Why the Civil Service Is No Way to Run a Business

Why the Civil Service Is No Way to Run a Business
by Michael Barone
06/30/2011

What's the fair way to run a large organization? That's a question that is squarely, and interestingly, raised by Justice Ruth Bader Ginsburg's dissenting opinion in Wal-Mart v. Dukes, a Supreme Court case decided last week.

The lawyers for the plaintiffs, women who work or worked for Wal-Mart, were seeking to bring a class action charging pervasive discrimination against women. The 5-4 Supreme Court majority ruled that the group was too diverse to be given class-action status.

Ginsburg partially disagreed, saying that all female employees and former employees of Wal-Mart might have enough in common to form a coherent class with common interests and entitled to common remedies. (We'll leave aside the fact that much of the money in these cases ends up with the lawyers.)

"A system of delegated discretion," she wrote, can be the subject of a class-action lawsuit "when it produces discriminatory outcomes."

There was no disagreement that Wal-Mart's management practices are "a system of delegated discretion." Wal-Mart store managers, as Justice Antonin Scalia explained in his majority opinion, have considerable discretion in deciding whom to hire and whom to promote.

The company, which employs some 1.4 million people in this country, is proud that it tends to promote from within, and it evidently holds its managers responsible for results that it famously monitors extremely closely.

It is hardly necessary to add that this formula was been successful. Wal-Mart is enormously profitable. And I don't think I'm the only one who has found Wal-Mart greeters and sales people to be friendly and helpful every time I've shopped there.

But this is not a fair way to run a business, Ginsburg said, because women hold 70 percent of the company's hourly jobs but only 33 percent of its management positions. Women are paid less on average than men in every region, and the salary gap between men and women widens over the years.

All of which provides, Ginsburg concluded, an "inference of discrimination." The fact that many women these days freely choose less demanding work in return for more family and free time surely couldn't have anything to do with it.

The conclusion I draw is that Ginsburg thinks the only fair way to run a large organization is the way government runs civil service.

All jobs should be numerically classified to eliminate "arbitrary and subjective criteria." Promotions should be determined by written tests or seniority, not by managers choosing "on the basis of their own subjective interpretations."

Managers should understand that they will face harsh scrutiny if they don't hire and promote equal numbers of men and women and pay them all the same. Better just to figure out how to make your gender quotas and avoid any trouble.

Of course, anyone with experience in the real world can tell you that an organization run this way wouldn't be as efficient as Wal-Mart. It wouldn't do as good a job of satisfying consumers' wants. Its employees would probably not be as friendly and helpful.

If you doubt that, think back over the years about your experiences in your local department of motor vehicles. Only the most strenuous efforts by local officials, like former Washington Mayor Adrian Fenty, gets a DMV operating with anything close to Wal-Mart efficiency.

The folks that concocted this lawsuit against Wal-Mart want, in effect, to model the private sector of the economy on the civil service. That's why they took on the largest private-sector company of them all.

Their motives are similar to those of feminists who, in the 1970s, pushed for "comparable worth" legislation, under which bureaucrats would decide what each job was really worth and what each worker should be paid.

We're better off if private firms allow managers to use "subjective criteria." Which is to say, the human judgment we all use in everyday life to judge the performance of others. Sometimes those judgments turn out to be wrong, but on balance they're more reliable than rigid civil-service criteria.

All of which is recognized by liberals who care about government performance, like education reformers who want to give principals more discretion to weed out bad teachers.

Or, as Elaine Kamarck, head of Al Gore's Reinventing Government initiative, told me in the 1990s, "No rational person would choose civil service as the way to manage a large organization." Justice Ginsburg notwithstanding.
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To read another article by Michael Barone, click here.