MANAGEMENT REFORM

Using the Results Act and

Quality Management to

Improve Federal

Performance

Statement of

J. Christopher Mihm, Associate Director

Federal Management and Workforce Issues

General Government Division

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

9:30 a.m. EDT

on Thursday

July 29, 1999

GAO/T-GGD-99-151

Statement

Management Reform: Using the Results Act

and Quality Management to Improve Federal

Performance

Page 1 GAO/T-GGD-99-151

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the essential role that quality and

process improvement initiatives such as Total Quality Management (TQM)

must play in any serious effort to improve the effectiveness and

performance of the federal government. A look across the federal

government over the last decade clearly shows that there has been

widespread interest and effort on the part of Congress, the leadership in

the executive branch, and within the agencies in making dramatic

improvements in public management. TQM, with its customer focus and

concern with product and service quality, is one improvement approach

that has been widely used in the public as well as in the private sector.

My major point today is that if federal agencies are to make the major

improvements in their mission-related results envisioned by the

Government Performance and Results Act (Results Act), they must have

management and process improvement initiatives—including those that

employ the principles of quality management—in place to achieve those

results. Fortunately, TQM and the Results Act share a common and

mutually reinforcing focus on achieving program results and customer

satisfaction, measuring performance, and using performance data to

identify and select improvement opportunities.

As agreed, my statement today will elaborate on these points by covering

three topics. I will first discuss the complex and challenging environment

facing governments at all levels that is encouraging a recommitment to

many of the values of TQM and related efforts--efficiency, service quality,

customer satisfaction, and results. Second, I will highlight selected

aspects of the federal government’s response to this environment. Third, I

will discuss several areas where a results orientation and quality

management share common approaches to improving organizational

performance and suggest areas needing additional attention for both

approaches to be successful. My comments today are based on our

ongoing and past work looking at management improvement efforts across

the federal government and at high-performing organizations.

Government decisionmakers and managers in the major democracies

around the world confront a strikingly similar set of challenges to efficient

and effective public management in the 21st century. Driven by citizen

demands for more economical, efficient, and effective government; the

pressures of economic globalization; advances in information technology;

a consistent set of demographic realities; and other factors, many of these

governments have undertaken major public management reform

The Focus on

Government

Performance
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 2 GAO/T-GGD-99-151

initiatives. While these initiatives have been crafted in response to

different immediate needs, political environments, and historical cultures,

the reform efforts are taking a generally consistent direction.

Performance-based management, the unifying theme of these reform

initiatives, seeks to shift the focus of government performance and

accountability away from a preoccupation with activities to a greater focus

on the results of those activities. Empowering line managers with the

operational authority to achieve results--a fundamental tenet of TQM and

related quality management initiatives--when combined with appropriate

accountability mechanisms, is seen as vital to improving performance and

is thus also acknowledged to be a key principle of performance-based

management.

The public management reforms that governments around the world are

implementing have profound implications for (1) what government does

(in terms of the products and services it delivers and partnerships that are

formed with the private sector and other governments), (2) how it is

organized, and (3) how accountability is defined. Government

decisionmakers and managers are adopting new ways of thinking,

considering different ways of achieving goals, and using new information

to guide decisions. A common lesson of the current range of management

reform efforts is that change does not come quickly or easily. Old ways of

doing business must be critically reexamined and new approaches have to

be developed and institutionalized. This includes, for many organizations,

creating the basic management capacities needed to become more

performance based.

In that regard, our work and that of others over the last two decades has

found that many federal agencies need to build or strengthen the

management capacities that form the foundations of high-performing

organizations. These capacities include (1) a clear mission and vision for

the organization and a sense of direction that is clearly and consistently

communicated by top leadership; (2) a strategic planning process that

yields results-oriented program goals and performance measures that flow

from and reinforce the organization’s mission; (3) organizational alignment

to achieve goals; (4) sound financial and information management

systems; (5) the strategic use of technology to achieve mission-related

goals; and (6) the effective management of human capital—the

organization’s employees—including ensuring that the right employees are

on board and provided with the training, tools, incentives, structures, and

accountability needed to achieve results. Management approaches that

strive to achieve continuous improvement of quality through
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 3 GAO/T-GGD-99-151

organizationwide efforts based on facts and data, such as TQM, can be a

key attribute of high-performing organizations.

