Collaboration

 

Collaboration

A Conversation with the Honorable Timothy M. Kaine

Friday, October 5th, 2007 - 11:03
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Conversation with LeadersA Governor of the Commonwealth of Virginia

Dan Blair interview

Friday, August 31st, 2007 - 20:00
Phrase: 
Mr. Blair serves as the first Chairman of the independent Postal Regulatory Commission, the successor agency to the former Postal Rate Commission.
Radio show date: 
Sat, 09/01/2007
Guest: 
Intro text: 
Missions and Programs...
Missions and Programs
Complete transcript: 

Originally Broadcast September 1, 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.

Recent postal reform has provided opportunities to address issues facing the country's Postal Service as it continues its transformation in a more competitive environment, with a variety of electronic alternatives for communications and payments.

With us this morning to discuss his organization and its efforts to facilitate this reform is our special guest, Dan Blair, Chairman of the Postal Regulatory Commission.

Good morning, Dan.

Mr. Blair: Good morning, Al.

Mr. Morales: And joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Good morning, Solly.

Mr. Thomas: Good morning, Al. Good morning, Dan.

Hotlink Topic 1

Mr. Morales: Dan, let's start off by learning a little bit more about your organization, the Postal Regulatory Commission. Can you give us an overview of the Commission's purpose and its mission?

Mr. Blair: The Commission is a new organization built on the foundation of the former Postal Rate Commission. Last December, the President signed into law the Postal Accountability and Enhancement Act. And under that new legislation, the Postal Rate Commission was changed into the Postal Regulatory Commission, with new additional authorities and responsibilities to exercise oversight and regulatory authority over the Postal Service.

Mr. Morales: Can you give us a sense of scale then of this organization? Can you tell us a little bit about how it's organized, its size, its budget and perhaps its geographic footprint, if it has a broader footprint?

Mr. Blair: The organization is a very small organization. I was formerly at the Office of Personnel Management. We were around 5,500 employees -- on a good day with everyone there, 55 employees, but we oversee an entity that generates around $78 billion in revenues that has 850,000 employees, and so it's a big task for a very small organization.

Mr. Morales: $78 billion? That's probably about the size of a Fortune 50 company, if not bigger.

Mr. Blair: Oh, probably larger, probably larger, more like a Fortune 10, and really the depth and scope and breadth of the Postal Service is amazing. It's really the one federal agency that touches everyone almost on a daily basis.

Mr. Thomas: Dan, you've given us a nice broad context of the agency. Can you tell us a little bit about your roles and responsibilities as the Chairman of the Commission?

Mr. Blair: The Chairman of the Commission serves at the pleasure of the President, and is designated chairman from among the five commissioners. We have five Presidentially appointed Senate-confirmed commissioners; we serve terms of six years each; we are located in downtown Washington D.C., at 901 New York Avenue.

As chairman, I'm the administrative head of the agency, and have broad authority over the employees and over the management of the organization. Everything we do though is as a commission, appointment of office heads, organization, all require input of the commissioners, and we work very collegially together. And so I'm very fortunate to be part of a very intelligent, very hard-working group of individuals.

Mr. Morales: Great. Dan, earlier, you mentioned your transition from OPM. Could you describe your career path for our listeners? How did you get started, and what attracted you to leave your senior position at the Office of Personnel Management to become the first Chairman of the Postal Regulatory Commission?

Mr. Blair: I started my career on Capitol Hill working for the former ranking Republican on the old Post Office and Civil Service Committee in the House of Representatives. My issue portfolio included both postal and civil service issues. After the Republicans took over the House in 1994, I had the good fortune to become the Staff Director for then-Chairman John McHugh on the Postal Service Subcommittee. And one of the things that we began on that subcommittee was the Postal reform movement. We conducted a series of hearings on conducting oversight of the Postal Service, and came to the conclusion that the basic business model under which it was operating was broken, the legislation needed fixing. And under Chairman McHugh's leadership, he began the Postal reform movement.

After three years working on the House Government Reform Committee for Chairman McHugh, I moved over to the Senate side and worked for Senator Fred Thompson, who was the Chairman of the Senate Governmental Affairs committee at that time. My portfolio changed a little bit -- I got back into the civil service arena, but was also involved in the Postal Service as well, government ethics, budget issues, and it's from that platform that I was able to make the transition to the Office of Personnel Management, where I was appointed the Deputy Director by President Bush and confirmed by the Senate.

Served there for about five years. It was a phenomenal and educational experience for me, working with some really good people, such as one of the interviewers here today, Solly Thomas, but it was really a phenomenal opportunity for me to gain good management experience and insights on how to run an organization. My passion has always been I think on the Postal side, and when this opportunity arose last year to serve the President as Chairman of the Commission and serve on the Commission, I seized it, because I think this is a one-time opportunity to really help change the way the Postal Service operates.

The legislation granted significant new authorities, but also counterbalanced it by empowering a new commission, a regulator in this point, to make sure that the intent of the legislation was being properly carried out. We view ourselves really as the agents of transparency and accountability, and take that very seriously.

Mr. Morales: That's a very broad set of experiences. I'm curious, Dan, how have these experiences prepared you for this current role -- leadership role, and shaped your current approach and leadership style?

Mr. Blair: I think that my work at OPM certainly gave me the management skills that were necessary for running an organization. And they gave me an appreciation for one fundamental concept, and that is that the organization is only as good as the people that you have for it. So I come into the job with a special appreciation for the human capital side of the equation. I also come into with a broad knowledge and background in Postal issues. This is almost an alternate world of sorts in that many of the ways that government functions -- functions just a bit differently when it comes to the Postal side, and I think there is a steep learning curve for some folks, and luckily, I've had a background in that and I've able to negotiate that steep learning curve well.

Mr. Morales: What are the goals and priorities of the Postal Regulatory Commission?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Mr. Morales: Dan, can you give us an overview of the Postal Accountability and Enhancement Act? What was the impetus for this legislation, and what additional tools does the new law provide the Postal Service to meet the challenges of a changing marketplace?

Mr. Blair: The Postal Accountability Enhancement Act was intended by Congress to give the Postal Service additional flexibility in the way it sets its rates. Right now, the way we set rates for the Postal Service is that they come into the Regulatory Commission, it's a 10-month litigated proceeding at which point we make a recommended decision, which is then considered by the Governors of the Postal Service. This process was clearly broken, it was very adversarial in nature, and I don't think there was anyone who thought that this was a viable model for a 21st Century Postal Authority.

Under the new legislation, we won't be recommending rates, we'll be reviewing the rates, but we'll also be looking at all aspects of Postal operations. The new legislation divided Postal products into two areas: competitive products and market-dominant products. And this is really a watershed in the way that Postal products are viewed and how they'll be regulated.

Mr. Morales: Now, the enactment of this new piece of legislation brought about several changes to the organization itself. Could you describe the fundamental differences between the roles and responsibilities of the predecessor agency?

Mr. Blair: Most fundamental is the name change, and I think that that speaks volumes. We were formerly the Postal Rate Commission, and what we did was recommend rates. As a regulator, we'll be reviewing the rates that the Postal Service sets in the future, but we're also going to be looking at things such as, is there cross-subsidization? Are they keeping rates within the price cap?

The new law has said that the Postal Service could raise rates within each class subject to a price cap, which should be equal to the rate of inflation. But within that, they have great flexibility; we'll be reviewing those rates as well.

Also, the legislation strengthened the complaint process, and it gave the regulator the authority to order corrective action. Now if there's a complaint filed with the Commission, we could only recommend changes. Under the new legislation, we can enforce those changes. We have subpoena authority. So there is significant new authority vested in the regulator to counterbalance the flexibility and additional authorities granted to the Postal Service.

Mr. Thomas: Dan, can you talk some more about the new oversight roles and responsibilities, and to that end, what are your goals and priorities, and how do you plan to accomplish them?

Mr. Blair: Right now, we're multitasking. The legislation gave the Postal Regulatory Commission 18 months from the date of enactment to come up with a new set of regulations governing the new system of ratemaking. In our conference with the Postal Service, I said that I thought it would benefit the system if we had those regulations in place sooner rather than later, and suggested that we might be able to get those regulations up as soon as October of this year, and we're on target to do that. Thus far, we've put out two Notices of Advanced Rulemaking in the Federal Register to receive comments on what this new system would look like. We're engaging the Postal Service in the preliminary stages before full consultation on how to develop new service standards for Postal customers as well with the Postal Service.

But still, we have some clean-up to do under the old act. We issued a decision cleaning up from the rate case that was issued back in February of 2007. We still have a number of smaller cases that are pending. We have negotiated service agreement cases that are pending -- one by Bank of America -- so we're multitasking, we're doing things under the old law, we're trying to get the new law in place, and we're also -- I'm trying to make sure that the organization is prepared to undertake the new responsibilities granted to it by the Congress.

Mr. Thomas: We'd like to give our listeners a better understanding of the relationship between the Commission and the U.S. Postal Service. Can you explain the regulatory role played by the Commission?

Mr. Blair: We have a great relationship thus far with Postal Service. I think it's one of mutual respect and understanding. I've developed a good working relationship with Postmaster General Jack Potter. I think he's done a fine job in his position. Also, Jim Miller, as the Chairman of the Board of Governors, has reached out, and we've established a good working relationship there.

But the legislation definitely empowered the regulator, and we're going to be working to make sure that the regulator fulfills those roles. Part of this will be compliance with the new rate cap, making sure that rates are within the cap that's envisioned by Congress; adherence to new Sarbanes-Oxley reporting requirements.

The Postal Service will be required to develop for the Postal Service new accounting principles for their competitive products category. In addition, we'll be consulting with them later this summer in a formal process on development of service standards, and so it really has given the Commission a new role in helping the Postal Service obtain its missions and objectives.

Mr. Thomas: Given the rather unique nature of the U.S. Postal Service in that it receives no federal funding and operates on its own revenue generation, could you elaborate on this, and how the Commission works to ensure the sustainability of the Postal Service?

Mr. Blair: Under the old law, it was a cost of service pricing system whereby the Postal Service would come in and say that their costs are "X," and the Rate Commission would recommend rates to cover those costs. Under the new regime, the Postal Service will be able to raise rates up to inflation, but will have to manage within that, and so if rate increases in the future will mirror inflation, they're going to have to manage their cost within the allowed framework. It's a substantially new framework for them to operate in.

Congress envisioned more flexibility in ratemaking for the Postal Service under this legislation, but they also said that the overarching considerations were that rate stay within the price cap, and so we'll be making sure the rates within the class -- that the class itself isn't raised higher than the rate of inflation.

Mr. Morales: Dan, you've used the term now "competitive products" and "market-dominant products." Could you describe more specifically what these are for our listeners?

Mr. Blair: The market-dominant products include Postal products such as first class mail, your letters and sealed parcels, post cards, periodicals, magazines, newspapers, standard mail, the mail that you read -- advertising mail, including catalogs, single-piece parcel post, packages that you might sent through the Postal Service and library mail. The competitive products are those areas where the Postal Service finds itself competing against private competitors, and they include products such as priority mail, expedited or express mail, and bulk parcel service for business users.

Mr. Morales: Great. Now, going back to the Postal Regulatory Commission and the Act, one of the most critical requirements of the Act is the establishment of a modern system for regulating rates and classes of market-dominant postal products as you've described, and the law is very clear on the objectives of the system as well as factors for the Commission to consider.

Can you describe these in a little bit more detail for us?

Mr. Blair: Congress granted the Postal Service the ability to raise rates within each Postal class up to the rate of change in the Consumer Price Index. This was done in order to give Postal customers the ability to better predict annual increases, and that was especially important to business mailers. We've seen that under the old cost of service system, some rates were more predictable than others, and that some rates would shoot up based upon their cost, and that would lead to hardship for many businesses. And so a price cap is intended to solve that by introducing an element of predictability and allow businesses to better budget for price increases in the future.

The Act listed objectives and factors by which the rates will be evaluated. The objectives include the value of the Postal services to both the sender and the recipient, making sure that we have regular and effective access to Postal services for all communities, both urban and rural, ensuring that the Postal Service's customers receive reliable delivery, speed and frequency of Postal service, and that they also have objective external performance measures for each of the market-dominant products, and that's what we're working with the Postal Service in the future to develop.

Mr. Morales: On a related matter, can you talk about how the Commission plans to in fact establish this system, and what are your ongoing efforts to outreach to stakeholders, mail users and other government agencies?

Mr. Blair: The first thing we did was we issued a notice in the Federal Register earlier this year, asking stakeholders what this new system rate regulation should look like. We received I believe 30-some-odd responses. Also, those responses were subject to reply responses as well. We also issued another Notice of Proposed Rulemaking. We co-hosted a summit with the Postal Service with over 200 attendees talking about what this new system would look like, and we've also invited comments on service standards and performance measurement for market-dominant products.

But this has all been really Washington-centric, and we wanted to take the message out beyond Washington, and so what we're doing is conducting three field hearings in Wilmington, Los Angeles and Kansas City, in which we're going to hear from different Postal customers as well, and we're inviting written testimony from the public as well as in the Federal Register.

Mr. Morales: Great.

What is the Postal Regulatory Commission's approach to performing its auditing and reporting function?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

Also joining us on our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Dan, with the recent postal rate increase, the Commission also approved the Postal Service's new "Forever" stamp to ease the transition to the new rates. Could you tell us about this new innovative approach, and how does this effort illustrate your collaborative relationship with the Postal Service?

Mr. Blair: Well, I think the adoption of the Forever stamp really evidences the collaborative relationship between the Service and the new Regulatory Commission. It was a proposal by the Postal Service, but it's also grounded in the Commissioner's desire to move forward with something that was very consumer-friendly. We've heard complaints throughout the years of people having old stamps, which they had to go buy the make-up stamps for, if you had a 37-cent stamp, you had to go buy another 2-cent stamp. And so people have rolls and rolls -- odds and ends of old stamps in their desk drawer.

The Forever stamp is intended to be very consumer-friendly, and if you purchase it, it will be good for -- a single piece for a class letter basically forever. But this was an instance where the Commissioners had voiced support for the concept; the Governors of the Postal Service took that and made that a formal recommendation. The Commission adopted it, and it shows you that this can work, that good things can come out of a very collaborative environment. It was a win-win for Postal customers and for the Postal Service.

Mr. Thomas: Dan, under the Postal Accountability and Enhancement Act, the Commission is also advancing toward performance of its auditing and reporting responsibilities. Can you talk about the actions you plan to undertake at the Commission to carry out these responsibilities?

Mr. Blair: The new Act does require the Commission undertake significant new auditing and reporting responsibilities. Part of that will be involving consultation with the Department of Treasury on recommending appropriate accounting principles in the competitive market areas. We've engaged the Department of Treasury in that area. We're also consulting with the Federal Trade Commission about laws on governing competitive products. And Congress asked us to perform a number of reports in the legislation, which we'll be doing over the next few years, in order to give them an idea of where we stand on implementation of the Act as well as ways that we might be able to improve on the Act in the future.

Mr. Thomas: Dan, you've taken over a relatively small agency that now has new authorities and responsibilities, and surely this is a tall order for any agency, particularly one with limited resources.

What changes do you see are necessary for the Commission to carry out its mission and its new responsibilities?

Mr. Blair: That's where I approach this job maybe little bit differently than my predecessors did. Having come from the Office of Personal Management and helped lead the President's Initiative on the Strategic Management of Human Capital, I have a special appreciation for the people that work in an organization, realizing that the organization is only as good as the people that work for it. And so we want to take a hard look at the Commission to make sure, and do the cross-walk between what our old responsibilities were, what the new responsibilities are, what that difference or delta will be, and make sure that we have staff capable of performing those new tasks.

And if we don't, how are we going to bring the staff up to speed, or what new staff are we going to have to bring in to augment that? Along this course, we've hired some outside experts to conduct a skills gap analysis and recommend some organizational changes. We're looking at succession planning. The Commission, much like rest of the federal government, is facing a retirement wave. I believe that 100 percent of my senior management team will be eligible to retire over the next five years, and so we're taking a look at that, to ensure that we have some good succession planning strategies in place.

One of the new areas in which the Commission hasn't had to focus on before, but the legislation requires it, is in the financial reporting area. For example, the Sarbanes-Oxley reporting review and the new accounting principles. So these are new areas for the Commission, and we'll be working to fulfill our goals and roles in these areas over the next few months.

Mr. Morales: Recently, the Commission made two structural changes: the appointment of the Commission's first Inspector General, and the creation of the Office of Public Affairs and Governmental Relations.

Can you elaborate on why these two changes were made, and what are you looking to accomplish with these new organizations?

Mr. Blair: When I came to the Commission, realizing the Commission's augmented role and profile with regards to its new role as a regulator, one of the things that struck me is that we really need to make sure we have a good external outreach. And so the Commission undertook an effort to develop and create a new Office of Public Affairs and Government Relations.

The Commission has been very fortunate in that we were able to secure the services of a long-time Hill staffer who worked on the Senate Homeland Security and Governmental Affairs Committee, Nancy Langley. She's doing an outstanding job in working with our media stakeholders, as well as with our congressional oversight committees and appropriators, to make sure that we're communicating well with them and meeting the expectations of the Act.

The Act also called for the appointment by the agency of a new Inspector General. So that was one of the first actions that we took at the Commission was a creation of this office. And Jack Calendar joined the staff of the Commission as its first Inspector General. Jack came to us as the Chief Postal Counsel from the House Oversight Committee, where he served as Chief Postal Counsel for ranking Republican member Tom Davis.

Also have the good fortune to have join us at the Commission, Ann Fisher, who served as the Deputy Staff Director on the Homeland Security and Governmental Affairs Committee for Susan Collins. Senator Collins was the chief sponsor, along with Senator Carper, of the reform bill in the Senate, and helped shepherd that legislation through the Senate and through its enactments. So we have some really good new staff joining the Commission as well.

Mr. Morales: With the Commission's changed role, do you see the need to undergo further changes in the Commission's organizational structure, its workforce size, skill mix, staff expertise, or perhaps in the policies and procedures? And can you talk about what you think these changes might be?

Mr. Blair: Again, we've brought in an outside consultant to help us better focus on what we need to do differently in order to be successful in meeting the mandates of the new Act. We want to make sure that our organizational structure is best-suited and aligned to this new role. So one of things we're going to have to do is develop a strategic plan.

And we're also moving in several directions at one time, which makes it just a little bit more interesting, if not more complicated, by wrapping up the old rate case and soliciting comments on the new system, reviewing a new negotiated service agreement case, along with the possibility of another rate case being filed before December, which is the last date in which the Postal Service can file for an old cost of service rate increase under the old law.

Mr. Morales: So it's fair to say that the organization is still under a state of transition?

Mr. Blair: We're very much under transition, and we're working forward to making sure that we have the right people onboard in order to carry out the duties of the new Act.

Mr. Thomas: Dan, as a follow-up to your discussion on your role as chairman of the agency, can you also describe your business interactions with the other Commissioners within the agency?

Mr. Blair: As I said early, the Commission's comprised of five Presidentially-appointed Senate-confirmed Commissioners. The President designates the Chairman. The Chairman is the administrative head of the agency. However, all the decisions that are rendered by the Commission, including the employment of office heads, are done on the basis of majority vote of the Commission. Decisions that we've rendered since I've been there, we've been fortunate in that they've all being unanimous decisions, which I think shows you how well and collegially the five Commissioners work together.

We come from divergent backgrounds, with different points of view and different political philosophies. But I think it's a testament to the way that the Commission works is that rather than emphasizing our differences, we've emphasized where we have our commonalities, where we share common beliefs and common strengths and we're able to work out any differences. And so I think that it speaks well for the Commission and strengthens the Commission that we're able to work in that kind of fashion.

Mr. Thomas: Dan, given the regulatory nature of the Commission, can you describe to our listeners the deliberative process that is in place at the Agency?

