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Tuesday, January 30, 2001
Mr. Lawrence: Welcome to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the Endowment for the Business of Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at www.endowment.pwcglobal.com.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business.
Our conversation today is with John Nolan, Deputy Postmaster General, and Chief Marketing Officer of the U.S. Postal Service. Welcome, John.
Mr. Nolan: Glad to be here.
Mr. Lawrence: And joining me in our conversation is another PwC partner, Nancy Staisey. Welcome, Nancy.
Ms. Staisey: Thank you, Paul.
Mr. Lawrence: John, in this first segment let's talk about your career. You began with the Postal Service in 1970. Could you tell us about the various positions you've held?
Mr. Nolan: Well, I actually started in the Postal Service as a management intern right out of college, and I did that for a short period of time and then moved into a program management position in Washington. And got involved in the start-up of our new bulk mail centers back then in the late-'70s, or mid-'70s, starting up these 33 centers.
I came back to Washington from New York where I had been starting up the first of those centers and worked in Washington for a while, and then moved back out to the region from our regional office in New York City and held a couple of positions before I became postmaster in New York City.
After 19 years I left the Postal Service and then went to work for Merrill Lynch for 11 years, and like a bad penny I'm back.
Ms. Staisey: John, you served as general manager and postmaster for the New York division, as you mentioned, which is the largest division not only in the Postal Service but also worldwide. What did you learn from that experience?
Mr. Nolan: Well, it was a great job. As postmaster in New York, you're the 800-pound gorilla, and so pretty much you had the opportunity to do what you wanted and people were just happy that you wanted to do it. If you were successful, they wanted you to keep being successful.
But I think the biggest thing in that job, you're really running a business. You really are. You have customers, you have a mission that you have to carry out every day. Constantly talking to your customers and communicating their needs aggressively within the organization I think was the most critical thing because if not for the customers, we don't have a reason for being in existence. So I think in an organization that large, 25,000 employees, and as many customers as we have, you can't overcommunicate. You've just got to constantly communicate.
Mr. Lawrence: You also mentioned that you worked for Merrill Lynch for 10 years after a long tenure with the Postal Service. How do you contrast your experience in the private sector with that in the public sector?
Mr. Nolan: Well, there's a much greater focus on money in the private sector, I'd say. We had one figure really that drove a lot of our behavior at Merrill Lynch, and that was turn on equity. We can't do that in the Postal Service. It's just a little bit more complex so in a sense it's easier in that sector, although Merrill Lynch is a very complex company.
I think our set of problems is very challenging because you not only worry about what a normal businessperson would do in such a situation like this, but what are the political implications because we're not just a regular business. But I think it's very similar in many ways. The business I was running was actually a related business for Merrill Lynch and so they had a lot of similarities. But I found the focus on profits, the overriding focus on money, to be a very all-encompassing one, and a very healthy one in many respects because it forced people to really think about the consequences of what they did in very clear monetary terms very day.
Ms. Staisey: How did your experience at Merrill Lynch prepare you for your present position?
Mr. Nolan: I think that there was a greater breadth at the way we looked at problems that I've got now. I had the postal experience, now I've got the Merrill Lynch experience. I've seen things from both sides. I think I understand better all sides of issues that typically come in front of us.
I was a customer, so I knew what it's like to be a customer at the Postal Service and the satisfactions and sometimes the frustrations in that regard dealing with a very large organization. I had an advantage because I knew about the inside of the Postal Service so that gave me some advantages. But I saw the way our people had to deal with the Postal Service, and I think it's enabled me as we get into discussions of key policies, programs, futures, et cetera, to stop and say, "well, wait a minute, what would I be thinking if I were sitting on the other side of the fence again," and I think that's certainly an advantage.
Mr. Lawrence: What is it about public service that attracts you?
Mr. Nolan: It's just a very challenging period. I was very fortunate in the years I was at Merrill Lynch financially, so I'm able to consider this again because the big drawback for me of course is financially doing this. But I've known Bill Henderson for 25 years, the prospect of working alongside of him and the rest of the management team is one that I thought would be interesting.
It certainly is a very challenging time in the history of the Postal Service. I think finally the one thing that got to me is that 20 years from now Bill said someone is going to write a book about the Postal Service, you need to be in that book, again, referencing the fact this is a particularly critical time. As soon as my wife heard me make that statement, she says, "oh no, you're taking the job."
So I think the challenge, the tremendous challenge, the sheer size and the importance of what we do is something that's pretty, especially, for someone like me, hard to overlook.
Ms. Staisey: Which positions or management challenges provided you the best opportunity to develop as a leader?
Mr. Nolan: I think that being postmaster of New York with 25,000 employees trying to change directions in what we were trying to do, dealing with the unions, the customers, the management groups, really helped me grow as a leader. I think that some of the -- or just before then my position as the regional director of customer services in the Northeast region of the Postal Service and had to deal with the entire regional area and, again, communication being key was one.
Frankly, at Merrill Lynch trying to build a company within a company that's not a mail business to try and figure out how do you get people whose main mission in life isn't what you're to accomplish, but for whom it's very important that we do well, how do you get them moving in that direction and getting people excited about this new company you want to form. I think all three of those things would be things I'd point to.
Mr. Lawrence: You mentioned communication, and I'm wondering about some other key characteristics of leadership.
Mr. Nolan: Well, I think leaders challenge limits. They challenge processes that exist to make sure that we are on the right track. I think leaders have to inspire a shared vision. I think that's a very important thing that just managers sometimes don't do, but that shared vision is very critical.
I think leaders find a way to enable others to do their best and to really serve as a role model to encourage the heart. It's not just the things that you do, but why you do them and to get enthusiastic about those.
I think leaders have a tremendous performance bias. It's not "let's sit down and think about it," it's "let's go, let's go, let's make something happen." So I think those are critical things for a leader.
Mr. Lawrence: How do you do that in such large organizations?
Mr. Nolan: In some ways, I don't know that the size is part of the problem I guess, but it's the bias within the organization. It's the way you structure things. It's the way you challenge people within an organization. Size can be a tremendous advantage because you've got tremendous resources to bring to bear on a given issue. So I think structure comes into play there and how people feel about what needs to be done.
I think the big thing is that you can't get into this mind-set that this is a big ocean liner and when you turn the wheel it takes all those analogies that you always hear. The fact is that you give an order and a whole lot of dust can start to move in one direction if you get people moving that way. So you can make some pretty big changes in a hurry if you're crystal clear about what you're doing and why you're doing it and you're able to communicate that.
Mr. Lawrence: Do you think the characteristics of leadership have changed over time?
Mr. Nolan: I don't know. I think that it may be that the need for increasing flexibility because of the speed at which change occurs is one that's risen to the top of the list of things that leaders have to be aware of and concerned about. So I think that flexibility, of all the things, I think that's probably one that leaders have to be conscious of.
Mr. Lawrence: We're talking with John Nolan of the U.S. Postal Service. This is the Business of Government Hour. We'll rejoin our conversation in just a few minutes.
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with John Nolan, Deputy Postmaster General, and chief marketing officer of the United States Postal Service. Joining me in our conversation is another PWC partner, Nancy Staisey.
Ms. Staisey: Thank you, Paul. John, as Deputy Postmaster General and as Chief Marketing Officer, what are your areas of responsibility?
Mr. Nolan: Well, there are several. First, I have the chief technology officer who reports to me, and obviously the marketing functions, everything from product development, to pricing. The sales organization is about to shift over to my area of responsibility.
The other area, which is new to the Postal Service, is an area called corporate and business development. We're really looking at more Internet/e-commerce related products and services and alliances and partnerships that we're going to see more and more of.
Mr. Lawrence: Throughout your tenure at the Postal Service you have stressed positive labor/management relationships, particularly in your work in New York City. How have you been able to improve labor/management relationships, and what lessons learned would you advise other managers?
Mr. Nolan: Again, I go in with a certain bias that people do want to do a good job. I mean, you always have the ÄÄÄÄ but you don't structure a whole approach to business for a few people, you do it for the large group.
I think honesty is very important. I mean, if you're going to do something, if you need to do something, you ought to be honest about it and get it on the table and discuss it. I think I try and work hard to understand the other's viewpoint to be direct about what my viewpoint is and to encourage them to see things from my side as well.
And don't give up on important goals. I mean, if the first time you get a "no" that you go off and pout, it doesn't accomplish very much. If people know what's important and you can get a way for people to work cooperatively to achieve a compatible end, I think that's important.
Ms. Staisey: As New York City postmaster, you also improved service and productivity. At the same time, you exceeded safety, performance, and budget goals. How did you do it? What were some of the keys to this success?
Mr. Nolan: Well, following a good management team didn't hurt. George Schuman who was postmaster in front of me, and Bill Dowling who was head of operations really did a great job. The team that I first inherited and then built were very good people.
I think one of the things we did is, we focused very heavily. I think we tried to focus on the customer to make sure that what we were doing made sense for the customer. We paid a lot of attention to that, as well as paying a lot of attention to detail. In our kind of business it's "what have you done for me lately," and it's sticking to the knitting every day and making sure you're doing the fundamentals right.
Then the other big thing as I mentioned before is communication. You just cannot overcommunicate to an organization as large as that.
Mr. Lawrence: What do you mean when you say you focus on the customer?
Mr. Nolan: A lot of times what we do is we say if we do our job right, then the customer benefits because obviously what we're doing is in the customer's best interest. That's an operations- centric look at this, and basically what we're doing may not be the right things for the customer, and what we've got to understand is what does the customer want.
It may be that they're using our products, but they're using our products in spite of the fact that the product is the way it is and they wish that something could be done slightly differently. What we've got to do is constantly look at what are our customers telling us, what do they want? Certainly if you make your budget goals and you make your service goals, in general that's got to be good for customers, but it may not be enough. So I think that's the big think that we tried to focus on.
Mr. Lawrence: How would you describe the challenges today from your current position in terms of improving service and productivity?
Mr. Nolan: Well, in our structure, the chief operating officer really handles the day-to-day operations of the company, but I think that working as part of the management team in a leadership role, we've got to make sure that we're challenging ourselves enough. If you set easy targets, you achieve easy things. If you set very tough targets, you sometimes find a way to achieve those tough targets.
So I think the challenge from our standpoint is to make sure that we understand what is it going to take to be competitive, to meet the needs of the marketplace, and then to try and exceed those and set tough targets. In some cases things that would seem impossible you've got to lay out there as a challenge, just like a number of years ago the Postal Service decided it was going to hit mid-nineties on service, and at the time they were in the seventies and everyone figured that's crazy, that will never happen, and it happened. Why? Because they set tough targets and they didn't take no for an answer.
Ms. Staisey: The Postal Service recently launched a number of new online service such as secure electronic documents and net post certified. Can you tell us more about these and the directions the Postal Service is going in terms of online services and products?
Mr. Nolan: Well, there's been a lot of questions about what in the world are you all doing. This doesn't look like mail. What are you doing going into this business. Our answer is, look, we've been dealing in money, messages, and merchandise for over 200 years. It's what we do. And if you follow that line of reasoning, why in the world did we ever leave the Pony Express?
We helped develop commercial aviation. Mail was the first big user of planes. Our customers are continuing to see incredible value and importance in mail, but they're also trying to communicate in other ways, to move money in other ways, to receive merchandise in other ways over the Internet. We need to be there to make sure we're providing a full range of services.
Just as any other company would seek to diversify if part of its product line was in jeopardy from diversion, we're diversifying. But the big thing is that we think that it's what our customers want us to do. We bring a tradition of trust. The secure messaging, again, the old game, who do you trust. When people ask that question we come up very high on the list so we think we can bring a greater element of trust to the Internet.
We think that our NetPost Certified for example is going to enable government and individuals to take a lot of the difficulty out of transactions, costs out of transactions back and forth by offering the ability to authenticate the sender of information whether it's birth certificate information or medical information and be able to authenticate it. Encrypt the document that's being sent to Social Security or to the Health Care Finance Administration or whoever so that they're able to get it in a mode that eliminates their work to get it in a machine readable format. It will speed everything significantly, reduce costs, enable government to work better, and enable citizens to be satisfied.
Part of what makes it possible is our ubiquity. We're everything, and people have an easy time dealing with us. We've partnered with some very, very good people in AT&T and IBM. The other of course big one that we've mentioned is eBill Pay. Some people want to pay bills online. I mean, we love it in the mail. We like to keep bills in the mail and payments in the mail, but some customers want to do things differently.
We believe that nobody in America or in the world offers a better bill payment service than we do. We've partnered with a very good company there as well, Check Free, and so we bring strengths, they bring strengths, and we think this is helping us be of a complete answer for your customers.
Mr. Lawrence: What are the management challenges of introducing online services?
Mr. Nolan: Well, it's being sure you're very crystal clear about what you know and what you don't know, what you should do and what you shouldn't do and leave to partners on the outside who do this for a living. But that's no different for any company or any issue, whether it's transportation issues or whatever.
But again, things more very quickly. Things that seem really interesting and exciting and a lot of companies want to jump at them right way without thinking. You've heard that dot-coms caused everyone to lose their judgment about what makes sense in business, you've got to, again, go back and do what makes sense in business and not just get enamored with a new technology.
So I think you have to understand the technology, understand the customer and what they want and, again, stick with the things you do well, and partner with the best for those things that you don't.
Mr. Lawrence: Many are apprehensive about having partners so deeply involved in the operation of the organization. They're actually worried about the management challenge. How have you addressed that?
Mr. Nolan: I think first of all what you do is to make sure you're careful about who you partner with. Second of all, you've got to sit down very carefully and make sure that you understand along with your partners what is it that each member of the team wants out of this relationship; what is it that each person on the team brings to the relationship; and how can we make sure that those things are being delivered. Then to constantly reevaluate that to make sure that you're asking the question is the equation changing or are we still in good shape here.
Mr. Lawrence: We'll be back in a few minutes with more of the Business of Government Hour and our conversation with John Nolan of the United States Postal Service.
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with John Nolan, Deputy Postmaster General and Chief Marketing Officer of the United States Postal Service. Joining me in our conversation is another PWC partner, Nancy Staisey.
Ms. Staisey: John, we've heard a great deal in the news lately about the $6.3 billion alliance between the Postal Service and FedEx. Can you tell me more about this?
Mr. Nolan: No. It's top secret. Actually, what this is, it's a two-part agreement really, and it's a business alliance or business partnership that we've created here. The first is a transportation contract where they're transporting express mail, priority mail, and some first class mail for us on both the night and day network just as we have contracted with other airlines in the past, except they just happen to be one of the largest airlines in the world and have a network that's very beneficial for us and for our customers.
The other is a retail agreement where we are agreeing to enable them to put their collection boxes in front of our post offices so that areas that we can't hit with the services that our customers want, FedEx might be an answer to their shipping needs. So it becomes more convenient for customers, and it's something that FedEx wanted because it's a whole lot easier to explain to people where your boxes are if you say go to the post office.
So we're enthusiastic about the partnership. We think it's good for our customers, for the industry as a whole. I think it's a win-win.
Ms. Staisey: Seems like it's one of the biggest strategic moves ever for the Postal Service.
Mr. Nolan: Yes, and no. Yes, in the -- well, no in the sense that we've done transportation contracts all over the place and other kinds of deals. I mean, you can mail things through Mail Box, Etc. now. So we've done a business partnership with them. You can buy stamps in grocery stores. So that's the "no" part.
But the "yes" part is who would have thought about it. I mean, who would have thought that the Postal Service would actually be partnering with one of its competitors. I think what's that, competition or something like that is used so we're going to compete like crazy in certain spaces where we do compete. Some areas we just don't overlap at all. But I think it does signal for people in this country that this is a Postal Service that's going to do whatever it takes to make sure that we are effective for our customers and are there for them with solid services that are very affordable.
Ms. Staisey: Is it a sign that there will be more new and different ways of doing things in the future?
Mr. Nolan: I would certainly think so.
Mr. Lawrence: What's been the reaction of the various stakeholders?
