Reinventing Government: Especially the U.S. Internal Revenue Service Bob Stone ([email protected])
Sponsored by KalDer
Ankara, April 3, 2006
Copyright © 2006 by The Public Strategies Group, Inc.
Origins of Reinvention
Clinton 1992 campaign promise followed:
Quality movement in business ~1980
In Search of Excellence 1982
Isolated government efforts mid-1980s
Broad reform in New Zealand, Australia, UK in late 1980s
Reinventing Government 1992
What Needed to Change
Crazy regulations (thermostats)
Impossible procurement (radios)
Can’t hire, promote, or fire
Washington knows best
How to Change Government
1. Have a simple uplifting message that you repeat over and over
2. Find and reward people who are doing what you want
3. Don’t waste a minute on waste, fraud, and abuse
The National Performance ReviewClinton-Gore reform to restore trust in government by making it work better and cost less
Put customers first
Empower employees to get results
Cut red tape
NPR Phase 1: Report
Six-month effortStaff of 300 civil servants at White House,
plus teams in every agency1200 recommendations to President,
cutting 252,000 people and $108 billionPresident approved everything
NPR Phase 2: Setting 66,000 Fires and Fanning the Flames
“Find and reward people who are doing what you want.”
Hammer awards helped us find 66,000 people to reward
Created lots of internal and external publicity
Often intervened to protect reinvention and reinventors
People Doing What We Want U.S.Customs was getting amazing results in
Miami:Compliance increasingWaiting lines goneImporters happy
Lynn Gordon’s “Compliance Model”–Assume most “customers” are honest–Help those who want to comply–Go after those who don’t
We tried to spread this model to all regulatory and enforcement agencies
Showing off the Compliance Model to Business
• Customs• OSHA’s (Worker Safety) Maine 200• Food and Drug Admin in Missouri• Environmental Protection Agency’s 33/50
Program
Business reaction: IRS! IRS! IRS!
IRS in 1994• More customers, lower customer satisfaction
than any organization in America• Unhappiest workers in government• No sense of “customers”, rather “tax
evaders”• Long tradition of tax lawyers in top job• “World’s best tax collector”
First Steps• Customer Service Task Force• Hire successful business leader• Meetings with taxpayer reps (the
“IRS..IRS..IRS people”• Problem-solving days• Better telephone hours
Meanwhile, Congressional hearings inflame nation and sharpen appetite for reform
Rossotti’s New Mission Statement for IRS
“Provide America’s taxpayers top quality service by
•helping them understand and meet their tax responsibilities and by
•applying the tax law with integrity and fairness to all.”
Note: No mention of collection or enforcement.
Guiding Principles• Understand and solve problems from
taxpayer’s point of view• Enable managers to be accountable • Use balanced measures of performance• Foster open, honest communication• Insist on total integrity
Goals• Service to each taxpayer• Service to all taxpayers• Productivity through a quality work
environment
Taxpayers as Customers?
• “We’re making it easy for deadbeats to get away with not paying.”
• “Taxpayers are adversaries who are out to pay as little as possible.”
• “We can be a kinder, gentler IRS or an effective IRS that collects the taxes—but not both.”
Two Biggest Challenges to Transformation
• Convince honest taxpayers that the IRS was on their side
• Convince IRS workers that most taxpayers were not adversaries
Transformation of the IRS
Provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the
tax law with integrity and fairness to all
Guiding Principles Goals
Revamped Business Practices
Organize by
Customer Group
Balanced Measures of Performance
New Technology
Levers of Change
Old Organizational Structure
• Organized by work specialty• Did not allow IRS to meet differing
needs of taxpayers• Created unclear accountability
Wage & Investment
Income
Small Business &
Self-Employed
Large & Mid-size Business
Tax Exempt & Gov’t Entities
Filers 90 million 40 million 180,000 2 million
Average tax liability per filer
$3000 $17,000 $2 million $40,000
IRS transactionsper filer
1-4 4-60 60+ 60+
Prepare own returns
60% 20% 0 0
IRS Workers 21,000 39,000 9,000 3,000
Taxpayer Characteristics
New Organizational Structure
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He adLM SB
Ta xp a ye r Ed& C o m m
C u s to m erAc c t S vc s
C o m pl i a n c e
He adS B/ SE
e tc
He adTxEx/ Go vEnt
e tc
He adW &I
Fi ve Oth e r s
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Key Benefits of Reorganization
• Clear accountability• Closer connection to taxpayers• Improved competence through
specialization
New Business Practices• Pre-filing emphasis on education and partnership• Greatly expanded use of e-services• Pro-active compliance actions• Improved coordination and use of 3rd party
information• Single point of contact• Ombudsman--and many many others
Information Technology•Secure e-enabled environment•Security and privacy technical infrastructure•Analytical data warehouses•Data integration•Improved information exchange
Extraordinarily difficult task, bumpy road to completion, not done yet
Measuring Results“What you measure is what you get”
1998 law:IRS must change its measures:Balance customer service with overall tax administration responsibilities
Balanced Scorecards• Traditional ratings based on revenue• New ratings based on—
– Customer satisfaction– Employee satisfaction– Business results
--in equal parts
Balance is EssentialCustomer
Satisfaction• in specific transactions
• taxpayers perceptions andexpectations of the IRS?