As the federal response to demands for a higher-performing government,

Congress, over the last decade, has put in place a statutory framework to

promote, create, and sustain high-performing federal organizations. In

enacting this framework, Congress sought to shift the focus of government

decisionmaking and accountability from the activities that agencies

undertake to a focus on the results of those activities. Congress’

framework includes the Chief Financial Officers (CFO) Act of 1990 and

related financial management legislation; information technology reform

legislation, such as the Clinger-Cohen Act of 1996 and the Paperwork

Reduction Act of 1995; and the Results Act. The key requirements of these

Acts are as follows:

• The CFO Act, as amended by the Government Management Reform Act

of 1994 and the Federal Financial Management Improvement Act of

1996, is the most comprehensive financial management reform

legislation of the last 40 years. The CFO Act sets expectations for

agencies to develop and deploy modern financial management systems

to routinely produce accurate, reliable, and timely program cost

information and to develop results-oriented reports on the government’s

financial condition.

• The information technology reform legislation is based on the best

practices used by leading public and private organizations to more

effectively manage information resources. These best practices help to

ensure that information technology dollars are directed toward prudent

investments that achieve cost savings, increase productivity, and

improve the timeliness and quality of service delivery. Under these

laws, agencies are to better link their technology plans and the

management and use of information resources more directly to their

programs’ missions and goals. This involves, among other things,

redesigning inefficient work processes and using performance measures

to assess technology’s contribution to achieving results. This is

important because our work with leading organizations has shown that

information technology projects aimed at improving performance that

do not involve process improvement may fail to yield any significant,

long-term benefits.

• The Results Act was enacted in part to improve federal program

effectiveness and public accountability by promoting a new focus on

results, service quality, and customer satisfaction. The Results Act is

The Federal Response

to Demands for

Improved Performance
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 4 GAO/T-GGD-99-151

intended to improve the efficiency and effectiveness of federal programs

by establishing a system to set goals for program performance and to

measure results. The Results Act requires executive agencies to prepare

multiyear strategic plans, annual performance plans, and annual

performance reports. The Act also requires the President to include

with his annual budget submission a federal government performance

plan. In each of the first two plans, covering fiscal years 1999 and 2000,

the President’s plan has shown an array of management objectives and

initiatives dealing, for example, with responsiveness to the public,

service delivery, and program performance and management.

During the same time frame that Congress was establishing a statutory

framework, other, often complementary, federal management

improvement efforts have also been under way. The most noteworthy of

these efforts, the National Performance Review, now known as the

National Partnership for Reinventing Government (NPR), was launched by

the administration in March 1993. NPR shares many of quality

management’s principles, such as a focus on customers. NPR’s initial

focus was to make the government "work better and cost less," and its first

phase made recommendations to reinvent government systems and

individual agencies' programs and organizations. As part of the NPR and

under the direction of a presidential Executive Order, over 200 federal

agencies established customer service standards. A second NPR phase,

undertaken in late 1994, was designed to identify additional programs that

could be reinvented, terminated, or privatized, as well as to reinvent the

federal regulatory process. NPR has continued to evolve, and it is

currently working with 32 “high impact” agencies that have a high degree

of interaction with the public and business and it has recently focused on

working to improve services that government delivers in partnership with

local, state, and other federal agencies and the private sector.

A related executive branch initiative, the President's Quality Award

Program, is the most important statement of quality management

principles within the federal government. Since 1988, the program 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 result in the

effective use of taxpayer dollars. The Office of Personnel Management

(OPM) manages the program and its award criteria, with several

modifications, are closely aligned with the Malcolm Baldrige National

Quality Award Criteria.
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 5 GAO/T-GGD-99-151

The award criteria are updated annually to reflect the best approaches

within the public and private sectors to systematically improve

organizational performance. OPM’s assessment criteria for the year 2000,

issued this April, underscored the essential connection between achieving

mission-related results and quality and process management.1

 The criteria

are designed to define a quality system, the key elements of a quality

improvement effort, and the relative importance and interrelationships of

these efforts. The assessment categories include leadership, strategic

planning, customer focus, information and analysis, human resources,

process management, and business results. According to the Director of

OPM, organizations that have used the criteria claim two important

outcomes:

• “First, they can apply a disciplined approach for assessing and

measuring performance on several important business factors:

customers, products, services, financial, operational, and human

resources.

• Second, managers are better able to target key performance gaps, set

improvement priorities, and introduce better and innovative ways to

work with customers, partners, suppliers, and the workforce.”

