oversight

Management Reform: Elements of Successful Improvement Initiatives

Published by the Government Accountability Office on 1999-10-15.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Oversight of Government
                          Management, Restructuring, and the District of Columbia
                          Committee on Governmental Affairs, U.S. Senate


For Release on Delivery
Expected at
9:00 a.m. EDT             MANAGEMENT REFORM
on Friday
October 15, 1999


                          Elements of Successful
                          Improvement Initiatives
                          Statement of
                          J. Christopher Mihm, Associate Director
                          Federal Management and Workforce Issues and
                          James R. White, Director
                          Tax Policy and Administration Issues
                          General Government Division




GAO/T-GGD-00-26
Statement

Management Reform: Elements of Successful
Improvement Initiatives

              Mr. Chairman and Members of the Subcommittee:

              We are pleased to be here today to contribute to the Subcommittee’s
              ongoing efforts to identify ways to improve the management and
              performance of the federal government. As you know, last January we
              issued a new volume of reports, the Performance and Accountability
              Series, outlining the major management challenges confronting our largest
              federal agencies and the substantial opportunities for improving their
                            1
              performance. Many of the challenges discussed in that series represent
              long-standing, difficult, and complex problems that our work has shown
              will not be easily or quickly resolved. In fact, implementing and sustaining
              major change initiatives requires a cultural transformation for many
              agencies. Therefore, given the magnitude of the problems an agency may
              face, and the extensive effort and long period of time it can take before
              problems are fully resolved, progress must often be measured initially in
              terms of whether the agency has a well thought out management
              improvement initiative in place to guide its reform efforts.

              As agreed with the Subcommittee, this morning we will discuss the
              elements that our wide-ranging work on federal management issues
              suggests are particularly important in implementing and sustaining
              management improvement initiatives that genuinely take root and
              eventually resolve the problems they are intended to fix. These elements
              are (1) a demonstrated leadership commitment and accountability for
              change; (2) the integration of management improvement initiatives into
              programmatic decisionmaking; (3) thoughtful and rigorous planning to
              guide decisions, particularly to address human capital and information
              technology issues; (4) employee involvement to elicit ideas and build
              commitment and accountability; (5) organizational alignment to streamline
              operations and clarify accountability; and (6) strong and continuing
              congressional involvement. Not surprisingly, the elements of successful
              management improvement initiatives that we will discuss today are
              consistent with the approaches shared by performance-based management
              efforts under the Government Performance and Results Act (Results Act)
              and quality management that we discussed in our July 29, 1999, statement
                                      2
              for this Subcommittee. Our statement today is based on our broad body of
              work and resulting knowledge of management issues, including our
              examination of the implementation of the Results Act and related
              initiatives, our reviews of selected National Partnership for Reinventing
              1
                  Major Management Challenges and Program Risks (GAO/OCG-99-SET, January 1999).
              2
               Management Reform: Using the Results Act and Quality Management to Improve Federal Performance
              (GAO/T-GGD-99-151, July 29, 1999).




              Page 1                                                                       GAO/T-GGD-00-26
                     Statement
                     Management Reform: Elements of Successful Improvement Initiatives




                     Government (NPR) recommendations, and our ongoing analyses of
                     agency-specific improvement efforts, such as the Internal Revenue Service
                     (IRS) modernization.

                     Perhaps the single most important element of successful management
Demonstrated         improvement initiatives is the demonstrated commitment of top leaders to
Leadership           change. This commitment is most prominently shown through the personal
Commitment and       involvement of top leaders in developing and directing reform efforts.
                     Organizations that successfully address their long-standing management
Accountability for   weaknesses do not “staff out” responsibility for leading change. Top
Change               leadership involvement and clear lines of accountability for making
                     management improvements are critical to overcoming organizations’
                     natural resistance to change, marshalling the resources needed in many
                     cases to improve management, and building and maintaining the
                     organizationwide commitment to new ways to doing business.

