Originally Broadcast Saturday, May 12, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness.

You can find out more about the Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good Morning. I'm Albert Morales, your host, and managing partner of the IBM Center for the Business of Government.

Today, the U.S. Department of Labor is one of only two federal agencies to have Green ratings across the board on the President's Management Agenda. Labor can also boast to be the first of all federal agencies to achieve such an accomplishment. Its diligent efforts to instill the importance of sound financial management and internal controls throughout the organization have transformed Labor into a financial management leader. This success has not gone unrecognized, as evidenced by its tenth consecutive clean audit opinion this year.

With us this morning to discuss such an achievement is our special guest, Sam Mok, Chief Financial Officer at the U.S. Department of Labor.

Good morning, Sam.

Mr. Mok: Good Morning.

Mr. Morales: And joining us in our conversation, also from IBM, is Steve Watson, partner in IBM's financial management practice.

Good morning, Steve.

Mr. Watson: Good morning, Al, and good morning, Sam.

Thanks for joining us this morning.

Mr. Mok: Thank you.

Mr. Morales: Sam, perhaps you could share with us a sense of the history and mission of the U.S. Department of Labor. When was it created, and what is its mission today?

Mr. Mok: Well, the Organic Act that established the Department of Labor was passed in 1913. In the words of the Organic Act, "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."

Labor Department is not only about labor. It's really an economic engine, because we provide job training. We provide employment security. We try to effect a safe workplace, and we also try to effect a positive workplace, and also prepare the American workforce for the 21st Century.

We promote and foster the welfare of the jobseekers, the wage earners, the retirees of the United States, by improving their working conditions, advancing their opportunities for profitable employment, and protecting then certain groups of retirement benefits, and helping employers find workers, strengthening free collective bargaining, and tracking changes in employment prices and other national economic measures, through the Bureau of Labor Statistics.

And in carrying out this mission, the Department enforces a variety of federal labor laws that include a guarantee of workers' right to safe and healthy working conditions, a minimum hourly wage and overtime pay, freedom from employment discrimination, and unemployment insurance and other income support.

We also administer almost over 180 federal laws. These mandates and regulations that implement them cover the workplace activities of about 10 million employers and 125 million workers, and we also administer numerous job training programs, which I talked about earlier, including something that most of you are familiar with, the Job Corps. And then our Bureau of Labor Statistics, which I talked about earlier, calculates important figures such as the Consumer Price Index.

So we are not only a service providing organization, we are also a benefit delivery organization. At the same time, we also have an enforcement arm that inspects the workplace conditions and enforces wage laws. So we are a very complex organization.

Mr. Watson: Sam, that's obviously a very, very broad mission set. How is the Department organized, and can you give us a sense of scale in terms of the size of the budget, the number of employees, and the geographic footprint of the organization?

Mr. Mok: Of course. The Department of Labor accomplishes its mission through 19 component agencies, or supporting agencies and offices. And these agencies and offices administer various statutes and programs which the Department is charged with the responsibility. We carry out these programs through a network of regional offices and smaller field and district and area offices, as well as through grantees and contractors.

The largest program agencies are headed by an Assistant Secretary or a Commissioner or a Director. And these agencies, I will give you some examples: ETA - Employment Training Administration; ESA - Employment Standards Administration; everybody's heard of OSHA - Occupational Safety and Health Administration; Employee Benefits Security Administration; the Pension Benefit Guaranty Corporation, otherwise known as PBGC. And the one that has most impact on economic statistics and in some way affects the stock market with its reports is the Bureau of Labor Statistics.

The Department of Labor requested a budget of about $50 billion, and about 17,000 FTE for FY 2008. 80 percent of our budget is for mandatory programs. The fiscal year 2008 budget for the Department of Labor is basically focused on securing our workers' futures and supporting three key priorities:

First, protect the workers' safety and health; second, protect the workers' pay and benefits and pension; third, increase the competitiveness of the American workforce.

As you can see, our mission is very broad. The program we administer is very complex, and we affect every American in many different ways.

Mr. Watson: Sam, now that you've provided us with a sense of the larger organization, can you tell us more about the office of the Chief Financial Officer? What are your specific responsibilities and duties? How is your office organized? What's the staff size and your budget size? And I guess most importantly, how does your office support the mission of this Department?

Mr. Mok: The Office of the Chief Financial Officer, which we affectionately call OCFO, is a product of the CFO Act of 1990. In accordance with the CFO Act, my office is charged with the responsibility of developing comprehensive accounting and financial management policies, and assures that all of the Departmental financial functions conform to the applicable standards.

We provide leadership and coordination to the Department's trust and benefit funds and other financial processes. We also monitor the financial execution of the budget in relation to the actual expenditure. Part of our very important responsibility is to enhance the knowledge and skills of the Departmental staff working on the financial management operations. We also manage a comprehensive training program for the accounting and financial support staff. The Office of Chief Financial Officer requested for fiscal year 2008 a $5.6 million budget; plus, it also received funding through the Department's Working Capital Fund and other sources. We have an authorized FTE of about approximately 100, so we are not a very big organization.

