[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]


 
                        TOTAL QUALITY MANAGEMENT
=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                      INFORMATION, AND TECHNOLOGY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM
                             AND OVERSIGHT
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 9, 1997

                               __________

                           Serial No. 105-62

                               __________

Printed for the use of the Committee on Government Reform and Oversight










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              COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois          TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland       ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico            EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida         GARY A. CONDIT, California
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEPHEN HORN, California             THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, Washington, 
THOMAS M. DAVIS, Virginia                DC
DAVID M. McINTOSH, Indiana           CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
JOE SCARBOROUGH, Florida             DENNIS J. KUCINICH, Ohio
JOHN B. SHADEGG, Arizona             ROD R. BLAGOJEVICH, Illinois
STEVEN C. LaTOURETTE, Ohio           DANNY K. DAVIS, Illinois
MARSHALL ``MARK'' SANFORD, South     JOHN F. TIERNEY, Massachusetts
    Carolina                         JIM TURNER, Texas
JOHN E. SUNUNU, New Hampshire        THOMAS H. ALLEN, Maine
PETE SESSIONS, Texas                 HAROLD E. FORD, Jr., Tennessee
MICHAEL PAPPAS, New Jersey                       ------
VINCE SNOWBARGER, Kansas             BERNARD SANDERS, Vermont 
BOB BARR, Georgia                        (Independent)
ROB PORTMAN, Ohio
                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
         William Moschella, Deputy Counsel and Parliamentarian
                       Judith McCoy, Chief Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

   Subcommittee on Government Management, Information, and Technology

                   STEPHEN HORN, California, Chairman
PETE SESSIONS, Texas                 CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            PAUL E. KANJORSKI, Pennsylvania
JOE SCARBOROUGH, Florida             MAJOR R. OWENS, New York
MARSHALL ``MARK'' SANFORD, South     ROD R. BLAGOJEVICH, Illinois
    Carolina                         DANNY K. DAVIS, Illinois
JOHN E. SUNUNU, New Hampshire
ROB PORTMAN, Ohio

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
          J. Russell George, Staff Director and Chief Counsel
                  Matt Ryan, Professional Staff Member
                          Andrea Miller, Clerk
          Mark Stephenson, Minority Professional Staff Member






                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 9, 1997.....................................     1
Statement of:
    Bailey, Steven, president, American Society for Quality 
      Control; and Harry Hertz, Director, National Institute of 
      Standards and Technology [NIST], National Quality Programs, 
      Department of Commerce.....................................     3
    Carroll, Thomas, National Director for Quality, Internal 
      Revenue Service; David Cooke, Director of Administration 
      and Management, Department of Defense, accompanied by Anne 
      O'Connor, Director, Quality Management; Gerald Kauvar, U.S. 
      Air Force; Brigadier General James Boddie, Jr., U.S. Army; 
      Captain Scott T. Cantfil, U.S. Navy; and Lieutenant Colonel 
      Tom Sawner, Air National Guard.............................   190
    Conchelos, Joe, vice president for quality, Trident Precision 
      Manufacturing, Inc.; Rosetta Riley, president and chief 
      executive officer, Sirius 21, Inc.; Rear Admiral (Ret.) 
      Luther Schriefer, senior vice president and executive 
      director, Business Executives for National Security; and 
      Lawrence Wheeler, vice president, Programs Systems 
      Management Co., Arthur D. Little, Inc......................    49
    Wall, Steve, director, Ohio Office of Quality Services; and 
      Greg Frampton, executive administrator, South Carolina 
      Department of Revenue......................................    96
Letters, statements, etc., submitted for the record by:
    Bailey, Steven, president, American Society for Quality 
      Control, prepared statement of.............................     6
    Carroll, Thomas, National Director for Quality, Internal 
      Revenue Service, prepared statement of.....................   193
    Cooke, David, Director of Administration and Management, 
      Department of Defense, prepared statement of...............   209
    Frampton, Greg, executive administrator, South Carolina 
      Department of Revenue:
        Information concerning debt and personal bankruptcy......   132
        Prepared statement of....................................   111
    Juskiw, Nick, CEO, Trident Precision Manufacturing Inc., 
      prepared statement of......................................    53
    Hertz, Harry, Director, National Institute of Standards and 
      Technology [NIST], National Quality Programs, Department of 
      Commerce, prepared statement of............................    27
    Riley, Rosetta, president and chief executive officer, Sirius 
      21, Inc., prepared statement of............................    59
    Sawner, Lieutenant Colonel Thomas E., Deputy Director, Air 
      National Guard Quality Center, prepared statement of.......   250
    Schriefer, Luther, Rear Admiral (Ret.), senior vice president 
      and executive director, Business Executives for National 
      Security, prepared statement of............................    68
    Wall, Steve, director, Ohio Office of Quality Services, 
      prepared statement of......................................   100
    Wheeler, Lawrence, vice president, Programs Systems 
      Management Co., Arthur D. Little, Inc., prepared statement 
      of.........................................................    75


                        TOTAL QUALITY MANAGEMENT

                              ----------                              


                          MONDAY, JUNE 9, 1997

                  House of Representatives,
Subcommittee on Government Management, Information, 
                                    and Technology,
              Committee on Government Reform and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
room 2154, Rayburn House Office Building, Hon. Stephen Horn 
(chairman of the subcommittee) presiding.
    Present: Representative Horn.
    Staff present: J. Russell George, staff director and chief 
counsel; Andrea Miller, clerk; Matt Ryan, professional staff 
member; and Mark Stephenson, minority professional staff 
member.
    Mr. Horn. The Subcommittee on Government Management, 
Information, and Technology will come to order.
    In our relentlessly competitive global economy, the only 
constant is rapid change. In this environment, organizations 
must adapt or perish. Effective competitiveness depends on 
effective management. The private sector has proven remarkably 
adept at organizational flexibility. The public sector has been 
distinctly less successful at changing with the times.
    Today, we will learn about one of the management 
philosophies that has helped many organizations become more 
efficient and effective in a very competitive environment. 
Government has many concerns, other than the bottom line, but 
public and private sector services are inevitably compared in 
the consumer's mind, and in certain cases, Government must 
compete directly with private companies. It is no surprise that 
in recent years voters have made abundantly clear their desire 
for a more efficient and affordable Government.
    Total quality management, TQM, is a management approach 
that strives to achieve continuous improvement of quality 
through organization-wide efforts based on facts and data. 
Organizations use quality management principles to determine 
the expectations of all their customers, both external and 
internal, and to establish systems to meet those expectations.
    In recent years, both Federal and State governments have 
found that they could not attain high quality by using 
traditional approaches to managing service and product quality. 
The customer of the Federal Government is the American 
taxpayer. To satisfy its customer, the Government must design 
its programs, goods, and services for quality. I will be the 
first to admit, however, that this is a vague prescription. How 
can we talk about total quality management in simple concrete 
terms? Is this a management philosophy about good human 
relations? Would it be accurate to say total quality management 
boils down to paying attention to the customer? If so, how can 
that principle systematically be applied in an organization?
    I hope our witnesses today will help us bring management 
theory down to the level of plain English and concrete 
examples. Furthermore, application of quality management 
principles to the government, an organization whose customers 
are also its owners, presents a unique set of challenges. We, 
therefore, hope to hear suggestions from each witness today on 
how quality management principles might be applied to the 
special case of the government.
    Our purpose here is to work toward a more efficient and 
effective Federal Government. We ask that you help us to 
benefit from your expertise as we go about this. The formal 
definition of a total quality management company exists in the 
criteria for the Malcolm Baldrige National Quality Award. This 
annual award, given since 1988 by the Department of Commerce, 
recognizes companies that excel in managing for and achieving 
quality.
    We will hear from the American Society for Quality Control 
and the National Institute of Standards and Technology, which 
administer the Malcolm Baldrige program, and we will also hear 
from two past recipients of the Baldrige award. The hearing 
begins with an overview of total quality management from two 
management experts, Steven Bailey, president of the American 
Society for Quality Control and Dr. Harry Hertz, Director of 
National Quality Programs in the National Institute of 
Standards and Technology of the Department of Commerce.
    Following this overview, we will hear from several 
individuals who have experience with total quality management 
in the private sector. Joe Conchelos is vice president for 
quality at Trident Precision Manufacturing Inc.; Rosetta Riley, 
president and chief executive officer of Sirius 21, Rear 
Admiral Retired Schriefer is senior vice president and 
executive director of the Business Executives for National 
Security, BENS; Lawrence Wheeler is vice president of Programs 
Systems Management Co., a division of Arthur D. Little, Inc.
    After the view from the private sector, the third panel 
will focus on total quality management experiences in State 
governments. Witnesses, Steve Wall, director, Office of Quality 
Services for the State of Ohio; and Greg Frampton, executive 
administrator, South Carolina Department of Revenue.
    Finally, the fourth panel will focus on the Federal 
Government. The witnesses are Thomas Carroll, National Director 
for Quality at the Internal Revenue Service; and David Cooke, 
Director of Administration and Management at the Department of 
Defense. Mr. Cooke will be accompanied by several Department of 
Defense colleagues, Anne O'Connor, Director of Quality 
Management, Department of Defense; Dr. Gerald Kauvar, U.S. Air 
Force; General James Boddie, Jr., U.S. Army; Captain Scott T. 
Cantfil, U.S. Navy; and Lieutenant Tom Sawner, Air National 
Guard.
    We welcome all the witnesses and look forward to the 
testimony. I see Mr. Bailey and Dr. Hertz are here.
    Gentlemen, on this committee, we have the tradition of 
swearing in witnesses, so if you don't mind standing and 
raising your right hands.
    [Witnesses sworn.]
    Mr. Horn. Both witnesses affirmed.
    Why don't we just go in the order in which they are on the 
agenda. Steven Bailey, president, American Society for Quality 
Control. Welcome.

 STATEMENTS OF STEVEN BAILEY, PRESIDENT, AMERICAN SOCIETY FOR 
QUALITY CONTROL; AND HARRY HERTZ, DIRECTOR, NATIONAL INSTITUTE 
OF STANDARDS AND TECHNOLOGY [NIST], NATIONAL QUALITY PROGRAMS, 
                     DEPARTMENT OF COMMERCE