                     Commissioner Rossotti’s efforts at IRS provide a clear example of
                     leadership’s commitment to change. The Commissioner has articulated a
                     new mission for the agency, together with support for strategic goals that
                                                                               3
                     balance customer service and compliance with tax laws. Moreover, the
                     Commissioner has initiated a modernization effort that touches virtually
                     every aspect of the agency, including business practices, organizational
                     structure, management roles and responsibilities, performance measures,
                     and technology. Commissioner Rossotti has assigned clear executive
                     ownership of each of IRS’ major initiatives and is using executive steering
                     committees to provide oversight and accountability for driving the change
                     efforts.

                     Sustaining top leadership commitment to improvement is particularly
                     challenging in the federal government because of the frequent turnover of
                     senior agency political officials. As a result, sustaining improvement
                     initiatives requires commitment and leadership by senior career
                     executives, as well as political leaders. Career executives can help provide
                     the long-term focus needed to institutionalize reforms that political
                     executives’ often more limited tenure does not permit. In addition, the
                     other elements of successful management improvement initiatives that we
                     shall turn to shortly are important for institutionalizing reform initiatives.


                     3
                      IRS’ new mission statement reads, “Provide America’s taxpayers top quality service by helping them
                     understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to
                     all.” IRS’ supporting strategic goals are to (1) provide top quality service to each taxpayer, (2) provide
                     service to all taxpayers by applying the law with integrity and fairness, and (3) increase productivity by
                     providing a quality work environment for its employees.




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                   Statement
                   Management Reform: Elements of Successful Improvement Initiatives




                   Traditionally, the danger to any management reform is that it can become
Integration of     a hollow, paper-driven exercise where management improvement
Management         initiatives are not integrated into the day-to-day activities of the
Improvement        organization. Thus, successful organizations recognize—and implement
                   reform efforts on the basis of—the essential connection between sound
Initiatives into   management and the programmatic results those organizations hope to
Programmatic       achieve.
Decisionmaking
                   The Results Act provides a ready-made statutory mechanism for making
                   this essential connection, engaging Congress in a discussion of how and
                   when management problems will be addressed, and helping to pinpoint
                   additional efforts that may be needed. We have found that annual
                   performance plans that include precise and measurable goals for resolving
                   mission-critical management problems are important to ensuring that
                   agencies have the institutional capacity to achieve their more results-
                   oriented programmatic goals. Moreover, by using annual performance
                   plans to set goals to address management weaknesses, agencies provide
                   themselves and Congress with a vehicle—the subsequent agency
                   performance reports—for tracking progress in addressing management
                   problems and considering what, if any, additional efforts are needed.

                   Unfortunately, we found that agencies do not consistently address major
                   management challenges and program risks in their fiscal year 2000
                                        4
                   performance plans. In those cases where challenges and risks are
                   addressed, agencies use a variety of approaches, including setting goals
                   and measures directly linked to the management challenges and program
                   risks, establishing goals and measures that are indirectly related to the
                   challenges and risks, or laying out strategies to address them. Figure 1
                   shows the distribution of the 24 agencies covered by the Chief Financial
                   Officers Act and their different approaches to addressing management
                   challenges and program risks in their annual performance plans.




                   4
                    Managing for Results: Opportunities for Continued Improvements in Agencies’ Performance Plans
                   (GAO/GGD/AIMD-99-215, July 20, 1999).




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                                         Statement
                                         Management Reform: Elements of Successful Improvement Initiatives




Figure 1: Approaches Used to Address
Management Challenges and Program
Risks




                                         Note: Numbers do not add up to 100 percent due to rounding.
                                         Source: GAO analysis based on agencies’ fiscal year 2000 performance plans.


                                         IRS has important management reform initiatives underway to address
                                         long-standing management weaknesses, but it missed the opportunity to
                                         demonstrate these actions in its portion of the Department of the
                                         Treasury’s fiscal year 2000 performance plan. For example, the
                                         Department of the Treasury’s plan has no goals, measures, or strategies to
                                                                               5
                                         address several of the high-risk areas we have identified at IRS, including

                                       • internal control weaknesses over unpaid tax assessments (We found that
                                         the lack of a subsidiary ledger impairs IRS’ ability to effectively manage its
                                         unpaid assessments. This weakness has resulted in IRS inappropriately
                                         directing collection efforts against taxpayers after amounts owed have
                                         been paid.);
                                       • the need to assess the impact of various efforts IRS has under way to
                                         reduce filing fraud;
                                       • the need to improve security controls over information systems and
                                         address weaknesses that place sensitive taxpayer data at risk to both
                                         internal and external threats (Our high-risk update reported that IRS’


                                         5
                                          These areas are characterized as “high-risk” because of their greater vulnerability to waste, fraud,
                                         abuse, and mismanagement.




