The Business of Government Hour

 

About the show

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. The executives discuss their careers and the management challenges facing their organizations. Past government executives include Administrators, Chief Financial Officers, Chief Information Officers, Chief Operating Officers, Commissioners, Controllers, Directors, and Undersecretaries.

The interviews

Join the IBM Center for a weekly conversation about management with a government executive who is changing the way government does business.

Samuel Mok interview

Friday, July 19th, 2002 - 20:00
Phrase: 
"The department's purpose is to foster, promote, and develop the welfare of the working people, and to improve the working conditions and to enhance the opportunities for profitable employment."
Radio show date: 
Sat, 07/20/2002
Guest: 
Intro text: 
Financial Management; Managing for Performance and Results; Strategic Thinking; Collaboration: Networks and Partnerships ...

Financial Management; Managing for Performance and Results; Strategic Thinking; Collaboration: Networks and Partnerships

Complete transcript: 

Arlington, Virginia

Wednesday June 12, 2002

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of The Endowment for The Business of Government. We created The Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about The Endowment by visiting us on the web at endowment.pwcglobal.com.

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Sam Mok, the chief financial officer at the U.S. Department of Labor.

Good morning, Sam.

Mr. Mok: Good morning.

Mr. Lawrence: And joining us in our conversation is another PwC partner, Morgan Kinghorn. Good morning, Morgan.

Mr. Kinghorn: Good morning, Paul.

Mr. Lawrence: Well, Sam, let's start by finding out about the Department of Labor. Could you describe its mission and its organization to us?

Mr. Mok: Well, the Department of Labor is one of the Cabinet agencies headed by a Secretary, Elaine Chao. She was appointed and confirmed January 9, 2001. And within Department of Labor, we are not one of the biggest organizations. We have about 17,000 employees. To give you a comparison, Treasury has 170,000 employees, so

150,000-170, depending on, you know, who is counting.

So we are not really that big. But we do have an almost $60 billion budget. So it's pretty big. Within the Department, it's organized into major components, and each of the components is headed by an assistant secretary or commissioner. And they administer different programs within DoL -- that's the Department of Labor. And these programs are carried out through a network of regional offices, or small field offices. And sometimes, they are actually carried out by representatives or contractors.

The largest program of the agency, I'll just briefly explain is, for example, the Employment Training Administration -- we call it ETA within the Department of

Labor -- contributes to the efficient functioning of the U.S. labor market by providing high-quality job training, labor market information and income maintenance, such as unemployment insurance and employment services.

And they provide these services primarily through the state and local government. And another major component within the Department of Labor is the Pension Welfare Benefit Administration. Its acronym is PWBA. They protect the integrity of pensions, health plans and other employee benefits for the nation's workforce.

Another major component within the Department of Labor is the Pension Benefit Guaranty Corporation. Most people know it as PBGC. It protects the retirement income of about 44 million Americans, and more than 35,000 private, defined benefit plans, pension plans.

Another one that a lot of American citizens have come into contact with is called the Employment Standards Administration. This is an enforcement arm and benefits delivery agency of our department. Primarily, this agency is responsible for enhancing the welfare and protects the rights of the nation's workers through wage and hour enforcement, for example.

It increases the equal employment opportunity for employees of federal contractors. And it provides wage replacement, cash benefits and medical treatment for certain workers due to work-related injuries, disease or death, such as workmen's comp, black lung, so forth and so on. It also promotes internal union democracies and financial integrity and right of union members.

One that a lot of people hear about frequently is called OSHA, Occupational Safety and Health Administration, that establishes and protects standards, enforces those standards, and reaches out to employers and employees through technical assistance and consultation programs with the goal of protecting the health of the American workforce.

Another one is Mine Safety and Health Administration. Probably a lot of Americans have no contact with that agency unless you are from the mining states. It enforces compliance with mandatory safety and health standards in order to eliminate fatal accidents, reduce non-fatal accidents and promote safety and health in the nation's mines.

And we have other agencies, such as the Bureau of Labor Statistics, which is a very important organization, because they publish the Consumer Price Index, Producer Price Index and unemployment rate that has impact on economy and nation's policies.

So these are a sample of some of our internal components. And we'll work together as a team. Secretary Chao, Secretary of Labor, is very committed to the following goal, that Labor Department represent everybody in the workforce, not just a small group. We also represent the employers as well as the employees. So this is not about just unions, or about employees. We are committed to provide full access to everybody that we serve.

