Accompanying Report of the National Performance Review
Office of the Vice President
Washington, DC
September 1993
Executive Summary 1 ^^^^^^^^^^^^^^^^^
Recommendations and Actions
^^^^^^^^^^^^^^^^^^^^^^^^^^^
QUAL01: Provide Improved Leadership and Management
of the Executive Branch 7
QUAL02: Improve Government Performance Through Strategic and Quality Management 15
QUAL03: Strengthen the Corps of Senior Leaders 23
QUAL04: Improve Legislative-Executive Branch Relationship 29
Appendices
^^^^^^^^^^
Implementation Categories
^^^^^^^^^^^^^^^^^^^^^^^^^
Each action is followed by a number in parentheses that indicates the necessary avenue for effective implementation. Appendix A organizes all actions according to these categories.
(1) Agency heads can do themselves
(2) President, Executive Office of the President, or Office of Management and Budget can do
(3) Requires legislative action
(4) Good idea, but will require additional work, or may be better suited for future action
Abbreviations
^^^^^^^^^^^^^
AFLC Air Force Logistics Command
CEO Chief Executive Officer
CFO Chief Financial Officer
CMA Central Management Agency
COO Chief Operating Officer
CSRA Civil Service Reform Act of 1978
GAO General Accounting Office
DOD Department of Defense
EOP Executive Office of the President
EPA Environmental Protection Agency
FQI Federal Quality Institute
GPRA Government Performance and Results Act of 1993
GSA General Services Administration
IRS Internal Revenue Service
NAPA National Academy of Public Administration
NASA National Aeronautics and Space Administration
NIST National Institute of Standards and Technology
NPR National Performance Review
OMB Office of Management and Budget
OPM Office of Personnel Management
PA Presidential Appointment
PAS Presidential Appointment with Senate Confirmation
PCMI President's Council on Management Improvement
PMC President's Management Council
SES Senior Executive Service
"The state of management in the federal government is not good," the General Accounting Office (GAO) concluded in 1992.(1) Also that year, in Managing the Federal Government: A Decade of Decline, the House Government Operations Committee found that, "first and foremost," executive branch management problems are caused by "the lack of leadership."(2)
Such criticism of federal management is not limited to specialists. More than four in five Americans think the federal government needs "fundamental change" or a "complete rebuilding," a May 1992 CBS poll showed. At the same time, the share of Americans who "trust the federal government all or most of the time" fell to 21 percent in 1993--from 76 percent in 1963.(3)
Sound leadership and strategic management are vital to any organization. Sound leadership at the top of an organization develops vision, values, and policy agendas, sets priorities among competing demands, and plans strategically. Strategic management aligns programs and management systems (e.g., personnel, budgeting, procurement) to support the vision and agenda, and ensures that these programs and systems are continuously improved to give better value to customers. The combination of sound leadership and strategic management is essential to driving and guiding major cultural change in an organization.
Historically, the executive and legislative branches have tried to resolve management problems by extending and tightening the oversight, regulation, compliance, clearance, and review mechanisms of executive branch agencies and managers. However, this has not led to any lasting improvements. Under a reinvented system of executive branch governance, senior leaders would be involved in crucial leadership and management processes. This approach, known as "managing for results," has three components.
First, the President, working with his cabinet as a team, should create a sense of purpose and vision. These actions would, in turn, highlight the value of continuous improvements in management and in achieving results.
Second, to demonstrate and institutionalize this value, the President should order each agency head to designate a chief operating officer (COO)--a post for someone already in the agency, most often the Deputy Secretary, who would have line management responsibility.
Third, the President should create a cross-functional council--a President's Management Council--which would be composed of the COO's of major agencies. It would take the lead in reinventing programs and management systems to support the President's agenda. In addition, it would be responsible for creating the culture changes needed to put in place a management approach dedicated to ever-improving efficiency, effectiveness, and results.
"Managing for results" is founded on strategic management concepts, such as those in the Government Performance and Results Act of 1993, as well as quality concepts, such as those embodied in the Presidential Award for Quality and the Malcolm Baldrige National Quality Award.(4)
Nations, such as Australia, and states, such as Oregon and Florida, have already adopted this approach. Now, in Washington, D.C., interest in adopting it at the federal level is spreading.
The federal government is learning how to manage for results and improve performance from the private sector. During the summer of 1993, numerous business leaders shared their experiences with the Vice President as he led the preparation of the National Performance Review (NPR) report. Studies, such as a 1991 GAO report, found that companies using quality management strategies achieved better employee relations, higher productivity, greater customer satisfaction, increased market share, and improved profitability.