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                         Management Reform: Elements of Successful Improvement Initiatives




                         controls do not adequately reduce vulnerability to inappropriate
                         disclosure.); and
                       • weaknesses in internal controls over taxpayer receipts.

                         Similarly, the General Services Administration’s (GSA) fiscal year 2000
                         annual performance plan does not address several long-standing problems
                         identified by the GSA Inspector General. These problems include top
                         management’s lack of emphasis on ensuring that the internal controls are
                         in place to deter fraud, waste, and abuse. GSA’s plan also does not fully
                         address issues raised by the Inspector General related to developing new
                         management information systems and ensuring that automated
                         information systems have the proper controls and safeguards. These
                         omissions are significant because GSA’s governmentwide oversight and
                         service-provider role, its extensive interaction with the private sector, and
                         the billions of taxpayer dollars involved in carrying out its activities, make
                         it especially important that GSA’s operations be adequately protected.

                         The magnitude of the challenges that many agencies face in addressing
Thoughtful and           their management weaknesses necessitates substantive planning be done
Rigorous Planning to     to establish (1) clear goals and objectives for the improvement initiative,
Guide Decisions          (2) the concrete management improvement steps that will be taken, (3)
                         key milestones that will be used to track the implementation status, and
                         (4) the cost and performance data that will be used to gauge overall
                         progress in addressing identified weaknesses. Our work across the federal
                         government has found the effective use of human capital and information
                         technology—both separately and, importantly, as they relate to one
                         another—are areas where thoughtful and rigorous planning is needed if
                         fundamental management improvements are to be made.

                         For example, we looked at the efforts of four agencies (the Departments of
                         Agriculture, Health and Human Services, Interior, and Veterans Affairs) to
                         both improve services and reduce staffing levels in their personnel offices
                                                                                    6
                         through the better application of information technology. The agencies
                         planned to increase operating efficiencies and improve services by
                         automating paper-based personnel processes. The agencies expected that
                         new hardware and/or software technology would reduce paperwork and
                         workload, thereby permitting sizable staff reductions. However, the
                         agencies made the staffing reductions before much of the new automation
                         was in place, and automation efforts had not been fully implemented as of


                         6
                          Management Reform: Agencies’ Initial Efforts to Restructure Personnel Operations (GAO/GGD-98-93,
                         July 13, 1998).




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Management Reform: Elements of Successful Improvement Initiatives




late 1997. As a result, the agencies were struggling to achieve their
efficiency and service improvement objectives.

On a more positive note, we recently reviewed the efforts of three agencies
(the Postal Service, the Department of Veterans Affairs (VA), and the Park
Service) to more strategically manage their facilities and assets by forming
                                              7
business partnerships with the private sector. In each of the six
partnerships that we reviewed, the agency built the expertise to engage in
the partnership and make it successful. For example, the Department of
Veterans Affairs established a separate organizational unit staffed with
professionals experienced in management, architecture, civil engineering,
and contracting to manage its partnerships.

With regard to planning for major technology projects, IRS has historically
lacked disciplined and structured processes for developing and managing
information technology. We reported in February 1998 that IRS had not
clearly defined system modernization phases, nor had it adequately
                                                                       8
specified organizational roles, making it unclear who was to do what. IRS’
systems modernization challenges include completing a modernization
blueprint to define, direct, and control future modernization efforts and
establishing the management and engineering capability to build and
acquire modernized systems. The key to effectively addressing these
challenges is to ensure that long-standing modernization management and
technical weaknesses are corrected before IRS invests large sums of
modernization funds. As we have reported, IRS recently initiated
appropriate first steps to address these weaknesses via its initial
modernization expenditure plan that represents the first step in a long-
                                             9
term, incremental modernization program.

