If you were its commissioner, what is the one thing you would do to improve the efficiency and effectiveness of the US Internal Revenue Service?
—Ned Nazzaro, Washington, DC
Simple—we would install differentiation. And we predict that within five years, if not sooner, subsequent radical changes in the agency’s people management system would catapult the IRS into a new, supercharged league of productivity and results. Agents would be energized to work faster and smarter and new ideas for process improvements would begin flowing across the agency.
(Malay Karmakar/ Mint)
More than 100 million customers—virtually every adult tax-paying American—would feel the positive impact. Too bad it is impossible: not because the IRS is a special case by any means but because it is like every other government agency from the post office to the department of motor vehicles and—perhaps most disheartening of all—the public schools system. Because of these agencies’ lifetime job security, managers have few mechanisms to reward great performance and employees have very little reason to do anything more effectively or efficiently.
Indeed, all they really need to do is show up every day and, well, not screw up. With its 115,000 employees, the IRS, like so many public organizations, undoubtedly has thousands of self-motivated, change-hungry civil servants in its ranks. You, for instance, care passionately enough about the agency’s performance to ask your question. But unfortunately, the prevalence of organized labour thwarts public agencies from making change, except around the edges.
An IRS commissioner could, for instance, lobby for new technology funding to further streamline online filing. Or, he might find a way around union rules to encourage and celebrate noteworthy individual performance with customer service awards. But beyond such modest suggestions, we cannot really answer your question. The fact is, our approach to management with differentiation at its foundation is not unlike the approach used to field the best sports teams.
It cannot work unless managers can reward the best players, so they are motivated to stay with the organization, coach middle-level performers and move out underperformers. Sure, some pieces of our management approach can translate to the IRS: The agency could develop a clear and meaningful mission and link it to gritty, actionable values. It could also adopt our principle of candour in all communications and ensure that all employees have their voices heard with dignity and respect.
But none of our principles can transform an organization without differentiation as an “enforcement” device. Say, for instance, the IRS was to announce a mission of making taxation a faster and less painful experience. What values (and therefore behaviour) would it then seek from its employees? We can only guess but it seems reasonable that rapid response and extreme courtesy would be included on the list. Great, but then what? If managers cannot reward employees for demonstrating courtesy and speed and they cannot move out those who do not, missions and values become like laws in a country without police.
The same is true for candour. Without a reward for it why would anybody in the IRS, or any workplace for that matter, muster up the courage to speak frankly? Without differentiation, in other words, our whole system is pretty useless. (You can read a complete description of our management philosophy on our new website www.welchway.com
Sorry to offer you such a frustrating response but we are frustrated too. Not a week goes by when we are not asked a question like yours about improving performance or creating change in a government setting. Usually we write a personal note of apology—not our area—and leave it at that. But we answered you because the IRS touches so many people and because we fear that its inability to change due to lack of differentiation may soon become a much wider problem. Why? The answer is the Employee Free Choice Act, proposed legislation that aims to remove the secret ballot from organized labour elections. In 2006, the last time the Act was politically alive, it passed the House but stalled in the Senate. But come January, a new configuration on Capitol Hill could very likely turn such a stall into “full steam ahead”.
If so, companies large and small could soon face widespread unionization efforts. And soon, they might also face the very limitations that already constrain your own employer. The IRS’ hobbling lack of differentiation would no longer be the exception: It would be the rule.
©2008/BY NYT SYNDICATE
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