The debate over social services in the United States is often couched in the language of social justice, individual responsibility, and the appropriate roles of government and private charity. Yet the problems plaguing the welfare state—and indeed many private nonprofit social-service agencies—are less philosophical than managerial. To put it simply: how can social services be delivered in a timely fashion while having the greatest impact on their recipients?

The sweeping reorganization of the Illinois Department of Human Services (DHS) can provide an example to other agencies in the public and social sectors. Created in July 1997, the department brought together, under one roof, a vast array of social services, from welfare assistance to substance-abuse treatment to mental-health programs. All in all, the department serves more than 1.8 million people, employs more than 20,000 workers, and spends approximately $4 billion a year.

Many of the organizational challenges facing the DHS also confront smaller social-service agencies as well as corporations: integrating a complex mix of products and services, streamlining processes for clients, and providing appropriate incentives for employees (see sidebar, "Changing the public and nonprofit sectors"). The way the DHS has tackled these challenges shows that despite the...