The Census Bureau, through its effective use of technology in expanding
the electronic availability of census data, demonstrates how federal
agencies can leverage performance and customer satisfaction through the
better use of technology. Before applying technology to its data
dissemination efforts, the Bureau released massive amounts of data in
printed reports. Now, by using the Internet as its principal medium for
disseminating data, the Bureau is able to reduce its reliance on printed

7
 Public-Private Partnerships: Key Elements of Federal Buildings and Facility Partnerships (GAO/GGD-
99-23, Feb. 3, 1999).
8
Tax Systems Modernization: Blueprint Is a Good Start But Not Yet Sufficiently Complete to Build or
Acquire Systems (GAO/AIMD/GGD-98-54, Feb. 24, 1998).
9
 Tax Systems Modernization: Results of IRS’ Initial Expenditure Plan (GAO/AIMD/GGD-99-206, June 15,
1999).




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                       Management Reform: Elements of Successful Improvement Initiatives




                       materials, reach a wider audience, and provide its clients with information
                       in a format that better meets their needs. The Bureau reports that its
                       customers are responding positively to the shift, with significant growth in
                       the number of customer hits on the Census Internet site, from about 10,000
                       per day in 1994 to more than 850,000 per day in 1999. The Bureau plans to
                       use the Internet as its principal medium for releasing data from the 2000
                       Census.

                       Successful management improvement efforts require the active
Employee Involvement   involvement of managers and staff throughout the organization to provide
to Elicit Ideas and    ideas for improvements and supply the energy and expertise needed to
Build Commitment and   implement changes. Employees at all levels of high-performing
                       organizations participate in--and have a stake in--improving operational
Accountability         and program performance to achieve results. Our work has shown that
                       high-performing organizations use a number of strategies and techniques
                       to effectively involve employees, including (1) fostering a performance-
                       oriented culture, (2) working to develop a consensus with unions on goals
                       and strategies, (3) providing the training that staff need to work effectively,
                       and (4) devolving authority while focusing accountability on results.

                       Fostering a performance-oriented culture requires agency management to
                       communicate with staff throughout the organization to involve them in the
                       process of designing and implementing change. Setting improvement goals
                       is an important step in getting organizations across the government to
                       engage seriously in the difficult task of change. The central features of the
                       Results Act—strategic planning, performance measurement, and public
                       reporting and accountability—can serve as powerful tools to help change
                       the basic culture of government. Involving employees in developing and
                       implementing these goals and measures can help direct a diverse array of
                       actions to improve performance and achieve results. However, our survey
                       of federal managers, conducted in late 1996 and 1997, indicates there is
                       substantial room for improvement in this area. This survey found that only
                       one-third of non-SES managers (as opposed to nearly three-fourths of the
                       SES managers) reported they had been involved in establishing long-term
                                                          10
                       strategic goals for their agencies.

                       Employees in high-performing organizations understand the importance of
                       and the connection between their performance and the organization’s



                       10
                        The Government Performance and Results Act: 1997 Governmentwide Implementation Will Be
                       Uneven (GAO/GGD-97-109, June 2, 1997).




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          11
success. The failure to constructively involve staff in an organization’s
improvement efforts means running the risk that the changes will be more
difficult and protracted than necessary. For example, in the fall of 1997,
the Nuclear Regulatory Commission’s (NRC) Office of Inspector General
surveyed NRC staff to obtain their views on the agency’s safety culture. In
its June 1998 report, the Inspector General noted that the staff had a strong
commitment to protecting public health and safety but expressed high
levels of uncertainty and confusion about the new directions in regulatory
practices and challenges facing the agency. Employees who are confused
about the direction their agency is taking will not be able to effectively
focus on results or make as full a contribution as they might otherwise.

One way high-performing organizations can enhance employee
involvement and gain agreement on an organization’s goals and strategies
is by developing partnerships with employee unions. The U.S. Postal
Service’s long-standing challenges in labor-management relations illustrate
the importance of having a shared set of long-term goals and strategies
agreed upon by managers, employees, and unions. As we have reported,
labor-management relations at the Postal Service have been characterized
by disagreements that have, among other things, hampered efforts to
automate some postal systems that could have resulted in savings and
                                                12
helped the Service reach its performance goals. Although there has been
some progress, problems persist and continue to contribute to higher mail
processing and delivery costs. To help the Postal Service resolve its
problems, we have long recommended that the Service and its unions and
management associations establish a framework agreement to outline
common goals. We have also noted that the Results Act can provide an
effective framework for union and management representatives to discuss
and agree upon goals and strategies.