Mr. Blair: Right now, under the current rate regime, the Postal Service comes into the Commission with a request to raise rates, and that is a fully-litigated case in which parties hire representation and counsel. We have briefs filed, we have cross-examination of witnesses, and it's an adversarial quasi-judicial proceeding. At the end of ten months, the Commission issues a recommendation to the Governors.

That will be changing, however. Since the Postal Service will be given the flexibility to determine it its own rate increases subject to a 45-day review of the Commission, our quasi-judicial role will really be taking a background to our regulatory and oversight role, which will be reviewing how those rates were set, whether or not they are in compliance with the cap as established, and other issues that might come up regarding compliance with the law.

Mr. Morales: 45 days certainly sounds more efficient than 10 months.

Mr. Blair: That's why the Congress enacted it

Mr. Morales: Great. What does the future hold for the Postal Regulatory Commission?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Dan, we don't often see many federal employees with your type of background, particularly one who has held senior positions in both the legislative and the executive branches. Can you tell us what some of the major differences, or perhaps similarities, there are between life in the legislative and life in the executive branches?

Mr. Blair: I think life in the legislative branch allows you the opportunity to conduct the oversight and to get to know government broadly, and to get know the agencies in which you can exercise oversight. The flip side is actually being in the agency where the oversight's conducted and you see the operational challenges and the daily activities, and you gain an appreciation for what it actually takes to make the trains to run on time.

I've been able to come full circle. I've been on both sides. I helped initiate with Chairman McHugh a fundamental reform movement of our largest domestic federal agency, the Postal Service, and saw that to fruition -- from the legislative branch through my work with Senator Thompson, then working for the executive branch when the President signed it into law; now, I'm chairing the Commission which was a key component of that legislative reform effort, and making sure that the intent of Congress is carried out through the regulatory oversight that the Commission will be conducting.

That's a full plate, but it's interesting to see how that has come full circle. I come from a government oversight background. I worked for both the House Government Reform Committee and the Senate Governmental Affairs Committee. So I have a full appreciation for the efforts involved on both the legislative and executive branches of good governance. I helped lead while I was at OPM the President's Strategic Management of Human Capital Initiative, and saw how important it was for agencies to have the right people with the right skills in place, and for agencies having strategies in place to bring that about as well.

I also saw the efforts of good government acts such as Clinger-Cohen and the Government's Performance and Results Act and the CFO Act, and how important that is to management initiatives within the federal sector. And so I have a keen appreciation for the way that federal government works, in an effort for transparency and accountability to the public and to Congress.

Mr. Thomas: Dan, in your last position as the Deputy Director of the Office of Personnel Management, you led a number of government-wide initiatives to address human capital challenges, such as recruitment, succession planning, leadership development, and performance management.

We'd like our listeners to get your broad prospective on what you see as the biggest issues facing the federal government as a whole.

Mr. Blair: You know, it's on several fronts. One I think is making sure that we have a workforce that meets the talent requirements of the federal agencies, making sure that we have good talent onboard, and that we can bring that good onboard quickly rather than having them languishing over periods and months in which you have to go through a hiring process. We've made gains in that area, but I think there's still a lot of ways that we can go on in that area.

I think addressing the security background backlog -- OPM is working hard to do that, but I think that as we continue in the War on Terror, I think bringing people into government with credible suitability backgrounds is going to be ever more important in making sure that we can conduct those backgrounds on a timely basis, will always be an effort on the part of OPM, which does about 90 percent of those background checks, and other agencies as well.

The retirement wave -- I look at the retirement wave in two aspects. One, it certainly is a challenge, because you don't want to have your key staff leave; at the same time, it's a tremendous opportunity to bring new staff on and to grow staff. And so that's why you need to have systems in place to bring younger people on -- people in mid-career on. At OPM, I was able to be part of some initiatives where we looked at mid-career hiring. And so I think that having a well-balanced workforce is a key to success in the succession strategy planning of the future.

So I think those are things that have to be done -- you look at the big picture, but you also have to look at the little picture -- making sure that the workforce that you have in place is meeting your goals and expectations. You need to align workforce performance goals with that of the agency and make sure that's cascaded down to the people who are in the mailroom understand as well as the top executives what the mission of the agency is, and how what they do every day, and how their jobs contribute to the overall success and mission of the agency.

Mr. Morales: Dan, given all the changes, what do you see as your vision and goals over the next five years for the Postal Service?

Mr. Blair: Clearly, we have to get a new regulatory regime in place, as envisioned by the Act, and the Act does lay out specific reporting requirements as well. But overall, I think that our measure of success is to the degree to which we have a vibrant Postal system in the United States. Clearly, the viability and sustainability of the U.S. Postal Service is important, but so is the importance of the competitive nature of the system, and the competitors making sure that there's no cross-subsidization, ensuring fair competition, but also making sure that businesses are being well-served, that individuals are being well-served by the Postal Service, and that the Postal-dependent businesses, be they small or large, that the system itself is vital and that we have done everything we can to encourage the vibrancy of that.

Mr. Morales: So that it continues to provide growth for this country?

Mr. Blair: Absolutely.

Mr. Morales: Dan, you've had a very broad and diverse set of experiences with your career, and you've been very successful.

What advice would you give to a person who perhaps is considering a career in public service, or perhaps in the federal government?

Mr. Blair: I think it's an incredibly important calling to be able to say that you can put yourself out -- there is a key speech by President Theodore Roosevelt about The Man in the Arena. When you get battered about in the press or you've had a bad Congressional hearing, or you've had just a generally bad day in which people are second- and third-guessing everything you are doing, you have to remember that you're putting yourself out there on a line and you have to do the best you can everyday.

I think public service is a very noble calling. It may not be for everyone, but you know what? It doesn't have to be for everyone. And anyone who picks up that mantle to engage in public service, it's not something they have to do for a career either. It's turned out to be a career for me, but for others, it can be a period of a couple of years, five years, a short time or a long time, but I do think public service is very important, and I think we need to create an environment in which public service is recognized and appreciated.

Mr. Morales: Dan, that's a fantastic prospective. Unfortunately, we have reached the end of our time together.

I want to thank you for fitting us into your busy schedule. But more importantly, Solly and I would like to thank you for your dedicated service to our country across your federal career.

Mr. Blair: Thank you Al, I appreciate that. And thank you, Solly. I also want to thank the folks who helped me prepare for today's session, and that includes Nancy Langley, Jeremy Sermons, Ann Fisher as well as Judy Grady.

Mr. Morales: Great. And thank you, Dan.

This has been The Business of Government Hour, featuring a conversation with Dan Blair, Chairman of the Postal Regulatory Commission.

My co-host has been Solly Thomas, associate partner in IBM's human capital practice.

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.

Jonathan "Jock" Scharfen interview

Friday, July 6th, 2007 - 20:00
Phrase: 
"Immigration services has to be focused on national security throughout all of its missions."
Radio show date: 
Sat, 07/07/2007
Intro text: 
Jonathan "Jock" Scharfen
 
Magazine profile: 
Complete transcript: 

Originally Broadcast Saturday, April 28, 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.

A secure homeland depends on the integrity of its immigration system. Since its inception, the United States Citizenship and Immigration Services, otherwise known as USCIS, has sought to strengthen the security and integrity of the nation's immigration system. With much discussion surrounding the possibility of comprehensive immigration reform, much of its execution and success will rest on the shoulders of the Citizenship and Immigration Services.

With us this morning to discuss these challenges is our special guest, Jonathan (Jock) Scharfen, Deputy Director of the U.S. Citizenship and Immigration Services.

Good morning, Jock.

Mr. Scharfen: Good morning, Al. How are you?

Mr. Morales: Great, thank you.

Also joining us in our conversation is Dave Abel, director of Homeland Security Services at IBM.

Good morning, Dave.

Mr. Abel: Good morning, Al.

Mr. Morales: Let's start off by setting some context for our listeners.

Can you tell us about the mission and the evolution of U.S. Citizenship and Immigration Services? Give us a sense of its history and the programs it runs.

Mr. Scharfen: Yes. The U.S. Citizenship and Immigration Services was originally the INS, Immigration and Naturalization Service, which was part of the Department of Justice. But after 9/11 and after March 2003, it was broken out -- "it" being the old INS -- was broken out from the Department of Justice and placed in the Department of Homeland Security. And then in turn, the old immigration service was broken into three parts.

One part was the Customs and Border Protection. Another part was the Immigration Customs Enforcement. And the third part was my organization, the United States Citizenship and Immigration Services.

Immigration Services has to be focused on national security throughout all of its missions. And we work in conjunction with the other organizations. We work with CBP and ICE almost in -- if you think of it in terms of concentric circles -- CBP protects the borders. ICE does internal enforcement, and we run the immigration services. We provide the benefits when people apply for citizenship or a green card or for some type of immigration status.

To give you a sense of the scale of our operations, Al, we end up processing about 6 to 8 million applications a year. We have 250 offices throughout the country and the world. The scale of it gives you an indication that the management -- you started off talking about the management of Immigration Services -- is a real struggle. It's a challenge for any good manager to be able to manage just the daily operations.

For instance, we conduct 135,000 security background checks a day. We have 135,000 visitors visit our internet site a day. We have 82,000 calls, phone inquires, to our phone lines. We take 8,000 sets of fingerprints. We welcome about 2,000 new citizens every day and swear them in. You can see that the management side of immigration services alone is a serious challenge.

Mr. Morales: In support of that broad and complex mission, can you give us a sense of the budget and the employees involved in your organization?

Mr. Scharfen: Our budget is approximately $2 billion a year. Most of that is derived from fees, and so it's not from appropriated monies, Al, but rather fees that the applicants for immigration benefit when they make an application -- they also have to pay a fee, and we collect those fees, and it comes to about $2 billion, and we run our enterprise based on that.

In terms of our employees, we have 15,000 employees. 10,000 of them are full-time employees, and then we have on top of that 5,000 term or contract employees, for a total of 15,000 employees.

Mr. Abel: Jock, let's narrow in a little bit. We're talking about CIS broadly. I'd like to get a better understanding of your role as Deputy Director. What do you do on a regular basis?

Mr. Scharfen: Dave, I serve as the Chief Operating Officer. The Director, Dr. Emilio Gonzalez, sets the goals and emphasizes strategic direction of the organization. I work with him closely with that, but I'm in charge and responsible as a Chief Operating Officer to implement that, to operationalize, if you will, those strategic directions. And I work with the Domestic Operations Director, our Refugee Asylum and International Operations Directorate, and our National Security and Records Verification Directorate. Those are three major directorates the way our organization is broken down.

We have a chief financial officer; we have an information technology officer; and then we have a few offices that are peculiar to the Immigration Services. For instance, we have an administrative appeals office that works on appeals, on decisions in different immigration benefits.

Mr. Abel: How many people support you directly? How many people are on your direct team?

Mr. Scharfen: Well, in my direct team, it's rather small. I have just a handful of people that support me directly. But what I do is I reach out to the directorates, and then that's my mode of operation is I work with the associate directors of the organization, and then those organizations in turn provide anything I need.

Mr. Abel: So with such a small group of people supporting you directly, and the numbers you're running through are astonishing in how large they are as far as how many benefits are processed -- phone calls, contacts, things of that nature -- what are the top challenges that you and your team face on a regular basis?

Mr. Scharfen: After 9/11, clearly, we always start off in answering this is that it's national security. Well, no one needs to be reminded, of course, is that the hijackers, many of them had abused different aspects of our immigration system. We know that terrorists continue to want to take advantage of our immigration laws, and so we have to remain vigilant to ensure that our people are trained and that they understand the threats that are out there.

For instance, just last fiscal year, we stood up the National Security and Records Verification Directorate. Its sole mission is to ensure that national security is kept to the forefront in our organization.

A second challenge, I would say, would be public integrity. Recently, unfortunately, there have been some stories just here in the region about fraudulent behavior of some of our CIS employees, and that's of major concern to us. We want to make sure that our employees are honest as well as efficient. And just recently, we announced the creation of an Office of Security and Integrity, to ensure that we have good management systems in place.

Finally, one of our major challenges would be the efficient delivery of immigration services. Just recently, we cleared a 3.4 million application backlog. We were augmented by the Congress with appropriations; half a billion dollars to pay what it took, extra manpower, to work back that backlog.

Moving forward, we have to ensure that we are performing our mission as efficiently as we can so that we don't end up creating backlogs like that again, and that's going to have to end up in the necessity of a fee role in a transformation program.

Mr. Morales: Jock, we had an opportunity before the show to talk about your career as a Marine and as a lawyer, which I find to be a very potent and dangerous combination.

Could you describe for our listeners your career path? How did you get started?

Mr. Scharfen: My dad was a career Marine, and I knew -- gee, since I could remember -- I always wanted to be a marine. So I went to the University of Virginia on a Marine option scholarship, joined the Marine Corps and became an infantry officer.

The Marines have a great program, as do all the Services, and it's a funded law program, and then sent me to law school at the University of Notre Dame. And then later on, the Marine Corps sent me to get a master's of law in environmental law at the University of San Diego.

My assignments were varied in the Marine Corps. I had some great command both as an infantry officer and then as a lawyer. And I had a command as a lieutenant colonel in Frankfurt, Germany, where I commanded Marine security detachments at different embassies.

I was able to serve as a prosecutor at Camp Pendleton. I had three tours at the National Security Council, where I got to see national security policy made and managed.

And then when I finished with the Marine Corps, I retired after 25 years. I then went to work on Capitol Hill. My mother influenced my second career choice. My mom had worked for Senator Warner for 20 years, and I had always admired my mom's work on Capitol Hill. She was a caseworker for Senator Warner, and one of her responsibilities was immigration. I was chief counsel for the House International Relations Committee for three years before assuming my current duties as Deputy Director.

Mr. Morales: That's just a fascinating story and fascinating career. So tell me, how has this broad set of experiences prepared you for your current role at USCIS, and how has it shaped your management approach and leadership style?

Mr. Scharfen: Good question, Al. I would say that the Marine Corps is known for many things, but one of the things that they inculcate in all of its Marines when they train us is the importance of values. So I've taken those leadership traits and values that were taught by the Marine Corps, and I tried to live by those in my current job.

The emphasis on mission, and to try to do the best you can in terms of achieving your mission. Finally, I think in terms of background as being a lawyer, that respect for the law has to be throughout the organization, and so those two things, I try to bring: values and the respect for law, and then finally, the respect for people throughout my management.

Mr. Morales: That's great.

How will USCIS handle the passage of comprehensive immigration reform?

We will Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within the U.S. Department of Homeland Security, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, as a result of a comprehensive fee review, which we began to talk about in our first segment, USCIS has sought to adjust the immigration benefit application and petition fees of the examinations fee account. What prompted this comprehensive fee review, and what are some of the examples of fees that applicants will be paying under this proposed structure, and when will they become effective?

Mr. Scharfen: Al, this has been the subject of some intense public debate, and we've gone up to Capitol Hill and testified before some House committees on this. The fee review was prompted by a number of things. First of all, the President, in his FY 2007 budget request, directed that the USCIS reform its fee structure.

A second reason was that the Government Accountability Office, the GAO, had done a report for both the House and Senate Judiciary Committees that indicated and concluded that the fee structure that we currently are operating under was insufficient to fund our operations. In other words, we were operating in the red every year because the fee was inadequate to cover our operations, and the GAO recommended that we do a new fee study to make sure that the fees covered operational costs.

And then, finally, there's a legal requirement under the Chief Financial Officers Act of 1990, which in 2004 began to apply to the DHS, that requires that fee-based agencies have a fee review every two years. But really what's driving this, the reality of this is that we are not covering our current costs. We fall short hundreds of millions of dollars over actual costs.

The backlog numbered up to 3.4 million just back in 2004. That backlog was building because we did not have the fees coming in to be able to pay for both the processes and the manpower to work out those applications in a timely fashion.

Another reason why we need to do the fee rule is that all the new security steps that we're taking, the different integrity measures that we're taking, have not been funded. Those were all new requirements that we placed on ourselves that are not being funded, because the last major fee study was back in 1998. So in between the last major study, we had 9/11 and the requirement of all these national security measures, and they're unfunded. And this leaves us short hundreds of millions of dollars.

Mr. Morales: Can you expand a little bit more on the details of the overall impact of this fee increase? And you referenced a statute, so will USCIS then be conducting these fee reviews on a more regular basis?

Mr. Scharfen: That's correct. Every two years, we're committed and we're required by law to do a new fee study, to ensure that the fees are either meeting the costs of our current operations. We have a new staffing model, we have a new fee model that we're using that's a more nimble and now analytical tool, and we'll be able to, we think, as we go forward here, have fee adjustments that will reflect the actual costs of our doing business, and it will be better for the public.

But to give you some examples of what we're talking about here, to give our listeners a little bit of a context of what this means, I'll just start with the average increases here. Right now, we have an average increase -- if you take the weighted average of the application -- and that's the way you get that is you take the volume, the mass volume of applications, and we'll call that about 4.7 million -- and then divide that by the total projected costs of processing those, which would be roughly $2 billion -- that comes out to a weighted average of about $491 per application. Compare that with the current one, which is $264. That's the average fee for an application. You get an increase of $227.

But when you start taking a look at that in the individual applications, it's not always that great. And if you indulge me here, I'm going throw out a few more numbers, and I'll run through what's a highly-used application. A guess a big, if you will, a business line of USCIS are the I-485s, which is the Adjustment of Status Application.

Today, an individual, an applicant when they file an I-485, or a Application to Adjust Status, they would apply or make an application using this form. They pay $325 to do that. However, in the course of their waiting, they will frequently end up having to apply for an Employment Authorization, which is called an I-765. Or they'll apply to travel -- they need a travel document -- and that would be an I-131.

When they apply for these other benefits, Al, they have to also pay a fee. When you add that up, it comes to about $800. What we plan on doing is charging one fee at the beginning, so when you apply for an I-485, when you want to adjust your status in the United States, in the future, if the rule goes through, and as we propose it, you would make one application, and you'd make one fee. You'd pay one time, and that would be $905.

But what I would like to add here, Al, is that we're not insensitive to the fact that no matter how you slice this, these are significant fee increases. And we realize and we don't take lightly our proposal on this, and that these are not insignificant fee increases, and we are receiving our public comments as we get through this, and we've gotten some very good ones. We realize that we have a responsibility to the public to make sure that we look at those comments carefully and that we have the fee schedule down properly.

And then the flipside of that is that when we go forward, and we hope that we will be able to go forward with the final fee regulation, that we provide better services to the public.

Mr. Morales: So just as a quick clarification, the $905 that you reference is sort of like a projected lifecycle cost, and so you're sort of providing a convenience by bundling that together?

Mr. Scharfen: Al, I think that's exactly the way to think of it, and I'll start using that now. "Lifecycle cost."

Mr. Abel: Jock, when you were talking about the fees, you mentioned that one of the purposes of increasing the fees was to make sure that CIS has sufficient resources in order to be able to meet its mission going forward.

There's a big debate going on right now about immigration reform. Is CIS ready today to be able to accept the impact that will be created by immigration reform if a temporary worker program does come into existence?

Mr. Scharfen: I would say yes. We've been planning for this day for some time. However, much of what we have to do will be dependent on what type of bill we get. We are working carefully -- the Administration and USCIS -- is working very carefully with the different committees on the Hill to make sure that we're communicating what's operationally feasible, so that whatever bill comes out of the Congress, we hope it'll be something that will be feasible in terms of the operational side of it, and we're working very well and cooperatively with the Congress to try to get those parts of it as right as we can.

But it will be a big lift. We're talking about 12.5 million applications. And if you take a look at our current annual business, we do about 7 million applications on average a year. On top of that, Dave, we'll go from 7 to 12.5 million. It will not be an insignificant management and leadership challenge.

Mr. Abel: I would imagine one of the things that makes growth of demand like that so difficult to be able to meet is the manual paper-based environment in which you currently operate.

Can you tell us a little bit about CIS's integrated digitization document management program?

Mr. Scharfen: Yes. This is part of our effort to move from a old paper-based system. To give our listeners a mental image maybe of what we're dealing with here, we have approximately 100 million paper records in our systems, Dave, and we have different record facilities around the country. Some of them are quite large -- there's just boxes and boxes -- we have records facilities, that you look on it and they go on forever.