The CFO's primary focus in the last five years is to support the program agencies to achieve their goals by providing information that is relevant and useful in their decision-making. OMB's priorities are more global in nature in addressing the integrity of the overall financial management, including supporting various federal agency achievements and goals. We at Labor Department, the OCFO, take that down to a working level, and making sure that my peers and my counterparts and their staff receive proper guidance, support, and also help in whatever way we can to make sure that the Department of Labor has the highest financial fiscal standards and best practices of our federal government.

Mr. Watson: Sam, you've outlined a broad range of responsibilities and duties for your office. What in your estimation are the top three challenges that you face in your position, and how do you go about addressing those challenges?

Mr. Mok: Well, that is one of my favorite subjects, again. Thanks for asking that very important question. The biggest challenge -- this is by the way my second time being a CFO. In the '80s, I was CFO for five years-plus at U.S. Department of Treasury, and here I am at Labor for another five and half years.

Having been a CFO twice, this is how I see the challenges facing the CFO at U.S. Department of Labor, and to a large extent many federal Cabinet-level agency CFOs. The first one is what I call a proliferation of CXOs. Now everybody is a chief. You have the CFO; you have the Chief Information Officer. You have the Chief Human Capital Officer. You have the Chief Acquisition Officer. And who knows, next you have Chief Procurement Officer.

So what happens is everybody is a chief. I'm not really sure all chiefs are created or should be created equal. And one of the big issues that needs to be harmonized over time is financial systems and the ownership. For example, CFOs under the CFO Act have the responsibility of financial systems, and therefore, all its attendant responsibilities.

But on the other hand, the Klinger-Cohen Act gives the CIO ultimate responsibility on system architecture, so forth and so on. And when one set of requirements does not mesh with the other, it requires a lot of coordination, negotiation, and compromises. Sometimes it works. Sometimes it doesn't. And then at the same time, the Chief Human Capital Officer a lot of time has similar if not overlapping responsibilities as prescribed to the CFO under the CFO Act, such as training, such as staffing, such as job requirements. So when you have all these chiefs and all these acts that create these positions that still has room for harmonization, what happens is it sometimes creates a lot of organizational tension; organizational issues that need to be resolved.

The way I see it is, if you've been to a circus, you see what I call the motorcycles in a steel ball. You have this huge empty steel ball that you have one motorcyclist go in and starts riding, and they'll introduce another motorcyclist, then introduce a third one. So at the end, you have many, many motorcyclists roaring at high speed inside the big ball, but because of fine coordination and synchronization, they don't hit each other.

Now in many ways, I think that is the vision of those who created all these positions, that they all should move along smoothly and create a spectacular show. But in a re-organization, sometimes that doesn't happen -- because of personalities, because of chemistry, because of organizational needs. So I think there is a lot of room for harmonization, and I think if we don't really focus on that, sometime in the future, there may be some fiery crashes because of these motorcycles spinning around. So that's the first challenge; the proliferation of CXOs.

The second one, I would say, is keeping financial management issues on the radar screen of the senior managers in any Cabinet-level agency. If you work very closely with a Cabinet Secretary and the sub-Cabinet officers, you will see that most of the days, not by their creation, fighting fires, so financial management gets lost in the translation, or gets squeezed out on the radar screen.

The CFO's biggest responsibility is making sure that financial management, sound internal control processes are firmly fixed on the radar screen of these folks so that they understand the consequence of not paying attention. They want to do this because they think it's good for them, it's good for the agency; it's good practice, not because they are required to. The second challenge; keeping financial management issues firmly in the radar screen of those top decision-makers.

And last but not least is what I call the Balloon paradigm. Somebody wanted to see the countryside, got into hot air balloon, floated around; had a good time, suddenly got hit by unexpected rainstorm. So when the storm died, this fellow found out that he was totally lost; no clue where he ended up. Then he saw a man walking on the ground below, so he lowers his balloon and says, "Sir, where am I? I am lost." So this fellow looked up for a moment, gazed at him and said, "Sir, you are about 300 feet in the air." So the guy in the balloon said, "My God, you must work for Labor Department CFO's office."

Well, this is a fungible joke; you can change anything you want. So the fellow on the ground said, "My God, how did you know?" The fellow in the balloon said, "Because the information you gave me is technically correct but totally useless."

Frequently, people in the financial management practices are guilty of that; providing technically correct information, but totally useless to the decisionmaker. I think the CFOs in the federal government had never gained the influence or the role in management as private sector CFOs. They failed to deliver a product that top, top managers find useful or compelled to say "Where is it? I need it." So those are the three challenges. That last one really has to do with systems and a product delivery.