Employees’ capabilities also play an important role in achieving
performance improvements, and training is a key factor enabling employee
involvement. Agencies that expect their employees to take greater
responsibility and be held accountable for results must ensure that the
employees have the training and tools they need to fulfill these
expectations. In that regard, IRS is beginning to implement significant
changes that will require training for frontline employees and their
supervisors. For example, in lieu of hiring a large number of seasonal

11
  Major Management Challenges and Program Risks: A Governmentwide Perspective (GAO/OCG-99-1,
January 1999).
12
  Major Management Challenges and Program Risks: U.S. Postal Service (GAO/OCG-99-21, January
1999).




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Management Reform: Elements of Successful Improvement Initiatives




employees to handle return processing workload during the annual filing
season, IRS plans to increase the number of permanent employees and
expand their job responsibilities to include compliance work that they can
do after the filing season. Those employees will have to be cross-trained so
that they can handle both their return processing and compliance
responsibilities. Training is expected to be a key factor in IRS’ efforts to
provide top-quality customer service. Further, given the dynamic
environment agencies face, employees need incentives, training, and
support to help them continually learn and adapt. Our 1996/97 survey
found that about 60 percent or more of the supervisors and managers
reported that their agencies had not provided them with the training
necessary to accomplish critical, results-oriented management tasks.

High-performing organizations also seek to involve and engage employees
by devolving authority to lower levels of the organization. Employees are
more likely to support changes when they have the necessary amount of
authority and flexibility--along with commensurate accountability and
incentives--to advance the agency’s goals and improve performance.
Allowing employees to bring their expertise and judgement to bear in
meeting their responsibilities can help agencies capitalize on their
employees’ talents, leading to more effective and efficient operations and
                              13
improved customer service. Some federal agencies, such as the Social
Security Administration (SSA), are exploring new ways to involve
employees by devolving decisionmaking authority. Although the efficacy of
this initiative has not been fully assessed, SSA has been implementing a
pilot program to establish a “single decision maker” position. This
program expands the authority of disability examiners, who currently
make initial disability determinations jointly with physicians, and allows
the single decision maker to make the initial disability determination and
                                          14
consult with physicians only as needed.

Our work has shown that agencies can improve the extent to which they
devolve authority for employees to make decisions and the extent to which
they hold employees accountable for results. Our 1996/97 survey of federal
managers found that less than one-third of non-SES managers felt that to a
great or very great extent they had the decisionmaking authority needed to
accomplish strategic goals. Likewise, only about half of the managers we


13
  Executive Guide: Effectively Implementing the Government Performance and Results Act
(GAO/GGD-96-118, June 1996).
14
  SSA Disability Redesign: Actions Needed To Enhance Future Progress (GAO/HEHS-99-25, Mar. 12,
1999).




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                        surveyed reported that they were being held accountable for program
                        results.

                        Our work has also shown that agencies can do a better job of providing
                        incentives to encourage employees to improve performance and achieve
                        results. Only one-fourth of non-SES managers reported that to a great or
                        very great extent employees received positive recognition from their
                        agencies for efforts to help accomplish strategic goals. At the request of
                        this Subcommittee, we are surveying federal managers again to follow up
                        on whether there have been improvements in these critical areas.

                        Some agencies have explored new ways of devolving decisionmaking
                        authority in exchange for operational flexibility and accountability for
                        results. For example, in fiscal year 1996, the Veterans Health
                        Administration (VHA) management structure was decentralized to form 22
                                                                15
                        Veterans Integrated Service Networks. VA gave these networks
                        substantial operational autonomy and the ability to perform basic
                        decisionmaking and budgetary duties. VA made the networks accountable
                        for results such as improving patient access, efficiency, and reducing
                        costs. VA also established performance measures, such as increasing the
                        number of outpatient surgeries, reducing the use of inpatient care, and
                        increasing the number of high-priority veterans served to hold network
                        and medical center directors accountable for results.