A year later, GAO reported that 68 percent of federal agencies said they had started or were starting to implement quality management. A few agencies--such as the Internal Revenue Service, the Departments of the Navy, Air Force, and Army, Defense Information Systems Agency, National Aeronautics and Space Administration, and National Security Agency--have begun organizationwide efforts. Agencies that have moved beyond initial stages of quality management have enhanced customer satisfaction, organizational performance, and workforce excellence, GAO found.
The first step is education. Experience has shown that widespread training in an organization is crucial for using this approach effectively. All executive branch employees, starting with the President, Vice President, and cabinet members, should attend introductory education sessions, which should then cascade throughout all departments and agencies. The Federal Quality Institute (FQI) will work with the President, Vice President, Cabinet, and President's Management Council as facilitator, advisor, and coordinator to provide the needed institutional support. Fortunately, the executive branch already has much expertise in this area, but it must tap into and mobilize it. Centers of expertise within individual agencies also can provide needed support as well as create learning networks across the government.
Leadership and management, of course, cannot be improved without enlightened leaders and qualified managers. Long gone are the days when, experts believed, just anyone could fill a government job. With the government's huge size, budget, and complexity, the executive branch requires a tremendous amount of executive talent to lead and manage it. The President relies on a multi-tier system of political appointees and career executives to provide the required leadership and management.
In the seniormost ranks of government, political turnover is a major cause of absent leadership. Moreover, in the past, political appointments did not always match job requirements and, in choosing appointees, top leaders placed a higher premium on an individual's policy expertise than on their managerial qualifications. Senior career executives can provide some of the needed management continuity. However, due to political appointees' historic distrust of public servants, and the absence of a formal institutional talent pool, these career executives are not used as well as they could be.
"No modern administration has yet fully succeeded in developing a set of initial staffing procedures that are comprehensive, timely, or adequately related to the new President's immediate policy objectives," Assistant Comptroller General Lawrence Thompson observed in a 1991 hearing on the reasons for the ineffectiveness of government in serving the public.(5) One way of addressing this would be to develop a summary of qualifications needed for senior political positions as well as adequate training, especially in contemporary approaches to leadership and management.
The Constitution establishes three branches of government: legislative, executive, and judicial. The first two have a symbiotic relationship. Congress enacts laws, authorizes and appropriates funds, and provides oversight of program accomplishment and compliance with laws. The executive branch executes programs and also provides internal oversight. A broad array of experts says Congress has become overly involved in executive branch functions and responsibilities, such as with too much detailed program direction and program oversight. Congress, however, responds that the executive branch appears unable to guarantee sound internal management. Regardless of who is right, the government and the country would benefit from a more collaborative relationship between the executive and legislative branches--without compromising the fundamental value of separation of powers. The President can work to enhance informal communications with lawmakers and staff and to reach agreement on ways to deal with management problems.
More than 80 percent of American adults believe that fundamental change is needed for the federal government to be responsive to people's needs.(1) Congressional reports and studies document "a decade of decline" for an executive branch that lacks effective leadership and is poorly managed.(2) The House Committee on Government Operations observed in its 1992 report that the cause of management problems in the executive branch is "first and foremost . . . the lack of leadership."(3)
Leadership and management are crucial functions for any organization.(4) The concept of "quality" leadership and management brings a focus to leadership and management of meeting and exceeding customer expectations and continuing productivity and quality improvement.(5) Sound leadership develops vision, values, and policy agendas and prioritizes competing demands. Strategic management aligns programs and management systems (e.g., personnel, budgeting, procurement) to support the vision, agendas, and priorities while simultaneously ensuring continuous improvement in programs and systems to give better value to taxpayers. The outcome of effective management is "predictability and order." Effective leadership "produces change" that is often "dramatic. . . and extremely useful."(6) Effective leadership and management must exist at all levels of an organization; however, this report gives particular attention to top-level leadership and management.
Traditionally the executive and legislative branches have "corrected" poor leadership and mismanagement by extending and tightening oversight, regulation, compliance, clearance, and review mechanisms of agencies and managers. These processes foster staff-directed management through rules and regulations. These tools and levers have created a culture of tight control. However, they also create gridlock in programs and organizations. They are not mechanisms for action, accomplishment, or empowerment. These staff-driven rules wrap managers in layers of control, oversight, and red tape; obscure responsibility and accountability; and shift management's focus to compliance with rules--and away from achieving results and satisfying customers. Based on the public's opinion of government, this approach has not worked. But it stubbornly persists throughout the federal government.