Mr. Morales: Sam, that's a great metaphor. You paint a very vivid picture. You've had a fascinating career, both in the private sector and in the public sector, and you describe some of your activities, not only at Labor, but at the Department of Treasury. Could you describe for our listeners your career path? How did you get started in public service?

Mr. Mok: Most of you cannot see me because you are hearing me through the radio, but I am a follically, chronologically, and vertically challenged American. In everyday speak, I am a short, bald, old immigrant.

I was born in Shanghai, raised in Hong Kong, came to this country when I was a very young man, attended college in New York City, and then served five years in the military as an officer during the Vietnam conflict. And then I joined Time-Life and became the director of accounting for the Pope Publishing Group. And then I went to U.S. News and World Report and became their treasurer. And then I went into Foreign Service, and then I left and I went to the Treasury Department, became the first Comptroller of Treasury, and then later, CFO.

So if you look at my public sector service, I have been at Defense Department in the Uniformed Services. I've been in Foreign Service at State Department. I also have been a career CS at Treasury Department, and now I am a political appointee at Labor Department.

So I began my active public career -- in some way you can say because of the Vietnam conflict, by taking ROTC and got a 2nd Lieutenant commission after I graduated from college. But my civilian side of public service started actually with State Department. So I was commissioned as a Foreign Service Officer because the fact that I speak and write fluent Chinese, I become a Budget Officer. That's a joke.

So what happened is that got me into financial management of federal government, and had the pleasure of working with some very, very smart people, learned a lot of good stuff, and also brought a lot of private sector experience into my Treasury job. And I was permitted to do that by my superiors at Treasury who had very progressive outlook on life, so finally I was given a chance to basically experiment with different things over a period of time, and eventually, I think Labor Department gained a lot of benefit from my past experience.

Mr. Morales: Sam, that's great. I'm curious, and I only have a minute left. Over this range of experiences, how have they informed and shaped your current leadership style and approach?

Mr. Mok: Very good question. I think the most important part was my five years in the military as an officer during a draft army period in a war that nobody liked. So I was taught and gained from personal experience how to manage people from different segments of society, and motivating them to do things that they didn't want to do, and motivating them to stay in places that they didn't want to stay.

In Foreign Service, I went through the entire Foreign Service training. It taught me manners, I hope. Social grace, I hope, and most importantly, negotiation skills, and how to get things done diplomatically. And at Treasury Department as a career SES, I learned how to navigate a bureaucracy and how to build coalition to get things done, or sometimes how to take a stand without destroying a career. So all these came to bear when I got to Labor, and it really helped me a lot from a military, diplomatic training and as well as career civil servant.

Mr. Morales: That's fantastic.

How is the Department integrating Budget and Performance information?

We will ask Sam Mok, Chief Financial Officer at the U.S. Department of Labor, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Sam Mok, Chief Financial Officer at the U.S. Department of Labor. Also joining us in our conversation is Steve Watson, partner in IBM's financial management practice.

Sam, let's take a moment and talk about the President's Management Agenda, or the PMA. In the last OMB scorecard, unlike Labor, about half the federal agencies received a Red rating in Financial Performance Status. What has your organization done to continue to receive a Green rating in progress and status in this area? And second, if I may, could you tell us from your perspective why this is such a challenging area for many federal agencies?

Mr. Mok: First of all, we are extremely proud to be the agency, one of the two agencies -- we used to be the only agency that achieved all Green. It took a lot of work; a lot of teamwork, to be exact, and good leadership, and also commitment to excellence in management and fiscal integrity by our Department Secretary, Secretary Elaine L. Chao. As most of you know, Secretary Chao is a Harvard MBA. She really understands the importance of good financial management, because from her personal experience -- I don't know how many of you are aware she inherited the United Way after the big financial scandal, she has this unyielding support and commitment to sound financial and good financial management, and she holds us to very high standards; both ethics and also other performance.

As a result of the good teamwork, Labor Department probably has one of the most stable management teams in the entire federal government among all fifteen Cabinet-level agencies. Another big reason is we look at Green as a milestone, not as an endpoint. It's a continuous journey with no destination.

One of the persons I also need to give credit to is a gentleman by the name of Bill Reese. 20 years ago, way before the passage of the CFO Act, Bill was the comptroller of the U.S. Department of Labor. He had the foresight to work with his colleagues at that time and created an accounting system which we call DOLIS that really laid a foundation of financial reporting and fiscal integrity that allowed us to get ten consecutive years of clean audit opinions and six CEAR awards. So this is something we are very proud of, and also because of this foundation and this platform, we were able to win all the other awards that we have won in the last several years.

But we look at getting to Green in the PMA as a milestone, not as an endpoint, as I talked about. In our case, we got further ahead than most people because of Secretary Chao's commitment, Secretary Chao's support. And when the leader really believes in this, I think it makes a very big difference.

Mr. Morales: Sam, you referenced your tenth consecutive year of an unqualified opinion. First, what is the significance of a clean opinion, and what are the keys to successfully achieving a timely and a clean opinion?

