Perhaps the single most important element of successful management improvement initiatives is the demonstrated commitment of top leaders to change. This commitment is most prominently shown through the personal involvement of top leaders in developing and directing reform efforts. Organizations that successfully address their long-standing management weaknesses do not “staff out” responsibility for leading change. Top leadership involvement and clear lines of accountability for making management improvements are critical to overcoming organizations’ natural resistance to change, marshalling the resources needed in many cases to improve management, and building and maintaining the organizationwide commitment to new ways to doing business. Commissioner Rossotti’s efforts at IRS provide a clear example of leadership’s commitment to change. The Commissioner has articulated a new mission for the agency, together with support for strategic goals that balance customer service and compliance with tax laws. Moreover, the Commissioner has initiated a modernization effort that touches virtually every aspect of the agency, including business practices, organizational structure, management roles and responsibilities, performance measures, and technology. Commissioner Rossotti has assigned clear executive ownership of each of IRS’ major initiatives and is using executive steering committees to provide oversight and accountability for driving the change efforts. Sustaining top leadership commitment to improvement is particularly challenging in the federal government because of the frequent turnover of senior agency political officials. As a result, sustaining improvement initiatives requires commitment and leadership by senior career executives, as well as political leaders. Career executives can help provide the long-term focus needed to institutionalize reforms that political executives’ often more limited tenure does not permit. In addition, the other elements of successful management improvement initiatives that we shall turn to shortly are important for institutionalizing reform initiatives. 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. Thus, successful organizations recognize—and implement reform efforts on the basis of—the essential connection between sound management and the programmatic results those organizations hope to achieve. The Results Act provides a ready-made statutory mechanism for making this essential connection, engaging Congress in a discussion of how and when management problems will be addressed, and helping to pinpoint additional efforts that may be needed. We have found that annual performance plans that include precise and measurable goals for resolving mission-critical management problems are important to ensuring that agencies have the institutional capacity to achieve their more results- oriented programmatic goals. Moreover, by using annual performance plans to set goals to address management weaknesses, agencies provide themselves and Congress with a vehicle—the subsequent agency performance reports—for tracking progress in addressing management problems and considering what, if any, additional efforts are needed. Unfortunately, we found that agencies do not consistently address major management challenges and program risks in their fiscal year 2000 performance plans. In those cases where challenges and risks are addressed, agencies use a variety of approaches, including setting goals and measures directly linked to the management challenges and program risks, establishing goals and measures that are indirectly related to the challenges and risks, or laying out strategies to address them. Figure 1 shows the distribution of the 24 agencies covered by the Chief Financial Officers Act and their different approaches to addressing management challenges and program risks in their annual performance plans. controls do not adequately reduce vulnerability to inappropriate disclosure. ); and weaknesses in internal controls over taxpayer receipts. Similarly, the General Services Administration’s (GSA) fiscal year 2000 annual performance plan does not address several long-standing problems identified by the GSA Inspector General. These problems include top management’s lack of emphasis on ensuring that the internal controls are in place to deter fraud, waste, and abuse. GSA’s plan also does not fully address issues raised by the Inspector General related to developing new management information systems and ensuring that automated information systems have the proper controls and safeguards. These omissions are significant because GSA’s governmentwide oversight and service-provider role, its extensive interaction with the private sector, and the billions of taxpayer dollars involved in carrying out its activities, make it especially important that GSA’s operations be adequately protected. The magnitude of the challenges that many agencies face in addressing their management weaknesses necessitates substantive planning be done to 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 identified weaknesses. Our work across the federal government has found the effective use of human capital and information technology—both separately and, importantly, as they relate to one another—are areas where thoughtful and rigorous planning is needed if fundamental management improvements are to be made. late 1997. As a result, the agencies were struggling to achieve their efficiency and service improvement objectives. On a more positive note, we recently reviewed the efforts of three agencies (the Postal Service, the Department of Veterans Affairs (VA), and the Park Service) to more strategically manage their