Incoming presidents and senior political appointees are traditionally warned to resist the temptation to manage the executive branch and are instead encouraged to accomplish a few significant political changes that define the incumbent administration. One conventional point of view is that, as the chief political officer, the President's principal task is to lead the federal government, not to manage it.
The President, department secretaries, and agency heads are responsible for providing political and policy leadership. However, they are also key to providing overall leadership for effective management of the executive branch and for initiating cultural changes.(7) Without an adequate focus on management, an Administration can be undermined and derailed by political crises ensuing from lack of effective executive branch leadership and management.(8) As Elliot Richardson, an illustrious former secretary of several departments, observes:
The really hard problems of government start with choosing goals, setting priorities, making choices, and formulating plans for fulfilling those chosen objectives. . . . Whether or not an administration succeeds or fails depends on how clearly, forcefully, and persuasively it defines its goals and creates the understanding of the necessity for sacrificing desirable ends that do not have sufficient priority to claim a share of the available resources.(9)
Strong executive branch leadership can only come from the President and cabinet secretaries, who have "line" leadership responsibilities. Staff organizations cannot begin to fill these roles, yet these organizations currently dominate the operations of government. As a result, responsibility for executive branch management must shift from staff organizations and their use of controls over "inputs"-- such as staffing levels and budget line items--to line organizations and line managers, who will then be held accountable for achieving agreed-upon results.
Effective executive branch leadership can flourish only in a radically different organizational culture. Existing staff oversight systems designed to ensure accountability for the use of resources must be ultimately replaced with quasi-market tools, such as incentives and competition. These new accountability tools more directly assess accountability and results. However, to do this means staff offices must relinquish their traditional controls and give line managers true authority to use resources. At the same time, line managers must be held accountable for achieving results. While some traditional staff oversight systems will continue to be necessary to discourage fraud and waste, a large share of existing resources used in these functions could be shifted from non-value-added oversight to program and service delivery.
Other countries and some American state and local governments now operate according to the management approach of "managing for results."(10) This new approach represents a shift from public management theories favoring rules and controls over the use of inputs--dollars, staff years, etc.--to an executive branch management philosophy of:
Sharpening and clarifying responsibilities and accountability for leadership in management of the executive branch by top "line" executives, such as cabinet secretaries and agency heads;
Building capacity and support for effective leadership;
Giving organizations and managers greater flexibility in their use of inputs in exchange for greater accountability for results;
Shifting from an emphasis on input controls to accountability for results; and
Improving cooperation between the executive and legislative branches.
The vision of the new "managing for results" approach is to provide a well-managed and effective executive branch that:
Empowers line agencies, managers, and employees to meet and exceed customer expectations;
Results in continuous quality and productivity improvement; and
Provides clear accountability for results.
The current emphasis on the use of executive branch management controls via staff offices as a means of ensuring accountability has fostered a culture of dominance, compliance, helplessness, and dependency.(11) Recasting the system to one focused on accountability for results would promote a culture shift to a focus on partnership, responsibility, and customer service.(12) The key to "managing for results" is the empowerment of line agencies, managers, and employees.(13) In this new approach:
Line agencies, such as the Departments of Agriculture and Health and Human Services, would be empowered by shifting power from external staff agencies, such as the Office of Personnel Management, to line managers and focusing line decisions on mission and results, rather than controls via the use of inputs.
Line managers would be empowered by shifting authority and responsibility from departmental staff offices to line managers and field staffs through decentralization, delayering, and reductions in the size of staff offices.
Employees would be empowered by the delegation of authority and responsibility; greater use of self-managed work teams; use of crossfunctional, cross-unit teams; and encouragement of employee diversity.
However, culture changes cannot be relegated to staff agencies. The President and his cabinet must personally articulate the vision and champion the changes. Together, the President and his cabinet members are responsible for (1) developing a unifying purpose or mission for the executive branch as a whole; (2) setting policy and associated program agendas, including making the hard choices among many competing priorities and claims from assorted constituents and stakeholders; (3) developing and communicating values; and (4) creating a shared vision of what government should become in the future.
Major changes in large systems like the executive branch cannot happen without leadership, direction, and a long-term commitment from top leaders. Their continual reinforcement of their vision is needed on an ongoing basis to cement cultural changes.
