Originally Broadcast Saturday, September 30, 2006

Arlington, VA

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government. We created this center 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 www.businessofgovernment.org.

Dr. Wells: Good morning, Al.

Mr. Morales: And also joining us in our conversation from IBM is Tony Hess. Good morning, Tony.

Dr. Wells: I would be happy to, Al. The Social Security Administration came into being after President Franklin Delano Roosevelt signed into law the Social Security Act, back in August of 1935, and it began as a board but then evolved into an independent agency, and over the years it has really been like most federal agencies. As our government tends to enact laws in very incremental ways with lots of amendments and changes, it has morphed into something much larger, serving many more people. The original mission was to serve and basically provide income security for individuals who retired from gainful work.

Over the years, it's evolved, continuing that basic mission, but also evolving into serving or supporting people with disabilities, so it's essentially a social insurance program aimed at making sure that people have the subsistence they need to live in our society. And we do a tremendous job, in my opinion, on carrying out that mission. Essentially, we provide, for example, some 48 million folks in our nation with benefits that, I believe, are worth somewhere in the neighborhood of $521 billion, so it's really evolved into quite a substantial program. A very successful domestic program, obviously.

The Agency has actually once again returned to independent status. It had been part of the AGW; then HHS; Health, Education and Welfare; and Health and Human Services, but in 1995, once again it became an independent agency.

Mr. Morales: You have teased us a little bit with the size of the organization, can you give us a better sense of the scale, in terms of budget, number of employees, and geographic footprint of the organization?

Dr. Wells: Right, the total budget in '06, was $595 billion and the workforce is 65,000. As I think most of our listeners probably know, social security, we estimate, affects at least 95 percent or more of the public, and that range goes all the way from getting a social security card to receiving disability benefits. The mission is carried out through a network of field offices, hearing offices, teleservice centers, and program service centers that essentially allow us to be in communities around the country. And the commissioner often says that social security for many people is the face of the government, because most folks know where their social security office is.

Mr. Morales: Great. Can you give us now, a sense of the role and mission of your office, specifically, the Office of Human Resources? How big is your team and how are you organized?

Dr. Wells: I am responsible for the Office of Human Resources, and that is a cadre in headquarters of about 400 people. Because we are so decentralized as an organization and because we have 65,000 employees scattered over the entire country and beyond, actually we have some international involvement, the Social Security Administration has to administer that HR or human capital role through those regional offices that we have out there. And we have another 300 employees who work technically for the operations part of our organization, but because of our responsibility to oversee the policy for human capital and human resources, we oversee them technically.

One of the things we do in order to ensure that we have consistency across the agency is to be responsible for going out and monitoring the hiring, retention, and support of employees in the field. And of course, we do a similar thing for headquarters under the supervision, in a sense, of the Office of Personnel Management. In addition, my budget is roughly $100 million that includes obviously a lot of the service that we render to the employees for things like training. I have the Office of Training under my responsibility, the Office of Personnel, the Office of Civil Rights and Equal Opportunity, and the Office of Labor-Management and Employee Relations. Then I have a very small, actually new, component, a very small unit we call the Human Capital Planning Staff.

That allows us to do a lot of the coordination between my components and also it tends to oversee the national recruitment for the Agency. The gentleman that heads that component is responsible for our national recruitment campaign and he works through the regional offices and with local managers. It's a relatively small group, given the demands on it, but it allows us to do some of the tracking that is necessary under the President's management agenda. That's one of the important initiatives that all federal agencies are engaged in right now. They are being tracked by the Office of Management Budget and the Office of Personnel Management on how they go about certain lines of business, human capital being one of those.

Mr. Morales: Perhaps you could tell us a little bit more about your specific role. Although, your title is much longer, many of our guests will understand your role as being the Chief Human Capital Officer at SSA?

Dr. Wells: I wear those two hats. My social security formal title is Deputy Commissioner for Human Resources, but the government has the role, similar to the Chief Information Officer and the Chief Financial Officer, a Chief Human Capital Officer for many agencies. In some agencies the HR lead is not necessarily the Chief Human Capital Officer. At social security, the Commissioner's thinking was that those responsibilities should be contained under a single individual who can then coordinate and make sure that what we are doing internally is certainly consistent with what we are being expected to do externally. I will explain that a little bit.

As Deputy Commissioner for Human Resources, obviously, I have the responsibility for managing those areas that I have described a moment ago, personnel training, civil rights and labor management. In addition though, there is an expectation I think with this administration to look across government to make sure that we are achieving some consistency in the way we administer our strategic management of human capital, and so the Chief Human Capital Officers Council, and the Chief Human Capital Officer role was established in 2002 to make sure that we are achieving some continuity and that we have Chief Human Capital Officers coming together in a central place and sharing issues and working on planning for things that will further our interest as a government.

Mr. Morales: And that's very interesting. We also understand that you come from a family of public servants. Perhaps you could tell us about growing up with a family culture of federal government work?

Dr. Wells: Yeah, I do. I come by this work, pretty honestly, through my mother who worked for the Internal Revenue Service for 44 years. And growing up, of course, I heard a lot about the importance of public service, and I was fortunate to have both parents. My father worked in a factory in the private sector, but my mother worked in government and so I heard a lot about what that was like, and I never envisioned necessarily going into a government work, but I guess that acorn doesn't fall too far from the tree.

I also have a brother who works for the Veterans Hospital System. He was a Vietnam vet, came home, and, wanting to counter balance what he had experienced over there, he went to medical school and is now working in the VA System.

Mr. Morales: That's a great history. You obviously have a very distinguished career, including running the District of Columbia's Department of Human Services as well as Associate Commissioner of the Administration of Developmental Disabilities, how have these roles shaped your current management style?

Dr. Wells: Well, it obviously impacted it a great deal. I grew up, if you will, a little bit every time I had a new management experience, a new leadership challenge, and all the way from my early days working in New Jersey in what they called citizen services, the equivalent of what Health and Human Services does at the federal level, and also in their Health and Rehabilitation area, I got a lot of opportunity to see how things work at the local level; how local issues and concerns from direct service to the public sort of challenge you and force you to do your very best and to deliver that service. And working through people to get it done, is what you learn obviously, when you have a team.

And I got a lot of experience with those challenges in New Jersey. And then when I came into the District of Columbia it was probably a good time for me to experience that. I started out managing one of their institutions located in Laurel, Maryland, and was later asked to come into the city proper, and manage some of the programs; initially, the disability programs, but later I was asked to serve as the Deputy Commissioner for social services, and it really was that everything that was in public health and mental health fell under social services, so it really was a challenge and a lot of crisis management. You learn very quickly how to adapt to situations.