    Mr. Bailey. Thank you and good morning, Congressman Horn. I 
would like to thank you for inviting the American Society for 
Quality Control, or ASQC for short, to share our insights on 
quality improvement.
    ASQC is one of the world's principal sources of information 
on quality methodologies, with over 130,000 individual members, 
include nearly 3,000 quality practitioners who work in 
Government at the Federal, State, and local levels.
    The message for you from the ASQC is simple and involves 
these four points. First off, there is a great deal of quality 
activity occurring today in the public sector and we are 
learning a lot from it. Second, Government experience with 
quality, in many ways, parallels the private sector's 
experience. Reasons for success and failure aren't so much 
different between these two sectors. Third, you need a solid 
framework for improvement, and the good news is you have one--I 
will talk about that--that can mean the difference between 
success and failure. Fourth, public sector quality efforts are 
at a critical turning point right now. So let me elaborate on 
each of these points.
    First off, the public sector started its quality journey 
later than the private sector. It is still not as far along as 
one would like but we now have several years of accumulated 
experience in Government and many examples of successes. We 
also have many opportunities to learn from the failures. Lots 
of good things have been accomplished, many of which have gone 
unrecognized. You will hear about some of these later on today, 
I believe.
    Some of these are even examples for the private sector to 
emulate. For example, the Social Security system's telephone 
operation was recently deemed to be the best in the country, 
better even than organizations like L.L. Bean, whose fortunes 
are tied to their phone responsiveness. And I think it is also 
significant ASQC has just bestowed on a public servant one of 
the highest honors we can give to any quality professional, our 
Ishikowa Award for leadership in improving the human aspects of 
quality went to Joseph Dickey, chief operating officer of the 
Tennessee Valley Authority [TVA]. He introduced a three part 
model to help improve the relations between management and 
employees.
    In the packet of materials, there is a bibliography that 
documents experience of numerous Government quality efforts at 
the Federal, State, and local levels. Many of these examples 
come from sources that are not widely circulated, so I think 
you will find them new and instructive.
    Based on these and many other experiences, I can tell you 
that there are more similarities than differences between the 
public and private sectors. Reasons for the success and failure 
are remarkably similar. So how does one in retrospect judge 
success or failure? Well, in the same way an organization 
guides its progress as it is designing and implementing a 
quality system. You have got to have a framework for 
improvement, a guide to tell you how to start out and how you 
are doing. You need this framework just as in the private 
sector.
    Now such a framework exists in the criteria of the Baldrige 
Award and there is a Federal counterpart to the Baldrige Award 
called the President's Award for Quality. The award categories 
and underlying core values define what it takes to have a 
successful quality system.
    We are very fortunate to have Harry Hertz from NIST and he 
can explain better than I how this works. We know that in some 
private businesses, quality efforts start out with a bang and 
then stall dead in their tracks. Others keep forging ahead. 
Motorola, Ford, DuPont, and Texas Instruments are just a few of 
the well-known examples of companies that have continuously 
renewed their quality efforts.
    In the public sector, early successes in the IRS regional 
centers seem to have stalled, perhaps distracted by massive 
problems in upgrading the agency's technology. IRS faces major 
hurdles in establishing the public's confidence. It, 
unfortunately, ranks dead last among 200 companies and 
Government agencies rated in the American Customer Satisfaction 
Index, the ACSI.
    By contrast, consider the Patents and Trademark Office. In 
1992, its public services and administration division won a 
quality improvement prototype award, which is part of the 
President's Quality Award program that I mentioned earlier. 
Recently, the office made a commitment to the Secretary of 
Commerce to do a Baldrige-style assessment of the entire 
organization to build on its previous successes. So which shall 
it be for the Federal Government, continued progress and more 
success, or backsliding?
    I am personally very optimistic, and here are some reasons 
why. First, there is a core of believers out there in Federal 
agencies who have demonstrated what is possible. I can tell you 
they are fired up about quality and making things happen. 
Second, they now have some structure to support their efforts. 
For example, the National Performance Review is a catalyst for 
some stunning changes in Government's adoption of quality 
methods. Third, we are seeing stronger links to quality experts 
and private sector quality practitioners being formed. And 
fourth, there is a lot more sharing back and forth among all 
these groups. These networks are growing rapidly. A prime 
example is the Public Sector Network, which is an interest 
group within ASQC. It is having a real impact among people 
dedicated to advancing public sector quality. Recently, the 
Public Sector Network launched its 21st Century Governance 
Initiative to bring citizens' focus and to bring citizen focus 
and involvement back into the Government processes.
    So in conclusion, this is really a critical time for public 
sector quality. The challenge for the Federal Government will 
be to capitalize on these good examples which exist. Some of 
which you will hear later today, other ones are in the 
bibliography that we provided. To make sure that the best work 
spreads, momentum needs to be sustained and encouraged, and 
this committee has a role to play. I encourage you to use your 
influence to make sure it happens. After all, oversight is one 
of the key steps in the quality improvement cycle.
    Your efforts are to be commended. Let me suggest that the 
best way for you to learn about quality in Federal Government 
is directly from the people who are living it every day. And 
you have a great opportunity to do that. The 10th Annual 
Conference on Federal Quality takes place here in Washington 
next month. I encourage you to attend. You will learn more 
about the reality of quality in a day there than you could get 
in a week of sitting and listening to people like me. You can 
hear about the best of the Federal quality activities. And I am 
sure people will speak frankly about their problems and 
setbacks as well as their triumphs. I hope I have conveyed the 
quality profession realistic assessment of the state of public 
sector quality, and I thank you for listening.
    Mr. Horn. Thank you very much for that summary and as you 
all know, your full statement goes automatically in the record 
when we introduce you. I particularly appreciated the 
bibliography with your attachment, and I am going to have to 
ask you to translate a few of the various euphemisms, initials, 
and others on some of that bibliography.
    [The prepared statement of Mr. Bailey follows:]
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    Mr. Horn. Dr. Harry Hertz is Director of the National 
Quality Program for the National Institute of Standards and 
Technology, U.S. Department of Commerce. Thank you for coming 
over.
    Mr. Hertz. Thank you, Mr. Chairman. I am pleased to appear 
before you in the 10th year of the Malcolm Baldrige National 
Quality Award program, to give you an update and 10-year 
perspective on quality and performance improvement in the 
United States. I would like also to outline some of our 
thinking on future challenges.
    On August 20, 1987, President Ronald Reagan signed Public 
Law 100-107, the Malcolm Baldrige National Quality Improvement 
Act of 1987 with the purpose of providing a national program to 
recognize U.S. companies and other organizations that practice 
effective quality management, and as a result, make significant 
improvements in the quality of their goods and services, and 
also to disseminate information about their successful 
strategies.
    From the start, our definition of ``quality management'' 
has focused both on the customer and on operational 
performance. We view quality as delivering ever-improving value 
to customers while at the same time maximizing the overall 
effectiveness and productivity of the delivering organization.
    The Baldrige Award Criteria, now called the Criteria for 
Performance Excellence, to emphasize their applicability to all 
types of organizations, have been developed through extensive 
interaction with the private sector. The criteria are based on 
11 core values. They are: customer-driven quality; leadership; 
continuous improvement and learning; employee participation and 
development; fast response; design quality and prevention; 
long-range view of the future; management by fact; partnership 
development; company responsibility and citizenship; and a 
results focus.
    The criteria provide a systems perspective to performance 
management, focusing on assessment of leadership, strategic 
planning, customer and market focus, information and analysis, 
human resource development and management, process management, 
and business results.
    The criteria have evolved over the 10-year period since 
1987, as our understanding of quality has evolved and matured. 
This evolution has led to the fundamental reconsideration of 
even the term ``quality,'' to a concept better characterized as 
``performance excellence'' that embodies every aspect of an 
organization's performance management system. Embodied in this 
shift is a maturation in many aspects of our thinking on 
performance management.
    We have evolved through stages of quality, from quality 
assurance to process quality, to quality management, and now to 
overall performance management. This mirrors the U.S.' 
evolution from a singular need to improve the quality of 
products and services to a recognition that competitiveness and 
performance excellence require a focus on the system.
    As the U.S. focus on quality, competitiveness, and 
performance excellence has grown, the Baldrige approach has 
spread across the United States, and around the world. There 
are currently more than 40 State and 25 international Baldrige-
based programs. The Office of Personnel Management, as Steve 
Bailey already mentioned, administers the President's Quality 
Award, a Baldrige-based award for Federal Government agencies. 
Many of the State award programs include State agencies in 
their eligibility categories. While the National Quality 
Program shares Baldrige materials with all these programs, and 
is gratified by the widespread adoption of Baldrige principles, 
we do not monitor progress of the many State and Federal 
agencies that use the Baldrige criteria.
    With the evolution and maturation of our focus, from a 
focus on quality management to a focus on performance 
management and performance excellence, we have learned a number 
of important lessons. They include: Quality management is 
organizational management; the two cannot be viewed as separate 
activities with independent leadership. Management of process 
quality is process management of all key product, service and 
support processes. When you manage, align and coordinate key 
processes, you manage and improve their quality. Quality 
results are an organization's business results. If the quality 
results are not focused on operational, product service, and 
bottom line financial performance, they are not addressing what 
is important to the organization. Numbers are plentiful; few 
organizations go the extra step of transforming numbers into 
vital data for monitoring progress, even fewer organizations 
align, correlate, and analyze data to permit fact-based 
strategic decisions. Mission, vision, values, strategies, key 
processes, and key measures are related. Many organizations 
still do not relate key measures to their key processes, much 
less to their forward-looking strategies. Performance 
excellence is a journey; it is not a destination that is ever 
reached in a globally competitive economy and marketplace.
    In pilot studies in 1995, we learned with some translation 
to make the criteria understandable and more relevant to 
specific settings, the education and health care sectors can 
also use and benefit from the Baldrige approach to quality 
performance and excellence. Encouraged by the results of these 
pilot studies and by the support we have received from the 
education, health care, and business communities, we are 
looking forward to the creation of Baldrige Award categories 
for education and health care in 1998, using the proven public-
private partnership approach that already exists for the 
business award program.
    We have also learned that quality pays. In a study 
conducted by the U.S. General Accounting Office in 1991, of 20 
companies that were among the highest scoring Baldrige 
applicants in 1988 and 1989, the GAO observed, companies that 
adopted quality management practices experience an overall 
improvement in corporate performance. In nearly all cases, 
companies that used quality management practices achieved 
better employee relations, higher productivity, greater 
customer satisfaction, increased market share, and improved 
profitability.
    In a study we conducted in 1994, for the 10 Baldrige Award 
winners analyzing productivity enhancement as annual revenue 
increase per employee, a median average annual compounded 
growth rate of 9.4 percent and a mean of 9.25 percent was 
achieved, far outstripping the economy as a whole.
    In our annual stock performance study, conducted in 
December 1996, the group of 16 publicly traded winners 
outperformed the S&P 500 by about 3 to 1, that is 300 percent. 
The 48 publicly traded companies receiving site visits as part 
of the Baldrige award application process outperformed the S&P 
500 by 2 to 1 or 200 percent.
    Looking to the future, I believe the most significant 
challenge facing U.S. organizations today is the development of 
a fully implemented systems approach to performance management, 
to understand and guide systemic actions, to create value, and 
to learn as an organization. The challenge is to use customer 
and market knowledge in setting strategy, to use strategic 
directions in helping to create economic and customer value, to 
define key processes and human resource needs in a globally 
diverse work force, to understand the requisite information 
needs and appropriate analyses that clarify business results, 
and from those results, drive continuous organizational 
learning and improvement.
    Thank you, Mr. Chairman. I would be pleased to answer any 
questions you may have.
    Mr. Horn. Well, I thank you for that very thorough 
statement.
    [The prepared statement of Mr. Hertz follows:]
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    Mr. Horn. I am sort of motivated to ask you one question to 
start with, and don't take it as a hostile question; I am just 
curious. Does the National Institute of Standards and 
Technology have any total quality management programs?
    Mr. Hertz. We have done a Baldrige assessment of our own 
office at NIST, as have several other units within NIST begun 
to do the same. And we have undertaken a significant strategic 
planning exercise as part of an overall activity for NIST.
    Mr. Horn. You have a very scientific high quality 
organization. What have you discovered there that might be 
different from a more typical governmental process oriented, 
let's get the job done, let's serve the public directly 
organization?
    Mr. Hertz. I think what we have learned is a focus on 
customer is equally applicable, that the scientific discovery 
process is not one that lends itself fully to the exact same 
process management protocols that some other processes do.
    Mr. Horn. Well, what could we learn from the science groups 
that perhaps we need to learn and apply in the nonscience 
groups?
    Mr. Hertz. I think what we can learn from the science 
groups is the importance of strategic planning, certainly that 
is important in a technological environment. I think we can 
also learn that as we are doing routinely at NIST these days, 
we focus each year on activities that need startup and 
activities that have also reached their useful life and to use 
that as an internal renewal process, and I think other 
organizations could benefit from that.
    Mr. Horn. Mr. Bailey, I was most interested in your 
testimony. On the first page you note there are three agencies 
you feel were early leaders within quality management within 
the Federal Government. One is the Department of Defense, 
another is the IRS, and the third is the Tennessee Valley 
Authority.
    Well, I am fascinated on the IRS and the Department of 
Defense in this sense, that we have on the books the Chief 
Financial Officers Act and a requirement that all Federal 
agencies give us a balance sheet by the fall, essentially, of 
this year, and the two agencies that we have known for 5 years 
will not be able to give us a balance sheet are two of your 
three; namely, the Department of Defense and the IRS.
    Can you explain how they can be conducting quality 
management work and not get at the basic problem, that they 
can't produce a balance sheet and there is no hope they will 
produce a balance sheet this year?
    Mr. Bailey. I can't answer that directly. I guess part of 
the comment was that they were early leaders, and I think you 
can learn from some of their less than successful 
implementations, perhaps, and that is certainly one of them.
    One of the key concerns or criticisms of total quality 
management, or TQM, has been the fact it never delivered, in 
many instances, the bottom line results, and there are key 
reasons for that, and if you learn from those, you are better 
off in correcting your mistakes and going forward.
    Again, the IRS was an early leader; however, we noted that 
they are last in the American Customer Satisfaction Index. Of 
course, that is a little bit unfair in one sense because that 
is measuring the customers of public sector companies as well, 
so maybe it is hard to envision yourself in the mix with all 
the other folks who are looked at in that index, but then again 
maybe not.
    But I think there is really an opportunity in those areas 
that you mentioned to really improve upon what they have 
started. At least they have an appreciation for what it is they 
need to be doing, but there are a lot of opportunities, 
especially in those agencies, that need to be worked on.
    Mr. Horn. Obviously, it leads me, and some of the testimony 
leads me even further in the direction that are we taking the 
easy tasks for total quality management and avoiding the tough 
tasks? I mean, I am not against incrementalism, this is maybe 
the best way to go, and I am not knocking that, I am just 
saying, are we just doing the easy stuff?
    Mr. Bailey. I think that is a fair statement. There is 
always a tendency in the private and public sector to go after 
the so-called easy ``low hanging fruit'' and I think that is 
appropriate to do if it is hanging there. However, I think this 
avoids actually bellying up to some of the hard but important 
breakthrough changes you need to do, some of which Harry talked 
about. The actual focus on a strategic management of the 
overall quality and performance effort, is, I think, one of the 
failings of many of the applications of quality management 
techniques, both in the public and private sector.
    Mr. Horn. The rest of the questions are to both of you, now 
that I have gotten away with those two. I am curious, what are 
the key factors that really make total quality management work? 
We have a lot of experience; now we have had it on the small 
and the large problems. If you do nothing else with the total 
quality management effort, what is the absolute essence of 
doing something with that effort?
    Mr. Hertz. Well, several things. First, I think leadership 
commitment is an absolute necessity. Without the commitment of 
top leadership of an organization, what we find is that there 
are fragmented efforts, frequently not tied to the overall 
strategy of the organization, and that generally leads to 
failure.
    The second is a lack----
    Mr. Horn. Why don't we take them one at a time? Give me an 
example of where you think leadership is an absolute key and 
where you have seen it failing and where you have seen it 
succeed with leadership commitment.
    Mr. Hertz. I think where it certainly succeeds is with the 
Baldrige Award winners. Where it fails is from many of the 
companies we hear from. We conduct four regional conferences 
each year in conjunction with the Conference Board, at which 
Baldrige winners share their strategies. I would say the most 
commonly asked question at that conference from the audience, 
every time, and I was at one in Chicago last week, is, I can't 
get my leadership to buy in, we are floundering, how do I turn 
around and bring my leadership on board?
    What we are seeing is incremental improvement in pockets of 
the organization and it is not focused on the organization as a 
whole.
    Mr. Horn. Since you are the administrator of the Baldrige 
Award, why is it that the Baldrige Award has no relationship to 
governmental processes? Originally, it was designed from the 
private sector, the profitmaking sector. Now how much of the 
Baldrige Award criteria can we really translate to Government 
processes?
    Mr. Hertz. I think the President's Quality Award shows we 
can use the criteria basically, totally, as is, in the 
Government. Indeed, if one looks at the State award programs 
that are based on Baldrige, many of them are open to State 
agencies. They are open with the exact same criteria, no 
rewriting of the criteria, and there have been winners at the 
State level that are State agencies whom are education systems 
within States. Police barracks within States have won them, so 
that there are ample examples now of State agencies that have 
adopted Baldrige successfully, as is.
    Mr. Horn. And we look forward to their testimony this 
morning, of showing us how it is done.
    What leads to the failure of total quality principles? You 
have mentioned leadership has to be there. What else is an 
absolute essential?
    Mr. Hertz. I think another absolute essential is a focus on 
results. I think the failure in a lot of early attempts at 
quality management was a total focus on process, find a process 
that could use improvement, incrementally improve every process 
that can be improved, without ever focusing on those that 
really impact results or strategic direction. I think what we 
learned over time is if you divorce your quality management or 
quality improvement from your organizational management, you 
tend to get incremental improvement of processes at local 
levels without ever tying to the overall organizational 
strategy. You can improve processes that don't particularly 
impact the organization's overall performance.
    Mr. Horn. As you know, we have put substantial interest in 
the Government Performance and Results Act. How would you tie 
GPRA, as they call it--and I will call it the Government 
Performance and Results Act. How would you tie that to the 
total quality management effort?
    Mr. Hertz. I think the intent there actually succeeds and 
ties it very closely because there is a requirement for both 
performance measures and strategic planning. The intent, 
obviously, to tie key performance measures to strategy for the 
organization, and I think, as organizations do that, they will 
be successfully implementing quality management.
    Mr. Horn. Hopefully, the results part would include some 
realistic measurable criteria and I agree with you completely 
on leadership, but I think, second, you are absolutely right, 
that is the most difficult situation, how do we know we have 
accomplished that and is it easily recognizable by people 
engaged in the effort? Because if they are engaged and we 
haven't accomplished something, that just leads to frustration 
after a year or 2 year's work. Any other things that are 
absolute essences here? Leadership, results, orientation?
    Mr. Bailey. Let me say, Harry and I didn't compare our 
lists, but he listed, in my order, No. 1 and No. 2, leadership 
and results orientation. Those are 2 of the 11 characteristics 
that Harry mentioned in his testimony. The third one I usually 
call out in my list is customer-driven quality, or maybe 
constituent-driven quality might be the particular buzz word 
here.
    You need the leadership at the top. You need to focus on 
real measures, but you need to be doing it in an environment 
that is fulfilling, getting better performance for those 
customers or those constituents. You need to always have to 
focus on who it is you are serving there, so I think those 
three are the 3 of 11 that really stand out.
    Mr. Horn. And that is certainly the same as the private 
sector in the sense of the customer is always right. You take 
it, Target stores and others that have made a fortune because 
they trust the customer, even if the customer comes in to bring 
them goods to hand back from some other store that is not one 
of their chains, that wins them friends.
    Now when we look at these efforts, what leads to the 
failure of the total quality principles in an organization, is 
it simply the reverse, the lack of leadership, lack of results 
orientation, and the lack of looking at the needs of the 
customer, internally and externally? What else happens?
    Mr. Hertz. I think the other key point to failure is a lack 
of long-term commitment, commitment for a year or two, 
achieving some incremental improvement and then walking away 
from the effort, the lack of strategic vision, the lack of 
long-term commitment, and that is particularly challenging, 
obviously, in any organization where leadership changes with 
frequency.
    Mr. Horn. Could you cite me a few examples in Government 
over the last 20 years where there has been an effort, a buzz 
word approach, I might say, and nothing much has happened, and 
people are standing around saying, this too shall pass?
    Mr. Hertz. I am not sure I am an expert on the history of 
buzz words.
    Mr. Horn. I am thinking you may be too young to remember 
PPBS, in terms of budgeting and that kind of thing.
    Mr. Hertz. I don't remember that. I remember MBO, I 
remember ZBB, and I am afraid that TQM has three letters that 
have much the same potential. And I think that is, among other 
things, why we have actually in the Baldrige criteria departed 
from the word ``quality'' and focused more on performance 
excellence and performance management, because that is really 
what quality management is about. It's about managing the 
performance of the overall organization.
    Mr. Horn. Now, when we discussed the Government Performance 
and Results Act, we can talk about how you focus on results, 
you all agree to that. But many employees feel they are simply 
bound up by a wide range of processes. Now, how do we move from 
processes to results? Does TQM always do that?
    Mr. Bailey. One thing you do is in the simplification 
activity. If you are bound up by all these processes, odds are 
that you have not mapped out these processes into the overall 
system that you currently have, the ``as is'' part of how you 
are operating, and then ask yourself the question of which of 
the processes are value-adding, and which should we simplify or 
totally eliminate, so you are looking at the whole system of 
processes.
    I think there is a lot of activity we have seen recently 
that goes after that simplification. In the private sector we 
see it a lot, and in the public sector, at all levels, we have 
seen simplification activities on one or more of the important 
processes, and that breaks free the employees to really 
contribute. They know what is important in terms of the key 
processes, they know what is important in terms of the key 
results, they know how to contribute, and they don't feel bound 
up by all the extra stuff that isn't value-adding.
    Mr. Horn. Since you administer the Baldrige Award, Dr. 
Hertz--and there are other awards, I know, that are offered 
there; not everybody who does a good job can get one of those 
awards--what is the incentive to do anything, and what do you 
find the incentives are as you talk to people off the record?
    Mr. Hertz. I think the incentives are not to win an award. 
I think the award, from our perspective, is a means to getting 
a message out to sharing best practices, to putting those in 
front of organizations. But the real rewards are those from 
improved organizational performance that come from use of the 
criteria.
    And just to give you some numbers, we typically have about 
30 applicants per year for the Baldrige Award. There are about 
800 applicants nationally for Baldrige and State award 
programs, but last year we distributed 150,000 copies of the 
criteria, State award programs distributed another 90,000 
copies of the criteria, so approximately a quarter of a million 
copies. There were another 70,000 downloaded off our web site 
on the Internet.
    So the use of the criteria far exceeds the application for 
award programs, and indeed there are many companies in the 
United States that are now using the criteria in internal 
divisional improvement efforts where divisions within the 
company are using the criteria as a basis for learning and as a 
basis for sharing, without applying for the Baldrige Award.
    Mr. Horn. Dr. Hertz, are you involved with the 
administration of the President's quality awards program?
    Mr. Hertz. I am not involved with that. It is administered 
through the Office of Personnel Management. However, many of 
the volunteer examiners and judges for the Baldrige Award also 
serve on the President's Quality Award frequently after service 
on the Baldrige Award program, so they bring the expertise with 
them when they move to the President's Quality Award.
    Mr. Horn. I don't think we have a witness here from that 
group this morning.
    And there is the Quality Improvement Prototype Award and 
Presidential Award for Quality. The reason I raise that, in the 
Department of Defense testimony, they seem to say since the 
inception of the program, DOD units have earned 59 percent of 
the Quality Improvement Prototype Awards and 83 percent of the 
Presidential Awards for Quality. I don't know if that is good 
or bad, frankly, at this point. I take it that it's good.
    I mean, I am worried about both Baldrige and these awards 
when you have got the small, little effort going on that might 
be a superb effort that maybe they can't put it in fancy words 
that fill out the form, and that is what I worry about in the 
private sector, and a good part of Government, that there are a 