That's fraught with extra expenses and dangers: the misfiling of a record, and the trying to manage those, and it's very labor-intensive and it's just not efficient, and it's not congruent with our current capabilities. We should be electronically adjudicating cases. That's what this program is designed to do. It's made up of two parts.

The first part, we have a records digitization facility, and that exists to scan or convert our paper-based A files -- those are Alien files -- into a digitized format. And then with that, we have a management system that will store, manage, and provide access to the digitized files to our organization. And the benefits of this will be we hope to have just-in-time electronic file delivery operation. It'll make it easier to share information with the Department of Homeland Security with our components.

For instance, you can understand ICE, and enforcement actions, need to have access to our files. It'll be faster. We'll get rid of shipping costs as well. And then finally, it reduces significantly the danger of misplaced files.

Mr. Abel: It sounds like a lot of the results of this particular program will help folks within CIS and within the Department of Homeland Security to more effectively manage a case or manage a file.

Are there activities that you're doing electronically that focus on the immigrant or those that are applying for benefits as well, such as online applications or telephone support? Are there customer-facing activities that you're enabling as well?

Mr. Scharfen: Yes. We want to expand our e-filing capabilities significantly. Among our users of the immigration system, we get different requests. For instance, our business users really want us to increase e-filing because they're comfortable with making a computer-based electronic application. Some of the immigration community-based organizations are less enthusiastic about it -- we're trying to do two things. We're trying to be sensitive to both needs there. We want to increase our electronic filing, but in the interim as we move forward with increasing electronic filing opportunities for immigrants making applications, we want to tie this into also including with that the ability to make a paper-based application until people get more comfortable.

We'd like to do this in a number of ways. One, we're working with the Treasury Department, and they have a great system called the lockbox operations. And they specialize in taking in large numbers of applications, taking in the money, as well as setting up electronic filing systems, because the banks that work with the Treasury Department that takes in the money, it's in their business interests to make it as easy as possible to take in the application forms. And they'll set up -- they're expert at it -- new e-filing application forms for us. And so we get to leverage that and perhaps save some money and keep costs down for the immigrants making applications by using these different lockbox contracts to have expansion of our e-filing systems.

Mr. Morales: Jock, we opened the show with you describing one of the greatest challenges is the support of our nation's security.

Could you elaborate on improvements USCIS has pursued in such areas such as background checks, fraud detection, and worksite inspections to meet current and emerging threats to the integrity of the immigration system?

Mr. Scharfen: Yes. We've done a number of things, Al, to try to improve our ability to ensure that we meet our obligations to the American public on national security.

I believe under the Director Gonzalez's leadership is that he set the right tone. I think the principles and the missions emphasis that are made by the Director are very important, and people pick up on that. They want to do what the Director has laid out, and he has made it very clear that national security is the central goal of his. He likes to say there's a reason that USCIS is in the Department of Homeland Security, and that's because of national security.

We've emphasized to our employees that national security is important, and I think that that can't be overemphasized, the importance of that.

The other thing though is what we've organized for national security. We've created just this last fiscal year a new National Security Directorate, and part of that -- also one of the sub-offices of that is a Fraud Detection Office. They are dedicated to looking at the different areas of national security and fraud, both to study our vulnerabilities and then to seek out enhancements. And I'll give you just a couple of examples.

We have been authorized to hire an additional 400 immigration officers. We are in the process of already doing that and deploying them out into the field, who will concentrate on the research and analysis and other aspects of detecting fraud throughout our application pool.

They, for instance, do benefit fraud assessments. They did an assessment on religious worker fraud. And we took some of the statistics from that, which were very telling, and then we've made some policy changes and operational changes in order to try to preempt some of the fraud that we saw with the religious workers.

We have increased our site visits where we go out and we make sure that if someone is making an application as a religious worker, that the person sponsoring that applicant, that the church actually exists, that it's not a fraudulent storefront, and that it's not just a front. We hope to get out a proposed rule that will tighten down some of these processes even further.

On the national security side, we have been careful to ensure that we do fingerprint checks and national security checks. We take 10 fingerprints; we run it through the FBI and run it through the FBI fingerprint checks. We also do name checks, and we run it through the FBI databases to ensure that the individual isn't on, for instance, a terrorist watch list. We have procedures to make sure that we handle that appropriately.

Mr. Morales: Great.

What are USCIS's efforts to build an immigration service for the 21st century?

We will ask Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within the U.S. Department of Homeland Security, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, in your efforts to build an immigration service for the 21st century, USCIS continues to pursue an organizational and business transformation program.

Could you elaborate on this transformation initiative? To what extent does your recently developed strategic acquisition plan inform the underlying transformation strategy? And if I may, what are some of the critical challenges facing your organization as it pursues this transformation initiative?

Mr. Scharfen: Thanks, Al. One of the ways we hope to avoid future backlogs, especially of the extent that we had built up in the past where we had millions in the backlog -- we also want to improve the quality of our services that we give to the different applicants. And the way we're going to do that is to transform our business processes of USCIS, and that involves both organizing how we do go about our business of giving benefit applications, or granting them, and also, it feeds into our technology, so it's both the business side or the process side and the technology.

And right now, the different pieces of our transformation initiative involve the digitization, moving from a paper-based system a computer-based system. It also involves moving to a person-centric process from a form-centric process.

The way we look at our immigration applications right now, we do it by application type. When you come in about your application, Al, I wouldn't put your name in. I would have to try to get the A file number and try to match you up with your application file number. I would be able to do a name search for you, but it wouldn't necessarily identify all the different applications that you had submitted. And what we want to do in the future is have a person-centric system where we would be able to get all of the applications up and to get your history there.

That's more efficient for you, for the applicant, and it's more efficient for us to be able to see your record all in one keystroke. The other thing is, that's also better for national security. Because then we can see whether or not you're being consistent in the story you're telling.

Another thing that we want to do with this transformation program is that we want to have our records and our applications put into electronic form. We have electronic filing, we have paper filing and we scan in the paper into an electronic system and then we get rid of the paper and we just keep that electronic file.

We want to manage that case then from beginning to end electronically. And that requires a sophisticated, nimble system, both hardware and software, to manage the case electronically. How are we doing that? We're starting off with a pilot, the International Adoption Pilot, and we're trying to put all of these different pieces together with that pilot and taking some lessons learned from that and moving on.

We have a spend plan, and it's for $100 million this year. $43 million of that were from appropriated funds, and then we matched it with -- or a little bit more -- $57 million of our fee money to come up with $100 million, and this is moving forward to the next increment of the transformation program.

We'll take our experience there -- and that's if this is approved, of course, by the Department, but it's there and we're talking with the Hill on this, and this has to go through, by law on the transformation program, the Hill is taking great interest in this. And we are working carefully with the committees, and GAO will have to take a look at it, too. But working cooperatively with the Department, with the Congress, we hope to have a robust stage two of this -- increment one, we're calling it -- where we then start taking the lessons we've learned from this initial pilot program and moving it into the naturalization. We have about 11 different applications that fall under the naturalization rubric, and we'll then start seeing whether or not we can have this transformation system work on a larger scale.

Again, we'll work with the Treasury Department as much as we can to set up lockbox operations where the applications will come into these processing centers for the case intake, and it'll either be electronically or it'll be by paper and then it'll be scanned. We're looking then to have biometrics. Those are the 10 fingerprints and the photograph. We want to make this easier so that when you first come in, you have to do that just one time, and we hope to include that into our transform system.

Finally, working on the electronic adjudication piece of it, and that would include having electronic or by computer scheduling for the applicant, as well as notices.

In our fee rule, we would be looking to put $139 million roughly a year going forward, making a very large investment as we move forward in this transformation system.

Mr. Morales: You know, it sounds like this individual-centric single view of data would serve as a great model for the health care industry, who I think is struggling with the same issues around how do you consolidate large amounts of data around a single individual as opposed to having it in disparate systems.

Transformation is often described as an alignment of people, process, and technology with robust investment management.

How has USCIS strengthened its investment management review process to better ensure that programs and initiatives align with the overall strategy, business, and IT initiatives?

Mr. Scharfen: We have hired about a year or so ago a very good Chief Financial Officer, and he is just superb. Rendell Jones has really provided great management organizational skills, as well as just leadership in this area. And what we've done is we have started a strategic resource board where we review the enterprise investment decisions, and the transformation office feeds into -- for instance, its proposed expenditure plans -- go before the Strategic Resource Board, and all of those are reviewed by the senior leadership of the organization.

We put those into the larger context of USCIS's large strategic plan, we put the transformation piece in there and we make sure that it's integrated, and that the different leaders within the organization are first fully advised about the transformation expenditure plans, and then that everyone has a chance to vote on it. We work in a collaborative, collegial fashion there, and we have quarterly reviews then to go back and take a look at -- to make sure that we are getting feedback in to make sure that the expenditures are resulting in the things that we expected.

We also have a review process of these annual expenditure plans. We work with the Department carefully, and we also work closely with OMB, which has a longstanding and continuing interest in our transformation program, and with GAO and Congress.

Mr. Abel: Jock, one of the risk areas in a transformation program like this is being able to work effectively with stakeholders. The stakeholder community for CIS is large, it's complex, and it's diverse.

What are some of the activities that you're doing to make sure that the redesigned processes, systems and IT services meet just not the needs of folks in CIS, but those in the community as well?

Mr. Scharfen: That's a good question, Dave, and my transformation project officer was really spending a lot of time on the road personally going out and meeting with stakeholders. His name's Dan Renault, and he's a very good manager -- I sat down with Dan and I said, Dan, what's going on here? And he explained it to me, and I have to be honest with you, at first, I was a little dubious about the value of that much outreach. Well, I am now a convert, and I understand the value and importance of that.

Number one, we don't have all of the answers, and it's important to reach out to them. And the type of people we've reached out to, for instance, is on the adoption pilot. If I could use that as an example. We have really invested a lot in reaching out to those different adoption agencies, and in fact, right up to the eleventh hour, we've been making changes to our pilot program to reflect some of that input, and I expect as we move forward, as we roll this out this summer, that we'll continue to make some of those changes.

Finally, we expect to get some of our smart people who really know process and who know IT, information technology, kind of brainstorm this thing. Dan has done this on his own, really took the initiative to doing this, and this is one aspect of it that I think we've done well.

Mr. Abel: Jock, a bit earlier, you mentioned that one of the benefits of modernization, of transformation, was an increased ability to be able to share information with other components within DHS and other organizations within the federal government. Can you elaborate a bit on CIS's efforts with other DHS subcomponents to share information, and what your role and responsibility is there?

Mr. Scharfen: Yes, Dave. I think we all can remember that post-9/11, when you had the Commission's report; one of the big failings is is that the government failed to share information. And when it did share information, it didn't share it in the right manner or it didn't share it in an efficient way. And so we're all reminded of that frequently by the Department, and the Department's direction to us has been very clear, that we are to take the initiative and reach out within the Department to share information, and also outside of the Department. For instance, with the State Department.

And our orders on that are very clear from headquarters, and so that's our challenge and that's what we're trying to do. And I'll give you a couple of examples where I think we're being successful on that.

First, within the Department, we are improving our timely sharing of information with US-VISIT, and those would be our fingerprints and our photographs that we include in that database that the US-VISIT then manages for the entire Department, and, for instance, State Department feeds information into US-VISIT and can then tap into that and make checks from abroad on that database.

I met with ICE and CDP representatives to make sure that our digitizing of files are being done in a way that is going to meet their needs. Our mission and our requirement as USCIS was to make sure that we met their needs, that it was given to them using the proper standards and in a way that they could use it efficiently.

We also collaborate with the different departments in that regard, and I think that our big challenge, though, is that we need to digitize our entire operation. We have to go electronically. Until we do that, until we transform into an electronic system, our ability to share information quickly and efficiently will be impeded.

To give you an example of that, if we were subject to another attack, a terrorist attack, one of the first things that are done is that you want to identify who the terrorists were, and if they are immigrants, whether they've touched the immigration system at all, and whether there are any records there. And obviously, the law enforcement agencies would be very interested in getting those files immediately.

It would be much easier just to share that information with multiple investigating law enforcement agencies electronically with just a keypunch. If you're paper, you've got to copy it, you've got to send it, you might be able to scan it, but it's still not as efficient.

The other part of it is, until it's digitized, Dave, we can't datamine it, and I'm careful of how I use that word. We're always advised by our lawyers and our privacy offices, and when we speak about datamining, all of those issues are, I believe, managed aggressively and well by USCIS, but the fact remains is that datamining is important, so that when you want to identify, for instance, other people who have associated perhaps with a terrorist, you're better able to do that when you take a look at the data electronically. You can't do that with a paper file as easily.

Mr. Abel: Jock, nobody can replace CIS's responsibility for adjudicating a benefit decision, but there are lots of industries -- Al mentioned health care previously, and if you look at banking, finance, insurance, there's a lot of industries that have been moving towards a person-centric case management system.

To what extent do you anticipate opportunities for public and private partnerships in the execution of your transformation program going forward?

Mr. Scharfen: Dave, that's a good point, and I think that it's one that we've been talking about extensively with the Department, and we are looking to take advantage of all the opportunities that are out there for a public-private type partnership.

We've been working with our procurement division to ensure that as we go forward with future contracts, particularly some of these major contracts, whether it's if we do get a TWP program, for instance, or our Transformation program, when you take a look that we might be spending $100 million in the upcoming fiscal year, and $100 million going to $139 million in the years as we go forward, that's a significant investment.

We have a responsibility that we spend that money in the wisest, smartest way so that we leverage that to the best of our ability, and that means we have to be open to doing things not just the old way, but that we're open to new ideas, and that we make sure that we have contract provisions that will be designed in such a way that we can get those type of different proposals.

We're going to ask those who make a bid on our contracts is that they include their alternate financing mechanisms, those things where you could just contract out by the transaction, for instance, where the government would own none of the infrastructure, and it would just be a contract for services, just as an example, that they would be able to do 12.5 million transactions of a certain type, and they would deliver that and we would set out the standards, and the way they do that would be a matter of contract and all.

But what we would do is that we would invite those type of different alternate scenarios for the provision of these contracting services, or we could go out, alternatively -- it may prove to be better to go out and buy the system for the government, where you buy all the hardware, you buy all the software. But what we want to do is make sure that those options are put into the contracting mechanisms so that we can take a look at that and we do have those type of choices.

Well, we may see what they have to offer in that regard and make business choices based on what we see from there, but we are very interested in trying to get as many different types of offers that we can get so that we can evaluate them and pick those choices that do two things: leverage our money, our investment, the best we can, and provide the very best services, both maybe in the short-term and in the long-term.

Mr. Morales: That's great. That's really going to the marketplace with a limited set of constraints to really get as many ideas as you can. That's fantastic.

What does the future hold for USCIS? We will ask Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within DHS, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, what trends will have the largest impact on USCIS in the next 10 years, and how will the organization need to adapt to these changes?

Mr. Scharfen: Well, I think that as we've been talking about the transformation of this organization is that we're clearly in the world of electronic and IT transformation is that as we move into this transformed business process where we go from paper-based to electronic-based, is that that will never end. We will continually have to go back and reassess where we are, and I think that on information technology and re-looking at our processes, that this is not just a one-time effort, but that we'll have to continue to look at that and improve upon that.

And I think in the next decade, the challenge will be first to make sure that we move from a paper-based to an electronic-based, person-centric, modern system, and then to ensure that that system works efficiently and it continues to be improved as it moves on.

I think that we'll also continue to have challenges with managing large numbers of immigrants, and that a subset of that issue of just sheer numbers is also the type of immigrants.

It's important, and we hear from our different stakeholders, is the importance of getting students into our universities, foreign students into our universities, and also getting high-tech immigrants and non-immigrants into our economy. And that is I think an issue that will persist, and that will be one that we'll have to manage going forward in the years ahead.

Mr. Morales: Jock, there's a lot of discussion these days around the pending government employee retirement wave.

I'm curious, how is your organization handling this phenomenon, and what are you doing to ensure that you have the right staff mix to meet the demands of these transformation efforts?

Mr. Scharfen: Al, I can't tell you today we have the answers to that. I can tell you that we've got in place a strategic workforce plan. And that strategic workforce plan for USCIS will profile our workforce, give us the demographics, and give us things like the age profile, fit in the retirement aspects to that. It'll also tell us about our diversity profile, which, by the way, looking at our EEO, our diversity numbers, we're happy with those, but we're going to work hard to make our organization reflect our country as much as it can.

Although the strategic workforce plan will have many parts to it, one of the key parts to that will be the future workforce, and we hope to identify where we're going to have gaps in the future. And that was one of the key things we asked them to do so that we can start planning, that we can identify those gaps, whether it's retirement gaps, whether it's skill gaps, whether it's diversity profile gaps, whether it's education gaps, whether it's our recruitment on the front end, whether we're getting the quality-type people we want.

Question here is right now, we do not require a college degree. That will be addressed there. All of those type questions -- we hope to put them into gap-type language so that we can then not just analyze it, but come up with some type of practical action plan.

Mr. Abel: So as you look at those gaps, to that end, what steps are you taking to attract and maintain a high-quality technical and professional workforce?

Mr. Scharfen: Director Gonzalez has a lot of experience in this area. First of all, he has a Ph.D. and he is committed to education, and he's a thoughtful guy. And he is also in the Army. He has worked in education -- he taught at West Point, and he was also in the personnel leadership management area within the Army, which is a huge organization to manage, and so he's an experienced personnel manager. And he's looked at this and he has come to a number of conclusions, and one way to attract and maintain our high quality of workforce is to offer first-rate world-rate education and training.

This year, we moved $2 million in the short-term into increasing our education and training for our employees from both the most junior employee to our most senior leadership. We also though, looking under the fee rule -- a big part of the fee rule would go towards better training of our employees, and also educational opportunities. And we're talking about investing tens of millions of dollars into the training of our employees and education of our employees. And we believe that that will help attract and maintain that high quality we need. We'll also take a look at the intake process there of how we recruit people. The Army has a saying that the Director is fond of saying, and that is that everyone is a recruiter. He's encouraged the organization, and I've seen that, where people are going out and recruiting.

For instance, we're going to Walter Reed, and we're trying to recruit disabled combat veterans from Iraq, and we're finding a very high-quality group of people there: our veterans, our disabled veterans. But that kind of personal touch that Director Gonzalez is out there setting an example recruiting himself, and he comes back and he has names of individuals who happen to be very good, for instance, in computers. And it's a good thing both to recognize the needs of our disabled vets, and it's also good for our organization.

Mr. Morales: Jock, along a similar theme, you've obviously had a fascinating and a very highly successful career as a Marine and as a lawyer, all in the service of our country.

So what advice would you give to someone who is perhaps thinking about a career in public service? What do you tell that young individual at Walter Reed?

Mr. Scharfen: First of all, I would encourage it. I've really enjoyed public service. And one of the things I mention is that those people I know, for instance, in private practice, when you speak to them, many times, they get the greatest personal and professional satisfaction when they somehow volunteer or get involved in public service.

For instance, I have a friend who's a partner in a law firm here in Washington, D.C., and he volunteers his time as a lawyer to our disabled vets, and he gets great satisfaction out of that. He's a very successful lawyer here in Washington, but when I see him on the soccer field or somewhere else, what he wants to talk about is that service that he's been able to provide, and he gets great personal and professional satisfaction out of that.

So first of all, I'd just encourage them in general and tell them they're going to enjoy it. But that there's a lot of responsibility that goes with that, and that if you do go into public service, that you go into it with the right attitude, and that it is about service. You go in with the right attitude, and if you go in with the goal to serve the public, it has its own rewards. You may not have the largest paycheck and you may be able to get a larger paycheck elsewhere, but you get paid in a different coin, and it's that coin of going home knowing that you've served the public well.

So first of all, I would encourage them to do it. Next, I'd tell them they should take chances, and they should do what they're interested in doing, and that if they see a job, they should not be hesitant to apply for it.