And I guess what really impacted me and influenced me was operating without all the tools and all the resources one would ideally like to have. And I think that is one of the challenges that public servants, no matter where they are, whether at the federal, state, or local level are sort of challenged with. There is never enough money to meet the needs of the public, particularly when you are talking about the kinds of programs that we are responsible for and the types of populations that rely on our support, so my management style has evolved into one that's pretty participative. I really believe that we get things done through teamwork, through collaboration, through effective communication, and those have been hallmarks of how I have tried to conduct myself as a leader and as an executive.

Mr. Morales: Excellent. How is the Social Security Administration managing the government retirement wave? We will ask Chief Human Capital Officer, Dr. Reginald Wells, 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 Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us in our conversation is Tony Hess.

Dr. Wells: Well, and I'm glad you asked me that question, Al, because that is something we have been tracking as an organization at least for the last decade or so, maybe even a little longer than that. It was the foresight, I think, of the leadership at the time to pay attention to the baby boomers moving through employment and getting to a point in the not too distant future where they would be retiring in larger numbers. I think the leadership felt they needed to take stock of that and social security, maybe because of the role we play, tends to be an organization that is very data driven.

We have, just to give you a sense of the actuaries on staff who project well into the future, the solvency of the program and the service delivery trends and that kind of thing. So we started looking at how many folks are we likely to lose and at what points in time are we likely to lose them over a decade ago. So we do what we call a Retirement Wave Analysis. We update it every year. Right now, approximately 23 percent of our workforce is eligible to retire. Fortunately, most folks work a little beyond their eligibility and that's something that we have experienced at social security.

I think a lot of federal agencies have that. I think our rate beyond eligibility is something like 3.7 years. In five more years that number of people eligible will go up to 40 percent of the current workforce and in 15 years it goes up to about 54 percent, so obviously we had best be in a position to replenish that workforce and to have some sense of when they would be likely to retire. We do projections and we use a model for determining what those numbers are likely to be. And what we are projecting right now is that over the next five years we are going to lose about 21 percent of our workforce.

So it moves us to really pay attention to that and to have some strategies for keeping it from being such a spike. I think the way the model projects are right now, we are looking at the peak of losses between 2008 and 2010. We have been using some strategies however to try to flatten that curve so that we don't have a tremendous spike at any particular point in time over the next few years.

Mr. Morales: So you just referenced this wave of baby boomers retiring across the country, and told us a little bit about how this puts additional pressures on services that supported the SSA. How are you preparing for this perfect storm of resource challenges?

Dr. Wells: Well, it isn't easy, as you might imagine, and I knock on wood every time I talk about this, because we really have not had the difficulty yet. That's why I knock on wood, because I don't take that for granted, recruiting and hiring people. But to address your question about the baby boomers moving into those disability-prone years and moving into retirement causing a greater obvious demand for our programs, we are doing things like a lot of agencies. We are trying to automate as much as we can.

The Commissioner recently announced that we have new regulations for our disability program. We were making some disability service improvements, which should allow us to move them through the process more quickly in general, but where there are appeals, we should be moving people through that process a lot quicker as well so that they have an answer much quicker about whether they are going to be eligible and entitled to benefits. On automation, there has been some reform of some of our systems to try to make it less cumbersome, less labor intensive obviously for us. Technology is not going to be a panacea, but I think it is going to help.

More and more people are applying for benefits over the internet. We are pushing that and promoting that a lot. In my area, people will be able to apply and that's been something that the Office of Personnel Management has been working on as well so that the opportunity to apply for federal jobs is streamlined from what it has traditionally been. So we are using various techniques, technology, systemic reforms, and I guess speaking regarding the human capital issues. We are really emphasizing training within the organization.

We want our employees to be the best they can possibly be. Part of that are the concerns about the loss of institutional memory when these very seasoned employees we have now move onto retirement, well-deserved retirement. We want a group of younger employees coming behind them to get up to speed very quickly. And I think, the retirement wave is a challenge for all federal agencies, and actually, is a challenge for all organizations, because it's not just a public sector phenomenon. But I think you really do have to invest on the front end to make sure you bring people into the organizations who really want to be there and want to do that kind of work.

Our training programs or entry-level training programs are pretty extensive. People can come in and end up in 16 weeks of training before they are even are allowed to attempt to serve the public and that's a substantial investment. So you don't want a serious retention problem early on. If people come into the organization and work five or ten years, and you get a really good service out of them and they choose to move on to other things, so be it, but to have someone new come into the organization, you give them 16 weeks of training and they punch out almost immediately would be a tremendous waste. And fortunately, particularly with new recruits, we have a pretty good retention situation.

Mr. Morales: Perhaps you could tell us a little more specifically about some of the activities your office is doing to develop and manage this kind of challenge? For example, what is the workforce transition plan?

Dr. Wells: The workforce transition plan, actually, was the precursor to the human capital plan. Truth to tell, it actually attempted to do a lot of the same kinds of things. It sort of, describes what the workforce is, what kind of succession planning we should be engaged in, where our greatest needs are from the human capital perspective. We have since adapted it to become really more like a tracking document for us, so we updated quarterly to see in specific detail what kind of activities we are engaged in, in our human capital work. And it just helps us stay on top of what we are doing and allows us to self evaluate whether we are doing all the right things and working on all of the important things.

Mr. Morales: You alluded to succession planning, and certainly this sounds like one of the keys to success in managing this whole retirement wave. Can you provide some lessons or advice to other government leaders who are facing this challenge of succession planning?

Dr. Wells: I think I can offer a little bit of advice. I think that it's very important, first of all, to know what your needs are as an organization. If you have a core mission that requires a certain competency or a certain classification of employee, then obviously you have a little bit of a sense of what kind of skills and abilities the people need and if there are logical pathways to hire or to work, obviously, you want to wait to try to identify the people who are most likely to do the best job there. Obviously, we always have to be engaged in merit principles and you want to never have instances where you regress into prohibitive personnel practices, but it is important to try to identify employees who are interested in moving up into other types of work that are important to the organization.

One of the mechanisms we used to do that, which certainly withstands the scrutiny of meeting merit principles is we have a number of career development programs which allow us to compete within the organization for identification into one or more of these groups where you would be on developmental assignments, getting training, doing this developmental work that allows you then to be a prime candidate for promotional opportunity down the road. We have four mechanisms that we use dealing with the various levels of our organization. For example, we administer our own senior executive service career development program, which is geared toward our GS-15 employees who aspire to be senior executives and they go through a year, or 18-month developmental process where they receive a lot of training.

Some of it is formalized training provided by the Office of Personnel Management at FEI, Federal Executive Institute. Some of it is actually working in areas outside of where they may have come from. So if you were a GS-15 working in operations, you might work in systems, or you might work in human resources and get a better appreciation for the organization as a whole. The next level down for our developmental programs is our advanced leadership program, and it's geared to our 13 and 14 graded employees.