lot of people out there, we should note, even if they don't 
have the time to fill out the form, which is the attitude of 
some people in this world, they say, let's get the job done.
    Mr. Hertz. We actually provide guidance on use of the 
criteria, and part of that guidance is that we advise them, 
when you are first starting, don't fill out a written 
application. There is a lot you can learn through doing a self-
assessment, that is a fact-based self assessment, without 
writing an application, just outlining your strengths and 
opportunities for improvement, not doing any scoring, and 
prioritizing the opportunities for improvement and building on 
them.
    Mr. Horn. What is the most difficult of the Baldrige 
criteria you have in terms of translating that into 
governmental total quality management?
    Mr. Hertz. I am not sure that I would say any of the 
criteria themselves are the most difficult. I think what is 
most difficult for all organizations, including Government, is 
the linkage issue, how to link strategy to process, to results, 
to information, to analysis; so how to take the seven 
categories of Baldrige and perform the key linkages so that 
your strategy is tied to your key processes, your key measures 
are tied to your key processes, and your analysis is tied to 
those key measures.
    Mr. Horn. Since you both are the lead-off witnesses, we 
expect you to be able to answer the next question easily. What 
is your assessment of the willingness of Federal employees to 
get involved in quality improvement efforts, as opposed to 
private sector employees to get involved in quality improvement 
efforts? Do you see any difference, in your experience, looking 
at this now for several years?
    Mr. Bailey. Well, we haven't really discerned any real 
differences in participation or motivation for quality efforts 
on the part of Government employees compared to those in the 
private sector. Actually, we think the two are remarkably the 
same. We have seen great success stories with individuals and 
individual groups in both areas, private and public. We have 
also seen places where it has floundered.
    When we get down to the individual, that is where we find 
more of the success stories that are actually out there. With 
this growing impetus for adopting quality methods in the public 
sector, we see patterns of adoptions are very similar to the 
experiences we are seeing in the private sector. Change happens 
when individuals in small groups get excited about it and 
actually start pushing it. You can call them zealots or 
champions or whatever you will. There are many people out there 
doing that within the Government agencies, and this is why I 
said I am very optimistic about the future of quality efforts. 
Many of the folks do get together at the conference I mentioned 
that is happening next month.
    Mr. Horn. You would say then the Government is no less 
enthusiastic than the private sector?
    Mr. Bailey. If we talk about Government integrated across 
all the levels, I would say that.
    Mr. Horn. Where have you seen the most difficulties in 
either the private sector or the Government sector, at any 
level? What do you think has been the one overwhelmingly sort 
of strategic factor that has affected what happens in that 
program?
    Mr. Bailey. Again, it comes back to leadership. As far as 
strategic factors, you have the leadership and the linkages. I 
think the other part of cleaning up the multitude of processes 
that are out there is, in a sense, you get out of the way of 
individuals actually being able to make contributions within 
that overall system. They see the road map, they see the 
performance they want to ultimately achieve as an organization, 
and with a simplified system of key processes out there, that 
paves the way for them to make the achievement they need to 
make. They are making them now even with, you know, bogged down 
processes, unclear systems, and noncustomer-focused measures, 
and they could do so much more if you clear the way with better 
strategic planning.
    Mr. Horn. Any comment, Dr. Hertz?
    Mr. Hertz. The only thing I would add is drawing from our 
revised framework for 1997, in which we have three categories 
we call the leadership triad, that consists of leadership, 
strategic planning, and customer and market focus. And I think 
the most important aspect of a program succeeding is the 
commitment of leadership and the focus of leadership on 
strategy, communication of that strategy to the organization, 
and the focus of leadership on the customer and the markets 
that the organization serves. If the leadership isn't focused 
on the customer and markets, then the rest of the organization 
doesn't.
    Mr. Horn. Where do you find most of the initiative comes 
from in the typical plan? Is it top down from the leadership? 
Is it a group of employees that think they have developed a 
better type of mouse trap in their approach? What do you find?
    Mr. Hertz. I think it is both; it is a leadership 
commitment and employee empowerment that goes with it.
    Mr. Horn. It is a chicken and egg question, I understand 
that. But what has been your experience in both the private and 
public sector as to whether or not they say, hey, it's about 
time our agency did something? Is that from the employees or 
leadership?
    Mr. Hertz. I think it has happened both ways, and it varies 
from organization to organization. I think what is clear, 
though, is whether it starts with leadership or starts with 
employees, if it doesn't then go from the employees to the 
leadership, it won't succeed. So in the end, it is what we have 
been saying: Leadership commitment is absolutely necessary.
    Mr. Horn. We have in a lot of the written testimony good 
reports on the involvement of employee unions with management 
in doing some of the total quality management efforts. We had a 
bill before us in the House last year that the unions heavily 
opposed, and that was to encourage quality circle-type 
operations in business across the country, and nobody up here 
that put that together thought that they were doing anything to 
disturb unions, but the unions got very disturbed.
    Now, what can you tell me about the role of unions in the 
private sector in these efforts, and what can you tell me about 
the role of governmental unions in the public sector on these 
efforts?
    Mr. Hertz. I can't say much about unions in the public 
sector. I do know more about the private sector, obviously, 
because of the Baldrige Award. I do know we have Baldrige Award 
winners and companies that have adopted those principles that 
are unionized, and companies that are nonunionized, and some 
that have union facilities and nonunion facilities within one 
organization, and they all seem to function and adopt and use 
and cooperate and succeed.
    Mr. Horn. Mr. Bailey.
    Mr. Bailey. We are interested in this area, too, and we 
have provided some testimony based on some of our team act-type 
studies. We get concerned when we see in the press articles 
that say why teams fail, and, of course, there is a union 
aspect to that, and other aspects as well. We want to try to 
facilitate, if you will, the allowance for getting barriers out 
of the way to have folks work in partnership, in order to tap 
into the great employee base of individuals and teams working 
together. To whatever extent we can help foster that, we will 
do that.
    Mr. Horn. Well, this can stand, and the question I have 
heard everybody mention that has ever been in management, 
whether it be total quality management or just any other new 
idea, how do you overcome organizational and human resistance 
to change, and do you find this is a major problem in success 
of some of these various projects?
    Mr. Hertz. One of our Baldrige Award winners and good 
friends, Jerry McQuaid of Corning, always tells the story of 
the high school dance. He said there are those who are at the 
high school dance who, when the music starts playing, are the 
first ones on the floor dancing and eager. There are those who 
are on the corners or the sides of the high school gym, who 
need a little persuasion and then come and join the dance. And 
then he said there are those out in the parking lot who can 
never even be brought into the school, who are out there 
smoking, drinking, I think is his term, and never come in. And 
he said, well, maybe those just will never be able to make the 
change, and you have to work with those who can change and will 
change, and others just have to be dropped out.
    Mr. Horn. Is the conclusion of that story that we ought to 
move this operation to the parking lot?
    Mr. Hertz. I think it is that we focus on those in the gym.
    Mr. Horn. Maybe we are making a mistake, remembering my 
high school dance.
    Mr. Bailey. I will just add to that that it does sound in a 
sense like an oxymoron, ``constant change.'' It is what all 
organizations have to deal with. So those that are resistant to 
change need to have some overall fundamental structure there 
that is a constant, at least in terms of a framework, against 
which they can implement widespread changes. Otherwise the 
change after change after change that people are resisting is 
just floundering against not knowing what direction you are 
going for, what results you are going for, and all of that.
    It is an interesting problem, one we in ASQC have wrestled 
with. Our name is the American Society for Quality Control, and 
some folks in various industries, like health care and 
education, look at that and say that control is about the last 
thing they need; they need something a little bit more change, 
breakthrough-type stuff. I think you can thrive on both control 
and change, and, in fact, just as a side point, we are changing 
the name of our society to the American Society for Quality, 
effective July 1st.
    Mr. Horn. Very good.
    One of my favorite corporations in California, a very 
progressive corporation, did a study about 10 or 15 years ago 
on the corporate culture in their corporation. They found there 
wasn't one corporate culture, there were nine different 
corporate cultures, based on nine different operating 
divisions, and the fact that three companies had been merged 
together, there was a culture carried over from all three that 
came to the dance, if you will, in the merger. And I just 
wondered, since the whole business of the culture of an 
organization seems to either aid implementation or cause 
problems for implementation, how do you suggest we deal with 
that?
    Mr. Bailey. The first step is identifying what the culture 
or cultures are. That is definitely a good step. And then it 
comes back to the doorstep of leadership to understand that 
their job is not just to manage for the next quarter or the 
next half a year, or the next stockholder meeting, if you are 
talking about the public sector, but they have a long-term 
commitment to manage, and that a key part of that is the 
culture.
    So, again, you have to identify the few things, whether it 
is in terms of defining the principles that you are going to 
manage from or the environment or culture you are going to 
build, against which all this constant change is going to be 
able to be rolled out. It's important to identify and build 
upon the strengths you find in the cultures that exist and 
somehow eliminate the barriers that are there.
    Mr. Horn. Dr. Hertz.
    Mr. Hertz. I think I would pretty much agree with those 
comments.
    Mr. Horn. Let's say in terms of an organization that is 
unionized, what is the best way to handle that, just bring the 
union leadership in from the first time you have a glimmer of 
thinking you are going to do something in this area or what?
    Mr. Bailey. That would be consistent with the partnership 
mode.
    Mr. Horn. Has that usually worked?
    Mr. Bailey. Actually, I can only speak within DuPont. That 
generally works very well.
    Mr. Horn. One of the underlying assumptions, as I look at 
all this testimony, is the usefulness of teams. However, I 
think teams are probably not appropriate for every context or 
problem, yet they are advocated as sort of the universal 
mantra, if you will. When is it appropriate to use teams and 
when is it not appropriate to use teams?
    Mr. Bailey. I think that the answer probably is dependent 
on the culture of the public or private sector entity you are 
looking at. In general, I think that a lot myself in terms of 
we need to put another team on this. There are some cultures 
that don't have basically a management structure at all, they 
do everything by teams. They don't even have the organization 
chart, and with the culture there they work really well. I know 
one of our Delaware-based companies, Gore and Associates, works 
real well that way. It is a bunch of small sites with very 
little organizational structure, other than knowing where they 
are going and getting teams together, when necessary, to do 
that. They recognize they don't need them all the time.
    But you are right. Sometimes teams can be nonempowering 
with respect to the individuals that are on the team that want 
to provide their own creative forces to do things, so you need 
a proper balance. There is no quick answer to that question. It 
just relates to the culture you are dealing with.
    Mr. Hertz. I think one of the biggest issues is also to 
learn when it is time to end the activity of a team. Not all 
teams need to be teams forever. There are some that have a 
problem, solve it, and move on. So I think one of the big 
issues is when organizations become overteamed and don't know 
when a team's activities have reached the end of their useful 
life. That is why many teams develop team charters to begin 
with, that define the goal, and once the goal is reached, 
finish the activity.
    Mr. Horn. Is that the understanding in successful efforts, 
that you don't keep the team going, or you keep an overall 
monitoring group going to make sure this progresses?
    Mr. Bailey. I think the most successful organizations have 
two types of teams, those that are longer-standing teams and 
that are responsible for ongoing processes and those that are 
there to solve a particular problem and then move on, and the 
charters are very different.
    Mr. Horn. The word ``constant change'' came up here. At 
some point don't employees get a little weary of hearing about 
constant change or feeling it is constant change?
    Mr. Bailey. Absolutely. These are trying and tough times 
for organizations, in terms of staying competitive, both in the 
public and the private sector, and it can be disheartening at 
times to see all this change. I think, again, where you see it 
most is where the organization, be it public or private, hasn't 
at least put forth principles against which they are going to 
manage the enterprise that are constant. Also, the overall 
constant framework from which people can see where the 
``constant change'' of each step makes sense: ``Oh, I know why 
we are doing this, it relates to this overall piece of the 
framework we are trying to move towards, and it supports the 
principles we are for.'' So you need to lay that top level 
framework there, otherwise it is going to be totally 
frustrating.
    Mr. Hertz. And I think this is where the system's 
perspective, again, comes in, critically. Change has to be 
related to vision and values of the organization. Those values 
are constant, and that vision has to relate to strategy. If 
change then ties to strategy, then the purpose of ongoing 
change is visible and understandable. When change becomes an 
end in itself, then it obviously leads to frustration.
    Mr. Horn. Along that line, often there are long lead times 
between change and the results, as we know. How do you keep the 
employees motivated during these long lead times?
    Mr. Hertz. The way we encourage organizations to do it is 
look for milestones along the way, so that progress can be 
tracked, so there are measures that show that the organization 
is moving in the right direction, and so that all in the 
organization feel a sense of accomplishment along the way.
    Mr. Horn. And this is where leadership really has to come 
in and also self-leadership of the employee group, the union 
group, and so on.
    You both mentioned focus on the customer, and I think that 
is obviously correct. The big problem is how do you get the 
customer's input into the quality process when the customer, in 
the case of the Federal Government, is we, the taxpayers? What 
is the best way you have seen to find out what the customers 
want?
    Mr. Bailey. Well, there are plenty of ways. I think many of 
the customer information gathering techniques that are 
available, regardless of whether you are in the public or 
private sector, do apply here. You have to define the customer 
to begin with, and whether you are talking about meetings, 
focus groups or surveys, the quicker the better. Pulse surveys 
get a focus on what folks are really thinking and where we 
ought to be going. I think all those apply very well, and I 
think they break down only when you don't know what it is you 
are going after, customer input when you are going to be doing 
the surveys.
    Mr. Horn. Are you familiar with the Oregon benchmark 
approach to deciding whether they are being successful in the 
implementation of various laws and programs?
    Mr. Bailey. No, I am not.
    Mr. Horn. We will wait for the State officials. I am sure 
they are aware of it.
    And obviously, the question is, there is the result of the 
program, and when you have achieved the basic goal in that 
program versus the quality management approach, which might be 
steps along the way, and what is measurable, have you found in 
companies that there have been really accurate surveys of the 
employees in the sense of either hiring a professional polling 
organization that would go get a random sample that is 
legitimate, or is it left open to here are a couple 
questionnaires and throw them in the suggestion box or 
whatever? What have you found is the successful way to elicit 
that opinion as to the immediate internal clientele in an 
organization and the external clientele being served by that 
organization?
    Mr. Bailey. We find both approaches work well, and probably 
both approaches are needed, because one approach doesn't 
necessarily get you everything you need. The more formally 
structured survey that has all the statistically valid sampling 
and analysis criteria associated with it gives kind of a stand-
back snapshot of what the customers need or want. And the flip 
side is some of these very quick data-gathering activities that 
may not be as scientific, but are quick, get a pulse of what is 
happening right now. And they really provide a gut check on 
today's thinking about where it is we are going. I think both 
of those are definitely needed.
    Mr. Horn. Any comment, Dr. Hertz?
    Mr. Hertz. Yes. Leading organizations use both approaches, 
and I think that the approaches are as valid in the public 
sector as they are in the private.
    I know, for example, in our own program, we have an annual 
improvement day. We have an annual improvement survey that goes 
out to all our leading customers to get their input into the 
ongoing improvement of the program and the criteria. And we 
also have a feedback survey, for example, from our primary 
customers, the award applicants, that each of them get 30 days 
after they receive their feedback report.
    Mr. Horn. With the emphasis on the team approach, is the 
reward system primarily to the team as a whole, or is it the 
team leader or people nominated by the team? What is the best 
way to use that reward system?
    Mr. Hertz. I think it's all of the above.
    Mr. Horn. Well, in one firm it's usually going to be one or 
the other. Or they give things to the whole team and then take 
out a few people within the team, or what?
    Mr. Hertz. In one firm, generally there will be a multiple 
recognition system, one that is for teams as a whole, one that 
is individual performance, and one that is company or corporate 
performance that rewards profit-sharing or gain-sharing to all 
the employees. So it's generally a combination.
    Mr. Horn. How about in Government, what should it be?
    Mr. Bailey. Well, we've seen a mix of both work. But one of 
the things I've seen that, and I think this may even apply more 
for the private sector than the public sector, but I've seen it 
in the public sector; is to act almost like ``virtual teams.'' 
It's hard to really get your hands on who the team members are.
    Mr. Horn. Translate the virtual team for the noncomputer 
world.
    Mr. Bailey. Virtual teams are nothing more than, in a 
sense, there's a task that--let's talk about the short-term 
teams, ones that there is a specific problem out there; there 
is a problem to be solved. The problem statement is well 
defined by someone, maybe a so-called team leader. The goals of 
where we want to get to and the measures and all that are well 
defined, and it's somewhat understood who the key players ought 
to be to work on that particular activity. But they don't 
particularly come out and say, we're going to charter a team 
that has five folks or seven folks on it, and these specific 
names are expected to do all this stuff. No one outside that 
box or five or seven are supposed to help them and people 
inside the box of five or seven folks are the ones that are 
fully responsible.
    What we find is, once the whole organization knows the 
problem that needs to be solved and once they know who the 
responsible single person is to make sure it gets resolved and 
who the accountable few are, there are other folks in the 
organization that want to be informed about it, can provide 
input or need to be consulted about it, and you find that the 
actual solution of a problem is by a team. But the team, if you 
see everyone who has participated on it, is a large collection 
of folks, because they've learned by spreading ideas out 
through the electronic mail and the like. So there's a wide 
variety of folks involved.
    So the challenge, coming back to the reward piece, is, 
oftentimes you have a large collection of folks that have been 
involved in it, and when you try and reward a team, it is very 
tough to decide where you draw the line, given you don't have 
this box of seven people that are on the team but, instead, a 
large number of folks that are actually participating in the 
solution.
    So that's what I mean by virtual teams.
    Mr. Horn. Besides the plaque, besides the recognition, 
besides the feeling good with some of your colleagues and 
envied by others, should there be compensation awarded to those 
on the team, primarily employees, not executives, but could be 
executives occasionally--they take care of themselves, I found, 
usually--I mean, should there be flexibility where there is 
monetary compensation that is built into the payroll, not just 
the annual bonus, which I regard as sort of nonsense, I would 
rather reward the people with something that stays in there for 
their effort.
    Mr. Bailey. I think some of that should be built in. It's 
very important to note, however--and this is true in both the 
private and the public sector--if you're talking about what's 
going to be the biggest motivator for getting folks more on 
board or contributing to the quality improvement effort, it's 
not going to be monetary rewards, believe it or not; it will be 
other things such as simple recognition of a job well done. 
Some people will trivialize plaques and all, but that can be 
meaningful things like dinners out and extra vacation, that 
kind of nonmonetary stuff.
    But just the recognition itself is really what scratches 
the itch of most folks. They want to know that they're in an 
organization where they're contributing, and that they are 
recognized that they're contributing, and that oftentimes is 
all they're asking for, not the extra dollar bill in their 
wallet.
    Mr. Hertz. I think peer to peer recognition is an important 
part of that also. In our own office, we've implemented 
something as simple as what we call than Q notes which one 
employee can give to another one for thanking them for doing 
something above and beyond the ordinary, to help them in 
accomplishing their tasks.
    Mr. Horn. It's a good idea. I remember I had one vice 
president of the university who had won awards from the Nation, 
the State, and everything else, gold medals, so forth, and the 
reward that meant the most to him was the plaque from the 
associated students for being an outstanding professor, despite 
his administrative career, teaching career, and so forth. So we 
never quite know what touches people the most.
    Let me move to one or two last questions, and then I thank 
you for bearing with me on this.
    Training, obviously, is a major thing to face up to here. 
In some organizations in the Government, I have seen there has 
been a lot of training, but nothing has happened or very little 
has happened. With a scenario like that, what is wrong? And how 
do we go about tying the training to what we are trying to do 
in a total quality management effort?
    Mr. Bailey. I think you answered your own question. The 
reason why it goes wrong is that there is no clear tie-in.
    I've seen too many instances, in both the private and the 
public sector of sheep dip type training. It's just like, 
here's the training of the day and the answer to all the 
solutions; we don't know where we want to go and we don't know 
how we're going to measure it, but if we train everyone on this 
latest fad, if you will, that will just solve all the problems. 
If it's not connected to the overall framework of where you're 
going, and if the employees can't say why do they even care 
about being in this training and how are they going to use it 
to go toward those strategic goals you have, then it's just 
doomed to failure.
    So the idea of just-in-time training is definitely a much 
more--you know, worthwhile and rewarding experience for the 
enterprise.
    Mr. Hertz. I think there are several things. One is to 
relate training to key processes and key strategies and try to 
tie at least a portion of the training to moving in the 
direction that the organization needs to move. If there are new 
competencies that are needed in order to accomplish a strategy, 
to offer that training and make it clear what the relationship 
of that training to the accomplishment of those strategies or 
improvements are.
    The other is to try to implement some sort of effectiveness 
measure of the training, and that's something that's still very 
much at the forefront and difficult to do. But there are 
organizations that are trying to correlate improvements in a 
key strategic measure with the training that's being offered.
    Mr. Horn. Can the quality management approach work in an 
organization of any size? And where has been the most success, 
in small organizations or small parts of a large organization? 
What is your feel of that?
    Mr. Hertz. I think it can work in organizations of any size 
and has worked in organizations of all sizes. I think 
implementation obviously is easier in smaller organizations, 
because it can be done more informally; it can be done through 
leadership personally touching each of the employees. There's 
personal contact with each of the employees, which doesn't 
occur in a larger organization which requires a cascading 
system. But it's been implemented in both. I think results can 
be achieved more rapidly in a smaller organization.
    Mr. Horn. Anything to add to that, Mr. Bailey?
    Mr. Bailey. Yes, I'd add to that. Where I've seen it work 
or not work in small organizations and where I've seen it work 
or not work in big organizations ties yet again to the overall 
framework you have in place. You can have a small organization 
of 50 folks working on something, and the CEO can in fact reach 
out and touch all of them. That's great. But if the leader 
don't set forth what is going to be the constant framework for 
change and what the principles are and really identify that as 
part of the culture against what you're going to do all these 
constant changes and improvement, then it will fail even in a 
50-person organization. I think it becomes more vital, 
obviously, with large organizations to have that framework and 
those principles in front of you.
    Mr. Horn. Last question: You're familiar with the Hawthorne 
case and the famous Harvard Business School litany of cases. 
The question comes up: As you know, the conclusion of that was, 
it didn't matter what we do, productivity increased, and that 
was because it was shown that we cared about people.
    How do we differentiate total quality management from the 
Hawthorne approach, which said, if you pay attention to people, 
good things will happen?
    Mr. Bailey. Interestingly, I think back then there was a 
system where you basically were constant all the time, and then 
you did one new thing and things improved, and then you did 
another new thing and things improved again.
    Now we're in a world with a different ratio of constancy to 
change; there's just dramatically more change in all types of 
organizations. So there's so much stuff going on that sometimes 
you wonder whether you're being attended to at all or being 
overattended. It's a difficult situation, and I think this 
leads to the ``fed-up'' factor.
    How many different things in a row do you try to pay 
attention to get improvements? If the workers are not seeing 
the measures that they're supposed to be working toward 
improving, and if those aren't listed right on top for them to 
always look at as the constant thing along with the framework, 
they're eventually going to allow themselves to just turn 
completely off, and I think it will be an opposite effect.
    Mr. Hertz. I think it's an issue of good things happening 
and right things happening. I think good things happen when you 
pay attention to people, right things happen when you pay 
attention to people, pay attention to strategic direction, and 
pay attention to your customers and markets.
    Mr. Horn. And wrong things happen when you pay attention 
to, people get their hopes up and you can't make the tough 
decision that solves the process problem or the results 
problem. It again gets back to leadership.
    Well, I thank you gentlemen for sharing some of your ideas 
with us. And I don't know if you are going to stay, but if you 
get any other thoughts going back and forth on the plane, or 
the automobile in your case, why, let us know and we will put 
it in the record at this point.
    Thank you so much for sharing your knowledge with us.
    Mr. Hertz. Thank you.
    Mr. Bailey. Thanks again.
    Mr. Horn. We are now going to the second panel.
    OK, I think we have everybody there. If you don't mind, 
just stand and raise your right hand.
    [Witnesses sworn.]
    Mr. Horn. All four witnesses affirmed.
    We will just go down the line starting with Mr. Joe 
Conchelos, vice president for quality, Trident Precision 
Manufacturing, Inc.
    Or does the president want to testify first?
    Mr. Conchelos. No. He is, unfortunately, not here today.
    Mr. Horn. OK. Very good. Then, Mr. Conchelos, go ahead.