So that, in a nutshell, is what Labor Department is about.

Mr. Lawrence: Even though you said it wasn't a large group, it seemed like a large group in terms of its mission and its organization, and a lot of diverse activities. What types of employees are in the Department of Labor? I first thought they were all accountants when you began describe it.

Mr. Mok: If I had my way, they would all be accountants. But I'm just joking. But we have, actually, a workplace that very much looks like America. We have economists, we have clerks, we have computer programmers, we have accountants, of course. A lot of lawyers. We have MBAs; we have high school graduates. We have a full representation of the workforce in America; that we have people of very different ethnic backgrounds. So it's really an exciting place.

Mr. Kinghorn: Can you sort of give us your view of what are the responsibilities you see as most critical as it relates to the mission of the department?

Mr. Mok: As to the mission of the department, or the mission of the CFO within the department?

Mr. Kinghorn: How you see the CFO supporting that mission, the broader mission of what you do.

Mr. Mok: Secretary Chao, Elaine Chao's main top priorities, for example, there are four priorities. The first one is prepare the workforce for the 21st Century. The second one is a secure workforce. And at the same time, a quality workplace for the workforce. And at the same time, we also put a lot of emphasis on upfront compliance assistance, so that we can minimize the enforcement on the back end. Because if you help people understand the rules and regulations, and help them comply with it, then you don't have to come back and find out why they violated it.

So, these are the things that we work very hard towards. So, from my vantage point as a CFO, I have to do the same thing within my own organization. So, I am doing my best in whatever way that we know how to do it in a most intelligent way to have a prepared workforce, a competitive workforce, and a secure workplace.

And since, as a CFO, we also have compliance work, but within the department, compliance with various federal regulations so that we help our clients -- in this case, the other agencies we talked about earlier -- comply with the various financial regulations, the laws, and other rules governing the operations.

Mr. Kinghorn: Can you share with us a little bit about your career or how you got to where you are? It's been quite an interesting career.

Mr. Mok: Well, I have a fairly diversified background. And when I started out in college, being the CFO of the Labor Department was not on my radar screen. As a matter of fact, back then, I had no idea what the Labor Department was about. I'm a professional accountant by training. I received my undergraduate degree from Fordham University in accounting, one of the few fellows who got a bachelor of science degree in accounting. It's a very unusual program.

And I have a master's degree in auditing and accounting. I am a certified internal auditor as well as a certified financial government manager. I had worked from the private sector, you know. So I had worked as an auditor for a company that's now part of KPMG. I actually started out as a hospital auditor, and eventually became, you know, more involved in other things.

I was also at one time director of accounting for Time-Life Books. And later I became treasurer at U.S. News & World Report. So, from the private sector side, I started -- actually, my first real job in college was accounting clerk for a company back then called Continental Can. I worked in the accounts receivable department.

So I started -- one can say I started as a bookkeeper and worked all my up. From the public sector side, I was a budget officer at State Department as a Foreign Service Officer. And later, I became a comptroller, U.S. Department of Treasury, and became the first career CFO, chief financial officer, at the U.S. Department of Treasury.

So I had a lot of public experience background. Insofar as leadership is concerned, also in the public sector, during the Vietnam conflict, I served 5 years as a commissioned officer, as what is known as an AG officer, which stands for Adjutant General's branch, which are the administrative officers and personnel officers of the Army.

So, I had good training in terms of government bureaucracy, so to speak. And then I joined Foreign Service later. So, if I look back in my career, I have done a lot of different things. But they all have one common thread, administration and management and dealing with people.

I didn't, you know, grow up and say I want to be the CFO of Labor. I became CFO of Treasury quite by accident, because I was in Foreign Service at that time, I was on orders to go overseas and to -- I believe to China. And I found out I couldn't bring my children, or it was not practical to bring my children. And I didn't want to leave them behind. So I said, "No, I don't want to go."

In Foreign Service, if you turn down an assignment, you have automatically resigned. So, I came and told my wife. I said, "You know, this is what happened." She said, "You have another job?" I said, "No." She said, "How are we going to pay rent?" I hadn't thought about it.

But to make a long story short, one thing led to another. I was in a job search. And I

had -- I came across an opportunity that I was recommended to. And I was invited to join the Jim Baker team, who was coming into Treasury. And I was named Comptroller of the U.S. Treasury. And the next year, I was named CFO.

So that got me into the government financial management and senior executive rank. And I left in 1992 and started my own consulting practice. Done fairly well representing American companies in Asia.