A very similar program, it demands having a mentor, someone that can work with you around your development, developing an individual development plan so that you have some very specific skills you are expected to live up to and meet, and you identify through this collaborative process, what goals you are trying to achieve in terms of self development and professional development. We have a leadership development program, which is the next step down for 9 through 12 graded employees and it's very similar to the others. It is just the level of complexity for the work that you do and the exposures that you get. And then the Presidential Management Fellows is a mechanism we use to bring some pretty talented people into the organization. They may not have grown up in social security, but they have advanced degrees and are willing to come in and get on that track toward leadership.

Mr. Morales: This is a very extensive program. How is the Social Security Administration recruiting new talent? We will ask Chief Human Capital Officer, Dr. Reginald Wells to explain this to 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 Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us here on our conversation is Tony Hess.

Dr. Wells: We recognize, because of the retirement wave and the importance of maintaining our workforce both the numbers that the public, and the Congress, and the President expect, and also the competency, and the commitment to service. And so we, a few years ago, decided we needed to revitalize our recruitment program, our recruitment efforts, and we came up with a tagline: "Making a Difference in People's Lives and Your Own," as a way of branding social security, the service agency that it is.

It was very important for us to do that because, within our mission, the Commissioner, with our strategic plan, has identified four areas: service, stewardship, solvency, and staff, and it's extremely important to bring employees into the organization who bring a skill set that and an interest in service that allows them to really apply themselves to what we expect them to do and what the public expects in the way of service. So we developed this integrated marketing campaign, and we have really updated our materials so that they can be specific to individuals interested in particular career paths.

Social security is a huge organization, and if you have a systems background there is a place for you in one of the largest computer systems in the world. Collecting all of that payroll data, the information on payroll taxes, social security numbers, and the new disability system which is paperless, so there is obviously a lot of work going on in that area.

We have an agency that's large with a tight budget. We have a pretty large budget staff. And well…it's not large. When I say large, that's relative.

Mr. Morales: Be careful what you say.

Dr. Wells: Yeah, exactly. It's not large in the sense of large numbers of people, but they manage a large budget, and they have to be really good at that. So we obviously recruit and hire people who are very good at that. So if you have a financial management background, you are the type of person we would want to bring in to the organization. In that area, our largest operation obviously is our Deputy Commissioner of Operations component. And we need people there who obviously bring a very strong service ethic and who are very good in dealing with the public across the counter and across the desk and who bring an empathy for the types of people who rely on us for economic support.

And in the Office of Human Resources, where it's, as I said, relatively speaking, a small staff, we want people who understand and have a commitment to that type of work. My point is that it's a very diversified organization. And if a young person or even a mid-career person had an interest in this kind of work, we are trying to reach them, so we developed this integrated marketing campaign. We put an emphasis on communicating with people using technology, so we do as much work as we can over the internet.

And we try to get ads and magazines that cater to various populations, because we have to be a diverse organization. Diversity for us is a business imperative, because we serve the entire population. And in order to do that, you obviously have to be able to relate to them. We need that sort of diversity of thinking within our organization to be effective, and so that's very important. We've attempted as have the government as a whole to streamline the hiring process so that people don't have quite the cumbersome role they have coming in.

In fact, the Partnership for Public Service just put out some information from a study that they've done that is focused on college graduates. And what they reported was that people were basically very interested in doing public service, but they very often found it cumbersome or they didn't know where to go to pursue that interest. And so we do go out to colleges and universities and we do job fairs that try to let people know just what kinds of career opportunities there are at the Social Security Administration.

It really requires a lot of outreach, a lot of coordination, and we, because we are so decentralized, while we have recruitment lead and headquarters, we actually work through lead recruiters in all of the regions so that we can have a local presence. And they can cultivate relationships with local colleges and universities, and people who can refer the best and brightest to us.

Mr. Morales: You touched upon, in the last segment, some of the leadership programs that you have at SSA as well as potentially up to a six week training program for some of the new hires. Many of our guests across government share that a great deal of their focus is on ensuring that staff have these appropriate skills. With such a large organization distributed across the entire country and in some foreign territories, how do you manage this at SSA?

Dr. Wells: It's not easy, as you probably appreciate. It requires a lot of focus and attention. We have an office of training, as I mentioned at the outset of this discussion that is solely focused on trying to make sure that our workforce is receiving the best training they can possibly receive. And we've put a lot of emphasis, as you would probably hope we would, on our entry level folks coming into the organization. Our programs in one sense are very basic in terms of providing income security for people.

But in other ways, they're very complex, because there are a lot of rules around eligibility and assets that people bring to us when they come in requesting support. And so it's vital that we do that entry-level training and that we get our new employees up to snuff. But the employees who stay with us, and work with us over the years, and do an entire career with us, of course, have to be nurtured as well. They have to be kept as interested and committed in work. And so you have to replenish them, you have to give them support.

We have a significant e-learning mechanism that employees have access to. It allows them to go online and take over 2000 courses that are available in a variety of areas. Some of it is technical, but it can also be self development; it can be courses that allow them to perhaps make a career or transition to another part of our organization. It's really a tremendous resource, and folks can access it either from their PC at work, or from home. So that part of it is good.

We are really focusing on honing in this year and last year on our leadership training, because we like a lot of organizations when resources are tight, tend to not do as much of that as is really warranted by the needs of your management cadre. And so we have dedicated ourselves. And I'm really pleased that the commissioner in her foresight felt that in order for us to really be effective into the future, we have to cultivate that talent, and build a leadership cadre that will take us obviously into the next 30-40 years of this program.

Mr. Morales: Can you tell us about the role the Office of Human Resources plays in promoting diversity at the SSA, and do you have any advice you'd like to share with other government leaders?

Dr. Wells: Well, my Office of Human Resources plays a major role with the support and the commitment of all of the senior executives. As I said earlier, diversity is a business imperative for us in a lot of ways, and I'm defining diversity in the broader sense, not simply the EEO compliance focus that I think a lot of organizations focus on very appropriately. But we broaden it, because we feel that in order to be inclusive, we have to have a diversity strategy that encompasses all employees, not simply certain groups of employees. So we basically pay attention to the data. Once again, SSA has always been a data-driven organization.

We track, very closely our hiring, and promotions, and training and on a lot of dimensions. I am proud to say that as of today, because it's constantly changing, we are at parity with all of the numbers for all of our protected groups. And our workforce is comparable to a civilian labor force across the board. And that's something we're very proud of. In addition, we really do well hiring employees with disabilities. And it's not something we rest on our laurels about, because it is a very underemployed group of folks in this country.

