Back-Office Blues

This was a central point too of our mid-April special Federal Performance Report issue, which graded agencies' capabilities in five areas of management on the premise that positive results presuppose effective organization and management.

One can put this idea another way: The absence of effective systems saps agencies' potential for mission excellence. Nowhere is this more true than in the vast Defense Department, as former Deputy Defense Secretary John P. White argued in a recent speech to the Council for Excellence in Government. With Ashton Carter, former assistant secretary of Defense for international security policy, White has a new book, Keeping the Edge: Managing Defense for the Future (MIT Press, 2001), making the point. He told the audience that behind "the spear's sharp point, you have in the Department of Defense largely a dysfunctional organization. Much of it does not work, [including] weapons requirement identification, procurement, audit and accounting, personnel systems, and on and on. You're going to have to fix these so-called back-office functions if you're going to assure the success of this military institution into the next several decades."

The human resources infrastructure is one system that's broken at Defense and elsewhere in government, as Matthew

Weinstock reports this month. Human resources offices were targets of Clinton administration downsizing, and their staffs were and still are largely composed of clerks enforcing intricate rules governing hiring, firing and everything in between. In private business, hiring, training and retaining the right people is essential to high performance, and now government agencies are looking to HR staffers less as rules cops and more as consultants, helping with strategies for filling positions that are key to mission success. But in a recent poll, the Office of Personnel Management found that 94 percent of human resources executives believe their staffs lack key competencies needed to evolve from cop to consultant.

Financial management is another discipline whose absence can handcuff agencies as they attempt to meet modern demands for accountability and results. There has been progress here, as Katherine McIntire Peters reports about the CIA's drive to bring corporate-style, bottom-line management to administrative functions, and former OMB controller Joshua Gotbaum says in describing implementation of 1990s reform laws. But there's also a long way to go, and as Gotbaum writes, modern financial management requires not just clerks and accountants, but also MBAs, CPAs, risk management specialists, IT professionals and systems engineers. So government needs more highly trained people for financial management. And for human resources. And for IT management and oversight. And in the important field of acquisition and contract management, as George Cahlink reported in our February cover story on the Pentagon's brain drain. Then again, perhaps government must hire these skills from the outside, as David Kleinberg, veteran financial executive at the Transportation Department tells Peters.

Problems abound, but we should take as good news the focus of top Bush administration officials at OMB on such management issues now that their initial round of budget revisions is done.