Mr. Mok: I can say this and I don't want the listeners to get this the wrong way: I'm not really sure a clean opinion amounts to very much. Let me explain why, so don't quote me out of context.

As a former auditor myself; I don't do audits anymore, a clean opinion only means one thing: your numbers add up. That's all. Because basically all it says is you have performed your accounting process in accordance with certain predefined regulations and policies and your numbers added up. If you read history and follow the news, many organizations received a clean opinion and then went belly up. So therefore, getting a clean opinion is one of the many indicators, cannot be the only indicator.

To me, getting a clean audit opinion is kind of like a doctor telling you your body temperature is good, your heart rate is good, your pulse is normal. Does that mean you are healthy? Don't know, because you could have high blood cholesterol, you could be having cancer cells in your body. Those indicators don't tell you. But it's a good sign, and it's important -- I'm not saying it's not important. It is one of the many indicators. You have to look at an organization's financial state of affairs in a holistic way. So my point here is don't get carried away by a clean audit opinion. Obviously, if you don't have a clean audit opinion, job number one ought to be get a clean audit opinion, because that is the starting point.

Mr. Watson: Sam, moving on to job number two, budget and performance integration, this really lies at the heart of ensuring both the strategic allocation of funds and the efficient use of funds. Could you tell us about your Department's efforts in budget and performance integration, and how your organization has expanded the use of financial data to improve management decision-making?

Mr. Mok: In my opinion, we have had some spectacular successes in integrating budget and performance information, but having said that, we also have much room for improvement, and let me elaborate. At the Department of Labor, the Office of Chief Financial Officer has developed a managerial cost accounting system that we affectionately call CAM; it's the acronym for Cost Analysis Manager. CAM reports provide resource cost information; full costs of agency activities, and full costs of significant outputs of major programs, and unit costs of output by type, region and trend analysis reports. These are very important data and statistics for the operating managers to manage their programs.

Department of Labor's program managers are using a plan to use the CAM system for budget formulation and justification, resource allocation and determining best practices across similar programs or regions, costing a performance's goals, trend analysis and meeting external reporting requirements, and compliance with various laws and regulations.

We were not able to, at that time, accurately assess, to the best of our ability, the cost effectiveness of these operations, so we may have an office in one building and three blocks down the street, we have another office in another building belonging to another subordinate agency doing similar inspection work, and yet the cost per inspection can vary vastly. So through our CAM system, we started looking into that. We are still trying to bring CAM to full maturity, but some interesting statistics started coming back, and that's what I meant by using it for budget formulation.

We started looking into it. Some was due to lack of good management, others were because of the complexity of the cases. Still others were because of bad reporting of data. So through this kind of discovery, we were able to fine-tune the system so that at the end of the day, we want the program managers to have good information, and back in the home office, we can start looking at these trends to see if in Memphis, we have four offices doing similar organic work, why is one office more efficient than the others; then we can share best practices.

Mr. Watson: Sam, you've been talking about the CAM system, and it's certainly a robust system known across government. What were some of the challenges and lessons learned in implementing a cost management system within the Department?

Mr. Mok: Well, very good question, Steve, because when I first came to the Department, there was not a very robust CAM system, and I didn't really at that time look at it as a high priority; of course, the IG came in and gave us a big finding on the compliance issue. So as I am trying to implement this program, I ran into the same kind of resistance that I originally gave to this program: why are we doing this?

So it took us just a lot of blood, sweat and tears, and after some not-so-pleasant confrontation, to get the program rolling. Some of the folks who really actually got very mad at us because they felt we were jamming this down their throats within the Department of Labor are now the biggest supporters.

Mr. Watson: Sam, earlier, you mentioned your sixth straight Certificate of Excellence in Accountability Reporting, known as the CEAR award, issued by the AGA. Can you tell us a little bit about what is accountability reporting, and the benefits of it, and second, what is the process for achieving this award.

Mr. Mok: Well, this report is put together by a lot of people, not just by my office; it's a Departmental effort. First, we are very proud of the fact that we have been getting awards every year on this particular report, so that speaks well of the information we put out, and also speaks well to the fact that we are meeting the fiduciary responsibility as charged to us by the CFO Act and other requirements.

The report that we publish, like many of the federal reports, was actually instigated by a requirement, not because we thought, well, let's see how we can get the information to the people so that they can use it. So as a result of a federal requirement, the product tends to be weight -- almost like heavy, very very thick, and full of a lot of information that while useful, I'm not sure it is in a useful way; the information is meaningful, but I am not sure the product is useful.

That's why I call it a yet-to-be-success story. I really believe that one, this report ought to be relooked at to see if we can publish a Reader's Digest version of this report for the American public. Point 2 is, as I go through these reports, a lot of them got mailed out and now we are sending electronic versions, it is so long that sometimes it's hundreds of pages -- I question how many American taxpayers actually read these reports from page one to the end.

