Managing For Results: Next Steps to Improve the Federal Government's Management and Performance
Published: 2002-02-15T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Federal agencies need to work with other governmental organizations, nongovernmental organizations, and the private sector, both domestically and internationally, to achieve results. By focusing on accountable, results-oriented management, the federal government can use this network to deliver economical, efficient, and effective programs and services to the American people. The administration's plan to use the Executive Branch Management Scorecard to highlight agencies' progress in achieving management and performance improvements outlined in the President's Management Agenda is a promising first step. However, many of the challenges facing the federal government are long-standing and complex and will require sustained attention. Using broad standards, the scorecards in the president's budget grade agencies on the following five governmentwide initiatives: (1) strategic management of human capital, (2) competitive sourcing, (3) improved financial performance, (4) expanded electronic government, and (5) budget and performance integration. These initiatives cannot be addressed in an isolated or piecemeal fashion separate from other management challenges and high-risk areas.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the President’s Management  Agenda to improve the management and performance of the federal  government.  The federal government is one of the largest, most complex,  and diverse organizations in the world, facing a wide range of challenges in  responding to a number of key trends, such as globalization, changing  security threats, and demographic changes.  Especially in light of the tragic  events of September 11, federal agencies will need to work better with  other governmental organizations, nongovernmental organizations, and the  private sector, both domestically and internationally, to achieve results.   Focusing on accountable, results-oriented management can help the  federal government use this network to deliver economical, efficient, and  effective programs and services to the American people.
My central point today is that the administration’s plan to use the Executive  Branch Management Scorecard to highlight agencies’ progress in achieving  management and performance improvements embodied in the President’s  Management Agenda is a promising first step.  However, it is important to  recognize that many of the challenges the federal government faces are  long-standing and complex, and will require sustained attention.   Therefore, as this subcommittee has emphasized by the topic of this  hearing, the value of the scorecards is not in the scoring, but in the degree  to which scores lead to sustained focus and demonstrable improvements.   This will depend on continuing efforts to assess progress and maintain  accountability to ensure that agencies are able to, in fact, improve their  performance.
As agreed with the subcommittee, my statement today will:   discuss the administration’s scorecard approach to address five   describe the key elements that our work suggests are particularly  important in implementing and sustaining management improvement  initiatives so that they genuinely take root and eventually solve the  problems they are intended to fix, and   highlight the need for transparency and congressional oversight to  provide the continuing attention needed to improve management and  performance across the federal government.
subsections: section_title: The Administration’s Scorecard Provides a Starting Point for Improving Federal Management
paragraphs: The objective of the Executive Branch Management Scorecard is to provide  a tool that can be used to track progress in achieving the President’s  Management Agenda.  Using broad standards, the scorecards in the  president’s budget grade agencies’ performance regarding five  governmentwide initiatives, which are:  strategic management of human capital,  competitive sourcing,  improved financial performance,  expanded electronic government, and  budget and performance integration.
Central to effectively addressing the federal government’s management  problems is recognition that the five governmentwide initiatives cannot be  addressed in an isolated or piecemeal fashion separate from the other  major management challenges and high-risk areas facing federal agencies.   As stated in the President’s Management Agenda, they are mutually  reinforcing.  More generally, the initiatives must be addressed in an  integrated way to ensure that they drive a broader transformation of the  cultures of federal agencies.  At its essence, this cultural transformation  must seek to have federal agencies become less hierarchical, process  oriented, stovepiped, and inwardly focused; and more flat, partnerial,  results oriented, integrated, and externally focused.
The focus that the administration’s scorecard approach brings to improving  management and performance is certainly a step in the right direction.  As  we have seen by your example, Chairman Horn, in calling attention to  agencies’ financial management, the year 2000 computer concerns, and  computer security issues by grading agencies on their progress, this  approach can create an incentive to improve management and  performance.  Similarly, we have found that our high-risk list has provided  added emphasis on government programs and operations that warrant  urgent attention to ensure our government functions in the most  economical, efficient, and effective manner possible.
The President’s Management Agenda focuses on important challenges for  the federal government.  The items on the agenda are consistent in key  aspects with the federal government’s statutory framework of financial  management, information technology, and results-oriented management  reforms enacted during the 1990s.  In crafting that framework, Congress  sought to provide a basis for improving the federal government’s  effectiveness, financial condition, and operating performance.  Moreover, I  believe it is worth noting the clear linkages between the five  governmentwide initiatives and the nine program-specific initiatives  identified by the administration, and the high-risk areas and major  management challenges that were covered in GAO’s January 2001  Performance and Accountability Series and High-Risk Update.  For  example, we have designated strategic human capital management as a  governmentwide high-risk area that presents a pervasive challenge  throughout the federal government, and this is also one of the president’s  governmentwide initiatives.  Our work has found strategic human capital  management challenges in four key areas, which are:  strategic human capital planning and organizational alignment;  leadership continuity and succession planning;  acquiring and developing staffs whose size, skills, and deployment meet   creating results-oriented organizational cultures.