But we feel, given that it is part of our mission to serve people with disabilities, that we really should have a workforce that also reflects and has empathy for that population. So we do real well there. Some noted magazines: Careers & the Disabled, have recognized us as one of the better agencies in this regard. And we put a lot of emphasis into things like reasonable accommodations for employees with disabilities.

We are bullish about hiring veterans, and we're working as a matter of fact, with Veterans Affairs to basically step up some of the things we are doing in that regard.

One of the things we're talking with them about, because we do serve people with disabilities as a core part of our mission. We're really interested in some of those vets coming back from the war, who may choose to get employed with another federal agency. And we're hoping it can be us, because of the insights they'll bring, and the commitment that they have to service. But I think the important thing really is to pay attention to your workforce, understand the ways in which it's diverse, and the ways in which it is not and be deliberate in going about addressing that.

And obviously in doing so, you have to be sensitive, as I said earlier, to avoid prohibited personnel practices and maintain merit principles. Those are always a given. But I think within that, there's still a lot of opportunity to reach out and communicate to populations that you may not have traditionally talked to or approached about coming into your organization and being a part of it. The other thing we do, which is a little unique, although I think there are a few other agencies that do it, is we have a number of advisory groups that we charter and work with very closely.

Most of them represent those protected categories. But we have found that has been a really good resource, because at the Social Security Administration, those people not only advise us on how to recruit and hire members of their group, but they also do a lot of volunteer work in the community, building relationships with the community, and of course, that then accrues back. People who they may have helped, or people who may have observed them helping others will want to come and work for an organization that's willing to do that.

Mr. Morales: What does the future hold for the SSA? We will ask Chief Human Capital Officer, Dr. Reginald Wells to explain this to 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 Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us in our conversation is Tony Hess.

Dr. Wells: Well, Tony, we get a lot of feedback. Fortunately for me, most of it is very positive. There are no shrinking violets among the executive team at Social Security, and so I get a lot of weekly feedback. The Commissioner holds an executive staff meeting once a week, every Monday. We gather as a team and we share important things, we discuss things. Very often, before and after, and sometimes during those meetings, people are commenting on the level of support we offer from HR, and I'm fortunate, because as an executive, most of that feedback is very important.

And when there are issues, I think what they understand is that we are there to serve them. We are there to facilitate their ability to serve the American public, and so it's very important for us to meet the needs of our workforce. And that's not always easy, because we do have legitimate limitations in things that we can do. Certainly as a public sector organization, you're protecting stewardship which is one of the things I mentioned. It is very important to our Commissioner and our strategic plan, and you really do have to utilize the public dollar in a very responsible way.

So there aren't opportunities to do Cadillac things sometimes for employees. But I think the fact that we focus on their needs and we try to meet them where they are, and support them when meeting the needs of the public, I think goes a long way. We have a number of programs that we do under the group of work which we call "All Ages All Stages." And that is really a way of trying to address the needs of the workforce as an intergenerational group, particularly now, with a lot of new employees coming in, and a lot of senior folks, you know, moving to retirement.

So we do surveys of employees. We often get feedback unsolicited, good and not so good, when people feel that way. And we just remain very receptive to any and all feedback. I think that having me at the table as a partner goes a long way. And there are some organizations that don't have that opportunity. In fact, the Chief Human Capital Officer role was intended particularly for those agencies where the HR human capital interests were not always sitting at the corporate table. At Social Security, that has been true for a long time. They've had a Deputy Commissioner for human resources for a while, well before the CHCO was established. So it really has worked very well for us.

Mr. Hess: We understand that the Social Security Administration was involved in providing relief to the hurricane victims. Can you tell us about SSA's involvement, and what lessons did you learn that can provide insights into possible future emergency responses?

Dr. Wells: Well, I've been with the agency for over four years, it was four years in April. And I don't think I've ever seen a better example of public service than I saw with that particular crisis. Last year when hurricane Katrina, and then Wilma and Rita hit, I think everyone became painfully aware of the devastation in that part of the country. We have countless examples of where our employees, even though their houses were washed away, were, within a day or two, mobilized in meeting with hordes of people who obviously were reeling from the devastation of the hurricanes.

And it doesn't get any better than that as far as public service is concerned. They worked, 12, 14, 16-hour days, 18-hour days, or more. They were reeling back and forth between Baton Rouge and the New Orleans area in shifts, keeping around-the-clock service to the people, and we got checks out within a matter of days. It really was one of the success stories. I didn't get the sense it got a lot of publicity in terms of the main media, but within government, I think, we were recognized as having really hit the ground running.

And it really was not a surprise to us within the agency. I mean, obviously there was no storm as devastating as that one. It was a once in a lifetime kind of catastrophe. But that's what we do. Every year, there are hurricanes some place. Every year, there are earthquakes of some sort. Every year there are brush fires that may destroy the peoples' homes and displace people. And our agency always adjusts to it. It always has been on a smaller scale obviously, but we apply the same approaches in terms of this large scale catastrophe.

And really the lessons that we can offer are things like the importance of communication, making sure that people know what they're supposed to do and being prepared, having done that planning, or having that experience, even if it's on a smaller scale, addressing those kinds of needs is really, really important. And being visible, I think, one of the things we took away from it was that leadership really does matter, and our people stepped up when the need was there, to become the leaders for distribution of checks or whatever was necessary to keep people going.

Mr. Hess: Many in government encouraged folks who are starting their career to think of government as a stop in a long career. Do you encourage this philosophy and can you tell us what advice would you give a person who's interested in starting a career in public service?

Dr. Wells: There is a lot of discussion about that today. I know that Director Springer is trying to address that issue. Director Springer, the Director of Office of Personnel Management, she's doing a lot of very fine work, and she is looking at the fact that some people are not necessarily looking at government as their final stop in terms of their career path. At Social Security, we've had a little bit different experience, and again, I knock on wood, because it could change. But we've had a lot of young people coming into the organization.

And I think because we are so big, relatively speaking, and because we do direct service, which gives that sort of tremendous intrinsic reward feedback to people, we've had a lot of our young people coming, and saying, "You know, we think we do want to spend a career with you." Of course the caveat is, "as long as we're able to continue to progress in the organization and advance and move into areas that we really want to move into as we get older and more established in our careers." So we're really sort of shaving it that way. As I said earlier, we do a lot of training on the front end.

And we ideally don't want to lose any of those people even after 30-40 years. But where people are looking at us as maybe the first stop, obviously you've got to be prepared to address that too, and if you only want to serve for 10 years we're still interested. And, you know, it's not servitude. We happen to think if you come and work for us, you'll probably want to stay for a career, because I think there are a lot of opportunities working in the Social Security Administration.

Mr. Morales: That's great. So what advice would you give a young individual who's getting ready to launch their career?

Dr. Wells: Come work for us.