Mr. Nolan: By and large, positive. I mean, some of the initial questions dealt with antitrust issues, gee, is there a problem here, and we feel strongly that there isn't, and some initial indications are that there seems to be no problems. But some people are concerned about that.
Obviously some of our competitors are curious and concerned about it. You had some of the airlines that were hauling or are hauling our mail that will phase out certainly aren't thrilled to death with it. But by and large, from our customers, from the analysts in the industry, I think it's by and large seen as a very shrewd maneuver.
Mr. Lawrence: How about with the postal employees?
Mr. Nolan: Well, it doesn't negatively impact the postal employees at all. It makes us more competitive we feel. No postal employees are losing jobs because it's a transportation agreement and putting retail boxes in front of our facilities for which we're being paid. So we think it makes us more competitive which should help us sell more product and help pay for the retail structure that we have out there with some additional revenue.
So our employees have been very positive about it. Surprised because we haven't done this with a competitor in the past but again, our people are very sophisticated when it comes to these kinds of things, and I think that they just like any analysts analyzed the thing and saw that it was a good deal.
Ms. Staisey: Besides alliances, does USPS plan to use any other new mechanisms for doing business? I'm thinking of things like joint ventures, teaming approaches.
Mr. Nolan: Yes. Well, we actually already are, interestingly enough. Again, with our e-bill pay service we partnered with Check Free, which is a top company in the bill payment area. On net post certified we've set up a partnership with -- business arrangement partnership with AT&T and IBM. There's a company called Imagitas, which handles our moving guides that we have in post offices for which we were recognized by former Vice President Gore in efficiency in government.
So we've begun to do some partnering. Do I think that the phrase "you ain't seen nothing yet" may apply? I think so. I think that there will be more things we're going to do, more interesting relationships, whether it's with ISPs, Internet providers, whether it's with other companies that can bring something to the table and we can add something. I think we'll look to do a lot more innovative things to make sure that our products and services are everything they can be.
Ms. Staisey: What about taking an equity position with some of your teammates?
Mr. Nolan: Well, it's something that we're looking at certainly. It's not without controversy as they say to some. We think it's -- any business would reasonably look at that and look to determine whether that would be a beneficial way of ensuring financial viability in the future. So I think we acting as a business as we're supposed to do by our law that formed us in 1970 look at all opportunities and try and determine what's appropriate given our statutes.
I think that there are some things that clear that we can do, some things that we can't do, and some things in the middle that we have to sit down and evaluate. But certainly looking to make sure that our investments in services and products give us the best possible return would make you want to look at the financial alternatives that exist.
Mr. Lawrence: There's been talk of postal reform by the Postal Service board of governors and the postmaster general. What do they hope to accomplish with postal reform, and what do they mean?
Mr. Nolan: Well, our hands are tied. I mean, one of our competitors complains that they don't have a level playing field. Every time I talk I say anytime you want to trade playing fields, I'm happy to do it, believe me. The rub is we don't pay parking tickets, we don't park illegally, and we don't pay taxes. We don't make money. You want me to pay taxes? Fine. Give me a chance to make some money.
The big thing for us, frankly, is that you've got a company here that doesn't control 76 percent of its costs, its wages. It's set by an outside arbitrator. We don't control our pricing, we're limited as to what products we can offer, and we can't make investments. If someone said, "Paul, I've got this great opportunity for you. You're going to be CEO of this company and there's only a few things that we're not going to let you do." Would you jump at a chance to run this company? I think the answer to that would be "no."
We need these freedoms to be able to operate in the future we believe. Business is challenging. It has nothing to do with whether mail is relevant or irrelevant because mail is relevant. But the Postal Service sparked a whole explosion in the mailing industry in the '70s and '80s because we freed up the industry to do things.
In some ways we're beginning to be a roadblock. We think with the value of mail that still exists that the industry can explode more, but we need to be freer to offer our customers greater opportunities.
Mr. Lawrence: And yet a tremendous amount of creativity has already been demonstrated through the alliances that you just described. So I'm wondering ...
Mr. Nolan: It's not enough. It starts to go a little way, but it's not enough. Again, when you don't control your prices it's very difficult, or your costs to a large extent.
Ms. Staisey: What are the most critical freedoms that you need?
Mr. Nolan: Well, again, for example, we have a tremendous customer in the priority mail area and our prices are set and are fixed we can't negotiate those. So it enables a competitor to go in there and undercut is anytime they want to. If they happen to have space on a plane and want to fill it up, let's see which customers the Postal Service has and we'll just go with marginal costing and, bingo, we're toast. So I think pricing is a big thing.
I think that offering new products. Again, there's a lot of people that have questioned why are you into these things, the Internet, et cetera. And yet when other companies do it -- boy, that makes a lot of sense. Well, there's no difference there.
From an investment standpoint, again, when you're going to work very closely with a company, the opportunity to make investments so that you grow two ways certainly makes a lot of sense.
Mr. Lawrence: We'll be right back with the Business of Government Hour and our conversation with John Nolan of the United States Postal Service.
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with John Nolan Deputy Postmaster General and Chief Marketing Officer of the United States Postal Service. Joining me in our conversation is another PWC partner, Nancy Staisey.
John, we hear a lot about the forthcoming retirement wave and the difficulty of attracting young people or new people to government. Can you tell us whether these issues are problems for the U.S. Postal Service, and if so how they're being dealt with?
Mr. Nolan: Well, they are. I think I saw a figure that 85 percent of executives in the Postal Service are within 10 years of retirement. That's a huge number because we have a couple of folks in the executive ranks in the Postal Service.
One way of looking at it is it's a tremendous opportunity. When I joined in 1970 there was a whole wave of retirements that occurred and I got positions of importance a lot faster than I ordinarily would have because they needed people. So I think if there are people listening out there that want a real challenge, the Postal Service is the place to be.
Nobody is as diverse as we are. Nobody values diversity as much as we do I think, and so there are tremendous opportunities. We're stressing very heavily development, redevelopment actually of a management intern program that we sort of had let slide for a while. We have leadership training programs. We've got our own management academy out at Potomac so we do value training.
And we send people to Harvard and Stanford and MIT because we need to have leaders that are savvy, that have rub shoulders with a lot of other leaders in industry. So you've got a great opportunity in the Postal Service to get a lot of responsibility, do a lot of interesting things, and be trained very well.
So I think these are the kinds of things we're trying to stress. We've got 800,000 employees. We're trying to move as aggressively as we can to get people within our own ranks interested in moving up and trying to get people from outside of our industry to move in because the things we do are pretty exciting.
Ms. Staisey: John, one of the demographic trends on the customer side has been an increasing number of new businesses and a great deal of residential development that's been going on. What's the impact of this in terms of the ever-increasing number of daily physical deliveries that USPS has to make?
Mr. Nolan: Well, the way we look at it, last year we added Chicago. We added 1.8 million new deliveries. We added the city of Chicago in terms of deliveries. Now, we don't get paid a penny for delivering to those residences unless there's an increase in revenue from people sending mail. Last year our revenue or the volume went up some, but not as much as it has in the past. So that's a tremendous cost on our operation; 1.8 million, the city of Chicago we added last year, and that's continuing. We don't see any signs of abatement there.
We had a huge influx of dot-coms and we had to build infrastructure to serve them, and then they collapse in some cases. So the breathing that we're doing in and out to grow and shrink from some of those businesses or something, but we haven't stopped growing when it comes to possible deliveries.
Ms. Staisey: Now, are there ways you can use technology to further your mission and also to help serve the ever-expanding number of deliveries you need to --
Mr. Nolan: Well, we're as big a user of technology as almost anybody in the world. That's why we have so many companies eager to do business with us. Unfortunately, there's not many ways that technology can help us walk up to the front door or to the curb to serve new deliveries. But when it comes to the use of mechanized equipment, automated equipment, bar code technology, scanning devices, electric vehicles. Technology is everywhere in what we do. Finding new ways for customers to reach us using the Internet at usps.com, finding ways of making call centers more efficient by using artificial intelligence. I mean, there's very little that we're not looking at or working on. So technology is critical for our future.
Mr. Lawrence: How is the Internet and use of e-mail and even the rise of e-commerce affected the way the Postal Service does business? Does it threaten the volumes?
Mr. Nolan: Well, the way we look at it, the Internet is both a disruptive and supportive technology. It's disruptive in the sense that some of our business could go away, and bill payment and bill presentment is certainly a very big part of our company, 25 percent of our revenues. And so the extent that that's threatened, that would be categorized as disruptive I would think.
On the other hand, it's very supportive. The most important thing that we're doing on the Internet now is using the Internet to reduce our internal costs. It's the biggest thing that we're doing. Second, it's enabling us to build an information platform more efficiently that enables us to manage better what we do every day.
The third thing, we're going to be adding a lot more value to our current core products and services. If you have a post office, for example, in the future we envision that you'll be able to look on the Internet to see whether you have mail in the post office box, whether you need to stop by the post office, and things like that; the status of your mailing. We'd be able to scan documents en route, and you'll know whether or not you're about to receive a package or that the package you sent was delivered.
Finally, the e-commerce initiatives that we've got to offer more products and services. So it really is changing the whole landscape of what we do. It's how we look at the future and how we're tackling the present and moving toward the future.
Mr. Lawrence: How is all this technology changing the way the Postal Service is managed?
Mr. Nolan: Well, we need to have technical savvy, first of all. That's sort of the ante to be in the game. So you need to understand the technology, either through people you have in house or consulting partners or vendors that you deal with so that's critical.
But the big thing is that still the fundamentals apply in managing an organization and it's a matter of understanding customers, and the big challenge here is that not only do you try and understand what the technologies can do for you and what you have to do internally but also how is it affecting your customers and be able to anticipate that impact and be able to be there as the customers change. Because when you've got a customer who very often doesn't know for sure how it's going to impact him, it's pretty hard for them to tell you.
So what you just got to be is more of a futurist I think to examine what's really going on here and to be there at the pass to cut them off and make sure they stick with you.
Ms. Staisey: John, if we could all be time travelers and travel ahead 10 years into the future, what would USPS look like in 2010?
Mr. Nolan: The U.S. Postal Service is the gateway to the household. Nobody in their right mind will go to their household directly. They drop at the Postal Service and let us do that, walk that last mile. No one is more efficient, no one is more effective at doing it. No one is trusted more. So whether it's packages, whether it's videos, you name it, people are going to use the Postal Service to move that last mile.
On the origin end, we've got all the tools necessary for our carriers to make it very easy to hand things to us so you won't necessarily have to go to a post office. You're going to see some post offices changing location. We need to move where the population is. With technology today, with kiosks and all sorts of things, there's a whole easier ways; the Internet. You don't have to come to the Postal Service to buy a stamp. You may not even need the stamp. You can do PC postage now and pay for your postage.
So I think what you're going to see is a Postal Service that has moved with technology and understood clearly what customers were trying to accomplish. You're going to see a lot of different models setting up in different areas. The post office today, there's a lot of sameness to it. It's the same everywhere. Well, in the future I don't see that always being the case. I think that there are certain areas where the post office ought to have a whole lot of services that it doesn't have today, and in other areas that just wouldn't be appropriate. So you won't see some of those services offered.
If you're in a town with no greeting card stores, why not be able to buy a greeting card at the post office. In other places that has greeting card stores, we can't add extra value there so don't do it.
So I think what you're going to see is a Postal Service that's much more tailored to the customer where the customer is, and a greater flexibility and range of service offerings.
Mr. Lawrence: What type of leaders will be in this organization in 10 years?
Mr. Nolan: Probably ones that don't include me, but I think to be effective in the Postal Service 10 years from now you're going to have to be someone that has a vision, and stick with that vision and move aggressively toward it. You're going to have to have sound business knowledge because you're going to be up against the biggest and the best and the littlest and the fastest.
So you're going to have to have a business acumen that's going to be critical for the future. Hopefully there will be a greater movement of executives from outside to inside and inside to outside, but it's going to be a lot of challenges and they're going to have to be innovative.
Mr. Lawrence: I'm afraid we're out of time, John. Nancy and I want to thank you very much for spending time with us. We've had an interesting conversation.
This has been the Business of Government Hour featuring a conversation with John Nolan, Deputy Postmaster General, and Chief Marketing Officer of the U.S. Postal Service. To learn more about the endowment's programs and research into new approaches to improving government effectiveness, visit us on the web at www.endowment.pwcglobal.com. See you next week.
Tuesday, February 13, 2001
Mr. Lawrence: Welcome to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the Endowment for the Business of Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at www.endowment.pwcglobal.com.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business.
Our conversation today is with Ida Castro, Chairwoman of the U.S. Equal Employment Opportunity Commission. Welcome, Ida.
Ms. Castro: Thank you, Paul. I'm very happy to be here, and I want to extend a warm hello to all of your listeners.
Mr. Lawrence: Great, and they'd like to find out more about the EEOC. Can you tell us about the commission and your role?
Ms. Castro: Well, the Equal Employment Opportunity Commission was created, actually opened its doors around 35 years ago as a result of the enactment of the Title VII Civil Rights Act, and our responsibility is to enforce anti-discrimination laws throughout the work force.
Some years later we also were given the responsibility of similar types, although quite different in certain regards, of enforcement and promotion of equal employment opportunity in the federal government as well. Throughout the years, our jurisdiction has expanded significantly. Initially it was race and gender and national origin and the well-known areas. As you know, throughout the years there have been additional laws that have been enacted, whether it's age discrimination or disability discrimination and so forth and so on.
So our plate is pretty full, regrettably, at this point. Generally speaking, the commission receives on average about 80,000 charges from the private sector alone each and every year so we investigate in the private sector, we make determinations and findings of discrimination. We conciliate with the employers in a confidential setting, and if conciliation fails, then the commission decides whether or not to pursue the matter through litigation or if the party has a private attorney. They may request a right to pursue and proceed to court, separate and independent from the commission.
In addition to enforcement in the private sector and in the federal sector, the commission is also responsible for policy questions and for issuing guidance rules and regulations in guiding the employer community and the employee community on their rights and responsibilities under the law.
So we are basically a very holistic type approach of agency. In the past, we've been basically an enforcement agency, a law-enforcement type agency. Since I arrived, I've tried to amplify our outreach efforts and make sure that we also do all that we can, given our limited resources, to encourage compliance with our laws and to stimulate voluntary compliance because we do have far more than what we can handle, quite frankly.
Mr. Lawrence: You've worked as a lawyer and a professor as well as a government manager and leader. Can you describe your career to us?
Ms. Castro: Well, I first started actually as a manager. At a very early age I had the unique opportunity of being permitted to submit a proposal, get funding, and actually start a whole program. The initial proposal that got funded was an employment and training program in a municipality in Puerto Rico, and the program started with slightly over $100,000, and within 16 months mushroomed into an $8 million proposal that was funded under the CITA program which was just starting. So I'm going back for those of you in employment and training some time ago. I just want to highlight that I was extremely, extremely young at the time and was given some wonderful opportunities.
From there on in, I proceeded to work in a variety of areas. I guess I had a number of roles in the employment and training arena, which is public service. From there I had the opportunity to begin an academic career at the Institute of Management and Labor Relations for Rutgers University. At that time I was a labor educator, and I completed also my law degree and became the first woman tenured in the Labor Education Center.
Once I had my law degree, then I wanted basically to make sure that I could practice and have that experience under my belt as well, so I did that. I did labor law, and ultimately I also did management representation. I further administered a number of programs in the Department of Labor, the latter being an experience I've had within the last 7 years culminating in the nomination to the Equal Employment Opportunity Commission as Chairwoman which has been indeed a privilege and an honor for me to have been able to do this job for the last 2 plus years.
Mr. Lawrence: What drew you to public service?
Ms. Castro: Public service offers a unique opportunity. I did private practice and I also did government practice. The unique opportunity is always the level of impact that one can have, particularly when one is at the federal government, actually the Washington, D.C. level. I mean, literally with the stroke of a pen so to speak one can have a real impact on the entire work force from where I sit. That is certainly an attractive position to be in.
