Going Corporate Pays Off for the Feds

Traditional business values such as strong management, accountability, and a clear mission are bringing greater efficiency to many agencies

When it came to the weather forecast, it used to seem you'd have about as much luck with the Psychic Friends Network as with a brigade of meteorologists. Not anymore. The National Weather Service -- whose 2,300 weathermen and -women keep America on notice for tornadoes, hurricanes, and other agents of doom -- has at last gotten its act together. Last year, the agency's average warning time for a twister rose to 10 minutes, from just six in 1993. Over the same period, NWS's average lead time for predicting a flash flood doubled to 44 minutes from 22.

So, what's up at the weather service, besides Doppler radar? It's true that a much-needed 10-year, $4.5 billion modernization program has given the Silver Spring (Md.) agency better tools for doing its job. But that's only part of the story. Another key has been stronger management that keeps employees focused on the overriding goal of continually improving forecasts -- and rewards them if they deliver. This explains, in part, why the 130-year-old weather service was the only agency to earn an A grade for management in this year's third annual "Federal Performance Report," released on Apr. 16 by the George Washington University Department of Public Administration and Government Executive magazine, which belongs to National Journal Group, a publisher of government-related periodicals.


  An A for management in a civil-service shop? George Washington and Government Executive graded seven agencies this year on their ability to produce results and manage human resources, finances, information, and physical assets. The worst grade, a D, went to the Bureau of Indian Affairs, an agency long plagued by budget problems and management turmoil, the report says. The report also found that government agencies that install a corporate style of management perform better than others. Strong leadership, accountability, and a clear sense of mission are just some of the hallmarks that got the weather service top marks, just as they might at GE or IBM.

"The best agencies have all their management systems leading in the same direction," says Phil Joyce, associate professor of public administration at George Washington University and the school's principal investigator for the project. "Having a clear sense of your mission is key." (The agencies were graded based on several pieces of data, including surveys of agency managers and staff, interviews with at least 60 agency and outside officials by Government Executive reporters, and studies on each agency by the U.S. General Accounting Office and other government groups. The reports on each agency were written by reporters for Government Executive.)

At the weather service, leadership comes from Jack Kelly, the former commander of the Air Force's Air Weather Service. Kelly's top-down military-management style has alienated employees, Government Executive says. But his strong execution, which includes overhauling technology and getting costs in line, helped the NWS avert a budget crisis after he came on board in 1997, the report says. Kelly wasn't available for comment, but he admitted to Government Executive that his management style can sometimes rub employees the wrong way. "Day to day, I am not a real friendly guy to deal with on issues," the report quotes him as saying.


  Among the reasons Kelly's agency scored high: Its managers have freedom to play with their budgets -- to hire more meteorologists, for instance -- if they can make the case that their tweaks will improve forecasting, Joyce says. "It's because they are focused on results that they are achieving," he adds. Indeed, managers set high standards. Every month, the weather service checks the accuracy of its forecasters. Last year, the average error rate for temperature forecasts one day in advance was 2.6 degrees versus 2.7 degrees in 1993.

Managing government agencies such as the U.S. Postal Service (overall grade: A-) can be trickier than running a publicly traded behemoth like Wal-Mart, which happens to be the only civilian employer bigger than the USPS -- at least according to the report's authors. True, federal bureaucracies may not be beholden to pesky shareholders, who cry foul if they don't see the bottom line rise quarter after quarter. But the postal service can't easily raise prices -- postal rates -- to meet a shortfall. That takes up to 18 months. Nor can the service choose to serve only the most profitable customers. "Our expectations of government make it more difficult for government to be as efficient as we want it to be," says Anne Laurent, deputy editor for Government Executive.

That may help explain the low rating of the Bureau of Indian Affairs, which funds programs such as irrigation, student transportation, and police protection for some 1.2 million Americans who are members of more than 550 federally recognized tribes. (Among the other contestants, the Administration for Children & Families and NASA earned Bs overall, while the Bureau of Consular Affairs and the Forest Service earned Cs.) For one thing, the BIA is seriously underfunded. The report notes, for instance, that the agency was recently able to replace only 15 aging fire trucks that protect BIA schools and other buildings, while 10 old ones remained in use, even though a report found they were unsafe or unserviceable.


  The BIA's troubles go beyond a lack of cash, the report says. For a variety of reasons, officials at BIA headquarters aren't able to effectively gauge how well the agency does its job, the report claims. Joyce says one of the agency's tasks is to maintain 24,000 miles of road, but the BIA doesn't have measures in place at all of its 130 field offices to evaluate the condition of those roads. And in the management ranks, a revolving door has led to a lack of accountability, the report says.

Jim McDivitt, acting assistant secretary for the BIA, blames the lack of reliable information on the agency's practice of contracting with tribes to administer many of its programs. Under the Self-Determination & Education Assistance Act of 1975, tribes have wide flexibility in deciding how to run the programs -- so much so that they don't have to regularly provide information to the government, McDivitt says. The BIA "isn't the most brilliantly managed place in the world," says McDivitt, who spent 26 years at other government agencies before joining the BIA six years ago. "But I certainly don't believe it is the worst managed [federal agency]."

The space agency NASA has had its share of management troubles, too. During the 1990s, the Clinton Administration put the federal bureaucracy on a crash diet -- a challenge some agencies handled better than others. NASA lost nearly 26% of its staff, the report says, because it didn't effectively suss out who it should offer buyouts to -- and who not. So, staffers with skills NASA needed -- test and evaluation experience and contractor oversight, for example -- walked away under the agency's voluntary reduction plan, the report says. Among the consequences were two unsuccessful missions to Mars in 1999, which even reports commissioned by NASA blame in part on staffing shortages.


  "Staffing is only one piece of all the contributors that the reports suggest had something to do with those failures," says Vicki Novak, NASA's associate administrator for human resources and education. Yet, she adds, NASA is preparing to do a "strategic capability" review to determine where the agency still has skill gaps. "We wanted to do our cuts on a voluntary basis," Novak says. "Unfortunately, we lost a number of people we would rather not have lost.... But we did make a deliberate decision to do it in the most humanitarian way we could."

As Corporate America proceeds with its own raft of downsizings, that's one lesson the executives can learn from the bureaucrats: Consider carefully not just how many you're letting go, but who.

By Eric Wahlgren in New York

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