But I'd add a quick caveat to that, that the most important thing you can do, though, is to do the job you're doing currently well, and be enthusiastic about it, and do the best job you possibly can and work well with others, because the government is all about working well with others. You've got to be a team player. But first do the job you're doing well, but then don't be shy about reaching out and trying to apply for a job that may be a little bit out of the ordinary, but you never know unless you apply. And don't be discouraged the first time you've applied and you've been told no. When you reach my age, you can take a no better than when you're younger. And I've been told no many times and you get over it, but that shouldn't stop you from reaching for that job that you're interested in.

Mr. Morales: I think that's fantastic advice for all of us. Unfortunately, we have reached the end of our hour this morning. I want to thank you for fitting us into your busy schedule, but more importantly, Dave and I would like to thank you for your dedicated service to our government in protecting the homeland, and we most definitely want to have you back in September to hear about the results of your strategic workforce plan.

Mr. Scharfen: Thank you very much, Al and Dave, and if I could just close off by making reference so that our listeners can visit us, USCIS, on our Web site. It's uscis.gov, and it's the new Web site that we have there. It was put together by our IT guru, Jeff Conklin, and our communications guru, Jose Montero. I think it's pretty good. We're working hard to make it better, so we encourage the listeners to come visit at uscis.gov.

If you've got some suggestions to make that even better, don't hesitate to give us some ideas. I know those two fellows are working hard to make it the very best they can.

Mr. Morales: Fantastic.

This has been The Business of Government Hour, featuring a conversation with Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

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.

Raj Chellaraj interview

Friday, June 8th, 2007 - 20:00
Phrase: 
The Bureau is responsible for administrative support operations; supply and transportation; real property and facilities management; official records, publishing, and library services; language services; domestic emergency management; overseeing safety and occupational health matters; small and disadvantaged business utilization; and support for both White House travel abroad and special conferences called by the President or Secretary of State.
Radio show date: 
Sat, 06/09/2007
Guest: 
Intro text: 
Human Capital Management; Managing for Performance and Results...
Human Capital Management; Managing for Performance and Results
Complete transcript: 

Originally Broadcast Saturday, June 9, 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 The IBM Center for The Business of Government.

With its unveiling of transformational diplomacy, the U.S. Department of State has charted a bold new course in U.S. diplomacy, a course that rests on working with U.S. partners around the world to build and sustain democratic well-governed states using America's diplomatic power and resources to help people across the globe better their own futures, build their own nations and thrive under an umbrella of security and peace. Supporting this ambitious approach seems no small feat.

With us this morning to discuss his Bureau's efforts in support of transformational diplomacy is our very special guest, Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Good morning, Raj.

Mr. Chellaraj: Good morning, glad to be here.

Mr. Morales: And joining us in our conversation is Bonnie Glick, project executive at IBM.

Good morning, Bonnie.

Ms. Glick: Good morning.

Mr. Morales: Raj, most of our listeners are probably familiar with the Department of State as the diplomatic arm of the U.S. government. But perhaps you could give us a sense of the State Department and its history. When was it created, and how has its mission evolved over time?

Mr. Chellaraj: Surely. The State Department was the first federal agency, created in 1789. Thomas Jefferson was our first Secretary of State. It is the lead U.S. foreign affairs agency. Currently, Secretary Rice has defined transformational diplomacy in this way: it is to work with our many partners around the world to build and sustain democratic well-governed states that will respond to the needs of their people and conduct them responsibly in the international system. That means all of us need to think about how we are doing business, and adapt and change to meet these new priorities.

Here are some current initiatives under the leadership of Management's Under Secretary Fore: one, provide buildings and administrative infrastructure to 38 agencies overseas; maintain American presence with over 260 embassies and consulates, utilizing technology with virtual posts that can be accessed from anywhere in real time; help to ensure secure borders and provide a dignified welcome to visitors.

Mr. Morales: Raj, obviously, this is an extremely broad mission. Can you give us a sense of the scale at the Department of State? How is it organized? Can you give us a sense of the budget, the number of full-time employees, and its geographic footprint?

Mr. Chellaraj: There are nearly 57,000 employees worldwide. Nearly 45,000 of them are overseas. Over 7,500 Americans proudly call the State Department home who are overseas, and 37,000 locally engaged employees. There are more than 260 posts in 189 countries, and also in the United States. The State Department's appropriation for the past several fiscal years has been roughly $30 billion per year, and includes both State operations and foreign assistance. The FY 2008 request is about 11 percent increase, and it's around $36 billion.

Ms. Glick: Now that you've provided us with a sense of the larger organization, maybe you could tell us more about your specific area and your specific role within the Department. What are your responsibilities and duties as the Assistant Secretary of State for Administration? Could you tell us a little bit about the areas under your purview, how your area is organized, the size of your staff and your budget? Also, given the Bureau has responsibility for both overseas and domestic operations, can you give us a sense of how you balance limited resources between domestic and overseas operations?

Mr. Chellaraj: Wow, there are a number of questions in that one question. So let me just at least highlight the key areas. Some departments, as you know and our listeners know, have offices. Our department has Bureaus. So the Bureau of Administration provides global administrative support for the people and programs of America's diplomacy. We are proud that our work supports every foreign policy initiative, every employee and family member and every agency that's involved in foreign affairs activities.

The "A" Bureau is one of the Department's most diverse and dynamic organizations. The "A" Bureau budget is approximately I would say $600 million, with over 2,000 employees in over 30 offices. The Bureau's mission is making diplomacy work. And when I joined the Bureau, I added the word "better," making diplomacy work better. One of my priorities and our priorities in our Bureau is customer service and satisfaction. Our Bureau programs and services are very varied.

Let me just highlight on some of them. One, domestic real property and facilities management. We do procurement, roughly $5 billion or so a year, and that's a billion with a "b." Supply and transportation. Diplomatic pouch and mail services. Official records, publishing, library services, language services. Setting allowance rates for U.S. government personnel assigned abroad, and that's a fairly key one, as you can imagine. Overseeing safety and occupational health matters, small disadvantaged business utilization. Support for both White House travel abroad and special conferences called by the President and Secretary of State.

We also do direct services to the public and other government agencies. These include authenticating documents used abroad for legal and business purposes, responding to requests under the Freedom of Information and Privacy Acts, printing official publications, codifying policies into Department regulations, designing, publishing, and maintaining the Department's electronic forms, processing all Department public notices for publications in the Federal Register, and the list goes on.

Ms. Glick: The list does appear to go on. You're quite right when you say the responsibilities of the "A" Bureau are very varied. Regarding those responsibilities and duties, what would you say are the top three challenges that you face in your position, and how have you addressed those challenges?

Mr. Chellaraj: Surely. There are many challenges just based on the types of things we do, and frankly, we look at challenges also as opportunities to see how we can improve overall customer satisfaction. Let me give you three specific ones. Firstly, our posts are scattered throughout the world in different working environments with different technological capabilities and operating constraints, and so you can imagine the issues associated with that.

Secondly, in addition, emergency or crisis situations arise, as was the case when the war broke out in Lebanon last summer. We provided the logistics support, ships, planes, not quite cars, but vans and buses for safe passage of American citizens, 15,000 of them approximately, out of harm's way. By having sound and well-thought-out management processes in place, we are able to respond to these types of unexpected situations quickly and effectively.

Thirdly, it is really difficult to predict where the next challenge will arise, so we have our antennas and radar up and be very vigilant in terms of where the next challenge will come from.

Mr. Morales: Raj, I want to switch gears a little bit here and talk about you. You've had obviously a very diverse background, starting in the private sector and now migrating over to various roles within government. I'm curious, how did you begin your career?

Mr. Chellaraj: Surely. I immigrated to the United States with a Bachelor's degree in Engineering and a couple of dollars. I realized very soon after I got here that the American education, the critical thinking was a great equalizer, and so I worked, went to school, worked, went to school, and did this a few times, and I moved from the focused field of engineering to the broader issues of public policy.

The early days were simply tough, but I struggled and survived. And career-wise, I moved between private sector and government many times, and I would encourage your listeners out there who are considering a public sector career and an opportunity to come contribute in the government to consider doing that. And over the last 25 years, this is my fourth agency in government, and this has been a real tremendous opportunity. And I will always come back when a President calls, when the Secretary of State calls or when I'm called upon to serve the country.

Mr. Morales: That's fantastic. So with these various experiences both in the commercial sector as well as now in government, I'm curious, how have these experiences shaped and formed your current leadership style, and how are you applying those experiences to your current role?

Mr. Chellaraj: I have handled and been responsible for most of the functions that are currently in the Bureau of Administration in my prior life, prior career, either in government or in the private sector, and I really believe good management transcends both the public sector and the private sector. And let me give you an example here. Take procurement, for example. In government, you have the Federal Acquisition Regulations, known as FAR, which I'm sure our listeners are familiar with.

In the private sector, it's not too different. There's what is called DOAG. You know, there are always all these acronyms, and essentially, DOAG is Delegation of Authority Guide. And the principles are essentially the same, in areas like procurement. You want to have the proper checks and balances, the internal controls, and who can sign up to what limits, and the principles are the same. People generally say -- either when I'm in the government or in the private sector, and I hear this in government a lot -- we are really a unique organization. We are different. Not really sure whether something will work, and what I really look for is commonalities and similarities on how we can improve processes to be more effective.

Mr. Morales: So even though the core missions are different, many of the core fundamentals are really the same between the commercial and the public sector.

Mr. Chellaraj: That's absolutely true.

Mr. Morales: How is State administering its resources in more efficient ways?

We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, given the release of the joint State and USAID strategic plan for 2004-2009, could you tell us about the efforts to integrate USAID operations with those of the State Department, and what efforts has the Administration Bureau undertaken to streamline its operations in line with the efforts of the Joint Management Council of State and USAID?

Mr. Chellaraj: Thanks, Al. Again, there are several questions there, and I'll try to highlight the key points. Interestingly enough, I worked at USAID a while back. In fact, my office then was on the same floor as where I am today, just down the hall. Who would have thought I'd be back again?

Frankly, USAID does certain functions very well, and State does certain functions well. This is about getting the best of both. State and USAID have been attempting to restructure our overseas presence to meet the challenges of transformation diplomacy and sustainable development. We both recognize the need for a shared overarching vision for management partnership, overseas and domestically, to contain growth and consolidate administrative support services. The Joint Strategic Plan established the Joint Management Council. The Joint Management Council's mandate is to identify opportunities for cooperation, cost avoidance and improved service through operational improvements. The results from our pilot posts are very encouraging.

We believe the joint approach will result in significant savings as well as a more logical, more manageable administrative platform at our overseas posts. Our focus in the Bureau has been identifying the activities where we carry out tasks that are common to both organizations. We believe that by doing this, we discover opportunities to both save money and enhance performance for both of us.

Mr. Morales: So how has this joint effort enhanced the ability of both organizations to ensure that the nation's foreign policy and development programs are fully aligned, and how has it impacted your workload?

Mr. Chellaraj: Sure. In terms of impacting the workload, it is a little difficult to quantify, as some individuals and offices directly concerned with the joint management initiative work on projects would be underway regardless of whether we had a joint management effort. Let me give you an example. We have something called the Integrated Logistic Management System, or ILMS. This is a very customer-friendly IT platform that enables us, both our contracting officers, logisticians, and most importantly, our customers, to track items from the time they are purchased until they're eventually disposed of.

Through ILMS, we get a clearer picture of our worldwide logistics operation than we've ever had before. Enhanced transparency and a whole new level of accountability for our resources. This particular initiative and effort will be important to the success of joint management, particularly overseas.

Mr. Morales: So to provide a more specific and broader context, could you provide a brief overview of such initiatives, such as the right sizing initiative and regionalization?

Mr. Chellaraj: Surely. Transformational diplomacy has a number of ramifications for the Bureau of Administration, and Department management generally. For example, we're addressing the practice of each Bureau or post providing the full range of administrative services. Today's technology allows, as you know, many of these functions to be performed by a smaller group of people anywhere in the world and shared among Bureaus and posts. For example, the Department is working on establishing human resource centers of excellence.

The Bureau of Administration's executive office is one of those centers of excellence. Overseas, the security environment concerns underscore the need to provide the most efficient support services in the safest possible locations. My office is working with the regional bureaus to expand the number and scope of services currently provided by regional support centers located in Frankfurt, Bangkok, and Fort Lauderdale.

Another regionalization initiative that the "A" Bureau spearheaded along with the regional bureaus is the standardization of support services according to best practices identified and endorsed by a central governance council. These efforts I'm sure will facilitate our ability to further consolidate and regionalize overseas support services.

Ms. Glick: That sounds great. Given even tighter budget constraints, would you tell us a little about your efforts to administer the resources of the Department in the most efficient ways? How has the International Cooperative Administrative Support Services System that's known as ICAS assisted you in this regard? How does it operate and who uses it, and to what extent has it achieved its primary goals? Are there any plans to enhance the ICAS system and its use?

Mr. Chellaraj: Bonnie, the ICAS system that you refer to is really a cost-sharing mechanism. Industry has been using this for 15-plus years, and it provides us, the U.S. government, a platform for overseas shared support services. The State Department is the primary service provider at more than 260 posts worldwide. State provides these services for the Department employees, and most importantly, for the employees of dozens of other federal agencies posted overseas. There are more than 280 separate entities that receive invoices under the ICAS system. And it is really a customer-driven interagency mechanism for managing and funding administrative support services.

For example, it gives the post the authority to determine how services are delivered at what cost and by whom. This is about acting locally, ensuring that service providers are formally accountable to the customer, and incorporates a full-cost recovery mechanism for the Department of State.

Ms. Glick: Raj, you serve as chair of the ICAS Executive Board. Would you tell us about the strategies ICAS has developed to address several recommendations outlined by the General Accountability Office regarding the need to improve ICAS accountability and enhance its cost containment capability?

Mr. Chellaraj: Surely. The ICAS Executive Board -- let me just give you a little background on that. It is really composed of 15 senior representatives of Cabinet-level agencies, and we meet quarterly or more often depending on what the needs are. And this is set up similar to -- akin to a corporation that would have a board of directors and management. There is a working group -- we have several subcommittees, and it is staffed and funded office within the Department of State. You're right, the GAO's report in -- I think it was in September of 2004, which was the first systematic review of the ICAS performance since it was established in 1998.

And overall, I must say the GAO found that ICAS is generally effective in providing quality administrative support in an equitable and transparent manner. Like all organizations, we take these recommendations seriously, and it will continue to be a work in progress as it evolves and we adopt the recommendations and continue to move forward.

Mr. Morales: Raj, I want to turn to the President's Management Agenda for a moment. The Department of State is one of only two federal agencies out of about 15 that have recently achieved a Green for both status and progress on the PMA's federal real property initiative. Could you elaborate on this achievement, and could you tell us about your efforts in developing and implementing an OMB-approved asset management plan? And I'm curious, what advice would you give to some of your colleagues who are perhaps pursuing the same area?

Mr. Chellaraj: The responsibility for asset management of real property is really shared by two bureaus within the Department, the Overseas Building Management office and the Bureau of Administration. In terms of advice, the short answer is there are no quick fixes. Be real detail-focused, results-oriented, and continue to monitor the progress.

Mr. Morales: Now, competitive sourcing is another initiative under the PMA. Could you tell us about some of the key competitive sourcing initiatives being pursued by State that have affected your Bureau, and as a member of the Competitive Sourcing Executive Steering Group at State, could you give us an update on your Department's overall progress in this area?

Mr. Chellaraj: Surely Al, happy to. The important thing about competitive sourcing is we are looking for the most effective outcome for the government, whether the work is done inside the government or outside. And competitive sourcing is not outsourcing, and that is a concept that has been misunderstood. It is a really effective management tool, a tool designed to obtain the best value for the government, whether the work is done internally or externally. We completed the first standard competition, and it was to transform printing and publishing activities for the Department, with an estimated savings of $80 million over the next 10 years.

This is fairly significant. Modernizing printing and publication services will -- we believe -- will enhance the Department's ability to communicate its public diplomacy message in a more-timely, compelling and visually interesting way to overseas audiences. There were actually three offers that we received, and the award went to the revamped in-house organization, the Global Publishing Solutions Group. The in-house organization shifted to a market-driven pricing arrangement and adopted industry best practices and performance standards.

The Department overall from a broader picture on competitive sourcing has a green plan charting future studies which we have submitted to OMB, and we've committed to plan in terms of how we move forward. We are reviewing other administrative functions and really rethinking how the Department delivers domestic administrative services.

Mr. Morales: That's fantastic.

What are some of the challenges in administering the diplomatic missions in Iraq and Afghanistan? We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, what are some of the significant challenges your Bureau faces in administering the diplomatic missions in Iraq and Afghanistan? How does the model for overseas management support within your Bureau ease the burden of administrative support in dangerous posts such as these?

Mr. Chellaraj: Thanks Al, for that question. Operationally, the model for overseas management support is now known as the Iraq Orientation In-Processing center, OIP. This center developed several concepts and methods to ease the burden of administrative support in danger posts. While developed for danger posts, many of these have potential applicability for other overseas posts.

Employees from all federal agencies who are bound for Iraq and who are subject to chief of mission or the ambassador's authority, go through the center to receive their electronic check-in, their OpenNet and e-mail log-ons, cyber security training, deployment support, common access cards and so forth.

This remote check-in process allows the employees to take up their responsibilities sooner at posts. It also saves embassy human resource personnel and diplomatic security staff considerable time and effort in the processing, and spares them from responding to policy questions from multiple federal agency headquarters and entering security eligibility data into the Department of Defense systems.

Mr. Morales: Now, Raj, earlier we talked about the very complex mission that your organization has, so I'm curious, what kinds of interagency, private sector, and nonprofit partnerships are you developing to improve operations or outcomes at State, and what are you doing to enable the success of these partnerships and collaboration efforts?

Mr. Chellaraj: Sure, happy to address that. Our offices throughout the A Bureau partner with other government agencies, the private sector, and nonprofit organizations regularly to achieve their individual missions. I encourage the A Bureau staff to seek out the best in class in their respective fields, both government and private sector, and benchmark against them.

For example, we sponsor the Management Immersion Program, where we place Foreign Service officers in recognized, well-managed external organizations to learn management best practices and bring them back to their posts and the Department. Another example is our Overseas School Advisory Council. Having been a product of several degrees myself, I take real pride, and this is very important to me and for us in the Administration Bureau and the Department.

In '67, the Department of State established the Overseas School Advisory Council, a public-private partnership with U.S. corporations that have substantial overseas operations. OSAC, as it's known, is the longest-running advisory committee in the Department. The purpose of this partnership is to obtain the advice and support of the American corporate community in providing quality education for U.S. citizens, children attending overseas schools.

Currently, there are 194 American overseas schools in 132 countries assisted by the Department of State, and serve 112,000 school-age children of U.S. government and private sector employees stationed abroad, as well as children of host country and third country nationals.

Mr. Morales: Along the same lines of partnerships, could you tell us about the Department's commitment to the small and disadvantaged business community? We understand that your Bureau annually recognizes selected small business contractors who have displayed exemplary performance. Could you tell us more about this award and your Bureau's efforts in this area?

Mr. Chellaraj: The Department of State is committed to ensuring the small businesses, including small disadvantaged, (8a), women-owned, HUBZone, and service disabled veteran-owned small businesses have the maximum opportunity to participate in the Department's acquisition.

For example, last year, the Department awarded approximately $1.3 billion to small businesses. The Department's Office of Small and Disadvantaged Business Utilization is a strong advocate for small business firms, and has a strong history of providing outreach to the small and disadvantaged business community.

Our office participates in many small business outreach events locally and throughout the U.S. that offer small and disadvantaged business with opportunities to learn about contracting. For example, we participated in 38 events last year. We also have a successful record of achieving small business goals.

Here's something we're very proud of: the Small Business Administration presented the Department with the Gold Star Award for excellence in achieving small business goals in both 2005 and 2006. We are also proud of the mentor-prot�g� program, which encourages large business prime contractors to provide mutually beneficial assistance to small businesses.