But I think more importantly is the commitment to make sure that America holds up to its dream, and certainly to its well-earned reputation. That is, America needs to maintain its number-one standing in terms of not only its employment opportunities but also the environment in the context of the work force opportunities that are offered in America. We're leading in the world, and I wanted to serve my country, serve it well, and make sure that the promise that we've often made through our own values as Americans are met, and that is the opportunity I was offered in this position, so it's been really the best job I've had.
But public service in general is certainly to be commended. It takes a lot of commitment and a lot of hard work, and often times a lot of misunderstanding from the public in general. Certainly it's not the money you get paid because you can make more in the private sector more often than not. And often times, regrettably, it's not the accolades one gets from the public. It's really that knowledge that you are working for the betterment of your country, and that is a wonderful feeling.
Mr. Lawrence: What position or challenges gave you the best opportunity to develop as a leader?
Ms. Castro: I don't think I can pinpoint it to any one particular position. I've had I guess the wonderful opportunity of working in such a wide variety of positions from a Head Start teacher to manager to lawyer to different executive positions to planning, and then to implementing. I think that has really allowed me to be a better chairwoman at this point and a better leader because it's the exposure to the different kinds of skills one acquires along the way to the different kinds of leaders that one meets along the way that really allows you to figure out what is your best style and how is it that you can have the greatest impact.
So I really agree with the corporate world for the most part that you need to track experiences that are diverse.
Mr. Lawrence: I'm talking with Ida Castro. This is the Business of Government Hour. We'll rejoin our conversation in just a few minutes. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and our conversation today is with Ida Castro, Chairwoman, U.S. Equal Employment Opportunity Commission.
Well, as chairwoman you've implemented an innovative agenda to increase fairness, quality, effectiveness, and efficiency of all aspects of the agency's operations. Could you tell us more about how you went about doing this?
Ms. Castro: Well, given the nomination and appointment process, Paul, it tends to be sometimes rather lengthy. I did have the good fortune of having about 9 months to think about what is it that I needed to do and focus upon once I arrived at the agency. I really welcomed, in a warped sense, the time because it did give me that opportunity to really plan out, identify what I thought would be the major challenges for the agency, and begin to formulate a plan that would address those challenges that would accomplish results, and do so in a fair and swift manner so that the experience of success for the staff itself could then reenergize them and reenergize actually me so that we can continue to evolve and change the areas that really required attention.
Let me backtrack a moment. Because the Equal Employment Opportunity Commission, although it's always had a very noble mission, and a mission that's difficult to accomplish given the universe of need, it had experienced a time of about 15 to 20 years almost where it was understaffed and underresourced. That long-time resource starvation had had an incredible impact in the infrastructure of the agency as well as staff morale, so I also understood that that was another layer of my challenge. So it's not coming up with ideas, but it's also making these ideas real for the people that really have survived, so to speak, a 20-year famine, and that tends to be pretty hard.
I was helped immediately by the fact that I came in with an increase in our budget, a $37 million increase, which for EEOC was an enormous amount of money. However, given the need, it really quite frankly wasn't enough at the time because our credibility was in question as an agency. We had been involved as anyone that would have read the papers at the time, in a series of articles that really were extremely critical to the agency. At the time, everyone thought about EEOC in terms of its backlog and in terms of the length of time it took to get to a charge and investigate cases 2 or 3 years before you even got an investigation.
In other words, all of our customers were unhappy. All of our stakeholders were unhappy. The primary question had to be, "why is it that such an important agency with such an important mission has such a terrible reputation," and then work backwards and see what is it that we could correct immediately and what were the longer-term projects.
So in the immediate corrections, obviously the budget went a long way. We were able to expand our staff. We were able to improve on technology. When I arrived in '98 at EEOC, we couldn't even communicate through e-mail and people were complaining about, for example, quality of work and uniformity of decisions. Employers would raise this all the time and how can I guarantee that one region does as the other one does when they can't even communicate? So clearly that was a big issue for us.
So we were able to connect all of our offices, upgrade all of the computer technology, and therefore improve on our productivity while at the same time we're expanding the staff and training them. Our staff had not been trained in like 10 years so how do you guarantee quality customer service, and so forth and so on.
And lastly but not less importantly, we were able to once again refocus on our mission, clarify our mission, look at the way we were doing our work, and ask staff to really think through these processes and think them through not just as staff members, but think them through from the eyes of all of our stakeholders and advise me on how is it that we can address all of these processes so that we can accomplish several things.
One and foremost, results. If we're here to identify discrimination, then how quickly can we do this, how well can we do this, and how strong can we do this in the sense that once we've identified discrimination, do we have everything in place so that we can follow-up accordingly?
Have we explored all of the tools available to us to resolve discrimination? I mean, once we identify the problem, then what are the mechanisms that we have at play to increase the resolution of these disputes? And then how is it that we strengthen our actual enforcement capability?
These were the three areas that I immediately focused upon so we created a comprehensive enforcement approach. For the first time, believe it or not, Paul, we brought together our lawyers and our investigators, which had been bifurcated for the history of our commission. We had them working early on the charges so that we can identify priority charges from the beginning.
We established a National Mediation Program, which has been a total success throughout the country. That National Mediation Program allowed us to take an enormous amount of charges, refer them at the outset without any government investment in investigation and resources right at the entry point, and just refer them to a qualified mediator in the hopes that it can get resolved without the need of governmental intervention.
I'm happy to say that this program has been up and running for about 18 months now, and in 18 months alone we've already successfully resolved more than 13,000 charges. Successful resolution means that the parties came together and came to an agreement. It's voluntary, and it's free to the parties, by the way. It's a great deal, but they come together with a qualified mediator. They discuss the dispute within 10 or 15 days of the charge being proffered, and they tailor-make their own resolution. It's a voluntary agreement. We don't get involved. If they agree that this is the way to resolve the dispute then, fine, we just sign it.
On average it takes about 3 months, only 3 months, from point 1 to end of process and that is definitely a major success for us because I know that those that thought it would take 5 years to get anything done in EEOC are pleasantly surprised to see that we can actually resolve charges in less than 3 months. That's a major milestone for our agency.
In addition to that, we strengthened our litigation program. Our litigation program had been unfocused at times. The policy that whatever cause we found in our enforcement side had to be litigated regardless of the strength of the case, I thought, was also a misapplied policy that was very cumbersome. It did not allow us to prioritize our own cases and invest the taxpayer's dollars where we would get the greatest mileage, so to speak, and mileage really doesn't mean money. Mileage really means where is it that we can clarify the laws, where is it that we can clarify the parameters of behavior that's acceptable within the laws, and how is it that we can benefit the employer community and the employees that we're intended to protect? So all of these questions need to be brought to bear, and we need a program that will get us to that end game.
Mr. Lawrence: It's time for a break in just a few minutes with more of the Business of Government Hour and our conversation with Ida Castro, Chairwoman of the U.S. EEOC. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and our conversation today is with Ida Castro, Chairwoman, U.S. Equal Employment Opportunity Commission.
Well, Ida, in our last segment you described the processes you went through and the things that you did, but I'm curious about the results. How did it turn out?
Ms. Castro: I'm very proud of the results. Over a 5-year period, EEOC has slashed its backlog which stood at one point at 111,000 charges by 70 percent. This year we came in at a 17-year low of less than 36,000 charges. We've increased all of our performance indicators in many instances, tripling and quadrupling our performance indicators. We have had two record years in terms of obtaining benefits on behalf of charging parties.
As I stated, our National Mediation Program has been off the charts in terms of the success. Both employers and charging parties have rated that program in the 90 percentile, which is a happy factor that generally government agencies get in any program, even when they give you money.
So this has been a really wonderful result in terms of all the things that we've been able to accomplish. For example, average processing time in the private sector used to be 2 to 3 years, and now it's all the way down to about 210 days, and we hope within the next year to reach our goal which is by regulation 180 days. Now we're within a real good distance, I mean, a very comfortable distance. It's a very achievable goal for us.
But more importantly, I think it's our reputation, it's our ability to be where we need to be when we need to be. It's the level of trust that we've developed with both charging parties and the employer community because we, for the first time, have opened up a very good dialogue with the employer community.
I am very, very confident that most employers want to comply with the law, and there's no reason for me to treat everyone as if they were evil or violators of the law. On the contrary, I want to encourage those employers that wish to comply with the law to work with me and help me think through the major challenges that the EEOC has been facing in the last decade and work with me to resolve them at the earliest possible point.
I would rather reduce my backlog by individuals not feeling compelled to come to my office rather than having to ask for more money or streamline more processes.
Mr. Lawrence: In addition to working through the private-sector charges, you've also reformed the federal-sector EEOC complaint process. Could you tell us about that?
Ms. Castro: Sure. I also focused on the federal sector which, by the way, had been neglected for years and years and years, and for good reason, I mean, in terms of the EEOC, not good reason but explainable. Let's put it this way because it's really not a good reason, but the workload of the private sector is so huge in the EEOC that often times the federal sector gets neglected.
I promised the federal sector I wouldn't ignore it so we pushed for federal regulatory reform. We reformed Section 1614. We streamlined significantly this process certainly from our perspective.
We also become an active part of the NPR Task Force to reinvent the federal EEO process. Although we ran out of time, we couldn't come out with a report. I do have the benefit of all the thoughts and the recommendations of all the stakeholders we brought together in that process, and we're currently looking at all of these recommendations and looking forward to continue to improve the federal sector both front and back end.
Mr. Lawrence: The EEOC is often in the news, and you indicated in one of your earlier answers that it undergoes tremendous public scrutiny. How do you deal with that as a manager and a leader?
Ms. Castro: Up front. I believe information is power and that it's very important to maintain stakeholders and the public full informed and aware of what is happening.
For example, given the fact that EEOC had been often criticized because its backlog, the perception of the public and discrimination is no longer an issue. The real problem is that EEOC just can't handle its work and all its paperwork. It's fair to say that that was a common perception.
However, our work is not just paperwork. We don't just process charges, regrettably, there are only too many instances of very crude and egregious discrimination. There are a number of other instances that certainly provide the basis, a sound basis and foundation for pattern practice claims of discrimination, and we need to work with all of our stakeholders to begin to resolve these questions. The media and our public perception is key in turning that around and making the relationship a far more positive one.
Mr. Lawrence: How does one prepare for such public scrutiny as a manager?
Ms. Castro: How does one prepare for it? Well, one needs to understand what are generally the concerns that the public faces. In the federal government in particular, people who pay taxes want to know that their taxes are going to efforts that are worthwhile, and definitely antidiscrimination laws are efforts that are worthwhile. I mean, I don't think there's a question about that amongst the American public.
However, the American public expects us to do our job and do it well. The employer community understands that violations to the law need to be pursued, but they expect us to do that and do it well. Charging parties who are victims of discrimination certainly expect justice and trust this agency with finding discrimination and doing it well. So what is our responsibility? We have to do it well.
So in that sense, unless you correct the issues that prevent you from really reaching your mission, you won't have a good relationship with the media, so to speak. It will be far easier for people to deviate at trying to address media crises concerns. It will be easier to find that one mistake, that one ugly case that you shouldn't have brought up that is being twisted in the wind, and it will be easier then for people to have the wrong perception of what your mission is.
So if you're results oriented, if you achieve the appropriate results, then rather than shying away from the media, you should be ready and actually willing eagerly, quite frankly, to get your message across so that the public understands the value of the mission of your agency and, therefore, then continues to support not just the agency but the staff that's doing the hard work.
Mr. Lawrence: EEOC often partners with other agencies such as the IRS or the Department of Labor. What lessons about effective interagency collaboration would you share with other managers?
Ms. Castro: Well, I think it's extremely important from the federal perspective to make sure that as a leader of an agency or as a manager that one understand what are the other agencies that would normally be involved on this question and bring them together so that you can provide an answer that "A" makes sense not just within the laws of your jurisdiction, but it makes sense for the receiver of your directive.
In my conversations, for example with employer representatives, the most common complaint has always been, well, the EEOC tells us to do X, and OFP tells us to do Y, and the other agency tells us to do A, B, and C � how does one keep this all together? I happen to agree with that. I mean, laws will be effectively applied, and laws will be complied with if they're understood so that is really the importance of coordinating policy and coordinating enforcement.
Mr. Lawrence: Time for a break. We'll be right back with more of the Business of Government Hour and our conversation with Ida Castro. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Ida Castro, Chairwoman, U.S. Equal Employment Opportunity Commission.
The type of jobs in the future and the skills and the abilities of the workers and even the change in the work patterns will require adjustments in how we address employment discrimination in the work place. What are some of the examples of these challenges, and how are we going to be thinking about them?
Ms. Castro: Well, there are a number of challenges that actually we don't have to look too far into the future to understand because we're already facing them, and we may be a bit unclear on how ultimately we will deal with them, and history will tell.
But for example, in the area of discrimination, as we increasingly use the Internet as a mechanism to find, apply, and acquire employment, it will become extremely useful then to prove for example and provide sufficient evidence that any particular individual might have been discriminated because of sex, gender, race, national origin, age, or what-have- you. Does this mean that it doesn't occur? No. But necessarily the issue of evidentiary thresholds begins to take a greater importance. How does one prove glass ceilings or plexiglass ceilings or glass walls or sticky, gluey, floors, whichever analogy you want to use?
The issue of evidence, the issue of how does anyone actually know why it was that you were deprived of this employment opportunity really becomes a question in a practical sense. But there are other issues that come about that present a series of challenges certainly for the agency and ultimately for anyone involved in the area of human resources or in the area of employment litigation.
That is the reality. We have such a large work force, which is almost kind of split in half, and half of our work force is already in the work place of the so-called future, while the other half is in your more traditional work place setting; the fixed hours, fixed place, and so forth and so on. And the conditions under which each group works is varying increasingly, and in one sector, meaning the one that's supposedly in the future but really is in the present, varies constantly and so rapidly even amongst itself.
So there are a number of learning curves in terms of us that are not necessarily a part of that work force in understanding what are the changes and understanding what are the realities. From our perspective, for example, I'll tell you in the information technology field a lot of anecdotal references to wage discrimination to glass ceilings to lack of hiring of minorities and women after certain levels and so forth and so on.
It's difficult to prove. Why? Because the level of fear of retaliation in that industry is so enormous that it's beginning to dwarf the level of fear that generally you see in the lower-wage industries that employ for example undocumented workers, that employ the most vulnerable in our work force even though in IT, you have higher paying individuals and so forth and so on.
The stress that's caused by discrimination, the stress that's caused by the uncertainty of the work environment, and the stress that's caused by the fear of retaliation, however, has the same effect on the work force on its productivity and on its loyalty, of course, to the employer. This should be concerns to any employer in that industry. If you want to recruit the best talent, if you want to retain the best talent, and if you want that best talent to give you all that it has to give, then you have to provide a work environment that really tells this talent that they should want to work for you.
That works across the board industry to industry, and it works geographically. It doesn't matter where you are located. It's just simply good business to provide those kinds of work practices.
How do we get involved with this new area, new industry that is constantly changing where people pop up almost as teenagers and become instant business owners and multi-billionaires with little or no training about how to manage a work force, et cetera? How do we do that? We need to do that by focusing on this reality, understanding it, and working together.
Certainly, as Chairwoman, I will do all that I can while I'm still in this position to reach out to the employer community and reach out to everyone so that I can understand what the challenges are that all these industries face and begin to work with the employer community as well as the employees to develop policies that make sense and to develop policies that get us where we want to go which is in a discrimination-free environment.
Mr. Lawrence: What advice would you give a young person contemplating a field in your field?
Ms. Castro: I would certainly encourage young and old to look at this area, and certainly come forward and work within the area whether it's from a business perspective or a labor perspective, but perhaps even more importantly, from a public-service perspective.
Certainly, at the federal level and I'm sure that at state levels, this experience is replicated in a variety of commissions and like agencies. It's always important to not only contribute to your community and society but also to have the exposure of understanding of what are the competing industries, how is it that discrimination actually plays out at the work place, how do you identify it, and perhaps how is it that you can have an impact, a real impact, in making people's lives better for all. Because this is not a matter of preferring one group to the other, it's really a matter of creating a work force in America that will keep us number one in the economy globally.