Mr. Morales: Excellent, excellent. This has been a wonderful conversation, and unfortunately, we've reached the end of our time. I want to thank you for fitting us into your busy schedule. But more importantly, Tony and I would like to thank you for your dedicated service to the public and our country in the various roles you've held at the SSA and in the federal government.

Dr. Wells: Well, as a follow-up to your last question, I just want to offer to anyone listening, our website: it's www.socialsecurity.gov/careers. And if you go into that site, you will get a really good sense of all that we offer, and as I said earlier, I think there are a lot of opportunities not only in terms of direct service delivery to the public, but also all of those support roles behind the scenes, that infrastructure that allows our frontline workers to be so effective.

Mr. Morales: This has been The Business of Government Hour, featuring a conversation with Social Security Administration, Chief Human Capital Officer, Dr. Reginald Wells. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's businessofgovernment.org.

Arlington, Virginia

Tuesday, April 25, 2000

Mr. Lawrence: Good evening, and welcome to the Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and a co-chair of The PricewaterhouseCoopers Endowment for The Business of Government. The endowment was created in 1998 to encourage discussion and research into new approaches to approving government effectiveness. To find out more about the endowment and our research, visit us on the web at www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our special guest tonight is Joe Thompson, Undersecretary for Benefits for the Department of Veterans Affairs.

Welcome, Joe.

Mr. Thompson: Thank you. It's a pleasure to be here.

Mr. Lawrence: Joining us in our conversation is another PricewaterhouseCoopers partner, Greg Greben. Hi, Greg.

Mr. Greben: Hello. Thank you.

Mr. Lawrence: In this first segment, Joe, we would like to talk about your career in VBA. VBA administers some of the most well-known federal programs. Could you tell us about them?

Mr. Thompson: Our largest program, both in terms of the number of veterans who participate in it and the amount of money we spend, is a compensation program. Those are the benefits that we pay to veterans who were hurt in service.

We also have a pension program which is designed to help veterans who have fallen on hard times, both financially and also in terms of their health. We have a home-loan-guarantee program where we provide enough of a backing for a veteran to buy a home without a down payment. We issued our 17 millionth home loan this past year.

We have vocational rehabilitation, which is designed to both educate and help veterans find employment when the veterans are seriously disabled from service, and then we run the nation's fourth-largest life insurance program. Between the coverage we provide to men and women in service and the coverage we provide to veterans, it runs in the neighborhood of $600 billion total coverage.

Mr. Lawrence: Joe, your career at the Veterans Benefit Administration began some 25 year ago. Can you tell us a little bit about your career with VA?

Mr. Thompson: I began as a claims examiner in New York City and from there came down to Washington, a very interesting experience for me about 20 years ago, actually in 1977, and I worked on staff in headquarters, first as a procedure writer. I got to learn the nuances of trying to write for a large audience and try to make it understandable in the shortest amount of time possible. I then went on the staff of one of our line operations that was in VA headquarters.

From there I went to the Philadelphia Regional Office and Insurance Center as an assistant director, and it was a great experience for me because we got to participate and be involved in a lot of projects; it's VBA's largest field office. We had a lot of opportunity to interact with other agencies, to interact with private-sector concerns, so it was a good learning and good experience for me.

After that I became the director of the New York Regional office located in Manhattan, and from there I came into this job.

Mr. Lawrence: What are some of the biggest changes you've seen at the VA during this time?

Mr. Thompson: Well, not just VA but government in general, I would say, the need for speed. The agency that I came to work for 25 years ago moved at a slower pace, as I think is probably true for just about any organization that's been in business that long, just to adapt to the changing conditions that you find yourself in, the changing technologies. So there really is an emphasis on doing things quickly that I don't think was present, at least to that extent, when I began my career.

And I think the changing expectations of the people we deal with, the changing stakeholder concerns, have driven our system considerably in certain directions. Whereas veterans of an earlier age might have accepted a government's decision, the VA's decision, on their claims and those kinds of things, we find that it is much more likely to be challenged. I think, again, that's a reflection of broader societal changes as well.

So I think that the agency is changing fundamentally. We are further away from a major conflict like Vietnam. We're a quarter of a century away from that now, and so the conditions that we deal with are not the traditional battlefield-type disabilities that you might normally see. They are more likely to arise to exposure to environmental hazards. Agent Orange is a good example of that, some of the undiagnosed illnesses from the Gulf War.

So the type of business that we see coming into the agency is different. The individuals, I think, are more demanding as they well should be, and I think we have an obligation to be a lot faster at what we do.

Mr. Lawrence: How about changes in management style and approaches during the same period of time?

Mr. Thompson: Well, I would say historically VA is a very conservative organization. We are command-and-control oriented and approach things typically in an assembly line-type fashion. That's the way we looked at most of our business processes. We have tried to open that up to become more participative, to engage employees in the business of making the business better, and to change the business processes fundamentally to make them both more responsive to the veterans that come to us for help and to our own employees make it more rewarding for them and a more rewarding environment to work in.

Mr. Lawrence: What drew you to a career in public service?

Mr. Thompson: Well, initially they were those that would hire me. I did not plan on making a career of government service, but I had just finished school under the GI bill. I had a wife and a young son at home and I needed the money, so I took the federal service exam and came to work for the VA.

And after I was there a bit, I found that I really enjoyed it. The mission itself to me is very compelling. The people that you get an opportunity to help are recognized as heroes by this country, so the work itself, the end product of the work, I find very rewarding.

I also found that in government service you often times are given enormous responsibilities at a very early stage of your career which in my case was true. I was supervising a staff of approximately 70 people in the first year I was there, knowing maybe one page more in the manual than they did in terms of the business we were engaged in. But I found it very challenging. I found it very stimulating. I found it very rewarding, and I've spent the last 25 years trying to do that.

Mr. Lawrence: Are you concerned about the VA's ability to attract young people today?

Mr. Thompson: Yes, I am. Yes, I am. We're in a competition with every other agency and government with most of the private sector for the same folks graduating from college today. The government salary is not as competitive in many markets around the United States, and we have a presence in every state so in some locales we are not that competitive in terms of the economics. What we do find as a competitive advantage is the mission, that if we can get people engaged in the business for a little while they will find the job itself very rewarding.

So that's our long suit but our short suit is that the economics and maybe government service in general is not seen favorably by a lot of young people, and I think that that tends making the job a bit more difficult trying to get in good folks.

Mr. Lawrence: You've really grown up in the VBA organization. I'm wondering what do you think are the advantages and disadvantages of the Undersecretary coming from within the organization?

Mr. Thompson: The advantage is that you do know the business. You do know most of the personalities if you spend any time in there. So you should have a pretty clear idea about what needs to be done and who you can get to help your doing that. The disadvantages are that you may not know what you think you know. Your ideas may have been so shaped by your experience in the organization that it may just be wrong.