I mentioned at the outset of my statement the important interconnection

between efforts to improve agencies’ mission-related results and efforts

(through TQM and related initiatives) to improve the efficiency and

effectiveness of the programs and processes that make those results

possible. The approaches that are shared between performance-based

management efforts and TQM underscore the essential nature of this

interconnection. These shared approaches are grounded in the

understanding that implementing and sustaining major change initiatives

requires a cultural transformation for many agencies. In enacting the

Results Act, Congress understood, and the experience of TQM initiatives

show, that organizational change and real performance improvement do

not come quickly or easily. Today, I will highlight five areas where a focus

on mission-related results and TQM share common approaches to the

direction the needed cultural transformations should take and how those

transformations can be accomplished.

 

1

 The President’s Quality Award Program: 2000 Information and Application, U.S. Office of Personnel

Management, April 1999.

Performance-Based

Management and TQM

Share Common

Approaches
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 6 GAO/T-GGD-99-151

Successful implementation of the Results Act and of quality management

principles requires the demonstrated and clear commitment of agency top

leadership. Strong, visible, and sustained commitment to change requires

setting a clear and consistent vision of where the organization is going.

Political appointees and top-career officials must work together to

communicate this vision throughout the organization, teach people what

their roles are in accomplishing this vision, and hold them accountable for

fulfilling those roles.

In looking at the experiences of leading organizations that were

successfully pursuing management reform initiatives, we found that four

top leadership practices were central to making the changes needed.2

• First, successful leaders devolve decisionmaking authority in exchange

for accountability for results. Leading organizations create a set of

mission-related processes and systems within which to operate, but they

give their managers extensive authority to pursue organizational goals

while using those processes and systems. Consistent with quality

management principles, these organizations invest the time and effort to

understand their processes, how those processes contribute to or

hamper mission accomplishment, and how those processes can be

improved.

• Second, successful leaders use a range of tools to encourage a results

orientation. For example, employee incentive and accountability

mechanisms are aligned with the goals of the organization. In addition,

leaders use informal mechanisms, such as staff meetings and personal

contacts, to reinforce to managers and staff their commitment to

achieving the agency’s goals and to keeping those goals in mind as they

pursue day-to-day activities.

• Third, successful leaders take steps to build the necessary expertise and

skills. These leaders view training as an investment in human capital,

rather than as an expense. And, as human capital and quality

management experts have pointed out, organizational learning must be

continuous in order to meet changing customer needs, keep skills up to

date, and develop new personnel and organizational competencies.

• Finally, leaders in successful organizations integrate the implementation

of separate organizational improvement efforts. As I have suggested,

 

2

 Executive Guide: Effectively Implementing the Government Performance and Results Act

(GAO/GGD-96-118, June 1996).

Strong Leadership is

Essential to Improving

Performance
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 7 GAO/T-GGD-99-151

the management reforms now under way spring from various sources.

Some of these reforms may be self-initiated, such as TQM; others

mandated by legislation; and still others may result from administration

initiatives, such as NPR. Our work has shown that the top leadership of

each federal agency needs to meld these various reforms into a

coherent, unified effort. Traditionally, the danger to any management

reform is that it can become a hollow, paper-driven exercise. Leaders

who integrate performance-based management into the culture and dayto-day activities of their organizations will help avoid that danger.

A central principle of both TQM and performance-based management is

that a clear understanding of what is to be accomplished and how progress

will be gauged drives daily operations. Organizations that implement the

key principles of both reforms recognize the importance of using resultsoriented goals and quantifiable measures to address program performance.

Both TQM and performance-based management also recognize that

desired results can have several dimensions, for example, customer

satisfaction, program costs, social outcomes, and operational

transparency. Our work shows that federal agencies still have a ways to

go in establishing the necessary balanced sets of goals and performance

measures. Our summary assessment of the fiscal year 2000 annual

performance plans that executive branch agencies provided to Congress

earlier this year will be released shortly.3

 That report will detail our finding

that agencies need to develop performance goals and measures that better

depict the complexity of the results federal agencies seek to achieve. On

the other hand, all of the performance plans we reviewed contain at least

some goals and measures that address program results.

High-performing organizations appreciate that effectively managing and

developing an organization’s human capital is essential to achieving

results. Organizational success is possible only when the right employees

are on board and are provided the training, tools, structures, incentives,

and accountability to work effectively. High-performing organizations

gather and use employee-related data such as employee skills and

satisfaction. Such data are tied to measures of organization or unit

performance, including results, customer satisfaction, and productivity.