Mr. Lawrence: One of the toughest challenges that public-sector managers face today is recruiting and retaining employees. Does the EEOC have this problem, and how do you deal with it?
Ms. Castro: Absolutely. We have this problem because the minute we train our folks and we get good investigators and good lawyers, the private sector comes running and takes them away from us. We deal with that problem by making sure that we have a sound fiscal program that creates the level of credibility that will then command the support of the executive and of Congress so that we can continue to have the funds that we need to train and to provide the opportunities for growth within the agency that will permit us to retain good staff.
Now let me quickly say, though, that we also have an advantage, and that is that many staff members come to us because of their profound commitment to our mission. We've been very lucky over the years in that regard, that even though we've not been able to reward them as they deserve, they've stuck it through with us because they really believe in that which we do.
Certainly, I think that that is a plus for our agency so I would suggest to any listener that is interested in serving his or her country like the U.S. that wants to get a job in this area, this actually is a good time. We received some additional resources, we're hiring folks, so look us up. The experience will be unforgettable.
Mr. Lawrence: Do you want to mention a web site?
Ms. Castro: The web site, absolutely, another pride and joy of mine. That is www.eeoc.gov, very easy to reach, and very user friendly.
Mr. Lawrence: I'm afraid we're out of time, Ida. I want to thank you for being with us today. I've enjoyed our conversation very much.
Ms. Castro: Paul, I'm really appreciative that you asked me to come, and at whatever time we can continue to discuss these important issues, I'm willing to do so. I really appreciate the opportunity.
Mr. Lawrence: Thank you very much. This has been the Business of Government Hour featuring our conversation with Ida Castro, Chairwoman of the U.S. Equal Employment Opportunity Commission. To learn more about our programs and research into new approaches to improving government effectiveness, visit us on the web at www.endowment.pwcglobal.com. See you next week.
Wednesday, April 11, 2001
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers and a co-chair of The Endowment for The Business of Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at endowment.pwcglobal.com.
The Business of Government Hour features a conversation about management with government executives who are changing the way government does business. Our special guests today are Dana Brown, assistant director of administration -- welcome, Dana.
Mr. Brown: Nice to see you.
Mr. Lawrence: And Stephen Colo, chief information officer. Welcome, Stephen.
Mr. Colo: Glad to be here, Paul.
Mr. Lawrence: And both are with the United States Secret Service. Well, Dana, let's start with you. Most of our listeners know about the Secret Service as the agency that guards the president. But could you tell us about its other responsibilities?
Mr. Brown: Probably the least known aspect of the Secret Service is investigative responsibilities. People might know about the counterfeiting and credit card fraud. But we also have other areas of expertise as well that go beyond just the simple, straightforward processes of counterfeiting and credit card fraud. We are involved in many other aspects. And increasingly, we're involved in the globalization of crime, as opposed to what might have previously been indicated as domestic issues.
Mr. Lawrence: And I'm also under the impression that it's no longer just people investigating. It's much more elaborate in terms of technology and the new sciences being brought to bear.
Mr. Brown: Oh, certainly. Technology has changed -- for all law enforcement -- how we do business. I think the computer in particular has now become the repository of criminal information, the means to facilitate a crime or strictly the instrument to commit the crime itself. So in many respects, computerization of criminal endeavor has made identifying the criminal and locating him or her, again, from the global perspective, much more difficult than it might have been in the past.
Mr. Colo: You know, I'm fascinated. I always love to tell this. I'm a little bit of a history buff. I like to talk about the history of the Secret Service. We were actually founded in 1865. And in fact, it was April 14th of 1865, when then-Secretary of the Treasury Hugh McCulloch came to Lincoln and said, 'we need to start a federal investigative service,' because at that time the Civil War had just ended, and about one third of the currency was counterfeit. And so Lincoln gave his -- he agreed to go forward with this initiative, just before he went to a performance at Ford's Theater.
So, the irony is that the man who created the Secret Service, which is best known for presidential protection, that night was assassinated.
Mr. Lawrence: That is an irony of history. Let's spend some time finding out about your careers. Could you tell us about your careers?
Mr. Colo: Well, actually, Dana and I, our careers are very much parallel. We both came on literally within weeks of one another, and we both were local police officers before we came into the Secret Services. Dana was a Fairfax County police officer, and I was a Metropolitan police officer.
And for myself, you know, my career has moved back and forth from the protective aspect and the investigative aspect of the Secret Service. I spent most of my investigative time at our three largest field offices, which were our Washington field office, our New York field office, and our Los Angeles field office. My protective responsibilities included assignments at The White House with President Bush and President Reagan. I ran the presidential campaign, not this one in 2000, but in 1996. So, I feel that I have had a pretty diverse career.
Mr. Lawrence: And, Dana, how about you?
Mr. Brown: As Steve said it, there are some parallels, particularly the time on the job and the different perspectives of our employment. I also had three field assignments. I've also been assigned to the presidential protection division. I also had a position in liaison at the time. I was the Information and Privacy Act's officer for the Secret Service. And then the inspection division has been probably the bulk of my career in investigations, and then most recently in the office of protective research, and then now in the office of administration.
Mr. Lawrence: In describing your careers, it sounds rather traditional in terms of my perception of what Secret Service folks do, and yet now you are leaders and managers of the organization. What prepares you for that?
Mr. Colo: Well, my job as the chief information officer is certainly unique within the Secret Service, especially as being an agent. And probably how I came about being chosen for this position was really what I did during the last campaign. And I was very interested in finding ways to be more efficient and effective with how the Secret Service moves people from location to location during a presidential campaign. So I helped create a logistical system that tracked their movements, was interested in the storing of information on CD-ROM, which hadn't been done before. So after I got done with that assignment, they kind of looked at me and said, "We have an assignment for you." So, that's how I became the CIO.
Mr. Lawrence: How about you, Dana?
Mr. Brown: Well, my position probably is a little bit the exception to most agents' career tracks, in that it is largely an administrative position versus a protective or investigative position. I think the one thing, though, that probably helped me in coming to the position is that I had a great deal of experience throughout the assistant director's offices. We have seven different offices, and I had been a supervisor in five of those. So if anything prepared me for the opportunity to have this position, it might have been that, the greater perspective.
Mr. Lawrence: What drew you to public service?
Mr. Brown: As Steve had pointed out, we're both law enforcement officers at the local level. I've always been interested in law enforcement. I had previously been in the Marine Corps, which at that point in time, given the Vietnam War, most -- not most of us, but many of the people from the Marine Corps gravitated toward law enforcement.
And once there, the opportunity to look at it from a federal perspective provided me the opportunity to do this. And it has been an excellent opportunity. It is such a great job, in that you get to look at two different phases of law enforcement for us, which one is the protective and investigative, which is kind of unique in law enforcement. Plus the opportunities to travel and other things as well have been exception and extraordinary. And being in government in general has been a very good thing.
Mr. Colo: I would probably have to parallel what Dana has said. I think we are both children of the '60s, and Kennedy had a tremendous effect, at least on myself. So this was something that I can honestly say that when I look back at my career and I talk to my friends, and most of the people that, like, I went to college with are very successful. A lot of them are extremely wealthy. But when we compare our careers, I think that -- and they generally agree -- the satisfaction that I have gotten in public service, I think, transcends any monetary value. And I wouldn't change it at all.
Mr. Lawrence: In your careers in government, what qualities have you observed as key characteristics of good leadership?
Mr. Colo: Well, I think that a strong work ethic is very important, especially in the jobs that we are in, because you really have to put in long hours.
Certainly you have to be a motivator of people. I think it was Harry Truman who said something to the effect that 'a good leader is a person who can persuade other people to do what they don't normally want to do and like it.' So I think that being able to motivate other people to move forward in the direction that the leadership feels is appropriate is very important. I also think that you have to be approachable, and I think you have to be a good teacher to bring other people along. I think that's very important.
Mr. Brown: I would say that being responsible, being reasonable, and being affable in many respects. By being responsible, I would say that the ability to act responsibly, but also to accept responsibility for your actions; in terms of being reasonable, to be fair and equitable across the board as much as you can; and the affability issue really is that you can do so in a manner that -- with an even temperament so that you can bring logic to bear, as opposed to some less exact science at how you arrive at a decision, particularly when issues are contentious.
Mr. Lawrence: Do you think these qualities are going to change for leaders in this century?
Mr. Colo: Well, being one that is involved in the technology field, I think that definitely knowledge and technology is going to be something that people of our generation might be able to get by right now, because truly there is a transitional phase. But I think that you will be -- I think leadership is leadership. But I think the ability to be able to grasp the vision of where technology takes you is very important for the leaders of the future.
Mr. Lawrence: It's time for a break. This is The Business of Government Hour. We'll rejoin our conversation in just a few minutes. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And our conversation today is with Dana Brown, assistant director of administration, and Stephen Colo, chief information officer of the U.S. Secret Service.
After the Columbine shooting, the Secret Service started the Safe Schools initiative to investigate school violence. What does this project involve?
Mr. Colo: Let me start out and tell you how it started. Actually, a couple of years ago, the Secret Service completed an operational study of the behavior and thinking of people who attacked or attempted to attack major national figures or celebrities. And this study was called the "Exceptional Case Study." And it redefined how the Secret Service handled their threat assessment and methodology.
We were very pleased with the results. And in fact, after -- I think it was 1998 through '99, when we saw some parallels in what was happening in our school systems, that we started to take that same analysis approach and look at attacks in schools. And we had been partnered with Department of Education to study that.
It's really interesting, because I believe it was -- we have looked at 37 different attacks, and there are some parallels. Three-quarters of these attacks were planned in advance. And they also, the students, communicated what was going to transpire, or gave good indication to other students. And if that is the case, if this isn't students that are snapping, and if they are communicating with others, then certainly it is our belief that we can prevent these type of attacks. So it is an ongoing study. But I think that it really has some very hopeful results in the end.
Mr. Lawrence: I have also learned that the Secret Service announced a partnership with the FBI and South Carolina law enforcement to operate the Computer Crime Center. How has technology changed the way the Secret Service investigates crime?
Mr. Colo: That's correct. We just recently announced a partnership with the FBI in South Carolina and what they call the -- I believe it is the State Law Enforcement Division, or SLED -- to put a center in South Carolina. It will be manned by the three different law enforcement entities. And they're going to put a -- I think it is about a $2-1/2 million forensic lab in South Carolina.
I think what this partnership does, especially for local police, it assists, because many local police departments don't get a lot of, maybe, intrusion cases, computer cases, and so they might not have the expertise. So this allows us to assist them and improve the training and the forensics that they do in these cases.
So we believe this is going to be very successful, and we have been doing similar types of partnerships throughout the United States, to really rave reviews.
Mr. Lawrence: And speaking of partnerships, the Secret Service partnered with other law enforcement agencies to solve some high-profile computer crimes this year. What is the Secret Service doing now to fight electronic crime?
Mr. Brown: Well, as you can imagine, electronic is an evolving crime. What we have in place, Electronic Crime Special Agent Program, it's well over 100 agents now that have been very well trained in computer forensics. They have the ability to access computers, identify information in the computers that could be used to identify the individuals who took part in the crime.
Also, we have gone into -- as Steve just mentioned a few minutes ago -- a task force approach in many areas. Our New York Crimes Electronic Task Force is one of the unique task forces in the country. It's a partnership among many law enforcement agencies, federal, local, and state, as well as the industry.
Also, we have now taken, as I said earlier, a global approach to this matter. And these issues having to do with computer crimes and electronic crimes is -- again, the individual that is accessing your computer could be anywhere in the world. So it has changed the whole perspective on how we do business, and the effort now is to attack the problem globally as opposed to parochially.
Mr. Colo: Yeah. I want to follow up on the New York Electronic Crime Task Force, because truly, this is probably one of the most unique partnerships in this country in law enforcement. It is approximately 45 law enforcement agencies, to include things like the Federal Trade Commission. It is not just what you would think of as law enforcement, you know, which would be the Secret Service and NYPD, the FBI. You have the FTC, Customs, and the Postal Inspectors. But more important is the business partners that we have, 75 different corporations, to include places like Intel, the Bank of New York, Lucent Technologies. It goes on and on. Fortune 500 companies.
And they have gotten together to really look at electronic crimes and assist in how we approach this, because the passing of information has been a big problem when it comes to electronic crimes, because a lot of companies don't feel comfortable passing that information to federal agencies, and even local agencies. This partnership really works both ways, and it has solved some tremendously important cases.
Mr. Lawrence: Relatedly, credit card theft and fraud have increased significantly in the past decade. What advice do you have for our listeners with credit cards?
Mr. Brown: Well, generally speaking, it is best to protect the information as best you can; also, to be careful with anything that would relate to your identification that might make it easy for people to take identification and create counterfeit credit cards or otherwise obtain information that might be used to generate a credit card in your name.
Also, we do work with the industry to a great extent to identify best practices and to make those public as best we can. We aggressively pursue all the cases that we can. And generally speaking, we just have promoted a public information program to make that known to the public in general, that there are issues that they need to be concerned about, all types of information, not just credit cards.
Mr. Colo: Yeah. I think that one of the big issues that we really want to emphasize is the issue of social engineering. I mean, there are a lot of really smart criminals out there that have really good technical expertise. But generally, especially when it comes to things like credit card fraud, they need to get some information from individuals. And oftentimes you may get a call from someone posing as a bank or a credit card company, and they say things like, 'we just send you out a credit card', or maybe 'something was stolen from the mail, and so we're just going to give you some information, and you need to just give us back, you know, to make sure that's true.' And they solicit PIN numbers from people. And all of a sudden, the person finds out that his bank account has a zero balance. So you have to be very, very skeptical about anyone asking you that type of information over the telephone.
Mr. Lawrence: And we also know that counterfeiting of our currency has risen in the last decade with the help of technology. How does the Secret Service help us recognize and protect us from that?
Mr. Colo: Well, I'll just add one thing before I turn it over to Dana. Actually, it has not risen. We have actually been very successful recent years. We had approximately $40 million passed last year. And in the government, you have a performance matrix that you must hopefully meet. And I believe that our -- what we had anticipated and we had successfully accomplished was a 12 percent reduction under what we had expected, so we are very pleased, especially in a campaign year, to see that type of reduction.
Mr. Brown: Probably the one thing that really has changed, though, is how counterfeit is produced. It is no longer the mainstream approach to what people might have some recollection of, whether it is a printing press involved. Much of it can be done now through computer generation or through photocopying processes.
And to work against those issues, we're working with the industry significantly to try to identify where they can be of assistance in helping us to modify the equipment or put into place practices and approaches and awareness that these computers and photocopiers can be used for legitimate purposes to produce counterfeit currency.
Mr. Lawrence: Okay. It's time for a break. We'll be back with more of The Business of Government Hour in just a few minutes. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers. And our conversation today is with Dana Brown, assistant director of administration, and Steve Colo, chief information officer of the U.S. Secret Service.
Well, Steve, you mentioned that this was one of your jobs earlier in terms of protecting the president or the presidential campaign. What are the logistics involved in such an enormous task?
Mr. Colo: The logistics are formidable. Think about a presidential campaign, where the polls really oftentimes dictate where a candidate will be going from day to day. And the Secret Service is mandated to get to that site ahead of time, doing site surveys and putting up an infrastructure so that these people can be relatively safe, and yet we can't be so intrusive. So there is a balancing act.
It is very difficult, to say the least. And in this campaign, for example, the difference between the amount of sites and stops that we had done in the year 2000, as opposed to 1999, was almost a 30 percent increase in activity. So you can imagine, when you have a fairly static pool of people, and you need to improve your travel by about 30 percent, it is not only a logistical nightmare, but you are talking about a budget nightmare. And I can turn it right over to Dana, and he can answer that issue.
Mr. Brown: Probably the most difficult thing for us is that we can't predict travel. So much of that is depending upon the individual protectees and what their responsibilities will be, or what their interests are, where they are going to travel and world events, and world events influence a lot of the travel.