So, with the election of George Bush as president, Bush 43, Secretary Elaine Chao was nominated to be Labor Secretary. And basically, I knew her for quite a while before she became the Secretary of Labor. So, she went around her circle of friends and asked if anybody would want to come in and help. And at the same time, since I was involved in the Bush campaign, you know, presidential personnel and the White House also asked, you know, all those who were willing to serve to provide their names.

So, my name came up in different circles. And I was actually offered opportunities -- not job offers, but possibilities in different agencies. And I find Labor to be most interesting, for two reasons. One is it's one of the few agencies that actually has clean opinions 5 years in a row, the audit opinion. It's the first agency that has a clean audit opinion. Two, it is a self-contained CFO shop, because they have a centralized core accounting system, and so forth and so on. So it's like a CFO-ship of a $60 billion corporation. So, that's why I said yes, please give me a chance.

Mr. Lawrence: That's a good stopping point, because it's time for a break.  Rejoin us in a few minutes as we continue our conversation with Sam Mok of the Department of Labor.

Do you know why clean opinions matter? You'll find out when The Business of Government Hour continues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And this morning's conversation is with Sam Mok, the chief financial officer of the U.S. Department of Labor.

Joining us in our conversation is another PwC partner, Morgan Kinghorn.

Well, Sam, in the last segment, you described your career. And I'm curious. You've worked in both the public and private sector. How do you compare the two?

Mr. Mok: Let's talk about money first. Obviously, there's a tremendous pay gap between, you know, positions in the public sector versus the private sector. The compensation and the perks are also different. But that's a real cash payment. But you have to look at the total compensation package.

There is something, what I call "psychic income," that cannot be measured in dollars. I'll give you an example. When I was working at Treasury, at the main Treasury Building, walking down the hallway, there are some of the, you know, very historic persons that you read about: Alexander Hamilton and all those people. And working in the same building, the sense of history, you cannot measure it in dollars.

When I come out of the building at night, walking out through a back door, you see the Washington Monument, the White House on your right side. And you know you're part of the history. You cannot measure it in dollars.

Now, working at Labor Department, and I always tell people that when I walk out of the front door, I look at the U.S. Congress on my left-hand side and remember my responsibility. And every day, being part of the action, to see how national policies is being shaped and carried out. The satisfaction, you know, just cannot be measured in dollars. So that more than adequately made up the shortfall in cash. So that's one big difference.

The second big difference is, within the government, there are a lot of rules and regulations. Sometimes, those can be extremely frustrating, like hiring people. When I was running my own consulting firm, if I have a need for a particular person, I just go. And if I meet somebody in a bar and I like the person, I think they qualify, I can offer a job right there and then.

Well, within the federal government, I have to post the job. There has to be a panel and there has to be a cert. So, you have to go through all this. So it takes a lot longer to hire somebody. And also, there's a structure. I don't really have the latitude to negotiate salary, because you either come in as a GS-15 or GS-14. All these are predefined.

So that in itself is an extra step you have to carry. But I also think that the hiring process in the federal government is quite efficient. It takes time. But by the time you go through all of these steps, hopefully the chance of making mistakes are minimized, whereas, in my consulting days, you go and hire somebody you think is dynamite, turns out to be a total dud. And then you've got to deal with the aftermath.

So, that's the other big difference. Also, in the government, at least where I sit right now, I spend more time on administrative matters than on substantive matters when compared to the private sector. Because in the private sector, I contract everything out. I don't want to deal with administrative matters. I'm only there to make money, and that's the only reason why I'm there. And everybody works who for me and with me shares the same goal.

Whereas, within the government sector, you have a lot of rules you have to follow. So you want to make sure the T's are crossed, all the I's are dotted. So those are the major differences that come to mind.

Mr. Kinghorn: Let's get back to the clean opinion. I think you're right, Labor was the first to get a clean opinion, and you've certainly sustained that. Why is it important, in a federal perspective, to get clean opinions?

Mr. Mok: Well, because when we put a financial statement together, it's kind of like we're telling the world how we look like. To have that opinion reviewed by an independent, outside entity, you know, be it the Office of the Inspector General, or an accounting firm, it validates the data integrity. And I think that's important, because as more and more government executives learn to use financial statement as a basis for decisions, it gives you the extra layer of quality assurance, if you will.