Federal agencies still have significant room for improvement in making

this vital link between their human capital planning and their mission-

 3

 The work was done at the request of Senator Fred Thompson, Chairman of the Senate Governmental

Affairs Committee; Representative Dick Armey, Majority Leader of the House of Representatives; and

Representative Dan Burton, Chairman of the House Government Reform Committee.

Clear Goals and

Performance Measures

Should Drive Daily

Operations

Building the Organization’s

Human Capital is Key to

Achieving Results
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 8 GAO/T-GGD-99-151

related goals and strategies. Most of the performance plans we reviewed

do not sufficiently address how the agencies will use their human capital

to achieve results. This suggests that one of the central attributes of highperforming organizations--the systematic integration of mission and

program planning with human capital planning--is not being effectively

addressed across the federal government.

High-performing organizations understand and articulate how their day-today operations and processes contribute to mission-related results and

improved customer satisfaction. Such understandings of how processes

and strategies relate to achieving results are important to pinpoint

opportunities to improve performance and reduce costs. Simply stated, an

organization cannot improve performance and customer satisfaction if it

does not know what it does that causes current levels of performance and

customer satisfaction.

Our review of the fiscal year 2000 performance plans suggests that much

work remains in this area. Although most of the agencies' annual

performance plans relate strategies and programs to performance goals,

few plans indicate specifically how the strategies will contribute to

accomplishing the expected level of performance. Further, agencies in

some cases provide no strategies at all. For example, Health and Human

Services’ (HHS) Administration for Children and Families (ACF) has a goal

to provide children permanency and stability in their living situation and

related performance measures, such as increasing the percentage of

children who are adopted within 2 years of foster care placement.

However, ACF does not identify the strategies it will rely on to achieve this

goal.

Both TQM and Congress’ statutory framework for performance-based

management seek to create decisionmaking proceses that are based on

accurate, reliable, and timely data. Unfortunately, significant progress is

needed across virtually all agencies in this regard. Most of the fiscal year

2000 annual performance plans we reviewed provide only limited

confidence that performance information will be credible and they lack

information on the actual procedures that agencies will use to verify and

validate their performance information. For example, regarding the

validity of data that will be used to measure progress in offering outreach

services to homeless and mentally ill persons, HHS’ Substance Abuse and

Mental Health Services Administration (SAMHSA) states “since the

sources of data are the local agencies that provide the services, the quality

of the data is very good.” SAMHSA appears to be assuming that these data

are valid, but the plan does not indicate whether SAMHSA will verify the

Programs and Processes

Must be Linked to Results

and Customer Satisfaction

Decisions Should be Based

on Sound Data
Statement

Management Reform: Using the Results Act and Quality Management to Improve Federal

Performance

Page 9 GAO/T-GGD-99-151

quality of these data or that it has conducted prior studies that provide this

confidence.

In summary, Mr. Chairman, high-performing organizations consistently

strive to ensure that their organizational missions and goals drive day-today activities. Experience has repeatedly shown that fundamental

performance improvements occur when organizations transform their

cultures so that achieving results becomes the driving concern of daily

operations. Program and process improvement techniques, including

TQM, thus have important roles to play in agencies’ cultural

transformations and thereby in helping them achieve their goals and

deliver the products and services at the cost and with the quality that the

American people are rightly demanding.

Mr. Chairman, this concludes my prepared statement. I would be pleased

to respond to any questions 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. Individuals making key contributions

to this testimony included Justin Brown, Elizabeth Bowles, Susan Ragland,

and Bill Reinsberg.
Page 10 GAO/T-GGD-99-151
Page 11 GAO/T-GGD-99-151
Page 12 GAO/T-GGD-99-151
Ordering Information

The first copy of each GAO report and testimony is free. Additional

copies are $2 each. Orders should be sent to the following address,

accompanied by a check or money order made out to the

Superintendent of Documents, when necessary. VISA and

MasterCard credit cards are accepted, also. Orders for 100 or more

copies to be mailed to a single address are discounted 25 percent.

Order by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 or by using fax

number (202) 512-6061, or TDD (202) 512-2537.

Each day, GAO issues a list of newly available reports and testimony.

To receive facsimile copies of the daily list or any list from the past

30 days, please call (202) 512-6000 using a touch-tone phone. A

recorded menu will provide information on how to obtain these

lists.

For information on how to access GAO reports on the INTERNET,

send e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100

(410487)