So while we can take a look at past years and come up with estimates, what we can't do is project factually what is going to be the next year's cost. And as Steve pointed out, airfare, hotel costs, overtime, all those are issues that are paramount in dealing with the protective mission. And again, we have very little independent influence over that. We don't necessarily tell people where they can or can't go, when or when they can't go there.
The urgency of the travel, the short notice sometimes, also curtails our ability to have more influence over some of the issues we might otherwise be able to control in terms of cost.
Mr. Lawrence: But how do you manage the balance between perhaps a candidate's desire to be out amongst the people and a need to keep them away from certain groups of those people?
Mr. Colo: Well, it really depends on the situation. If an individual is going someplace in some spontaneous location where there is not a lot of warning ahead of time, we have a comfort factor that you wouldn't have if it is well-known and it's published in the newspapers. And that is the problem in the democracy that we live. We need to make that balance, because in our political systems, the politicians need to be among the people. And we have to sometime realize that we will not get our way all the time.
And it's a matter of doing threat assessment. Once again, it depends on the circumstances, obviously, the crowd. And, you know, we certainly do -- we inform these different people that we protect of the situations that we go in, and we work with them to make sure that they get the exposure, but they are protected also.
Mr. Lawrence: What's protective research?
Mr. Colo: Well, protective research is the division of the Secret Service that handles most of the scientific and technical support programs. It consists of our information and resource management division, which I have direct oversight, which is basically our information technology part of the Secret Service.
It has our intelligence division, which they handle all of the threats or potential threats against the president, the vice-president, and the various people that we protect. It has the technical security division, which really handles most of the fixed-site security for our protectees; whether they are temporary at a hotel, they set up really kind of the perimeter and countermeasures, whether they are chemical or biological countermeasures, make sure there is radiation countermeasures in effect. They have a lot of really interesting programs, a lot of them which were classified, especially around the White House. So they are responsible for the alarms at the White House, all the cameras. And then we also have what we call the National Threat Assessment Center, and that's the staff that handled what we talked about before, about the school initiative and the violence in schools and also the exceptional case study project. And finally, the last division under that is really our emergency preparedness office, which handles all of the contingency plans for the Secret Service.
Mr. Lawrence: Could you describe the career path available to agents and the type of training they get?
Mr. Brown: New agents come on board through the Federal Law Enforcement Training Center. That's their first introduction. It's a general criminal investigations background. They come up to the Riley Training Center, which is our facility at Beltsville, for their specific Secret Service training. Throughout that -- it is 16 to 18 weeks, I guess, now, it's quite a long time; it's very intensive. And we think it is probably some of the best training in the world, certainly specific to what we do as an organization.
From that, those agents are dispatched to various field offices throughout the country. Generally speaking, they can expect to spend three to five years in a field office before going to a second assignment. Generally speaking, that second assignment will be a protective assignment of some nature, either to one of the two large details or presidential/vice presidential detail or one of the support details for the former presidents. From there, they'll generally transition to a headquarters assignment somewhere in Washington, D.C., if they are in proximity, or back to the field.
We now have set into place a new career planning that has been developed over the last couple of years, and we are in the initial stages of implementing that now. And we feel, with the influx of new agents that we have had over the last several years, that our average agent in the field now probably has four to five years on the job.
The demographics have changed a lot over the recent past. We have hired more young people. We have lost some very senior people. So this will probably afford us the opportunity to provide these agents greater latitude than those of us that are more senior may have had in the past. And we think that there will be some kind of unique opportunities for those that want to remain in the area where they have started, provided it is probably an area that lends itself to it, principally an area with a larger field office. Perhaps they can do most, if not all, of their career in there. Of those that want to have a protective background and do that, they can do that as well.
Those that want to have an investigative career track, once you have done some protection, you can go back in the field and actually maintain a supervisory position back there.
Then you have the standard management track, where you would migrate through all the various aspects of the Secret Service, investigative, protective, as well as administrative, in the pursuit of reaching the higher levels in the Secret Service, going back once more to this well-rounded perspective, which we have somewhat prided ourselves on over the years.
Mr. Lawrence: Almost all agencies have developed strategic plans and performance assessments as part of GPRA implementation. How well is the Secret Service doing in meeting its performance goals?
Mr. Colo: Well, Dana and I are both very strong believers in strategic planning. And we really push this issue, because I think that's the cornerstone, which everything else falls under. Actually, after we completed the overall strategic plan for the Secret Service, I worked on and completed an information technology strategic plan and actually went back to all of the assistant directors and interviewed them to make sure that the business aligned with the technology. And we're very pleased on how that ended.
Now, as to the performance measurements, I talked about it a little bit before, about the counterfeit currency. And we're very pleased that we actually had a reduction of 12 percent in a very, very busy year. And although it is very difficult not to just show statistics, statistics, certainly, in the law enforcement community is very important, because you can gauge the amount of arrests from year to year. But also now, we are forced to look at really the quality of the arrests and the quality of the cases that we handle to say what impact they have on the overall population. So we really have changed the way that we use the statistics for performance measurements. And probably Dana can probably talk a little bit more about that.
Mr. Brown: All I would say is, we're trying to align the financial plan, I think, more with the performance measurements issues than perhaps we have in the past. We have set into place over the last year a number of mechanisms in the Secret Service that we think will provide us kind of a unique opportunity to develop more of a protocol for how we look at the strategic plan, performance measurements, and the financial plan by making the process much more inclusive, whereas in the past, the office of administration might have had pretty much independent responsibility for making some budget issues, whereas now we have included all the assistant directors' offices in making those decisions.
Mr. Lawrence: It's time for a break. We'll be right back with more of The Business Of Government Hour in just a few minutes. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Dana Brown, assistant director of administration, and Steve Colo, chief information officer of the U.S. Secret Service.
One of the toughest challenges facing many employers is recruiting and retaining new employees. Does Secret Service have this problem?
Mr. Colo: Well, I can talk about it, especially on the IT side, because that's a major issue that is not just unique to the Secret Service, but the government in general, because you are competing for very technical skills against a private sector that has the capability of paying more.
Although I can say that the government actually has done a pretty good job of improving the pay issues, there is now a lot of pilot programs out there, such as pay banding, where especially an IT professional, they can eliminate the static step increases. And it is actually pay for performance, where a person who really improves his skills can be paid more than maybe someone who would be normally at the same grade level.
The government is also more willing to give out retention bonuses. In fact, the Secret Service has done that on a number of occasions to keep those people that have the skills that we need when it appears that they are leaving or maybe actually have had job offers. And there are some other type of pilots that we have been using: Telecommunicating, flexi-work schedules. Right in our IT shop, I just started a pilot; I wanted to try some people who were going to work at home who probably -- especially with maybe programmers or people who do not have to be at the workplace can spend some time at home. And obviously, you're saving funds when it comes to, you know, travel costs and parking.
I also have someone at a GSA-sanctioned location, and I put another person at another Secret Service location, just to test these types of programs to see how they would work.
And also, even on the agent population, especially when it comes to technical skills, it is very competitive out there. We are, as you have heard, very interested in computer crimes, and to get those people coming out of college with those type of skills, the best thing I can say is, fortunately, we have a very unique mission, and that draws a lot of people. So we're fortunate.
Mr. Brown: I'll just say a couple of things. One is that we have been very sensitive over the last several years to the quality of life issues, work life issues, for our agent personnel. We recognize that they were working excessive numbers of overtime hours. With the cooperation of the Department of the Treasury, we have instituted a study called the "Workload Balancing Study," which has brought us the opportunity over the last couple of years to hire additional personnel to address that issue, to bring those hours of overtime down. Also, I don't want to neglect the fact that we have a uniform division of the Secret Service as well. And the contribution of the Secret Service is unique and exceptional. They also have some very serious quality of work life issues.
We just completed a study on January 19th, with the department, again, identifying their issues, one of which again was the number of hours worked, having to take -- the lack of days off, being forced overtime hours, things like that. So we're also looking to try to improve their stature by increasing their positions. And both of those really have an impact on recruiting and retention. It is very difficult to get people to come places where they are going to have work forever and very little opportunity to have a break, those type of things as well. But also, because of the first program, it is much more competitive than it used to be. Agents and officers now are probably less inclined to stay for the retirement purposes and benefits than they might have been in the past, because they are pretty much general, as opposed to unique to this particular agency.
So we're looking at those issues. Also, from support personnel in general, I think we're finding that we need to take a different approach to retaining and recruiting them than we have in the past, certainly in the technical field that Steve has mentioned, but also just generally. We're looking at different ways to try to make the Secret Service unique, make it a better place, and do that uniformly throughout the regions, uniform division officers and support staff as well.
Mr. Lawrence: What advice would you give to a young person interested in a career in the Secret Service?
Mr. Colo: Well, we do these type of speeches all the time, going to college campuses. And, you know, once again, fortunately, we have a really interesting mission and a very diverse career when you can move back and forth between protection and investigation. And I feel that the government certainly pays fairly well, and money isn't what it is cracked up to be. And I feel that, surprisingly, the people that we get in today are as qualified, if not much more qualified, than the people that came on the job with Dana and I. We were talking about -- we are probably lucky that we don't have to apply right now. We probably wouldn't make the job.
Mr. Lawrence: I was going to ask, what types of skills would you be looking for?
Mr. Brown: Pretty much, I think, as Steve has indicated. In some areas, certainly having some technical skills is an attribute. Since we do financial crimes, having some accounting or business background sometimes is an attribute. Having foreign language skills can be. We do have and have increased significantly the number of overseas positions that we now have. Generally speaking, though, I think just a well-balanced background, some previous job experience, not necessarily law enforcement experience, that might lend itself to success in the Secret Service in either its protective or investigative capabilities.
We are and have put a lot of emphasis, as I said earlier, on being well-rounded. And I think that that plus your willingness to work significant hours and be dedicated to the job is probably the single most important purpose.
Mr. Lawrence: One of the things I have heard in our conversation is the forming of partnerships by the Secret Service with other agencies of the government, perhaps, and even amongst colleagues. How do you partner so effectively, and what are the lessons learned?
Mr. Colo: Well, we're going to be forced throughout the government to partner more and more as time goes on. And I'll just once again use the area of information technology. You know, our mission is indeed unique. But our business process is not. What we do when it comes to financial management, when it comes to procurement, when it comes to the administrative process, is the same thing that other government agencies do. And in the past, we in government agencies have looked very myopically at what we do, and we have built these stovepipe systems. And to save money, we are going to now have to go and partner with other agencies and say, 'okay, we're not going to build this system, and you build this system. We're going to build one system, and it is going to be enterprise-wide. And in fact, you build the system, we'll fund the money to you, and we'll give the input as to how it best works.'
Partnerships are very important. We have some very good partnerships with ATF and throughout Treasury. And also, we are doing very limited partnerships, actually, internally. For example, Dana and I work very closely as the CIO and CFO. In fact, I'll let him talk a little bit about that.
Mr. Brown: Well, we did take a look at how we have done business in the past, and we looked to try to change that dramatically, particularly in terms of our financial management processes, from the particularly financial management perspective. In the past perhaps, financial management didn't have this kind of influence in being able to participate in the process they might otherwise have had. And we're trying to change this from being a bookkeeping situation to being more of a management consultant situation.
Steve and his colleagues had an excellent idea in setting up a council, a technology council to review what they wanted to do in terms of IT. When we reviewed it, we actually saw some opportunities for us in the financial management area to cooperate with them and change the tenor of the council to a technology and investment management council.
What we have done, then, is incorporated them into nearly all the assistant directors' offices into a cooperative effort to review everything that comes up of an IT and a non-IT nature, bringing them before the council. It gets considered. We have adopted a business case perspective for everything. We're looking to use the information technology and a portfolio system. We're looking at decision-making software.
We're trying to make what has been historically a very subjective process into a much more objective one. And I think that will benefit us all over time. The principal issue is to generate a methodology or a protocol that will be consistent over time, be defensible, so that when we bring forward initiatives to the department or to wherever, that we can defend them with some -- not only anecdotal information, which we're very good at, but also, now, some empirical data, which perhaps in the past we haven't been quite as capable in terms of producing.
So we're trying to do both. And working with Steve and his people has been outstanding.
Mr. Lawrence: Well, I'm afraid we're out of time. I want to thank you both for being with us. Thank you, Dana.
Mr. Brown: Yes, sir. Thank you very much.
Mr. Lawrence: Thanks, Steve.
Mr. Colo: Well, thank you, Paul.
Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Dana Brown, assistant director of administration, and Steve Colo, chief information officer of the U.S. Secret Service. To learn more about our programs and research into new approaches to improving government effectiveness, visit us on the Web at endowment.pwcglobal.com.
See you next week.
Thursday, March 29, 2001
Mr. Lawrence: Welcome to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of The Endowment for The Business of Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at firstname.lastname@example.org.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation today is with Ann Brown, chairman, U.S. Consumer Products Safety Commission.
Ms. Brown: Thank you. It's delightful to be here.
Mr. Lawrence: Well, let's start by finding out more about the Consumer Products Safety Commission. Could you describe the activities for our listeners?
Ms. Brown: Well, the U.S. Consumer Products Safety Commission is the federal agency that oversees the safety of 15,000 different kinds of consumer products used in and around the home. Everything from toasters to toys is under our jurisdiction.
When you get up in the morning, and you take a shower in your non-skid tub, until you go to bed under your electric blanket, we are taking care to make sure that families, and especially children, are safe.
Now, we have many tools that we can do that with. We can do mandatory and voluntary standards, or recalls, or civil penalties, education, publicity. And we have a very, very active hotline. We received over 4,000 complaints on our hotline and about 3,800 complaints over our website just last year.
So, one of the most important things that we have to do at the agency is to be in constant touch with our customers. And those are American consumers.
Mr. Lawrence: Let's find out something about your career. How did you start?
Ms. Brown: Well, let me tell you that right now I have what I call my dream job. I certainly was an outside critic of this agency for many years. I felt it was all burn, and no beef. I didn't think it really did what it needed to do to protect consumers.
I was a Washingtonian. I grew up here in Washington. And after I went away to Smith College, and then came back and graduated from George Washington my last year because I married my husband who I've now been married to for forty-two years, which is actually my greatest achievement.
I started working for a newspaper here in Washington. Then I went off to have my kids. And then I went back into politics. But I started a grassroots consumer organization. And we did many, many things, consumer advocacy kinds of issues. But one of the things we did was the safety and quality of toys and children's products.
And so I got to be a children's product expert and a safety advocate. And I started all those toy safety surveys that you saw in the 1980s. And when I got interested in the safety of toys and children's products, I got interested in the Consumer Products Safety Commission.
And I knew the President and Mrs. Clinton from being active in national politics, as well. And when Mr. Clinton became President, the President asked me, 'would I like to head up the Consumer Products Safety Commission?' And I said, "You bet I would."
Mr. Lawrence: What got you interested in consumer issues way back then?
Ms. Brown: Well, quite honestly, it was something I didn't have to go back to get an advanced degree for, if I tell you the truth. I had had enough of school. I wanted to be out in the world.
And I also knew that the people of Washington, D.C., by only having a local government, and not a federal government, really weren't represented on consumer issues. My father had been a merchant in downtown Washington. And I was a latchkey kid. I went to school and took two buses downtown and sat in the back sitting rooms of his store and watched the buying and selling mechanism.
And then I would walk on F Street and see people buying and selling. I got very interested in the process of buying and selling and equity for consumers.
And I also always had a good appreciation of the problems of the businessman. For, after all, my father was a small businessman.
Mr. Lawrence: You've had a lot of experiences in the different sectors. In the public sector, the private sector, perhaps your father, in the non-profit. Could you describe your perceptions of the different cultures?
Ms. Brown: Well, certainly government is very different. If you're in government, you basically have to be more careful about what you say and do because you wield more power. And so, you can't just mouth off anytime you think about it.
And you also have to be careful, because you can affect businesses in a very important way. So, you never want to do anything in government that isn't absolutely, firmly believable and well documented. That's a very important thing.
