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Germany Calls in McKinsey to Fix the Refugee Crisis

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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"We will manage," Chancellor Angela Merkel said in October about the huge refugee influx into Germany. The verb is appropriate because, apart from everything else, the crisis is a management challenge. Now, Germany's migration service, BAMF, has asked has called in consultants from McKinsey & Co. to help streamline the asylum application process.

QuickTake Europe's Refugee Crisis

Frank-Juergen Weise took over as head of BAMF in late September. His predecessor Manfred Schmidt -- who faced the task of processing the 800,000 asylum seekers expected in Germany by the end of the year (now the number probably is closer to 1 million) -- quit for "personal reasons." Weise, a crisis manager with extensive business experience who was once tapped to improve the efficiency of the German armed forces, called in McKinsey, which had handled a similar job for the Swedish migration board, Migrationsverket.

The consultants agreed to provide the first six weeks of services free of charge, but bringing them in wasn't universally popular. "We have all asked others for help," the leftist Berlin newspaper Die Tageszeitung mocked in a column, "a psychiatrist, a debt counselor ... Mom. The recognition of one's own inability to cope is the first step on the path to a solution."

Sweden's Migrationsverket started using McKinsey in 2008 to cut asylum application processing times. Each applicant received $45 a day while he or she waited, meaning that the less time it took to make a decision on an application, the lower the costs. There was one more consideration: Swedish pride. "If the Migrationverket had been working in a competitive market, then the long wait would have persuaded many of our customers to go somewhere else," Dan Eliasson, the agency's director general , said at the time. "This we will change." 

McKinsey consultants came in with their "lean management" playbook. The idea is to start with a small pilot project, study the current process and cut out everything that slows it down. Once the process has been deconstructed and streamlined, the team that worked on the pilot is charged with rolling out the improved procedures throughout the organization.

Both the government agency and McKinsey were happy with how the project worked. The consulting company wrote in a 2012 case study:

In 2008, despite a dranmatic increase in refugees from Afghanistan and Iraq, the board got no additional funding and took an average of 267 days to process each application. Introducing lean management in 20090, the board designed a new operating system, upgraaded management practices, and introduced continuous-improvement techniques. By the end of 2010, average application-processing times had fallen by more than 50  percent, to 130 days. In the units that had adopted the new way of work, processing times averaged 86 days.

The decrease in processing time made Sweden one of the most desirable destinations for asylum seekers, and the country ended up taking in more refugees, relative to its population, than any other European nation. And then the McKinsey-honed machine was overwhelmed. In January 2014, the Migrationsverket handled 4,451 asylum applications. In November, it received 36,741. As the number grew, processing times began slipping, until they were back to pre-McKinsey levels:

Lean and Mean?
Asylum request processing time in Sweden
 
Source: Migrationsverket

Now, the refugees are complaining that it can take more than a year to reunite them with their families. Swedes are unhappy, too: about 20 percent now support the anti-immigration Sweden Democrats, up from 14 percent in May. The 190,000 migrants who have come this year are too many for a nation of 10 million. There's not enough housing for all the new arrivals, and it's getting cold. Prime Minister Stefan Loefven recently announced that Sweden needed some "breathing space," and his government began tightening immigration rules, including making family reunification more difficult.  

In Germany, McKinsey has a chance to help build a less fragile  system -- that is, if it can improve on already efficient German management: The average processing time of an asylum application is 5.2 months (though applicants from some countries, such as Pakistan, have to wait 15 months).

Wiese's goal is to cut the waiting time to 3 months. If that can be done, however, the influx of asylum seekers could increase. Judging from the Swedish example, that may seem like a great idea -- but success could become politically untenable.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Max Berley at mberley@bloomberg.net