The President should publicly articulate his vision and support for the concepts embodied in "managing for results" and the recommendations of the National Performance Review (NPR). This statement of commitment would:
Express the administration's vision for 21st century government based on the philosophy of "managing for results," the recommendations of the NPR, and the principles of strategic and quality management required for the "Presidential Award for Quality," and
Direct agencies to commit to full implementation of NPR's recommendations.(15)
This commitment would supersede Executive Order 12637 of April 27, 1988, "Productivity Improvement Program in the Federal Government," which the President should revoke by separate Executive Order.(16)
2. Direct department and agency heads to designate chief operating officers. (2)
To apply the principles of strategic and quality management and to lead the way to the President's vision of 21st century government, the President should direct department and agency heads to designate chief operating officers (COO) for their organizations.(17) The chief operating officer would be second-in-command to the agency head or chief executive officer (CEO) and would report directly to the agency CEO. It would be an additional responsibility for an existing position. This would be either the deputy secretary or undersecretary with agencywide management authority. The COO would have explicit line authority and accountability for managing executive branch agencies. The responsibility would not be assigned to someone in a staff role, such as the chief-of-staff or assistant secretary for administrative management. The COO would be responsible for:
Implementing the President's and agency head's goals and the agency's mission;
Providing overall organization management to improve agency performance;
Assisting the agency head in promoting ongoing quality improvement, strategic plans, and measuring results;
Overseeing agency-specific application of performance measures, procurement reforms, personnel reductions, financial management improvements, telecommunications and information technology policies, and other governmentwide systems reforms adopted as a result of the NPR recommendations;
Directing ongoing reengineering of the agency's administrative processes; and
Reforming the agency's management practices by incorporating NPR principles into day-to-day management.
Some agencies might find other approaches more appropriate for designating a Chief Operating Officer:
An executive team as COO. COO responsibilities can be assigned to an executive team reporting to the CEO. "An executive team is a group of people who collectively take on the role of providing strategic, operational, and institutional leadership for the organization."(18) Members of the executive team are responsible for management of their own units and for the organization as a whole. In this case the deputy secretary or deputy agency head could serve as the executive team's chairperson.
Two executives can share the COO role. A military officer and civilian executive effectively exercised COO responsibilities (though without the title) in the Naval Material Command, because of the civilian and military composition of the workforce.(19) A shared COO responsibility between a political appointee and a career executive might mitigate agency anxieties that career executives should supervise political appointees.
The agency head as CEO and COO. In small agencies, the CEO could also act as the agency's COO.
3. Establish a President's Management Council. (2)
The President should establish a President's Management Council (PMC) to ensure that the reforms adopted as a result of the NPR are implemented throughout the executive branch in order to improve overall executive branch management.(20) The PMC would operate within the strategic framework of the vision, goals, and priorities established by the President and Cabinet to set policy and serve as change agents in the executive branch. The PMC's progress would be specifically overseen by the Vice President.
The new PMC would be the President's chief instrument for ensuring that strategic and quality management principles, reengineering of administrative processes, and NPR's other recommendations are implemented throughout the executive branch. The PMC would coordinate management-related reinvention efforts by the Executive Office of the President (EOP), the departments and agencies, the Office of Personnel Management (OPM), and the General Services Administration (GSA). It would also identify and resolve inter-agency management problems, provide continual improvement of management systems, and spearhead the cultural change necessary for introducing "managing for results" throughout the executive branch.
The PMC would be an interagency team with COO responsibilities for executive branch management.(21) PMC members would be responsible for management of their own organizations and, collectively, for advising the President and Vice President on the management of the entire executive branch. The President should appoint the OMB Deputy Director for Management as the PMC chairperson. The PMC would have 22 regular members: the OMB Deputy Director for Management; designated chief operating officers from the 14 cabinet departments, the Environmental Protection Agency, and three other agencies (designated by the chairperson); the heads of OPM and GSA; and the Secretary of the Cabinet. Other officials of executive departments and agencies would be appointed to the PMC as decided by the President.
The PMC's work would be conducted through PMC committees, working groups, commissions, and forums. It should solicit feedback from customers and government employees. It might also profit from the advice of successful nonprofit organizations, government unions, and state and local governments.
The PMC would establish its own work agenda consisting of activities and decisions addressing overall executive branch and inter-agency processes and issues within the strategic framework established by the President. Examples of PMC agenda items and activities could include:
Improve overall executive branch management, including reform of governmentwide systems, such as management controls, financial management, personnel, budgeting, and procurement.
Coordinate management-related efforts to improve government throughout the executive branch and resolve specific inter-agency management issues.