The Department recognizes the achievements and contributions that small businesses make to its mission during the annual Small Business Prime Contractor of the Year Award ceremony. The Award is sponsored by the Bureau of Administration. It recognizes contractors that have displayed exemplary performance, customer service, management and technical capabilities.

The 2006 award was presented to a team of four highly skilled interpreters, translators, who traveled with our ambassadors in Iraq and provided interpreting support. We also host a small business trade fair at the Department each June for firms that sell office supplies and common usage items, as well as three information technology fairs a year, a prime subcontracting networking session in October and in veterans business affairs. So we do quite a bit in this area, and that is why we are successful, and we're really happy that the Small Business Administration has recognized us for this.

Mr. Morales: That's quite impressive.

Ms. Glick: Turning again to the topic of language services, the State Department has an Office of Language Services that effectively delivers timely, world class interpreting and translating services to the Department as well as language training.

A significant challenge, though, facing this program is recruiting a pool of direct hire employees and contractors who are among the world's best interpreters and translators. How has your organization handled this challenge, and are there any plans to relax some of the Office of Personnel Management's applicant rating procedures and security clearance requirements, which may hinder the recruitment of direct hire employees in this area?

Mr. Chellaraj: Surely. This is a very critical area for us, and we compete head-on with many organizations, particularly international organizations. Our language staff services has a staff of approximately 45 interpreters and translators working in eight languages, and a roster of 1,500 contractor interpreters and translators in 40 languages.

Finding talented individuals to perform these tasks, evaluating their abilities and ensuring that they can pass the necessary security scrutiny will always be a challenge. State Department has certain advantages, we believe. The work we ask our interpreters and translators to perform is difficult, but it's also interesting and it's international. Anyone who can say they work for the State Department, whether as a staff employee or as a contractor, enjoys considerable respect in the profession, we've come to know, because we are well-known for the rigor of our testing process.

In our recruiting efforts for qualified contract interpreters and translators, we require individuals with the highest skill levels and in many languages, and this means that the pool of qualified applicants is limited, in some instances because there's no recurring commercial need for interpreters and translators, and certain languages of limited diffusion.

We actually have to find individuals with strong language skills and provide them with training in interpreting or translating. Let me give you some examples. We've achieved considerable success in the programs we've organized in such languages as Haitian Creole, Urdu, Hindi, Albanian, Vietnamese, Macedonian, Turkish and Greek.

The search for interpreting and translating talent, particularly for the languages of limited diffusion will be an unending quest, and it'll continue. Our staff attends conferences, seminars, regional gatherings, academic symposiums, and job fairs to find the talent we need to perform the work that is required by our clients at the White House, the National Security Council, Department of State, among others.

We also work closely with our colleagues in the Bureau of Diplomatic Security, turning to your question about the security challenges, to perform the required background checks in a timely manner. We receive excellent support from our Diplomatic Security Office, but there are no shortcuts, as you know, when you're trying to do background checks on people who have lived all over the world. This will always continue to be, I believe, a work in progress.

Ms. Glick: As the Chief Acquisition Officer, would you give us a sense of how procurement works within the Department of State? Given the State Department's global footprint, how decentralized are procurement operations within the Department, and what are the benefits of this decentralization, what are some of the challenges? Also, to what extent does your acquisition model emphasize the customer is king approach within your area?

Mr. Chellaraj: Sure. Procurement is a key area for us. In our Department, it is unique, because we have over 200 individual procurement offices at each embassy and post. These offices are located in virtually every country on the planet, with every imaginable set of market conditions. Some of this procurement must be done at post, because necessary goods or services can only be obtained there. Some examples would be renting a facility for a conference or obtaining janitorial service and vehicle maintenance.

These overseas procurement responsibilities are handled by Foreign Service officers who generally manage procurement, as well as a larger portfolio which could include warehousing, shipping, housing and motor pool operations. Locally hired procurement staff would support our Foreign Service officers.

For both the Foreign Service officers and local staff, one of our priorities is to provide worldwide training and oversight of this procurement workforce. Our Office of Procurement Executive, which is in our Bureau, uses the Department's improved Internet capability and e-mail to assist with these trainings. We have all the online training, we have the website, we have the help desk. So all we have made as part of standard operating procedure.

And the Department also uses regional procurement support offices. These are the ones I mentioned earlier in Frankfurt, Fort Lauderdale. It doesn't have to be procured from posts; if it doesn't have to be, we don't do it. We do it regionally as best as we can.

We're also focusing more on our technical representatives. In government, it is called COR, Contracting Officer Representative. And we hold seminars to build a community of practice. These CORs need to learn from each other. This is in addition to the normal training required to be designated a COR at the Department. We are also focusing on strategic sourcing. We've selected medical supplies, furniture, and digital copiers as strategic sourcing targets, commodities that the Department uses throughout our worldwide operations.

For example, we are piloting buying medical services by teaming up with larger partners such as DoD and the Veterans Administration. We are negotiating furniture contracts that'll standardize the types of furniture at posts for easier asset management and will leverage our worldwide purchasing power. With digital copiers, we are more concerned about supplier management and increasing the availability of suppliers.

So there are a number of things under way. Procurement is a real critical function, and we want to ensure that as we standardize and we change some of these processes, we maintain procurement integrity and the proper internal controls and the checks and balances are there.

Ms. Glick: That's great. One of the other areas that you focus on is in the area of allowances, and the Office of Allowances coordinates policies, regulations, standards and procedures for overseas allowances and differential payments throughout the federal government. Would you tell us about the e-Allowances Initiative, and what is the status of this initiative in its implementation?

Mr. Chellaraj: This is an area, where again, we are trying to focus on the customer and improve the service. The Office of Allowances, which is very closely monitored, for obvious reasons, as you can imagine, protects the interests of U.S. government and its employees and families serving overseas by ensuring that overseas allowances and differentials are appropriate to reimburse them for extraordinary costs and difficult living conditions associated with serving abroad.

Conditions at our overseas locations may change abruptly. Our current subsystem for submitting and reviewing allowances is a paper-based system, which obviously will have a lag, as you can imagine. And we really think this delay is unacceptable and began developing e-Allowances, an online way of doing things with quicker turnaround, so the surveys are done, it's reviewed properly, and the adjustments are made in a very effective manner.

Mr. Morales: What does the future hold for the U.S. Department of State?

We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, given the management changes already underway at the Department, where do you see the Bureau of Administration going in, say, the next five years?

Mr. Chellaraj: Sure. If I had to blue-sky this, my objective during my tenure is to ensure that the fundamentals are in place and working well, that we have the flexibility to respond to the changes coming in the future, such as the new IT capabilities. And it's a work in progress, and certainly will be influenced by the external environment.

There will continue to be an evolution to more quicker turnaround, you know, better cycle times, solving issues in real-time.

To your point about advice for successors, I would say focus really on people. People are the key to making things happen, and I would say attracting a talented, innovative, diverse team of experts on the Bureau team, and continuing to do so, is very important. We are currently focused on that, and the Department and the Bureau need to focus on that, and also the processes -- do the standard operating procedures -- are they making sense, and are we doing things the most effective and efficient way possible?

Mr. Morales: Now, Raj, I understand that BusinessWeek has identified the State Department as one of the top 10 places to launch a career, specifically for new college graduates, and was the only federal agency listed in the top 10.

Could you tell us how significant this recognition is to your Bureau, and how has this recognition benefited your Bureau?

Mr. Chellaraj: Oh, this recognition is very important. As you know, competition is intense for top-notch employees, and on that list you will find many recognizable names who are in the Fortune Top 10, Top 20 companies. I recently spoke at an entry-level officers' conference for those serving on their first or second tour in the Middle Eastern region, and the work experience and the academic credentials these individuals offer the Department are very impressive. They represent a wide range of backgrounds and areas of expertise, and language skills. This is exactly the type of individual the Department needs both here and overseas.

Ms. Glick: To that end, and in the spirit of the BusinessWeek ranking, what steps are being taken to attract and maintain a high quality technical and professional workforce?

Mr. Chellaraj: That's a great question. The Department senior leadership, including Secretary Rice, are fully committed to ensuring the Department's workforce reflects the excellence and diversity of America; we want the best and the brightest to come to State, and we are seeking diversity. Now, well-run private companies, as you know, have already realized this and have taken major steps in this direction. Not having diversity is not an option. Look at President Bush's leadership team here at State.

In addition to doing diversity, we are also forming partnerships with many organizations, take part in conferences and gotten our message in print and electronic media. We have diplomat residents in 17 college campuses currently across the country and growing. We identify, counsel and mentor. We have broadened outreach to many minority organizations. We need Arab-Americans, Turkish-Americans, Chinese-Americans, Korean-Americans, scientists, IT professionals.

In terms of the recruiting for the civil service, the Department is one of the most active participants in the President's Management Fellows Program. In FY 2004, we ranked second among overall government agencies for employing the Presidential Management Fellows. We've expanded the Career Entry Program, which is a two-year career development program open to the public, with positions in areas like contract management, personnel management, financial management and other areas and other areas.

In addition, we've done something fairly unique. We have a number of students, interns and career development programs. We have something called a "Stars Program," which is a student program that allows students to work part-time on Freedom of Information Act issues and declassification programs. We have something called CLIMB, which is an entry-level career ladder program for logistics professionals. State really is reaching out to ensure that we have the best and the brightest workforce, and that is why I believe that we are on the Top 10 list.

Ms. Glick: It is fantastic, and it's quite an accomplishment. Attracting employees is important, retaining employees is important. How do you ensure that your employees have their appropriate training and skills to do their jobs? What's your organization doing to ensure that it has the right staff mix to meet the upcoming challenges that will be faced by the Department of State?

Mr. Chellaraj: Bonnie, the Department established a civil service training continuum, which is a tool designed to be a career planning roadmap and a means to ensure that an employee systematically acquires the knowledge and skills needed for successful performance from entry-level to senior-level.

In addition, we have identified certain types of trainings as mandatory for all employees, or in some cases specifically for employees at a grade level. Give you some of these examples: computer security awareness training, mandatory leadership training, equal employment opportunity diversity awareness. Our Bureau works with our colleagues at the Foreign Service Institute to develop and teach a variety of courses; both classroom and distant learning courses, on topics such as emergency preparedness, grants management, procurement.

I mentioned the Management Immersion Program that we have sponsored. I personally encourage and support our own staff to participate in external training opportunities such as the Department of Defense National War College and the Department of Agriculture leadership programs. One of our own special assistants will start at the National War College this August.

Mr. Morales: Raj, there's an ongoing discussion around government, and even in the private sector, about the pending retirement wave. How are you preparing for this within your organization?

Mr. Chellaraj: Sure. Happy to address that. Along with the rest of the federal government, this is an important human capital issue at the State Department. As part of the Department's broad succession strategy, we have developed numerous initiatives and programs designed to ensure we have the right number of people with the right skills to carry the Department's mission.

The Foreign Service system, which is roughly 60 percent of our workforce, is an up or out career system. Higher-level positions, needs will be met by those already in the system through promotion and seasoned employees according to anticipated needs at each level. With the civil service currently -- 14 percent or so of our civil service workforce is eligible to retire, and by 2010, nearly one third of our civil service workforce will be eligible to retire. This is a fairly sizable challenge for the Department of State.

To prepare for this, we've undertaken several initiatives under the leadership of the director general. The Foreign Service Institute School of Leadership and Management Development ensures the leadership training is part of every employee's career path. We project that by the end of the first quarter of 2007, 100 percent of the State Department's target population of roughly 7,000 mid-level employees will have completed this program.

There is the Senior Executive threshold seminar, which is a mandatory 2-1/2-week course for employees newly promoted to the Senior Executive Service or the Senior Foreign Service. Mentoring is also emphasized in the Department, both for our civil service employees and Foreign Service employees. Our own Bureau of Administration also promotes and encourages using individual development plans for our employees.

The individual development plans, or IDPs, as they're known, is a statement of long- and short-term career goals and development objectives that provides a systematic approach to the training needs of employees. By planning needed training and experiences in consultation with their supervisors, employees are better able to develop the knowledge, skills, and abilities to contribute to the organization in achieving their career goals, and more importantly, meeting the Department's mission.

Mr. Morales: Raj, we're coming to the end of our time, but I want to ask, given your diverse and highly successful federal career, what advice would you give to a person who perhaps is considering a career in public service?

Mr. Chellaraj: That's a great question, and that's a great last question. First, I highly encourage everyone to work in the public sector. The government needs innovative, dedicated and energized people. As you consider what you want to pursue, I would remind your listeners do what you're really passionate about. This may mean your career follows a non-traditional path; it certainly has for me. When I started my career, I did not plan to be the Assistant Secretary of State for Administration. Lastly, I would also say work hard, do your job well and you will get recognized and rewarded.

Mr. Morales: That's fantastic advice.

We have reached the end of our time. I want to thank you for fitting us into your busy schedule, but more importantly, Bonnie and I would like to thank you for your dedicated service to our country across the various roles you've held in our government.

Mr. Chellaraj: Thanks again. It's been a delight being here. In summary, as you can see, we in the Bureau of Administration touch a lot, we work hard at making diplomacy work better. And thanks again for the opportunity to speak to your listeners and share with them our mission and programs. I'd encourage our listeners to look at www.state.gov for very timely information relating to the Department of State.

Thanks again, it's been a pleasure.

Mr. Morales: Great. Thank you.

This has been The Business of Government Hour, featuring a conversation with Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

My co-host has been Bonnie Glick, project executive within IBM.

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.

Terry J. Pudas interview

Friday, June 1st, 2007 - 20:00
Phrase: 
"Transformation can allow you to do things more efficiently. And that's what the question is about; it's not about numbers, it's about capability."
Radio show date: 
Sat, 06/02/2007
Guest: 
Intro text: 
Innovation; Strategic Thinking ...
Innovation; Strategic Thinking
Complete transcript: 

Originally Broadcast Saturday, June 2, 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.

President George Bush's mandate for defense transformation was "to challenge the status quo and envision a new architecture of American defense for decades to come."

Over the past several years, it is becoming increasingly clear that defense transformation is not simply a response to global terrorism, but rather a way to leverage the core strength of the U.S. armed forces, which is its ability to adapt and change.

As the rate of change of technology continues to accelerate, it will be even more important that the U.S. military keep pace.

With us this morning to discuss this critical challenge is our special guest, Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Good morning, Terry.

Mr. Pudas: Good morning. Thanks for having me.

Mr. Morales: And joining us is in our conversation is Chuck Prow, IBM's Defense Industry leader.

Good morning, Chuck.

Mr. Prow: Good morning, Al, Terry.

Mr. Morales: Terry, to provide our listeners an overall context on the subject of military transformation, could you give us a sense of the history, mission, and evolution of the DoD's Office of Forces Transformation and Resources, as well as its predecessor organization, the Office of Force Transformation?

Mr. Pudas: Sure, I'd be glad to. Let me just sort of go back in time, so maybe 5-1/2 years ago, when we first embarked on this journey. The President had declared transformation as a key priority. Secretary Rumsfeld clearly was charged was transforming the military for the new world, the new global security challenges in the 21st Century. And so my former boss, the late retired Vice Admiral Art Cebrowski, was asked to take the challenge up. The way we did that initially, of course, was we created an office that was intended to be a catalyst and a focal point for transformational thinking, and tried to jump start that kind of activity within the Department.

And so we went from that idea to creating a fairly modest office of about 15 people or So began to develop concepts of transformation. What was it, first of all? Everybody was kind of confused by this word. What do you really mean by transformation? And why do we need to do it? And of course, change is always very frightening for a lot of people -- how is it really going to affect me? And so that was a lot of the work we did in the first several years.

And besides just sort of the developing the concept, we tried to look at what are some alternative views of the future, perhaps with some alternative logic for the decision-makers as we run through this transformational activity. And then we actually created some sort of what we called experimental articles along the way as sort of tangible examples of those things.

So we went from there to last year, when we realigned the office within the Under Secretary of Defense for Policy to continue that kind of work within the Department. So essentially, we went from sort of this what is this and how is this going to affect me to the culture of the organization actually changing in a way where you can move this activity from outside and more closely align it with the formal processes within the building.

And so that's where we find ourselves today. We're a fairly young organization, obviously, but we're getting our portfolio together and developing the new relationships and making decisions about where you engage in certain processes and the things you can do to continue the work.

Mr. Morales: Now, certainly this area of transformation is very broad, so I'm curious, what is the size of the budget that you manage, and have you moved up from the 15 employees in your organization today than you were 3-1/2 years ago?

Mr. Pudas: Well, actually, the budget's remained fairly constant over the last several years, and it's fairly modest. I mean, we have probably around $5 or $6 million dollars that we use to catalyze projects with and research and studies and war-gaming kinds of events, and we always do that in collaboration with other partners, so we don't embark on these with ourselves. We try to develop a large community of interest in these things.

And the size of the office is about the same. We have about 15 to 20 folks comprised of sort of government employees and military officers as well as some outsourcing support, which we've done.

And so the question is, how do you do this with such a modest budget and few people? Well, you develop a lot of relationships with other folks. And so we have relationships with many of the think-tanks in town, and FFRDCs, or Federally Funded Research places, as well as academia, and quite frankly, with industry. We have -- all the large industries have groups of people that think about strategy and the future, and so we try to team with them as well. So you leverage a small amount of people and build a large virtual team.

Mr. Prow: Please describe your specific responsibilities and duties as Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Mr. Pudas: Well, I'll try to be as definitive as I can. The vision is really to align the transformational thinking, mainstream it within the Department, as I said, and be connected to some of those formal processes that look at the future strategic environment, think about what future capabilities might look like, and then participate in the processes along the way that lead to the fielding of those kinds of things. And so that's a major undertaking. As well as to continue to sort of push the envelope and look at alternative futures, look at alternative capabilities, look at what technology opportunities might be out there from a policy perspective.

And then part of my tasking is to be sort of the policy point of contact for all of those good transformation issues that are going on at the Joint Forces Command in Norfolk, and of course, Allied Command Transformation down there as well.

So that takes up a significant amount of time, and then, of course, we want to look broadly across all the general purpose forces to look where those interdependencies might be, and highlight those kinds of things.

Mr. Prow: What are the top few challenges you face in your position, and how have you addressed those challenges?

Mr. Pudas: If you've ever worked in a large organization, which I'm sure both of you have, that catalyzing change is always very, very difficult. And so that's one of the specific challenges, obviously, to do that. A large organization has a tendency to be bureaucratic, and so you have to find ways to deal with that and still be effective.

For me personally, not having been within the mainstream here for some time, that's a challenge for me to understand how that works, and so we're doing that. And then of course, it's always a challenge because there's very many competing priorities. But we are not necessarily charged with worrying about the near term. Our job is to be somewhat custodians of the future. And so to have that mix and still be relevant to some of the current things that are going on is always somewhat of a challenge.

Mr. Morales: Terry, we had a few moments prior to our show to talk a little bit about your career, and some time that you spent with the German Navy. I'm curious, how did you get started in your career, and how did you start with Defense Transformation?

Mr. Pudas: Yes, it's very interesting. I had a career as a naval officer for 32 years. At one point there during Desert Storm, I was working for a fellow named Capt. Art Sebrowski, who I got acquainted with very well in a particular job that I had, and it was very interesting. And anybody that knows of him or has been around him knows he's a very unique individual. And so that was the beginning of my association. We then parted ways and went on our own careers, and we ended up working together again up at the Naval War College in his capacity as president, and he asked me to be somewhat of a special assistant.

At the time, his charge was to sort of catalyze transformation in the Navy, and so we worked very closely together for two or three years, and then of course, he was asked to come and take this post, and he asked me if I would be willing to help him do that. And it's pretty hard to pass up a chance like that, to really have a chance to contribute, and of course, it's very hard. He used to talk about what he had spent his professional career doing, and he used to describe it as working at the intersection of national security and large-scale change. And there isn't any more difficult task, but there also isn't one that's more rewarding than that.