I think the similarities between the public and private sector are that I'm a very mission oriented person. At this agency, I have a great mission. I had a great mission when I worked out in the field as a consumer advocate and as a children's safety advocate. Mission defines me, and motivates me. And I think that's exactly the same thing as when you're in government.
Of course, when you're in government, you do have more power, and you have to use it judiciously.
Mr. Lawrence: How do you measure the success of your mission in government?
Ms. Brown: Well, one way that we do it is actually by seeing what has happened in numbers of deaths and injuries. I love it when people used to tell me at the agency, they gave out a million pamphlets. Well, you can give out a million pamphlets. How do you define whether people have taken those pamphlets, read the information, and whether they have absorbed it? And whether they act on it?
We can really tell one thing is by the reductions of deaths and injuries. And since this agency came into being, they have reduced injuries a third, and reduced deaths a third. We announced this year, for example, that we have seen a 20 percent reduction in injuries to children from children's products. The first time the agency has ever seen such a reduction. So, one of the ways we know we're successful is if we see a reduction in deaths and injuries. That's a result. And I'm a very result-oriented person.
We can also see results by the kind of connection we have with consumers. And we have seen consumers learning about our agency, knowing about us, contacting us. It's been a tremendous give-and-take.
Mr. Lawrence: What drew you to public service?
Ms. Brown: Well, I say what every other politician says in the world, but it's true. The ability to make a difference in people's lives. I'll tell you what didn't draw me to public service, and that was the money. But certainly, I was drawn by the possibility of making a difference. And I must say, I've been enormously gratified by that.
Mr. Lawrence: And what position or training best prepared you to be the leader of this organization?
Ms. Brown: Quite honestly, all my past life experiences have built up to taking this job. I mean, I joke that when I was a captain at camp, I learned leadership. And when I worked with my consumer group, I learned how to work with volunteers, and how to motivate people.
When I worked for a newspaper, I learned a lot about how you make an issue palatable, how you get attention from the public, how to use the press.
Certainly, as an advocate, I became enamored of a mission. And I was able to carry over that mission to the agency.
So, I think that specifically, my sense of mission, my knowledge of product safety, and press training, and media training, were my major attributes that qualify me for this job.
Mr. Lawrence: In your years of government service, what qualities have you observed as a key for good leaders?
Ms. Brown: Well, good leadership I think is ageless. We see the leadership qualities from over the ages -- from the 12th century, the 21st century -- it doesn't really matter.
I think of vision. I keep coming back with that. Commitment to a vision. Passion. Energy. Charisma. Teamwork. Flexibility. And responsiveness to change.
The worst thing anybody can say to me at the agency is when I say, why are we doing it this way? And they say, because we always have. That's death, as far as I'm concerned. So, the liveliness, the inquisitiveness. The ever being responsive to what needs to be changed I think is very important.
Mr. Lawrence: Do you think those characteristics will change for the future leaders?
Ms. Brown: I don't think so. I think those are basic characteristics, personality aspects, that will always be the same. I think they were before. And I think they will be in the future.
Mr. Lawrence: I'm talking with Ann Brown. This is The Business of Government Hour. We will re-join out conversation in just a few minutes.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And our conversation today is with Ann Brown, chairman, U.S. Consumer Products Safety Commission.
Ann, given the limited resources, how does CPSC select products or industries for review?
Ms. Brown: Well, first of all, we are a data-driven agency. And we have built an extensive system for gathering information about dangerous and defective products. And we use that system to tell us where to focus our investigations.
We do spend a great deal of time looking at the safety of children's products. And about 40 percent of our budget goes to children's products because children are our most vulnerable, and one of our most precious, populations.
We gather information extensively from all around the country, from a myriad of sources. We have a wonderful system, called the NICE system, which gives us hospital emergency room injuries, product injuries, from all over the country every day. And so it's critical that we know what's happening. We work closely with coroners, so we unfortunately can hear about all the deaths.
Furthermore, we have eighty investigators around the country who follow up on any incident or complaint. In fact, I say, we're the only agency that still makes house calls.
And of course, information from consumers is critical to us. We don't wait for injuries to pile up. I have a data meeting every month, where my people take and mine the data, trying to cut it different ways, so we can see what we have in that data, and we can anticipate deaths and injuries. That's extremely important.
But even one complaint from a consumer can lead to a product recall. Of course, we investigate it seriously. Somebody just doesn't call us. It could be a kook, you know? Somebody just doesn't call us on the phone, and we recall something. We do a serious investigation. We have our own laboratories. But even one, one complaint can trigger a recall.
Mr. Lawrence: Well, we know that you have a special investigative unit to investigate defective consumer products. Could you tell us about that, and what they do?
Ms. Brown: I guess you're talking about Operation SOS. That's how we find, on-line, we find dangerous products. We started this special project, called Operation SOS. It stands for Safe On-line Shopping. And that's to find dangerous products before they are sold on the Internet.
And our investigators go undercover. They use secure computers. They use credit cards that can't be traced back to the government and anonymous P.O. boxes. They can find products for us that are being sold that are dangerous.
We have done some recalls from this, because products that are sold on-line have to have the same safety standards as those products that are sold in the bricks and mortar stores.
Mr. Lawrence: In 1998, the CPSC Fast Track Product Recall program was a winner of the Harvard University Innovation in American Government award program. Could you tell us about the Fast Track program?
Ms. Brown: Well, Fast Track is a marvelous program, and it came from staff in the Commission. It was not a "filtered down" program. We very much get our information and our ideas from our staff, who is right at the front lines, doing the work.
This was a great award. It even came with $100,000 from the Ford Foundation, who did it with Harvard. Fast Track is an innovation that gets products recalled faster. It encourages companies to come to us immediately when they learn of a product hazard. It cuts through the red tape, and speeds up that record process. With Fast Track, we can recall a product within twenty days or less, instead of going through a whole extensive investigation.
And you see, time is of the essence with a product that is out there that's dangerous. Because you absolutely need to get that off of store shelves, out of peoples' homes, before people get injured or possibly killed.
Mr. Lawrence: What does CPSC do once a product has been recalled?
Ms. Brown: Well, after a product has been recalled, we will keep track of what percentage of the recalled products gets returned. And we will see that if we don't think it's enough, we will encourage the company, or work with the company to issue another recall.
We make sure that we get around to as many people as possible. We have made major, major public relations efforts on recalls. We not only do the morning shows, more often than I can imagine, nightly news, also, of course, newspapers.
We've instituted something called a video news release that we do at the agency. When I got to that agency, quite honestly, they had one fax line in public affairs. The way they got their information out was what I call the paper airplane approach. You make a little -- take a press release and make a paper airplane of it. And float it through the outside window, and hope it hits somebody on the head below.
We do all these major efforts to get our information about recalls out. The video news release is something that goes out by satellite to local news shows, all around the country. And we traditionally hit about 60 million people, viewers, at a time, seeing this.
So you can see, getting our information out is crucial to us.
Mr. Lawrence: We know that CPSC has improved customer service through the hotline. Could you tell us about the hotline, and the recent improvements?
Ms. Brown: Well, our hotline has been improved immeasurably. We have added a number of consumer service reps and our hotline handles about 300,000 calls a year. It is answered by the voice of James Earl Jones, who comes to work free of charge every day.
And we have bilingual English-Spanish speaking operators, of course. And we can also handle inquiries in sixteen languages, through a language bank of our employees. So, our hotline has been a major connection with us, and our customers, the consumers.
But our website also is creeping up on our hotline as being something that's very valuable as a communications tool. Our website handled 3.7 million visitors last year. And in the year 2000, we had about 250,000 website visits a month, compared with 10,000 a month in 1996. Our website has become a wonderful interactive way of consumers both contacting us, and getting our recall information.
Mr. Lawrence: What's the Product Safety Circle?
Ms. Brown: Well, I can tell you a lot about this. The Product Safety Circle is a way to help companies make safer products. We often deal with companies only after they've had to recall something.
What we're trying to do is institute safety, and to praise companies, rather than to hit them over the head with a shovel. What we're trying to do is institute safety within their common work practices, as part of their business practices, so that we can head off problems before a recall occurs.
And we have gotten more than forty companies now, almost fifty, and they have pledged to make safety an integral part of their business. To build safety into their products, so they don't have to have a recall. Save them money, and the embarrassment of a recall. And make the world safer for consumers.
Now, there are ten principles, such as, build safety into a product design. Or, do product safety testing for all foreseeable hazards. Or keep informed about and implement the latest developments in product safety. And this has been, this Product Safety Circle has been very, very good.
We're having a conference about it outside of Chicago in the end of June, where different companies will show all of their safety innovations. And we know this encourages other companies, as well.
Mr. Lawrence: Does CPSC build partnerships with important corporations in other ways?
Ms. Brown: Well that's been very, very important. When I first came to the CPSC, the business community thought I was going to want to regulate everything that moved, since I'd come from the advocacy community. Well, that is certainly not the case.
Partnerships with companies are extremely important. That's why most of our recalls are voluntary. Why we've done five to one voluntary, instead of mandatory regulations. Because with limited resources, and with time being of the essence, you don't want to end up in court at the end of the day.
So, we've worked very cooperatively with dozens of companies, on partnerships, as well, with a common interest in safety. For instance, we have the safety expertise, and they have the resources. Nice marriage.
So, for example, Gerber has had a six-year partnership with us on baby safety. We've worked with Amazon.com and eBay. They've linked with us to provide consumers warning about secondhand products. We've got a list as long as your arm of companies that we've worked well with.
Mr. Lawrence: It's time for a break. We'll be back in a few minutes with more of The Business of Government Hour, and our conversation with Ann Brown.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And our conversation today is with Ann Brown, chairman, U.S. Consumer Products Safety Commission.
Does CPSC have any methods in place to reward excellence in product safety on the part of private companies?
Ms. Brown: Yes. We certainly do. Very early on, when I first got to the agency, I initiated something called "The Chairman's Commendation". And we've given twenty of them for special contributions for safety on the part of companies.
For example, Proctor and Gamble, who came out with the first senior-friendly child-resistant caps for children, so that children still can't get into the medicine, but it's easier for adults to open. You know? When you have a headache in the middle of the night, and you get a worse headache because you can't open the bottle.
But now, they're easier for adults to open, but still child-safe. But the nice thing is, Proctor and Gamble did this first, ahead of other companies.
That's what we're looking for: a company that does something ahead of when the government makes them do it, or ahead of their competitors. We gave another award to Toys-R-Us for their safety toy-testing program. That was so exemplary.
So, over the seven years we've given twenty of those awards. And they are highly coveted. And we like to encourage good behavior.
Mr. Lawrence: How does CPSC determine that regulation is the best solution for consumer safety issues?
Ms. Brown: Well, as I said, we like to work voluntarily with industry whenever we can. Most product safety standards are handled voluntarily by the industry. For every one mandatory we've done, we've done five voluntaries. And that, as I said, is the most efficient, cost-effective, and time saving way to work.
But when we find that a voluntary standard isn't working, then we can put a mandatory standard in place. For instance, bunk beds. There's a new mandatory standard that requires space in the bunk beds to be reduced, so children can get their bodies through, but their heads don't get caught, and we've reduced that.
But most of our recalls, as I said are, 99 percent of them are done voluntarily. We rarely have to go to court. And that is the way it works best.
Mr. Lawrence: How do you build partnerships with other government agencies, particularly those that regulate products and services?
Ms. Brown: Well, it's very important that government shouldn't be duplicative. It's not fair to consumers to spend the money if we're doing something, and another agency is doing it. We will prefer to work in partnership, so that you have the best use of your resources.
r we build partnerships with members of Congress. We've done baby safety showers with them, or home safety checks. That's another branch of government.
We have worked with EPA and HUD on lead paint in homes. And we've worked with Health and Human Services on child health and safety, on the problem of SIDS. So, we will very often work with another agency as often as we can. FDA, for instance, which will handle a device, when it is not a safety device but a health device, will give us the safety advice. They'll recommend something for us to look at.
So, we work in close cooperation.
Mr. Lawrence: What are the components of a successful inter-agency partnership?
Ms. Brown: Well, the first component is making sure that you're saving the taxpayer money, by working together. And not having a sense of turf, and wanting to do it yourself, no matter whether it's done by another agency, or not.
You have to trust the other agencies. They have to be efficient, and effective, and you have to work well with them. Those are the main things that you have to do, so that you're giving the taxpayer the bang for the buck.
Mr. Lawrence: The CPSC's involvement in, and the results of the preliminary review of gun safety locks was controversial. What lessons learned can you pass on to other leaders when faced with this level of controversy?
Ms. Brown: Well, the first thing you have to do when you pick up on something that controversial is, you have to research it to death. You have to have it absolutely right, and absolutely correct. Because you can tell if you have your ear to the ground, that this is controversial, but it's the right thing to do.
And you have to make sure that it's the right thing to do, and believe in it. And the best way to believe in it is to know that you have all your facts and data lined up perfectly; that you're not just making an emotional pitch.
Once you've got that all lined up, then hold the line, and do what is right. That's the main thing. If you know you're doing what is right, particularly with gun locks.
We tested thirty-two trigger locks, and cable locks from ten different manufacturers. These are the things that lock away from kids. And we found that in most cases, they simply didn't work. They could be opened without a key. You could open them with tweezers. You could open them with a paper clip. You could whack them on the desk, and they would open.
This gave a very false sense of security to gun owners, who were trying to do the best thing, and lock their guns away from others who shouldn't be having them.
You know, when you stop to think about it, controversy is not such a bad thing. It makes people think. It helps spread the word about a safety hazard such as a gunlock that doesn't do what it's supposed to do.
So many, many people find out about it. We were A-1 of The Post about our survey of gunlocks, and our going to do a standard about it. I mean, it's a tragedy when you think about it, that there are twelve regulations for every toy, but not one safety standard for a gunlock.
So, controversy can be a help in building up knowledge about a problem.
Mr. Lawrence: How has technology affected your ability to interact with consumers regarding recalls and other time-sensitive safety information?
Ms. Brown: Well, it has been an absolute blessing, and a boon to us. Consumers can get our safety information over the web. If they don't have a computer in their own house, they can go to the library.
We put all our recalls up on the web. And we can e-mail. You can get on our e-mail list, and have all the recalls e-mailed to you. We've used technology for the video news release, which is very important. Every TV station can pull down from satellite.
So, I think it's of crucial importance that you use all the high technology that you can. It helps the communication enormously.
Mr. Lawrence: What advice do you have for consumers who want to become more educated about product safety issues?
Ms. Brown: Well, the first thing is, to be aware of recalls. Be aware that they'll be on TV. They'll be on the morning shows. Look for them in your newspapers. Many newspapers have a column specifically devoted to our recalls.
Check our website often. Get on our e-mail notification list and then check your home. Check your day-care center. Check your caregiver's home. Make sure you don't have a recall product lurking in your attic, or your basement.
And also, be cautious about secondhand products, both in the secondhand stores, and in those garage sales. I always see people going to those garage sales to buy other people's junk. Well, you can do that if you want, but make sure it's not dangerous junk.
Mr. Lawrence: Do you have any advice, any special advice for new parents?
Ms. Brown: Well, the most important thing that new parents can do is to have a new crib. And even if you can't afford a new crib, when you have that baby shower, perhaps, get your friends and relatives to get together. And instead of giving you all those puffy blankets, and things that you may not use, and those little silver cups, see if you can get them to pitch in together so you can have a new crib because an old crib can be dangerous. It can be repaired wrong. It can be faulty. The screws can be loose. It cannot meet all the current standards. The slots can be too wide, and a kid can get their -- a little baby can get their head in it, and get strangled. But with a new crib, we know all the new cribs on the market meet our safety specifications.
So, and the other thing of course new parents should do is be aware of all our recalls of baby products.
Mr. Lawrence: I understand that CPSC recently issued its annual performance plan for 2001. Could you tell us about this plan?