Ensure adoption of new management practices in executive branch agencies.
Identify examples of, and provide mechanisms for inter-agency exchange of information and support of "best management practices."
The PMC's work would receive staff support from a small team in the Executive Office of the President (EOP) composed of current EOP staff. The FQI Director should participate as a member of the EOPbased PMC support team and provide a direct link between the PMC and FQI. This would provide additional support for implementing NPR's recommendation for creating a quality management culture in the executive branch.
4. Update and refocus the Executive Order establishing the President's Council on Management Improvement. (2)
The President should revise the role and change the name of the President Council on Management Improvement (PCMI) to reflect the changed role of the council and its members in relation to the new PMC.
The PCMI, established in 1992 by Executive Order 12816, needs to focus its work on improving administration, consistent with the overall management responsibility of the President's Management Council.(22)
The PCMI is a large advisory body chaired by OMB's Deputy Director for Management and composed of at least 44 members from executive branch administrative-management staff organizations. Its members are responsible for a variety of staff activities in their agencies concerned with administrative matters (e.g., food service, security, motor pools, building maintenance), personnel, budget, procurement, information resource management, and other administrative management issues corresponding to the compliance, clearance, and review responsibilities of OMB, OPM, and GSA.
PCMI's name and some of its functions broadly focus on overall management of the federal government. For example, the executive order authorizes the PCMI to recommend "improvements in Government management and operations . . . and . . . the development, review, revision, and implementation of Government-wide policies in support of the central management agencies of the federal government."(23) However, PCMI activities are primarily focused on administrative management concerns and not the implementation of broad management policies and programs. Nevertheless, these activities are important to the continuous improvement of government operations.
The PCMI should continue in operation, but its functions should be clearly defined as improving administrative management. The responsibilities and experience of the PCMI's members position it to act as a clearinghouse, communications network, and advisory body for reviewing the appropriateness of existing and proposed administrative directives and regulations. A name such as the "President's Council on Executive Branch Administration'' might better describe the PMCI's functions.
Because of its size, the PCMI has proven to be too large and unwieldy to be effective. The PCMI's membership should be reduced to a smaller group, much like the President's Management Council.
5. Conduct periodic performance reviews to provide ongoing improvement and renewal in the executive branch. (2)
The President should ensure periodic performance reviews of the executive branch are conducted, new government reinvention and reengineering opportunities are identified, and ongoing government improvements are provided.
6. Redefine the Federal Quality Institute as an organization to support the President, Vice President, Cabinet, and PMC in the implementation of strategic and quality management throughout the federal government. (2)
The President should redefine the FQI as an organization with responsibility for fostering the implementation of strategic and quality management throughout the federal government.(24)
FQI's mission should be expanded to serve as a focal point for communications, network-building, education, and research to implement strategic and quality management throughout the federal government. To these ends, FQI should:
Provide staff support for the President, Vice President, Cabinet, and the PMC to formulate and implement those policies improving line management operations of federal agencies through the implementation of strategic and quality management.
Provide agencies with guidance and support for the implementation of the strategic and quality management approach throughout the executive branch and facilitate recognition of outstanding performance.
Develop networks and sponsor collaborative research on strategic and quality management "best practices" and theories with government agencies (e.g., OPM and DOD educational institutions and behavioral labs), government unions, universities and associations, businesses, and state, local, and foreign governments.
In conjunction with OPM and OMB, create networks of technical assistance resource centers within agencies to enable strategic planning, performance planning and measurement, and continuous management improvement.
Cooperate with OPM and other agencies to integrate corporate strategic and quality management principles into all management development programs and specific agency training programs and curricula.(25)
Collaborate with OMB, OPM, and others in providing education for all executive branch employees to implement strategic and quality management and the Government Performance and Results Act of 1993.
Improving Customer Service, ICS01: Create Customer-Driven Programs in all Departments and Agencies that Provide Services Directly to the Public.
Improving Financial Management, FM06: "Franchise" Internal Services.
Mission-Driven, Results-Oriented Budgeting, BGT02: Effectively Implement the Government Performance and Results Act of 1993; BGT03: Empower Managers to Perform; and BGT05: Provide Line Managers with Greater Flexibility to Achieve Results.
Reinventing Human Resource Management, HRM09: Improve Accountability for Equal Opportunity Goals and Accomplishments; HRM11: Strengthen the Senior Executive Service so that It Becomes a Key Element in the Governmentwide Culture Change Effort; and HRM13: Form LaborManagement Partnerships for Success.