Mr. Kinghorn: Interesting. As you know, the President's management agenda has a component called the -- sort of the "Report Card. " And Labor, even with a clean opinion, got sort of a red mark on financial management. Of course, you weren't alone. There were 26 grades in that area, and only one agency got a green. Can you give us a sense of why that happened, and what you're going to be doing to get to the green, as the OMB says?

Mr. Mok: Well, I have good news to report. Yes, we started with a red mark, like most federal agencies. We are now practically a green, except two components. One is the integration of budget and performance. Another one is competitive sourcing. All the other components are either already a green in an interim assessment, or a yellow, with great confidence that we'll go to green.

And I believe that the competitive sourcing, you know, getting the green is not a humongous challenge. It's doable.

The integration of budget and performance is a challenge, because you need the proper system. To arrive at that state, you need to have the technology. For example, if the Secretary wants to know how much does an inspection of mine shaft costs, I'm not really sure if one can right now provide the correct data on a timely basis for the Secretary. The data's there. We can get it. But it requires a tremendous amount of effort.

So, by the time we got the information, the need might have passed. We are right now focusing on investing in technology, and also a shift in paradigm for the staff, so that that way, that type of need can be satisfied in a very effective and efficient manner.

Mr. Kinghorn: You are the CFO that sort of looks at information from a broad variety of fairly large, complex bureaus. What are the challenges in trying to coordinate that data, and the financial information of those various agencies?

Mr. Mok: The good news is, as I said, one reason why I chose Labor over the other Cabinet agencies is that Labor has a central core accounting system. And Labor is fairly centralized in that respect. If I compared it to my previous government job at Department of Treasury, the CFO at Department of Treasury is more of a traffic policeman, because each bureau is fairly autonomous. And they have their own system, they have their own CFO.

That situation does not exist in Labor. So, it's easier for us to do. But the challenge is, our technology is quite old. My central core accounting system was quite old. It is not on demand web-based. That's a challenge for us to get to, so that users, clients and executives, can design their own report by point and click any time they wish, in the form that they like, and with good data and reliable data. We are not there yet.

And that is to me a big personal challenge. The technology is out there in the business world. We just need to figure out a way how to bring that into the Department of Labor and the federal government, and Mark Everson at the OMB is doing a great job in, you know, giving guidance and also assistance to help us get there.

Mr. Lawrence: What will the management challenges be of implementing and using the new technology?

Mr. Mok: What are the challenges?

Mr. Lawrence: Yes.

Mr. Mok: Obviously, the first thing is funding. That's the biggest problem for everybody. The second is also know-how, because when you bring in technology like that and implement it, it requires a lot of one-time know-how that I'm not sure any agency or any private sector business would like to invest in their own staff. So, finding the right partner to work with to select the right software, select the right implementation strategy, and manage to change management correctly afterwards.

Those are the real big challenges. I mean, in theory, you know, there's textbooks for that. But carrying it out is not the same thing.

Mr. Lawrence: How about the challenges of time? My sense is that there is an increased pressure on doing management right and very fast. The scorecard is pretty clear, and everybody wants to do it quickly. But sticking in the kind of technology I think we're envisioning generally takes time.

Mr. Mok: Yes, that's true. But I kind of look at this differently. We talked about getting a green at Treasury, and sharing experiences. And my view towards getting the green is getting the green is really a process. A lot of people look at it as an endgame. To me, it's not an endgame. I place more emphasis on why are we getting the green versus getting to green.

If we understand the philosophy about the green benchmark, and how to embed those practices into the infrastructure, so that one day, for those who are non-career and move on, these things will continue. And I think that is our biggest contribution, if I can make that happen.

Mr. Lawrence: How will you do that, because I believe there is a lot of perception that because people will move on shortly and these are long things, we can ignore them or it will all pass.

Mr. Mok: Right. This getting to green, in my mind, is really change agents. They cause paradigm shifts, hopefully. And then the next challenge is lock those changes in.

For example, e-government. Once you start that process, I think it's hard to put the genie back in the bottle. So, for example, I invite all your listeners to visit our website, www.govbenefits.gov. That is our major e-government initiative, spearheaded by Assistant Secretary Pat Pizzella to deliver information for American citizens in the way they're familiar with, by going through and asking yes-no questions and answers.

But once you have that thing going, I am not sure, and the citizens like it, I'm not sure if you can roll that back, and that's an example.

Mr. Lawrence: That's a good stopping point. It's time for a break. Come back with us as we continue our discussion about management with Sam Mok of the Department of Labor.

