Report says communication hallmark of successful agency reorganizations

Successful mergers of government agencies require a new organizational culture, extensive communication with stakeholders, swift implementation and time for adjustment, a new report says.

During the past few years, several federal agencies have undergone major reorganizations, including the 22 agencies merged to create the Homeland Security Department in November 2002.

When the HSD reorganization was first proposed in June 2002, advocates said the government needed to consolidate homeland security operations currently spread among numerous agencies. In the following months Congress and the Bush administration debated how best to align the agencies in the department, as well as tie together agencies' separate data infrastructure and personnel systems. Much of this work is still going on, with Homeland Security Secretary Tom Ridge and Office of Personnel Management Director Kay Coles James currently collaborating with the major federal employee unions to develop a personnel system for the new department.

So while some of the work is done, Homeland Security officials still have a daunting job before them, according to Making Public Sector Mergers Work: Lessons Learned, a new report from the IBM Center for the Business of Government. "Newly merged agencies must quickly demonstrate that they perform services more efficiently and effectively than before the merger," writes Peter Frumkin, the report's author. "Demonstrating this department's competence and viability is a great challenge because success must be defined negatively, as a lack of successful terrorist attacks."

Previous government agency reorganizations have taken lots of time, cost lots of money and often did not result in better-run programs. For example, when the Energy Department was created in 1977, the legislation authorizing the department created a large staff of deputy secretaries to help the Energy secretary take control of the new department. However, those deputies acted as a barrier between agencies and the secretary, making it hard for officials in the field to gain top-level support.

To prevent that type of breakdown in communication, Frumkin recommends that department officials with an eye toward consolidation address four factors in the merger process: deciding to merge, planning the merger, implementing the merger, and following up on the merger.

Not all public agencies with overlapping responsibilities are ripe for merger or consolidation," writes Frumkin, who is an associate professor of public policy at Harvard University's John F. Kennedy School of Government. "In selecting agencies for a merger, managers need to consider not just the possible short-term cost savings but also the 'fit' of the agencies in terms of culture and competencies."

Unlike mergers in the private sector, federal agencies can't just be shut down in order to save money or because they perform poorly. As such, agency officials and Congress should consult closely with stakeholders-unions, employees and constituents-before making a decision to merge agencies.

Merger plans must also be discussed extensively with stakeholders, according to Frumkin.

"It is critical for leaders to communicate early and openly with all affected parties, to answer questions and concerns, and to find a way to counter the defensiveness and resistance that can sometimes accompany an attempt to create change," Frumkin says. "Managers should focus on explaining new processes and structures to employees through multiple forms of internal marketing."

Agency mergers should also happen quickly, Frumkin says, to build momentum to stabilize as quickly as possible. "Delaying the implementation of structural and symbolic measures may leave the merger vulnerable to criticism and political opposition," the scholar writes. P> But swift implementation does not remove the need for long-term oversight, Frumkin says. "Adjustments and adaptations are almost always needed once the first wave of change has settled and it is possible to see the new organization clearly," he writes. "The initial merger schema may have to be altered or rewritten altogether after assessing the new agency's performance."

In the future, agency heads will be able to look at the Homeland Security merger and use those lessons as a blueprint for potential agency mergers, Frumkin says.