3 is, I also think that while it contains a lot of extremely useful information, I don't think it's packaged in a way that people can digest and translate into useful information easily. Now, my office has been trying to do that for a while, and we have run into all kinds of unexpected challenges, so I haven't given up that yet. I hope before I leave office, I can be in a position to publish a Reader's Digest or Cliff's Notes version of this report that many people will write and say, we want a copy.

Mr. Morales: Sam, transferring money between agencies can become a fairly tricky and difficult process. The GAO repeatedly identifies intra-governmental transactions as a material weakness when they perform their annual audit of the federal government's finances. Could you tell us about your efforts to promote a new standard for exchanging financial data called the Extensible Business Reporting Language, or XBRL, and how might this help?

Mr. Mok: Well, I'm a great believer in XBRL, and I really believe XBRL can help resolve many problems, including those that you talk about. But I also want to caution the listener that there is no silver bullet out there.

The intra-government transaction issue that you mentioned earlier is actually a multi-dimensional problem from where I sit. First, you got timing issues, you got definition issues; you also got posting errors and things like that, so it's not something that one product or one solution can resolve the problem.

Let me talk about XBRL. XBRL, as you said, stands for Extensible Business Reporting Language. When I first heard about it, I said I don't need this, I don't need another programming change, I don't need another programming product The second thing is, XBRL is not a computer program, it is not a product and it's not a software. What is it? It is a process, or it is a means for us to standardize financial information, in effect to try to create a better way to extract meaningful financial information without what I call invasive surgery.

If you look at it in another way, the Labor Department right now is in the process of implementing a new core accounting financial management system. We have a particular version of the ORACLE financial. The Transportation Department also has implemented ORACLE financial, and the version they use is fairly similar to ours. The Energy Department is also implementing ORACLE financial, and the version they are using is very similar to ours.

The nature of business among these three agencies is not really that different; while they are not the same, they are not really that different, and yet the three agencies' financial processes cannot talk to each other. So if you take that and extrapolate, can you imagine the difficulties of standardization? They're all probably different, so when you start going through consolidation, you are going to have a mishmash.

XBRL, if implemented correctly, can avoid all of that. If you think of it as a blanket that you can put on top of all these different systems, that you just, through data tagging, can feed into a process, so that way, as OMB, the Inspector General or those who have a need in the American public can get the information from different agencies through data mining or whatever a lot easier, and financial reports will become more meaningful, will become simpler, and yet there is no massive retrofit cost. So XBRL itself I think is a fantastic concept. XBRL itself is not going to be the silver bullet, but it is a very important tool, in my opinion, to achieve that ultimate goal.

Mr. Morales: Thank you.

What about the Labor Executive Accountability Program, or LEAP?

We will ask Sam Mok, Chief Financial Officer at the U.S. Department of Labor, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Sam Mok, Chief Financial Officer at the U.S. Department of Labor.

Also joining us in our conversation is Steve Watson, partner in IBM's financial management practice.

Sam, earlier, you alluded to new financial systems within your organization. Could you tell us more about Labor's efforts in replacing its core accounting system with a new state-of-the-art financial management solution called the Labor Executive Accountability Program, or LEAP? How key is this to your financial management modernization strategy and meeting the future needs of the business?

Mr. Mok: Thanks for asking the question, because that is probably the most important issue the CFO of the U.S. Department of Labor has to deal with or manage. When I first became the CFO, when I was sworn in or confirmed by the Senate in 2002, I took office and assembled my staff and all those people who were associated with the office, and I gave a talk, and in that talk, I drew two pyramids. On the left-hand side is what I call the today pyramid; on the right-hand side is what I call the pyramid that should be in place when this administration leaves office.

The left pyramid, which is the pyramid today, consists of a very thick base called transaction processing. That basically is what most of my staff was doing back then, processing paper in and out. And the next layer up is what I call financial report generation. It's a legacy system, it's still a batch-mode system, and it is a very outdated system. So by the time the requester receives the report, frequently they don't remember why they asked for the report.

And then we also have another base called analysis, which is not much thinner, because by the time we are done through transaction processing, through the report generation, and then the next thing is what we call analysis and reporting that we have to file required reports from OMB. At the end is a very small sliver or speck of what I call internal controls -- and basic functions of a CFO basically got squeezed out. That's where we were in 2001 and before.

What I wanted to achieve is a modern-day CFO-ship by the time we leave office, a very thin layer of transaction processing. How do I accomplish that? Because by using this ORACLE financial system, it's web-based, it's single data point entry, and once you put the data in, it just does borderless navigation. You can create your own report � la carte.

So a lot of time is being saved and created because of that so that we can devote more time to financial analysis and decision support and actual decision-rendering. That's the new pyramid. How do I go from one pyramid to the other is the Labor Executive Accountability Program. That is LEAP. There is a new core financial system that we're trying to implement.