I think that there are advantages to coming from the inside in that you can get up to speed very quickly, but I think there are disadvantages as well, that you can be overbought into the status quo and not see the need for change.

Mr. Lawrence: Well, how should organizations make the decision to hire from within or go outside?

Mr. Thompson: I would utilize the Dallas Cowboys philosophy. When they drafted football players they always said they took the best athlete. I would take whoever you thought had the best skills and the most potential, be they insiders or outsiders, and try to shore up their weaknesses at the next level of the organization.

If they are an insider, it would probably help to have some people from the outside coming in and working along with them. If they are an outsider, I think having a good, knowledgeable person who has worked inside the organization is a great asset.

Mr. Lawrence: Well, it's time for a break. We'll be right back with more of the Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Joe Thompson, Undersecretary for Benefits for the Department of Veterans Affairs, and joining me is Greg Greben, also a partner at PricewaterhouseCoopers.

Well, Joe, in this segment we would like to talk about reinvention at VBA. You began in New York City, so perhaps you could go back and spend some time. Tell us about your experience, what it was like when you were there and what changes you made.

Mr. Thompson: Well I had an interesting experience, in that I grew up in New York, I'm a veteran, and I happen to have filed claims with that office many years earlier. I also began my career there as a rank-and-file worker, and now I came back as the director.

In looking at the same process that we had in place, I found it frustrating from all three perspectives, that it didn't satisfy veterans and it made both rank-and-file employees and managers of the process very frustrated that, again, it was very much command and control.

It was an assembly line-type process. We had up to 12 to 14 people handling each claim. The people that spoke to veterans when they called in or visited the office to find out what was going on with their claims actually had nothing to do with the actual processing of the claim, so they often were in the dark themselves. So you had this business process that took too long, often came to the wrong conclusion, and pretty much didn't satisfy anyone in the process.

So we set about trying to change that. We said if you had a blank sheet of paper and you could draw any process you wanted onto it what would you do if you were designing this from scratch? So that's what we had done in our reinvention activities. We consolidated 17 jobs down to 3. We took 24 hand-off process down to about 7 or 8.

We merged the public contact jobs with the claims-processing jobs so the person speaking to the veteran had intimate knowledge of what was going on in the claim, and we put in a set of balanced measures to make sure that we didn't overfocus on one area.

Instead of just looking at how quickly things were going, we looked at the speed, the accuracy with which we made decisions, how much it was costing us to make those decisions, the veteran's satisfaction with the process, and how our own employees were doing in five equal measures in what we called our balanced score card.

Mr. Lawrence: What are you most proud of from that experience?

Mr. Thompson: I think the single thing I'm most proud of is the focus on meeting veterans' expectations and needs. Changing the focus of the organization from being so consumed with internal processes to one that cared about what veterans thought, what was going on, and not just cared about it but did something about it. You had a means of determining what they thought about it, and you had a means of changing the system once you found out what you had in place wasn't working.

Mr. Greben: Joe, building on your New York experience, in 1997 you were appointed to your current position as Undersecretary for Benefits. What changes did you most want to make in the larger organization?

Mr. Thompson: I think what I mentioned about the thing I'm most proud of in the regional office, which is a focus on veterans, is a similar issue I saw with the larger organization, that we had become consumed with our own internal concerns, and the organization. I hate to use the term "low morale," but for want of a better term I think I will use that one. It had been severely criticized by all of the stakeholders in the process.

I think many people had come to the conclusion that VBA was incapable of doing the right thing or changing itself fundamentally. So I think just trying to get a sense in the organization, a belief that we could do the right thing by veterans, we could bring about fundamental change, that we could get the support of stakeholders was an important barrier to cross, and it isn't one you do overnight. It's something that has taken place and continues to do so, but I think there is a growing belief that we're on the right track, we're doing the right things. It's an expansion of many things we did in New York.

We are, in fact, implementing business-process reengineering or reinvention in every regional office. We prototyped six last year. We have nine going up live this month. We'll have 41 out of 57 done by the end of this year, and it's a fundamental reworking of how they do business in regional offices.

It's not a small change. You literally train virtually every employee in new operations. You have to put in IT systems. You have to change their telephones and communication structure, so it's a big change.

Mr. Lawrence: And how is VBA serving the veterans? You've described a lot of processes. What are their responses?

Mr. Thompson: We're seeing small but steadily increasing indicators telling us we're on the right track. A slight increase in customer satisfaction, probably more importantly is an improvement, and I think what is a veteran's ultimate statement of dissatisfaction, which is an appeal of the issue that's been decided, we're seeing significant declines in our appellate work.

We have really focused on trying to make good decisions up front and be quite clear in explaining them to veterans and giving them the opportunity before we go into the formal appellate proceedings to explain their position, and then if we can make changes we do that. So we're starting to see some very positive signs showing that we're on the right track and that veterans are agreeing with it.

Mr. Greben: You've implemented a balanced score card in VBA. Can you tell us about the balanced score card?

Mr. Thompson: For each of our business lines for compensation, pension, education, we have a balanced score card, and in those score cards there are five measures for each program, speed, accuracy, unit cost, customer satisfaction, employee development and satisfaction. There are multiple measures within each of those categories anywhere from two to four or five. We assign a minimum value. If you go below that, you get no credit for what you achieved.

And then we have strategic goals. We have annual goals and strategic goals that we shoot for. Depending on how well you do in a particular indicator, you get points assigned. You can have a maximum of 100 points on each of these score cards.

Now, the best part about this is that we have this on our Intranet site. Every employee can go in and look at their score card for their organization. They can compare it with their network, and they can compare it nationwide. They can look at other business lines.

It's a very, very open system that is beginning to build the basis under which we want to run the organization which is solid data that people understand and can make national decisions on.

Mr. Lawrence: What impact is the score card having currently on the organization?

Mr. Thompson: It's changing behavior fundamentally. Traditionally, we have tended to focus on single measures, typically speed. We would say timeliness is our key goal, and we would sacrifice accuracy and veterans' satisfaction just to hit a speed goal.

Mr. Lawrence: Well, great. It's time for a break. We'll be right back with more of the Business of Government Hour and our conversation with Joe Thompson. (Intermission)

Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Joe Thompson, Undersecretary for Benefits for the Department of Veterans Affairs, and joining me is Greg Greben, also a partner at PricewaterhouseCoopers.

Mr. Greben: Joe, finishing up on the balanced score card, why is it important to the VA?

Mr. Thompson: I think that the real strength of the balanced score card is that it balances internal measures. It makes you not sacrifice one measure for another, so you really have to be a good manager. You need to concern yourself with how much things cost and how long they are taking and what their impact is on the customers, for example.