EmployeeSatisfaction
• General level of satisfaction?
BusinessResults
• Perceived effectivenessof management?
•Are we providing the right working environment
• Quality•Assess/collect the proper tax?•Quality customer service?
• Quantity•Did we manage efficiently?
Measures from LMSBMeasures from LMSB
MeasureMeasure FY01FY01 FY02FY02 FY03FY03 FY04FY04
TargetTargetFY04FY04
ActualActualStatusStatus
% Employee % Employee SatisfactionSatisfaction
5353 5757 6262 6565 6868 GreenGreen
% Customer % Customer SatisfactionSatisfaction
8181 8585 7777 8282 7676 YellowYellow
% Quality% Quality 8080 7878 8989 9090 8787 GreenGreen
Returns Returns ClosedClosed
37343734 48514851 45274527 29052905 39213921 GreenGreen
The Super Bowl Barrier
“We won the SUPER BOWL last year.
Why are you telling us we have to change???”
--Manager from Naval Sea Systems Command
The Super Bowl Barrier
Recent Winners2004: NE—first to repeat since Denver 98-992003: Tampa Bay goes 7-9 next year2002: New England goes 9-72001: Baltimore goes 10-6, loses in playoffs2000: St Louis goes 10-6, loses wild card
Winners can’t relax: only 8 of 39 winners repeated
Norms of Behavior
Organizations develop norms that support their survival.
If the norms are disregarded the organization disintegrates.
Where they are followed slavishly, as they were in the IRS, they ensure adherence to the status quo.
Some IRS Norms Tax lawyer as commissioner
Managers don’t talk to taxpayers
Revenue is the only goal
Office doors are closed
Communicate through the chain of command
Taxpayers are out to cheat us
“If you always do what you always did,
you’ll always get what you always got.”
--Saying from the quality movement
Why Rossotti Succeeded
• Gifted business leader• Had widely understood (and felt) mission and goals• Personally modeled behavior he wanted, smashing
norms as he did• First got organization chart right• Brought in a few from outside, mostly used IRS internal
reform leaders to lead transformation• Partnered with workers union, tax preparers, small
business representatives, and Congress• Totally committed to balanced scorecard at all levels
Further Reading• Many Unhappy Returns, by Charles Rossotti, 2005--
Amazon.com• Reinventing Service at the IRS, by Al Gore and Robert
Rubin--on line at http://govinfo.library.unt.edu/npr/library/reinvent-all.pdf
• Confessions of a Civil Servant: Lessons in Changing America’s Government and Military, by Bob Stone—Amazon.com
Or email me: [email protected]
NPR Phase 3: Changing Government Forever
Catalytic StrategiesConcentrate on the 32 agencies with greatest impact on AmericansManage all with balanced scorecard: customer satisfaction,
employee satisfaction, operational results
Spread e-Government: change government the way Amazon.com
changed bookselling
Some Operational Results
Cut injuries 20 percent in 50,000 hazardous workplaces
Restored hundreds of “brownfields” to economic reuse
www.recreation.gov
Sweeping transformation of IRS
Things NPR did wrong Not doing enough collaboration, teaching,
and acknowledgement
Not cutting headquarters, including some departments
Not reforming the personnel system (but we helped it get started)
Not following through to fix some major problems
Why Bush succeeded (where he succeeded)• Ideology sometimes reinforced reinvention—e.g.,
FDA, OSHA, EPA, BLM• Put gifted leader in charge (e.g., Powell)• Built on past success (e.g., electronic government)
Why Bush failed(where he failed)
• The MBA President: hands off—completely• More incompetents and ideologues than usual• No crazy fanatics for reform in White House• OMB responsible for reform leadership• Many devastating budget cuts (e.g., FEMA, Veterans
Administration, and Homeland Security!!)
Stone’s Universal TruthsFour ideas that apply in any culture• Workers know work better than managers
or politicians• Customers know what they want better
than anybody else• People are capable of things they (and
you) never dreamed of• Move fast
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