Managing for Results: Answers to Hearing Questions on Quality Management

Published by the Government Accountability Office on 1999-09-10.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States General Accounting      Office                                              General     Government       Division
Washington,  D.C. 20548


                   September lo,1999

                  The Honorable George V. Voinovich, Chairman
                  Subcommittee on Oversight of Government Management,                 _
                    Restructuring, and the District of Columbia
                  Committee on Governmental A&i.rs
                  United States Senate

                   Subject: Managing for Results: Answers to Hearing Questions on Qua&v Management

                   Dear Mr. Chairman

                   This letter responds to your request for information following your July 29* hearing on quality
                   management. The enclosure contains our responses to questions we received from your
                   Subcommittee dated August 23,1999.

                   Our responses are based primarily on our previously issued work on management reform,
                   and we therefore did not obtain agency comments on a draft of this letter. We are sending
                   copies of this letter to Senator Richard J. Durbin, Ranking Minority Member, Subcommittee
                   on Oversight of Government Management, Restructuring, and the District of Columbia,
                   Senate Committee on Governmental Affairs. We will make copies available to others upon
                   request. If you have any questions concerning this letter, please contact me at (202) 5128676.

                   Sincerely yours,

                  J. Christopher Mihm
                  Associate Director, Federal Management
                    and Workforce Issues

                  Page 1                             GAOIGGD-99-181B   Answers   to Hearing   Questions   on &us&y   Management

Responses to Subcommittee Questions
Following July 29,1999, Quality Management
               1. Should a vigorous quality management program be implemented
               governmentwide    in addition to the strategic planning framework
               mandated by the Results Act?

               We have not done work to specifically identify whether a governmentwide
               quality management program, separate from the statutory and
               management initiatives already under way, is needed. However, our work
               concerning high-performing organizations provides useful insight. F’irst, as
               noted in our statement for the hearing, leaders in successful organizations
               integrate the implementation of separate organizational improvement
               efforts.’ Regardless of whether these reforms are self-initiated, such as
               Total Quality Management (TQM), or mandated by legislation, such as the
               Results Act, agency top leadership needs to meld these various reforms
               into a coherent, unified effort.

               Second, high-performing organizations understand and can articulate how
               their day-to-day performance contributes to results and improved
               customer satisfaction-a key tenet of quality management. Consequently,
               any effort to improve governmentwide performance also needs to pay
               attention to the day-to-day processes and strategies that agencies employ
               to achieve mission-related results. Effective implementation of the Results
               Act requires such attention. Our work that looks at agencies’fiscal year
               2000 performance plans has shown that agencies need to improve how
               their human capital and management resources and strategies are linked
               to achieving mission-related results2 Understanding and then articulating
               how these resources and strategies can best be mobilized to produce
               results is crucial if agencies are to improve their performance.

               The fiscal year 1999 program performance reports, due to Congress by
               March 3 1,2000, under the Results Act, will provide valuable evidence
               concerning the degree to which agencies have considered and understand
               how their processes and strategies lead to results. Each agency, in its
               report, is to compare the agency’s actual performance against the goals
               established in its annual performance plan. In cases where a goal has not
               been met, the agency is to explain why and discuss the plans and
               schedules for achieving the established performance goals. Agencies that
               lack a clear understanding of the relationships among the agency’s

                ’Management Reform: Usina the Results Act and Ch~&tv Management tn Improve Federal
                Performance (GAO/T-GGD99-151, July 29,1999).

                * Managing for Results: Owortunities for Continued htmrovements   in Apencies’ Performance Plans
                (GAO/GGD/AIMD99-215, July 20,1999).

                Page 2              GAOfGGD-99-181R     Answers   to Hearing   Questions   on Quality   Management

Responses to Subcommittee  Questions    Following     July+ 29,1999,
Quality Management Hearing

resources, processes, products and services, and results will not likely be
in a position to successfully meet this requirement.

2. Does the Office of Management and Budget (OMD) have the
necessary resources and institutional knowledge to implement a
quality management initiative?

While we have not examined this issue directly, we would note that in 1990
OMB’s governmentwide TQM leadership functions and its staffing devoted
to TQM were moved into the Federal Quality Institute (FQI), which at the
time was part of the Office of Personnel Management (OPM). As a result,
there are serious questions about whether OMB would have the
institutional knowledge and resources needed to implement a quality
management initiative.

The degree to which OMB provides management initiatives with the
necessary resources and commitment has been a perennial question, and
we have found that the effectiveness of OMB’s leadership with regard to
management issues has been uneven. OMB’s challenge is to carry out its
central management leadership responsibilities in a manner that leverages
the opportunities of the budget process, while at the same time ensuring
that management issues receive appropriate .attention in an environment
driven by budget and policy decisions.

