As former career executives who now consult for federal agencies,
weve been involved in some of governments most sweeping
reorganizations. Weve been there, done that, and got the T-shirts.
Based on those hard knocks experiences, we believe
mega-reorganizations can be successful. We are talking about the
exceedingly complex, multi-agency reorganizations, which may be an
order of magnitude harder than the regular fare. Here are seven of
the most critical lessons we have learned.
1| Get the Enabling Legislation Right
The administration and Congress have to strike the right balance.
Too much detail can prevent the agencies involved from fine-tuning
the design to reflect operational realities. However, too little
detail (for example, with regard to the authorities and
relationships of the agency heads involved), can leave the effort
in legal gridlock.
The IRS Restructuring and Reform Act of 1998 gave then-Commissioner
Charles Rossotti a high-level blueprint, but left much of the
details for him and his team to work out. The eventual design was
far better for it. In contrast, the Intelligence Reform and
Terrorism Prevention Act lacked clarity for many of the director of
National Intelligences most critical administrative authorities,
such as dealing with personnel and procurement. Its implementation
was made far more challenging as a result.
2| Engage and Empower Career Executives
Major, game-changing reorganizations cannot be driven exclusively
by senior political appointees sitting atop an agency or the U.S.
Office of Management and Budget. Savvy political leaders know that
fundamental change takes time and the engagement of empowered
Career executives must be co-owners of the reorganization
effortpart of the most sensitive discussions and decisions,
actively solicited for their views on how best to go about the
reorganization. Department of Defense Deputy Secretaries Don Atwood
and Bill Perry looked to career executives to drive their
respective Defense management reviews in the 1990s, and then to
lead their implementation even after they had left office.
IRS Commissioner Rossotti did the same, enlisting some of the
agencys most respected career leaders to lead its
restructuringlistening to their views, and then empowering them to
design and drive its implementation.
3| Avoid the Thirst for Instant Gratification
Anyone seeking (or promising) instant gratification from a major
government reorganization is being unrealistic. While every major
reorganization must have a compelling case, the urgency to just do
something must not come at the expense of deliberate planning. It
must include the development and execution of a comprehensive
change management strategy. For example, teams of IRS managers and
employees spent two years planning and preparing for that agencys
massive realignment, so that when it finally occurred, there were
few unanticipated problems.
4| Take the Opportunity to Reengineer
Mega-reorganizations unfreeze an agencys status quo; they offer a
unique opportunity to fundamentally change the way an agency does
business. Indeed, the benefits of such change can offset the
immediate tangible and intangible costs associated with the
reorganization. For example, IRS didnt just redraw its organization
chart in the two years of planning that preceded its realignment;
it radically transformed the way it viewed its role as the Nations
tax agency and how it serviced taxpayers.
For example, in the 1990s the U. S. Department of Defense (DoD)
leveraged its several sweeping management reviews to transform
business areas such as payroll, acquisition, and personnel. With
the latest round of organizational efficiencies, Defense Secretary
Robert M. Gates and his leadership team (both political and career)
continued to look for ways to improve the department, and given his
reputation as a master money man, its clear that
Secretary-designate Panetta will be at least as aggressive. The
opportunity to re-engineerindeed, to transformis just too good to
5| Give the Union(s) a Seat at the Table
While unions cannot demand collective bargaining over a decision to
reorganize, they do have a statutory right to negotiate over its
implementation and impact. If labor unions are involved at the
pre-decision, planning stage (literally as at the table partners
with senior agency leaders), the odds of their delaying execution
of reorganization plans diminish.
When the IRS began to plan its massive restructuring in 1998, the
president of the National Treasury Employees Union was given a seat
on the Commissioners Executive Steering Committee and participated
fully in its deliberations on every key decision. That
unprecedented involvement (and the transparency that came along
with it) brought instant credibility with employees. It
substantially reduced the resulting workforce turbulence and
negotiation period regarding the reorganizations impact and
6| Pay Attention to the Soft Stuff
Reorganizations have a tendency to dwell on wiring diagrams, as
tangible evidence that government has acted. However, in our
experience, these are necessary but insufficient conditions for
success. Its the intangibles that can make a difference:
leadership, culture, values, employee engagement, and strategic
Director of National Intelligence Mike McConnell took this approach
with the intelligence community, articulating a core set of values
that were tied directly to the goals of the Intelligence Reform
Act: interagency collaboration, critical thinking,
information-sharing and embedding them in everything from
performance appraisals and personnel assignments to awards and
collaborative IT platforms such as Intellipedia. And its no stretch
to suggest that the culture of collaboration he helped instill in
the IC contributed to the take-down of Osama bin Laden and other
intelligence successes too classified to publicize.
The efforts were intended to create a culture of collaboration that
would thrive without regard to the wiring diagrams. IRS took a
similar approach to customer service, embedding it in a new mission
statement (Service to each, Service to all), defining it in a way
that was consistent with a mission in which the customer cannot
always be right, and embodying it in performance metrics, training,
employee evaluations, and rewards.
7| Be Prepared to Weather the Storm
No matter how compelling the case for reorganization or how well
planned its execution, those who lead it must be prepared for two
inevitabilities: something will go wrong in its implementation, and
when it does, the second-guessing will begin. After the initial
drive to stand up and staff the Transportation Security
Administration, Administrator Jim Loy faced a series of challenges
that had the potential to derail his fledgling organization.
In IRS, already-low employee and customer satisfaction survey
results plummeted after the agency restructured, and many began to
question its wisdom. Four successive DNIs have had to face
questions about the agencys raison dtre. However, in each case,
senior leaders remained unified and resolute about their course.
That resolve resonates in the press and with frontline employees.