It also makes you balance internal concerns with external concerns. It isn't just what you think inside your organization that's important; also, the outside world has a say in how well you're doing. So I think that it brings a perspective that traditionally has been lacking inside VA, at least; so for that it changes behavior fundamentally.

Mr. Lawrence: It's always been my impression, Joe, that the Department of Defense and the old Veterans Administration didn't work very closely together. Can you tell us if that has changed?

Mr. Thompson: That is changing, again, very fundamentally. We actually are beginning our relationship with service members in the first week of their enlistment. We work with the Defense Manpower Data Center, and we know when a veteran has enlisted or when a service member has enlisted because they are our customers, most likely. They have life insurance with us, and they probably are participating in the Montgomery GI bill. It's in the high nineties for those two programs. So we contact them at that point and keep them apprised through their military service about what benefits they are entitled to and what kind of help we can provide.

Even more interestingly, on the far end of the experience, when they are ready to get out of the service we have a pre-discharge program now where we work at defense installations, typically those that have the most separations each year. And we provide not only counseling and help with buying a home, going to school, finding a job when they get separated, but if they have disabilities, we actually rate or evaluate their disabilities before they get separated. They will know what they are entitled to, and it may provide them health-care coverage and vocational rehabilitation.

So it's something this nation has never done, which is to treat military service and veterans' affairs as a continuum of the same process. So we're very pleased with that. This has been built up over the last year, and my expectation is that it will continue to grow.

Mr. Lawrence: We were just talking about different departments working together. Can you tell us how the Veterans Health Administration and VBA are working together?

Mr. Thompson: You're asking me if we are no longer divided by a common mission? We are working very closely with our counterparts in the Health Care Administration. Obviously, veterans that come to us don't see us as two separate parts of the same agency. They see VA, whether they are in the hospital or regional office or any other part of the organization.

Now, we have worked extraordinarily closely with them over the last year. We have linkages in the exams that they provide. We have important IT linkages that are being created, so I think that we are really building the basis for making a seamless system, what we call one VA.

When veterans come in they don't need to commit our organizational chart to memory in order to find their way through the system. They know they are dealing with a single entity.

Mr. Lawrence: Well, how about the employees of VBA? What are you doing differently today than in the past in terms of management of employees?

Mr. Thompson: As I mentioned before, we are in a great struggle with all other organizations to attract and retain the best employees possible. They are our key resource. You can knock the buildings down and immobilize the computer systems. This is the only thing you really need to keep standing is your employee work force.

We've devoted an extraordinary amount of our available resources to developing training systems, again, over the last 18 months to two years. We had no centralized training. This was literally done at every location somewhat differently from every other location. So we've spent about 18 months building up excellent, computer-based instruction. We spent time bringing them into our training academy in Baltimore.

We have nationwide satellite hookups to do training. I speak to all employees once a month. I go on satellite and have the opportunity to tell them what's going on in VBA, where we're headed, why we are doing certain things, take questions from them, sometimes that make you squirm while you're on camera. So we're really trying to build up the strength of the employee work force.

We have just negotiated an agreement with our two largest unions, AFGE and NFFE, on certification, which means that we will certify employees' skills before they are promoted. It also puts a heavy training burden on us to make sure we've given them the opportunity to do that. We have the Intranet sites that provide them all kinds of information about what's going on in the agency.

And I think one thing that will come into play this year that will have great significance for employees is we're developing what is actually going to be a score-card measure, a means of determining their skill levels and what types of training they need on an individual-employee basis that will in effect create an IDP, an individual development program, for every employee in VBA. So they will know, depending on the career track they want to pursue, what training they need and what experiences they need to get, and we'll know as well what gaps we have in our own collective training needs in the organization. So this is employees themselves are going to be a key focus of what we do.

Mr. Lawrence: Well, let me just follow up real quick. Are you worried about the average tenure of the employees? Statistics show that in the federal government the average employee is getting older. How is that playing out at VBA?

Mr. Thompson: That's a major issue for us. We are a Vietnam-era, baby-boom generation. VA does hire based on war-time era, so if you do the math age 55 and 30 years of service, you will find a very large number of key decision-makers and senior managers in VBA are either eligible or will shortly be eligible, so we're pushing succession planning. We are trying to hire the next generation of VA employees and bring them in. That is a concern of mine, though.

Mr. Lawrence: Veterans and veterans' service organizations are quite vocal. They make their wishes and views well known. How have you reached out to consult with them on present VBA and the future of VBA?

Mr. Thompson: We work very, very closely with the veterans' service organizations. Once a month we have the largest organizations in, and we sit down and have informal discussions. Once a quarter we meet with all of them and have a much longer session, going into great detail about all of the programs. We also attend virtually all of the veterans events that they sponsor every year, their own conventions, their own training sessions. We do a lot of the training for them as well.

We are also working in partnership with them. We have asked them to become more integral to the front end of our process. Traditionally, they file claims and mail them into us, and then we take it from there. We are asking them to get engaged in actually doing a lot of the up-front claims work and giving us a more finished product, and we're working with the national organizations on that right now, and we have begun that already. We have begun to implement that, so we have a very good, very productive, and very close relationship with the service organizations.

Mr. Lawrence: You described earlier a lot of the business process reengineering that took place, and we believe that VBA was one of the early leaders in government to adopt this. I'm wondering if you could reflect on this experience and talk about its strengths and weaknesses.

Mr. Thompson: The strength of the system and our business process reengineering was as I described in the New York Regional Office, where you collapsed the assembly line. You case-managed individual veterans' claims. They had a good link into the agency. They had better explanations of what was going on. So it drives satisfaction with the process up and actually makes the process itself more efficient.

The down side is that that's an enormous investment for any organization to go through, to retrain virtually all of your employees, to invest in different types of technology and bring them into play because you have different needs when you reorganize.

It really does get to be a major issue, both in terms of resources and time, and you need patience because the other thing you need to understand is that you're asking people to change often times long-held believes about what they should do on the job and how they should do it.

So the whole process of changing the organization's culture does take time. So I always counsel folks when they ask me about this, you need to be very persistent and very patient and stay actively engaged in it through the whole process.

Mr. Lawrence: Technology has become increasingly important to the success of government agencies. Can you tell us what role technology has been playing at VBA and is it improving customer service?

Mr. Thompson: It's beginning to. We have a mix of legacy systems and modern platforms that are woven together. It's not satisfactory at this time. I think we're making some progress, but some of our systems literally date back to the '60s, and they are coupled with Windows and NT and all of the modern platforms. My concern is that not only is that a complex IT system to manage; it's also very difficult for employees to find and fight their way through it and go on from system to system.