When we first started with this program, I told my staff the previous paradigm doesn't work anymore. What we want to do is we want to create a new process. The motto we are trying to accomplish is "the right information to the right people at the right time."

In many ways, the CFO's office is like a policeman's. We have basically two responsibilities: we have law-enforcement responsibility, fiscal integrity, enforcing accounting policies and rules and regulations. But we also provide a service, so I always model my office on a community policing basis, that we're there to provide a service, because if we see something wrong, we need to help the citizens. But on the other hand, we also have to remember, we wear a badge and we have an enforcement responsibility. So how do you reconcile the two is provide better information to my constituents and to assist them with complying-assistance so that if we explain upfront what the requirements are, they can do the compliance themselves. So that way, we don't have to beat people over the head.

Mr. Morales: Now, that's a great analogy.

Now, the Department is the first federal agency to fully deploy an eGov travel system.

Mr. Mok: That's correct.

Mr. Morales: Could you tell us a little bit about this system, and how does it result in significant savings, enhance accountability, which we have been talking about, and operating efficiency?

Mr. Mok: We are very proud to be the first federal agency to deploy an end-to-end eGov travel system. Let me give you an example of some of these savings. Let us take a mine inspector, for example, who could be operating in Kentucky, Montana, someplace, in a field office. They travel because they go to inspect mines. In the old days, they'd fill out a paper form to document their travel and then they attach all their receipts, and it got mailed to the district office to get approved, and it got mailed to the processing center to get processed to be paid, and then a check comes back to them.

With eTravel, using that little example, the same inspector can file that through a computer, and as soon as he is done, he pushes a button and that thing gets electronically sent to his approver. His approver could be thousands of miles away, but he or she can receive it instantly. He or she can approve it electronically, and then it goes right into the processing system. And then once it is processed as electronic, the reimbursement is sent electronically through the person's bank or designated financial institution. You save many days now.

On top of that, we also build in front-end edit checks. We edit out a lot of human error upfront and it just expedites the whole processing in reimbursement.

Under our current system, which is split disbursement, anything that got charged to the travel card that has been approved for reimbursement, the money goes directly to the bank to get reimbursement, to reimburse the bank on the travel card. That's one of the reasons, if you look at the delinquency rate of the U.S. Department of Labor, we have an extremely low delinquency rate because we relieve our traveler of the burden of having to sit down and write a check to reimburse.

Mr. Watson: Sam, switching gears here for a minute, one of the administration's key emphases is on creating a federal government that is accountable, results-oriented, and appropriately aligned with strategic goals. In meeting these goals, can you tell us how federal managers can effectively manage an ever-increasing blended workforce comprised of contractors and federal workers? What are some of the key differences intrinsic in using contractors to get work done?

Mr. Mok: I have written articles about what I call the hybrid workforce. I don't know the statistics government-wide, but I think the U.S. government, federal government, is relying more and more on contractors. I see a lot of merit in doing that. I also see pitfalls in some cases. And let me talk about both.

For example, on the LEAP program itself right now, we are trying to implement this financial management core system. Not many if any federal government are staffed to do that because you do this once every 10, 15 years. Hopefully you don't do this every year. So therefore, the expertise does not necessarily reside within the federal government. You don't want to hire a whole office full of people to do this and put them on the federal payroll, because what do you do with them after you finish implementing the program? So this is an area where you can use good consulting help, and we are blessed with that in the Labor Department.

So therefore in this particular case, I see a need for federal employee leadership with extensive consulting support, because the consultants go from job to job implementing these systems, so hopefully as they go from job to job, they acquire more experience, then that knowledge passes through to us.

Another area of consulting help is when we need to create a new program, such as what I call the CAM Program, managerial cost accounting, Cost Analysis Management of the Labor Department --nobody in the Department had done that before, and we needed to do that. At the same time, we also require that they train our staff. So eventually this thing will be managed and run by the federal agencies. So that is what I call a transition workforce. The consultants coming in help us get it off the ground -- in the meantime, also, we federalized it. That's different from the first one: as basically we just hired outside consultants to help us build it and after, they leave, because the building process is a one-time deal every 10, 15 years, hopefully.

Mr. Watson: Sam, earlier you talked about the growth in the number of c-suite leaders within an organization. Let's see, I think you mentioned chief financial officer, chief information officer, chief acquisition officer, chief administrative officer. I think you even had a few in there I'd never heard of before there. How important is the coordination and collaboration among an organization's chiefs? And in your perspective, is there a single solution to this CXO conundrum?

Mr. Mok: I think the coordination is really important. Failure to coordinate will result in the fiery crashes that I alluded to before in the motorcyclist and the steel ball. I don't think there is, again, a silver bullet. But Comptroller General David Walker will be hosting a forum this month. And I think he might be on the right path on that, although I don't think a chief management officer is necessarily the solution to every Cabinet-level agency.