   STATEMENTS OF JOE CONCHELOS, VICE PRESIDENT FOR QUALITY, 
TRIDENT PRECISION MANUFACTURING, INC.; ROSETTA RILEY, PRESIDENT 
  AND CHIEF EXECUTIVE OFFICER, SIRIUS 21, INC.; REAR ADMIRAL 
 (RET.) LUTHER SCHRIEFER, SENIOR VICE PRESIDENT AND EXECUTIVE 
   DIRECTOR, BUSINESS EXECUTIVES FOR NATIONAL SECURITY; AND 
 LAWRENCE WHEELER, VICE PRESIDENT, PROGRAMS SYSTEMS MANAGEMENT 
                  CO., ARTHUR D. LITTLE, INC.

    Mr. Conchelos. Well, thank you, and good morning, Mr. 
Chairman. I want to thank you for inviting Trident to give our 
testimony on our quality journey today.
    Let me begin by offering a brief introduction to Trident. 
Trident Precision Manufacturing is a contract manufacturer of 
precision sheet metal components at electrical mechanical 
assemblies. We are located in Webster, NY, which is a suburb of 
Rochester, NY. Trident began operations in 1979 as a three-man 
facility and today employs over 180 people.
    In October, we were awarded the 1996 Malcolm Baldrige 
National Quality Reward. We began our total quality journey in 
1988, and when our CEO, Nick Juskiw, attended a symposium 
explaining total quality management, he realized this was the 
structure that his young organization needed to grow and remain 
competitive into the next century.
    As a young company, we operated under a business strategy 
known as crisis management. The strategy was so well developed 
and ingrained in our society, we even had a motto: ``We make it 
nice because we make it twice.'' We knew this was not the way 
to run a successful business.
    The entire management staff of 10 was trained in the 
principles and philosophies of total quality management. That 
team then spent the following 14 months developing Trident's 
strategy entitled ``Experience in Motion.'' Although our 
strategy is based on the Xerox Corp. model, we benchmarked 
several other organizations, including Eastman-Kodak Co., IBM, 
Tennant Corp., and Corning. We were able to take the best of 
the best and incorporate them into our strategy.
    The development and implementation of ``Experience in 
Motion'' has allowed us to become a customer-focused 
organization in a continuous improvement atmosphere. We 
understood from the outset that our employees were the source 
and foundation of our quality leadership and competitiveness. 
Our employee involvement is encouraged through a number of 
strategies, including our Total Quality Round Table, where 
employees are asked two questions: What is working? And what is 
not working at Trident?
    Management and employees have developed a partnership 
wherein the employees have the opportunity to develop and 
implement plans that directly affect their work life. This 
philosophy and plan to Trident employees can be summed up in 
one phrase from our mission statement. We utilize our 
experienced individuals, blending their creative talents and 
personal dedication to remain competitive, satisfying our 
customers' needs, and fulfilling the expectations of our 
employees.
    I would like to share with you now one success we've 
achieved in the area of human resources. At the beginning of 
our journey, one metric we selected to monitor was employee 
turnover. We wanted to know what effect the processes we were 
implementing were having on employee satisfaction.
    In 1988, we found our employee turnover rate was 41 
percent. We felt somewhat comforted by this result since our 
local industry turnover average was 52 percent. But we still 
wanted to know why we were losing so many people each year. We 
asked an employee team to investigate the problem. We wanted 
them to identify the root cause and develop a corrective 
action. Their answer was very frank and direct: Management did 
not care who they were hiring, so long as they were breathing 
and they had two hands.
    They suggested we revise our hiring practices and develop a 
new employee orientation process. We implemented their 
suggestion, and, in conjunction with several other facets of 
our strategy, we have been able to maintain less than 5 percent 
turnover for the past 5 years. In the first quarter of 1997, 
our turnover rate was 1.2 percent.
    We've established our key business drivers as supplier 
partnerships, employee satisfaction, operational performance, 
customer satisfaction, and shareholder value. We have developed 
several metrics to measure and determine our progress for each 
driver.
    I would now like to share with you some of the 
accomplishments we have been able to achieve through our total 
quality management strategy.
    Our corporate quality rating, which is an aggregated rating 
to our delivered quality to our customers measured 97 percent 
through 1989. Through many of our process improvements 
developed by our employees and the use of our statistical 
techniques, we have been able to achieve and maintain a quality 
reading of 99.99 percent and higher.
    In that same time period, we were able to increase our on-
time delivery percent from 87 percent to 99.94 percent. We've 
been able to reduce our average cycle time from 70 days to 45 
days. Today we have teams in place looking at ways to reduce 
that even further.
    In 1990, 8.7 percent of our time was spent on reworking 
nonconfirming material found within our facility. In 1996, we 
spent just over 1 percent of our time in this type of activity. 
As I said earlier, our employees are our most valuable asset. 
Twice each year, we conduct an employee survey. Our employee 
satisfaction score for 1996 was 92.5 percent. Our management 
team has been working to improve this score for 1997. Since the 
bar has been raised, our goal for this year is 95 percent 
employee satisfaction.
    We spend an average of 4.6 percent of our payroll dollars 
on training. This compares with an industry average of 1.5 
percent. Our employees receive an average of 40 hours of 
training each year. This includes total quality management 
training, blueprint reading, statistical process control, and 
even English as a second language for some of our foreign-born 
employees.
    Process improvements suggested by our employees have 
increased over the years. In 1991, 550 process improvements 
were suggested by our employees. In 1996, over 2,200 
improvements were suggested. Over 98 percent of all of those 
suggested improvements have been implemented.
    I began by stating that Trident was a customer-focused 
environment. We want to know how our customers feel about us. 
Twice each year, we survey our customers and ask them to grade 
us in nine different areas. We've received an average grade in 
1996 of 93 percent customer satisfaction. We understand that 
100 percent customer satisfaction is not a realistic goal, 
since it is such a changing target. What was satisfaction 
yesterday is expectation today.
    There were downfalls along the way. We decided to introduce 
a suggestion program. We had a box built and put it in our 
break room. We received over 250 suggestions. We did not have a 
process in place to deal with one suggestion, never mind 250. 
Our CEO called a company-wide meeting and explained that he had 
failed, not the staff and not the employees; he thought this 
would be something we could do very easily without a process, 
but we couldn't.
    We used this failure as a learning experience. It taught us 
not to introduce something without a full process developed. It 
was also the turning point in our journey. It was at this point 
when everyone understood that this total quality was not a 
flavor of the month and this gentleman was very serious about 
making this work.
    Does total quality work? I can only speak for my 
department, and the answer is an emphatic yes.
    In closing, I would like to offer you an invitation to 
Trident to get a firsthand view of Experience in Motion. And 
thank you very much.
    [The prepared statement of Mr. Juskiw follows:]
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    Mr. Horn. Where is Trident located?
    Mr. Conchelos. We are in Webster, NY, which is a suburb of 
Rochester, NY.
    Mr. Horn. Well, we'll try to work it out one of these next 
few months and enjoy seeing what you're doing there.
    Now our next witness is Rosetta Riley, the president and 
chief executive officer of Sirius 21, Inc.
    Welcome.
    Ms. Riley. Good morning, Mr. Chairman. Thank you for having 
me here today. I'm honored.
    I'll address the question of whether or not TQM is a fad, 
or is it a fact, and what are some of the issues that cause TQM 
to succeed at some companies and fail at others.
    Before I begin, let me tell you about my company. Sirius 
21, Inc., is a business consulting company that provides 
expertise to U.S. companies in total quality management, value 
driven leadership, and the Baldrige Award criteria. I was a 
Baldrige judge for 4 years, from 1992 through 1995. I'm also a 
professor at Falmouth Institute of Quality Systems Management, 
teaching total quality principles. I was previously employed by 
the General Motors Corp. I led Cadillac Motor Car Co.'s efforts 
to implement total quality management principles, and I also 
led Cadillac's efforts to win the Baldrige Award in 1990.
    My company, Sirius 21, Inc., works with many types of 
companies and organizations, helping them to develop and 
implement processes and systems that will lead to high-
performance excellence. My company and my associates have 
considerable experience in teaching TQM principles to employees 
and leaders of corporations.
    As I work with various companies, one of the concerns that 
I encounter most often from corporate leaders is: ``We've 
implemented teams, we're listening to them but nothing is 
happening. What's wrong?'' That is what I'm going to address 
today.
    It has been my observation that when TQM is not producing 
results and has not been embraced by the organization, it's 
usually one or more of these major issues that are acting as a 
roadblock to success. These aren't all of the issues, but they 
are just some major ones that I highlight for today's 
testimony.
    One issue is, leadership does not communicate a customer-
focused direction nor establish total business management as a 
way of life. Many companies venture no further than 
establishing vision, mission, and value statements. They fail 
to put in place an organization structure and a leadership 
system that ensures deployment and implementation.
    Leadership is impatient and does not want to and cannot 
invest the necessary time. They fail to recognize that it took 
many years to evolve the culture that rendered the United 
States noncompetitive in the 1980's and, thus, to reverse these 
negative trends by reinventing our culture takes time.
    Leadership has not recognized how to effectively use human 
resources and capitalize on the significant benefits of using 
teamwork for implementing strategic objectives, increasing 
flexibility, improving communication, responsiveness, 
productivity, and efficiency.
    Leadership's commitment is communicated in words but not 
actions. Employees and stakeholders take their signals and 
direction directly from the actions of management. When a 
leader's action is not in line with company directions, the new 
norms that are required by TQM systems are not implemented.
    Last, leadership fails to train itself and its 
organization. The implementation of total quality management 
systems represent a massive and complex undertaking. It 
involves improving and possibly making some change in every 
aspect of the business. Since business processes are 
interactive and interdependent, even small changes can have 
significant downstream ramifications. These impacts can be both 
negative as well as positive. Therefore, it's imperative that 
when taking the total business approach to improvement such as 
TQM, the necessary training must be provided.
    If those are all the things that prevent TQM from 
happening, why is it working for so many companies? Well, for 
those companies where it works, those leaders lead in a 
focused, consistent, systematic manner. These leaders have 
accepted the notion that the customer defines quality and that 
customer requirements must be met or exceeded. They empower 
their employees and assure self-directed effort and teamwork. 
They emphasize management processes to ensure process 
capability and control, they utilize strategic planning to 
drive change in improvement, and they place strong emphasis on 
continuous improvement.
    Basically, I'm saying that TQM is not a fad. Due to the 
changes and the behavioral norms of future employees and 
customers, TQM is an absolute necessity for success in the 21st 
century. Besides, we have found nothing else that has had such 
a profound effect on improvements in the U.S. performance in 
quality and customer satisfactions.
    Many companies have derived significant benefits from TQM. 
Many of these are Baldrige Award-winning companies, State and 
local award-winning companies, and many of them are companies 
that we never hear from. They're just quietly out there 
implementing TQM principles very, very successfully without any 
fanfare.
    One of my observations is: the problems we had early on 
with the implementation of TQM and why companies fail, was 
improper training. There was just not the type of training that 
would help organizations understand what TQM entails. What is 
happening now is, schools and universities are starting to 
provide that training. One of the schools, in particular, that 
specialize in total quality management training is the Falmouth 
Institute of Quality Systems Management.
    I think that many of the mistakes that were made by 
companies in the 1980's will not be repeated as we move into 
the next millenium because of a lot of the things we didn't 
know in the 1980's. We are more aware now through the education 
and training provided by schools and universities, through the 
training provided by ASQC, through the training provided by the 
Baldrige Award process.
    That ends my statement, and I thank you for this 
opportunity to speak.
    [The prepared statement of Ms. Riley follows:]
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    Mr. Horn. Well, we thank you.
    Our next witness is Rear Admiral, Retired, Luther 
Schriefer, senior vice president, executive director, of 
Business Executives for National Security.
    Admiral Schriefer.
    Admiral Schriefer. Thank you, Mr. Chairman. And I want to 
thank for you inviting me to come and testify today.
    First of all, I would like to tell you a little bit about 
our organization, BENS, Business Executives for National 
Security. It's a nonpartisan organization of business and 
professional leaders that are dedicated to the idea that 
national security is everyone's business. BENS members apply 
experience and commitment to help our Nation's policymakers 
build a strong, effective, affordable defense and find 
practical ways to prevent the use of even one nuclear, 
chemical, or biological weapon. We work with Congress, the 
Pentagon, and the White House to ensure that the changes we 
recommend are put in practice.
    I am currently directing the BENS Tail to Tooth Commission. 
It's purpose is to address the imbalance that exists in the 
ratio of the support side of defense to that of the combat 
side, a 70 to 30 ratio. Through the application of best 
business practices, we believe this ratio can be reversed with 
dollars saved put into forced modernization. The commission is 
comprised of successful political leaders such as Bo Calloway, 
Vin Weber, Warren Rudman, and Sam Nunn, and also very 
successful CEO's and chairmen from business communities 
throughout America that brought the business community of 
America out of the struggling period of the eighties into 
today's preeminent position. We believe that many private 
sector business practices are equally applicable to the 
business of defense.
    Now, before joining BENS, I had just completed, in February 
of this year, 37 years of active duty in the Navy, both as a 
carrier pilot, ship commanding officer, and commander of 
several major shore establishments. I was commander of the 
naval base complex in San Diego. And I finished up my career in 
the Navy as director of the Navy's Environmental, Occupational 
Safety and Health. I also chaired the CNO's Total Quality 
Leadership Board. And I believe that is the relevant reason why 
I am here today.
    My following comments are that of my personal experience. 
I've applied the concepts of total quality in four separate 
commands, a ship and three shore-based commands. I experienced 
varying degrees of success, with the most successful in my last 
command. At least I got to practice the mistakes in the first 
three.
    In the Navy we called the program TQL, Total Quality 
Leadership. A TQL program embodies all the elements of Dr. 
Deming. It had support from the top. And the CNO, in fact, 
Admiral Kelso, was a very strong component, not just a 
supporter. He practiced it at the Navy's highest levels.
    Originally, in the Navy, it was the responsibility of each 
commanding officer to implement TQL in his or her command. The 
Navy established schools, trained facilitators to develop 
mobile teams, and provided the essential materials necessary to 
really change the attitude and, I could say, the culture of the 
Navy which is required to effect the principles of TQL.
    However, as it evolved, the training became more and more 
centralized, and the emphasis and cost shifted to schoolhouse 
training of randomly selected individuals. Less effort was 
spent training and coaching senior leaders at command level, 
where such coaching and training was really needed.
    It might be useful to review what I believe to be the 
principal elements of TQ so we can better analyze why the gaps 
and flaws occurred in its implementation. There is some 
variation in agreement of these concepts. However, the 
following notions are readily accepted.
    One, establish continual process improvement; two, focus on 
primary customer satisfaction; three, use data and statistical 
methods to identify, study, and solve problems; four, 
empowerment of individuals and teams through the entire change 
of command; five, strengthen and renew the Navy, command by 
command, through an ongoing assessment, evaluation of data, 
clarification of core values, and planning; six, emphasize 
leadership and personal development from the top down; seven, 
provide the best known vehicle to introduce and manage positive 
change thoughtfully and systemically; eight, redefine the 
leadership role to include managing processes and management 
change; and the last one, create a learning culture.
    I don't need to amplify any of these elements because 
they're fundamental to the Deming concept. However, I will say 
that as basic as these seem, the implementation of all nine in 
sequence as building blocks was seldom achieved. In fact, 
seldom did we get beyond element three into almost four, 
empowerment. And that is where the real payoff begins.
    From this perspective, I can comfortably state that the TQL 
program has not taken root except in isolated cases. In many of 
those isolated cases, they've been very successful. I believe 
the reasons for this are as follows: There is a focus on random 
schoolhouse training instead of focusing on an entire command: 
One, at a time learning and adapting and benefiting from 
application of TQ philosophy and its principles; two, although 
there were some outstanding TQ instructors developed, there was 
an overall lack of qualified TQ instructor facilitators and 
coaches with whom the Navy personnel, particularly our seniors, 
could relate and could translate TQ principles in operational 
Navy terms.
    You have to remember that tradition is endemic throughout 
the military and it is hard to change. There's also a lack of 
ongoing assessment of program results, no predetermined 
measures of effectiveness, and no individual accountability for 
success or failure. There was little or no reward for command 
implementation, no penalty for ignoring prescribed TQ goals or 
standards.
    Finally, the senior leadership failed to acknowledge that 
the responsibility for TQ's failure lay solely on 
implementation management and not on the TQ philosophy and the 
principles.
    Now I would like to sum up these five items in the 
following manner: The policy and direction that the Navy 
followed in implementing TQL was focused on training 
individuals one at a time. The concept of applying this 
training and implementing it across the entire command as an 
entity was not followed. TQ as a concept and philosophy can 
only prove itself in the context of an operational command 
accomplishing its mission. Genuine proof of its value in a 
command context is probably the only way that total quality 
will ever be accepted system-wide.
    Now having said all of that, statistics could be provided 
citing all of the training that was accomplished, the numbers 
of people or the percentages of training that had been 
completed, the number of programs that were created for command 
implementation, and the list could go on, giving you a 
tremendous picture of a concerted and successful effort 
introducing and implementing TQL.
    But I contend that no benchmarks have been established; 
there are no assessments that show the results of TQL or any 
identification of meeting the goals of predetermined measures 
of effectiveness, and, finally, no incentive to justify taking 
