State Department: Key Transformation Practices Could Have Helped in Restructuring Arms Control and Nonproliferation Bureaus
Published: 2009-07-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 2004, the Department of State (State) Inspector General (IG) concluded that State's three-bureau structure for conducting arms control and nonproliferation policy did not adequately address post-September 11 challenges, including possible terrorist use of weapons of mass destruction. The IG also noted that State had yet to formalize the responsibilities of the three bureaus in its Foreign Affairs Manual (FAM), which sets out agency organization and functions. Between late 2005 and early 2006, State created a new two-bureau structure to better address these issues and improve efficiency GAO was asked to assess the extent to which State addressed (1) the objectives of its 2005-2006 reorganization and (2) key transformation practices. For this effort, GAO reviewed State documents pertaining to the reorganization and staffing data for the affected bureaus in the periods before and after the reorganization and interviewed former and current State officials in Washington, D.C.
section_title: What GAO Found
paragraphs: State cannot demonstrate that the 2005-2006 restructuring of its Nonproliferation, Arms Control, and Verification and Compliance bureaus achieved all of its objectives because it did not clearly define the objectives and lacked metrics to assess them. State's objectives were to enable it to better focus on post -September 11 challenges; reduce bureaucratic inefficiencies and top-heavy management; and eliminate overlap. State sought to achieve its first objective by creating new offices and roles to address terrorism and counterproliferation issues. To meet its second objective, State merged three bureaus having 30 offices and functions into two bureaus having 26 offices and functions and freed up staff slots for these new roles, but problems with workload mismatches persisted after the reorganization as State employees noted it left some offices overworked and some offices underworked. State cannot demonstrate that it met its third objective, reducing top-heavy management, as its goals were undefined. Although it reduced the number of senior executives from 27 to 20 and reduced office directorships, the overall number of higher-ranking employees increased from 91 to 100 and executive office staff increased from 44 to 50. Moreover, concerns about mission overlap persist, in part because bureau roles remain undefined in the FAM. State's reorganization addressed few of the key practices for organizational mergers and transformations that GAO developed in 2002. These practices are found to be at the center of successful mergers and transformations. As illustrated below, State generally addressed one key practice, partially addressed two, and did not address the remaining five. For example, State did not address establishing coherent mission and strategic goals because it did not define an end state with measurable goals, nor did it devise a means to gauge progress toward such goals or assess the results of actions taken. As a result, State lacks reasonable assurance that the reorganization achieved its objectives or that it can identify any lessons learned.

section_title: Letter
paragraphs: The United States has negotiated numerous arms control and  nonproliferation treaties and agreements over the past 40 years, with the  Department of State (State) playing a major role in the process. In  December 2004, State’s Office of Inspector General (IG) reported that the  April 1999 integration of the Arms Control and Disarmament Agency  (ACDA) into State had produced a three-bureau structure—the bureaus of  Arms Control (AC), Nonproliferation (NP), and Verification and  Compliance (VC)—to deter the spread of weapons of mass destruction  (WMD) and further U.S. arms control objectives. According to the IG,  however, this arrangement did not meet post-September 11, 2001,  challenges, and unclear lines of authority, uneven workload, and  unproductive competition impeded the three bureaus. Among other  things, the IG recommended merging the bureaus of Arms Control and  Nonproliferation. Between July 2005 and March 2006, State undertook the  reorganization of its arms control bureaucracy to address both IG  concerns and a number of security challenges and priorities that had risen  after the September 11 terrorist attack. The Secretary of State merged the  Arms Control and Nonproliferation Bureaus into the new Bureau of  International Security and Nonproliferation (ISN) and expanded the  functions of the Verification and Compliance Bureau, renaming it the  Bureau of Verification, Compliance and Implementation (VCI).  The  former Undersecretary of State for Arms Control and International  Security characterized the reorganization as an effort to refocus the  bureaus on contemporary nonproliferation threats, rather than on past  threats such as nuclear confrontation with the former Soviet Union. In  January 2009, the Secretary of State announced at her nomination hearing  that the new administration placed high importance on the missions of  these bureaus and intended to review their organizational and staffing  requirements before making a decision to reorganize further.
In this requested report, we examine the extent to which State addressed  (1) the objectives of its 2005-2006 reorganization and (2) key  transformation practices GAO has developed for organizational  transformations and mergers. To address these objectives, we reviewed  State IG reports that recommended the reorganization and examined  relevant State personnel standards, applicable policies, and other  documents related to the planning, implementation, and review of this  reorganization. We met with directors of the current arms control bureaus  and with past and present State officials involved in the reorganization,  including all of the officials assigned to the senior management panel that  designed and implemented the reorganization. We also met with officials  from State’s Human Resources and Management bureaus and examined  State workforce allocations, staffing patterns, and promotion and attrition  data for the affected bureaus from periods before and after the  reorganization. We applied GAO’s criteria for key organizational  transformation and merger practices to assess how State addressed them  in the reorganization. Furthermore, we reviewed various State  documents—including draft descriptions of bureau missions and  functions, memorandums, and e-mails—with guidance on the  restructuring process and criticisms of it, and a study of the new bureaus’  workforce conducted shortly after the reorganization.
We conducted this performance audit from September 2008 to July 2009 in  accordance with generally accepted government auditing standards. These  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives. Appendix I provides a more detailed  description of our scope and methodology.
subsections: section_title: Background
paragraphs: State assumed direct responsibility for arms control, nonproliferation, and  disarmament issues when the Foreign Affairs Reform and Restructuring  Act of 1998 abolished ACDA and transferred its functions to the  Department of State, which in turn established two new State bureaus— the bureaus of Arms Control and Nonproliferation—headed by a new  Undersecretary for Arms Control and International Security (the  Undersecretary). Once these bureaus were established in April 1999, they  were combined with State’s existing Bureau of Political-Military Affairs to  form a new “T family” of bureaus. Subsequently in 2000, due to  congressional concerns regarding effective verification of and compliance  with arms control agreements, part of the Bureau of Arms Control became  a separate Bureau of Verification and Compliance.
In 2004, the State IG began reviews of the three new bureaus to examine  the effectiveness of ACDA’s incorporation into State and the performance  and interaction of the T bureaus. The IG found that the organizational  structure did not meet current needs and was marked by unclear lines of  authority, unproductive competition among offices, and uneven  workloads. The IG also found that the management structure of the three  bureaus was top-heavy, resulting in poor promotion prospects for junior  civil service staff and the difficulty of attracting Foreign Service Officers  (FSOs). The IG noted that State had yet to agree upon language  formalizing the responsibilities of the three bureaus in its FAM 5 years  after the merger. The IG recommended that the Secretary of State, in  coordination with the Undersecretaries for the Management and T bureaus  (1) form a task force to oversee the merger of AC and NP into a single  bureau to improve the policymaking process; and (2) restructure the VC  bureau into a smaller specialized entity better able to focus on its core  mission.