That's sort of how I've evolved into this position, and then of course, he stepped down a few years ago, and then I became acting for a couple of years, and we continued the mantra, and then I ended up where I am today.

Mr. Morales: Well, that sounds like a very busy intersection you just described there.

Mr. Pudas: Yes, it is.

Mr. Morales: You used the term "catalyzing change," and so I'm curious, how has your previous experience, your 32 years as a Navy officer and as a pilot, how do you think that's prepared you for your current leadership role and informed your managed approach and leadership style?

Mr. Pudas: Well, first of all, to be a good leader and manager, you have to have some competence in a particular subject, which is always key. And I learned a lot from my former boss, obviously -- you've got to be able to craft a vision for people. And then you have to be able to inspire them towards that vision. And so those three big pieces right there are the areas you have to work very hard at.

I had been in leadership positions in the Naval service and large organizations, and so I had some experience with managing people and different things. I alSo of course, had a history of making my own changes. And so some of the things that I learned were that you have to make change a very inclusive activity; you can't expect people to sit at their desks and wait for permission to think. And so what you do is you invite people into the process, you try to inspire them towards this vision, and then you invite them in to help craft their own future or participate in the transformation. And so I think some of those things that I learned while I was in Naval service, some of those I learned with my former boss, but those have been things that have sort of served me quite well.

Mr. Morales: That's great.

What is the Defense Transformation?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources .

Also joining us in our conversation from IBM is Chuck Prow, Defense Industry leader.

Terry, could you define transformation and transformation rate within the military context? What are some of the keys to transformation, and how has transformation changed from when then-Defense Secretary Rumsfeld first established the transformation office?

Mr. Pudas: Well, defining transformation is somewhat difficult. I think what I'd like to do is maybe try to describe it for you.

Our concept at Transformation is really about doing those things that allow you to continue to have a competitive advantage. And so the concept is really based on the fact that if you are in a competitive environment, whether it's in a national security context or whether you're in industry, and you're not doing this thing called transformation or constant creativity and improvement, you soon find yourself in a very big pickle here.

You are essentially a strategic fixed target. And if you think about it, there's lots of industry examples, and of course, in history in our nation-state examples. So the concept is to this continuum of constant innovation and creativity, seeking those things that are going to be the source of your competitive advantage. And it's really at the high level, it's really about strategy. It's really about choosing a competitive space and then going about the work of creating organizations, capabilities, policies, those sorts of things that influence that competition in the space.

So if you think from your side in industry, it's really the same thing, right? You're not interested in chasing the emerging market; you really want to create the next market. It's about creating the future. The future that you would like. So that's the competitive space. So essentially all the activities come under that sort of large, large strategic concept.

There's a number of things you do. You try to understand the future security environment. People like to look at it through the lens of technology. But it's really much broader than that. It's about new concepts, new organizations, doing things differently with different technologies. It's about trying to understand underlying principles, right? Which all strategists do; they look out there and they say that's really interesting that this is happening, but why is it happening? And is there a way that I could influence this particular trend in a useful way to my advantage?

So things like that. What's going to be the source of perhaps your next competitive advantage kind of thing, and there's some big examples in the past. There's the one from the Army that I always usually use is when the Army, several decades ago, said we want to own the night. Okay, well, we turned that vulnerability into an enormous competitive advantage for the U.S. today.

And it's looking for things that are game changers, changing the game and changing the rules. Changing the basis for competition. When we, for example, decided to compete on the basis of precise navigation and timing, that yielded GPS, Global Positioning Satellite, right? It not only changed the battlefield, but it changed the world. So are there things like that out there that we should be thinking about as well?

But really, and this gets to your question about rate, but it really is about people, it's about the culture of the organization. And all senior leaders know that that's where the real competitive advantage comes from. And so the ability to facilitate what you call a learning organization, one that has the ability to outlearn your competition, so this is about learning rate. And then of course, taking that learning and translating that into some kind of actionable kind of capability or organization or something. That's a real key to it as well, and if you listen to what very successful industry CEOs have done and other people, they really do focus on this learning rate piece.

Mr. Morales: That's interesting.

Now, recently, Defense Secretary Robert Gates has underscored that military transformation, and I quote, "is a major charge from the President that must continue."

I'm curious, how does the recent realignment of your office within the Under Secretary of Defense for Policy support this charge?

Mr. Pudas: Well, I think that we're there now to -- we're more closely along the line with the processes. We were more -- I guess I would characterize us as an influence organization, which would try to create some new logic and try to influence the larger processes, where now we are more closely aligned with the formal processes, and so it really has changed.

I mean, since I've been at this from the beginning, I remember trying to participate in certain forums to try to provide some alternatives, and that was met with mixed success sometimes. But now it's accepted. The views may not be accepted, but the views are always welcomed. And so I think that's a big change in the Department's culture, and so as I said, we're supposed to continue to do this. I mean, my job is to always be somewhat dissatisfied and impatient.

Mr. Morales: You just let out all your secrets.

Mr. Prow: Terry, the core of the U.S. defense strategy focuses on force security challenges outlined in the Department's national defense strategy.

Can you describe DoD's ongoing shift to enhance capabilities and forces needed to address irregular catastrophic and disruptive challenges?

Mr. Pudas: Yes. I mean, there's a tremendous amount of work going on here. Clearly, we had focused on what we called the traditional challenge. The Department of Defense is very, very comfortable in that particular quadrant and sort of took ownership of that, but when you step back and look at the larger competitive environment, you'll see that there's a dynamic that happens, and that is, as you create more and more capability to deal with what we call the traditional challenges, competition moves to the others. And that's part of what you're experiencing now. And so the question is, what kinds of capabilities and organizations and those sorts of things -- you need to deal with those, and so that's a great deal of the work right now. And of course, it's very complicated.

The traditional challenges were usually owned by the Department of Defense. The other three had a larger national security component to them where you now operate in interagency kinds of constructs, and so the team is much larger, so lots of work going on in developing those relationships and what do they look like, how do they contribute? And in many cases, you go from what people talk about as kinetic solutions to non-kinetic solutions, because it's really about behavior.

So what are those kinds of things that we need to be able to do to be more successful in that particular area? I mean, you hear lots of people talking about strategic communications, which is sort of the term of art today, but how much do we really know about that? How do we know about the cause and affect of those things. So that leads you to say, well, if we really want to understand that, then perhaps we need to bring in this group of cognitive sciences and cultural anthropologists to help us understand that particular dynamic.

The catastrophic things, those things are of course very troublesome because we are in a very globalized construct in the world today, where we are very interdependent, which brings with it an enormous amount of brittleness. What might trigger a shock through the system that we hadn't thought about? I sometimes refer to the SARS event in Singapore, right, which was in 2003. Our major focus was preparing for the Iraqi campaign. But the result of that had major disruptions in economics around the world. I think we had a couple of major airlines here in the U.S. that were on the brink of bankruptcy, and we all know what happened to the tourist industry in Canada. And so this catastrophic, cataclysmic kind of stuff is quite troublesome, so how to think through what might be the consequence management of those things.

Disruptive challenges are sort of another category. How do you think about those, and what kinds of things could you do deliberately to help mitigate those kinds of threats? And we have a construct, and if you're interested, we could share it with you. I know time is limited, but this is where rate of change comes in. If you're on a linear sort of path of modernization, a prospective opponent can get a bead on you at some point and disrupt whatever that is you're trying to create, and so being able to modulate rate of change becomes a very useful construct.

Mr. Prow: How can the U.S. military reduce its vulnerability to disruptive threats by increasing investments in programs that accelerate transformation?

Mr. Pudas: Yes, I just sort of touched on that a little bit, but clearly, there's lots of work going on in the Department to work on the processes. I mean, I don't think anybody would come in and say that we're really happy with our processes now and they're just fine, we don't need to change them. Because everybody acknowledges that the rate of change is causing us to re-look at how fast we can do things. So that's going on.

But how do we do other things that help influence our thinking about what are the kind of capabilities that we might want, and how would we use them and that sort of thing, and so this notion of experimentation really becomes a very powerful tool; creating sort of tangible capabilities or experimental articles, as I like to call them, putting them in the hands of operators, bringing the science and technology community together; and then on a very rapid cycle, the developing concepts and requirements and that sort of thing. And so I think that that's a very powerful activity which is very useful, this experimentation business.

Mr. Prow: Can you please elaborate on the concept of transformation chairs?

Mr. Pudas: Sure. I'd be glad to. That's something that sometimes is underappreciated and overlooked, but I talked about it briefly in the opening segment, which was this notion of culture. How do you fundamentally get at the culture of an organization? And of course, one of the key levers of that is education.

Several years ago, we said what could we do to effect that, and so what we decided to do was help facilitate the creation of transformation academic chairs at all of the departments, institutions, and as most people know, we have junior- and senior-level colleges. We have the academies; we have Naval post-graduate school; we have acquisition universities, a whole number of these.

So how can we catalyze transformational thinking in those institutions as sort of a focal point to insert certain things in the curriculum, help influencing how people think about things? And the chairs are interesting, but the real interesting piece is that they come together every quarter and they collaborate with one another, and they share experiences, and so it's sort of a large community, and it's been quite successful.

Mr. Prow: Very good. It sounds like you're creating new models in dealing with the academies and researchers.

Mr. Pudas: Yes. Yes, that's exactly the idea. This notion of collaboration is a different kind of construct in the Information Age. It means different things. And so to be able to facilitate that in this transformation chair network -- and we also have some affiliate chairs, both international and from other folks, too. So it's taking off.

Mr. Morales: Terry, you've used terms like "rate of change," modulating change, you talked about learning, you've talked about behaviors in culture. So I'm curious, to what degree has the DoD developed metrics for measuring the capabilities of transformed military forces and the effectiveness of transformational military services, and is DoD using these metrics in making decisions about programs and resources?

Mr. Pudas: Yes. Of course, that's really the hard question, isn't it; right?

If you're in industry, you can measure bottom line, but here, you're measuring behavior or outcomes that are very difficult to quantify, so they're normally qualitative, subjective kinds of things. And so there has been a significant amount of effort on doing that. It's difficult. We need to continue that effort.

We, of course, were great advocates, and continue to be, of this notion of networkcentric operations, or whatever term you want to use. Everybody seems to buy into that, and they like that, and it's no longer debated; it's how do you actually do it? But then of course, you always run into the question with the resource people, right, and everybody has this: so tell me about the return on investment. Okay, so you have to try to articulate that. And so we've done a number of case studies sort of things to look at different units and how their effectiveness was changed and different things, and so that's been a useful activity.

I actually have a personal metric that I use. And it's used to sort of judge the culture of the organization. Language conveys culture. So the words people use say a great deal about how they've changed, their attitudes about things. And so when I think back when we started, a great deal of talk always about coordination and deconfliction and those sorts of things, but you don't hear that anymore. You hear sharing and collaboration. People use those terms a lot. We used to talk about interoperability, and now we talk about interdependence of those systems. And so for me, that's a fundamental metric for judging how the culture is changing.

This is a tough subject. Metrics have always been the Holy Grail. But we continue to work at it.

Mr. Morales: Well, as you mentioned, it's really all about driving behaviors, and behaviors historically have always been difficult to measure and quantify.

Mr. Pudas: Absolutely.

Mr. Morales: What about efforts in military innovation?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Also joining us in our conversation from IBM is Chuck Prow.

Terry, the Defense Science Board recently released its summer study on 21st Century strategic technology vectors.

Could you elaborate on this study, and what are your views on some of the key recommendations outlined in the study, specifically on the Board's new version of Observe, Orient, Decide, Act?

Mr. Pudas: Over the last decades or so, we had been very, very successful in sort of creating some sort of vectors in terms of precision, stealth, and a couple of others, which really, really served us well. But as we've been talking about, the world changes and the rate of change continues to grow. And so what are those things that we ought to really be looking at?

My personal view is that there are a whole number of exciting technologies out there which some people are calling revolutions in science, and in that category are things like robotics, nanotechnology, bioenergy information, and those are all really, really exciting. But historically, many times, the big advances have come when two or three or those collide in a very clever way or intersect, and you are able to do things that you didn't imagine before.

So I think we always want to be looking at these sorts of things, and I'm glad that they did this, and I'm sure that's going to be very useful to the Department to get their views. These are some very, very bright people who've got a lot of experience and are grounded in these sorts of things. But my view is that sometimes we also need to look at the intersections of these.

Mr. Morales: So do you have a perspective on what some of these new vectors should be, going back to precision stealth joint operations and so on?

Mr. Pudas: Well, these are personal views, but I think that there are things that are going to be very interesting in the future, and perhaps some small investment might be very, very useful.

For example, I already mentioned sort of this notion of the cognitive sciences. I mean, I believe there are many people that believe that is real science now. There were a lot of skeptics that wouldn't allow those into the scientific club, but I think that that's becoming less of a problem. I think that if we don't begin to look at things that affect logistics and sustainability, those sorts of technologies, that we're going to find ourselves out of balance. We have invested enormously in networking the force to allow the force to operate differently in sort of this large dispersed way, and so what are the things that are inhibiting us getting the maximum return on investment out of that?

And then I think that one of the things that of course is going to be extremely disruptive in the future are things in the category of directed energy. Anybody that follows that knows that it's a very interesting area, and lots of work going on there. You just have to look at the reports in the open press to know that there I think have been over 400 incidents of commercial laser kinds of things trying to dazzle airline pilots that are being used by criminals and things like that. And so I think that's an area that's going to be interesting to follow.

Mr. Morales: So again, it goes back to the novel ways of trying to drive behaviors, whether that's in a kinetic or a non-kinetic fashion.

Mr. Pudas: Right. Exactly.

Mr. Morales: Great.

Mr. Prow: Terry, have the fundamental rules of combat, meaning mass surprise, logistics in unity of command, given way to the rules based on information and knowledge?

Mr. Pudas: Yes. I mean, that's a very interesting question. I think that we're beginning to learn more about that. I mean, most people in uniform or that have been in uniform intuitively know that battles are won and lost in the minds of your opponent. It doesn't necessarily have to do with kinetic sort of stuff unless your strategy is attrition. And so what are those things then that affect the cognitive domain of your opponent?

Being surprised, being outmaneuvered, creating closely coupled events. Confronting someone with a situation for which they have no mental model, and so it is really about this notion of creating an information advantage and turning that into a competitive advantage. And so we have I think done a lot in that area.

There's still a lot to understand. It's really interesting to talk to commanders who have been in command of large network organizations and how they have admitted that they had to kind of think through their philosophy of command. All of a sudden, we have the ability for these chat rooms to pop up, and the horizontal sharing of information at lower levels, which isn't necessarily the old command paradigm, when things went up and down the chain. Now they can go across.

And so I look for sort of manifestations of different behavior kinds of things to give me clues to that. What do commanders want to command now? Commanders now want to command bandwidth, which is quite interesting, right? It used to be a back office function, moved to the front office because there's so much -- that's a source of power, and so I guess the rules or the goal hasn't necessarily changed, but I think the way we use information as a real source of advantage has become more appreciated, and people now are understanding how to use that.

Mr. Prow: Given your projection of future challenges to the nation's national security, what is the proper balance between conventional and special operations forces?

Mr. Pudas: Yes. I guess I couldn't give you an exact answer, but if I look at what happened most recently over the last several years and you see how those two conventional and unconventional forces have been operating in concert in many ways, we've always talked about being able to be more soft-like. I mean, that's been sort of the term.

What does that really mean? Well, I mean the ability to -- ease of employment and sustainment, having an appreciation for the local area that you're operating in. I mean, the Special Operations Forces have spent a lot of time doing that sort of thing. I mean, I don't know what the right balance is, quite frankly. I mean, we have to make sure that we have enough sort of capability to deal with any potential high-end kind of thing. And at the moment, of course, we're doing very labor-intensive kinds of operations, and I mean, there's been a lot of emphasis on language training and cultural awareness skills and those sorts, and those are all really, really good things.

I can tell you, though, that there are a lot of people engaged in this particular question. What exactly is the right balance? Are there synergies between the two, et cetera? And so I'm not trying to duck the question, but I don't have an exact answer for you.

Mr. Morales: Okay. Terry, I want to take us back to something that we talked about earlier around this notion of a return on investment. And certainly, calculating the potential cost of defense transformation is not a non-trivial matter. And skeptics have argued that the cost of transformation, both in the near-term and long-term, are uncertain, and that transformation therefore might not necessarily be less expensive than, say, routine modernization.

Could you elaborate on the efforts to really understand the costs associated with transformation within the military, and is it possible to reduce the defense budget and improve the Department's ability to carry out its current and future mission simultaneously?

Mr. Pudas: Let me answer it this way: I think that associating transformation to cost may not be the right metric, because it's really about making choices. Some of the choices that you make have enormous payoff to be able to operate differently than you could before, but are relatively cheap in terms of the overall system. And of course, there are some legacy things that very hard choices have been made over. I mean, you remember the big debate about Crusader and Comanche and all those sorts of things, so it's not necessarily tied to more money, it's tied to the choices that you make.

I'll give you a personal example here: so I'm trying to make the decision on my internet connectivity in my house, so the decision was do I buy this new computer, which was fairly expensive at the time, or do I invest in the high-speed internet? So I invested a modest amount in the high-speed internet, and the productivity in the household went up enormously. So it's not necessarily about buying some new high-end piece of stuff, it's how you use it that really makes a difference, and so making specific choices and understanding the return on investment I think is the real key here.

Mr. Morales: So it sounds like people are drawing an equation that transformation is equal to cost reduction, and that's not really what this is about.

Mr. Pudas: No, not necessarily. Transformation can allow you to do things more efficiently. And that's what the question is about; it's not about numbers, it's about capability. A brigade combat team today can do significantly more than one could a decade ago. And it's just like with airplanes. We used to have 200 sorties per target in World War II, and now we have targets per sortie. And so yes, you can create some efficiencies and effectiveness as you go down this transformational journey.

Mr. Morales: Terry, I only have another minute left, and we talked a little bit about this, so I'm curious, how are we using joint professional military education to transform the mindset and culture of the U.S. joint force community, including our allies and our industry partners?

Mr. Pudas: Well, of course, we talked a little bit about the transformation chairs, and that's a good thing, but one of the things that we also do is we sponsor what we call a transformation short course, which the National Defense University puts on for us. And of course, we invite everyone in the Department, as well as the other agencies, as well as members from industry, but it's pretty much opened up to just about anyone, and to sort of help catalyze this transformational thinking.

So that's been really successful, and most recently over the last -- I would say half year -- we also began a course on what we're calling stability and reconstruction. There's been a great deal of dialogue about that kind of capability and what it really is and how to think about that. And so education is a really powerful tool, I think, to get at this whole piece.

Mr. Morales: Great.

What does the future hold for the DoD transformation efforts?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Also joining us in our conversation from IBM is Chuck Prow, IBM's Defense Industry leader.

Terry, we talked a little bit about behaviors and habits, and so I'm curious, how do you make something like transformation a habit? And given your efforts over the years, could you elaborate on DoD's culture of innovation?

Mr. Pudas: You're right. I mean, people are creatures of habit. It's difficult to catalyze change, and you have to remember that the product of the Department of Defense is national security. And so you have to be careful. I mean, you have to do the appropriate due diligence and all those sorts of things, because it is a really big deal.

But I think the Department's leadership has done a lot over the 5-1/2 years when I look through my lens, in empowering people to propose alternative solutions and different -- my experience is that everybody probably at every desk has some ideas on how to improve things. And so having the ability to listen and empower those people to go ahead and make some change, and be able to do informed risk taking I think is very powerful, and so when you look on the industry side -- I don't like to use too many industry examples because I get criticized for that -- but other large organizations, they're successful, they have that sort of culture. That's what they try to instill, so I think that great strides have been made. It's something that you always have to pay attention to because it's very easy to retrench, and of course, that's not what you want to do.

Mr. Morales: Terry, the integration of the DoD policy directorate was just one of the many changes to take place within the DoD policy directorate. Can you tell us about some of the other changes, and how these changes illustrate the core transformation principle of creating a more adaptable organization?