In the area of improved financial performance, we have continued to point  out that the federal government is a long way from successfully  implementing the statutory reforms Congress enacted during the 1990s.   Widespread financial management system weaknesses, poor  recordkeeping and documentation, weak internal controls, and the lack of  cost information have prevented the government from having the  information needed to effectively and efficiently manage operations or  accurately report a large portion of its assets, liabilities, and costs.   Agencies need to take steps to continuously improve internal control and  underlying financial and management information systems to ensure that  managers and other decision makers have reliable, timely, and useful  financial information to ensure accountability; measure, control, and  manage costs; manage for results; and make timely and fully informed  decisions about allocating limited resources.
Another of the administration’s initiatives is to integrate performance  review with budget decisions, with a long-term goal of using information  about program results in making decisions about which programs should  continue and which to terminate or reform.  The Office of Management and  Budget (OMB) has changed the presentation of the president’s budget to  provide added focus on whether programs are effective, and a management  focus is present throughout the budget document’s discussions of the  agencies.   In our observations of agencies’ efforts to implement the  Government Performance and Results Act (GPRA) and the Chief Financial  Officers Act, more agencies were able to show a direct link between  expected performance, resources requested, and resources consumed.   These linkages help promote agencywide performance management efforts  and increase the need for reliable budget and financial data.  However, our  work has also shown that additional effort is needed to clearly describe the  relationship between performance expectations, requested funding, and  consumed resources.  The uneven extent and pace of development should  be seen in large measure as a reflection of the mission complexity and  variety of operating environments across federal agencies.  Describing the  planned and actual use of resources in terms of measurable accurate  results remains an essential action that will continue to require time and  effort on the part of all agencies, working with OMB and Congress.
The administration has identified areas where it believes the opportunity to  improve performance is greater.  However, as stated in the president’s  budget, “The marks that really matter will be those that record  improvement, or lack of it, from these starting points.”  The administration  has pledged to update the scores twice a year and to issue a mid-year report  during the summer.  Updates and future reports will be important in  ensuring that progress continues as agencies attempt to improve their  performance.  It is key that rigorous criteria be applied to ensure that, in  fact, progress has been made.
section_title: Key Elements in Implementing and Sustaining Management Reforms
paragraphs: According to the administration, the President’s Management Agenda is a  starting point for management reform.  As such, we have drawn upon our  wide-ranging work on federal management issues to identify elements that  are particularly important in implementing and sustaining management  improvement initiatives.  These elements include:  (1) demonstrate  leadership and accountability for change, (2) integrate management  improvement initiatives into programmatic decision making, (3) use  thoughtful and rigorous planning to guide decisions, (4) involve and  empower employees to build commitment and accountability, (5) align  organizations to streamline operations and clarify accountability, and (6)  maintain strong and continuing congressional involvement (which will be  covered in the next section).  These six elements have applicability for  individual federal agencies, and the central management agencies, each of  which plays a fundamental part in implementing reforms and improving  federal government performance.
subsections: section_title: Demonstrate Leadership and Accountability For Change
paragraphs: One of the most important elements of successful management  improvement initiatives is the demonstrated, sustained commitment of top  leaders to change.  Top leadership involvement and clear lines of  accountability for making management improvements are critical to  ensuring that the difficult changes that need to be made are effectively  implemented throughout the organization.  The unwavering commitment of  top leadership in the agencies will be especially important 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 of doing  business.
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 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.
The Office of Personnel Management’s (OPM) amended regulations that  place increased emphasis on holding senior executives accountable for  organizational goals provide an opportunity to reinforce leadership and  accountability for management improvement.  Specifically, the amended  regulations require agencies to hold executives accountable for results;  appraise executive performance on those results balanced against other  dimensions, including customer satisfaction and employee perspectives;  and use those results as the basis for performance awards and other  personnel decisions.  Agencies were to implement their policies for the  senior executives for the appraisal cycles that began in 2001.