What's the link between performance and costs and why is that so important? We'll ask Sam for his thoughts when The Business of Government Hourcontinues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And this morning's conversation is with Sam Mok, the chief financial officer of the U.S. Department of Labor.

Joining us in our conversation is another PwC partner, Morgan Kinghorn.

Well, Sam, can you tell us about the department's three strategic goals?

Mr. Mok: We have three strategic goals right now and we're soon to have a fourth one. The first three are a prepared workforce, a secure workforce, and a quality workplace. Soon we're going to have a fourth goal called a competitive workforce.

Mr. Lawrence: And how does the office of the CFO assist the Department in working with these goals?

Mr. Mok: First of all, I have to make sure my own area of operation complies with and strives towards achieving those goals. So, for example, a prepared workforce. We are doing a series of training, both formal and informal, to prepare our workforce for the 21st Century.

A secure workforce, we contribute to making sure we have safety in the workplace, so that it is a friendly workplace and a positive workplace. And there's talk about quality workplace, too. The building itself, because of 9/11, has been very secure. But at the same time, you know, we also exercised extra measures within our own area, because we do have a lot of information that we don't want to float people's pay records, for example.

The competitive workforce. Departmentally, they talk about global competition. From my own area, you know, we need to compete with the private sector, compete with other agencies so that I can get the very best to come to work for us, and to keep them. So these are the things we're trying to do.

Mr. Lawrence: Strengthening the link between program costs and performance is something we hear a lot about. How do you this at the Department of Labor?

Mr. Mok: That is an interesting challenge that we are working on right now. I mentioned earlier that we have all these components. And their missions are quite diverse. And the way they go about doing their business is quite different.

What we're trying to accomplish is, there is some common denominator. We have continuous discussion, and different meetings that go on to try to accomplish building a database, a pool of information for the senior executives of the Department, so that on demand, user-friendly method, they can extract information in format they would like to.

For example, if, just for argument's sake, if Secretary Elaine Chao, sitting in her office one night, decides she wants to know how much a mine inspection costs in Montana, under the current scenario, she has to look somebody up, call somebody up, and make that request. And somebody will probably have to write a program, go to the database, do a test, and then deliver the report much later than she would probably like.

By having the financial system -- which we have a core accounting system and what we call the financial data store -- hooked up with parameters that we predefine, and hopefully using a web-based technology, point and click, we can produce all this information on any parameters that the manager would like, because we cannot anticipate what managers want.

And I think the best way to do that is create a situation where they can point and click, and extract the information and build their own report. In the private sector, the technology is there. I have not seen a whole lot of that in the government. The melding together of the performance goals and the budget, I think that's a very good goal and a very important function. Because how do you know the programs are effective? How do we make sure cost allocation is done correctly? We are not there yet and we are striving to get there.

 Mr. Lawrence: That was actually going to be my next question. While you're waiting for someone to write the program, while the Secretary's waiting for someone to write the program in your example, how do you make management decisions?

Mr. Mok: Well, we do right now. The information is there. The ability to deliver it is there. But it is not done in a timely or useful manner, useful in the sense that the user, or sometimes the client has to adjust their needs because of restrictions on format and things like that, which I think is ridiculous.

It's kind of like going to a restaurant. You look at the menu, you want this. They say, well, you want a chicken dish, but you can't have this and that. And so, it's a compromise. What we would like to do is to be -- the CFO office is a service delivery organization. So, we would like to have a very flexible menu, so that you can come in, you want this particular dish without salt? It can be done. Or you want the other dish to be more salty? That's fine, too.

So, that basically is the goal here. We are not there yet, because that requires an investment in technology, which we're doing. Also, a shift in paradigm from the employee's level. And also, data collection, which is also important.

Mr. Kinghorn: The financial management, as you know -- you've been in this business a long time -- the bar keeps getting raised on us. And OMB now is requiring agencies to prepare semi-annual consolidated financial statements this year. And they're going to go to quarterly next year. We know some departments are trying to do closings in 3 days. And two or three large departments still can't even get clean opinions, aren't even close. You've done it. But is this going to be a challenge for you to do, leaning toward a more consistent and earlier and earlier set of consolidated financials?

Mr. Mok: The answer is yes and no. Yes, it's going to be a challenge. No, it's not such an impossible dream. Okay? And I'll tell you why. In the �70s, I was head of the accounting operations for Time-Life Books in Alexandria, Virginia. And Time-Life Books are a division of Time, Incorporated, which now is part of Time Warner-AOL.