Mr. Pudas: Well, I can try. I mean, I'm fairly recent to the organization, and this effort was started sometime before we actually arrived, but I know that the leadership of the organization felt that there hadn't been a major transformation within that organization for quite some time. There was sort of some evolutionary steps that were done, and so I believe that they felt that it was time to sort of realign the organization to reflect the global environment of today post-Cold War, and be able to be much more effective in the future, as well as looking at things that could be done to make the organization more effective from a business perspective and management perspective.

And then also, there's a human capital strategy component of this. And so the idea was then to create a different organization that would be much more effective and perhaps more efficient for the future, as well as to create an organization which we call somewhat adaptable. The ability to then change as things unfolded or as new requirements came up and to create an organization where the whole is greater some of the parts.

Mr. Prow: An emerging area of DoD's vision for defense transformation are actions to reduce DoD's energy requirements and to develop alternate energy sources.

What is your role in this effort?

Mr. Pudas: Well, this is something we took an interest in probably three years ago, perhaps even longer than that, because it was our sense that at some point we were going to have to start thinking seriously about this issue, and so we did a couple of modest efforts, a couple of studies, and we actually co-sponsored with Under Secretary of Defense for Acquisition Technology and Logistics a seminar series that meets once a month. It's open to anyone that wants to attend, to look at the energy issues broadly, and it's a very complex thing.

Clearly, there are technology issues, there are policy issues, there are cultural issues. There's a whole number of things involved, but you can see that if you look just on the operational side of the house, how it's becoming a significant deal. It's part of the logistics burden I talked about earlier. And so what we'd like to be able to do is operate in this very dispersed sort of network environment that we've created, but we don't want to spend all of our time protecting convoys of petroleum, for example. So it's both a cost issue and an effectiveness issue.

And then of course, lots of people are talking about peak oil and when is peak oil really going to come, and how's that going to affect the world economy, and there's a competition for energy resources, so there's many dimensions of this, as well as environmental and all of those things. So we are still working on this. I have a couple of studies going on right now that they're trying to look at this through different lenses, trying to create some data for the decision-makers on how to think abut this big issue.

Mr. Prow: Transformation creates new competitive areas and competencies. What qualities will be needed in the warfighter of the future?

Mr. Pudas: We talked about the complexity of the potential future competitive space. Right now, we see our folks being put in very, very complex environments. They're very, very difficult. And so I think there are a couple of pieces of this.

One is clearly, there's a cultural dimension on all this stuff with language training and different things, and how do you think about these complex environments? And then also, of course, there's a capabilities piece of this, something which I call sort of how do you move from binary solutions to something that has a scale of effects? So we give our folks very, very good binary solutions, put them in very complex environments, and then perhaps they have to accept either enormous risk or they do something and there's unintended consequences. And so I think that things in that particular category that have a capability from sort of a non-lethal to a lethal capability would be somewhat useful.

Now, having said that, that is not a simple issue. There's incredible policy issues and cultural issues that go along with that when you start going down that trail, but I think that's an area that we have to start thinking about.

Mr. Prow: It sounds like there are significant human capital issues associated with this subject. What is the Department doing to attract and retain the highest quality workforce?

Mr. Pudas: I think they're doing a lot. I mean, I am not that familiar with the national security personnel system that was just put in place recently. But clearly, that was an attempt to be able to manage the human capital better, because everybody recognizes that that's really what we have to pay attention to. And so how can you unburden some of the previous burueaucratic things and large organizations have those, and so people don't necessarily want to be subject to those and in that kind of environment, so to make the environment much better, and I think that they're working very hard to attract people into government.

Mr. Morales: Terry, we're coming to the end of our time here, but I do have one more question I'd like to ask you.

You've had a very successful career in the Navy, and now supporting the DoD transformation efforts. I'm curious, what advice could you give to a person who perhaps is considering a career in public service today?

Mr. Pudas: I would tell them to do it, because I think there's no higher calling than to serve your country, whether in uniform or in the civil side. And it's very, very rewarding. It's difficult in some cases, but I believe it's a very worthwhile effort, and no matter what kind of day I've had at the office, at the end of the day, I always feel good about that I was contributing to something that was very worthwhile, so I'd like people to consider it very seriously.

Mr. Morales: That's fantastic. Thank you.

We have reached the end of our time, and I do want to thank you for fitting us into your busy schedule. But more importantly, Chuck and I would like to thank you for your dedicated service to our country both as a naval officer, and now leading the DoD's transformation agenda.

Mr. Pudas: At the end of every time I talk to someone or give a presentation, I always like to put a little plug in for our website. You can find us at www.oft.osd.mil, and we're always looking for your comments on our website. We try to keep it updated, and we do answer the mail that people send to us.

So thank you very much.

Mr. Morales: Great.

Thank you, Terry.

This has been The Business of Government Hour, featuring a conversation with Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

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 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

John Salamone interview

Friday, May 25th, 2007 - 20:00
Phrase: 
"Chief Human Capital Officers' responsibilities include such things as setting the workforce development strategy of the agencies, assessing workforce characteristics, and future needs based on the agency's mission and strategic plan."
Radio show date: 
Sat, 05/26/2007
Guest: 
Intro text: 
Human Capital Management; Leadership; Strategic Thinking...
Human Capital Management; Leadership; Strategic Thinking
Complete transcript: 

Thursday, January 25, 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 www.businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. This is Albert Morales, managing partner of The IBM Center for The Business of Government, and your host for The Business of Government Radio Hour.

Never before have the issues surrounding the management of human capital been more important than they are today. Globalization, the maturing of a Baby Boomer workforce, the high costs of health care and changing demographics are all forcing the government, and the private sector, for that matter, to take on the challenges of managing a diverse workforce.

With us this morning to discuss their organization's role on this topic is our special guest John Salamone, Executive Director of the Chief Human Capital Officers Council at the U.S. Office of Personnel Management.

Good morning, John.

Mr. Salamone: Good morning, Al; good morning, John. It's a pleasure to be here.

Mr. Morales: Also joining us in our conversation is John Kamensky, associate partner and senior fellow at The IBM Center for The Business of Government.

Good morning, John.

Mr. Kamensky: Good morning.

Mr. Morales: John, perhaps you could start by giving us a brief overview of the mission of the U.S. Office of Personnel Management, otherwise known as OPM.

Mr. Salamone: Thank you, Al, I would be happy to. For your listeners who may not be familiar with the agency, they can go to our website, which is opm.gov, and there, they would be able to find our 2006 to 2010 strategic and operational plan. In that plan, they will find OPM's mission, which is to ensure that the federal government has an effective civilian workforce, and they will also find our roles and responsibilities, which are multifaceted. For example, we accomplish our mission by providing federal agencies with personnel services ranging from recruitment tools to background investigations, as well as the administration of the federal retirement benefits and health insurance plans.

OPM also provides leadership for federal agencies on human resources policies. We provide guidance on labor management relations and programs to improve workforce performance. We do this in a way that's really designed to ensure compliance with the Merit Systems principles, and also protection from prohibited personnel practices. So basically, OPM's job is to hold agencies accountable for their human capital practices.

Mr. Morales: The Chief Human Capital Officers Act of 2002 established the Chief Human Capital Officer position as well as the Chief Human Capital Officers Council. At the time, I believe you were working for Senator Voinovich of Ohio, who championed this Act. Can you give us some background on the Act and why the Chief Human Capital Officer's position and the Council were established?

Mr. Salamone: Sure, I would be happy to. And I have the unique role, I think, of working for Senator Voinovich when he was working on the Chief Human Capital Officers Act, and now in my role in overseeing the Council. So I've had an interesting dynamic, and it's a unique perspective, I think. I will say that when I took the job, when I told Senator Voinovich that I was going to take the job, he sat me down and said, well here's what we would like you to accomplish, or here's what I would like you to accomplish. So I have my marching orders from the Director of OPM, but also from Senator Voinovich.

But to get at your question, both the position of the Chief Human Capital Officer and the Chief Human Capital Officers Council were created through Title 13 of the Homeland Security Act of 2002. The legislation created both the positions of the Chief Human Capital Officer and the Council really to elevate the importance of strategic human capital management in the federal government. Prior to the creation of the Council, there was some talk within the federal government that we really needed to elevate HR so human resources could be on a level playing field with some of the other chiefs; the chief information officer, the chief financial officer, really to get human resource professionals to have a seat at the table with the top level management in federal agencies.

Mr. Kamensky: John, before we discuss the Council and its role, let's talk a little bit about the Chief Human Capital Officer's position itself. Can you explain sort of what that role is and what the scope of responsibilities are of that officer within an agency?

Mr. Salamone: I would be happy to, John, that's a very good question. And actually, the Act specifically notes the responsibilities of the Chief Human Capital Officers, and those roles and responsibilities include such things as setting the workforce development strategy of the agencies, assessing workforce characteristics and future needs based on the agency's mission and strategic plan, allowing the agency's human resources policies and programs with the organization's mission, strategic goals and performance outcomes, developing and advocating a culture of continuous learning to attract and retain employees with superior abilities, and also identifying best practices and benchmarking studies.

And I would be happy actually on that last point to talk a little bit about what we've got going on in the Council with identifying best practices.

Mr. Kamensky: The Council that you just mentioned, could you tell us a little bit about the mission and the charter of the Chief Human Capital Officers Council and -- like how many people are on it, and their responsibilities, and how does that operate?

Mr. Salamone: Sure. I would be happy to. And in the Act actually, they specifically mentioned three areas for the Council and what the Council should be focusing on: first of all, working toward modernizing human resources systems; improving the quality of human resources information; and influencing legislation affecting human resources operations in organizations.

Now, the Director of OPM, Linda Springer, serves as the Chair of the Council, and the OMP Deputy Director for Management, Clay Johnson, serves as the Vice Chair.

We also have Chief Human Capital Officers from the 15 departments and other agencies, including the Environmental Protection Agency, NASA, the Nuclear Regulatory Commission, the Social Security Administration, the Director of National Intelligence, and we also have a small agency representative in the National Science Foundation.

The Council has -- in addition to just the Council structure, we have six subcommittees: Emergency Preparedness; Hiring and Succession Planning; the Human Capital Workforce; the Human Resource Line of Business; Learning and Development and Performance Management.

Mr. Morales: John, can you tell us specifically about your role and responsibilities at OPM as the Executive Director of this Council?

Mr. Salamone: Sure. As the Executive Director, I think my primary responsibility really is to advise and coordinate the Council business and the activities for the Chair and for the members on the Council. I also coordinate OPM's staff participation with all the Council activities. I really viewed my role coming in to this job that I am not the subject matter expert on any of these issue areas. I am learning quite a bit, and it's a tremendous opportunity. But I want to make sure that I bring the right people from OPM, the right staff from OPM to meetings with me so we can lend support to the Council activities.

I've also helped facilitate the development of the Chief Human Capital Officers 2007 strategic plan with our six subcommittee chairs. And the listeners can actually go to our website, which is www.chcoc.gov, and there, they will be able to find our strategic plan for the subcommittees. But my role also includes providing briefings to various human capital stakeholders, including the media. So I am happy to participate in today's event, and I'm hoping that your listeners will learn quite a bit about the Council and will help us raise awareness for the activities that we have going on.

Mr. Morales: Great. We'll certainly have some more questions for you coming up in a little bit.

But first, we obviously talked a little bit about your tenure with Senator Voinovich, but could you describe for our listeners your career path? We're always interested in how people got started in their current roles, especially within the public sector. And more specifically, how has your previous experience, including the work on the Hill, influenced your current leadership style?

Mr. Salamone: That's great. I am really happy to, and actually, I'm very excited because in March I will have reached the 15-year mark with federal service. So I will be accruing leave at the 8-hour milestone, I guess. But my career began in the office of Senator D'Amato in my hometown of Rochester, New York. I worked for Senator D'Amato on a part-time basis as a district representative in his Rochester, New York office, handling issues like case work and constituent relations. I mean, it was really an excellent experience for me personally to get started with federal service. It was very exciting, very energizing. And after about a year and a half, I moved to Washington to serve as Senator D'Amato's assistant personnel director, a position that I was actually promoted to in November 1994.

So I've always had an interest in government service and in personnel, and I think I had a very good solid foundation in Senator D'Amato's office. While I was working in his office, I started my master's degree in public administration at George Mason University, and I was happy to have Mark Abramson as one of my professors there.

Senator D'Amato actually lost in 1998, but that was the year I finished my graduate program, so I was very fortunate enough to apply into and be accepted into the Presidential Management intern program. So I left Senator D'Amato's office in November -- December of 1998 and went right to the Office of Personnel Management , where I served as a Presidential Management intern, finished my two-year tenure there, stayed on for an additional year, and went back to the Senate in January of 2002, where I began working for Senator Voinovich on his Oversight of Government Management subcommittee.

When I went to work for Senator Voinovich, my roles and responsibilities included human capital, but they weren't limited to human capital. I had a much broader portfolio, actually, and the way that the subcommittee was broken down was the Oversight of Government Management, the Federal Workforce and the District of Columbia. And I handled the Oversight of Government Management portfolio for the Senator, which included such things as the Social Security disability process, DOD supply chain management issues, the GAO high risk areas, federal law enforcement reform, which was a personnel issue. I also handled trade-related issues, the human capital issues related to the trade agencies.

But I really think that my previous experiences have prepared me well for the position that I am in right now. I believe that I have an open and collaborative approach to accomplishing the tasks at hand. Director Springer has given me a great deal of autonomy for managing the Council, and I think that's really been extremely helpful for me both personally and professionally to grow, to develop and cultivate relationships with the Council members, with OPM staff, and really piggybacking on the skills and competencies and the things that I learned while I was at George Mason, and kind of the things that I have been working on professionally as well.

Mr. Morales: Great.

How is the Chief Human Capital Officers Council structured? We will ask John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management, 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 John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

John, we want to talk about some of the changes you and Director Springer have put in place to enhance the effectiveness of the CHCO Council. I believe this past year, OPM established the Deputy CHCO position. Why were these positions established, and what are you looking to accomplish through these new roles?

Mr. Salamone: Sure. Actually, the Deputy Chief Human Capital Officers I think are extremely important. And prior to my coming on board, the Director talked about adding the Deputy Chief Human Capital Officers at the Council meeting last March. And we really see the Deputies playing three very important roles for the Council. First and foremost, they will help us serve as the links to the federal human resources directors. We've heard through GAO reports, through interviews that I actually conducted with the Chief Human Capital Officers and Deputy Chief Human Capital Officers when I first came on board -- I went around and met with all of the Chief Human Capital Officers and the Deputies. It took me about two months. And we heard that, you know, what was happening at the Council level wasn't necessarily filtering down to the federal human resource directors.

So, most if not all of the Deputy Chief Human Capital Officers are either HR directors themselves or they have HR directors that report to them. So we're hoping that the Deputies will serve as another set of eyes and ears to come to the Council meetings and filter information to the HR community.

Second, I think the Deputies will also help us identify and share best practices. We have a lot of goals in our strategic plan dealing with finding and sharing best practices. And really with their subject matter expertise, we're hoping that the Deputies will identify and help us share those best practices and find the right forums to share those best practices.

And finally, really the Deputies will help us ensure continuity when there are changes in leadership at the Council level. Most if not all of the Deputies are career civil servants, so when there are changes in administration or changes at the individual Chief Human Capital Officer level in an agency, the Deputy Chief Human Capital Officer will be able to step in and say here are the things that the Council's been working on, here's the direction that the Council is going, here's what's working, here's what's not working, and really just helping us ensure that there is continuity when we have that leadership change.

Mr. Morales: Certainly helps broaden the reach of the Council across the agencies.

Mr. Salamone: Most definitely. Most definitely.

Mr. Morales: Also recently, OPM made some additional changes to the subcommittee structure of the Council. Can you describe these changes as well as the rationale behind the new structure?

Mr. Salamone: Sure, I'd be happy to. And again, this was something that the Director was working on right around the same time, about the March Council meeting, right before I came on board. We have six new subcommittees. The structure includes Emergency Preparedness, Hiring and Succession Planning, the Human Capital Workforce, the HR Line of Business, Learning and Development, and Performance Management.

The six subcommittees -- really the Director looked at the structure that we had previously, and some of the subcommittees are the same, some of them are split up and combined in different ways. But really, the current structure is intended to ensure that we focus on the most pressing human capital issues facing the government.

And we've been very, very active with all of the subcommittees. Each of the subcommittees meets on a monthly basis, and we've been working very diligently toward meeting the goals and objectives that we've outlined in the FY 2007 strategic plan for the subcommittees.

Mr. Morales: Now, on the same topic, the subcommittees released their new mission statements and operational goals, which are obviously sponsored by the CHCO Council. Can you talk about how and why this document was developed, and more specifically, how the subcommittees plan to accomplish their goals?

Mr. Salamone: Sure, absolutely. The subcommittee's strategic plans were really born out of a conversation that Director Springer had, and she thought that the best way to get the Chief Human Capital Officers engaged and have the subcommittees work on things that are meaningful is to give the subcommittees and the subcommittee chairs the autonomy to develop their own strategic plans and things that they want to work on to accomplish the goals for the Council.

We've really taken a bottom-up approach. The Council members and the subcommittees had a great deal of autonomy to draft their own mission statements and their own goals. I will say that I played a role in that to the extent that I provided each of the subcommittees with a draft mission statement, because I felt that it was better to give them something to react to rather than starting from scratch. But when it comes down to the goals and objectives that they've put together, really, those were conversations that happened at the subcommittee meetings to really drive the agenda for each of the subcommittees.

Let me add to this and talk a little bit about how the subcommittees plan to accomplish their goals, to get back to your original question, Al. Each of the subcommittees, as I'd indicated, meets on a monthly basis. And I bring the OPM staff with me to the relevant subcommittee meetings. The listeners can go on the website -- as I indicated, it's www.chcoc.gov -- to pull up our strategic plan. And you will see that, you know, the goals -- for example, the Emergency Preparedness subcommittee, one of their goals was to assist OPM in the development of a communication plan for pandemic influenza. This subcommittee was extremely active with OPM when we were developing our guidance last summer from May to August. They helped us develop our guidance, and they helped us pre-clear our guidance before we went through the OMB clearance process.

So we're working very collaboratively between OPM and their subcommittees to accomplish the goals and objectives that they've put forward.

Mr. Kamensky: John, in 2006, the Office of Personnel Management issued its strategic and operational plan, so that's separate from what the Council's plan is. But it includes outcome and goals that are focused on human capital results that agencies have to implement. What role does the Council play in helping OPM achieve those kinds of goals?

Mr. Salamone: That's a great question, John. Actually, if the listeners look in the back of our strategic plan, the Council strategic plan, they will see that we have linked OPM's operational goals and objectives, the relevant operational goals and objectives, to the subcommittees as well.

So not only do we have OPM staff that go to the Council meetings or subcommittee meetings to talk about the goals and objectives that the subcommittees have put together, but we have staff that goes to the subcommittee meetings to talk about OPM's goals and objectives so we can partner and collaborate with the Council to accomplish the goals and objectives that OPM has set forward.

We've had some very good successes. As I mentioned, the Emergency Preparedness subcommittee, working with OPM on the pandemic influenza guidance. But we've also had the Hiring and Succession Planning subcommittee work very closely with OPM to develop more targeted job fairs for college students for our job fairs.

Mr. Kamensky: The Council and its members seem to operate maybe a bit as a federation of independent agencies. They obviously have diverse views and stuff because they come in from different programmatic areas. But what's the biggest challenge for OPM and the Council to work together on achieving common goals?

Mr. Salamone: That's a really good question. And yes, I think operating as a federation of independent agencies is probably a good descriptor. But I think we really do, fortunately, have a very open and collaborative working relationship with the Council and the Council members. And I think we're very pleased with the progress that we've been making so far.

