Mint Condition

magine a federal organization that sells products to the public. It has a director who refers to it as "the company." It has a marketing department, glossy direct-mail catalogs and an online shopping operation. It gets no appropriations from Congress and doesn't follow government procurement rules. It makes a profit and is vulnerable to changes in the financial markets.

This unlikely creature is the United States Mint.

The Mint has been so thoroughly reinvented that it's barely recognizable as an executive branch agency. As a Government Performance and Results Act pilot agency, the Mint has revamped almost all of its administrative operations, from personnel to financial management. But it wants to go still further; recently, its leaders asked Congress for permission to become a "performance-based organization," in which it would get still more autonomy in managing its people and processes.

In addition to winning two awards for labor-management partnership from the National Partnership for Reinventing Government and four Hammer Awards from Vice President Al Gore, the Mint has for three years running scored the highest marks ever recorded for a government agency by the American Customer Satisfaction Index-a ranking of government agencies and U.S. companies conducted by the National Quality Research Center at the University of Michigan School of Business-and the second-highest mark overall, placing second only to Mercedes-Benz.

While many agencies struggle just to upgrade their computer systems, the Mint is replacing much of the basic machinery at its manufacturing plants, some of which dates back to the 1960s. It has won four clean audit reports while some other agencies haven't even been able to get their books in auditable shape. And last year the Mint turned over a profit of $456 million to the Treasury.

Though he concedes that the Mint has some advantages over other government agencies in reinventing itself, Mint director Philip Diehl says other agencies also have the ability to change. "It's easy to dismiss what we've done because we're so different-that we create a profit, that we have a real product, we have real customers who are either happy or unhappy and you can measure it," he says. "All of that is true but irrelevant. What we have done here is doable in any government agency."

Diehl says he's glad his 2,200-employee agency is small enough "that you can actually see the organization culture change on a human-scale time frame," and admits that's tougher to do at bigger agencies. "But the approaches are the same," he says. "You've got to mobilize the vision of the executive leadership of the organization and plug it into the people who work in the agency. You don't have to mobilize 100 percent of the employees. All organizations that move are moved by probably a core of 10 percent who have a vision and a shared point of view.

"Then it takes something that government agencies are not really very good at, and that is strategic planning. In some quarters, there's an assumption that you put together a strategic plan and you come back and revisit it in five years. That plan is dead on arrival. The thing that's changed the most is us-our ability to strategically plan and to engage our abilities."

One main focus of the agency's strategic plan is customer service. The Mint has one very big customer-the Federal Reserve system, which buys up to 20 billion coins each year for circulation-and several million smaller customers, the collectors and investors who buy commemorative, special issue and bullion coins and medals. While those individual buyers have always given the Mint high marks for quality, they traditionally rated it low in customer service, a shortcoming the agency made it a priority to correct.

All Eyes on the Goal

Another element of the strategic plan is greater cooperation between labor and management through a partnership arrangement that is designed to encourage employee input, resolve problems before they turn into formal complaints and involve the union in setting agency goals. The Mint was the first Treasury Department agency to set up a formal partnership, and both the Denver and the Philadelphia facilities were among six National Partnership Award winners in the first two years of that program. In the early 1990s, by contrast, the American Federation of Government Employees was picketing at the Mint to complain about its management.

"There have been a lot of exciting changes in involving our people in the mutual goal of making the Mint successful so that everybody has jobs and career opportunities in the future," says Terry Rosen, an AFGE labor relations specialist who has dealt extensively with Mint matters. "I've seen our folks-front-line workers, union representatives-go from being somewhat uncomfortable raising an issue dealing with the business side of the organization to now being enthusiastic participants in the discussion, raising ideas of how things could be done better.

"I think we've gone further, faster than other agencies, and probably the single most important thing is that the director really believes in this and union leadership really believes in this," Rosen says. "I'm not saying that everybody's holding hands and it's all sweetness and light. It's just that when problems and issues come up, everybody has their eye on the important goal, the organization being successful. People don't get bogged down as much either being trivial about problems or being obstructive and stonewalling solutions."