3. I consider the National Partnership        for Reinventing Government
(NPR) the Clinton Administration’s         quality management initiative.
Its stated goals are making government work better and cost less,
with an emphasis on customer service. However, NPR lacks
institutional     leadership that transcends one person or one
administration.       Given that, would it make more sense to locate an
initiative    like NPR in an agency like OMR?

As your question suggests, management initiatives must have sustained
support from the political and career leadership to be successful. As long
as top leadership support exists, a variety of organizational arrangements
can be used to implement management reforms. Absent top leadership
support, a management initiative is unlikely to be sustained and
successful, regardless of where responsibility for leading the initiative is
housed. In response to our 1996 report on NPR’s Reinvention Labs,
administration officials noted that OMB’s historical role, its budget
responsibilities, and its statutory management responsibilities often
compete with exercising a role as a “change agent” seeking to foster

Page 3            GAO/GGD-99-181R      Answers      to Hearing   Questions   on Qua&   Management
Responses to Subcommittee Questions     Following    Juljr 29,1999,
Qnali~ Management Hearing

innovation.3 Historically, OMB has been reluctant to become heavily
involved in some management initiatives because of the small size of its
staff and its view that federal agencies themselves are responsible and
accountable for making management improvements.

In this context, we have found that effective collaboration with the
agencies-through such approaches as task forces and interagency
councils-has emerged as an important central leadership strategy in
developing policies that are sensitive to implementation concerns and the
need to secure consensus and consistent follow-through within the
executive branch. OMB’s work with interagency councils has been
successful in fostering communication across the executive branch,
building commitment to reform efforts, tapping talents that exist within
agencies, keeping management issues in the forefront, and initiating
important improvement projects.

4. Can you identify any other quality management programs that
were initiated by previous administrations? What became of them?

Prior to NPR, previous administrations undertook a series of related
quality management efforts. In February 1986, President Reagan issued an
Executive Order that formally established a governmentwide effort to
improve the productivity, quality, and timeliness of government products
and services. This effort was continued with OMB Circular A-132, which
until 1989 mandated a governmentwide TQM effort and provided
guidelines for the development and implementation of a productivity and
quality improvement process in the executive branch. An OMB official
recalled that agencies viewed the reporting requirements of this initiative
as too burdensome, and consequently emphasis on this particular TQM
program waned.

 The Federal Quality Institute was also established in 1988 to serve as a
 source of information, training, and consulting services for agencies
 engaged in TQM. As noted earlier, in 1990 OMB’s governmentwide
 leadership functions and resources devoted to TQM implementation were
 consolidated into FQI. In 1995, Congress eliminated FQI’s funding, and its
 responsibilities were shifted within OPM. The Federal Quality Consulting
 Group, FQI’s successor, is a federal franchise activity within the Treasury
 Department that offers federal agencies consulting and facilitation

 ’ Management Reform: Status of Agencv Reinvention    Lab Efforts   (GAO/GGD96-69,     Mar. 20,1996).

 Page 4             GAOIGGD-99-181R      Answers     to Hearing     Questions   on Quality   Management

Responses to Subcommittee Questions    Following     Jul? 29,1999,
Quali~ Management Hearing

Additionally, the President’s Quality Award Program (PQA), begun in 1988,
has given awards to federal government organizations for (1) improving
their overall performance and capabilities and (2) demonstrating a
sustained trend in providing high-quality products and services that results
in the effective use of taxpayer dollars. OPM manages the program, and its
award criteria are closely aligned with the Makom Baldrige National
Quality Award criteria used to recognize private sector organizations.‘ The
PQA award criteria have evolved to become more results-oriented and
now include a distinct category for producing results in areas such as
customer focus and human resources. This adaptation reflects quality
management’s overall evolution from a focus primarily on quality and
employee issues to a broader, results-oriented focus. Since 1988,the PQA
program has recognized federal organizations 85 times, including most
recently 9 organizations last July.

5. How can the information  in agency strategic plans, annual
performance plans, and performance     reports be used to identify
and facilitate improvements  in quality processes?

The information in agency strategic plans, annual performance plans, and
performance reports can be an important tool to identify and facilitate
improvements in quality processes. The connection between what
agencies do on a daily basis and the results that those activities are
intended to achieve are key elements of all three Results Act products.
The information in these documents can be crucial in identifying
performance gaps, targeting improvement opportunities, and tracking

6. How can agencies successfully integrate total quality
management and the Results Act to address some of the more long-
standing management problems?