the extra effort required. Tremendous resources in dollars and 
people have been given to this program without establishing 
valid measures of effectiveness. To meet the Government 
Performance and Results Act requirements, it would fall far 
short.
    What can be done to salvage this program to take advantage 
of the hundreds and millions of dollars already spent and to 
establish a program that truly makes a difference? The 
following is one approach: Conduct an assessment where the 
Navy's TQL program is today, where in relation to where it 
wants to be and should be.
    In order to be an unbiased and effective assessment, the 
following criteria is recommended: Establish an assessment 
team. The charter of that team is to evaluate present plans for 
command and leadership management development, and evaluation 
of the resources existing and expended.
    The product of this team should be specific recommendations 
for required adjustments that will make current plans 
effective, timely, and economically feasible. Team composition 
should be composed of those members who are knowledgeable, 
experienced advocates of continuing process improvement and 
leadership development.
    Now it's important that the team members be independent of 
today's organizations which design and implement the Navy's 
leadership/management and command development programs. 
Existing biases and attitudes that impede the organizational 
commander must be bypassed. All members of the team, including 
the civilians, should have experience in the field.
    Mr. Horn. I wonder if I might just interrupt you at that 
point since we've got all the time in the world. I didn't quite 
understand that sentence: The existing biases and attitudes 
that impede the organizational commander must be bypassed. All 
members of the team, including civilians, should have 
experience in the field. I'm not quite clear on what is the 
bypassing. If you could just elaborate here, I think it would 
help us.
    Admiral Schriefer. I think if you deal within the existing 
structure that we have right now to correct these problems, in 
other words, using the ongoing personnel, the bureaucracy that 
exists to implement TQL throughout the Department of Defense, 
you have a certain number of biases based on the way we've done 
business in the past: The reluctance to change, the reluctance 
to take that significant step, and also the mentality that 
exists throughout the entire structure, the tradition that I 
was referring to earlier.
    In order to avoid that, I think you need to have an outside 
group independently look at it, evaluate it--and that outside 
group includes not only military personnel, but also those 
civilians who are experienced in this field--and then deliver 
that directly to the commanders, and avoid the bureaucracy that 
tends to bog it down.
    Mr. Horn. Good. Please proceed. Sorry to interrupt on that 
one, but I thought it was a very important point and wanted to 
get it clarified.
    Admiral Schriefer. The next point is to ensure that the 
senior leadership--and this is for long-term involvement--
supports the implementing and the recommendations that come out 
of that advisory group. The program will only be successful if 
the senior leadership forcefully supports and implements the 
recommendations. As initially conceived, the elements of TQ are 
tools which can have a major impact on readiness, efficiency, 
and effectiveness of the organization.
    No. 3, establish an ongoing assessment which reflects and 
determines how predetermined measures of effectiveness are met 
and how they are implemented.
    No. 4, establish incentives to promote the program. These 
inducements can run the full gamut from just a simple directive 
to budgetary controls as envisioned by the GPRA. Regardless, 
incentives will be an essential part in the implementation at 
the organizational level.
    If the Chief of Naval Operations forcefully supports these 
recommendations and systems changes that will provide 
incentives, you will see this TQ program take off.
    In summary, total quality as initially conceived provides 
tools that can have a major impact on readiness, efficiency, 
and effectiveness of any organization. I believe that TQ 
provides an important philosophy and technology that will 
enhance both our Federal Government and national security. 
Implementation is already a matter of both national and DOD 
policy.
    It would be a shame to let it die as a result of poor 
politics, bureaucracy, or benign neglect. With modest 
experimentation, data collection analysis, and really 
courageous leadership at the top of Government agencies, we can 
develop a much lower cost TQ implementation effort. This will 
enhance the integrity and cost effectiveness of the entire 
Federal Government.
    I want to thank you for giving me the opportunity to 
express these views.
    [The prepared statement of Admiral Schriefer follows:]
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    Mr. Horn. Well, we thank you, Admiral. That's a blunt and 
truthful statement on the situation, and I thank you for saying 
it. We'll have a lot of questions about it later.
    Our last witness on this panel is Lawrence Wheeler, vice 
president, Program System Management Co., Arthur D. Little, 
Inc.
    Mr. Wheeler.
    Mr. Wheeler. Mr. Chairman, thank you very much, and good 
morning. Thank you for the opportunity to provide information 
about Arthur D. Little's experience in consulting on quality 
management principles within the Federal Government.
    I'm a director of ADL's Washington Government consulting 
operations. As a director, I oversee Arthur D. Little's total 
quality management services to Government clients. I also have 
personal experience in several assignments to help improve 
Government operations. I have been with Arthur D. Little for 
almost 13 years. Prior to joining ADL, I completed 24 years of 
active-duty military service as a Navy supply corps officer. I 
will now give you Arthur D. Little's observations on the 
subject of this hearing.
    Corporate America adapted the principles of total quality 
management in the 1980's as the means to revolutionize business 
practices, empower employees, improve productivity, and raise 
profits. While some corporations were successful in the short 
run, few improvements have led to sustained high performance. 
Within the Federal Government, I believe you would find the 
same results.
    We currently provide total quality management 
implementation services to the Federal Government under a 
General Services Administration contract. We have worked with 
the Navy, the Office of the Secretary of Defense, the Federal 
Aviation Administration, and the Internal Revenue Service.
    In general, our experience has left us with an overwhelming 
impression that the vast majority of civilian and military 
employees of the Federal Government sincerely want to improve 
Government operations; they want to provide best value to the 
taxpayers. The application of the TQM principles often results 
in more efficient and effective ways of doing business. 
However, as in private industry, the success of Government 
employee individual efforts requires persistent leadership, 
long-term funding to implement, not just design changes, and 
rapid passage of ideas through organizational change of command 
boundaries.
    My message is that the application of these principles to 
make Government work better and cost less is a positive 
approach. But the application to these principles must be 
championed consistently from the highest levels of an 
organization, and the trained resources must be aligned to make 
and, more importantly, sustain improvements.
    I will now cite a few examples from our work with 
Government agencies. Near the conclusion of my remarks, I'll 
provide our observation of the pitfalls to successful 
performance improvement that we have also seen in private 
industry.
    In the first example of our Government experience, we 
reviewed the financial procedures of an organization. Our 
mutual objective was to establish an improved process for 
determining whether the organization was making or losing money 
on a monthly basis.
    You probably know this is not standard procedure in the 
Federal Government, but we were trying to develop an easy way 
to forecast a proper loss for the year sufficiently in advance 
to be able to take proactive corrective measures. The desired 
result was to break even by the end of the year.
    As it turned out, our recommended approach was viable. The 
information was readily available and useful within the 
organization, and the process improvement worked without adding 
people. However, since the organization was not high enough in 
the chain of command, it did not have the authority to adjust 
resources to match work load, the key element that affected the 
year-end results. Thus, the organization had in fact improved 
the local process but the total process was controlled at 
higher levels in the organization.
    The lesson learned was that the processes to be improved by 
the organization must be critical processes that can be 
exchanged effectively at their level.
    In our second example, we made recommendations for 
significant improvements in a process that crossed 
organizational division boundaries, as most critical processes 
do, but the necessary resource and organizational realignment 
needed to implement the improvements could not be done quickly, 
and some of the benefits probably were lost because of the 
delay. The lesson here is that top managers must not only be 
consistent in their support of both the pursuit of the 
improvements, but also be persistent in making changes occur 
within a reasonable time.
    In the final example, or success story, we worked for the 
highest level in the chain of command with routine feedback and 
communication with the highest official. After an intense 
effort to find the best single standard system that would 
improve an acquisition process, it became apparent that there 
was no one system that would be the answer. But in this case, 
because of the routine personal involvement of the highest 
official, our unexpected recommendation to use more than one 
system, depending on the circumstances, was accepted quickly 
and is being implemented.
    The lesson here is that without the senior leadership 
commitment, our nonstandard answer would have had to be passed 
through several levels of review, probably delaying action on a 
very time sensitive issue.
    Changing directions now, we thought that a few observations 
from our experience in private industry might also be of 
interest to you. In private industry, we have seen three root 
causes for the failure of many quality initiatives. First, most 
TQM projects fail to focus on the most critical business 
processes. Rather, they focus on obvious, classically defined 
processes like manufacturing, in which the task are identified, 
the individuals responsible for the processes are clearly 
defined, the customers are known, and the success or failure of 
improvement efforts is easily measured. Unfortunately, most of 
today's critically important business processes do not meet 
these criteria.
    Rather than grappling with the complete and, most often, 
highly complex process, management allows improvement efforts 
to focus on only a portion of the overall operation. The 
results are usually marginal. My first example of our 
experience in the Federal Government is representative of this 
root cause in that the Government organization was improving 
only the local operation and not the entire process.
    Second, most organizations fail to align their organization 
and their resources to support long-term improvement efforts. 
For most companies, quality recommendations require fundamental 
changes in the characteristics of an organization. In its 
policies, culture, and structure, quality initiatives also will 
require wise investments in the resource base, the people, 
technologies, information, and facilities. Companies often 
understand the need for such investment also, but typically 
fail to recognize their interconnectedness.
    My second example of our Government experience fits this 
scenario and that the delay and implementation of improvement 
recommendations was related to culture and structure changes 
that could not quickly be overcome.
    Last, TQM-based improvements often are viewed and 
communicated as being separate from the strategic goals of the 
organization. Consequently, the quality initiative is not 
communicated through planning processes or translated into 
specific objectives for departments or employees. Quality 
programs that don't support strategic goals will confuse 
workers and create conflicting priorities. I believe these 
observations from the private sector should guide the 
implementation of TQM in the Federal Government as well.
    In summary, our experience in both the Government and the 
private sector indicates that positive and lasting results from 
quality improvement initiatives depend primarily on a 
consistent support of top managers at the level where critical 
processes are controlled.
    That concludes my remarks, Mr. Chairman. Thank you very 
much.
    [The prepared statement of Mr. Wheeler follows:]
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    Mr. Horn. Well, we thank you.
    Let me just ask some specifics now before I get to the 
general questions. And I might as well start, Mr. Wheeler, with 
you, just so I can clarify some of the testimony. You noted on 
page 2, you worked with the Navy, the Office of the Secretary 
of Defense, the Federal Aviation Administration, and the 
Internal Revenue Service. At what level were you dealing in 
working with those agencies?
    Mr. Wheeler. It varied, sir.
    Mr. Horn. Let's go down. Whom did you work with in the Navy 
now? What level was that?
    Mr. Wheeler. The Navy was at the commanding officer of a 
naval activity out in the field.
    Mr. Horn. This is a naval command?
    Mr. Wheeler. Yes, sir.
    Mr. Horn. Here in Washington?
    Mr. Wheeler. No, sir; it's in California.
    Mr. Horn. What's the aviation command?
    Mr. Wheeler. The aviation depot.
    Mr. Horn. This is in where? San Diego?
    Mr. Wheeler. San Diego, yes, sir.
    Mr. Horn. Everything seems to be in San Diego, so I thought 
I would have a good guess. The Office of the Secretary of 
Defense, who was----
    Mr. Wheeler. That was locally here, sir, right in the 
acquisition arena.
    Mr. Horn. This is Mr. Kaminski's area.
    Mr. Wheeler. In his area, yes, sir.
    Mr. Horn. In his area. I'm trying to figure out how high 
one has to go to get a success story here.
    Mr. Wheeler. Yes, sir. The point I was trying to make was, 
if you're dealing with a field level activity, as we were in 
the Navy, generally they try to do things that improve locally 
for that command. But the process itself is generally higher 
and goes through many levels up to the top.
    So your question is a good one, of course, but it depends 
on what process you're looking at.
    Mr. Horn. Well, in the case of the command in San Diego, 
was that the initiative of the commander of the Pacific fleet, 
or was it within the support system?
    Mr. Wheeler. No, sir.
    Mr. Horn. Who told them to get moving in this area?
    Mr. Wheeler. It was the CO permanent initiative, sir, and 
trying to find a better way to do business.
    Mr. Horn. Well, that's interesting. So in other words, they 
have the freedom within this----
    Mr. Wheeler. Yes, sir.
    Mr. Horn [continuing]. To not have to get the anointment, I 
take it, of the Chief of Naval Operations or the rest of the 
hierarchy in Washington; they actually can go ahead and do 
something.
    Mr. Wheeler. Yes, sir, they can.
    Mr. Horn. That is good news. So I have learned something 
here. And in the Office of the Secretary of Defense, was this 
in one of the major assistant secretaries' realm? And if so, 
which one are we talking about?
    Mr. Wheeler. Sir, it was for acquisition reform.
    Mr. Horn. Acquisition reform. OK.
    FAA, who are we talking about there?
    Mr. Wheeler. This was done for the administrator.
    Mr. Horn. OK. And the Internal Revenue Service?
    Mr. Wheeler. This was for the Corporate Education Division 
of the IRS.
    Mr. Horn. So they seem to have the freedom to contract, 
also----
    Mr. Wheeler. Yes, sir.
    Mr. Horn [continuing]. Or go right up to the commissioner.
    Mr. Wheeler. Yes, sir.
    Mr. Horn. Well, did it? The commissioner signed off on----
    Mr. Wheeler. No, sir. We got this from the Corporate 
Education Director.
    Mr. Horn. OK. Let me just see here if there was something 
else I wasn't quite sure on. No. That is the main thing I 
wanted to get clear in my mind. OK.
    You said, Mr. Wheeler, that most quality management 
projects fail to focus on the most critical business process; 
rather, most projects focus on classically defined processes. 
How can organizations address those critical business 
processes? What is your advice on that?
    Mr. Wheeler. I believe that there has to be a more 
correlated approach to--as the admiral was saying, that there 
has to be a higher level approach to determine what a full 
critical process is, and then have the individuals that are 
part of that process cooperate together to make it better. To 
go in and just shotgun processes for the purpose of statistics 
serves no useful purpose. How would they determine the most 
critical processes I believe would be determined basically on 
what the activity's results are expected to be and work 
backward from that.
    Mr. Horn. OK. Admiral Schriefer, let me ask you a couple of 
things. I was very interested in your almost first opening 
comment on the need to turn that ratio around of support to 
actual people on the line, the combat side, and you noted the 
70/30 ratio.
    As I remember, as a little kid, and I was fairly small 
then, but I sort of followed the Second World War, and I would 
like maybe if you could correct me if these were the wrong 
figures: The United States had essentially 90 percent behind 
the line and 10 percent on the line. The USSR, with its 
military, had 10 percent behind the line and 90 percent on the 
line. Is that too much of a difference or what? It has been in 
my mind for 50 years now, so you have----
    Admiral Schriefer. I can't verify those statistics. I 
haven't heard it that bad. Historically, over the last 15 to 20 
years, we've been running about 50/50. As a benchmark, the 
Israelis run 30 percent, almost the reverse of what we have 
today.
    Mr. Horn. This is 30 percent on the line?
    Admiral Schriefer. 30 percent support.
    Mr. Horn. Support, OK.
    Admiral Schriefer. And 70 on the line.
    What's happened to us is that as we have downsized at the 
end of the cold war, we have cut the combat forces and all of 
the support going with them, pretty much a steady budget, and 
we barely touched the supporting infrastructure. And that's how 
it's gotten so large. And our thrust is to look at the way that 
the Department of Defense does business and see if we can't 
apply the practices, the best practices that the business has 
to offer. And I could cite some various specific examples that 
show how that could be done.
    Mr. Horn. Well, I would like you to give us a taste of that 
here, as to how it could be done?
    Admiral Schriefer. Well, as an example, in the housing 
business, it costs about two and a half times more per person 
for the Department of Defense to maintain housing than it does 
if we turn it over to the private sector. Our administrative 
oversight and the travel budget----
    Mr. Horn. Well, let me ask you on point. I can see where 
you are coming from, but would that mean the sailors would have 
to go out and find their own housing, or does it mean the Navy 
would have to contract with private housing rather than build 
it?
    Admiral Schriefer. There are all kinds of variations with 
that. That's part of the ongoing discussion right now. In fact, 
the Department of Defense has taken a real hard look at it. 
They've got prototype projects most significant right now 
starting out in Corpus Christi.
    But the thrust is basically to get the Department of 
Defense out of the housing business, that is not their core 
business, fighting and destruction is their core business and 
to get into the business of things like housing, the business 
community can do a much better job.
    Mr. Horn. Would that be true around the country? In an 
urban area that might be true. How about in some of the rural 
areas where they simply don't have that amount of housing 
available with large group----
    Admiral Schriefer. That certainly would be one of the 
variations. And Department of Defense is looking at that.
    Mr. Horn. It's interesting. Did that start with Secretary 
Cohen, or has that predated him?
    Admiral Schriefer. It's predated him, although he has 
certainly taken the initiative in it.
    Mr. Horn. OK. How long has that study been going on?
    Admiral Schriefer. I can't answer that question. I don't 
know.
    Mr. Horn. It isn't over a year or 2 years?
    Admiral Schriefer. There have been various pockets of it. I 
think the most recent one Secretary Goodman has, who is 
responsible for this, is probably about a year. I know the Navy 
particularly has been addressing that and they've had some very 
strong prototype programs that are showing success.