facilities and assets by forming business partnerships with the private sector. In each of the six partnerships that we reviewed, the agency built the expertise to engage in the partnership and make it successful. For example, the Department of Veterans Affairs established a separate organizational unit staffed with professionals experienced in management, architecture, civil engineering, and contracting to manage its partnerships. With regard to planning for major technology projects, IRS has historically lacked disciplined and structured processes for developing and managing information technology. We reported in February 1998 that IRS had not clearly defined system modernization phases, nor had it adequately specified organizational roles, making it unclear who was to do what. IRS’ systems modernization challenges include completing a modernization blueprint to define, direct, and control future modernization efforts and establishing the management and engineering capability to build and acquire modernized systems. The key to effectively addressing these challenges is to ensure that long-standing modernization management and technical weaknesses are corrected before IRS invests large sums of modernization funds. As we have reported, IRS recently initiated appropriate first steps to address these weaknesses via its initial modernization expenditure plan that represents the first step in a long- term, incremental modernization program. materials, reach a wider audience, and provide its clients with information in a format that better meets their needs. The Bureau reports that its customers are responding positively to the shift, with significant growth in the number of customer hits on the Census Internet site, from about 10,000 per day in 1994 to more than 850,000 per day in 1999. The Bureau plans to use the Internet as its principal medium for releasing data from the 2000 Census. Successful management improvement efforts require the active involvement of managers and staff throughout the organization to provide ideas for improvements and supply the energy and expertise needed to implement changes. Employees at all levels of high-performing organizations participate in--and have a stake in--improving operational and program performance to achieve results. Our work has shown that high-performing organizations use a number of strategies and techniques to effectively involve employees, including (1) fostering a performance- oriented culture, (2) working to develop a consensus with unions on goals and strategies, (3) providing the training that staff need to work effectively, and (4) devolving authority while focusing accountability on results. Fostering a performance-oriented culture requires agency management to communicate with staff throughout the organization to involve them in the process of designing and implementing change. Setting improvement goals is an important step in getting organizations across the government to engage seriously in the difficult task of change. The central features of the Results Act—strategic planning, performance measurement, and public reporting and accountability—can serve as powerful tools to help change the basic culture of government. Involving employees in developing and implementing these goals and measures can help direct a diverse array of actions to improve performance and achieve results. However, our survey of federal managers, conducted in late 1996 and 1997, indicates there is substantial room for improvement in this area. This survey found that only one-third of non-SES managers (as opposed to nearly three-fourths of the SES managers) reported they had been involved in establishing long-term strategic goals for their agencies. success. The failure to constructively involve staff in an organization’s improvement efforts means running the risk that the changes will be more difficult and protracted than necessary. For example, in the fall of 1997, the Nuclear Regulatory Commission’s (NRC) Office of Inspector General surveyed NRC staff to obtain their views on the agency’s safety culture. In its June 1998 report, the Inspector General noted that the staff had a strong commitment to protecting public health and safety but expressed high levels of uncertainty and confusion about the new directions in regulatory practices and challenges facing the agency. Employees who are confused about the direction their agency is taking will not be able to effectively focus on results or make as full a contribution as they might otherwise. One way high-performing organizations can enhance employee involvement and gain agreement on an organization’s goals and strategies is by developing partnerships with employee unions. The U.S. Postal Service’s long-standing challenges in labor-management relations illustrate the importance of having a shared set of long-term goals and strategies agreed upon by managers, employees, and unions. As we have reported, labor-management relations at the Postal Service have been characterized by disagreements that have, among other things, hampered efforts to automate some postal systems that could have resulted in savings and helped the Service reach its performance goals. Although there has been some progress, problems persist and continue to contribute to higher mail processing and delivery costs. To help the Postal Service resolve its problems, we have long recommended that the Service and its unions and management associations establish a framework agreement to outline common goals. We have also noted that the Results Act can provide an effective framework for union and management representatives to discuss and agree upon goals and strategies.