One change was encouraging employees to develop individual development plans and then providing career-progression training targeted to the goals of both the employee and the organization. That program was created after an organizational assessment survey revealed that employees believed the agency wasn't investing enough in them. Also, both management and labor saw that new equipment and new operating approaches will change the nature of many Mint jobs.

Employees initiate the process by contacting their supervisors, who work with them in developing and monitoring their progress. "The philosophy we came to, management and union together, was that we want to help those who want to help themselves," says Diehl, who has been Mint director since 1994. "The biggest way to waste training dollars is to spend them on someone who doesn't want to be there or isn't ready to learn. So we said, 'We're making a commitment as an organization that if you want an individual development plan you'll get one. But you've got to work for it. It's not easy. It's really kind of uncomfortable because it takes a frank assessment of your strengths and weaknesses and it takes the hard work of knowing where the organization is going and matching what you want to do in your career with what we want to do in this organization.' "

So far the response hasn't been especially strong, partly because employees are too busy to fit in classes and partly because supervisors are reluctant to release people during the work day for training. However, employees who request training almost always follow through with it. So far, 33 employees have individual development plans, of whom 27 are receiving tuition assistance for training deemed to be directly job-related. Under the program, the Mint will pay up to $3,000 a year for such training.

The Mint also has increased training of supervisors and union leaders and has taught employees how to use a new integrated information system. Overall, the agency's training budget has tripled in recent years to $1.5 million.

Shedding Strictures

But the Mint-which in 1995 eliminated five of its 10 politically appointed positions requiring Senate confirmation and converted four others to career status-believes that still more personnel changes are needed. Several years ago, management identified 36 personnel flexibilities that are available either through legislation or administrative action. The Mint is now using almost all of them, but top managers believe they need more. The Mint has to compete directly with the private sector for employees, especially in certain specialized jobs not common to government, such as metal work and plant management.

"We move faster than most government agencies, but we are constantly finding ourselves at a disadvantage because it takes us four months or six months to go through the process of hiring somebody," Diehl says. "They have three or four job offers from the private sector before we're even halfway through the process, and we lose good candidates because of that. We need to have the ability to much more flexibly define jobs. When circulating coin demand is up and demand [from coin collectors] is down, I need to be able to move people around in the production facilities. I need broad-banding and job definition flexibility."

The agency recently proposed legislation that would allow such freedoms by designating the Mint a performance-based organization. Under the proposal, the Treasury Department would continue to provide political control, but the Mint would have wider autonomy over its operations. For example, the agency would have more control over setting salaries, and would be able to offer employees promotions more quickly. PBO authority also would let the Mint tie the goals and objectives of the strategic plan to financial incentives for executives and other employees in the organization.

The PBO proposal is currently pending before Congress, which has yet to approve any of the Clinton administration's PBO requests. But if the Mint succeeds in getting PBO authority, it would be the culmination of a series of changes that have granted the agency freedom from many of the operating restrictions that apply to most executive branch agencies.

The agency has in recent years received a waiver from the Federal Acquisition Regulation-a change that required its acquisition employees to unlearn much of what they knew-and won conversion to revolving fund status, meaning it no longer gets annual appropriations from Congress. Those changes allowed the Mint to cut the time required for a major procurement from nine months to two months and to award contracts to metals suppliers in four days rather than 40. They've also let the agency embark on a $176 million, five-year program of capital improvements that had been deferred for years due to appropriations and contracting restrictions-a common lament even among agencies less capital-intensive than the Mint.

"I had to make a business case, first to Treasury and then more importantly to the Hill, that the return on investment is great and that it really is foolish not to invest in the capital infrastructure of the enterprise," Diehl says. "Also, we had to demonstrate that if we continued to fail to invest, we were threatening our mission. In peak seasons we were biting our fingernails. If we had one furnace go down or one other bottleneck, we were going to have coin shortages. We had to convince folks that we weren't crying wolf, that this was the real thing. But we also made the business case that there were big efficiency gains to be had."