Ms. Brown: Yes. Each year we issue a performance plan that guides our product safety work for the upcoming year. It outlines the agency's activities that will help speed progress toward our goals of reducing deaths and injuries from consumer products.
And we have several goals in that plan. One of them is to reduce the fire deaths in the United States by 10 percent in ten years. You know, children are particularly vulnerable when fires occur. Each year about 900 children under the age of fifteen die in fires. And about 600 of these deaths to children, fire deaths to children, are children under five. And we're on track to reach our goal.
Some of our other goals: head injury, reduce head injury to children by 10 percent in ten years, poisonings, reduce poisonings to children under five, carbon monoxide, reduce deaths by 20 percent in ten years, carbon monoxide poisoning, and electrocution reduce deaths by 20 percent, deaths and injuries. And we are on track with our goals. These motivate us. And we don't just use these percentages just to come up, pull them out of the air. These we take very seriously, and plan to meet.
Mr. Lawrence: It's time for a break. We'll be right back with more of The Business of Government Hour, and our conversation with Ann Brown.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Ann Brown, chairman, U.S. Consumer Products Safety Commission.
One of the toughest challenges that employers are facing now is recruiting and retaining new employees. Does CPSC have this problem?
Ms. Brown: Well, luckily our life-saving mission is very motivating. And it helps us recruit and retain a highly skilled and dedicated group of employees at CPSC. The agency is just a wonderfully fulfilling and gratifying place to work, because people do keep their attention on this mission. We keep focused, as I say, all the time. If they don't keep focused, they often hear from me, our eyes on the part of reducing deaths and injuries from consumer products.
And so, by that mission orientation, we don't have quite the problem. In recent years, we did have some difficulty finding specialized technical staff to work at the agency. And what we did, this was sort of a clever -- I think we addressed this problem by hiring a number of well-respected senior scientists. And these scientists, in return, have helped us recruit lower level staff in their area of expertise. So, the word of mouth has been very, very helpful.
You know, the scope of retirement at CPSC is a problem, just as it is in other parts of the government. We face that, as well. And we are experiencing a higher number of retirements. Our turnover has increased from five percent in 1998 to 12 percent in 2000, largely due to retirements, but we're putting into place a suggestion of planning and aggressive recruitment offers, and efforts to deal with this rising number.
And sometimes it isn't all bad. Sometimes some tired folks leave, and some newly re-invigorated folks are hired. So we've found that in the turnover at our agency, our agency really looks like the face of America now.
Mr. Lawrence: What advice would you give to a young person who is interested in entering public service?
Ms. Brown: Well, first of all, I'd say, "just do it." It is enormously valuable, and it's fun. People really, even though they may not know it, depend on their government, particularly an agency like ours. They want their products safe. They want safety for their parents, for their children, for their grandparents.
In fact, when the government shutdown took place, one of the nightly news did a program on three important parts of government that weren't working. One was the National Parks. One was people getting their passports. And the third was our checking on the toys for Christmas, so the toys would be safe under the Christmas tree.
People want what we do. And the wonderful thing is, you can have fun doing it.
You know, I would suggest that public service is the most rewarding work. I can imagine, and I would advise young people to consider coming to work in the government, maybe coming to CPSC. We have a great mission.
Mr. Lawrence: What type of skills would you be looking for?
Ms. Brown: Well, first of all, what you need, you absolutely need a college degree. And then you, beyond that point, there's a whole range of skills and knowledge that places like CPSC need: scientists, mathematicians, lawyers, engineers, investigators, negotiators, communicators, writers.
So, you have a broad range of things that you can do.
Mr. Lawrence: You just mentioned that part of what CPSC does is very important. And yet, there is a move afoot to figure out what the government should be doing, and what it might have others do. What progress is CPSC making in reviewing positions for competition through the FAIR Act?
Ms. Brown: Well, the FAIR Act, in case people don't know, stands for the Federal Activities Inventory Reform Act. And it requires federal agencies to produce an inventory of positions that are commercial in nature, and could be contracted out. And also to make determinations about whether those contracting -- that works on a cost-benefit basis.
The majority of CPSC employees are engaged in governmental public safety occupations that is not appropriate for contracting out. However, we do contract out some of our administrative services, such as the mailroom, drivers, the laborers, copy room, library services. Our toll free hotline and some of our computer program positions are also staffed with contract employees.
And we've found contract employees to sort of get the same sense of mission that our other employees do. So, it's worked very well.
We've identified some positions in our inventory that we're going to review next year, to make sure that we are doing the best we can with the FAIR Act.
Mr. Lawrence: What's your vision for the next ten years of consumer safety and protection?
Ms. Brown: Well, I think if we talk about how CPSC will evolve, we're talking about technology. I think that is -- there's going to be more sophisticated technology in products. We see it all the time -- from toys, to washing machines -- everything is a higher technology. And new products keep coming out all the time.
So we need ever more sophisticated ways to check products for safety, to meet this higher level. For instance, we have just gotten new testing equipment that McDonalds gave us recently that they developed in conjunction with RAM. And it gives CPSC additional tools to assess safety hazards.
For instance, we got a breathing mannequin. This is a lifelike mannequin that helps evaluate suffocation hazards to children. We got a virtual child, which is a three-dimensional computerized model that simulates obstructions to a child's airways, and tests for choking. One of the common ways a child dies.
Also, we've got a simulated baby jaw. It tests to see if biting and tearing of a product presents a choking danger. That's the kind of way that the agency is going to keep up. Our vision for the future is to keep up technologically.
Mr. Lawrence: How about in terms of the employees? What type of employees will be needed in the future? It sounds like many of the things you have described are very technical in nature, so I was imagining more scientists, and more hard researchers, as you described them.
Ms. Brown: Well, we certainly need people who can work technology. And we do need just all of what you've said. But we also need people who are going to be able to analyze what children will do with a product, and when they do it. The human factors part of it is still very important. I don't want to make us sound like we'll be an agency of robots testing, because there's a lot more of judgment that comes to the fore, as well.
Mr. Lawrence: And how about in terms of any technological advances in the future helping CPSC communicate with consumers?
Ms. Brown: Well, of course, the web has changed the way we do business. And we will be using the web even more in the future. And we'll continue to use new communication tools as they come out.
You know, we started notifying the public by automatic e-mails, and doing video news releases. Our website is interactive. We can get complaints from the public via Internet.
As anything new is reported, we will continue doing it. Our website won an award as one of the three best websites in government from Brown University.
So we are developing that, and committed to that. And while I've been talking about our website and our hotline so much, let me give you those addresses. The website is www.cpsc.gov. And our hotline is 1-800-638-2772. So, write those down, and communicate with us. Everybody out there in the public works with us to keep all of our country safe.
Mr. Lawrence: I want to ask you another question. As you've been describing this, you've been describing two different roles. One of working with the private sector, and also one of watching over them. How do you balance those two different roles?
Ms. Brown: Very carefully. That is a tightrope that we have to walk. I think we've managed to do it successfully. We want to work voluntarily with industry. That is of crucial importance. But of course, the stick is always in the closet.
So, I think that industry doesn't want us to use the stick, and we don't want to use it. So industries work cooperatively with us. And that has been our most -- where we've had our most success.
You know, I think of product safety is a triangle. On one side is the industry. On one side is the government. And on one side is the consumer, because the consumer has a responsibility, too. If any one part of that triangle isn't working, the whole thing falls apart. That's the product safety triangle. And it works very well.
Would you like to mention the website and the hotline one more time?
Ms. Brown: Of course I would. Our website is www.cpsc.gov. Our hotline is 1-800-638-CPSC, or 2772.
Mr. Lawrence: Thank you very much. This has been The Business of Government Hour, featuring a conversation with Ann Brown, chairman, U.S. Consumer Products Safety Commission.
To learn more about the endowment, our research into improving government effectiveness, visit us on the Web at email@example.com.
See you next week.
Wednesday, January 17, 2001
Mr. Lawrence: Welcome to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and the co-chair of the Endowment for the Business of Government. We created the Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the web at www.endowment.pwcglobal.com.
The Business in Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation today is with Mike Smokovich, Chief Financial Officer of the U.S. Agency for International Development. Welcome, Mike.
Mr. Smokovich: Good to be here.
Mr. Lawrence: And joining us in our conversation is Patty Fisher, also a PWC partner. Welcome Patty.
Ms. Fisher: Hello, Paul.
Mr. Lawrence: Well, Mike, let's get started by finding out more about the U.S. Agency for International Development. AID administers economic and humanitarian assistance worldwide; we know that. Can you tell us more about the agency?
Mr. Smokovich: AID's been existence for about 40 years. We operate under the Foreign Assistance Act. We have a budget of about $7.8 billion. Our programs are worldwide. We have about 2,000 people composed of Foreign Service officers and Civil Service personnel who are the mainstay of our program. About one-third of those people were overseas, and we're also supported by Foreign Service national personnel. These people are employed as personal service contractors.
The agency's got many diverse programs and we work to develop both institutions and people. We have programs in health, food and nutrition, we are involved in humanitarian assistance in training and education. And we also work closely with governments to strengthen their institutions in terms of good governance and democracy, and in terms of the environment. So, we're a fairly broad-based agency with a fairly robust agenda delivered in many nations by many people.
Ms. Fisher: Mike, let's spend some time talking about your career. You served 30 years with the Department of Treasury. Can you tell us about your various positions at Treasury?
Mr. Smokovich: Yes, I served in many positions at Treasury. I came to the Treasury from the General Accounting Office in 1967. And I basically worked in all of our operational staff positions there both as a young person in those days and as an older manager. My first senior executive position was in managing all of our accounting and reporting operations which were the essence of the agency at that time.
Over the years, we attempted to grow the agency and it's a small agency of about 2,000 people. And we tried to turn it into a financial management service organization that would help government managers and program people understand how to do cash management well, how to administer grant programs, credit and debt collection services and basically to be better managed from the financial management perspective. My management positions at the agency involved, basically, running most of those operations at one time or another and for a seven-year-period, I served as our chief operating officer. And my last year there, I ran a consulting and training organization, which was a good exit from the Treasury and a good way to get to a CFO position in another agency.
Mr. Lawrence: How did those experiences at Treasury prepare you for the CFO job at the USAID?
Mr. Smokovich: Well, from the first or for the last 20 years in particular, either working on the Treasury agenda or the OMB agenda or the GAO central government agenda for making government better managed. I was often the chief negotiator for the Treasury or for the central government in working with agencies to make financial systems better to work on credit programs on cash management programs, so uniquely. What we did at Treasury was to urge the CFOs to do certain things according to the OMB five-year plan. And now, while I'm at AID, this issue has kind of turned around. I've got to help our agency to respond to all those standards and initiatives so, it was a good experience.
Mr. Lawrence: How would you contrast the two cultures, Treasury and then USAID?
Mr. Smokovich: There are many parallels, we're both relatively small agencies. The financial service where I worked is roughly 2,000 people, like AID. The Treasury is a finance organization, obviously, USAID is basically a program organization, but both organizations are dedicated to making government better managed. At Treasury, we were fairly centralized. AID is highly decentralized. We operate in 75 countries, provide developmental services in another 39 and our people are highly technical people and they are program people, not finance people. So those cultures are different in that regard.
Treasury has a lot of backroom operations and, as you know, a lot of our programs are on the front page. We're providing assistance to people in disasters and we're trying to improve the lot of people and nations across the world. So, there are some differences in the cultures.
Ms. Fisher: You've just articulated a number of different things that you've done throughout the years. What drew you to public service?
Mr. Smokovich: Largely the opportunity to have an impact. I came out of Pittsburgh, Pennsylvania and it was the coal belt, or the rust belt, you could see that happening if you looked ahead. Coming to Washington provided an opportunity in the 1960s to have an impact on the whole country, and at the Treasury, we had an opportunity to affect government. And you don't get that type of opportunity in a lot of the jobs that you might go into. If you look at the career aspect of government for young people in particular, if you have a vision and if you're interested in people and if you're interested in improving the country and you feel pride in the country, there's a lot of opportunity there to make the world a better place. And that's what draws people to Washington.
Mr. Lawrence: You've described working for leaders as well as being a leader and I'm curious, in your opinion, what qualities are the key characteristics of good leaders?
Mr. Smokovich: All good leaders have to have courage, maintaining the status quo doesn't require leadership. Seeing that things need to be changed takes a vision, it takes an energy and good leaders and strong leaders quite often have to keep working at it for a long time. So, having a vision, having energy and stubbornness are important but also, I think, seeing the need that change doesn't come easy and working with people, finding followers is essential. I used to say to a lot of our people at Treasury when they would ask me, "what's it take to be a leader?" I said, "well, you have to find at least one follower and build on that."
Mr. Lawrence: Have these qualities changed over time, do you think?
Mr. Smokovich: No, I think those are pretty fundamental. You know, the situations that we have to manage and change quite often. In Treasury, I had one situation, at AID there's another situation. If you're in the corporate environment or in the government environment or university environment, the situations change, but those basic capabilities of seeing the need for change, having the will power and the staying power and building consensus and followers, I think they're essential.
Mr. Lawrence: How about looking out into the future, I mean, we are in the twenty-first century now, but do you think in the future those qualities would change?
Mr. Smokovich: I don't think they're going to change, but some of the issues, I think, are more significant and more dramatic. I think, particularly, for CFOs and even leaders of organizations, whether you're number one, two, or three, I think, is less relevant than being a part of the management or leadership team.
In the past ten years, we've seen a lot of change in the way we do business and government quite often is slower to change than industry. I think the issue of seeing what needs to be done to transform the organization, to transform the agency about the way it does its business. My charge was to put an accounting system but the types of changes that are needed in the next five-to-ten years require more than putting in a system. I think they require a commitment and a need to transform the business so we can connect with the customers our suppliers and our stakeholders and in ways that we haven't done before.
Mr. Lawrence: I'm talking with Mike Smokovich of USAID. This is the Business of Government Hour. We'll rejoin our conversation in just a few minutes. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and tonight's conversation is with Mike Smokovich, Chief Financial Officer of the U.S. Agency for International Development. And joining me in our conversation is Patty Fisher, another PWC partner.
Well, Mike, let's find out more about your position as the chief financial officer. What are your main responsibilities?
Mr. Smokovich: As the chief financial officer at USAID, I'm charged with managing all of our accounting and reporting systems and in my particular case, managing the development and integration of our accounting systems, and making sure that when we have any systems initiative underway, whether it's procurement, personnel, payroll, what-have-you, that it all comes together. So there are a lot of CFO, CIO, IT aspects tied into my job, at least in the present that may not be tied into other CFO jobs at that particular moment in time.
The other big area of responsibility that we have is that we are an operational CFO organization, both in Washington and in the field. And we're providing direct accounting support and financial management support to people in Washington and to the 75 missions where we have operations. Because of the nature of our business, which is developmental, there is a large role that we play with our inspector general in making sure that audit recommendations and audit solutions are implemented in a timely fashion. So, we spend a lot of time with OIG and with our program people making sure that our processes for integrity, audit follow-up are in place.
Because we're highly decentralized, we spend a lot of time, and this is something we need to do more of, is investing in the training and education of people. Because of modern systems implementations and because of the downsizing of government, the financial management role has been dispersed among more and more people in operating the agencies.
And as I said earlier on, our people tend to be, you know, engineers or doctors or economists, and one of the challenges is to educate them to the fundamentals of financial management and to make sure that when we're making a grant or making a contract or executing its management, that we're following sound management principles. So, we have a large educational role in the agency.
And because we are investing systems, there's a large responsibility for the CFO at USAID, as well as the CIO, the procurement official. We have a management or team responsibility to make wise investments in systems and to make sure that when we make the investment, we get things implemented on time and on schedule for both the technical people but, also, for all the users, be they inside the agency or outside the agency. So, it's a fairly, fairly broad job.
Ms. Fisher: Mike, can you tell us a little bit more about the system that you're referring to? I know that it hasn't been very long ago that you just went live on that system and then, also, embellish about the modernization plan related to the integration of all the financial systems, if you would.