In response, State established a task force in August 2004 to evaluate the T  bureaus’ organizational structure, recommend changes if necessary, and  prepare a strategy for implementing structural changes. However,  according to a senior State official, the task force disbanded without  agreeing on a course of action. Nevertheless, the outgoing Secretary of  State approved the merger in December 2004. He deferred the  implementation of the merger until his successor could review the matter.  The new Secretary reaffirmed the decision in February 2005 but deferred  the matter until the Senate confirmed a new Undersecretary of State for  Arms Control and International Security in May 2005.
On July 29, 2005, State presented a proposed structure to Congress  showing how the Arms Control and Nonproliferation bureaus would be  merged into a new international security and nonproliferation bureau. The  proposed new structure was put together by the new Undersecretary. It  shifted significant responsibilities for implementing arms control  agreements to the newly expanded and renamed Bureau of Verification,  Compliance and Implementation. On September 12, 2005, the  Undersecretary announced the establishment of the new International  Security and Nonproliferation Bureau and the creation of a Senior  Management Panel (SMP) to implement the merger, consisting of the three  principal deputy assistant secretaries from the Arms Control,  Nonproliferation, and Verification and Compliance bureaus, plus the U.S.  Representative to the Conference on Disarmament, based in Geneva,  Switzerland.
On September 28, 2005, the SMP sent an e-mail and memo to staff  summarizing the reorganization procedures and designating acting office  directors to lead the new bureau. From October through December 2005,  the SMP carried out other actions, including the preparation of final  position and mission descriptions and the final placement or “crosswalk”  of AC and NP bureau staff to their new positions in the ISN bureau in  November 2005. The SMP was disbanded by January 2006 but only after  the reorganization had substantively ended. The reorganization of the VCI  bureau was finalized by March 2006. The reorganization affected 440  employees distributed among 30 offices and functions in 3 bureaus.
section_title: State Cannot Demonstrate That It Achieved the Objectives of Its 2005- 2006 Reorganization
paragraphs: Although State restructured the bureaus to better focus on post-September  11 challenges and priorities and combined related offices to streamline  staff, it cannot demonstrate that it reduced inefficiencies and top-heavy  management or that it eliminated mission overlap among the offices.  Moreover, the reorganization failed to accomplish other goals that State  officials said they hoped to achieve. Figure 1 shows how State organized  its T bureaus before and after the reorganization, where it moved or  combined old offices, and where it created new offices.
subsections: section_title: State Restructured Bureaus to Focus on Post- September 11 Challenges
paragraphs: State restructured key AC and NP offices and created new offices to better  focus State’s efforts on post-September 11 challenges, such as interdicting  illicit shipments of weapons of mass destruction (WMD) technology and  increasing attention on WMD terrorism and threat reduction programs.  For example, State designated a Principal Deputy Assistant Secretary  (PDAS) for Counterproliferation Issues in ISN and created three new  offices:    The Office of Counterproliferation Initiatives was to take the lead in  developing, implementing, and improving Proliferation Security Initiative  (PSI) and other efforts to interdict or deny shipments of WMD and their  delivery systems.
The Office of Weapons of Mass Destruction Terrorism was to develop  policy guidance and a diplomatic strategy. State officials noted that this  office was created to address as an emerging challenge the need to  counter the efforts of terrorists actively seeking weapons of mass  destruction. In February 2006, the Undersecretary testified that this office  would help bridge a gap between the government’s traditional state- focused WMD counterproliferation efforts and the focus of its antiterrorist  intelligence efforts on individuals and groups. The PDAS of ISN stated in  2008 that this office also helped create the Global Initiative to Combat  Nuclear Terrorism, which works to develop counterproliferation and  interdiction capabilities in other governments.
The Office of Strategic Planning and Outreach, in part, was to address a  perceived gap in the ability of the T bureaus to innovatively address future  threats, identify emerging proliferation threats, and develop a coordinated  and strategic counterproliferation response. For example, the  Undersecretary described the need to develop new ways to assess and  counter the proliferation challenges posed by black markets, front  companies, and global terrorist networks.
In addition, State merged existing offices to reflect the greater priority it  placed on these post-September 11 challenges, according to State’s July  2005 notification to Congress. For example, State merged offices from two  bureaus to form the Office of Chemical and Biological Weapons Threat  Reduction, which would lead new ISN efforts to prevent states or other  entities from pursuing, using, or proliferating WMD weapons and their  technology. State similarly merged two existing offices to form the Office  of Missile Threat Reduction to take the lead in implementing policies and  programs to counter the proliferation of ballistic and cruise missiles  capable of delivering weapons of mass destruction and better coordinate  these efforts with overall counterproliferation efforts.
section_title: Combining Related Offices May Not Have Reduced Bureaucratic Inefficiencies
paragraphs: State reduced the number of offices and functions assigned to the affected  bureaus, but cannot demonstrate how the merger reduced bureaucratic  inefficiencies or redressed uneven workloads. Combining functionally  compatible offices to streamline staff and reduce bureaucratic  inefficiencies was the second objective of the reorganization. State  documents and officials noted that State expected this reorganization  would streamline and refocus these offices, make them operationally more  effective, free up personnel resources, and make them available for higher  priority missions.
subsections: section_title: State Reduced the Overall Number of Offices and Functions Assigned to the Reorganized Bureaus but Did Not Reduce Overall Staff Levels
paragraphs: Overall, State combined 30 offices and functions present in the three- bureau structure into 26 offices and functions present under the new two- bureau structure. In particular, the merger of the AC and NP bureaus into  the new ISN bureau resulted in an organization with fewer offices,  functions, and staff. The reorganization consolidated 24 issue-related  offices and functions present in the two old bureaus into 17 issue-related  offices and functions in the new bureau. State also succeeded in slightly  reducing its overall personnel positions in these bureaus. In October 2004,  the AC, NP, and VC bureaus had a total of 440 staff positions; by  November 2008, the ISN and VCI bureaus had a total of 434 staff positions.  The reorganization affected four types of personnel positions: (1) civil  service full-time equivalents (FTEs), which are positions funded by the  bureau in which they are located; (2) Foreign Service FTEs; (3) other  government staff (that is, personnel not directly funded by the bureaus  such as detailees from other State bureaus, other government agencies,  the armed services, and interns); and (4) contracted employees.
In 2004, the AC and NP bureaus had a total of 314 staff positions. By 2008,  after they had merged to form the new ISN bureau, that total had  decreased to 291 staff positions. As depicted in figure 2, the new total  reflects changes in the numbers and composition of the staff positions  available to ISN, with declines in the number of civil service FTEs, Foreign  Service FTEs, and other government staff, but a slight increase in the  number of contracted employees.