Time-Life Books itself at that time was headquarters. We were headquarters of 36 companies around the world. And we had Italian liras, you know, Chinese dollars, so forth and so on. And we were able to close our worldwide books in 5 days. And this is like 20 years ago. Corporate-wide, Time, Inc., when I was working for Time-Life Books, which is part of Time, Inc., they closed the whole worldwide Time, Inc., I think in 7 days. This is 20 years ago.

So, I think to close our books in a few days, the technology is there. The question is, we have to change the methodology within the federal government. Secretary Paul O'Neill has committed to close the books, Treasury's books, if I remember, in 3 or 4 days. I was talking to Steve App this morning, and Ed Kamen. They think they can do it -- and Steve App being the deputy CFO, and Ed Kamen being CFO of Treasury.  

I also think that this goal is very doable. But a lot of agencies, including that of my own, have to make some changes in methodology. And we are making those changes now.

And I think it's important to provide that information. Because for the first time in history, or at least for us anyway, we have an MBA president, and an MBA secretary at the Department of Labor. And they are very focused on financial information, because they know how important it is. They know that having sound financial information helps make better decisions.

Mr. Kinghorn: You also have a lot more MBAs on the Hill, too.

Mr. Mok: That is correct. I'm a member of Treasury executive -- a Labor

executive -- see, you talk about Treasury, I just came from Treasury -- a Labor Department Executive Committee called MRB, Management Review Board. And we meet, you know, every week to discuss, you know, department-wide management issues. And yesterday, actually, the head of our human resource department, Tali Stepp, came in and talked to us about her efforts in recruiting more MBAs into the Labor Department.

And she was very optimistic. And she actually shared some statistics with us. And I'm quite impressed by her efforts. We actually have recruited quite a few MBAs, and we will continue to recruit more. So I think the demographics of the federal government employees are changing, too. Because I think the economy obviously also helped us. Five years ago, every MBA got 20 job offers upon graduation. Now they find government work a lot more attractive, because it's more secure.

Mr. Kinghorn: The issue of people is critical. So you can do a lot with both technology and people. But people are pretty essential. As you know, you can have a financial system. And if you don't have the right people and processes, it's probably not going to get you to where you want to go.

But you, like other agencies, are facing what GAO and others call the crisis of human capital. How is this impacting the Department of Labor as a whole, and what kind of strategies are you developing to find solutions to those issues?

Mr. Mok: Succession planning is the key to solving this problem. The baby boomers are all retiring, so everybody says. But I think what happened is I don't think a whole bunch of people are going to walk out on the same day. Number one. Number two, for example, we had a buyout recently at Labor. And, you know, a bunch of people took it. But not as many as I personally thought might have taken it. Part of the reason, I think, the economy, it's a recovery, so people want to wait and see.

I can use my own area of operations as an example. We did a demographic study in my department, in my office. Thirty percent of my staff are eligible for retirement. I mean, they can literally say tomorrow, "I'm retiring." And they can walk out the door after they file the papers. Okay?

So, it is very critical. That's one of the first issues I identified, that for me to plan succession correctly. So, for the first time in the CFO's office that recent

history -- because I inquired, you know, I have a chain of command. Not in the military style. But we start grooming the second- and third-generation leaders. I have an SES who's a deputy. But now I'm grooming several 15s to step in, that we actually do a rotation of duty assignments so that they have a chance to experiment what is a deputy CFO like? One day in the life of.

And I also groom 14s to step into 15 positions, so that they, too have a chance. As a matter of fact, some very interesting results came out. We had one individual who always wanted a promotion. So we happen to have an opportunity. He was a 14. And we said, okay, here is your opportunity. Would you like to be acting for a while, so that we get to know you better, and you get to know what it takes to be a leader? After two days, he came to me and said, I don't want to do this any more. He said, I didn't realize it was such a hassle, he said. I'm going to be very happy where I am. And that's fine. And that's the beautiful thing about the federal government system, that if you want to stay where you are and do a good job, there's a place for you.

But through these kinds of processes, we hope we can identify what are called voluntary leaders, and so there's always succession. At the same time, we also try to recruit more people at the entry level. That is, that would be ready and wanting to move up.

Mr. Lawrence: That's a good stopping point. Come back with us in a few minutes as we continue our conversation about management with Sam Mok at the Department of Labor.