Mr. Smokovich: Right, I was hired 23 months ago to basically do two things: To acquire and implement an accounting system and to develop a plan for the ultimate role out of that system and the integration of all of our systems in USAID. And we had some fairly finite objectives. One of the things we wanted to do was have an acquisition that we could accomplish within a very short time, namely, by September 30 of 1999. So that was a major objective.
And we needed to have a plan and we worked on the plan of the acquisition simultaneously. The plan was almost as important, if not more important, than the accounting system's implementation. Because it gave us the opportunity to set, not the CFO priorities, but the agency's priorities to invest in and fix our accounting systems both in Washington and across the world to do the same thing with our procurement systems, and to lay out the priorities for investments we needed for our telecommunications and computing systems. So there was the process of setting these priorities and then moving along fairly rapidly on the implementation.
We've been successful in getting a plan established. We continue to work on that plan and we've been successful in the implementation process of getting the acquisition out the door and having it done without protest and having it done timely and getting a system implemented. So, it's been a fairly finite schedule and set of priorities that we've managed these past 23 months.
Mr. Lawrence: I understand that the strategic vision for this implementation incorporated several best practices in financial management. What are these practices and how did you adopt them?
Mr. Smokovich: One of the best practices was to read and follow and believe in all the guidance that the CFO council and the central agencies have developed, which is to acquire an off-the-shelf system and to implement an off-the-shelf system. Now, typically, what most agencies will do is they will buy an off-the-shelf product and then they will develop their plans to customize it.
We had a different plan. We're going to buy an off-the-shelf system and we were going to make zero changes to that system. That was key to our strategy and that is the best practice. I would recommend to everyone that as an agency or as a management team you keep it at zero. If you can't keep it at zero, keep it in the single or double digits at worst.
The other thing we did is to really look to our users both in the acquisition and the implementation process. We spent a lot of effort on defining our requirements very precisely and very finitely. That helped us in the acquisition because both we and the vendors understood what we were buying and that enabled us to essentially have numerous understandings and avoid protest, which can be troublesome and mean automatic delays in schedule.
The other thing that allowed us to do with our users and our developers is to schedule the developmental process very tightly from a developmental perspective and in terms of working users that when we had a certain developmental phase completed, they could check in and check out fairly quickly. We spent a lot of time with users in bringing them on-board. And this comes down to the negotiation process.
In USAID, we have many offices and they all have diverse needs. One of the issues in the agency was standardized reporting. We spent a lot of time with the management team both policy people and program people deciding that we would have a standard account coding structure down to a point. But then that we would let our operating units define their business needs and processes and we would accommodate those. That created a lot of work for everybody, but it also bought us loyalty and buy-in and confidence and pride in the result.
And for example, in working on our data migration process, defining the types of data that would go into the system and working to have people understand their needs and the system's capabilities. We worked with, I believe it was 26 or 29 distinct units who had a different cut or a different spin on the product. But the result was that those people owned that data and when it came to migrating our data, nearly 100 percent of that data migrated, which is very unusual in the federal environment.
Ms. Fisher: In addition to all of the work around the systems, I understand that you recently released results of a benchmarking study. What were the findings in that study and how do you think that those findings will help aid you in the financial management tasks ahead?
Mr. Smokovich: Well, the benchmarking study was something that I thought we needed to do when I walked in the door 23 months ago because we appear to be short-staffed in many cases. The agency has gone through a lot of downsizing, so our performance was a mystery in some respects. And I was not used to that. At Treasury, I either had operating units, and I had been an operating manager and I knew what I could produce and couldn't produce, so we got into the benchmark to kind of benchmark and validate and verify what we were doing. The benchmark helped validate some of our ideas and priorities in the modernization plan. We need to invest systems more, we need to train and educate people more, and we have opportunities for achieving cost benefits, both in Washington and in the missions. So, we've let all of our people in Washington and in the missions get involved in using the data to target improvement initiatives.
Mr. Lawrence: We'll be back in a few minutes with more of the Business of Government Hour, and our conversation with Mike Smokovich of the USAID. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and tonight's conversation is with Mike Smokovich, Chief Financial Officer of the U.S. Agency for International Development. And joining me is Patty Fisher, another PWC partner.
Well, Mike, we came to a short end of that last segment, so let me double back. What I found interesting in that last segment was that you talked about benchmarking, measurement and also implementing new financial systems successfully. Two things that many people don't try or can't do and so I'm curious, how were you able to do this?
Mr. Smokovich: In our case, it was fairly easy because in terms of the accounting system, we didn't have a lot of choices. AID's needed an accounting system for more than a decade, and when we got our management team to make this the first priority, it became relatively easy. We then had to look to ourselves. And we said, "how do we support that priority?" We didn't have a lot of people, so we simply took our best and brightest and that meant our number one and number two managers from our operating units and from our systems organization and from our CIO organization. So we had a fairly tight team. We also knew that we couldn't manage it all ourselves, so we used a public accounting firm. We used the vendor for our accounting system and we used our integrator to build a team of people who would focus on getting the system implemented.
The other consideration we had was that this was not a small effort for us or for anyone and we looked at it from a risk-management perspective. The objective was to get operational in Washington and we developed a strategy that would allow us to do that by saying, "okay, how do you make Washington operational?" And the way you make Washington operational is to turn the vendor�s product on.
And part of that strategy was to delay some of the automated interfaces. And so, and in a short- run, you can live with manual interfaces. You can get things done that way. So we made those kinds of decisions looking at the team, looking at our skills, our strengths and weaknesses and say, no changes to the software, stick to the schedule, make decisions. A lot of these projects get off schedule because the vendor and the government cannot make a decision in a timely way and the clock turns. So, some of those types of things are what enabled us to take on the accounting thing.
In terms of some of the measurement issues, we know that we process a lot of transactions, both on the accounting side and on the procurement side and we're looking for ways to really improve our practices. And one of the things we said, "if we can engage people and provide them with information about the results of their business practices today, we can engage our whole work force, begin to manage the change process, and to also begin to look forward to implementing the systems."
You know, one of the things that motivates us right now in that way is that part of our plan involves implementing the system in Cairo and San Salvador. So, we spent time there building energy both in Washington and in the field to the challenge of making a system operational in Washington. I know measuring scares some people, but in the CFO business, in particular, if you don't know what you're doing and don't know where your opportunities are, you can't defend your organization and you can't fine tune it. So we've used these things, I think, in very, very positive ways to engage the work force.
Ms. Fisher: Mike, it was in 1990 that Congress created the CFO position within the government, but you've been involved in financial management for much longer than that. How has the field changed over your 30 years and what has been the impact of that Act, the CFO Act?
Mr. Smokovich: Well, the field's changed in this way. Twenty years ago, for example, we wouldn't be doing this show. The visibility for CFOs has increased dramatically. The CFO community whether the CFO was called a controller or whether the CFO was called an assistant secretary for management in the old days, the community worked very hard to get visibility. Well, we've gained visibility.
The other thing that's occurred, and it's just not in the government, it's across the world is that there's been a tremendous increase in the demand for accountability. How many CFO types or program types or CIO types talk to you without raising the issue of accountability?
The other thing is performance, with the changes in the ways services are delivered, people expect more. So, I think CFOs are more visible from a management perspective and they're certainly more visible from an operational or service perspective. These are the changes that, I think, all of us are dealing with and that we're all challenged by. And they're going to continue to be a challenge.
Mr. Lawrence: What skills are needed to be a federal CFO?
Mr. Smokovich: Well, if you look in the organization chart or in a textbook, every CFO is going to have to have some credentials for accounting, budgeting, credit-debt management. Those are the skills that all the people in these jobs bring to the job from their set of experiences. But the real issue, I think, today for CFOs is understanding how business works and understanding how systems work.
If you're a CFO of an agency, just as in the case of the private sector, you have to understand what generates your revenue. In our case, it's mostly appropriations, but it can be enterprise funds, too, where you're actually conducting business day-to-day with people and earning a revenue stream. So, those things are fundamental. Understanding the business, understanding systems, but more understanding the changes that are needed today, that's what, I think, any CFO has to bring to the table for the next five- to-ten years.
Ms. Fisher: You just mentioned one example of how a private-sector CFO might look at financial information that differs from a federal CFO. Are there other job differences between the public sector and the private sector CFOs?
Mr. Smokovich: I think there are some, but really I don't think there are that many. In fact, I looked at a magazine called "CFO," and it's oriented toward private-sector CFOs. And if you look in this month's issue or last month's issue and you look at rating or managing effective CFOs, all the issues look the same: managing revenue stream, managing working capital. You might say in the government, "well, what is the government's working capital?" Well, we just obtained a working capital fund from the Congress, which will allow us to run more of our operations in a businesslike way.
We just spent a year, going back and mining and reviewing our unliquidated obligations and we were able to basically take funds that were tied up in stale accounting and budget information and turn that into budget authority that can be used in our programs. These are the types of things that a CFO in a private-sector organization would do, the business of managing investments. Every CFO's involved in managing investments in one way or another. In structuring deals, every CFO in the private sector is involved in structuring deals. Federal agencies don't work in isolation, they work with contractors or vendors, they work with other governments or other agencies, and memoranda-of-understanding or deals are always being formed. So, I think, when you try to compare the two there, I think there are more similarities than not.
Mr. Lawrence: You are also a member of the CFO Council. What's the council and what does it do?
Mr. Smokovich: The CFO Council is composed of all the statutory CFOs and, in recent years, the deputy CFOs, which has been a good thing. The CFO Council develops a five-year plan in cooperation with OMB. It's been a place where CFOs can come together to share experiences, good and bad. The Council has been effective in working with the central agencies in this way. Many times a standard or law is proposed for implementation but it's the CFO community that has to actually implement the process. In the Council, we come together and we work on issues to improve systems or improve processes. We spend a lot of time trying to help ourselves in the recruitment and training and education area. So, it's those types of things the Council tends to try to make implementation effective and try to make CFOs more effective as a group of people.
Mr. Lawrence: It's time for a break. We'll be right back with more of the Business of Government Hour, and our conversation with Mike Smokovich of the USAID. (Intermission)
Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and tonight's conversation is with Mike Smokovich, Chief Financial Officer, U.S. Agency for International Development. And joining me in our conversation is Patty Fisher, also a PWC partner.
Ms. Fisher: Recently, Mike, the CFO Council issued the statement on the twenty-first century CFO. Can you tell us about this statement?
Mr. Smokovich: Yes, there was some interesting process involved here. The Act's been in place, the CFO Act's been in place for ten years, and what we did is to go back and look at the results and the implementation of the Act and to look at the CFO community at large. And a number of focus groups were established. The document that you're talking about here, is a result of CFOs talking to CFOs and considering what we've accomplished and what we haven't accomplished.
CFOs are visible today, they have accountability, they have responsibility and, clearly, that's one of the things that CFOs need to have in the future. I think all of us are aware that there's a great change going on in the way we conduct business. A CFO cannot be successful today, nor can an organization be successful today, if we continue to think of our business processes as a collection of organizational boxes that really separate us. I think the issue of how CFOs will help organizations change in the new economy is one of the things that's highlighted in this document.
The other issue we're all well aware of, is that it's not systems that solve problems, it's people do and the CFOs, in particular, have a lot of competition for a quality work force. We need to train people, we need to educate people and we need to acquire and retain people who can deal with the new business processes.
The report also talks about compensation. I mean, it's a fact, if you're working in the federal government, you're not going to make the salary that you might have in the private sector. But still, CFOs are at risk in the sense that they, today, are challenged to take on issues that require performance and part of the thesis of the document is that CFOs ought to be compensated based on performance. And it's something that, I think, is a point that needs to be made. But I think, fundamentally, what is done with the document is to pose to all of us, both those of us who are in the career community and in the new administration to ask the question, what is the proper role for the CFO and how can CFOs and other officials help make the government a better operating in-service organization.
Mr. Lawrence: We hear a lot these days about the forthcoming retirement wave of federal employees. How has this impacted your office?
Mr. Smokovich: It is a really big issue that every organization has. I will be 58 on my next birthday, which comes in March. I did not help the average age at AID. But our foreign service are 49 years old, or Civil Service are 47 years old and we have an aging work force. The other issue that we have in the work force is that because of the downsizing of government, there just are not many people in the pipeline.
And so the lack of a pipeline is an issue and, again, because the way we have to conduct business, both in the present and more so in the future has changed. We'd have to acquire people with different skills. And the whole CFO Council and CFO community is heaving invested in this, but if, without the right people, we're hard pressed to provide the right services.
Ms. Fisher: What do you think the government should do to attract more young people to public service?
Mr. Smokovich: One of the things we can do, and we've worked on this in USAID because it's very expensive to hire people, but it's more expensive not to hire them. If, particularly when you think you might have hired them and this has to do with expectations. One of the things we can do in organizations is recruit people based on what we believe their career will be. There are many jobs in government. There are many jobs in industry, but the way you attract people is to convince them that you're a good place to work, but then sell them on a future. And I believe if we can break down some of the barriers that relate to time-in-grade, for example. People should not be promoted based on how long they've been in the organization, they should be based on how well they're performing. And that's what happens in the private sector. And CFOs in particular.
And the document we were talking about a moment ago makes this an issue. If we cannot attract and retain and reward people based on a CFO's management assessment of the priorities and performance of the types of people we need in the organization, we're going to lose out, not to industry, but we're just going to lose because we will not be able to retain the people.
Mr. Lawrence: What types of skills and knowledge will this future federal financial and management work force need?
Mr. Smokovich: The future work force has to be able to communicate. Being an accountant or a computer technician is not sufficient, being trained in a particular skill. We need to hire people who communicate and can understand how business is conducted. The business model that we're looking at today relates to buying products or services so that you can deliver your products or services and managing the internalities and the externalities. If we can't communicate with our customer, our supplier, our stakeholders or our regulators in effective ways, we won't get the job done. So, I think, understanding the business of government is probably the most important thing we have to work on with all these people.
Mr. Lawrence: What other challenges do you think the future CFOs will face?
Mr. Smokovich: I think the biggest challenge is having to deal with the fact that business has changed dramatically in the past decade. The PC was something that was not common in the work place, even in many computing firms. The Internet was not here, and those things are ubiquitous now and we're all pressed to transform the way we do business. Well, unfortunately, we haven't hired a lot of people who are conversant with those technologies and those business processes. So, I think for the next few years, CFOs are going to be really challenged to get people on to be able to deal with these business issues.
Ms. Fisher: What advice would you give a young person considering government service in the area of financial management?
Mr. Smokovich: If you want to come to work for government, and I do recommend it, been at it for 36 years, I believe you need to have a personal plan. You need to to know what your priorities are. The first thing you want, obviously, is a job, but you need to have a plan for what you want to have happen in a three-to-five-year time frame. Do you want to be a manager? Do you want to be a staff person? Do you want to be a negotiator? Do you want to have your career and/or mature in your technical line, or do you want to aspire to be a general manager, so to speak?
And you have to have that contract with yourself. And when you're interviewing for jobs in government, I think that's going to be part of the interview and if you interview the right agencies and you get that handshake, I think you'll find a career in government that will satisfy your job interest and your career interest.
Mr. Lawrence: We've talked a lot about technology in our time together today, and, I'm just curious, what's the role of technology in the work of the CFO?
Mr. Smokovich: Technology enables a CFO in an organization to get work done. Without technology, you can't process your transactions. Without technology, you don't have productivity. But, more importantly, for the CFO and for all managers now, you don't have good technology, you don't have good information and that means you don't know what's happening.
Very few operations can rely on a monthly report. Most of us have issues that involve success or failure every day. The more informed we are about those successes and failures, the better we can manage.
Mr. Lawrence: Well, it's a good stopping point, Mike. Patty and I want to thank you for spending time with us today. It's been an excellent conversation.
This has been the Business of Government Hour, featuring a conversation on management with Mike Smokovich, Chief Financial Officer of the U.S. Agency for International Development. To learn more about the Endowment's programs and research into new approaches to improving government effectiveness, visit us on the web at www.endowment.pwcglobal.com. See you next week.