nor consequence for failure. In the private sector, if you screw up, you go out of business. In government, you can screw up and drag your feet and then just tax your way out of the problem.

Here's a case study: In Palo Alto, I suggested that we implement a very modest incentive payment program for our city manager. My colleagues rejected the notion immediately, saying that the job was not like the private sector. But that's just not true. A chief executive is a chief executive in city hall or in corporate hq: you manage people, you set up good metrics and ethics, you set up processes. These people have immense effect on the success or failure of their organizations. And their incentives should be aligned with reaching success. But it isn't in government, it's all out of whack. In Palo Alto, employees get every other Friday off. They get great pensions; public safety employees can retire when they are fifty and get paid for the rest of their lives. We spend a very big chunk of our budget paying people who are not working.

Opp Now: How can this system be changed?

GT: I recommend cities and counties start at the top. City managers are not unionized. We have full discretion on how we compensate them. There is nothing stopping us from aligning their compensation with their performance. But there is a lack of willpower. Elected representatives don't want to oppose raises because they have to work with these top managers. But electeds are here to represent our community and be stewards of their dollars we collect via taxes. We are not here to make friends. We should act like a board of directors and focus solely on delivering bang for the buck. We don't work for city staff.