What does the future hold for those in financial management? We'll ask Sam for his thoughts when The Business of Government Hour continues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Sam Mok, the chief financial officer at the U.S. Department of Labor.

Joining us in our conversation is Morgan Kinghorn, another PwC partner.

Well, Sam, how do you measure success in improving financial management?

Mr. Mok: The way I would measure it is, from the CFO's office, Sam Mok and his staff can provide timely and useful information to our clients, including executives and other users. That's the first criteria. The second criteria is that everybody working in the CFO's office at Department of Labor will become a better and more informed employee after I'm done there. What does that mean? Given their career in the government, as I observe, I call it the flock in the well syndrome in a very positive way.

If you sit at the bottom of a well, after a while, the sky is as big as the mouth of the well. So my goal is get the flock out of the well to see that there's a whole new world out there, so that they know how they fit into the bigger picture, so that when requests for information comes from the top, they can relate to the bigger picture, and make this information more useful.

I'll tell you a less than one-minute story about a balloon. A man was riding in a balloon to see the countryside. And he got caught in a windstorm. So when the wind died, he finally felt a sigh of relief that he's going to live. But he needs to figure out where he is. He's totally lost.

Suddenly he saw a man walking in a field down there, and he lowered the balloon and started yelling. He said, "Hey, man, I'm lost. Can you tell me where I am?" So the man stepped back, looked up, thought for a while, and said, "Sir, you're about 300 feet in the air." So the guy said, "You must work for the government as an accountant." The man said, "My God, how do you know?" He said, "Because the information you gave me is technically correct, but totally useless."

What I'm trying to do is, you come to the CFO's office, and Department of Labor, our staff gets a balloon that I give them, remind them that when a client, a user comes to us with information, not only is it important to give technically correct information, but think of how they're going to use that, and make it useful for them. That, I call success.

Mr. Kinghorn: We talked about how you were a presidentially appointed official. So now we all need to call you "Honorable" for the rest of your life. Not that you --

Mr. Mok: That and $1.25 will get you a cup of coffee.

Mr. Kinghorn: Right. But you also once, just like the rest of us, were sort of a career official. What do you find the differences there in terms of what you're facing now and what you faced when you were career, in terms of making things happen?

Mr. Mok: It's a very interesting change. Because when I was a career senior executive, I think very long-term, because I have 20 years to retirement. So when I think of projects, when I think of goals, time wasn't very critical to me.

Now, because I'm a political appointee or non-career officer, others would say I come and go with the President. So, the longest I'm allowed to serve is 3 more years,

2-1/2 more years.

So constantly, I feel there's a sword over my head that I'm running out of time. I need to do it now. I don't have 20 years to wait. So I've become more time-sensitive. And at the same time, because of level, I get to see a much bigger picture, because, as a

non-career senior executive, I get involved in many different things. My job definition, my job requirement is not defined by some PDs that say you've got to do this and that's it.

So, I see a much bigger picture. I also am invited to a lot more senior management meetings. So I see the interrelationship much better. So I think, as a result of that, my outlook and my goals are different.

Mr. Kinghorn: In looking back at that time when you were a career official, now you're looking at a staff and an organization with a lot of career officials in them, how do you sense you can maybe change their motivations and how they think about now that you've seen it both ways maybe differently?

Mr. Mok: I think the key to a successful relationship, including that between employer and employee, is there has to be a win-win situation for everybody. So, the programs I try and initiate within the Department of Labor, I always try to explain to my staff, and to those whose support I need, what is in it for them? Why is it good for them?

And one example I always use is, when I leave office, I hope I can look back and say, hey, we have established the most best practice within the federal government of any CFO offices. That's my personal goal. Why would my staff care? The way I explain it to them is, if we all work together towards this, it's glory for you folks, too. So one day, if you want a promotion, one day you want to move on to another position, you can say you came from that operation that has the most best practice.

Nobody wants to come from an organization that failed, or that's mediocre. So that's one or the ways I try to motivate my staff that there is a lot in it for them. And usually, if I want to initiate a program, I'll try and talk to them and find out, you know, how can we make sure everybody's wishes are accommodated now. This is not a democracy. I don't take it to a vote. But, on the other hand, I think it's important to respect institutional knowledge, because a lot of times, they've been there before, and they've done that.

Why reinvent the wheel? How do we leverage what they know into a new initiative?

Mr. Lawrence: Let me ask you Morgan's question a little different way. You were involved in financial management during the first Bush's presidency, took a break, and came back and are now involved in financial management, 8-ish years later. How do the two compare? What were your observations when you came back?

