If you can measure absenteeism, you can control it

In our book, we say that the main problem of business is how to align the incentives of employees with the goals of an organization. And that incentives have two pieces, performance evaluation and a way to reward good performance. But what happens when it is difficult to measure performance, as with government employees?

The government presents a unique challenge to any manager because it has no well-defined goals, few metrics to gauge its performance, and no sticks and only small carrots to align the incentives of employees with the goals of the organization. In addition, the employees are all lifetime civil servants, with better information than the political appointees who manage them and strong ideas about what the government should be doing. They can easily outlast the appointees who seem to come and go every few years or so.

In Italy, things have gotten so far out of hand...

Every Italian has a favourite story: the professor who gave less than 30% of the lectures in his courses; the judge, unable to sit or stand for long periods, found to be ocean-yacht racing. It would be funnier if the inefficiency of Italy’s 3.5m-strong public sector were not such a drag on the economy.

...that a politician has taken on the thankless management task of reform. Renato Brunetta, the public-administration minister in Silvio Berlusconi’s conservative government, is using input measures of performance because output is too difficult to measure.

He has imposed by decree a rule that, after the second absence in any year, only medical certificates issued by the public health service will be acceptable. Now he plans to introduce productivity bonuses based in part on attendance records.

As a result absenteeism among public sector employees has declined by 37%. If you think the government causes as many problems as it solves, this may be a step in the wrong direction.