The reductions resulting from the merger of the AC and NP bureaus into  the ISN bureau were largely offset by the augmented roles and increased  staff given to the old VC bureau. According to State officials, Congress had  made its acceptance of the new two-bureau structure conditional upon the  transfer of some offices and duties to the newly expanded and renamed  Bureau of Verification, Compliance and Implementation.
The VC Bureau’s PDAS for Compliance Policy was re-designated as PDAS  for Compliance and Implementation; moreover, the VC bureau’s Deputy  Assistant Secretary (DAS) of State for Verification Policy was re- designated the DAS for Verification and Implementation. The number of  offices and functions reporting to these officials initially rose from six to  nine. This was in part due to State’s decision to shift responsibility for  implementing strategic arms control agreements with the former Soviet  Union, such as the Conventional Forces in Europe treaty and the Strategic  Arms Reduction Talks, to VCI. According to a State announcement, the  expanded VCI bureau enhanced State’s ability to verify and ensure full  compliance with arms control and nonproliferation commitments. As part  of this shift, VCI incorporated four additional offices and functions from  the AC bureau to create the VCI Office of Chemical and Conventional  Weapons Affairs, the Office of Strategic Issues, and the Office of Missile  Defense and Space Policy. The latter office was transferred to ISN in June  2007, and the total number of VCI offices and functions dropped from nine  to eight.
As a result of these changes, total staff positions increased from 126 under  the old VC bureau to 143 under the new VCI bureau. As depicted in figure  2 above, the new total reflects changes in the numbers and composition of  the staff positions available to VCI, with increases in the number of civil  service and Foreign Service FTE positions, and in contracted consultant  positions, and decreases in the number of other government staff  positions. See appendix II for additional details on T Bureau staffing  profiles before and after the reorganization.
section_title: State Cannot Demonstrate That It Reduced Bureaucratic Inefficiencies as Problems Persisted after the Reorganization
paragraphs: While State achieved a reduction in the number of offices and functions, it  cannot demonstrate that these reductions resolved the bureaucratic  inefficiencies cited as one justification for the reorganization. State did not  define what constituted bureaucratic inefficiencies, nor did it determine  how reductions in the number of offices or personnel would improve  efficiency. Moreover, State did not establish targets or goals by which  progress toward achieving reductions in inefficiencies could be measured.  In contrast, State officials and documents show that some inefficiencies  identified before the reorganization, such as mismatched or uneven  workloads, persisted afterward and may have grown worse.
Some State officials contend that the reorganization addressed  bureaucratic inefficiencies. A senior official involved in the reorganization  stated that the merger reduced issue overlap, clarified office missions, and  streamlined staffing. He noted that the reorganization (1) reduced the  number of offices focused on furthering strategic arms limitations talks  with the Russians from 3 offices with 22 personnel to 1 office with 4  personnel, and (2) consolidated responsibilities for multilateral arms  control issues into one office and reduced the number of staff dedicated to  these issues from 28 to 18.
Nevertheless, workload mismatches persisted after the reorganization. For  example, the 2004 IG reports noted that NP staff were overworked, the VC  bureau believed it needed more staff, and some in the AC bureau were  embarrassed at their light workload. A post-reorganization review  conducted for State in 2006 by two consultants found three former NP  offices with continuing heavy workloads. Moreover, the review noted  that many staff believed the AC offices transferred to VCI remained  underworked. According to some SMP officials and employees  interviewed after the reorganization, transferring these AC offices to VCI  did not relieve the heavy workloads of some of the NP offices transferred  to ISN. Instead, the reductions in staff available to ISN to address the  undiminished workloads of preexisting missions, combined with the new  workloads imposed by the new counterproliferation missions, and the  reprogramming of resources  increased the workload burden on ISN staff,  according to the review and State officials.
section_title: Absent Clearly Defined Goals, State Cannot Demonstrate That It Achieved Its Objective of Making Management Less Top-heavy
paragraphs: In its July 2005 notification to Congress, State noted as its third objective  that the merger would reduce top-heavy management. For example, the  plan envisioned trimming the AC and NP bureaus’ front offices and  limiting the ISN bureau to two Deputy Assistant Secretaries and one  PDAS. Our analysis of State staffing profiles shows that State succeeded in  reducing the number of PDAS and DAS positions from 4 to 3, and the  number of office director positions and special representatives from 24 in  AC and NP in 2004 to 17 in ISN in 2008. However, in the absence of (1) a  definition of what constituted top-heavy management, and (2) measurable  goals that identified the number and ranks of the positions to be reduced  or eliminated, State cannot demonstrate whether these actions achieved  this objective.
Given the ambiguous nature of this objective, the results of the  reorganization can be interpreted differently. For example, while the  number of Foreign Service and civil service senior executives in the  affected bureaus decreased from 27 in 2004 to 20 in 2008, the number of  Foreign Service positions and civil servant positions with ranks just below  the senior level increased from 64 in 2004 to 80 in 2008. These officials,  Foreign Service Officer (FO)-1s in the Foreign Service and General  Schedule (GS)-15s in the civil service, fill some of the same management  positions held by the senior executives. Overall, the total number of staff  with a rank of FO-1 and above in the Foreign Service and GS-15 and above  in the civil service increased from 91 in 2004 to 100 by 2008. While not all  GS-15s and FO-1s hold management or supervisory positions in the  bureaus affected by the reorganization, State cannot demonstrate whether  the changes in the number and positions of the employees holding these  ranks helped it reduce top-heavy management. Figure 3 depicts how the  total number of staff with a rank of FO-1 and above in the Foreign Service  and GS-15 and above in the civil service increased from 91 in 2004 to 100  by 2008.
Moreover, while State reduced the number of front office staff working  directly for the assistant secretaries, deputy assistant secretaries and  principal deputy assistant secretaries from 49 in AC, NP, and VC in 2004 to  37 in ISN and VCI by 2008, State officials involved in the 2005-2006  reorganization did not define the front office positions to be trimmed by  the reorganization. The 2004 State IG reports also called the front offices  for the AP, NP, and VC bureaus top-heavy, but did not identify which  positions to eliminate.
section_title: State Reduced the Number of Issue-Related Offices, but Concerns about Mission Overlap among Offices Persist
paragraphs: State’s fourth objective was to eliminate overlap.  In 2004, before the  reorganization, the State IG reports identified a number of areas of overlap  between the AC, NP, and VC bureaus, including multiple bureau reporting  channels for some U.S. international conference representatives and treaty  negotiators, and unclear and conflicting demarcation of responsibilities  between AC and NP for their South Asia and North Korea issues. State  officials noted that the reorganization had addressed some organizational  redundancies. However, a May 2006  study on workforce allocation  conducted by two State contracted employees in the T bureaus conducted  after the reorganization found that mission redundancies persisted for  chemical weapons, missile defense and space policy, nuclear  nonproliferation, and bioterrorism issues among 14 VCI and ISN offices  and functions. Moreover, the study noted that further staff adjustments  between the two bureaus were under way 2 months after the formation of  the VCI bureau in March 2006.