Reengineering Information Technology, IT14: Provide Training and Technical Assistance in Information Technology to Federal Employees.
Streamlining Management Control, SMC01: Implement a Systems Design Approach to Management Control; SMC02: Streamline the Internal Controls Program to Make It an Efficient and Effective Management Tool; SMC03: Change the Focus of the Inspectors General; and SMC05: Improve the Effectiveness of the General Accounting Office through Increased Customer Feedback.
Transforming Organizational Structures, ORG01: Reduce the Costs and Numbers of Positions Associated with Management Control Structures by Half; and ORG03: Establish a List of Specific Field Offices to be Closed.
The "managing for results" approach builds on the Government Performance and Results Act of 1993, which mandates strategic planning and performance measurement in the federal government. It also builds on recognized principles of strategic and quality management embodied in the Presidential Award for Quality.(1) The President created the award in 1988 to recognize federal organizations that, by implementing quality management, created highquality products and services and provided best value for tax dollars. The award is intended to champion the understanding of the value of quality management and encourage its adoption throughout the federal government. The criteria for the award serve as a valuable assessment tool for culture change.
Leadership--requires the personal commitment and involvement of top leaders and managers in creating and sustaining an organizational vision and a customer focus. Leadership includes integrating vision, values, and a customer focus into an organization's management system, labor relations, and external partnerships and in the way it addresses its public responsibilities.
Information and Analysis--requires an organization to have a data, information, and analysis system to support improved customer satisfaction, products, services, and processes.
Strategic Quality Planning--requires short-term (one to two years) and longer-term (three or more years) plans containing (1) customer requirements and expected changes in these requirements; (2) organizational and individual capabilities to address key requirements or technological opportunities; (3) capabilities of external suppliers; (4) changes to work processes to improve performance; and (5) productivity improvement and reduction of waste. The criteria cover an organization's planning process as well as the specifics of the plan itself.
Human Resource Development and Management--requires an organization's entire workforce to develop its full potential and pursue quality and operational performance improvement goals. The criteria require building and maintaining an environment conducive to staff involvement and personal and organizational development. Employee education and training, employee performance and recognition systems, and employee well-being and satisfaction are emphasized.
Management of Process Quality--requires an organization to use systematic methods to continually improve quality and operational performance. It includes the design and management of process quality for all work units, the management of internal customer-supplier relationships, supplier quality, and quality assessment.
Quality and Operational Results--tasks organizations with measuring and continuously improving trends and quality levels for products and services. In addition, measures are to be developed for internal business processes and support services (e.g., procurement), and the quality of goods and services provided by outside suppliers, such as subcontractors. Data should be compared against competitors and world-class standards (known as benchmarks or "best-in-class").
Customer Focus and Satisfaction--requires an organization to identify external customer requirements, establish and maintain positive customer relations, and continuously improve customer satisfaction. This criterion also requires organizations to determine customer satisfaction in terms of absolute levels as well as trends.
Strategic and quality management, as embodied in these seven criteria, relies on their use as an integrated set of principles and systems. They are guides to culture changes, not a technique or a program.
At the request of members of Congress, the General Accounting Office (GAO), in 1991, examined the effects of quality management practices on the performance of selected U.S companies. GAO concluded that companies using quality management principles had better employee relations, higher productivity, greater customer satisfaction, increased market share, and improved profitability.(3)
A 1992 GAO study of quality management in the federal government reported that 68 percent of federal agencies said they had started or were starting to implement quality management.(4) While implementation was wide, it was seen as shallow--only 13 percent of employees in those agencies surveyed were involved in quality management. While most of these efforts are in small subcomponents within agencies, a few have been organizationwide, such as the Internal Revenue Service, the Departments of the Navy, Air Force and Army, Defense Information Systems Agency, the National Aeronautics and Space Administration, and the National Security Agency. GAO found that those agencies with mature efforts--three to five years old--had achieved significant increases in customer satisfaction, organizational performance (productivity, effectiveness, quality) and workforce excellence (improved employee morale, greater skill levels, fewer grievances). These findings confirm that cultural and systemic changes require a long-term effort, but that the results can be significant. For example,
IRS Ogden Service Center. Action on recommendations from its quality improvement teams improved customer service, effectiveness, and productivity. It also resulted in savings of over $11 million.
Air Force Logistics Command. On-time delivery rate for contract line items across the command rose from 65 percent in April 1988 to 76 percent in April 1989, and by March 1990 had improved to 79 percent.
Results such as these achieved by the early pioneers encouraged their agencies to expand their efforts and spurred other federal organizations to follow suit.