Having said all that, I don't think having a CMO or chief management officer will suddenly make all the problems go away, because the effectiveness of the CMO, if you have one, is still dependent on several things. One is the true ability of the CMO. Two is the relationship between the CMO and the Cabinet officer. Three is the mandate given to the CMO. So it's not a silver bullet, but I think it's something that's worth discussing and considering.

Mr. Morales: Sam, on a similar theme -- and I only have a minute left. We talk to many of our guests about collaboration. What kinds of partnerships are you developing now to improve the operations or the outcomes at Labor, and how might these partnerships change over time?

Mr. Mok: It depends on what you define as partnership. In politics, which political appointees practice, I think Lord Acton's statement a hundred years ago still applies today. Lord Acton wrote a hundred years ago that in politics, there's no permanent friends, there's no permanent enemies, only permanent interests.

So I think if a partnership is required and we can identify common interests, different people can become partners instantly. When their interests collide -- you may play golf every weekend, but professionally, you're going to have a problem. So I think that is a first important thing to remember, is where the interests lie. Two is: too often we forget, at the end of the day, we all work for the same boss. Especially those of us who are non-career, we can't take it with us when we leave. So it's very important that as we get sometimes emotionally involved with some of these turf issues, we need to take a deep breath and say, "one day this will end, too, so therefore, let's be realistic about how we work this out."

Mr. Morales: That's great.

What does the future hold for the U.S. Department of Labor? We will ask Sam Mok, Chief Financial Officer at the U.S. Department of Labor, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Sam Mok, Chief Financial Officer at the U.S. Department of Labor.

Also joining us in our conversation is Steve Watson, partner in IBM's financial management practice.

Sam, I'd like to transition now to the future. Could you give us a sense of some of the key issues that will affect the CFO and budget offices government-wide over the next few years?

Mr. Mok: Yes. I see going forward, the CFO will have to contend with a very serious issue: that is dwindling resources, expanding requirements. At the U.S. Department of Labor, that is going to be particularly acute for a couple of reasons. One is, the CFO set-up at U.S. Department of Labor is somewhat unique; we have a bifurcated CFO-ship. So therefore, I think we have an even greater need to look at the coordination, to look at the resource allocation.

Now, with the implementation of the requirement of OMB Circular A123, that is a requirement that all of us have to meet, and it is a good requirement, but at the same time, I am not sure there's a whole lot of funding that goes with it. So that is one big issue that we need to look at and figure out how to go forward, because as our resources are being constrained, the requirement -- growth -- has not. So that calls for greater efficiency in deploying what we are allowed to spend, and at the same time, a crying need for matrix measurements so that we know how to prioritize our requirements more correctly. So that's challenge No. 1.

Challenge No. 2 is that the CFO after me will have to look at how to retain and attract talented people. That is going to be a huge challenge, because according to OPM, more and more seasoned federal executives will be retiring, and we need to find good replacements. And I am not sure there is a very large pool, for many reasons. There are a lot of very capable people in the federal government, but are they given the training, the seasoning and the necessary tools so that they can step into leadership positions when this wave of retirements takes place? And at the same time, are they being brought along so that they are ready to step in? And I am not sure that this matter is totally under control at all federal agencies, including but not limited to the Labor Department.

Third, as we have about a year or two left in this administration, and there will be a new president in 2009, how do we transition some of these programs and initiatives to a new administration, and ensure that certain features that are important to the service of taxpayers are being kept and not being discarded for political reasons? So the deputy CFOs, in my opinion, at a federal level agency, and in particular, at Labor, will play an extremely important role, because the deputy CFO will be the transition figure, because he or she is the most-senior career civil servant.

I am the CFO appointed, nominated by the President and confirmed by the Senate, so if I'm lucky enough to be permitted to serve through this term, come 2009 January, I have to leave office. And I have reasons to believe the new President in the White House, whoever he or she may be, will not deem finding a CFO for the U.S. Department of Labor as the top priority as soon as he or she gets into the White House, so therefore, the sitting deputy CFO at U.S. Department of Labor will have to be that bridge to run the office until a new CFO is identified, gone through security check, nominated and confirmed. That can take some time. And in the meantime, run the ship, keep the new Secretary informed, keep a whole bunch of new Assistant Secretaries informed, and make sure that the needs are serviced properly. That's a big job.

Mr. Watson: Sam, you've touched on a number of challenges here. How do you envision your office evolving over the next five years to meet these challenges, you and your successor?

Mr. Mok: Yes, I probably should talk about my successor, because my days at Labor are very limited as we travel towards the end of the term. I see my office in five years, if it continues to grow at the current progression, will become more of an oversight policy office instead of a transaction-oriented office. I also see my office staff evolving to become a more analytical staff rather than a transaction-driven staff. Now, I also see some challenges on the horizon. The reason is, as we migrate toward these things, the issue between who is really responsible for some of these system issues will continue to occupy discussion and burn up certain resources within the organization. At the same time, depending on who is going to be the CFO in terms of personality, background, and access and relationship to the Cabinet officer in question will largely determine which way this office is going to grow, migrate in the future.