The ongoing lack of clear guidance in the FAM contributes to the  persistent overlap problem. The State IG first noted in 2004 that State’s  failure to clearly delineate the roles and responsibilities of the three  bureaus in the FAM may have contributed to problems before the  reorganization . The section of the manual detailing the roles and  responsibilities of these bureaus has never been drafted and approved  since the 1999 incorporation of ACDA into State and the creation of the  AC, NP, and VC bureaus. Furthermore, one member of the SMP noted that  the panel’s deliberations about assigning roles and missions to the new  ISN/VCI structure were hindered by the lack of an up-to-date FAM for  these bureaus.
Although State assured Congress in June 2008 that these omissions in the  FAM would be rectified, it had not modified the manual as of July 2009.  Some former State officials noted in testimony that the missions of the  PM, ISN, and VCI bureaus are also encapsulated in their Bureau Strategic  Plans and internal planning documents that outline the bureau’s goals and  resource needs for future years. Nevertheless, some current State T  bureau officials told us in April 2009 that the concerns about overlap  remain and that updating the FAM could help address this condition.
section_title: State Cannot Demonstrate That It Met Goals to Retain Experienced Staff, Increase Career Advancement Opportunities, and Increase Foreign Service Participation Rates
paragraphs: In addition to the four objectives for the reorganization presented to  Congress in July 2005, the Undersecretary and State officials responsible  for implementing the reorganization cannot demonstrate that State  achieved some additional internal goals, such as retaining experienced  staff, increasing career advancement opportunities for individuals, and  increasing Foreign Service participation in the new bureaus. In contrast,  civil service and Foreign Service staffing data, promotion rates, and  attrition rates indicate the reorganization may have made it more difficult  to achieve these goals.
State cannot determine whether it met its objective of retaining  experienced staff because State officials involved in the reorganization  noted that they had established no measurable goals for retention of  experienced staff. While our analysis of staffing profiles notes that some  experienced senior staff were retained as employees or contracted  employees after the reorganization, some senior State officials concluded  that expertise in some affected offices was significantly reduced. For  example, one official singled out the offices of Multilateral Nuclear and  Security Affairs, Regional Affairs, and Cooperative Threat Reduction as  experiencing particularly significant loss in staff expertise. Additionally,  we reported in March 2009 that State officials noted that the  reorganization resulted in the loss of 9 of the 14 staff in the office  responsible for overseeing the International Atomic Energy Agency and  the Nonproliferation Treaty, limiting its ability to effectively monitor  Technical Cooperation program developments.
Similarly, State officials did not establish goals for improved career  advancement opportunities. In contrast, available evidence indicates that  post-reorganization opportunities have declined. For example, the FSO  promotion rate within the NP bureau was about 12 percent in 2004 and 2005  before it merged into the ISN bureau—compared with an average annual  promotion rate of 40 percent for FSOs in the regional bureaus in the same  period. The rates then declined precipitously after the reorganization; only  two FSOs were promoted in ISN between 2006 and 2008.
Furthermore, State officials involved in the reorganization also noted that  State did not succeed in increasing FSO participation in the affected T  bureaus as the SMP had intended. As figure 4 indicates, the number of FSO  positions declined from 48 FTEs to 43 FTEs between 2004 and 2008. This  represents a decline of 10 percent. The number of higher ranking FSO  positions dropped from 14 (including 2 vacant positions) to 12, and the  number of overall vacancies increased from 17 percent of the total (8  positions) to 28 percent (12 positions). Comparable civil service FTE  vacancy rates in 2004 and 2008 were 10 percent and 17 percent,  respectively.
State officials indicated that the need to contribute some FSO positions to  help meet State’s priority to fully staff Iraq and Afghanistan positions at  the expense of other assignments contributed to this decline. However, a  more persistent cause is the ongoing FSO perception that assignments to  ISN or VCI are not as attractive as assignments to other bureaus.  According to the head of the task force that conducted a survey of FSOs in  the T bureaus in 2006, service in these bureaus is not attractive for several  reasons, including (1) a regional bureau preference to reward regional  rather than functional expertise, (2) career FSOs’ lack of understanding of  the missions and roles of the T bureaus, and (3) limited opportunities and  incentives to acquire technical experience needed for leadership in these  bureaus. State formed a task force in April 2006 to determine why FSOs  are underrepresented in T bureaus and suggest ways of making T bureaus  more attractive to FSOs. As of March 2009, State officials noted that the  group’s more comprehensive proposals had yet to be addressed, such as  requiring FSOs to obtain functional bureau experience to qualify for  promotion to the Senior Foreign Service.
section_title: State Lacks Reasonable Assurance That It Achieved Its Reorganization Objectives because State Addressed Few Key Transformation Practices
paragraphs: To better assist federal agencies implementing mergers and  transformations, we have identified eight practices fundamental to the  success of organizations undergoing transformations or mergers. State’s  approach to the 2005-2006 reorganization generally addressed only one of  these practices, partially addressed two, and did not address the remaining  five. As a result, State lacks reasonable assurance that the reorganization  achieved its objectives or that it can identify any lessons learned. Rather  State’s reorganization was unsystematic, which contributed to staff and  employee group criticisms of the process and contributed to the ISN  bureau’s higher than average civil service attrition rates immediately after  the reorganization. State did not substantively modify its approach in  response to employee criticisms, which may have adversely affected staff  morale. State’s FAM states that bureaus considering changes to their  organizational structure should consult during the planning process with  staff from the Undersecretary for Management with regard to general  management policy and planning issues, but does not describe or require  the use of key practices for reorganizing, merging, or transforming  organizations.
subsections: section_title: Key Practices That Leading Organizations Use to Guide Organizational Transformations and Mergers and Inform Reorganization Goals
paragraphs: We have reported that organizations that fail to adequately address or  consider a wide variety of people and cultural issues are more likely than  others to have unsuccessful mergers and transformations. To better assist  federal agencies implementing mergers and other organizational  transformations, we have identified eight key practices for successfully  merging and transforming organizations. Drawn from the experiences of  successful major private and public sector mergers and organizational  transformations, GAO developed these practices as part of a September  2002 forum of industry and government leaders to guide the formation of  the newly created Department of Homeland Security. The practices  emphasize, among other things, planning, transparency, and accountability  and are designed to address the wide variety of people and cultural issues  that determine the success or failure of a merger or reorganization. These  practices can also help managers balance the need to move quickly to  implement the reorganization, while addressing key challenges, including  short-term losses of productivity, effectiveness, and employee morale that  can often occur after an organizational transformation or merger. The  practices also incorporate broader workforce planning strategies that we  have identified as good practices that leading organizations follow. These  are designed to enable agencies and organizations to (1) align their human  capital programs with current and emerging missions and (2) develop  long-term strategies for acquiring, developing, and retaining staff to  achieve programmatic goals. Appendix III lists the implementation steps  associated with each key practice and provides a broader discussion of the  key challenges to successfully managing change. Appendix IV lists  selected GAO reports assessing organizational transformations.