    Mr. Horn. You mentioned the Chief of Naval Operations. 
Admiral Frank Kelso is a strong supporter of quality 
leadership. You served in the Pentagon under two CNO's. Was the 
other one the stronger supporter, and who was that?
    Admiral Schriefer. Well, Kelso was relieved by Boorda, and 
Johnson relieved Boorda. There has been just a change in the 
attention and the emphasis that's been placed on it, and 
primarily, I think, because there's more emphasis throughout 
the spectrum than was required or they felt was required on 
TQL. The effort that we had put in infrastructure, the 
training, and all of that did not change; that pretty much 
stayed as it is. It is just the emphasis that came from the 
top.
    Mr. Horn. Has the Secretary of the Navy made any effort to 
back this program up?
    Admiral Schriefer. He certainly has. He has an office that 
he's established that specifically is focused on quality 
management, TQL.
    Mr. Horn. As I remember, that is under the under secretary 
of the Navy and reports----
    Admiral Schriefer. That's correct.
    Mr. Horn [continuing]. Directly to him. We will get into 
that a little later.
    Do you think as you look at it--and the Pentagon is sort of 
unique compared to other agencies here, with rare exception--if 
we are going to get something done, is it basically the chief 
military officer in this case, the Chief of Naval Operations or 
the chief of staff or the Commandant of Marine? Is that where 
the initiative has to come from? Or do we need the civilian 
sector to keep prodding them even though they come and go every 
4 years or 8 years or we need both? What is your feeling?
    Admiral Schriefer. I think we clearly need both. All we're 
really talking about is change, change the traditional way of 
doing business, and when you want to start talking about the 
combination of management and leadership or just leadership, 
that clearly falls under the uniform service.
    Mr. Horn. Yes.
    Admiral Schriefer. And that's his charter, is to take care 
of his troops. And as a result, it has to be fully embraced at 
that level.
    Mr. Horn. In the testimony of the Department of Defense, it 
will be the last panel of the day, there really isn't much 
there, unless there is something they just aren't putting there 
in terms of the services, and is it just so much more difficult 
to get total quality management through the service hierarchy 
or is it simply the support services, little dibbles and 
dabbles here in the Department of Defense? I didn't get the 
feeling that anybody cares about it, after reading the 
testimony.
    Admiral Schriefer. I haven't seen the testimony, so I 
probably can't respond to it.
    Mr. Horn. There is probably a copy over there on the table. 
If not, we can furnish it. We will get into that at length when 
their witnesses come.
    So I was just curious in your sense of having been in the 
Navy hierarchy, having observed it, the civilian sectors of the 
Pentagon, is it much more difficult for us to have and expect a 
total quality management effort in the military services than 
in the civilian run services, where some come from business, 
they are familiar with the concept, and so forth?
    Admiral Schriefer. I don't think so. I think in my 
testimony I might have come across very negative, and that was 
not the intent. The thrust was to point out where I thought the 
weaknesses were.
    We have had some very good successes in the Navy. In fact, 
as was mentioned earlier by Mr. Wheeler, the work that was done 
by the commanding officer in aviation depot in San Diego was 
very well done, and we have several other examples where it has 
been within the local command and the structure has supported 
in it.
    From an overall perspective, I think it has been subsumed, 
the effort has been subsumed, in just the overall leadership 
approach the Navy has got.
    Mr. Horn. Is the commanding officer that did that in the 
San Diego depot, is he still in the Navy?
    Admiral Schriefer. I think the one that started it is no 
longer in the Navy. I know one is and I think the immediate 
successor is out at this time.
    Mr. Horn. So they retired from the Navy?
    Admiral Schriefer. I believe they did, yes.
    Mr. Horn. So there is no reward for a commanding officer to 
believe in total quality management is what that tells me, if 
the Navy let's an officer that is on the pioneering side----
    Admiral Schriefer. I think that is a wrong reaction or 
understanding of it. Any commanding officer's reward in 
applying this will be, if he in fact has a stronger, better, 
more effective, efficient organization. TQ really addresses not 
only the end product and all the things that are associated in 
Deming's concept, but also the fact you take care of your 
people better. They become real players, and as a result, that 
really supports the organization better, and any commanding 
officer that achieves that is going to get tremendous 
satisfaction on that. So I would not say that his incentives 
are lacking. If he understands what he is doing, he should have 
no trouble at all in really being motivated to go after it.
    Mr. Horn. Well, is it agreed that the TQ operation there 
was a success?
    Admiral Schriefer. I would say that it was a success.
    Mr. Horn. Well, I guess I would say if I were a junior 
officer in the Navy wanting to get to the top, gee, you know, 
it was a success, and he isn't rear admiral or he isn't vice 
admiral or he isn't admiral. It seems to me, the smoke signals, 
the shock waives, whatever you want to call it, people are 
stupid, they look ahead and they say, gee, what do you get 
rewarded for around here, and as you say, it is the total 
effort of that particular command, but if it was a success, 
that particular command ought to be doing better than a 
comparable command.
    Admiral Schriefer. Let me turn that question around a 
little bit. There are significant numbers of flying officers 
that applied TQ concepts in success of their command.
    We took a ship to a shipyard up in San Francisco. Any time 
you take a ship into a shipyard, it is not a pleasant 
experience, particularly for the crew. He was up there and 
started this--it was a major year or year and a half overhaul. 
At that time, the retention of the troops, the yearly, dropped 
significantly. Well, about 3 or 4 months into the overhaul, the 
company that was doing it went on strike, and they stayed on 
strike for a year. Now here you have a crew aboard a ship, who 
has really no focus on life anymore, and it is a very bad 
leadership problem.
    Well, he took that crew, he applied the total quality 
principles to that. His retention went up higher than just 
about anything, and he was very successful. So that is an 
example, and he clearly got rewarded for that. He went on and 
had plan of a carrier and selected for a flag by the way he 
applied those same principles both on his membership, as well 
as on his shore commands after that.
    So there are rewards and there have been rewards for those 
who applied it. When I talk about incentives, it has to be an 
incentive across the entire spectrum. In other words, the 
lowest level, as well as the senior readerships, have to 
realize and understand that.
    Mr. Horn. Well, from your position to observe the Navy now 
as a retiree, what percent of the Navy would you say is 
involved with total quality management efforts? Ten percent? 
Twenty?
    Admiral Schriefer. I tell you, I really couldn't answer 
that with any degree of confidence.
    Mr. Horn. Has this gotten into the bloodstream of the 
American Navy?
    Admiral Schriefer. Let me answer that two ways. I think the 
concepts of TQ are starting to be felt throughout the Navy, the 
concepts, not the application, because we are teaching it at 
all levels right now from the academic position. The actual 
application of it, which, again, we heard it several times 
today, requires the commitment of senior leadership, right 
straight on down. That has not been nearly the level you would 
expect, and a gut feel might be 20 percent, but I have no idea.
    Mr. Horn. Well, as I hear the grapevine in various fleets, 
Atlantic and Pacific, from just the average person, it sounds 
like a lot of people are being trained and they aren't given a 
project to deal with after the training. That just seems to me 
to lead to a lot of frustration and hopes and expectations, 
that we found the new religion of management, Drucker 10 or 
whatever we want to call it, or Deming 2, you know, it is just 
not the way to run an organization, to get all that high level 
of training and then not have projects where there is something 
to be done in a manageable period of time that puts that 
training to work. So you learn something from--as John Dewey 
said, learning by doing is what counts, not just reading about 
it.
    And that is what concerns me in the Department of Defense 
submission. It is a zilch, frankly, and we will be getting into 
that, unless they just forgot to say anything about the armed 
services, with rare exception, and some of the projects are 
fine, but they are piddling in terms of the challenge, and that 
is why I am curious whether we are just training people or 
whether we have missions for them to accomplish when they are 
training.
    My first mentor was the Secretary of Labor, under President 
Eisenhower. I was his assistant. He taught me early that 
endless job training does no good unless there is a job at the 
end of the line that someone can see and someone can place. He 
was right, and it just leads to frustration and organization 
when it is the other way around.
    So let me ask some questions of Mr. Conchelos and Ms. 
Riley. How did it feel for you to win the Baldrige Award? That 
is why you are here as witnesses.
    Mr. Conchelos. Absolutely phenomenal. It was not the end of 
a long road, actually; it is the beginning of a new road for 
us. I have never done so much public speaking in my absolute 
life.
    Let me explain, we didn't get into the Baldrige process, as 
Harry Hertz said earlier, to win this award. What we wanted to 
know was, in 1990, we submitted our very first application, and 
as I said, we started this in 1988 and it took us 14 months to 
develop our process, so we were virtually just implementing 
this throughout the organization when we applied for our first 
Baldrige. But what we wanted to know was, were we on the right 
track? We had benchmarked several organizations, as I stated 
earlier, but we still weren't sure and this was the criteria 
that could be used to find out exactly if we were on the right 
track.
    Mr. Horn. Well, what was the reaction and feedback from the 
employees?
    Mr. Conchelos. At implementing total quality or winning the 
award?
    Mr. Horn. Winning the award.
    Mr. Conchelos. They were ecstatic.
    Mr. Horn. How many years ago did you win the award?
    Mr. Conchelos. 1996.
    Mr. Horn. So we haven't had a full year yet.
    Mr. Conchelos. No, not yet. One of the things that people 
are very amazed about is we have a very small facility, we are 
180 people, we have 87,000 square feet right now. That Baldrige 
Award, along with our New York State Excelsior Award, which we 
won in 1994, are right in the break room.
    Mr. Horn. Who is the sponsor of that award?
    Mr. Conchelos. That is our local State award.
    Mr. Horn. Very good.
    Mr. Conchelos. Both of those glass crystals are right in 
our break room for our employees because they are the ones that 
won the award.
    Mr. Horn. How about it, Ms. Riley?
    Ms. Riley. Well, at General Motors it was complete 
pandemonium when we got the call that Cadillac had won the 
Baldrige Award. We were in a business meeting and our chairman, 
who at that time was Bob Stempel, called to tell us that he had 
received a call, and you could hear the senior executives of 
General Motors: we could hear all the noise and excitement. Now 
what impact did it have beyond the excitement? It had a very 
significant impact.
    Going back to your question that you have asked several 
times this morning, that is, can you implement TQM without the 
total commitment of the top leadership? Ideally, and I know 
Harry will support me on this, we want the top leadership to be 
in front of the parade, we want them to put TQM on their t-
shirts, we want them to name their first born quality, but the 
reality in the United States is that just doesn't happen.
    So the start sometimes is not at the top; the start may be 
some individual, because concepts come from individuals, not 
teams. Conceptually, it is possible in some types of 
organization where there are strong autonomous units, the 
change may start somewhere other than the top. In order for the 
development and implementation to occur, and become a true, 
total quality management system across the total company, you 
do need top leadership to get involved and lead the parade.
    Now how do leaders do that? Sometimes they do it by waving 
flags and putting slogans on the walls and what have you. 
Certainly the important thing is they have to establish 
direction and have to be consistent with respect to their 
direction, no matter how many changes are going on.
    Another way that leaders lead that we don't talk about a 
lot and I call it rotational leadership. That is when leaders 
have the ability to allow those in the organization to lead the 
change, who know best what the change is, and I heard the 
Admiral Schriefer talked about examples of change agents, down 
in the organization, who have started the momentum. Once 
Cadillac won the award, General Motors didn't say, hey, we 
don't want this here; the chairman called me up and said, 
Rosetta, if we can make this happen at Cadillac, at a 60-year-
old company that was in severe trouble, we ought to be able to 
make this happen at General Motors.
    To make a long story short, I was assigned to work directly 
for the chairman and his direct reports so that we could create 
a total quality management process for General Motors for the 
21st century. That is what GM is trying to implement now. So 
becoming involved with the Baldrige Award had a significant 
impact on General Motors Corp.
    Mr. Horn. Well, let's limit it a minute to the 
characteristics of the supporting leader. You have done some of 
that. I would like to know the characteristics of a leader that 
is unsuccessful and what are the primary things that the leader 
does wrong, even though they might mean well when they start on 
it.
    Ms. Riley. Right. Leaders, in many organizations that I 
have come in contact with, and even in my company, General 
Motors, and some of these autonomous units would establish 
values, vision, and mission statements. We would put them all 
over the wall. But we didn't have a process in place to make 
anything happen.
    It is the same thing as your comment on training. You can 
train all you want, but if the training doesn't have a mission 
and a purpose, and you don't have an organization structure in 
place so that employees can make something happen with that 
training, it just simply won't happen.
    In many organizations, we want TQM and its benefits, but we 
don't want the pain. So we take TQM principles and like fruit 
on the low hanging tree, or it is very similar to what we did 
in the early 1980's when we went to Japan and decided they had 
the best quality possible and looked at everything and we came 
back and said the reason for their quality was quality circles. 
We didn't understand it was systems.
    Well, the same thing is still going on in many companies 
where leadership does not understand that you don't look at one 
process and improve just that process. You have to look at 
every single process because they are all linked and 
interdependent, and just improving one and not doing anything 
with the others, you are not going to get the results you need, 
so you must take a systems approach. So that is certainly one 
of them.
    The other issue we talked about was training. In many of 
our companies we train our employees, and especially union 
companies, we trained union workers because, after all, they 
are the problem. However, we didn't train management or anybody 
else, so we created a euphoria for these employees. They came 
back with religion, they were ready to turn the company around, 
but their leaders or supervisors or foreman have never been 
trained so they would say, ``Hey, great news but that dog is 
not going to bark here.'' These kinds of issues are the kinds 
of issues that get in the way of success.
    Mr. Horn. When you did train union shop stewards and people 
in the collective bargaining hierarchy, did anybody find that 
made a difference in future collective bargaining negotiations?
    Ms. Riley. Training makes a difference. What made a 
difference in future bargaining negotiations at Cadillac, and 
you asked this question earlier, how they involve unions in the 
development of total quality management, the worst thing you 
can do is develop the process and then go to them and them to 
sign up for it.
    The second worse thing you can do is give it a name, 
because once you give it a name, it becomes a target. What you 
need to do is assume that they are our people, our greatest 
resource, and so we need to clear the table, start off with a 
blank sheet of paper with them around the table and say, here 
is what is wrong with our company, here is our values, here is 
our direction, here is where we need to be, show us how to get 
there. And they will come up with the same concepts.
    No matter how many times you go through this exercise--and 
I know Harry will support this--no matter how many times you 
come up with the exercise, the employees are going to come up 
with the same, basic answer, maybe giving different 
terminology. What I am saying about unions is when you go to 
them with the answer and ask them to buy in, it is very 
difficult for them to do that.
    Mr. Horn. Anything else, Admiral Schriefer, Mr. Wheeler, 
that you want to say on the successful characteristics and the 
unsuccessful characteristics of a leader, anything you want to 
add to the menu here?
    OK. I think we probably discussed this one enough, but what 
are the components of a good training program? How long should 
it last? Is it a daytime thing? Is it a day every few months? 
An incremental building of knowledge? What? How do we deal with 
that? You are an expert, Ms. Riley. Tell us about it.
    Ms. Riley. Well, I don't know about being an expert. But 
training certainly has to have a mission and a purpose; it has 
to be tied to something. It is best if it is just-in-time 
delivered so that once employees received the training they can 
go right in and use the training.
    In order to make training effective, leaders of a company, 
we must be certain that we have removed all roadblocks. We can 
train them, we can have mission, but if a company has 
roadblocks that prevent employees from doing the 
implementation, they still can't do it with the best training 
in the world.
    Training in terms of whether it should be 1 day or 2 days 
or what have you, that all depends on what kind of training you 
are doing. But certainly any kind of training that is done for 
process improvements or to help employees do their jobs should 
be done on a regular basis. In other words, what I am saying is 
you don't do it once at the beginning and never do it again; 
you have to reinforce knowledge over time.
    Mr. Horn. Anything anybody would like to add to that?
    Mr. Conchelos. Our training right now for total quality 
management is 21 hours. That is within the work cycle, within 
the regular work day.
    Mr. Horn. Twenty-one hours over what period?
    Mr. Conchelos. That is over 7 days.
    Mr. Horn. Over 7 days. So it is essentially 3 hours a day?
    Mr. Conchelos. Three hours a day.
    Mr. Horn. And when do the 7 days occur?
    Mr. Conchelos. We were, in the beginning, waiting until 
after the 60-day waiting period after they were hired, to make 
sure they were Trident material and we were right for them. 
Because we have had people there leave because they couldn't 
understand total quality. The original plan was after 60 days.
    We have since modified that as part of our new hiring 
practices. And to help these people understand about Trident 
and the team atmosphere they are going to be in and help them 
understand our language a little bit, they get 6 hours of 
training within the first 2 weeks of their working at Trident. 
So we are trying to bring them into our family a little faster, 
and we found that has helped with our turnover rate in our less 
than 60-day period.
    Mr. Horn. Is that 1 hour every other day or 1 day you take 
6 hours?
    Mr. Conchelos. We have kept it in 3-hour blocks, 2 days, 3 
hours, so they can really get a feeling for what they are going 
to be hearing, their interactive skills. It is basically their 
interactive skills training and introduction of the problem 
solving process because we do like to have new eyes on our 
teams, so they are constantly asking, why do you do that, why 
do you do that.
    And for our older--not older workers, but people who have 
been in the organization for a while, the easy answer is 
because that is the way we have always done it. When you have 
new people looking at it, they really make us stop and look and 
say, why do we really do that, help streamline our processes.
    Mr. Horn. What did you find your biggest mistake was when 