Mr. Lawrence: Great. And it's time for a break. We'll be right back for more of the Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation has been with Joe Thompson, Undersecretary for Benefits in the Department of Veterans' Affairs, and joining me has been Greg Greben.

Mr. Greben: Joe, playing on the technology theme from earlier, can you tell us some more about the role of technology in VBA?

Mr. Thompson: Well, it has played an enormous role for many years, and I don't see that role declining in any way. We're engaged in a number of things that I think are very interesting. We have an imaging project. We are going to replace veterans claims files with image documents. Ultimately, we'll get electronic data from DoD to replace that as well, but right now we maintain over two million cubic feet of paper.

Mr. Lawrence: What does that fill? How big is two million?

Mr. Thompson: I don't know. Well, it runs to 20-something-million claims files that have 150 to 200 pages in them. The difficulty is that in order to make decisions on any aspect of the veteran's claim you have to get your hands on that paper which greatly limitations your opportunities to do a better job. So by imaging them we will have the opportunity to change who does the work, when they do it, and where they do it and even how they do it.

So we have a very interesting imaging project on the horizon. We're testing it out now. We expect to export it to several locations this year and grow it out even more next year. We are using data warehousing tremendously. We got that up and running last year.

We are starting to build enormous volumes of information on the functional nature of our work and who is it that comes to us for help. This is information we traditionally have not had in the past or we have had to cobble together from many different sources, so we're finding that the data warehouse has tremendous implications for us.

Just the whole scope of technology now, it is so easy to develop certain systems we're really finding that there is going to be an enormous payoff for being able to leverage that. By the end of this year, veterans will be able to file applications for benefits on line with us. They will be able to update their own records and certain programs with us. So we see this as really being the wave of the future.

Mr. Lawrence: Well, if it's hard to attract employees in general, it's even harder to attract technology-enabled employees. How is the VBA doing in those regards?

Mr. Thompson: Traditionally, we have hired and kept COBOL programmers for many years on the payrolls. Obviously, that strategy is not going to work in the future. What we are seeing is that we can maintain a small corps of trained and knowledgeable employees in IT, but we are doing an awful a lot of contracting out of that work. It's too expensive and too difficult to maintain the skills you need in-house, so we're really looking to the outside world for help in many areas.

Mr. Lawrence: Any other comments regarding e-commerce playing other roles at VBA?

Mr. Thompson: Again, we expect that much of the paper that traditionally comes to VA, and not just in their claims files but even things that are filed by the people we do business with routinely such as schools, the GI bill education program, or mortgage companies for the home-loan program, that most of that will be replaced over the next few years, that the days of mailing paper to the VA are drawing to a close.

Mr. Lawrence: So much of what you described is paper process that you can easily imagine doing electronically now. In 10 to 15 years how many employees do you think VBA will have?

Mr. Thompson: We will have, my guess is, far fewer than we have today. I don't know what the number is because our projections are based more on what laws are written or what conflicts we are likely to be in than even advances in technology. If Congress changes a compensation law in a fundamental way, either to make it much more difficult to process or things are much easier, it has an enormous ripple effect on the size of the work force. But my estimation is we will be considerably smaller by at least a third, perhaps more than that.

Mr. Lawrence: One of the interesting trends in government is the increased use of public-private partnerships. Can you tell us what types of partnerships have developed at VBA and if you see these partnerships increasing in the future?

Mr. Thompson: Absolutely. We are working very closely with key segments of our stakeholders on partnering to do a better job to help veterans out. For example, our home-loan business, within the next two years about 90 percent of all home loans will be originated and guaranteed without any VA involvement.

Traditionally, you came to us, we gave you a certificate of eligibility, we assigned the appraiser, we underwrote the loan, and then we issued a guarantee at the end. All of that will be automated and will be in the hands of the mortgage community, and our job then becomes oversight to make sure that they are doing the best job possible.

The same thing with education. Schools traditionally send us information, and we enter enough of that in our computer systems to issue the veteran a payment. By 2002 our goal is to have 90 percent of that done automatically by the schools on a pass through that comes into our computer systems, and we maintain oversight responsibilities.

Our insurance program, up until the '60s was totally in house. Since 1966 we have done that in partnership with the Prudential Insurance Company. They actually issue the policies, and we oversee their running of the programs both for service members and recently discharged veterans.

And as I mentioned before, in our compensation and pension program we are asking veteran service organizations to provide a lot of the up-front information on claims, things that they traditionally have not done in the past that will make it easier and faster for us to provide good service. So partnerships are a key strategy for us in terms of how we see our organization proceeding in the future.

Mr. Lawrence: We have just talked about an awful a lot of change, doing it with fewer people and doing things electronically. What advice are you going to people who you are mentoring, the future leaders of VBA, in terms of the types of skills that they will need? Is it more technical, less technical? What will those managers and leaders need?

Mr. Thompson: I think you certainly need a greater awareness of technical capabilities and possibilities. I don't know that you need to be a supertechnician yourself, but I think you need to understand at least what's available to you in terms of technology. But I always counsel them the same thing. We're in the people business, and if you've got to learn one skill you need to learn about human beings and how to treat them and how to respond to their needs. That's how you're successful. So that's the advice I would give to anybody that would ask me that question.

Mr. Lawrence: And how about working in a large organization? Are there special challenges to managers and leaders?

Mr. Thompson: Absolutely. It's a complex world. You don't control many of the things that are going to directly impact on your performance, so you need to capitalize on the things you do have within your control and try to influence the things that are not under your direct control. And, again, VA has traditionally been a very conservative command-and-control organization.

Just the whole thought of bringing employees more into the mix and capitalizing on their skills and abilities is somewhat of a switch for us, and it's one that we put a lot of time into training both our more experienced managers as well as our new ones on this is the way organizations run in the 21st century. This is the only way they can succeed.

Mr. Lawrence: And how does one prepare for the openness around VBA? I mean, today in the newspapers and magazines there's grades about how well you're doing, so the flip side of openness is actually people come back and report on that. How does one prepare for being able to deal with that?

Mr. Thompson: Well, you just need to accept that as part of your life. I think any public-service job comes with great scrutiny that I think is an important part of the American political process. I like history and I like American government and I would say that having that scrutiny, while it makes you squirm and wiggle a little bit while it's on, ultimately it's good for you. And it's the right thing for a society to have that kind of focus and to make criticisms of you, even when it's not justified. That's okay, too.

Mr. Lawrence: Well, I'm afraid we're out of time. Thank you very much, Joe, for spending some time with us today. Greg and I have appreciated that.

This has been the Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner in PricewaterhouseCoopers and the co-chair of The PricewaterhouseCoopers Endowment for The Business of Government. To learn more about the endowment's programs and research into new approaches to improving government effectiveness, please visit us on the web at www.endowment.pwcglobal.com.