                        Successful management improvement efforts often entail organizational
Organizational          realignment to better achieve results and clarify accountability. For
Alignment to            example, GSA has sought to improve its efficiency and effectiveness by
Streamline Operations   changing its organizational structure to separate its policymaking
                        functions from its operations that provide services. GSA recognized that it
and Clarify             suffered from conflicting policymaking and service-providing roles and
Accountability          needed to replace its outmoded methods of delivering service. To address
                        this issue, GSA established the Office of Policy, Planning, and Evaluation
                        in 1995, which it later renamed the Office of Governmentwide Policy, to
                        handle policy decisions separately from functions that deliver supplies or
                        services. GSA believes that this realignment has improved efficiency and
                        reduced the perception of conflict of interest that existed prior to the
                        separation of its policymaking and service-delivery roles.

                        While GSA’s efforts thus far are an important reform, additional
                        opportunities for organizational realignment appear to exist. For example,

                        15
                          VA Health Care: More Veterans Are Being Served, But Better Oversight Is Needed (GAO/HEHS-98-
                        226, Aug. 28, 1998).




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the GSA Inspector General has expressed concerns that GSA’s
organization and management structure has not kept pace with GSA’s
downsizing, streamlining, and reform efforts. In addition, the Inspector
General has said that GSA’s organizational structure does not seem to
match the responsibility for managing programs with the authority to do
so. As a result, for example, GSA has faced situations where regions
(which operate independently) have taken divergent positions on similar
issues, according to the Inspector General.

IRS’ ongoing efforts provide another example of the importance of aligning
organizational structures. As Commissioner Rossotti has stated, IRS’
current cumbersome organizational structure and inadequate technology
are the principal obstacles to delivering dramatic improvements in
customer service and productivity. The Commissioner is reorganizing IRS
with the aim of building an organization designed around taxpayer groups
and creating management roles with clear responsibilities. One of the first
organizational realignments taking place is in the Office of the Taxpayer
Advocate. This office is intended to, among other things, help taxpayers
who cannot get their problems resolved through normal IRS channels.
Formerly, the Advocate’s Office had to rely on functional groups within
IRS, like examination and collection, to provide most of its program
                                                   16
resources—including staff, space, and equipment. When functional needs
conflicted with Advocate Office needs, there was no assurance that
advocate needs would be met. In the new organization, all advocate
program resources will be controlled and managed by the Taxpayer
Advocate. By organizing this way, IRS hopes to improve both program
efficiency and service to taxpayers.

The organizational realignments at GSA and IRS are consistent with a
more general exploration under way to use streamlined and clarified
organizational arrangements to help enhance accountability and improve
performance. For example, building on reform efforts in the United
Kingdom and other countries, the Administration has proposed creating
Performance-Based Organizations (PBOs) in which selected agencies that
deliver measurable services receive greater organizational autonomy in
exchange for heightened accountability for results on the part of top and
senior leadership. Last year, in an attempt to address significant
management and accountability problems with federal student financial
aid programs, Congress enacted the first PBO, the Office of Student
Financial Assistance, within the Department of Education. We have

16
 IRS Management: IRS Faces Challenges as it Restructures the Office of the Taxpayer Advocate
(GAO/GGD-99-124, July 15, 1999).




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identified the management of student financial aid programs, with more
than $150 billion in outstanding student loans, as being at high-risk to
waste, fraud, abuse, and mismanagement.

The PBO structure exemplifies new directions in accountability for the
federal government because the PBO’s Chief Operating Officer, who
reports to the Secretary of Education, is held directly and personally
accountable, through an employment contract, for achieving measurable
organizational and individual goals. The Chief Operating Officer is
appointed by the Secretary of Education to a minimum 3-year and a
maximum 5-year term, and may receive a bonus for meeting the
performance goals or be removed for failing to meet them.

The Office of Student Financial Assistance was provided with increased
flexibility for procurement and personnel management, and key managers
are to be held directly accountable for performance objectives that include
(1) improving customer satisfaction; (2) providing high quality cost-
effective services; and (3) providing complete, accurate, and timely data to
ensure program integrity. The Chief Operating Officer is to enter into
annual performance agreements containing measurable organization and
individual goals with key managers, who can receive a bonus or can also
be removed.