section_title: State’s Implementation of the Reorganization Addressed Few of the Eight Key Practices for Successfully Restructuring and Merging Organizations
paragraphs: According to State officials, to guide the reorganization process, State  prepared a nine-page methodology paper that the SMP used as its informal  implementation guide that, in effect, became its plan for implementing the  reorganization and placing employees in their new positions. The guide  devoted one page to the procedures for implementing the reorganization  and eight pages to describing how staff would be placed in their positions  and who would conduct the selection process. Based on our identified key  practices for implementing organizational transformations and mergers,  we found that State generally addressed one key practice, partially  addressed two practices, and did not address the remaining five. Figure 5  shows the results of our analysis, which compares State’s actions with the  key practices, while also taking into account the experience that we have  had assessing other agencies’ actions to merge and reorganize.
We found that State generally addressed the key practice of ensuring that  top leadership drives the transformation. Leadership must set the  direction, pace, and tone, and define and articulate a succinct and  compelling reason for change. During State’s merger of the NP and AC  bureaus, two successive Secretaries of State drove the process by signing  memos approving the reorganization. In addition, State’s July 2005  notification to Congress also described reasons to justify merging the two  bureaus, including the need to address post-September 11 challenges and  combine related offices to reduce bureaucratic inefficiencies.
subsections: section_title: State Partially Addressed Two Practices
paragraphs: State’s 2005-2006 reorganization partially addressed two practices: (1)  dedicating an implementation team to manage the transformation process  and (2) establishing a communication strategy to create shared  expectations and report related progress.
State dedicated an implementation team, the SMP, to manage the  transformation process, but initially the team did not contain any career  officials when it selected acting office directors non-competitively. The  composition of an implementation team is important because it sends a  clear signal regarding the components of a merger and whether the new  organization is a merger of equals. In the latter case, the team should  consist of a balance of employees from the various components. In  addition, according to State officials, the qualifications of implementation  team members are also a visible sign that top leadership is serious and  committed to the merger or transformation. For instance, the  implementation team can include personnel with knowledge or expertise  on personnel issues, change management principles, and perform other  complex tasks associated with such reorganizations. While the SMP  functioned as an implementation team to help manage the process, it  initially lacked balance because it contained neither career officials nor  employees with the knowledge of how to conduct necessary  reorganization steps, such as preparing implementation plans; and  establishing target personnel ceilings, position descriptions, and grade  levels. Staff were not permanently placed, and position descriptions and  office mission statements were not formalized until after the start of the  reorganization. T human resource officials told us this should have been  done before the reorganization started. Moreover, the chair of the SMP  stated that its members did not have any knowledge of the eight key  practices that are critical to the success of any merger or transformation.  In fact, Bureau of Human Resources (HR) and T human resource officials  originally envisioned the SMP would serve as a recommending body, with  HR and T human resource officials in charge of implementing the  reorganization.
State communicated with staff through meetings, memos, and e-mails, but  its informal implementation guide did not contain an overall  communications strategy. Moreover, the messages communicated were  not consistent and did not always meet the specific needs of employees.  As we noted in our 2003 report, communication is most effective when  done early, clearly, often, and in multiple directions. It also needs to be  consistent in tone and content to alleviate the uncertainties generated  during the transformation effort. We found that the SMP’s communications  were not consistent. While the SMP’s September 28, 2005, announcement  designating acting office directors stated that HR had approved the SMP’s  decisions, HR did not agree with all of them. Moreover, SMP officials told  us that the panel’s deliberations were conducted in near secrecy, without  HR participation or written criteria to justify decision-making. In addition,  the information provided did not always meet the specific needs of  employees. For instance, employees stated that they were being required  to make work choices without key information, such as final mission and  position statements corresponding to the new organization. According to  T human resource officials, these statements should have been developed  prior to requiring staff to submit their work preferences.
section_title: State Did Not Address Five Practices
paragraphs: State’s 2005-2006 reorganization did not address five practices. It did not  (1) involve employees to obtain their ideas and gain ownership for the  process, (2) focus on a key set of principles and priorities at the outset of  the transformation, (3) set implementation goals and a timeline to build  momentum and show progress from day one, (4) establish a coherent  mission and integrated strategic goals to guide the transformation, and (5)  use the performance management system to define responsibility and  assure accountability for change.
State did not involve employees to obtain their ideas and conducted the  reorganization in a top-down fashion. Organizations undergoing mergers  and other organizational transformations must involve employees from the  beginning to achieve their ownership for the changes that are occurring in  the organization. This can be done in several ways. For instance, the U.S.  Citizenship and Immigration Service involves its employees through focus  groups, project teams, and meetings with union representatives.  Information gathered from focus groups will be used to create feedback  surveys. We found that State did not effectively involve employees in the  process and directed the reorganization in a top-down fashion. For  example, it excluded career officials in deciding who the acting office  directors would be. Only in response to employee concerns was a career  official appointed to the panel. In addition, according to American Foreign  Service Association (AFSA) officials, State did not effectively engage  AFSA, the union that represents FSOs.
State did not focus on key principles and priorities from the outset of the  merger, such as adherence to sound personnel management principles.  For example, the new organization must have a clear set of core values  and priorities that serve as a framework to assist in the creation of a new  culture and to define the attributes that are intrinsically important to the  new organization. Aside from stating that the placement process would be  done fairly and in accordance with personnel laws and regulations, State’s  informal implementation guide never explicitly identified a set of  principles to guide internal decision making. In addition, a senior T  bureaus official criticized the SMP for focusing on only the most basic  legal or regulatory aspects of the personnel placement process and not  adhering to sound personnel management principles. According to this  official, this included not finalizing office mission and position  descriptions and not extensively involving career and other officials, such  as ones from HR, from the beginning of the reorganization.