No serious effort to fundamentally improve the performance of federal
agencies can succeed without addressing long-standing management
challenges and program risks. The Results Act and quality management,
with their shared focus on using sound performance data to make
decisions, can provide an integrated approach to improving both the
overall results agencies seek to achieve and the processes that contribute
to those results. Measurable goals for resolving mission-critical
management problems are important to ensuring that the agencies have
the institutional capacity to achieve their more results-oriented
programmatic goals. Our assessment of the fiscal year 2000 annual

Page 5           GAOIGGD-99-181R      Answers      to Hearing   Questions   on Quality   Management

    Responses to Subcommittee   Questions     Following   Julf 29,1999,
    Quality Management  Hearing

    performance plans showed that agencies are not consistently addressing
    management challenges and program risks in their plans.

    Agencies that did address the challenges and risks in their plans used a
    variety of approaches, including setting goals and performance measures
    that were linked to the management challenges and program risks. These
    agencies also discussed the strategies and processes that are to be used to
    address the program risks. Using the annual performance plans to identify
    strategies and processes for addressing management challenges and
    program risks is a clear iUustration of how quality management’s focus on
    processes can be used to complement the Results Act in addressing
    program risks. For example, the Department of Transportation’s (DOT)
    lack of controls over its financial activities impairs its ability to manage
    programs and exposes the department to potential waste, fraud,
    mismanagement, and abuse. DOT’s performance plan identifies financial
    accounting as a management challenge and addresses key weaknesses that
     need to be resolved before DOT can obtain an unqualified audit opinion.
     Importantly, DOT’s corporate management strategies include efforts to
     receive an unqualified audit opinion, enhance the efficiency of the
     accounting operation, and implement a pilot of the improved financial
     systems environment.

     7. How can Congress best use the information    in agencies’
     strategic plans, performance plans, and performance reports to
     identify the degree to which agencies have quality management and
     related initiatives in place?

     In our recent report summarizing our reviews of agencies’fiscal year 2000
     annual performance plans, we noted that we have long advocated that
     congressional committees of jurisdiction hold augmented oversight
     hearings on each of the major agencies.” Information on missions, goals,
     strategies, resources, and results could provide a consistent starting point
     for each of these hearings. Such hearings also would further underscore
     for agencies the importance that Congress places on creating high-
     performing executive organizations. Performance planning under the
     Results Act should allow for more informed decisions about such issues as

l    whether the agency is pursuing the right goals and making progress toward
     achieving them;
l    whether the federal government is effectively coordinating its responses to
     pressing national needs;

     ’ GAO/GGD/AlMD-99-215,   July 20,1999.

     Page 6             GAOIGGD-99481R        Answers     to Hearing   Questions   on Quality   Management

    Responses to Subcommittee  Questions    Following     Juls 29,1999,
    Qua&    Management Hearing

l   whether the federal government is achieving an expected level of
    performance for the budgetary and other resource commitments that have
    been made;
l   the degree to which the agency has the best mix of programs, initiatives,
    and other strategies to achieve results;
l   the progress the agency is making in addressing mission-critical
    management challenges and program risks;
l   the efforts under way to ensure that the agency’s human capital strategies
    are linked to strategic and programmatic planning and accountability
    mechanisms; and
l   the status of the agency’s efforts to use information technology to achieve

    8. One of the keys to the success of Ohio’s Quality Services
    through Partnership initiative was employee involvement.     How
    does the Results Act provide for employee involvement?

    The Results Act does not have a specific requirement for employee
    involvement, other than to identify the development of strategic and
    annual performance plans and performance reports as inherently
    governmental functions that must only be done by federal employees.
    Nevertheless, the involvement of managers and employees throughout the
    organization is important because if agencies are to implement and sustain
    major management reforms, a cultural transformation must occur at
    agencies that requires them to more effectively manage, develop, and
    involve their most important asset-their human capital. This cultural
    transformation requires employees to understand the importance of, and
    the connection between, their individual performance and achieving
    overall agency goals. Employees who are unsure about the direction their
    agency is taking whl not be able to effectively focus on achieving those

    When we surveyed federal managers at the GS-13 level and above in late
    1996 and early 1997, over half of the managers said that they had no
    involvement in many of the activities related to their agency’s
    implementation of the Results Act. However, members of the Senior
    Executive Service (SES) reported higher levels of involvement in key
    Results Act-related activities. For example, 72 percent of the SES
    managers reported that they had been involved in establishing long-term
    strategic goals for their agency. On the other hand, only 35 percent of non-
    SES managers reported being involved in establishing strategic goals. At
    the request of the Subcommittee, we are conducting the survey again to
    see whether the level of involvement has increased over the last 3 years.

    Page 7            GAOKiGD-SS-181R      Answers      to Hearing   Questions   on Quality   Management
Page 8   GAOIGGD-SS-181R   Answers   to Hearing   Questions   on Quality   Management
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                                                                                   .   ,’

Page 10   GAOIGGD-9%181R   Answers to Hearing Questions   on Qudity   Management
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