Improve Performance Through Strategic/Quality Mgmt

Improve Government Performance Through Strategic and Quality Management

Background

The "managing for results" approach builds on the Government Performance
and Results Act of 1993, which mandates strategic planning and
performance measurement in the federal government. It also builds on
recognized principles of strategic and quality management embodied in
the Presidential Award for Quality.(1) The President created the award
in 1988 to recognize federal organizations that, by implementing quality
management, created high- quality products and services and provided
best value for tax dollars. The award is intended to champion the
understanding of the value of quality management and encourage its
adoption throughout the federal government. The criteria for the award
serve as a valuable assessment tool for culture change.

Presidential Quality Award Criteria.

The Presidential Award criteria parallel the criteria used in the
prestigious Malcolm Baldrige Award--the national quality award for
top-performing private sector companies. However, its criteria reflect
the unique circumstances of the federal government. The award,
administered by the Federal Quality Institute (FQI), has seven criteria:

Leadership--requires the personal commitment and involvement of top
leaders and managers in creating and sustaining an organizational vision
and a customer focus. Leadership includes integrating vision, values,
and a customer focus into an organization's management system, labor
relations, and external partnerships and in the way it addresses its
public responsibilities.

Information and Analysis--requires an organization to have a data,
information, and analysis system to support improved customer
satisfaction, products, services, and processes.

Strategic Quality Planning--requires short-term (one to two years) and
longer-term (three or more years) plans containing (1) customer
requirements and expected changes in these requirements; (2)
organizational and individual capabilities to address key requirements
or technological opportunities; (3) capabilities of external suppliers;
(4) changes to work processes to improve performance; and (5)
productivity improvement and reduction of waste.  The criteria cover an
organization's planning process as well as the specifics of the plan
itself.

Human Resource Development and Management--requires an organization's
entire workforce to develop its full potential and pursue quality and
operational performance improvement goals. The criteria require building
and maintaining an environment conducive to staff involvement and
personal and organizational development.  Employee education and
training, employee performance and recognition systems, and employee
well-being and satisfaction are emphasized.

Management of Process Quality--requires an organization to use
systematic methods to continually improve quality and operational
performance. It includes the design and management of process quality
for all work units, the management of internal customer-supplier
relationships, supplier quality, and quality assessment.

Quality and Operational Results--tasks organizations with measuring and
continuously improving trends and quality levels for products and
services. In addition, measures are to be developed for internal
business processes and support services (e.g., procurement), and the
quality of goods and services provided by outside suppliers, such as
subcontractors. Data should be compared against competitors and
world-class standards (known as benchmarks or "best-in-class").

Customer Focus and Satisfaction--requires an organization to identify
external customer requirements, establish and maintain positive customer
relations, and continuously improve customer satisfaction. This
criterion also requires organizations to determine customer satisfaction
in terms of absolute levels as well as trends.

Strategic and quality management, as embodied in these seven criteria,
relies on their use as an integrated set of principles and systems. They
are guides to culture changes, not a technique or a program.

Quality Management Makes a Difference.

Achieving high levels of quality has become an increasingly important
element for success in a competitive environment. In recent years a
number of U.S. companies have found that they could not attain world-
class quality by using traditional approaches to managing the quality of
products and services. To enhance their competitive position, some
American companies have reappraised their traditional view of quality
and have adopted what is known as the quality management model in
running their businesses. At the same time, many companies have
continued to implement their quality management strategies and quite a
few have integrated quality management into their day-to-day
businesses.(2)

At the request of members of Congress, the General Accounting Office
(GAO), in 1991, examined the effects of quality management practices on
the performance of selected U.S companies. GAO concluded that companies
using quality management principles had better employee relations,
higher productivity, greater customer satisfaction, increased market
share, and improved profitability.(3)

A 1992 GAO study of quality management in the federal government
reported that 68 percent of federal agencies said they had started or
were starting to implement quality management.(4) While implementation
was wide, it was seen as shallow--only 13 percent of employees in those
agencies surveyed were involved in quality management. While most of
these efforts are in small subcomponents within agencies, a few have
been organizationwide, such as the Internal Revenue Service, the
Departments of the Navy, Air Force and Army, Defense Information Systems
Agency, the National Aeronautics and Space Administration, and the
National Security Agency. GAO found that those agencies with mature
efforts--three to five years old--had achieved significant increases in
customer satisfaction, organizational performance (productivity,
effectiveness, quality) and workforce excellence (improved employee
morale, greater skill levels, fewer grievances). These findings confirm
that cultural and systemic changes require a long-term effort, but that
the results can be significant. For example,

IRS Ogden Service Center. Action on recommendations from its quality
improvement teams improved customer service, effectiveness, and
productivity. It also resulted in savings of over $11 million.