Taking Coins Private?

While the future may hold still greater freedoms for the Mint, it also presents threats. The increased use of electronic payments could cut into the demand for circulating coins. The number of coin collectors is shrinking, and sales of collectibles and investment-grade coins decline when stock and bond markets do well, as they have recently. Proposals arise from time to time to eliminate pennies, which make up two-thirds of the Mint's output, and round prices to the nearest nickel. But more significant are suggestions that the Mint, which operates so much like a business already, should be turned into a government corporation like the Postal Service or simply be privatized.

The General Accounting Office last year researched how Canada, Germany, France, Italy, Japan and the United Kingdom handle the production of money. It found that while Canada and Germany use private companies to produce paper money, coin production is solely a government function in all six countries, except for some small-denomination coins in Japan.

GAO also found that while the U.S. Mint already relies heavily on contractors for functions such as the manufacture of coin blanks, training and telemarketing services, the Treasury Department has security concerns about further privatization. "Since the advantages and disadvantages of further contracting out have not been thoroughly studied, it is not clear whether savings would be achieved or whether the concerns raised by Treasury are valid or could be mitigated," GAO concluded.

Says Diehl: "The creation of legal tender is a constitutional function. It is as inherently governmental as it gets. I think it is appropriate that it is a government agency. I find there is significant value added to being a bureau of the Treasury Department. There is a legitimacy, there is authority that comes from that that I'd hate to give up."

A Brand You Can Trust

The agency has found the government status a benefit not only in negotiations with contractors but also in dealings with the coin-collecting public. Coin collectors tend to be white males over 50-not the group with the highest level of confidence in the federal government. Yet the "U.S. Mint" name has cachet with them.

"You will hear people say they don't trust the government but they do trust the Mint," says marketing director David Pickens. "We are involved almost on a daily basis in ensuring that we retain them and that we give them perceived value. If you look at our brand as the United States Mint, we've been in business a long time, and we probably have one of the finest brands in government."

Very few federal employees outside the Postal Service have the job Pickens does: selling products directly to the public. The job involves acting much like a private sector direct-mail firm by culling the Mint's database of customers to refine its marketing approaches and renting lists of potential prospects from jewelry and department store purchasers.

New lines of business are opening as well. The recent introduction of platinum bullion coins expanded the Mint's presence in investment-grade products, a new dollar coin has been approved to replace the Susan B. Anthony coin when the supply runs out in two years, and Congress has authorized a series of quarters commemorating every state-to be released five per year starting next year-that the Mint hopes will start a new generation of coin collectors. And proposals continually circulate to replace the dollar bill with the dollar coin.

The Mint also is looking to expand its reimbursable services to other agencies. It not only protects $100 billion of the Treasury's precious metals at Fort Knox, Ky., and elsewhere but also safeguards strategic metals for the Defense Department. It's exploring an arrangement with the Postal Service to store stamps and money orders, and executives think other agencies also might want the Mint to do their deep storage.

"There's an intent to expand the mindset of entrepreneurship and customer service within the organization," Diehl says. "I don't want to take that too far. I think there are undoubtedly services or products that we could get into that would be inappropriate for us. But there are certain services and products that are within our core competency that we know there is a demand for."

The best indication of the Mint's condition, agency officials say, is that private mints often try to leave the impression that their products are produced by the government. They do that through vague advertisements that sell coins based on U.S. Mint designs and by using names similar to the Mint's.

Says Diehl: "We never thought of the United States Mint as a brand-we're an agency. It's been only in the last year we've come to realize the United States Mint is a brand and we've come to appreciate the extraordinary value of that brand. That's the crucial thing, the value of the brand that people want to ride on. When people start to pose as you, that's a signal."

Eric Yoder is a Washington-based journalist.