you started your first training program? What had you forgotten 
or what didn't you know or understand? I mean, you obviously 
learned a lot.
    Mr. Conchelos. The difficult part about training was how 
are we going to do it. That was the difficult part for us. We 
didn't know whether we could do it during the work day, whether 
we had to do it after hours, so that we didn't interfere with 
the manufacturing process, because as wonderful as it is, 
business must go on. You still have to get those parts out the 
door in order to get paid at the end of the week, so that was a 
very difficult aspect for us, trying to figure out exactly how 
to do that.
    We made a few mistakes along the way, for example, we shut 
down entire departments when it really wasn't necessary. We 
went back and instead of just training people by departments, 
we took them cross functionally. And that even added to the 
conversations, because the people in one department could ask 
the people in the other department, ``well, as my customer, why 
are you doing this?'' And it helped to increase internal 
customer supply relationships.
    Mr. Horn. One of the things they said for years about law 
enforcement training is, when they have to go through the 
academy, is the graduate of the academy comes out with a lot of 
knowledge and a lot of ideals or they wouldn't have gotten into 
the police force. And they get out on the beat and the 
sergeants says, ``hey, kid, I know they taught you a lot at the 
academy. Forget it. Just watch what I do.''
    How do you deal with that in any human organization?
    Mr. Conchelos. As everybody has stated here, our training 
is just in time. What you learn in the classroom will be put to 
use very, very quickly.
    One of the most difficult aspects for us in this total 
quality journey has been the changing role of the manager, who 
for years has worked his way through the ladder to become the, 
quote/unquote, boss, who is no longer the boss, who no longer 
has all the answers. That was difficult for us, and we did lose 
a couple people on our staff because they could not handle 
that. But our people now understand they are no longer the 
boss, they are the coaches. The real experts are the people 
that are on the punch presses or on the press brakes. They are 
the experts in what they are doing, and we have, as we said in 
our statement, utilized their talents to become one of the--I 
hate to say best, but a national organization.
    Mr. Horn. It shows it can happen and can be done and can 
continue.
    Mr. Conchelos. It can continue, and it has to continue. It 
is the greatest thing when competitors come by. People don't 
understand how we can open up the doors to competitors, but we 
do open them up. We offer seminars each month, and there is no 
way of stopping them. But the better that our competitors 
become will be that much better that we become.
    Mr. Horn. So competition works.
    Mr. Conchelos. Absolutely. Absolutely.
    Mr. Horn. Are your competitors all trying to emulate you on 
this?
    Mr. Conchelos. They are trying to figure out if it is just 
painting the machines or keeping the place clean. They are 
trying to figure it out. They are trying. They are trying. We 
have some of them that are very, very close to us and keeping 
us just ahead of them.
    Mr. Horn. Ms. Riley, do you want to add anything to this on 
training?
    Ms. Riley. The one thing I wanted to address is the comment 
when you do train folks, and they go out and the sergeants on 
the beat says, you are not going to do this here. What we did 
to get around that, because that was the exact situation we 
encountered, we trained the people at the bottom levels of the 
organization the union workers and folks in the plant, but we 
didn't train senior leaders. We learned, though, through 
working with the Baldrige criteria and other sources to start 
our training at the top and let it cascade down to the rest of 
the organization. Our leadership in our divisions were required 
to conduct the training. They did not do all the training, but 
they did train a cross-section of the organization in various 
training courses that we considered to be key.
    Mr. Horn. Admiral, do you want to add anything to this 
discussion?
    Admiral Schriefer. I think the training, at least the 
experience I have had in the Navy, has been pretty significant. 
We have, in fact, incorporated it through all levels. The 
problems that we have had have been in the implementation 
phase. And like I said, the training is mostly schoolhouse-type 
training. It is the academic, it is the actual application of 
the techniques. That is where the breakdown has occurred.
    Mr. Horn. Well, let's use analogies with other types of 
training the services do. There is probably no group in the 
country that is more committed to training than the military 
services, and they have been way ahead of the rest of the 
country in a lot of areas. So are they treating total quality 
management different than normal training, or where are we 
missing it, besides the fact there is not much to implement it 
on when they get out of their training, and that is a 
frustration, obviously? But where are we missing it? Is it 
somewhere between the ranking noncommissioned officer that 
things aren't happening, or how does it work?
    Admiral Schriefer. Let me go back to a comment I made 
earlier. We are talking about change and changing a culture and 
how we go after things, and that requires involvement across 
the entire command spectrum. It involves the entire command to 
go at it. If you just have pockets within the command that no 
one understands and tries to implement it, it is not going to 
be successful. It's got to be a command involvement in it. The 
just-in-time training, if that is applied properly, with the 
leadership fully knowing and understanding, you are going to 
have success.
    Mr. Horn. We had a hearing here a week or so ago on the 
Government Performance and Results Act, otherwise known as 
GPRA, and that is what struck us is there is a little bit of a 
sprinkling around on sort of the easy stuff, and there is no 
involvement of a total department or no involvement of a total 
major section of a department, and it sounds like the 
Government Performance and Results Act is going the way of the 
Total Quality Management Act, where, I grant you, if you can 
show some small examples in some phase and then spread it out, 
I am not going to knock that, that is a possible success and 
learning story on both the training and the implementation.
    But the question comes, then, how do you deal with, as was 
pointed out, all of these interactive processes that relate to 
your neighbors in the organization, and how do we get at, 
through leadership and other matters, of making that 
commitment?
    Mr. Wheeler, do you want to add anything to this?
    Mr. Wheeler. Just to reinforce your last comment, sir, the 
commitment has to be there. The people that are receiving the 
training have to know there is a reason for the training, 
rather than just getting their ticket punched.
    Mr. Horn. What should Congress do, if anything, to 
encourage more widespread application of the total quality 
management principles throughout the Federal Government, 
because right now they are working on a timed schedule with the 
Government Performance and Results Act? That is somewhat 
different. But if you are going to be successful there, total 
quality management is needed in high numbers to really make 
that work.
    Mr. Wheeler. One idea might be, again, picking up on your 
feeling, maybe a commanding officer who did some good quality 
management didn't get recognized for the performance. Maybe 
there ought to be something put in performance evaluations to 
make it a serious commitment on the part of all the senior 
leadership.
    Mr. Horn. Well, let me ask Admiral Schriefer for a little 
history. As I remember, when Admiral Zumwalt became Chief of 
Naval Operations, some of the old guard was driven mad by his 
Z-grams. But what it really was was a commitment to listen to 
everybody, whether they were the newest enlisted personnel or 
the most senior admiral, and I would think that made a 
difference.
    Now we were coming out of Vietnam, all of the services were 
having trouble on retention and all of that, but as you look 
back at your 37 years or so, what success stories have we seen 
in leadership in the CNO's office to make a commitment to turn 
a very complex organization around? Who has been successful in 
that? Who has been the most successful in that area? Granted, 
in a 4-year term, you can't do much.
    Admiral Schriefer. I am not really qualified to judge all 
of our CNOs. I will say I think Admiral Kelso was really fully 
behind, supported, and believed in this program. He embraced 
it, and just about every aspect of the way he tried to run the 
Navy was incorporated in that. And it took his strong 
leadership, I think, to put the Navy out in front in this 
business.
    Now that wasn't sustained, and one of the problems that we 
have got in the service, with all of our commands, is a 
commanding officer is in command for a relatively short period 
of time. And that is why I commented so strongly on the 
implementation process. If it is totally dependent upon the 
characteristics of a given commanding officer, and he leaves, 
and he hasn't embedded that throughout the entire command, it 
is going to fall apart when he leaves. That is why it is so 
important to implement it throughout the command and have a 
good process in doing that, otherwise you are not going to have 
success, as we have experienced.
    Mr. Horn. Isn't the only way to assure continuity, that it 
becomes part of the promotion pattern within the service--let 
me give you an analogy. Maybe it isn't directly on point. As I 
remember, the Army was the first to recognize that they needed 
scientific officers at the general rank, and they just simply 
started rewarding that in terms of promotion. Scientific 
officers could advance as fast as many of the nonscientific 
officers, and that showed they welcome people in science and 
research and so forth on which the future Army depends. And the 
only way I know to get the incentives out is when you change 
the promotion system and the compensation system. Now we can't 
do much about the compensation system, but there is a lot I 
would like to do on it and I will be doing on it if we can get 
everybody to sign off around here is what we did in the 
university system where I was. It took me 5 years, but it 
happened, and that was to reward management and to give 
management flexibility and to have a contract written out as to 
what are you going to accomplish in the next 6 months or a year 
and hold people to that.
    So I would hope that we could get this into the promotion 
system, if anything is going to happen, because I don't know 
how else you keep people's attention on it. But, again, that 
has to be done by the top management, both civilian and 
military, I would think.
    Any other suggestions on this area? Do we have any other 
suggestions here?
    I think total quality was developed for manufacturing 
processes. Can it be successfully adapted to the Government 
environment? We have shown some of it has been adapted, but is 
that just a misnomer that people say, ``Oh, well, that crowd in 
the private sector, it isn't relevant to us, we serve the 
people.'' Any bright answers to that?
    Admiral Schriefer. The smart answer is that is a cop-out.
    Mr. Horn. That is a what?
    Admiral Schriefer. A cop-out.
    Mr. Horn. Yes, it is, and yet I bet you run into it once in 
a while.
    Ms. Riley. You can run into it in just about any company. 
The support functions like financial and marketing say, that 
does not involve us, it is only for manufacturing. But what we 
have found through the Baldrige process by observing all the 
companies that have applied all the information we know of what 
is going on out there, it applies. It doesn't matter what type 
of company or what type of organization. You can be profit or 
nonprofit, manufacturing or small business or Government, and 
it just really doesn't matter. We could probably implement it 
here at the Rayburn Building, if asked to.
    Admiral Schriefer. Within our own organization, when I 
talked about reducing cycle time, we look at the manufacturing 
process. We didn't even think of the service end of the 
business, and yet that is where we are finding most of the 
delays, in the paperwork end, not in the manufacturing end. We 
have gotten that down very well, but what we are looking at now 
is from the date we receive an order to the date we get paid, 
that is now our cycle time. And we would like to reduce that by 
50 percent, in 45 days. But we are applying the total quality 
management, and have been, to the service end, in the 
accounting areas, in the order entry area, et cetera, and in--
wherever we have tried to implement this, so long as we look at 
the metrics and develop the right metrics, what are we looking 
at, what are we looking for, we have made significant progress. 
And I am sure that within Government, whether it is the Federal 
Government or State and local, which I am going to be hearing 
from later on, this does work.
    Mr. Horn. One last question would be the setting up of a 
special office, as you suggested, Ms. Riley. You were reporting 
directly to the chairman, CEO, or does one depend on the 
personnel office? Or does one set up a special office that 
integrates broader considerations than personnel, if you are 
going to be successful in this area, and what do you see out 
there? I mean, when people try this--and all panels might want 
to participate in this question and file it for the record, we 
will put it in here without objection--and what is the best way 
to get down to the nitty-gritty and organize and pull the 
pieces together?
    You have somebody who has to monitor this. The chairman, 
the Chief of Naval Operations, or chief of staff, whatever, are 
running around with other obligations, but they have got to 
have somebody that keeps them informed, and that they can pat 
on the back and focus in the right direction and back them up, 
and I assume that would be a special office. Now, is it just a 
one-shot affair, or is that a special office forever, if you 
are really going to face up to getting this into the system? 
What is the best way to do it, special office; let the 
personnel people do it, what?
    Ms. Riley. Because personnel or human resources management 
is certainly one of the major processes of teaching, that needs 
to be addressed, as we empower our people and put together a 
human resources-type process so they can get their jobs done 
and come up with new work design approaches. However, I think 
TQM is the responsibility of the leadership. There needs to be 
a person on the leadership team that acts more or less as a 
consultant to help train the leadership, to help advise the 
leadership or consult with them on TQM principles, to act as an 
overseer who is pulling all of this together, because you are 
looking at the total business. Ideally, the leadership team of 
a company, you try to get them to behave like a board of 
directors. Thus they get rid of their functional 
responsibility, and every executive around the leadership table 
takes responsibility for every part of the business. We end up 
with engineering equally responsible for human resources and 
marketing equally responsible for engineering. That is the 
ideal situation. But even in that situation, you need someone 
sitting at the table with TQM knowledge that constantly acts as 
a consultant to the leadership group.
    Mr. Horn. Any other comments?
    Admiral Schriefer. I think her comments were right on. It 
is a leadership issue. In fact, that is why the Navy called it 
TQL, to wrap it right up in there, and it has to come at the 
highest level, and he has to be advised, and he has got to 
support it.
    Mr. Horn. Well, I think you are right, and I guess, just 
based on my earlier questions, what concerns me on the military 
side is the feeling that very few senior military or civilian 
leaders believe in or practice total quality management or 
leadership, and in view of the critical need for senior 
officers and senior civilian personnel to embrace and support 
that effort. I guess I would ask you, what is your estimate, 
whether it be in your industry, nationwide--you point out your 
competitors are coming in to look at what you are doing--or 
whether it be where you are consulting or looking at who Arthur 
D. Little helped over the years, in the case of the Admiral and 
the Navy, what percent of people do you think in these 
organizations just really don't want to spend their effort on 
it? And is it a major first job in saying how important it is 
and get them involved so they get excited by it; and after the 
excitement do we still have a group that says, ``Oh, well, I 
like the old way of doing things?'' You mentioned a few left 
your firm with that attitude.
    Mr. Conchelos. Yes, exactly.
    Mr. Horn. Or did you force them out?
    Mr. Conchelos. No.
    Mr. Horn. They decided this wasn't the way they wanted to 
go.
    Mr. Conchelos. Exactly. That one particular day when the 
CEO called the entire place together to explain about the 
suggestion box, that he was really the one at fault, that was 
really our turning point. People really understood this guy was 
serious about this, and no matter what they may be doing in the 
background, they were not going to change this, and they felt 
bitter--they wanted to be the boss. They could not accept the 
cultural change, and this is exactly what this is, this is a 
cultural change. This is not a flavor of the month, and people 
have to understand that. It is--unfortunately, American 
business today wants to see their invested dollar grow within 2 
or 3 days. This is a minimum of a 5-year project. When we 
undertook this, we understood that, our CEO understood, because 
understand, he was the one footing the bill for this, he was 
the one paying money; not so much us, but he was. We were 
putting the time in. He understood this was a minimum of a 5-
year program. We weren't going to see any results for 5 years. 
That is what we went in looking at and understanding.
    The results we have gained since then have been absolutely 
phenomenal. Our turnover rate went from 41 percent to less than 
2 percent this year. It is a major cultural change. And I just 
wanted to say, we have been talking about leadership so much, 
and Harry mentioned this morning that people at the regionals 
that we are giving our presentations to do ask us, how do I 
convince my CEO this is the way we have to go in order to stay 
competitive? And I had to look at this gentleman and actually 
tell him that I didn't know how to answer the question because 
I did not have to convince my CEO, my CEO convinced me, so it 
was a completely different relationship.
    Mr. Horn. Well, you raise an interesting point. We did have 
great resistance in this country for a long time to any change, 
and the prime example was the automobile industry, of being so 
backward it was unbelievable. But that is when it really comes 
to getting informed, members of boards of directors or boards 
of trustees, as the case may be, get a commitment there from 
people on the boards that would get the CEO in a good mood 
enough to say, hey, your future here is dependent on you 
turning this organization around. And the danger, of course, 
and I have seen it in universities, you can turn it around. 
What happens when the person leaves?
    I think of Robert Hutchins at the University of Chicago, 
probably the greatest educational reformer of this century. The 
minute he got out of there, however, they started going back to 
their old traditional university ways. That doesn't mean they 
aren't a fine university, they are. They could have been a 
better university if they kept what he started there in terms 
of interdisciplinary connections between disciplines and all of 
that, and they didn't.
    I asked him one night when I had dinner with him, because 
he was my intellectual mentor, I said, how did you get away 
with all you got away with? He said, they were flat broke when 
I got there, they had to listen. And, of course, tenured 
faculty and other tenured people in Government, that is one of 
the problems. They sort of say, oh, we will wait this craze out 
and do something else; you know, it comes, it goes. And you 
have to break through that and say, we are serious and future 
administrations, regardless of party or Congresses, regardless 
of party, are going to be serious, too.
    So anything else to add on this?
    Well, you have been very kind and patient with your time. I 
appreciate all of you coming. We are now going to take a break, 
and we will recess until 1:45, with panel three, starting with 
Mr. Wall from Ohio and Mr. Frampton from South Carolina. Some 
exciting things are going on in the States, and we want to hear 
about them. So we are now in recess.
    [Whereupon, the subcommittee recessed at 12:20 p.m., to be 
reconvened at 1:45 the same day.]
    Mr. Horn. We have our third panel. And if you gentlemen 
wouldn't mind, please stand, raise your right hands.
    [Witnesses sworn.]
    Mr. Horn. And we're going to start with Mr. Wall, the 
director of the Ohio Office of Quality Services. We thank you 
for coming and sharing your ideas with us.