State did not set implementation goals and a timeline to build momentum  and show progress from day one. At a minimum, successful mergers and  acquisitions have careful and thorough 30-, 60-, and 90-day plans in place  well before the effective implementation date, as well as a timeline for  achieving their goals. This can help an organization track its progress  toward intermediate and long-range goals, show progress, help pinpoint  performance shortfalls and gaps, and suggest midcourse corrections.  However, the SMP’s informal implementation guide did not set goals or a  timeline. SMP officials said that they did not set a timeline for the  reorganization because they wanted to complete the reorganization  quickly and did not know how long it would take. In addition, State did not  craft the reorganization with reference to its larger workforce planning  goals in mind. Moreover, it did not make use of a September 2004 baseline  workforce allocation study performed by the HR bureau in anticipation of  the reorganization, which was based on data from State’s Domestic  Staffing Model. According to State officials, this study was made  available to the task force formed to respond to the State IG’s  recommendations, but was not provided to the SMP. As a result, p workload imbalances or staffing gaps identified in the report were not  addressed. According to SMP officials, the Undersecretary did not use dat from the staffing model because the reorganization would not add staff  positions and would eliminate positions with long-standing vacancies.
State did not establish a coherent mission and integrated goals to guide  the transformation. This includes setting performance goals, measuring  progress, and determining strategies and resources to effectively  accomplish the goals. It also includes using performance measures to  make the programmatic decisions necessary to improve performance and  formally communicate results in performance reports. The SMP’s informal  implementation guide was never formalized and did not contain a results- oriented reporting framework, including performance measures that  defined an end state with clear and measurable goals.
State did not use its performance management system to define  responsibility and ensure accountability for change. A new organization’s  performance management system should create a “line of sight” showing  how team, unit, and individual performance can contribute to overall  organizational results. We have identified specific measures that can be  taken to accomplish this, such as (1) aligning individual performance  expectations with organizational goals, (2) providing and routinely using  performance information to track organizational priorities, and (3) linking  pay to individual and organizational performance. While State’s fiscal  year 2006 AC, NP, and VC bureau performance plans and fiscal years 2007  and 2008 VCI and ISN plans use performance ratings to track progress  toward organizational goals and objectives, the plans do not mention the  reorganization.
section_title: State’s Unsystematic Approach Contributed to Staff and Employee Group Concerns
paragraphs: Instead of using the above practices to plan, implement, and assess the  results of the restructuring, State reorganized the bureaus  unsystematically, contributing to staff and employee group criticisms of  the process and suspicions that some staff decisions had been politically  motivated. State officials told us that they spent most of their time in the  months before September 2005 developing the organizational structure for  the new bureau and little time planning to implement the reorganization.  In the wake of the reorganization, some ISN staff stated they perceived  morale within their bureau to be lower.  According to State data, attrition  rates rose to levels higher than the average for State’s civil service as a  whole.
To implement the reorganization, the T human resource office furnished  an informal implementation guide to the SMP at the panel’s request. This  paper envisioned a reorganization directed by the Bureau of Human  Resources and the T bureaus’ human resource office, while the SMP  would serve as an advisory body that would recommend specific actions,  such as decisions on acting directors, staffing levels, and other details for  the new ISN offices. Instead, according to a senior T official, the SMP  made its own implementing decisions and reduced HR’s and the T  bureaus’ human resource office’s roles to ensuring that State followed all  applicable legal and regulatory requirements.
State officials and employees expressed concerns about the SMP’s  direction and conduct of the reorganization even before the panel made its  first public announcement about the reorganization on September 28,  2005. While the Office of the Legal Advisor and HR stated that the SMP  could direct the reorganization, some officials in HR and the T bureaus’  human resource office disagreed with this decision. According to T  bureau officials, they were concerned that the panel’s members were not  sufficiently knowledgeable about change and personnel management  principles. On September 29, 2005—the day after the SMP sent out its  summary of the reorganization procedures—a senior T bureaus’ official  with human resource responsibilities sent an e-mail to the SMP stating that  it was not following sound personnel management principles. The email  also stated that the SMP had ignored or misinterpreted her office’s  recommendations, advice, and suggestions to the extent that the office had  been unable to contribute meaningfully to the reorganization process.
Some ISN employees and AFSA officials also criticized the SMP’s  decisions after it publicly announced its reorganization procedures and  named acting office directors in September 2005. Eleven ISN employees  wrote a memorandum to the Undersecretary for Management and the  Director General of the Foreign Service in October 2005, stating that  morale was poor within the new ISN bureau. Moreover, these employees  stated that the SMP’s selections for acting office directors (which resulted  in passing over several experienced officials for these positions)  reinforced their doubts about the impartiality of the process, as did the  lack of career officials or representatives from the T bureaus’ human  resource office, HR, and the Office of the Legal Advisor. They also  expressed concern about other aspects of the process, such as the  requirement to express workforce preferences without first having  concrete position and office mission descriptions, position grades, or the  names of permanent office directors or deputies. The employees asked the  Undersecretary for Management and the Director General of the Foreign  Service to suspend the reorganization until a comprehensive staffing plan  had been developed and add career civil service or FSOs and HR staff to  the SMP, among other actions. AFSA expressed similar concerns in a  November 2005 letter to the Secretary of State and noted that the  reorganization could result in the potential downgrade or elimination of  Foreign Service-designated positions. It also requested, among other  things, that State form an independent panel to review all proposed  reorganization decisions related to Equal Employment Opportunity  concerns and allegations of prohibited personnel practices. In response to  these concerns, State named a career official to the SMP, and included  representatives of the HR bureau and the Office of the Legal Advisor in the  SMP’s discussions, and agreed to have HR review the position descriptions  of the acting office directors and prepare new position descriptions where  necessary.
The lack of confidence in the reorganization may have adversely affected  staff morale and may have contributed to increased ISN civil service  attrition rates that immediately followed the reorganization, according to  current and former State officials and documents. Twelve percent of ISN’s  full-time civil service employees retired or otherwise left the bureau in  fiscal 2006, the highest level for the bureau and its predecessors from  fiscal year 2004 to fiscal year 2008. In contrast, State’s overall civil service  attrition rate during the same period averaged about 8 percent.
section_title: State’s Foreign Affairs Manual Does Not Address Use of Key Practices for Merging, Transforming, or Reorganizing Bureaus
paragraphs: State’s FAM does not address the use of key practices in merging,  transforming, and reorganizing bureaus, offices, and other organizations.  Volume 1 of the FAM provides broad guidance and principles for  structuring bureaus and offices within the Department. It also states that  bureaus considering changes to their organizational structures should  consult with staff from the Undersecretary for Management with regard to  general management policy and planning issues, since the Undersecretary  can overturn any changes that violate these broad organizational policies.  However, the FAM does not discuss or document any procedures for  reorganizing, merging, or transforming an organization, including the use  of key practices.
