Stier: Federal Consolidation Comes With Risks

Posted April 3, 2011 at 11:40am

At the recent Gridiron roast for politicians and journalists, Health and Human Services Secretary Kathleen Sebelius jokingly suggested moving the Transportation Security Administration into her department. Such a merger, she deadpanned, would allow airline passengers to obtain “a boarding pass and a colonoscopy at the same time.”

A more reasonable but just as tricky consolidation is now in the midst of a 90-day review by the Obama administration. It would potentially combine 12 separate federal trade and export agencies into a newly constituted Commerce Department, while sending unrelated units to other parts of the government.

As President Barack Obama and his advisers consider this option and possibly a broader reorganization with the worthy goals of making the U.S. more competitive and our government more efficient, they should be mindful of some of the lessons from the recent creation of two government entities — the Department of Homeland Security in 2002 and the Office of the Director of National Intelligence in 2004. Both shed light on difficulties that are likely to occur.

We know from experience that it is easy to create new organizational flow charts and titles. But the hard work requires unifying managers, employees and very different cultures into a common mission; integrating financial, human resources and technology systems; and reshaping relationships with important stakeholders that include Congress and private sector interests.

Successful reorganizations also require a sustained commitment over many years, an upfront expenditure of money even during these tough budgetary times and strong leadership.

Study after study has shown that the vast majority of business mergers fail to achieve the desired results or add value, and government reorganizations certainly come with their own special set of challenges.

If the president decides to move forward, he should:

• Be sure that all stakeholders know exactly what is supposed to be accomplished, how it will be done, what kind of culture is envisioned and how success will be measured. Four years after the new intelligence structure was created under the ODNI, the inspector general said employees still did not have a clear sense of mission, were confused about the lines of authority and felt the responsibilities of different intelligence agencies overlapped.

• Recruit a highly qualified and well-resourced management team for a lengthy transition period to get things up and running, to lay the groundwork for the long term and to fully engage employees in the process. The DHS has had countless politically appointed managers with short tenures, resulting in instability, a lack of continuity and a high level of employee dissatisfaction. The Government Accountability Office recently reported that the DHS still has “not yet fully addressed its transformation, management, and mission challenges.” Such troubles could be avoided by naming a career chief operating officer and other management executives with fixed terms to oversee crucial operations of a newly constituted organization.

• Urge Congress to consolidate its oversight responsibilities. Officials at the DHS now report to more than 80 committees and subcommittees ­— hardly a recipe for clear communication and accountability. Aside from the time this consumes, former DHS Secretary Michael Chertoff said, “most people miss the biggest problem. And that is that the direction you get from the committees tends to be inconsistent.” Congress needs to vest responsibilities in a smaller number of committees and subcommittees.

• Be mindful that many of the merged agencies will have secondary missions that are important. The Federal Emergency Management Agency’s natural disaster response got lost inside a DHS that was focused on terrorism, and New Orleans paid the price during Hurricane Katrina.

• Avoid declaring victory after the merger. The administration will have to keep a steady eye and a prolonged commitment to make sure the reorganization works from a policy and management standpoint.

No one can dispute that the structure and functions of many federal agencies need reform. And the president’s desire to make America more competitive, reduce inefficiencies and maximize the return on taxpayer dollars are all laudable goals and a priority for Jeffrey Zients, the administration’s highly capable point man on reorganization.

But transforming government agencies is extremely disruptive, consumes enormous energy, diverts attention from other priorities and requires far more than simply revising organizational diagrams. When government fails or is inefficient, it typically has little to do with how an agency is organized and almost everything to do with the quality of the people, and the performance, commitment and management skills of senior leaders.

Max Stier is president and CEO of the nonprofit, nonpartisan Partnership for Public Service.