But to really answer your question, John, I think we'll continue to find ways to strengthen and enhance those relationships so that we can work together to secure a positive legacy for the Council so that the next set of leaders coming into their CHCO roles will have a solid foundation for working with OPM, and building on what we've been able to put in place for the Council.

Mr. Morales: John, one of the other elements of the CHCO Act was the establishment of the CHCO Academy. Can you talk a little bit about this academy, as well as why it was established, and what role does it play in relation to the Council and the agencies?

Mr. Salamone: I'd be happy to. And actually, the academy was originally intended to serve as a way for the Chief Human Capital Officers to learn about and share best practices. With Director Springer opening up the Council meetings to Deputies as well, we now have Deputies come to the meetings. But I've worked on several training academy sessions. I serve, I guess, as the dean of the training academy. But when I came on board, the training academy sessions were relatively low turnouts. Six -- maybe five, six, seven Chief Human Capital Officers would show up.

My first meeting, we had Deputies on board, so I think we had close to 17, 18 members. But I took a look at the training academy sessions and felt that we may actually be missing an opportunity. In getting back to the link to the federal human resources community and the practitioners, I thought it was a good idea really to open up the academy sessions to allow each Chief Human Capital Officer to bring three staff members with them to the training academy sessions.

And in the last couple of sessions that we've had, we've had between 60 and 70 attendees. And that is 10 times what we were originally having when the Council first set up the training academy sessions. And in this year alone, we had in January a training academy session on the SES Pay-for-Performance System, where we had 70 agency representatives attend and hear best practices. OPM kicked off the meeting, talked about the system, talked about the requirements, talked about the certification process. And then we had the Department of Labor, the USDA, Department of Agriculture, and the Department of Treasury share best practices with those 70 attendees on things that they've done to help improve their SES Pay-for-Performance System.

And in February, we had a training academy session on Telework. And we talked to some agency -- some agencies brought some agencies in to talk about things that they are doing in their agency to enhance and promote Telework, which is obviously extremely important to the federal workforce, and quite frankly, an area where I think we need to focus a little bit more attention on. But really the training academy sessions I think is one of our biggest successes.

I am going to look to possibly webcasting the training academy sessions as a way to reach an even wider audience, something that I'm talking to the OPM staff about and will be talking to the Council members about as well. It may not make sense to webcast every single training academy session. But certainly there are some that we could webcast, and if the issue was hot enough, we really could reach a very, very wide audience.

I'm going to have to give credit to a DHS staffer, Department of Homeland Security staff member. I was talking about the training academy sessions at a recent presentation I gave at the National Academy of Public Administration. And they actually suggested that we webcast the training academy sessions. So it was an excellent suggestion. And one of the benefits I think about getting out there and talking about the mission and the successes of the Council is to hear from the community on what we're working on and how we can make improvements.

So certainly that was a worthwhile suggestion. And I'm hoping that we're going to be able to pull that off.

Mr. Morales: That's a fantastic forum for sharing best practices across a wide variety of agencies. That's great. Are they typically run by Council members?

Mr. Salamone: Actually, I work with the Council members to pull together the training academy sessions, the topics -- sometimes the Director, Linda Springer, will suggest topics. And she actually suggested the SES topic, and I thought that Telework was the next logical thing for us to be working on, or the next logical issue area for us to highlight. But we're open. And I talk to the Deputy Chief Human Capital Officers, I talk to the subcommittee members, and I talk to the members of the Council, about what future topics would be relevant and timely for the Council to showcase as an academy session.

Mr. Morales: That's fantastic.

What are the some of the key human capital challenges facing the federal government? We will ask John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management, 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 John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

John, what are some of the biggest human capital challenges facing the federal government? And mind you, we only have an hour to discuss this. And what are OPM and the Council doing to address these challenges?

Mr. Salamone: I think, Al, you know, one of the biggest challenges that we have facing the federal agencies today is hiring. The federal government must continually look for ways to recruit, hire, and retain top talent. You know, as I indicated, we do have a Hiring and Succession Planning subcommittee. The subcommittee has several goals. But really where we need to start is federal agencies have to take a look at the processes that they have in place for hiring their employees, and make sure that they are utilizing to the fullest extent possible all of the flexibilities available to them.

The Chief Human Capital Officers Act included several flexibilities such as category rating instead of having agencies use the Rule of Three. And OPM actually is working and positioning themselves to help the federal community to streamline the hiring process as well. For our listeners that are interested in the federal hiring process, they can go on the OPM website, www.opm.gov, and there, they'll find OPM's Hiring Toolkit.

The Hiring Toolkit is an excellent, excellent resource for federal human resource professionals, and it's really intended to help the federal human resource community and the managers navigate the hiring process and identify any bottlenecks that they have within their agency. Human resource professionals go on the Hiring Toolkit, they'll see that we've mapped out the 45-day hiring process, and we identify how long it should take in each step of the process. And then agencies can map that against how long it takes them to identify or hire an employee.

And what the Toolkit will do is identify where there may be very large gaps, and it will give the agencies helpful hints on how they can close those gaps to streamline the hiring process. In addition to hiring, I think the federal government must also focus on succession planning initiatives to ensure that we have the right talent to fill in for the loss of institutional knowledge when our federal employees retire. OPM has a plan to help agencies fill mission-critical occupations through our Federal Career Day job fairs.

And as I indicated, our Hiring and Succession Planning subcommittee on the Council has been working very, very closely with OPM on targeting those job fairs for mission-critical occupations. So that's another I think very big challenge that we have for the federal government. And as long as I am serving as the Executive Director of the Council, I'll really do my best to ensure that we have OPM and the Council working together to solve the biggest and most pressing challenges that we have in the human capital world and facing our federal government.

Mr. Morales: John, I'm sure that these challenges of hiring and succession planning are further exacerbated by projections on the retirement wave and the loss of talented and skilled individuals. What's the Council doing to recruit and retain the next generation of federal workers? And specifically, I'm interested in what is the Council doing to attract the younger generation, those that are perhaps still in college today, and may have some interest in working for the federal government?

Mr. Salamone: I think the first thing obviously is the Federal Career Day job fairs, but that's certainly something that the Council is looking at. And actually in our January meeting, full Council meeting, we had a briefing from the Gallup Organization and the Council for Excellence in Government, talking about their study that they had released earlier in the year: Understanding the Workforce of the Future. And they surveyed the general public and got some feedback from the general public on what were the perceptions of working for the federal government.

And I think that there is some really good news in that report, that they identified that we have an opportunity to go after and recruit Generation Y, the 18-to 29-year olds. There are specific findings. They said 34 percent of the Generation Y cohort are interested in working for the federal government. I think that is extremely promising. So the federal government has not done in the past 10 years or so a lot of recruiting. Recruitment has been ramped up in the past couple of years.

But we really need to see how we can target the Generation Y through colleges and university visits, through certain intern programs, to recruit and get some talent in the door, get some excitement about federal work and having the younger generation answer the call to serve. So I think there are some good new stories out there, and there are some opportunities for us to go after and recruit that Generation Y.

Mr. Morales: That's a surprising statistic. 34 percent is a very large number.

Mr. Salamone: Yeah, it is extremely large and something we're very very excited about.

Mr. Kamensky: Last year, OPM and the Council actually conducted a couple of hiring satisfaction surveys to try to improve the federal hiring process. Can you tell us a little bit about what these surveys were and the kind of results you saw, and what agencies plan to do to address the issues that surfaced?

Mr. Salamone: Very good question, John. And actually, the surveys were implemented prior to my coming onboard. But I will say that OPM staff did brief the Council on these issues during our November 2006 Chief Human Capital Officers Council meeting. The goal of the survey really is to improve the hiring process and assess management applicant satisfaction with the agency's hiring process in key areas. On the management side, the surveys look at things like job announcements, r�sum� contents, applicant quality and quantity, and hiring flexibilities.

For the applicant survey, we look at things like job announcements, r�sum� building, applicant storage and retrieval, job search, and just overall satisfaction. The findings that we discussed at the November meeting included on the management side, we're finding very high percentages of managers -- 90 percent to be exact -- believe that the vacancy announcements that they write for their agencies and for positions in their agencies accurately reflect the jobs at hand. So I think that was a very good statistic.

However, only 34 percent feel that they have the flexibility to use pay-setting flexibilities. And that's something that we want to take a look at and work with the agencies on to try and get that number up a little bit. But agencies are setting targets to date, and they've chosen to focus on improvements in several areas. And I'll just name some of those areas.

Things like hiring satisfaction; the appropriate number of applicants on the certificate; job announcements; the quality of the applicants; receiving certificates in a timely manner, again streamlining that hiring process to make sure that we are getting the certificates in the hands of the hiring manager fast enough so we don't lose that talent when we're competing against someone that may be interested in the government but we lose them to the private sector.

Again, just working on the job announcements and the application process, really making the job announcements more appealing to the applicants, putting catchy language in there, getting away from things that say "the incumbent will serve in this capacity," and just kind of improving the way that we write vacancy announcements.

Mr. Kamensky: In addition to hiring, another challenge that seems to be facing a lot of agencies is performance management; in particular, pay-for-performance. That's been a hot topic in the public sector, as agencies are looking to link individual and organizational performance. What's the Council doing to make sure agencies have the systems in place to support strong performance management programs, and that the agencies and the managers have the skills to manage them?

Mr. Salamone: That's an excellent question, John. And if you look at the recent survey results from the Federal Human Capital Survey, this was one of the -- and I think the lowest scoring result that we had for the federal government -- that employees felt that their pay raises were based on performance. And it's something that our subcommittee on Performance Management is looking at. I mentioned the academy session on the SES pay-for-performance system. That's one component.

But what we really need to do a better job of in the federal government is linking the agency's mission and driving that down to the goals and objectives that we set forward for the employees, that line of sight -- creating a line of sight that employees know what they're working on contributes to the mission of their agency or the mission of their organization, and that they are paid based on that performance, and based on how well they contribute to the mission of the agency.

If you look at the goals and objectives of the subcommittee, they're looking at identifying best practices for performance management. And I'm going to be working with the subcommittee to identify those agencies that have done a good job, those departments and agencies that are doing a good job, finding those best practices and showcasing those best practices in a document that we'll be putting together at the end of the year. So there's a lot going on. It certainly is a hot topic for the federal government. GAO recently issued their 2007 High-Risk Report, and it did include human capital as a high-risk area.

There's been a lot of work that's been done on human capital. But they mentioned as a first step toward human capital improvement that Congress must pass a pay-for-performance system for the federal government. So it's not only incumbent upon the agencies, but we can't do it alone. We need some help from Congress, and I don't know how likely it's going to be that that's going to happen. But it's certainly something that we will be looking at and hoping will happen to give us the flexibility to create a system that levels the playing field for the agencies.

Mr. Kamensky: That's interesting, as performance management has obviously been an enduring topic for a lot of things. There's a initiative this administration has taken up in the past couple of years called the HR Line of Business, the Human Resources Line of Business. And you have one of your subcommittees devoted to that. Could you explain a little bit about what is a Line of Business, and sort of what is the subcommittee doing, and how are they going to help move this initiative along?

Mr. Salamone: Sure. Actually, the mission of the Human Resources Line of Business is to support the governmentwide effort to ensure that the line of business meets the needs of the agency in their strategic management of human capital. The Human Resources Line of Business was established to really take a more central approach for some of the backroom day-to-day paperwork processes of the agencies, and consolidate those and centralize those into certain lines of business.

And really what we're trying to get to for the federal government is moving away in human resources -- moving away from just the day-to-day paperwork processing of the Standard Form 52s, the paperwork that you need to process, federal applicants, and the paperwork that you need to process for individual personnel files, and really move human capital or human resources in the direction of being more strategic partners, more strategic consultants in the agencies, so that an HR professional in the government can go and work with the manager and say here's how we can help you streamline the hiring process, here's how we think you would benefit from a different vacancy announcement, or using different language in your vacancy announcement.

So the Lines of Business will actually free up our HR professionals and help us develop the skills and competencies we need to make the human capital professionals in the government be more strategic. Now, we did not have a Human Resources Line of Business subcommittee in the Council. This was something that was new that the Director added. And really their first goal and most important goal is to provide more visibility of the Human Resource Line of Business to the Chief Human Capital Officers Council.

Gail Lovelace, from the General Services Administration, serves as our subcommittee chair. And the subcommittee is working extremely close with Norm Enger, who is the program manager at OPM for the Human Resources Line of Business. So we have a very good working relationship between the subcommittee and Norm Enger's office.

Mr. Morales: John, we only have about 60 seconds left. But over 90 percent of the federal employees are actually located outside of the Washington, D.C. area. What role does the Council play in reaching out to these employees that are beyond the immediate reach?

Mr. Salamone: That's a great question. And, you know, I think one way that we are looking to improve that coordination out to the field is to work through the federal executive boards and push information out through that infrastructure. But we're also hoping that the Chief Human Capital Officers and Deputy Chief Human Capital Officers will take what they learn and take what we discuss at the Council meetings and push that information out to their human resources professionals in the field.

I've made a pledge and offer to the Chief Human Capital Officers that I'd be happy to come and speak to their human resources team, whether they have an all-hands meeting here in D.C. that's broadcast out to the field -- to just introduce the Council to them, talk about what we have going on, talk about the things that we're working on in the Council. So I think I can play a role in that. But really, we're looking at working with the FEBs, working with the Chief Human Capital Officers and then seeing what role I can play in filtering information out to the field as well.

Mr. Morales: Great. What does the future hold for the Council?

We will ask John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management, 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 John Salamone, Executive Director of the Chief Human Capital Officers Council at the Office of Personnel Management.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

John, can you talk a little bit about the role the Council plays in the area of emergency planning? You alluded to this a bit earlier. Specifically in the areas of preparing for the pandemic threats, or responding to natural disasters such as Hurricane Katrina.

Mr. Salamone: I'd be happy to. And actually as I'd indicated, the subcommittee was extremely instrumental to OPM when we were working on our human capital guidance for pandemic influenza. And listeners can go to www.opm.gov/pandemic to pull up our human capital guidance. And they'll see what OPM has been working on and the guidance that we've delivered to the community.

But I'll say that not only with the human capital guidance for pandemic influenza, the Council was extremely helpful during Hurricane Katrina. Now, that was prior to my tenure on the staff of the Council, but OPM Director Springer held several conference calls immediately following Hurricane Katrina to discuss with the Council members existing personnel flexibilities to help the employees out in the Gulf region. And actually, there's a summary of those conference calls and what was discussed on the Council's website on our documents page; it will detail what the Council members talked about and things that we were working on to really help the employees in that region.

Mr. Kamensky: John, the Council's been in existence for, what, four years now. What challenges did OPM and the agencies face to get it off the ground? And how has the Council evolved to respond to those challenges?

Mr. Salamone: I think, John, that's a great question. And with your background in government, you know that whenever you start anything new in government, it's always difficult to start from the ground up. My predecessor, Mike Dovilla, who was the Executive Director prior to my tenure, really did an outstanding job setting up the Council, starting from scratch, and getting a very solid foundation in place.

My goal really when I came on board looked at my roles and responsibilities as the Executive Director, set some short-term and long-term goals for myself. And really my long-term goal is to make sure that I'm doing everything that I can to build on that foundation, work with the Director of OPM, work with the Council members, work with our stakeholders, to raise awareness and secure that positive legacy for the Council so that the next generation of Chief Human Capital Officers that come in have a good solid foundation and know that they're coming into a Council that serves a wonderful purpose for the human resources community, and has done some very good and innovative things for the community, and they can take it and build upon our successes.

Mr. Kamensky: In doing that and looking out to the future, how does the Council stay current on human capital issues? And what role do you guys play in anticipating or planning for future trends?

Mr. Salamone: That's a very good question. And actually, to Director Springer's credit, she's changed the structure of the Council meetings to make sure that we have more engagement and more involvement from the Chief Human Capital Officers. And beginning with the January meeting this year, we are breaking the meetings -- they're two-hour meetings, and they happen -- we have six meetings a year; they occur every other month. The first hour of the meetings really is to focus on the business of the Council. OPM will give briefings on cutting-edge issues that are coming up or things that we're working on at OPM. The subcommittees will conduct briefings. But that last hour is really for the Chief Human Capital Officers to volunteer and discuss cutting-edge topics that they have going on in their agency.

For example, our March meeting, which is coming up in a couple of weeks, Dr. Reginald Wells from the Social Security Administration is going to talk about Social Security's distance learning process, and how they've implemented strong distance learning procedures for the Social Security Administration, something that we can share as a best practice at the Council, something that fits in very well with the mission of our Learning and Development subcommittee, something that we hopefully will be able to showcase at the end of the year in a best practices document.

Mr. Morales: John, along the same lines, one of the trends that we're seeing is this transformation of the human resource workforce from what was traditionally a transactionally based organization to a more strategic business partner. Can you talk a little bit about what the Council is doing to address this transformation? But more importantly, to ensure that the HR workforce has the necessary competencies.

Mr. Salamone: Al, that's a great question, and I alluded to it a little bit before with the Human Resources Line of Business dialogue that we were having. And actually this particular issue dovetails very well with the HR Line of Business. Our human capital subcommittee is working on this very problem. And, you know, their mission is to make sure that we have the skills and competencies in the human resources community to serve as a strategic consultant for federal agencies, and making sure that we're hiring a new generation of human resources professionals that have those competencies to service as a consultant.

Mr. Morales: John, we started this show talking a little bit about your background and your experience on the Hill and at OPM, which shows a real commitment to public service. What advice would you give to a person perhaps still in college who is interested in a career in public service?

Mr. Salamone: Al, I'm happy you asked that. And I will have to say that I have been extremely fortunate, very lucky, and I am extremely honored to have served in all of the positions that I have had. You know, starting in Senator D'Amato's office part-time three days a week making $9,000 a year, I know I was not going to get rich, but I knew that it was a wonderful experience. I would not trade one day of my 15 years of federal service for anything.

I'm sitting here with you today; I never in my wildest dreams would have imagined that I would be on the radio talking about very important human capital issues that are facing the federal government. I would say to college students out there, give the federal government a chance. You could rise up very quickly, make an impact, and really do a great service to your nation by serving as a federal employee.

I'm going to work as hard as I can to continue my federal service, and we'll see where this job takes me. But I'm very excited about the future. And I think all the college students that are out there -- really think about it, because federal service is a noble profession, and you'll have an opportunity to do great things for the United States.

Mr. Morales: That's fantastic. And with that, we hope that the next Gallup poll shows a couple of more points increase in that 34 percent population.

Mr. Salamone: Hope so.

Mr. Morales: John, we have unfortunately reached the end of our time. I do want to thank you for fitting us into your busy schedule. But more importantly, John Kamensky and I would like to thank you for your 15 years of dedicated service to our country.

Mr. Salamone: I appreciate that Al, John. Thank you very much for the opportunity to come here today. If any of your listeners are looking for information on the Chief Human Capital Officers Council, they can visit our website at www.chcoc.gov. And in addition, too, they can go to the OPM website if they're interested in the Office of Personnel Management, at www.opm.gov. And finally, for those college students or those of you in the audience that are interested in federal employment, please visit our website, www.usajobs.gov. And there, you will find vacancy announcements and job opportunities that are available to you in the federal government.

Mr. Morales: Fantastic. Thank you.

This has been The Business Of Government Hour, featuring a conversation with John Salamone, Executive Director of the Chief Human Capital Officers Council at the U.S. Office of Personnel Management.

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 am 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.

A Model for Increasing Innovation Adoption Lessons Learned from the IRS e-file Program

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Transparency is one of the current buzzwords, which is notnecessarily bad. A keystone of democracy is accountabilityand transparency, i.e., providing information is one way forthe government to be accountable. Since no one wants tolook bad, transparency can be a major impetus for programimprovement.

Forum Introduction: Toward Greater Collaboration in Government

Thursday, April 12th, 2007 - 15:43
Posted by: 
 

Leading the U.S. Coast Guard

Thursday, April 12th, 2007 - 15:31
Posted by: 
Profiles in LeadershipAdmiral Thad W. Allen Commandant, United States Coast Guard
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