Mr. Mok: A lot of initiatives during the first Bush administration were actually carried out in different ways in the 8 years of Clinton and Gore. And for example, the reinvention of the government is really, in my personal opinion, an extension of some of the things we did in the first Bush administration.

But the current Bush administration I think is more specific. For example, there

Are -- getting the green. Very specific goals, and a very clear path to get there. The other major difference I find is that there is a tremendous amount of teamwork within this administration. And I'm just totally awed by the teamwork.

I think the President, the current President Bush, is extremely focused. He showed a tremendous interest in financial management, and also management in the government. And my boss, Secretary Chao, also showed a tremendous personal interest. My other experience is, I've been in government three times prior to that. The top bosses are more interested in the core mission of the agency they head. The Secretary of State is more interested in foreign affairs, for example. Defense, more interested in, you know, readiness. That kind of stuff.

Management has always taken a back seat. Under this administration, I think our president being an MBA, our secretary being an MBA, places a lot of emphasis on management.  And they know that that's a core to good government, and they actually spend time on it. They actually, you know, call people on the carpet about it. And so, people are taking this very, very seriously, not because they are afraid, but because they understand it's important. And they want to.

Mr. Kinghorn: Where do you see the CFO office of the future going, in terms of whether it's Department of Labor, or Education? What do you think 5 years, 6 years from now, your functional areas will look like? What do you think you'll be really focused in on?

Mr. Mok: My office in Labor is a fairly typical office within the federal government at the Cabinet agency level. I have -- my paradigm is I have two pyramids. And I show my staff, from time to time, kind of remind them. And I think Morgan Kinghorn also understands that theory. Because actually, I stole an idea from him way back 20 years ago or 15 years ago.

On the left-hand side, if you look at that pyramid, my current operation anyway, I think at least 60 percent of that pyramid is this transaction, after I do a time analysis of my staff, a transaction with no real value -- and the paper come in, the paper gets processed, paper go out -- maybe 15 percent are reporting, 20 percent are reporting. And very little decision support, and some control, because preoccupied with the transaction.

The pyramid on the right-hand side is 20 percent transaction, maybe 10 percent reporting. And the rest is decision support and decision and control. How does one get from one to another? Well, through technology. Because if you have a single point data entry, then you don't have to re-key, re-verify and so forth. So you'd reduce your transaction time.

E-government is a wonderful example of that. So, if you implement e-government to the fullest, it's all electronic, and reduced error, reduced reconciliation and reduced transaction processing time.

Well, it's because of e-government you also reduce report production, report programming. People will get report on demand at will in the form that you want. So, you free up all this time to provide decision support. Obviously, that will require a different workforce, because then we're going to more analysis, more advisory role.

That's what CFO is all about. And their staff. Provide advice and leadership. We right now have the tail wagging the dog. We spend most of the time trying not to make mistakes. And I think the future is more advisory and more leadership.

Mr. Lawrence: Speaking of the future, what advice would you give to a young person who's interested in a career in government, or perhaps even in the Department of Labor?

Mr. Mok: I think first of all, a young person ought to get an internship. Young meaning in this case, still in school for me. Get an internship in the summer, or part-time work. I went to a work-study program.

See what the government is like up front, up close, because on the outside, it looks different. For example, my daughter wanted to be a doctor. So we arranged for her to work in a hospital in the summer. And after one summer, she said, "I don't want to be a doctor." And then she said, "I want to be a lawyer." So we arranged for her another summer to work in a law firm. She said, "I really like that." So, another summer we arranged for her to work in another law firm, different size, different type of transactions. Three summers in a row, three different law firms.

She loved it. She's now a very successful lawyer. And we did the same thing for our son. So the point is, if you want to pursue a career in the government, get some real experience through an internship or part-time work. Point one. Point two is you've really got to ask yourself, why do I want to do this? Government work, government career, is really a calling. Other than a political appointee, if you want to be a career civil servant, which is a very honorable profession, you need �

Mr. Lawrence: Thank you very much.

This has been The Business of Government Hour, featuring a conversation with Samuel Mok, the chief financial officer of the Department of Labor.

To learn more about The Endowment, our research into improving government effectiveness, visit us on the web at endowment@pwcglobal.com.

Samuel Mok interview
07/20/2002
"The department's purpose is to foster, promote, and develop the welfare of the working people, and to improve the working conditions and to enhance the opportunities for profitable employment."

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