Shedding Light

Annual reports must include the bad with the good to be effective.

Transparency, or telling it like it is should be incentive enough for executives, analysts and program managers to take performance measurement and results seriously. But achieving transparency is not as easy as it sounds. Clear communication can be bought or taught. Exposing weakness is far more difficult.

No one likes to admit failure-especially in their organization's annual report. If managers and their staff believe executives want nothing more than to declare victory, then they will dodge accountability for clear, measurable achievements.

The foundation of effective performance management is commitment by the chief executive to honest, fair and accurate self-assessment. This leadership gives agency heads and program managers not just a fighting chance but a mandate to establish a policy of transparency-and to enforce it.

Political appointees inherit people, organizational structures and processes that must be carefully steered toward new policy objectives. Successful strategies identify fixed elements and degrees of freedom, and optimize both. In 2001, the Labor Department had a solid goal structure, but it contained too many objectives, some of which were vague. Since then, the agency cut in half the number of performance goals and the ones remaining are outcome-oriented.

Labor's Performance and Accountability Report has improved by 40 percent on the George Mason University Mercatus Center's annual score card of agency reports. Labor's report ranked No. 1 for the past three years among two dozen federal agencies rated by Mercatus, and it earned a certificate of excellence from the Association of Government Accountants for the last five.

The secret: transparency.

The PAR, mandated by the 1993 Government Performance and Results Act, is meant to improve effectiveness by informing decision-makers of the consequences of budgetary and management choices. Because it is a feedback mechanism, its quality affects agency performance. If strategic management is not evident in the report, then it is either absent or hidden-and there is no reason to hide good practices.

A good report involves much more than clear, outcome-oriented goals and measures, but it is impossible to produce a good report without them. At Labor, programs create and own their goals. At the departmental level, officials monitor quality and consult with agencies on performance so their proposed goals, indicators, targets, claims and analyses are challenged on all fronts for relevance, clarity, consistency and ambitiousness.

When those accountable for producing results also are accountable for setting goals and reporting progress-and that report is under a bright light-other pieces fall in place.

The Labor Department puts a premium on informing the public about its efforts to benefit America's workforce. "The Department of Labor is proud to have the Mercatus Center recognize us for the third year in a row as the top federal agency in communicating to the public how we utilize taxpayers' dollars," says Labor Secretary Elaine L. Chao. "The scoring regimen raises the bar every year, so being a repeat winner is a great distinction."

According to President Bush, "Government likes to begin things. . . . But good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. Not just making promises, but making good on promises." The Labor Department is making good on its promises-through transparency.