section_title: Conclusion
paragraphs: State cannot demonstrate that it achieved all of the stated objectives for  the 2005-2006 reorganization of its arms control and nonproliferation  functions. For example, State intended to address the previously identified  deficiency of overlapping and uncertain roles and responsibilities among  the arms control, nonproliferation, and verification bureaus. However,  concerns about this deficiency persist, in part because State has yet to  clearly delineate the roles and responsibilities of the three bureaus in the  FAM, despite having notified Congress in June 2008 that these omissions  would be rectified. In addition, the reorganization appears to have been  conducted in an unsystematic fashion with little effort to address key  transformation practices, such as involving employees from the beginning  or establishing a coherent mission and strategic goals. By not addressing  these key practices, State undermined its ability to implement an effective  and credible reorganization, achieve its stated goals, and correct  documented deficiencies. As a result, the reorganization appeared to lose  credibility among staff, may have contributed to reduced employee  morale, and created negative perceptions among staff that continue to the  present. Any future efforts to restructure State’s arms control and  nonproliferation bureaucracy need to address these key transformation  practices. In particular, by establishing a results-oriented reporting  framework with a defined end state with clear and measurable goals, State  would be better able to gauge progress toward its goals and assess the  results of restructuring.
section_title: Recommendations for Executive Action
paragraphs: We recommend the Secretary of State take the following two actions:    To better clarify the roles and responsibilities of the two new bureaus  created in this restructuring, the Bureau of International Security and  Nonproliferation and the Bureau of Verification, Compliance, and  Implementation—and to fulfill a pledge made to Congress—the Secretary  of State should formally delineate the roles and responsibilities of each  bureau in the FAM.
To better achieve stated goals and to implement effective and credible  organizational mergers or transformations, the Secretary of State should  modify the FAM to direct that the key practices and steps associated with  successful organizational mergers and transformations are incorporated  into subsequent bureau reorganizations.
section_title: Agency Comments and Our Evaluation
paragraphs: In written comments on a draft of this report, State concurred with our  conclusions and recommendations.  State indicated it will delineate the  roles and responsibilities for the ISN and VCI bureaus and add them to the  FAM.  Moreover, State’s Undersecretary for Management has directed that  GAO’s key practices for organizational transformations and mergers be  adopted by State when undertaking organizational transformations and  mergers.  It noted that these principles will be incorporated in the Foreign  Affairs Handbook and FAM as appropriate. State’s comments are included  in their entirety in Appendix V.
We are sending copies of the report to the Secretary of State and other  interested parties or interested congressional committees. In addition, the  report will be available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staff have questions about this report, please contact me at  (202) 512-4128 or at christoffj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: To assess the extent to which the Department of State’s (State) 2005-2006  reorganization achieved its objectives, we examined State Department  Inspector General’s 2004 reports to determine its findings and  recommendations. We also reviewed various documents, including State’s  July 2005 congressional notification letter; the 2002 U.S. National Strategy to  Combat Weapons of Mass Destruction, and the T bureaus’ strategic and  performance plans before and after the reorganization, as well as mission  statements. These and other documents enabled us to determine the goals  and achievements of the reorganization and construct the before and after  organizational charts found in the report.
To better understand what State did and did not achieve, we examined  State’s workforce allocations, staffing patterns, aForeign Service Officer  (FSO) promotion rates and civil service and FSO attrition data for the  affected bureaus before and after the reorganization, as well as a study of  the Bureau of International Security and Nonproliferation’s (ISN)  workforce conducted in May 2006. We met with officials from State’s ISN  and Bureau of Verification, Compliance, and Implementation (VCI), as  well as the Human Resources and Management bureaus. We determined  that the staffing data provided by State are sufficiently reliable for our  purposes by verifying that the personnel information for each employee  named in the 2004 and 2008 staffing profiles had a corresponding position  description and grade listed on the employees’ profiles. To determine the  reliability of the staffing data, we randomly selected at least 10 percent of  the staff listed in both the 2004 roster and the 2008 roster and only found  minor discrepancies that did not impact the total number of FTEs in our  sample.
State did not provide consistent before and after promotion rate data for  civil service and Foreign Service staff in the bureaus affected by the  reorganization. State said that providing data to enable us to compare T  bureau promotion rates with State-wide averages or regional bureau  averages would be misleading because promotion in the civil service and  the Foreign Service is based on performance over a 5-year period and for  that reason cannot be attributed solely to service in the T bureaus. Instead,  we have useddata State previously provided to the Congress after the 2008  congressional hearings. Similarly, we asked State to provide consistent  before and after attrition rate data for civil service staff in the bureaus  affected by the reorganization and for State as a whole between fiscal  years 2002 and 2008. State did provide bureau-specific civil service  attrition rate data for the requested years and provided the department- wide data between fiscal years 2004 and 2008. Finally, we examined State’s  Foreign Affairs Manual to determine that, as of June 2009, the manual still  does not define the organization and roles of the ISN and VCI bureaus.
To assess the extent to which State’s 2005-2006 reorganization addressed  eight key transformation practices, we obtained and analyzed State’s  methodology for implementing the reorganization, as well as e-mail,  memos, and letters describing the decision-making process and concerns  about the manner in which State implemented the reorganization. While  previous GAO reports had noted ninth practice, that of building a world  class organization, we determined that its associated implementation steps  were too broad to apply to the limited reorganization of State’s arms  control and nonproliferation bureaucracy. We assessed this evidence to  determine whether it demonstrated that State had generally addressed,  partially addressed, or had not addressed the objective. We determined  that State’s reorganization had generally addressed a practice if State  addressed most of the implementation steps associated with this practice.  We determined that it had partially addressed a practice if the evidence  demonstrated State had addressed some of the implementation steps  associated with this practice but had not addressed others. We determined  that State had not addressed a practice if it had not substantively  addressed any of the steps associated with this practice. Two analysts  independently reviewed and reconciled any differences in the data, and  their results were subject to supervisory review.
We also interviewed all of the principal members of the Senior Management  Panel, as well as other staff knowledgeable about the process, including staff  from the T bureaus’ executive office and the Bureau of Human Resources. We  obtained and analyzed transcripts of congressional hearings in 2006 and 2008  that addressed aspects of the reorganization. We analyzed and compared the  information obtained from these sources with GAO’s key practices, especially  as laid out in GAO-03-293SP and GAO-03-669. We also analyzed and compared  State’s actions with our reports documenting reorganizations conducted by  other U.S. government agencies, such as the Small Business Administration  and the U.S. Citizenship and Immigration Services. We examined State’s  Domestic Staffing Model for the T bureaus to assess how the reorganization  affected allocations among the broad missions of affected T bureau  workforce resources.