President Bill Clinton noted, "The American people deserve a government that treats them like customers. Government must be accessible to those it serves and to those who pay its bills. It must be responsive to [their] concerns. It must be run efficiently and well with respect for the tax dollars on which it depends. It must pay its way and live within its means."(5)
Although documented figures are unavailable, the government's cost of poor quality is probably at least as high as the 25 percent cost of poor quality in the nation's service industries.(6) Americans are hardly reticent when venting their frustration with the federal government. They wonder, why can't the government answer requests in less than two months or give correct information the first time? Why is mail misdelivered, and why are names misspelled? Why can't government employees be pleasant on the telephone and find someone else to answer questions when they can't? Why can't a public servant correct the same computer error that has occurred month after month? Why can't a public servant treat me like a customer?(7)
On the other hand, federal agencies now face severe, sustained budget cuts, have fewer staff to serve more customers, enforce more regulation, suffer tighter constraints on discretionary spending, and bear sharper criticism from customers and a Congress that is itself getting bitter complaints from constituents.(8)
Congress is doing its part to help. For example, the Government Performance and Results Act of 1993, signed by President Clinton in August 1993, requires all agencies to develop strategic plans, set agreed-upon goals and objectives, and measure their progress toward these goals and objectives. The Act also provides managers with incentives and tools to focus on results and program outcomes. Implementation of the Act is an important step toward systemic change in the federal government's management culture. However, the Act by itself cannot ensure that government will serve its customers. This means agencies must build on the framework created in the Act to develop ways to identify and meet their customers' needs and expectations, make themselves customer-friendly, maintain excellent relationships with their customer groups, and continually increase customer satisfaction.
To change to a culture that emphasizes quality and results, there must be wholehearted executive branch commitment. Top officials, starting with the President, Vice President, and department and agency heads, must understand, support, and lead the transformation in the federal sector. Fortunately, there is already progress and momentum upon which to build. However, continued visible leadership from the President and his management team is essential. Recent participation by the executive branch's top leadership in quality and productivity conferences, town hall meetings, and recognition programs has already attracted the attention of public servants and has sent a positive message of commitment for change in the federal government.
Another barrier has been the lack of employee participation and involvement. Research increasingly shows that employee involvement is essential to achieve quality and productivity improvement.(10) If the workforce is represented by one or more unions, top agency leaders should consider involving unions in the strategic and quality management effort from the outset. In addition, management should also consider involving other employee groups, such as minority representation groups.
To date, there are two primary ways in which union and management have chosen to deal with employee involvement when implementing quality and productivity improvement efforts. Some have chosen to work "cooperatively," where unions have membership on quality councils and participate fully in planning, implementation, and evaluation of the entire effort. Others have adopted the more "traditional" mode of bargaining to have input on the impact and implementation actions affecting unions. Either approach presents benefits and risks for both management and labor. However, highperforming government agencies found it was important to seek the early involvement of unions and make the nature of their involvement as specific as possible.(11)
FQI administers the Presidential Award for Quality, which recognizes organizations that have implemented quality management in an exemplary manner and have achieved proven results in operational performance and customer satisfaction. A public/private sector evaluation partnership is used to select the winning organizations. FQI also administers the Quality Improvement Prototype Award, designed for organizations that have recently successfully begun the quality transformation process.
The President's Council on Management Improvement (PCMI) administers the Award for Management Excellence to recognize excellence by federal employees, groups, or entire agencies. Nominations are submitted by PCMI members.
The Office of Personnel Management (OPM) administers the Presidential Quality and Management Improvement Awards. This award is for tangible benefits to the government of $250,000 or more, or significant improvement in the quality of government services or products. It is awarded to individuals or teams that have been recognized by their individual agencies. It is currently inactive and awaiting a decision as to whether or not it should be continued.
In addition to the four public sector awards given each year, the Malcolm Baldrige National Quality Award recognizes private sector organizations for their quality management efforts resulting in significant improvement of operational performance and customer satisfaction.(12) This award is the highest level of national recognition for quality for privately or publicly owned businesses located in the United States. It is administered by the Office of Quality Programs, National Institute of Standards and Technology (NIST), Department of Commerce.
Ideally, one set of federal quality awards would be given within the federal government just as one set of national quality awards is awarded in the private sector. Moreover, these two award systems should be closely linked. However, this new award should not be seen as a replacement for agency-level awards. Agencies should continue to recognize and reward individuals and teams delivering quality products and services to customers. Emphasis at the governmentwide level should be on recognizing agency transformation and reinvention.