Air Force Logistics Command. On-time delivery rate for contract line
items across the command rose from 65 percent in April 1988 to 76
percent in April 1989, and by March 1990 had improved to 79 percent.

Results such as these achieved by the early pioneers encouraged their
agencies to expand their efforts and spurred other federal organizations
to follow suit.

Need for Change

President Bill Clinton noted, "The American people deserve a government
that treats them like customers. Government must be accessible to those
it serves and to those who pay its bills. It must be responsive to
[their] concerns. It must be run efficiently and well with respect for
the tax dollars on which it depends. It must pay its way and live within
its means."(5)

Although documented figures are unavailable, the government's cost of
poor quality is probably at least as high as the 25 percent cost of poor
quality in the nation's service industries.(6) Americans are hardly
reticent when venting their frustration with the federal government.
They wonder, why can't the government answer requests in less than two
months or give correct information the first time? Why is mail
misdelivered, and why are names misspelled? Why can't government
employees be pleasant on the telephone and find someone else to answer
questions when they can't? Why can't a public servant correct the same
computer error that has occurred month after month?  Why can't a public
servant treat me like a customer?(7)

On the other hand, federal agencies now face severe, sustained budget
cuts, have fewer staff to serve more customers, enforce more regulation,
suffer tighter constraints on discretionary spending, and bear sharper
criticism from customers and a Congress that is itself getting bitter
complaints from constituents.(8)

Congress is doing its part to help. For example, the Government
Performance and Results Act of 1993, signed by President Clinton in
August 1993, requires all agencies to develop strategic plans, set
agreed-upon goals and objectives, and measure their progress toward
these goals and objectives. The Act also provides managers with
incentives and tools to focus on results and program outcomes.
Implementation of the Act is an important step toward systemic change in
the federal government's management culture. However, the Act by itself
cannot ensure that government will serve its customers. This means
agencies must build on the framework created in the Act to develop ways
to identify and meet their customers' needs and expectations, make
themselves customer-friendly, maintain excellent relationships with
their customer groups, and continually increase customer satisfaction.

Barriers to Culture Change.

Several barriers exist in changing the culture of government to focus on
management improvement. The major barrier, according to FQI, has
historically been the lack of a strong senior leadership intent on
achieving long-term results.(9) As a result, strategic and quality
management practices were often delegated to mid-level managers. In
addition, authoritarian and bureaucratic management styles have been an
additional barrier impeding a leaner, more participatory, quality
conscious organizational culture.

To change to a culture that emphasizes quality and results, there must
be wholehearted executive branch commitment. Top officials, starting
with the President, Vice President, and department and agency heads,
must understand, support, and lead the transformation in the federal
sector. Fortunately, there is already progress and momentum upon which
to build. However, continued visible leadership from the President and
his management team is essential. Recent participation by the executive
branch's top leadership in quality and productivity conferences, town
hall meetings, and recognition programs has already attracted the
attention of public servants and has sent a positive message of
commitment for change in the federal government.

Another barrier has been the lack of employee participation and
involvement. Research increasingly shows that employee involvement is
essential to achieve quality and productivity improvement.(10) If the
workforce is represented by one or more unions, top agency leaders
should consider involving unions in the strategic and quality management
effort from the outset. In addition, management should also consider
involving other employee groups, such as minority representation groups.

To date, there are two primary ways in which union and management have
chosen to deal with employee involvement when implementing quality and
productivity improvement efforts. Some have chosen to work
"cooperatively," where unions have membership on quality councils and
participate fully in planning, implementation, and evaluation of the
entire effort. Others have adopted the more "traditional" mode of
bargaining to have input on the impact and implementation actions
affecting unions. Either approach presents benefits and risks for both
management and labor. However, high- performing government agencies
found it was important to seek the early involvement of unions and make
the nature of their involvement as specific as possible.(11)

Fragmented Awards.

While not considered a significant barrier, the present quality
recognition efforts in the federal sector should be consolidated to
better focus on consistent criteria and to improve overall
administration and efficiency. Currently, three different organizations
are involved with the development, solicitation, and administration of
four governmentwide awards related to quality and productivity.

FQI administers the Presidential Award for Quality, which recognizes
organizations that have implemented quality management in an exemplary
manner and have achieved proven results in operational performance and
customer satisfaction. A public/private sector evaluation partnership is
used to select the winning organizations.  FQI also administers the
Quality Improvement Prototype Award, designed for organizations that
have recently successfully begun the quality transformation process.