We conducted this performance audit from September 2008 through July  2009 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Staffing Profiles of the Affected Bureaus before and after the Reorganization
paragraphs: Overall, State combined 30 offices and functions present in the three- bureau structure into 26 offices and functions present under the new two- bureau structure. In particular, the merger of the bureaus of Arms Control  (AC) and Nonproliferation (NP) into the new ISN bureau resulted in an  organization with fewer offices, functions, and staff. The reorganization  consolidated 24 issue-related offices and functions present in the two old  bureaus into 17 issue-related offices and functions in the new bureau. Also  State did succeed in slightly reducing its overall personnel needs in these  bureaus. In October 2004, the AC, NP, and Verification and Compliance  (VC) bureaus had a total of 440 staff positions; by November 2008, the ISN  and VCI bureaus had a total of 434 staff. The reorganization affected four  types of personnel positions: (1) civil service full-time equivalents (FTE),  which are positions funded by the bureau in which they are located; (2)  Foreign Service FTEs; (3) other government staff (that is, personnel not  directly funded by the bureaus such as detailees from other State bureaus,  other government agencies, the armed services, and interns); and (4)  contracted employees.
In 2004, the AC and NP bureaus had a total of 314 staff positions. By 2008,  after they had merged to form the new ISN bureau, that total had  decreased to 291 staff positions. As depicted in table 1, the new total  reflects changes in the numbers and composition of the staff positions  available to ISN, with declines in the number of civil service and Foreign  Service FTEs, but an increase in the number of contracted employees. The  number of other government staff positions also declined.
The reductions resulting from the merger of the AC and NP bureaus into  the ISN bureau were largely offset by the augmented roles and increased  staff given to the old VC bureau. Congress had made its acceptance of the  new two-bureau structure conditional upon the transfer of some offices  and duties to the newly expanded and renamed Bureau of Verification,  Compliance and Implementation. As a result of these changes, total staff  positions increased from 126 under the old VC bureau to 143 under the  new VCI bureau.
section_title: Appendix III: GAO’s Key Practices and Implementation Steps for Organizational Transformations and Mergers
subsections: section_title: Practice
paragraphs: Define and articulate a succinct and compelling reason for change   Balance continued delivery of services with merger and transformation activities   Establish networks to support implementation team   Communicate early and often to build trust   Provide information to meet specific needs of employees   Involve employees in planning and sharing performance information    Incorporate employee feedback into new policies and procedures   Delegate authority to appropriate organizational levels    Embed core values in every aspect of the organization to reinforce the new culture   Make public implementation goals and timeline.
Seek and monitor employee attitudes and take appropriate follow-on actions   Attract and retain key talent   Establish an organizationwide knowledge and skills inventory to exchange knowledge    Identify cultural features of merging organizations to increase understanding of former  work environments.
Following the key practices and implementation steps outlined in figure 6  above can reduce the chances that major problems could surface and  minimize the duration and significance of reduced productivity and  effectiveness. However, it does not mean that problems will not emerge.  This methodology recognizes that mergers and reorganizations can  ultimately create a new organization that is more than “the sum of its  parts” over the longer term. It also acknowledges that transformation can  be difficult and disruptive to implement in the shorter term, particularly in  the public sector, since public sector reorganizations must contend with  more stakeholders and power centers, less management flexibility, and  greater transparency than in the private sector. To be successful,  managers must understand and reconcile some contradictions while  implementing change. These contradictions include the following:    The need to move quickly, achieve early successes, and build momentum  while acknowledging that successful mergers and organizational  transformation can often take years to accomplish, and the pace cannot be  forced. The experiences of major change initiatives in large public and  private sector organizations suggest that it can take 5 to 7 years before  such initiatives are fully implemented.
Productivity and effectiveness normally decline in the period immediately  following the merger. This is because employees are often preoccupied  with how their jobs will be affected, what their rights and protections will  be, or how their responsibilities might change with the new organization.
Attrition can increase as a result of the reorganization, requiring the new  organization to identify and re-recruit its key staff; however, it can also  result in opportunities to recruit “new blood.” While some turnover is to be  expected and appropriate, the new organization must “re-recruit” its key  talent to limit the loss of needed individuals who leave because they do  not see their place in the new organization.
While it is important to involve employees in the transformation process,  day-to-day operations, service quality, and mission accomplishments must  continue to take first priority. Organizations and their employees must  guard against being so involved in implementing their transformation  initiatives that they lose sight of the fundamental reason for their  transformation—improved results.
section_title: Appendix IV: GAO Reports Assessing Organizational Transformations Using Mergers and Transformation Criteria
paragraphs: Since 2002, we have evaluated the implementation of several governmental  organizational transformations using some or all of the key practices and  implementation steps. The following is a list of selected products that have  fully or partially applied the key practices and implementation steps  identified in Results-Oriented Cultures: Implementation Steps to Assist  Mergers and Organizational Transformations (GAO-03-669) and used them  to make recommendations to Congress.
Homeland Security: Management Challenges Remain in Transforming  Immigration Programs, GAO-05-81 (Washington, D.C.: Oct. 2004).
Military Transformation: Clear Leadership, Accountability, and  Management Tools Are Needed to Enhance DOD’s Efforts to Transform  Military Capabilities, GAO-05-70 (Washington, D.C.: Dec. 17, 2004).
Department of Homeland Security: A Comprehensive and Sustained  Approach Needed to Achieve Management Integration, GAO-05-139  (Washington, D.C.: Mar. 16, 2005).
Human Capital: DOD’s National Security Personnel System Design  Generally Reflects Key Transformation Practices, but Faces  Implementation Challenges, GAO-05-730 July 15, 2005.
Military Transformation: Additional Actions Needed by U.S. Strategic  Command to Strengthen Implementation of Its Many Missions and New  Organization, GAO-06-847 (Washington, D.C.: Sept. 8, 2006).
Force Structure: Joint Seabasing Would Benefit from a Comprehensive  Management Approach and Rigorous Experimentation before Services  Spend Billions on New Capabilities, GAO-07-211 (Washington, D.C.:   Jan. 26, 2007).
Military Base Closures: Management Strategy Needed to Mitigate  Challenges and Improve Communication to Help Ensure Timely  Implementation of Air National Guard Recommendations, GAO-07-641  (Washington, D.C.: May 16, 2007).
USCIS Transformation: Improvements to Performance, Human Capital,  and Information Technology Management Needed as Modernization  Proceeds, GAO-07-1013R (Washington, D.C.: July 17, 2007).
Defense Business Transformation: Achieving Success Requires a Chief  Management Officer to Provide Focus and Sustained Leadership,  GAO-07-1072 (Washington, D.C.: Sept. 5, 2007)
section_title: Appendix V: Comments from the Department of State
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual contact named above, Jeff Phillips, Assistant  Director; B. Patrick Hickey; José M. Peña III; Katherine Bernet; Lynn  Cothern; and Joseph Carney made key contributions to this report.  Technical assistance was provided by Martin De Alteriis, Mark Dowling,  Etana Finkler, and Sarah E. Veale.