The President should encourage all department and agency heads to adopt the criteria in the Presidential Award for Quality as standards for a well-managed and effective organization. Department and agency heads should be encouraged to conduct regular organizational assessments using the criteria to identify areas for improvement and to provide standards for judging progress.
2. All executive branch employees should attend appropriate educational sessions on strategic and quality management, to include the criteria for the Presidential Award for Quality. (2)
To help achieve his vision of managing for results, the President should require training in strategic and quality management. The responsibility for undertaking this effort will rest with FQI in its role as facilitator of strategic and quality management in the federal government.
The objective of these educational sessions is to engage federal workers in the vision for transforming government through the use of strategic and quality management principles. It should also encourage management and agency employees to conduct their business according to these principles. The sessions should also include a component describing the role of performance measurement, as envisioned under the Government Performance and Results Act, as well as the basic findings and recommendations of NPR.
The educational sessions should help agencies, managers, and employees link organizational change issues, performance planning and measurement, strategic and quality management, budget decisionmaking, and financial reporting. The first session will be given to the President, Vice-President, and cabinet members.
This initiative should be based on a "cascading" approach that calls for leaders, after participating in the educational session, to personally conduct a session for their immediate subordinate employees. Consequently, this approach would reflect commitment by top management and send a clear message regarding the expectation of the organization's leadership.
3. Each department and agency head should establish a top-level "quality council" to lead that organization's culture change. (2)
The President should encourage all department and agency heads to establish top-level quality councils. According to Dr. Joseph Juran, a noted management expert, "the first step in mobilizing for the projects collectively is to establish a quality council. The basic responsibility of this council is to launch, coordinate, and institutionalize annual quality improvement. If no such council is in existence, the upper managers should create one."(13)
FQI reports that virtually every organization that has successfully introduced quality management in the federal government had also formed a quality council of top leaders--or executive steering group- -to lead the effort.(14) Quality councils are usually chaired by department or agency heads, or their deputies, and include other members of the senior leadership team. In organizations with cooperative labor-management efforts underway, union leaders are also often members. Membership sometimes also includes major external suppliers.
By establishing a quality council, top leadership provides identity and structure to culture change. It also serves to legitimize and institutionalize the quality improvement effort by being the first concrete indication that top leadership is willing to act.(15) This is especially true of cooperative labor-management efforts.
4. Create a category within the Malcolm Baldrige Award for quality in the federal government. (2)
The President should authorize one set of awards for quality in the federal government. These awards should be part of the Malcolm Baldrige National Quality Award program. This set of awards would take the place of the four sets of quality awards currently administered by FQI, PCMI, and OPM. The Secretary of Commerce will have to notify Congress of his intent to add the federal government to the Baldrige Award program. Currently, there are three eligibility categories for the Malcolm Baldrige Award: manufacturing companies, service companies, and small businesses. In accordance with the intent and authorization of the Malcolm Baldrige National Quality Improvement Act of 1987, a Malcolm Baldrige Award for excellence in government services should be proposed to Congress. Consideration might also be given to expanding the award at some later date to include state and local governments as well as nonprofit groups.
NIST's existing Office of Quality Programs should manage the award program and seek advice from FQI on the program's federal component. FQI should work with NIST to manage a properly phased transition from FQI to incorporate the existing Presidential Award for Quality into the NIST effort.
Combining existing awards will facilitate cooperation and the exchange of information between public and private organizations. It will also improve efficiencies by leveraging examiners, cost, and time. It also demonstrates that the federal government is willing to measure itself by the same standards with which it measures the private sector.
Improving Customer Service, ICS01: Create Customer-Driven Programs in All Departments and Agencies that Provide Services Directly to the Public.
Mission-Driven, Results-Oriented Budgeting, BGT02: Effectively Implement the Government Performance and Results Act of 1993.
Office of Personnel Management, OPM02: Redefine and Restructure OPM's Functional Responsibilities to Foster a Customer Orientation; and OPM03: Change the Culture of OPM to Empower Its Staff and Increase Its Customer Orientation.
Reinventing Federal Procurement, PROC10: Ensure Customer Focus in Procurement.
Reinventing Human Resource Management, HRM06: Clearly Define the Objective of Training as the Improvement of Individual and Organizational Performance; Make Training More Market Driven; and HRM13: Form Labor-Management Partnerships for Success.
Streamlining Management Control, SMC01: Implement a Systems Design Approach to Management Control.