Business of Government Stories
Wednesday, May 13, 2020
Moving to distance work arrangements have suddenly shifted from a “nice to have” to an agency’s “continuity of operations” survival in the age of coronavirus.

But as IRS managers have found, this is an uncomfortable shift because it involves a culture change for managers. They have to trust their workers to do the right thing and empower them with the information, training, and tools to do it.

This discomfort is not a new challenge. In 1993, the Clinton Administration’s reinventing government initiative set out to empower employees to work in ways that would improve customer satisfaction and better achieve mission results.  Its premise, though, was that the federal government was overstocked with too many supervisors and “systems control” staff to support them, and that they were barriers to effective operations. In fact, the reinventing government team referred to them as the forces of “over-control and micromanagement” and that they needed to be pared back significantly.

 


How did the government empower front-line employees by reducing the size of overhead staff? - John Kamensky explains!

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By the end of the Clinton Administration, the federal workforce had shrunk to the smallest it had been since the Eisenhower Administration in the 1950s. But today, the federal workforce has returned to the size it was before the Clinton downsizing efforts.

What was intent of the reinventing government empowerment effort via downsizing, and what are lessons for the shifts in today’s workforce to “reskill” and to empower employees to better achieve results? The imperative to reimagine how work gets done has a new urgency.

The Big Idea.  Perhaps the most controversial recommendation made by the 1993 reinventing government initiative, officially called the National Performance Review (NPR), was its proposal to reduce the 2.1 million civilian federal workforce by 252,000 (later raised by Congress to 272,900) over a five-year period.

This recommendation ran directly counter to a well-regarded 1989 study by Mark Goldstein that decried the “hollowing” of government and warned about the “incapacitating consequences of continuing austerity” for federal agencies.

NPR recommended cutting in half the number of supervisors and “system control” staff (e.g., personnel, audit, finance, legal, procurement) by half, in part by doubling the span of control of supervisors from an average of a 1:7 ratio to a 1:15 ratio.

The rationale of the NPR recommendation was: “Working toward a quality government means reducing the power of headquarters vis-vis field operations. As our reinvented government begins to liberate agencies from over-regulation, we no longer will need 280,000 separate supervisory staff and 420,000 ‘systems control’ staff to support them. Instead, we will encourage more of our 2.1 million federal employees to become managers of their own work.”

The report went on to conclude: “Put simply, all federal agencies will delegate, decentralize, and empower employees to make decisions. This will let front-line and front-office workers use their creative judgment as they offer service to customers and solve problems.”

The reductions were premised on a parallel reduction in statutory and regulatory requirements. Such as streamlined hiring, simplified acquisition requirements, and reengineered work processes that would shift the emphases of employees from compliance with outdates rules in order to improve customer service delivery.  The report encouraged “the use of employee empowerment, self-managed teams, simplified control structures, and better use of information and communications technology.”

But Then Reality Intervened. Broadly, the idea was to reduce the total number of supervisors and systems control staff in half – from about 700,000 to 350,000 – by shifting about 100,000 from headquarters to field to improve customer service, and to allow the remaining 250,000 to take a buyout or retire over a five-year period. The goal was that the federal government’s overhead staff – about 30 percent of the workforce – should parallel the overhead costs in the private sector – about 15 percent of a corporation’s workforce.

Members of the President’s Management Council – mainly the departmental deputy secretaries – were charged with developing plans for their agencies since they were

in a position to know the best way to cut administrative costs while improving performance.

Prior to NPR, streamlining efforts directed by central management agencies had involved across-the-board cuts. While these efforts led successfully to temporary cuts in staffing, they did not result in improved performance and left behind many of the same problems without changing the culture.

But the “thoughtful” cuts did not happen as envisioned. Congress intervened, mandating cuts at a faster pace, without providing the flexibility envisioned by streamlining personnel or acquisition requirements. Agencies tended to cut field staffs, not headquarters.  They also were not strategic in their cuts – for example, cutting the personnel offices first, when the demand for their services in processing buyouts, retirements, and transfers were the highest.  Also, federal “bumping rights” allowed more senior people to retain their jobs if their positions were eliminated by taking another less-senior job even if they were not qualified for that less-senior role. One apocryphal story was that a scientist replaced a mailroom clerk so he could stay on long enough to qualify for retirement benefits.

What Were the Long-Term Consequences?  The long-lasting effects of the downsizing initiative was that many agencies froze hiring in certain professional fields, such as acquisition, for years and that created cohort gaps so that 15 or 20 years later, there was a smaller pool of seasoned employees to serve in senior management roles.

There was also a residual bitterness by some who were affected by the downsizing initiative, even if they remained in the civil service for the rest of their careers. For example, Jeff Neal, who at the time was in the Defense Department and later was the chief human capital officer at the Department of Homeland Security, recently wrote about the current problems of the Office of Personnel Management stemming from NPR: “OPM’s problem is not its people, nor is it the Civil Service Reform Act that created the agency, or the changing nature of the federal workforce. The real problem is that OPM was basically gutted by the National Performance Review (NPR) in the name of “reinventing government” between fiscal 1993 and fiscal 1996. . . . The NPR branded OPM as a ‘systems control’ agency and slashed its budget and staffing and that was supposed to lead to great things happening.”

Steve Kelman, who was the head of federal procurement during the reinventing government period, reflected on this as well: “The events of 1993 launched major changes in the procurement system, which has continued to evolve in the past 25 years. In general, that evolution has seen the procurement culture shift its focus from compliance to performance, yet despite that shift, it is hard to say that the system's performance has improved.” He continued, noting: “the reinvention that produced a procurement system more oriented toward performance was also the one that produced cutbacks in the procurement workforce, which prevented improvements in the system from being translated into better performance.”

Lessons Learned.  For me, the biggest lesson was that a strategic idea – empowering frontline employees – doesn’t easily translate to on-the-ground implementation in a large, diverse, and decentralized government. Implementers in agencies will superimpose their own priorities within a broad range and focus their compliance on an easily-measured bottom line – personnel cuts as an end in of themselves – not the less-easily measured goal – shifting authority and empowering frontline workers.

This lesson is currently front and center with the sudden shift by agencies to telework as a result of the coronavirus pandemic. There is a growing likelihood that the model for work in the foreseeable future will continue to involve telework. But how will agencies adapt? Studies on effective telework says that managers will have to empower and trust employees to do the right thing, and use measurement and feedback as their management tools, instead of direct, physical observation. This works in many private sector settings, as well as in some of the long-time pioneers in the use of telework in the federal government.

So, the reinventing government goal of empowering employees to deliver results on their agencies’ mission may get implemented – in a different way, for a different reason, in a different time.

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Business of Government Stories

The past 30 years provides important lessons both for today’s leaders and for those of future administrations. Little has been written about the role leaders and teams have played in the evolution of management reforms. We are starting a series called “Business of Government Stories” where we will narrate the stories of many of the most influential events that have shaped government over the past generation. Our series will focus on the people behind this management evolution and feature a podcast with reflections on the stories behind these reforms.

Learn more about our stories and read previous posts.