Although the respective departments and agencies must have the primary  responsibility and accountability to address their own issues, leaders of the  central management agencies have the responsibility to keep everyone  focused on the big picture by identifying the key issues across the  government and ensuring that related efforts are complementary rather  than duplicative.  The top leadership of OMB, OPM, the General Services  Administration (GSA), and the Department of the Treasury need to  continue to be involved in developing and directing reform efforts, and  helping to provide resources and expertise to further improve  performance.
section_title: Integrate Management Improvement Initiatives into Programmatic Decision Making
paragraphs: To be successful, management improvement initiatives must be part of  agencies’ programs and day-to-day actions.  Traditionally, the danger to any  management reform is that it can become a hollow, paper-driven exercise  where management improvement initiatives are not integrated into the day- to-day activities of the organization.  The administration has recognized  this danger and encouraged agency leaders to take responsibility for  improving the day-to-day management of the government.  Integrating  management issues with budgeting is absolutely critical for progress in  government performance and management.  Such integration is obviously  important to ensuring that management initiatives obtain the resource  commitments needed to be successful.  More generally, however, the  budget process is the only annual process we have in government where  programs and activities come up for regular review and reexamination.   Integration also strengthens budget analysis by providing new tools to help  analysts review the relative merits of competing agency claims and  programs with the federal budget.
The management issues in the president’s agenda have both  governmentwide and agency-specific components.  Those aspects of the  problem that are governmentwide and cut across agency boundaries  demand crosscutting solutions as well.  Interagency councils such as the  President’s Management Council, Chief Financial Officers’ Council, the  Chief Information Officers’ Council, the Human Resources Management  Council, the President’s Council on Integrity and Efficiency, and the Joint  Financial Management Improvement Program can play central roles in  addressing governmentwide management challenges.  As I have noted in a  previous testimony, interagency councils provide a means to help foster  communication across the executive branch, build commitment to reform  efforts, tap talents that exist within agencies, focus attention on  management issues, and initiate improvements.
section_title: Use Thoughtful and Rigorous Planning to Guide Decisions
paragraphs: The magnitude of the challenges that many agencies face call for thoughtful  and rigorous planning to guide decisions about how to improve  performance.  We have found, for example, 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 results-oriented programmatic goals.  On  the basis of our long experience examining agency-specific and  governmentwide improvement efforts, we believe the improvement plans  that agencies are to develop in conjunction with tracking their progress in  achieving the goals of the President’s Management Agenda should establish  (1) clear goals and objectives for the improvement initiative, (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 the identified weaknesses.
While agencies will have to undertake the bulk of the effort in addressing  their respective management weaknesses, the improvements needed have  important implications for the central management agencies as well.  OMB,  OPM, GSA, and Treasury will need to remain actively engaged throughout  the planning and implementation of the president’s initiatives to ensure that  agencies bring to bear the resources and capabilities to make real progress.
These four agencies, therefore, need to ensure that they have the  capabilities in place to support and guide agencies’ improvement efforts.   These capabilities will be critical in helping agencies identify the root  causes of their management challenges and pinpointing specific  improvement actions, providing agencies with tools and additional  support—including targeted investments where needed—to address  shortcomings, and assisting agencies in monitoring and reporting progress.   For example, OMB can assist agencies in developing and refining useful  performance measures and ensuring that performance information is used  in deliberations and key decisions regarding agencies’ programs.  OPM can  provide tools for agencies to use in better gauging the extent to which  federal employees understand the link between their daily activities and  agencies’ results.  In this regard, OPM has announced a major internal  restructuring effort driven in large part by the need to provide better  support and resources to agencies.
section_title: Involve and Empower Employees to Build Commitment and Accountability
paragraphs: Agencies can improve their performance by the way that they treat and  manage their people, building commitment and accountability through  involving and empowering employees.  All members of an organization  must understand the rationale for making organizational and cultural  changes because everyone has a stake in helping to shape and implement  initiatives as part of agencies’ efforts to meet current and future challenges.   Allowing employees to bring their expertise and judgment to bear in  meeting their responsibilities can help agencies capitalize on their  employees’ talents, leading to more effective and efficient operations and  improved customer service.  However, our most recent survey of federal  managers found that at only one agency did more than half of the managers  report that to a great or very great extent they had the decision-making  authority they needed to help the agency accomplish its strategic goals.