The President's Council on Management Improvement (PCMI) administers the
Award for Management Excellence to recognize excellence by federal
employees, groups, or entire agencies.  Nominations are submitted by
PCMI members.

The Office of Personnel Management (OPM) administers the Presidential
Quality and Management Improvement Awards. This award is for tangible
benefits to the government of $250,000 or more, or significant
improvement in the quality of government services or products. It is
awarded to individuals or teams that have been recognized by their
individual agencies. It is currently inactive and awaiting a decision as
to whether or not it should be continued.

In addition to the four public sector awards given each year, the
Malcolm Baldrige National Quality Award recognizes private sector
organizations for their quality management efforts resulting in
significant improvement of operational performance and customer
satisfaction.(12) This award is the highest level of national
recognition for quality for privately or publicly owned businesses
located in the United States. It is administered by the Office of
Quality Programs, National Institute of Standards and Technology (NIST),
Department of Commerce.

Ideally, one set of federal quality awards would be given within the
federal government just as one set of national quality awards is awarded
in the private sector. Moreover, these two award systems should be
closely linked. However, this new award should not be seen as a
replacement for agency-level awards. Agencies should continue to
recognize and reward individuals and teams delivering quality products
and services to customers. Emphasis at the governmentwide level should
be on recognizing agency transformation and reinvention.

Cross References to Other NPR Accompanying Reports

Improving Customer Service, ICS01: Create Customer-Driven Programs in
All Departments and Agencies that Provide Services Directly to the
Public.

Mission-Driven, Results-Oriented Budgeting, BGT02: Effectively Implement
the Government Performance and Results Act of 1993.

Office of Personnel Management, OPM02: Redefine and Restructure OPM's
Functional Responsibilities to Foster a Customer Orientation; and OPM03:
Change the Culture of OPM to Empower Its Staff and Increase Its Customer
Orientation.

Reinventing Federal Procurement, PROC10: Ensure Customer Focus in
Procurement.

Reinventing Human Resource Management, HRM06: Clearly Define the
Objective of Training as the Improvement of Individual and
Organizational Performance; Make Training More Market Driven; and HRM13:
Form Labor-Management Partnerships for Success.

Streamlining Management Control, SMC01: Implement a Systems Design
Approach to Management Control.

Endnotes

1. Federal Quality Institute, Presidential Award for Quality:1994
Criteria (Washington, D.C.: Federal Quality Institute, June 1993).

2. Delta Consulting Group, Inc., Ten Years After: Learning About Total
Quality Management--A Study of CEOs and Corporate Quality Officers of
the Business Roundtable (New York: April 1993), p. 2.

3. U.S. General Accounting Office, Management Practices: U.S.  Companies
Improve Performance through Quality Efforts, GAO/NSIAD-91- 90
(Washington, D.C.: U.S. General Accounting Office [GAO], May 1991), p.
18.

4. See U.S. General Accounting Office, Quality Management: Survey of
Federal Organizations, GAO/GGD-93-9BR (Washington, D.C.: GAO, October
1992).

5. White House Press Office, A Vision of Change in America (February 17,
1993).

6. Ritter, Don, U.S. Congressman, "Needed: A National Commitment to a
Culture of Quality," Looking Ahead (Washington, D.C.: National Planning
Association, October 1992), p. 3.

7. Mizaur, Don G., "Is Quality Government Possible?" Looking Ahead
(Washington, D.C.: National Planning Association, October 1992).

8. Ibid.

9. Federal Quality Institute, Training Module 1: Overview (Washington,
D.C., August 1993).

10. Federal Quality Institute, Employee Involvement and Quality
Management in the Federal Government (Washington, D.C.: U.S.  Government
Printing Office, July 1993), p. 1.

11. Ibid., p. 47.

12. On August 20, 1987, President Reagan signed P.L. 100-107, the
Malcolm Baldrige National Quality Improvement Act. This law established
the Malcolm Baldrige National Quality Award, named for the former
Secretary of Commerce. The award is designed to recognize companies that
have successfully implemented total quality management systems.
Increasingly, companies view the criteria outlined in the Baldrige Award
application as useful diagnostic tools for evaluating the effectiveness
of their management practices. Corporate executives also see the process
of applying for the award as a way of improving their corporate
knowledge of quality management principles and practices.

13. Juran, Joseph M., Juran on Leadership for Quality (New York: Free
Press, 1989), pp. 43-45.

14. Federal Quality Institute, How to Get Started--Implementing Total
Quality Management (Washington, D.C.: U.S. Government Printing Office,
June 1993), p. 18.

15. Ibid.