One of the biggest questions my career staff has always been worried about or asked me continuously up to about a year ago is, will the CFO-ship at the U.S. Department of Labor implode after Sam Mok leaves office, because I am such a dominant person? I think at that time, they had reason to be concerned, but now I think if you go and ask all the senior managers underneath me, they would just laugh and say, Sam Mok can step off the train tomorrow and get killed and life will go on.

I think I have answered the question in a very professional way and I have done my job, because I believe that if I leave office tomorrow and the office starts to implode, I have failed as a leader, and I think I have created and recruited a very strong bunch of managers that can go on without me easily.

Mr. Watson: Sam, you've talked about the migration of the CFO's office over the next five years. What steps are you taking to attract and maintain a high quality technical and professional work force that will be able to make that migration?

Mr. Mok: That's an excellent question. A couple of things I've been doing, as I always have done: one is, as some of you may know, I am very active in many professional groups, including but not limited to the Association of Government Accountants, the Academy of Government Accountability, NAPA, the National Academy of Public Administration, and so forth and so on -- the reason why I am very active in those professional organizations is because I participate in those organizations and I go to their functions to listen to presentations. And through those forums, it helps me to identify really smart people who can articulate their views correctly and efficiently. I make friends with them and I recruit them. So that's the first thing.

The second thing is, within the Labor Department, I get very involved in different activities, and I spend quite a bit of time gathering information about hallway corridors, about some of the key managers, and I go recruit them if they're good.

Three is, I also believe that chemistry is very important. When I try to recruit a person, I always try to assess: "Does that person's personality fit with the team that I have?" Now, I'm not trying to get cookie-cutters; I don't want everybody to be alike. I always believed that if you have four people in a room and they all agree, you have three too many. What I'm trying to do is always have a very balanced team. I have thinkers, I have doers, I have conceptualizers. I also have people who want to bring everybody back down to reality. So if you come to our meetings, they are always very heated discussions, sometimes it looks like we may start a fight, but at the end of the day, everybody's extremely professional, because I think it is extremely important that we have diverse views, so that the sitting CFO and the deputy CFO have the benefit of these diverse views from people who are not afraid to speak up, and at the same time are professional enough to know that once the leader makes a decision, whether you like it or not, let's move forward. And by participating in many professional activities and volunteering to serve in these organizations, I get to know people like that and recruit them.

Mr. Morales: Sam, you've had a very highly successful career in the federal government. So I'm curious, what advice would you give to a person who perhaps is out there considering or thinking about a career in public service?

Mr. Mok: Very good question, thank you. First, you don't come into the federal government to get rich. If that's what you want, wrong place. You really have to understand the higher call of public service, because public service, especially at a senior level, tends to get very complicated, so you really have to have a very clear vision as to what you're trying to accomplish.

My goal in life is very simple: make some money, have some fun and leave some footprints. Leaving footprints is what public service is about. It's not about making money, and I'm not really sure you can have fun a lot of the time, so therefore it's about leaving footprints. Public service is about that, so that's the first thing I always tell potential applicants.

The second thing is, public service has its rewards, not in a monetary way, because if you do the right thing and have the right position, you can actually effect a change that can deliver benefits to a lot of people that owning a company or working at General Motors or working in General Electric and so forth cannot provide you that opportunity.

Last but not least, having an affiliation of a public organization such as the federal government provides you access to a lot of challenging opportunities, excitements not found -- I've been on both sides, private sector and public service. I'm doing this for the fourth time because every time I left the public service, I'll never do this again. But after a few years, I say, "Gee, it's doesn't look too bad." And that's why I keep coming back.

It's extremely consuming, it's very draining, but on the other hand, it's also extremely rewarding, but the stakes are also very high. In the private sector, if you screw up, probably the worst thing that can happen to you is getting fired. In public service, especially if you are in a very high senior position, horrible things can happen to you. So therefore, I always caution people, when you come into public service, make sure you know what you are getting into, because the consequences sometimes can be very unpleasant if you don't know what you're getting into and you mess up. But on the other hand, if you do the right thing and serve the right cause, the rewards could be extremely extremely satisfactory.

Mr. Morales: Sam, that's a wonderful perspective. Unfortunately, we have reached the end of our time.

I want to thank you for fitting us into your busy schedule, but more importantly, Steve and I would like to thank you for your dedicated service to our country across the many roles you've held over the past 30-plus years.

Mr. Mok: Thank you very much. If the listener wants to have more information about the U.S. Department of Labor or the Office of Chief Financial Officer, please visit our website, www.dol.gov, and click on the OCFO and you can find out more about us.

Thank you for sharing your time with us.

Mr. Morales: Thank you.

This has been The Business of Government Hour, featuring a conversation with Sam Mok, Chief Financial Officer at the U.S. Department of Labor.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.