Effective changes can only be made and sustained through the cooperation  of leaders, union representatives, and employees throughout the  organization.  We believe that agencies can improve their performance,  enhance employees’ morale and job satisfaction, and provide a working  environment where employees have a better understanding of the goals  and objectives of their organizations and how they are contributing to the  results that American citizens want.  In that regard, our work has identified  six practices that agencies can consider as they seek to improve their  operations and respond to the challenges they are facing.  These are:    demonstrating top leadership commitment;  engaging employee unions;  training employees to enhance their knowledge, skills, and abilities;  using employee teams to help accomplish agency missions;  involving employees in planning and sharing performance information;   delegating authorities to front-line employees.
section_title: Align Organizations to Streamline Operations and Clarify Accountability
paragraphs: Successful management improvement efforts often entail organizational  realignment to better achieve results and clarify accountability.  Agencies  will need to consider realigning their organizations in response to the  initiatives in the President’s Management Agenda.  For example, as  competitive sourcing, e-government, financial management, or other  initiatives lead to changes in how an agency does business, agencies may  need to change how they are organized to achieve results.
In recent years, Congress has shown an interest in restructuring  organizations to improve service delivery and program results and to  address long-standing management weaknesses by providing authority and  sharpening accountability for management.  Most recently, Congress  chartered the Transportation Security Administration in November 2001  and required:  measurable goals to be outlined in a performance plan and their  progress to be reported annually;  an undersecretary who is responsible for aviation security, subject to a  performance agreement, and entitled to a bonus based on performance;  and  a performance management system that included goals for managers  and employees.
section_title: Transparency and Congressional Oversight Are Necessary to Achieve Results
paragraphs: In implementing the President’s Management Agenda, it will be important  to ensure that information is available so that Congress, other interested  parties, and the public can assess progress and help to identify solutions to  enhance improvement efforts.  As stated in the president’s budget, “The  Administration cannot improve the federal government’s performance and  accountability on its own.  It is a shared responsibility that must involve the  Congress.”  Therefore, transparency will be crucial in developing an  effective approach to making needed changes.
It will only be through the continued attention of Congress, the  administration, and federal agencies that progress can be sustained and,  more importantly, accelerated.  Support from Congress has proven to be  critical in sustaining interest in management initiatives over time.   Congress has, in effect, served as the institutional champion for many of  these initiatives, providing a consistent focus for oversight and  reinforcement of important policies.
Making pertinent and reliable information available will be necessary for  Congress to be able to adequately assess agencies’ progress and to ensure  accountability for results.  Key information to start with includes the  agencies’ improvement plans that are being developed to address the  agencies’ scores.  Congress can use these improvement plans to engage  agencies in discussions about progress that is being made, additional steps  that need to be taken, and what additional actions Congress can take to  help with improvement efforts.
More generally, effective congressional oversight can help improve federal  performance by examining the program structures agencies use to deliver  products and services to ensure that the best, most cost-effective mix of  strategies are in place to meet agency and national goals.  As part of this  oversight, Congress can identify agencies and programs that address  similar missions and consider the associated policy, management, and  policy implications of these crosscutting programs.  This will present  challenges to the traditional committee structures and processes.  A  continuing issue for Congress to consider is how to best focus on common  results when mission areas and programs cut across committee  jurisdictions.
section_title: Conclusions
paragraphs: In summary, Mr. Chairman, serious and disciplined efforts are needed to  improve the management and performance of federal agencies.   Highlighting attention through the President’s Management Agenda and the  Executive Branch Management Scorecards are steps in the right direction.   At the same time, it is well recognized that consistent progress in  implementing these initiatives will be the key to achieving improved  performance across the federal government.  In implementing the  President’s Management Agenda, the elements highlighted during this  testimony should be considered and adapted as appropriate in view of the  fact that experience has shown that when these elements are in place  lasting management reforms are more likely to be implemented that  ultimately lead to improvements.  Finally, Congress must play a crucial role  in helping develop and oversee management improvement efforts  throughout the executive branch.  Congress has proven to be critical in  sustaining management reforms by monitoring implementation and  providing the continuing attention necessary for management reform  initiatives to be carried through to their successful completion.
Mr. Chairman, we are pleased that you and your colleagues in Congress  have often turned to GAO for assistance on federal management issues and  we look forward to continuing to assist Congress and agencies in this  regard.  We have issued a large body of reports, guides, and tools on issues  directly relevant to the President’s Management Agenda.  We will be issuing  additional such products in the future that should prove also helpful to  Congress and agencies in improving federal management and performance.
This concludes my prepared statement.  I would be pleased to respond to  any questions that you or other members of the subcommittee may have.
section_title: Contacts and Acknowledgment
paragraphs: For further contacts regarding this testimony, please contact J. Christopher  Mihm at (202) 512-6806.  Individuals making key contributions to this  testimony included Jacqueline Nowicki, Susan Ragland, and Aonghas St  Hilaire.