An additional accountability mechanism is that the Chief Operating Officer
and the Secretary of Education are required to agree on, and make public,
a 5-year performance plan that establishes the Office’s goals and
objectives. To further underscore accountability issues, the PBO’s Chief
Operating Officer is to annually prepare and submit to Congress, through
the Secretary, a report on the performance of the PBO. The report is to
include an evaluation of the extent to which the Office met the goals and
objectives contained in the 5-year performance plan. In addition, the
annual report is to include (1) an independent financial audit, (2)
applicable financial and performance requirements under the Chief
Financial Officers Act and the Results Act, (3) the results achieved by the
Office relative to its goals, (4) an evaluation of the Chief Operating
Officer’s performance, (5) recommendations for legislative and regulatory
changes to improve service and program integrity, and (6) other
information as detailed by the Director of the Office of Management and
Budget.




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                        Finally, Congress plays a crucial role in management improvement efforts
Strong and Continuing   throughout the executive branch through its legislative and oversight
Congressional           capacities. On a governmentwide basis, Congress, under the bi-partisan
Involvement             leadership of this Committee and the House Government Reform
                        Committee, has established a statutory framework consisting of
                        requirements for goal-setting and performance measurement, financial
                        management, and information technology management, all aimed at
                        improving the performance, management, and accountability of the federal
                        government. Through the enactment of the framework and its efforts to
                        foster the framework’s implementation, Congress has, in effect, served as
                        an institutional champion for improving the management of the federal
                        government, providing a consistent focus for oversight and reinforcement
                        of important policies. On an agency-specific basis as well, support from the
                        Congress has proven to be critical in instituting and sustaining
                        management reforms, such as those taking place at IRS, GSA, and
                        elsewhere across the federal government.

                        Congress, in its oversight role, can monitor management improvement
                        initiatives and provide the continuing attention necessary for reform
                        initiatives to be carried through to their successful completion.
                        Information in agencies’ plans and reports produced under the Results Act,
                        high quality financial and program cost data, and other related
                        information, can help Congress in targeting its oversight efforts and
                        identifying opportunities for additional improvements in agencies’
                        management. In this regard, we have long advocated that congressional
                        committees of jurisdiction hold augmented oversight hearings on each of
                        the major agencies at least once each Congress. Congress could examine,
                        for example, the degree to which agencies are building the elements of
                        successful management improvement initiatives that we have discussed
                        today into their respective management reform efforts. Such hearings will
                        further underscore for agencies the importance that Congress places on
                        creating high-performing government organizations. Also, through the
                        appointment and confirmation process, the Senate has an added
                        opportunity to make clear its commitment to sound federal management
                        and explore what prospective nominees plan to do to ensure that their
                        agencies are well-managed and striving to be high-performing
                        organizations.

                        In summary Mr. Chairman, serious and disciplined efforts are needed to
                        attack the management problems confronting some of our largest
                        agencies. Successful management improvement efforts often contain a
                        number of common critical elements, including top leadership
                        commitment and accountability, the integration of management



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Management Reform: Elements of Successful Improvement Initiatives




improvement initiatives into programmatic decisions, planning to chart the
direction the improvements will take, employee involvement in the change
efforts, organizational realignment to streamline operations and clarify
accountability, and congressional involvement and oversight. Experience
has shown that when these elements are in place, lasting management
reforms are more likely to be implemented that ultimately lead to
improvements in the performance and cost-efficiency of government.

Mr. Chairman, this concludes our prepared statement. We would be
pleased to respond to any questions that you or other Members of the
Subcommittee may have.

Contacts and Acknowledgement

For further contacts regarding this testimony, please contact J.
Christopher Mihm at (202) 512-8676. For information regarding GAO’s
work on IRS modernization, please contact James R. White at
(202) 512-9110, and for information regarding GAO’s work on GSA, please
contact Bernard L. Ungar at (202) 512-4232. Individuals making key
contributions to this testimony included Kelsey Bright, Deborah Junod,
Susan Ragland, and William Reinsberg.




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