  STATEMENTS OF STEVE WALL, DIRECTOR, OHIO OFFICE OF QUALITY 
  SERVICES; AND GREG FRAMPTON, EXECUTIVE ADMINISTRATOR, SOUTH 
                 CAROLINA DEPARTMENT OF REVENUE

    Mr. Wall. Thank you. And good afternoon, Mr. Chairman. I 
appreciate the opportunity to talk a little bit about the 
lessons we've learned in Ohio trying to make our quality 
improvement efforts work. I hope to be able to share with you 
both some of the successes we've had and some of the real 
frustrations we've had as we've moved forward.
    But before I begin, I want to give you a quick word about 
terms, and that is that most of us in Ohio really are sick of 
the term ``TQM.'' It doesn't come from that it stands for 
anything bad. What it comes from is that it has become jargon. 
It seems like every consultant that comes along and wants to 
sell a new course or a new book comes up with a new word. I 
recently received a brochure that said, come to this new 
course, it goes beyond TQM. It's about customer service, too. I 
don't think there's really an understanding of what this is all 
about.
    It begs the idea that what we're trying to do is implement 
a program. And so that word is an end in itself, and our 
efforts are a means to an end. We call our efforts Quality 
Services through Partnership simply because those words mean 
something to us about our union-management partnership, but 
primarily what we talk about is we're simply trying to become a 
high-performance workplace, one that both gives value to the 
customers and one that's a better place to work, and these are 
just simply the best practices we use to try to get there.
    And learning these best practices are not hard. There's a 
grade-school teacher in Westerville, OH, who teaches 
kindergarten kids how to use parados and fish bones and even 
control charts to improve the process. This is not hard to do. 
What's hard is to get people to change and do things 
differently from the way they've always done them before.
    I read somewhere that the only people that really welcome 
change are wet babies. And I'm not sure that that's necessarily 
the case, but I saw the this great Calvin and Hobbs cartoon 
that I think sums it up. And Calvin and Hobbs are flying down 
the road in a wagon, and Calvin says to Hobbs, ``I thrive on 
change.'' And Hobbs says, ``You? You threw a fit this morning 
because your mom put less jelly on your toast than yesterday.'' 
And Calvin says, ``I thrive on making other people change.'' 
And I think that really is what makes people mad. This is about 
giving the people who do the work and who deal with the 
customers the tools and the power to make things better for 
them. And it really is a better full kind of tool if we can 
just get the powerful managers to let them do that and to 
support them doing that.
    Three quick stories I want to tell about our QStP efforts. 
One of them is the bottom line numbers, what's been done, and 
the results we've achieved. Another has to do with the cultural 
changes that are needed and are still needed in some cases to 
make this work. And the last is how it affects people's lives.
    We started out slow, but we expected to start out slow, but 
the results are really coming in. We've got a long way to go, 
but we've come a long way. We've trained over 50,000 employees 
in a 3-day basic training session. And I emphasize basic 
training because you're never done learning on the principles 
and processes and tools.
    Each department has a steering committee that's in charge 
of the transformation effort made up of half the union and half 
management members. We have a quality coordinator for each 
agency and a union liaison for each agency. And we do our 
training in partnership, both union and management, and we do 
our training ourselves. We think that's important to cascade it 
down.
    One of the most important things we've done is develop a 
cadre of over 1,000 facilitators. Most of the teams that I've 
been on prior to this effort I would more call clumps than I 
would call teams, not getting a whole lot done. And the 
facilitators really step in and make it work. They make it 
happen. They follow the process. And you're not just throwing 
people to the wolves.
    At this count, we have about 1,600 formal process 
improvement teams currently underway trying to make things 
simpler, faster, better, and less costly for the citizens. But 
I want to admit something that I heard from the testimony this 
morning, and that is we fell into the same trap as where we 
trained a lot of people and didn't have much for them to do. We 
knew we shouldn't do that. We tried not to do that. We did it 
anyway.
    What happened was it was just easier to train people than 
it was to get projects started. We assumed that it would take 
the same amount of effort to both. We had to go back and 
redevelop our training so that it specifically had them come up 
with projects during the training. We had to go out with the 
supervisors and help them through a ready-set-go process to 
find teams that would actually work; and finally, our Governor 
had to stand up in front of his department directors and say, 
``I want to see more teams. I want to see more teams. I'm going 
to be watching.''
    About 3 months after I first started the job, the Governor 
called down and said, ``Where are your results?'' He not only 
said, where are your results, but, where are your home runs?
    And I tried to explain it didn't work that way. And I got a 
memo the next week saying, where are your results? And every 
week for the next 6 months I think I got a memo saying, where 
are your results? And I scoured high and low and I was able to 
come up with a one-pager with four or five fairly feeble 
excuses for how we had done things better. But a year later we 
put together our first results book, and that results book had 
14 perfect examples that had been implemented that had been 
working well. And every 6 months since then we've doubled in 
size until our most recent one, which I provided a copy with, 
has 134 different teams and accounts for a legitimate $47 
million in savings.
    About 25 percent of the teams didn't save a nickel. Simple 
things like reduced long, long lines; tens of thousands of busy 
signals not being answered anymore; permits that take days to 
get done instead of weeks to get done; snow plow blades that 
don't blow up when you hit a bump, and bolts don't go off into 
the oncoming traffic.
    Recently we had a hostage situation where someone was 
disgruntled, went into our Bureau of Workers Compensation and 
took an employee at gunpoint because he didn't think they were 
getting what they were worth. Instead of knee-jerk reactions, 
the first thing the Governor did was put a process improvement 
team and a QStP facilitator to take a look at it. So things are 
happening.
    But I do want to say that I don't think the $46 million 
represented in this book are the big deal. I think the big deal 
is the thousands of names in here of State employees who are 
thrilled about serving their customers better, have better 
skills than they used to before, and can't wait to use the same 
process for the next problem and the next problem and the next 
problem.
    I want to go on to the cultural changes real quick and tell 
you that we also made a mistake. We tried to do it to our 
unions rather than with our unions. We had to take a step back. 
We had to learn from the private sector a little bit about how 
to form partnerships, and we still struggle with that, but I 
feel very good about how our partnership is forming.
    We got help from Xerox to begin with, and we made a mistake 
where we tried to copy them. We're not Xerox. We don't have the 
same culture. We had to adapt these things rather than adopt 
them. For instance, one of the first things we had to do was 
learn that we actually did have customers. That came as a shock 
to people 5 years ago, I'm afraid to say. It's not much of a 
shock now. But the private sector model didn't help us to 
figure out who our customers were. We don't sell goods and 
services the same way.
    I'll give you an example. I stay at a lot of nice motels, 
and they really do a good job of treating me well. They get me 
in, and they get me out. They do things very quickly and 
efficiently. They know who their customers are. It's the people 
who eat there and sleep there and they want to come back over 
and over and over again.
    Now, let's turn to the Government for a second. I used to 
work in corrections for about 7 years. I'm going to go to a 
correctional officer and teach him about customers, who do I 
tell him the customer is? Is it the people that eat there and 
sleep there and we want to come back over and over again? I 
mean, obviously not. I don't think so. Their definition of 
customers was to delight and please the customers. I got 
nothing with delighting and pleasing them. But I'm not sure the 
cops or the inspectors or the regulators think that their job 
is just to say yes and delight and please.
    We had to redefine it. Our goal for customers is to help 
them be more successful. If we can delight and please them, 
too, great, but we want to help them to be more successful.
    We even had one group of people who decided that their 
customers weren't even born yet, some folks from the historical 
society, trying to decide whether or not to preserve things or 
use things. It makes it kind of hard to survey customers when 
they haven't been born yet. We had to figure out ways to adapt 
some of these kinds of techniques.
    Our mid-level managers were a serious issue for us, 
continue to be a serious issue. We spent a lot of time telling 
people what not to do; forgot to tell them how to lead, how to 
coach, how to remove barriers. And the last thing I think we 
did poorly that I would like to do over again is we tried to do 
everything everywhere all at the same time. We became a mile 
wide and an inch deep.
    I think it's really critical that you focus your limited 
resources on the champions that want to make this work and 
leave out the folks who are kind of retired but just haven't 
left yet, and later they'll come along after they've seen some 
results.
    The final thing I want to say is that one of the best parts 
about this, I think, is how it affects people's lives. I heard 
a speaker earlier talk about what motivates folks to get into 
it, and I guess I'm going to disagree. I believe strongly that 
it's not the money that does it for folks. I'm not sure it's 
even the recognition. I think it's the chance to be in on 
things and to make a difference; to not check your brain at the 
door, but to really do something different. The people that are 
the most frustrated with the long lines and the busy signals 
and the waste are the folks who have to deal with those people 
all the time. They want to make a change. And that's what this 
does.
    We hold an event every year called Team Up Ohio. Last year 
2,000 people crowded into the convention. People watched 130 
excited, proud State employees talk about how they serve their 
customers better. You couldn't pay money for that kind of 
enthusiasm no matter what you did. It was fantastic. We also 
have a competition where people talk about things. And at one 
forum, I heard one person say, I've hated my job for 23 years, 
but on Tuesdays from 3 to 4:30, I love it because I get to make 
a difference.
    Another woman said, if they make us feel good, we'll make 
them look good, referring to their managers who let them do 
things.
    I guess I want to wrap that up by describing one more 
cartoon I saw, and that was two dogs are walking down the road 
together, and they're kind of grumbling with each other. And 
one dog turns to the other and says, ``It's always sit, stay 
and heel; never think, innovate and be yourself.'' If we really 
want to make a difference in Government, I think that's what we 
do is we get those people who do the job, who do the work, who 
know the work best, the power, the tools, the skills to serve 
their customers better.
    Thank you.
    Mr. Horn. That's an excellent statement, confessions of 
where things went wrong, and success stories, and I think 
that's reality. And I'm grateful to you. I thought you did an 
excellent job in your presentation also.
    [The prepared statement of Mr. Wall follows:]
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    Mr. Horn. Mr. Frampton, we're delighted to have you here. 
We've had South Carolina testify before this committee and the 
last Congress. The State is way ahead of almost every State in 
the Nation except maybe Oregon. You are right on the path on 
the benchmarking of various programs, and you're way ahead of 
the Federal Government in terms of being results-oriented. So I 
look forward to hearing your testimony as executive 
administrator of the South Carolina Department of Revenue. 
Welcome.
    Mr. Frampton. Thank you, Mr. Chairman.
    When we first started this process we didn't really try to 
set out to make people like paying taxes. What we tried to do 
in the process was to make sure that when they were involved 
with us, that the process was simple. It was responsive. And 
the people that we dealt with were courteous and polite.
    I would like to quickly review our management system that 
we use. It basically involves strategic planning, total quality 
management, and performance measurement. And we like to convey 
to our employees that strategic planning is what we want to do, 
total quality management is how we do it and the performance 
measurement piece is how we're doing, and we set those out 
separately even though they could be rolled obviously under the 
total quality umbrella. We felt like they needed showing 
specifically because it was so important.
    On the strategic planning part, we found and discovered 
that the process was really more important, or as important, as 
a product. We built in a lot of customer input and customer 
involvement, much to the amazement of people when we went out 
and contacted them that we really were interested in how they 
paid taxes, how the system worked for them. It truly involved 
our employees. And it really helped enhance our enterprise view 
of our organization as opposed to our stovepipe view. And we 
tie basically back from the strategic plan to the performance 
measurement piece, and the cyclical part of that process really 
gives us the discipline and accountability to move forward on 
it.
    On our total quality portion, we emphasize three major 
areas: our customers, our systems, and our employees. We do 
reach out. We ask our customers what they want. We do not 
assume that we know and we build a lot of trust, really, 
through that process. We have constant feedback systems. Our 
branch managers out in the field are required, for example, 
every month to visit a local CPA firm or visit a tax manager of 
a small business and say, what are your problems? What can we 
do to improve our service? What are the future trends that you 
see?
    We've involved people in implementation of new tax systems. 
We go out to the business community and give them some of our 
proposals, work with them to implement good responsive tax 
processes, involving industries into some of our teams and 
analysis. The trucking industry came in and worked with us on a 
team, a joint industry-government team, to improve that 
particular tax process. And we think we really do understand 
what our customers want, and we're trying to move to customize 
service for our citizens rather than a one-size-fits-all-type 
mentality.
    From a systems thinking standpoint, the broader we define 
the system, we think the greater opportunity is for 
improvement. A very quick example is when we eliminated a lot 
of complexity in our tax filing system and conformed to the 
Federal Code in 1984, we reduced our numbers of errors on tax 
returns from 22 percent to 4\1/2\ percent. That's 330,000 
rejections as opposed to 60,000 rejections. And you can guess 
what we were doing in that particular arena. We were working on 
nondeliberate errors that the taxpayer public had made and 
confused them in that complex process.
    Some examples of a systems perspective that I think are 
very encouraging, there is an initiative called STARS which is 
a simplified tax and wage reporting system that the IRS and 
States and Social Security Administration are involved in where 
they're actually looking at reporting that tax and wage 
information into one source, and then the users of that 
information would go in depth and use what they wanted to, 
eliminating a lot of the cost to the public, and reporting to 
all of these various entities that we're involved in.
    When you start looking at systems perspective, you have to 
start asking the question, how many people need to be involved 
in collection activities? In the State of South Carolina, we 
have many agencies involved in collection, the county, the 
cities, and we're dealing with the same customers. As we 
redefine the enterprise, we see that Government really 
shouldn't be stovepipe agencies, but we need to look at how we 
deliver service and the niches that our Government agencies 
should be involved in.
    Third element being our employees, we think we have 
tremendous capacity in our work force. I love Dr. Deming's 
quote that ``the greatest waste in America today is the failure 
to use the abilities of our people.'' We believe that, and we 
are sobered frequently by looking at the Milliken Co.'s 
benchmark in employee involvement. They average 60 improvement 
suggestions per employee per year. Even though it took them 4 
years to get to one per employee, it's an incredible statistic 
that we look at very often to see how we're really stacking up, 
and we frankly don't stack up too well to that type of world 
class activity, trying to get management to take responsibility 
for employee failure and stop blaming employees and improving 
the system.
    We really are constantly pleased and amazed at the 
commitment ability of our work force. We try to focus in our 
organization not on teams as much as the natural work team. 
What we want to see organizationally is that natural work team 
working together every day, using the tools, using the process 
to improve that system. And we see teams surfacing as a by-
product of that activity.
    In the performance measurement area, there's a lot to 
overcome: fear of measuring oneself and how that measurement 
system might be used. We found that we've measured the wrong 
things. In fact, they've been driving us in the opposite 
direction, away from voluntary compliance, when we measure too 
hard on the collection activity.
    We see a lack of emphasis, so often on dollars saved the 
tax-paying public with compliance. We think that we've got an 
environment today that rewards mostly if you save budget 
dollars. We need to see more of a view on what does it cost the 
public to comply with your laws. If you save a dollar on the 
administrative cost, that goes to the bottom line just as fast 
as a tax cut does.
    Some of the results that we've seen organizationally, 
since, basically, 1991, we began a downsizing. We've had a 13 
percent reduction in our staff. Workload has increased through 
most of our common measures 25 percent. And, basically, we 
decline the option to cut programs and decrease customer 
service systems.
    Our total collections are up 32 percent. Our enforced 
collections, which are a measure of our dollars which we have 
to chase, are up 94 percent. We've put about $378 million in 
the till after inflation through those efforts. Dollars 
collected per employee is up. Cost of collection is down. Our 
customers think we're doing a pretty good job. We survey 
annually through the University of South Carolina on April 15th 
to make sure that people know when we're touching them with our 
system, and we are showing about a 7\1/2\ percent 
dissatisfaction rate, which needs to be worked on. But we think 
we're beginning to give people what they want out of our 
process.
    Some of the barriers that we've seen, quickly, mandates 
seem to be a problem sometimes. We think that, in South 
Carolina particularly, this has been done by invitation. It's 
been a grassroots effort, and we think it should be something 
that should be encouraged. People should be persuaded to move 
into this process.
    Delegating to the quality department, with all due respect 
to Steve, I know he understands that it's very, very important 
to keep top management involved in this process, and for him, 
for the quality departments, to serve as consultants to that 
particular role. Accounting teams have been a problem. We want 
to focus on our natural work team to make sure the improvement 
is going on there. We've seen soft skills being another 
difficulty where people are not really involved in process 
analysis and measurement of the system and a little too 
occupied with teams.
    We're delighted to be here today. And we will certainly be 
happy to answer any questions, Mr. Chairman.
    Mr. Horn. Well, I thank you very much for that very helpful 
statement.
    [The prepared statement of Mr. Frampton follows:]
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    Mr. Horn. What I'm going to do is concentrate on clarifying 
some of the testimony first, and then I'll have questions for 
both of you. But since you just spoke, Mr. Frampton, let me 
start with you. There are just a couple of things I want to 
know in relation to the testimony.
    One that interested me and would interest all Members of 
this subcommittee is the statement you make on the bottom of 
page 3, the major quality initiatives working with other 
Government entities to simplify and enhance delinquent debt 
collection. Since the debt improvement collection bill was 
authorized by this committee and is now the law of the land, 
we're very interested in how agencies go about structuring 
themselves to encourage more effective debt collection. I would 
just like to hear from you how you do it in terms of steps one, 
two, three, four, five, and let's see where we are. And I'll 
have a few more questions on that.
    Mr. Frampton. All right, sir. We basically began with the 
ability to offset our refunds for debts from State agencies, 
the Federal Government, or the Internal Revenue Service.
    Mr. Horn. Could you speak into the microphone a little 
more? It's not picking up up here. Just raise it a little. 
They're crazy microphones. That should be the first total 
quality effort for the House. Go ahead.
    Mr. Frampton. We began for offsetting refunds for 
delinquent debts for the Internal Revenue Service, other State 
agencies, county government, and city government. That's been a 
very, very successful program for us. In South Carolina, we're 
up to about $30 million for other agencies. Recent legislation 
has allowed us to go into the debt collection business for 
other State agencies and gives us the ability to contract.
    Mr. Horn. When you started this effort, what was the amount 
of the delinquent debt that the State of North Carolina had in 
both the Revenue Department as well as all the other agencies?
    Mr. Frampton. I do not have a figure for the consolidated 
debt.
    Mr. Horn. Well, if you do, let's put it in the record at 
this point without objection if you could find the figure, 
because I think it's a benchmark here of what did you face, and 
then what has this system done to change that picture?
    Mr. Frampton. All right, sir. We move from that basic 
refund offset process. And we're beginning today to contract 
with our Department of Health and Environmental Control.
    Mr. Horn. With whom?
    Mr. Frampton. Department of Health and Environmental 
Control.
    Mr. Horn. OK.
    Mr. Frampton. On some of their water fees, we're looking at 
what is known as a second injury fund. That's on some of their 
uninsured workers' compensation claims. We'll move into that 
process with them, and frankly, it's on a little bit of an 
experimental basis. But we have tremendous tools available to 
us to collect debts that are not available to a lot of the 
private debt collection services. So what we're doing 
strategically as an agency--a lot of our smaller debts that 
don't require a lot of the heavier tools we're going to start 
privatizing, pushing off. We'll focus our tools on the major 
debts that we have from our organization and other State 
agencies. We have the ability to close businesses, for example, 
and levy on salaries, et cetera, which are quite effective in 
debt collection.
    Mr. Chairman. Let me ask at that point, in terms of 
dividing your debt into the smaller debt, which you say you 
will privatize, and the larger debt, I take it you have a State 
income tax, do you?
    Mr. Frampton. Yes, we do.
    Mr. Horn. OK. What's your idea of a smaller debt versus a 
larger debt?
    Mr. Frampton. Well, we're looking right now at our initial 
phase of dropping off everything under $500.
    Mr. Horn. So you turn that over to private bill collectors?
    What would they get in turn for collecting that debt?
    Mr. Frampton. Our current contract is 17 percent.
    Mr. Horn. Seventeen percent.
    What did you do before you had the private bill collectors? 
Did the agency try to collect at all itself?
    Mr. Frampton. We did. But what happens is you lose your 
focus on some of the higher priorities when you have the 
mountain of debt coming to you. And this is just the way of us 
prioritizing what's important and not leaving anything on the 
table.
    Mr. Horn. Tell me--both pre-quality management and post are 
in your plan. How does the agency, when it handles the larger 
debt and originally handled all of the debt, how were you 
structured? Was there a telephone bank? Did you first give them 
sort of automated notice at all, that there was a debt and you 
should do it by X date, or did you have a phone bank in there 
somewhere? I'm just curious of the mechanics. Obviously, I'm 
interested in what the Internal Revenue Service will be doing 
on this problem.
    Mr. Frampton. Our debt collection process was basically, 
initially a notice, a second notice, or a referral into 
telecollections process. If no results there, a lien was 
issued.
    Mr. Horn. What was the collection process?
    Mr. Frampton. Telecollection process.
    Mr. Horn. Telecollection. OK, by telephone?
    Mr. Frampton. Right.
    Mr. Horn. Three notices essentially, and then it's the 
telephone.
    Mr. Frampton. And if no results there, then referred into a 
lien status, and then that goes out to the field staff to work.
    Mr. Horn. And they administer the lien essentially----
    Mr. Frampton. Yes.
    Mr. Horn [continuing]. The field staff? And then what 
happened, did somebody actually call on the person or what?
    Mr. Frampton. Various techniques, depending on what you 
might find to collect. It may be a levy on salary. It might be 
a levy on a bank account. It may be a telephone call again from 
the local people, a knock on the door.
    Mr. Horn. Now, does the State Department of Revenue have 
branches throughout the State of South Carolina?
    Mr. Frampton. We do.
    Mr. Horn. Or how do you work with that people power?
    Mr. Frampton. We have nine branches.
    Mr. Horn. And so that was it. And you weren't happy with 
that because too much time was wasted on some of the smaller 
debts. And then that's what led you to privatization of the 
smaller debts?
    Mr. Frampton. Privatization was one of our efforts started 
initially with our out-of-State collection. Us simply not 
having the time or the resources for us to chase somebody to 
Michigan or Kansas to check a debt, so we began with 
privatization of that particular area. And I must tell you that 
it's a pretty significant cultural change for an agency to move 
that collection off to a private side, and that did well for us 
and really was the foundation for us moving into privatization 
with some of our in-State debts. And we started first there 
with everything that was over 2 years old, that it was obvious 
we weren't going to either get to or hadn't been successful 
with.
    Mr. Horn. Do you have a law in South Carolina that would be 
a privacy law, a confidentiality law, that one cannot reveal 
the taxpayers form and status and so forth? Do you have such a 
law?
    Mr. Frampton. Absolutely.
    Mr. Horn. OK. Is there any problem at all living up to that 
law when you privatize the debt to private bill collectors?
    Mr. Frampton. None whatsoever. We only send to private bill 
collectors those debts that there is a lien recorded publicly, 
and the information in the lien is a matter of public record, 
and that's the information that the private debt collectors 
use.
    Mr. Horn. In other words, you give them the amount owed and 
the address?
    Mr. Frampton. That's correct. Type of tax and basic 
information that would be included on a courthouse lien-type 
record.
    Mr. Horn. You mentioned that's tough on an agency when 
they've been doing this job for years. I don't think South 
Carolina has employee unions, or am I wrong on that?
    Mr. Frampton. We do not.
    Mr. Horn. You do not. But whether you have unions or not, 
just the work force generally, I take it from your comment, was 
sort of upset that part of the agency business was being 
delegated to a private entity.
    Mr. Frampton. Well, it was a significant change in what we 
were accustomed to, but the fact of the matter was we weren't 
going to get any additional employees from our legislative 
process, the number of debts and liens were stacking up, and 
something needed to be done. We did bring it in incrementally 
and slowly on a trial basis and worked out a lot of the 
problems in that fashion, because we started with out-of-State, 
went to over 2 years old, and now on the verge with going to 
everything under 500. That's been an incremental way and softer 
on bringing it in. The public is not always as pleased with 
this process as might be. Some of these collection processes 
are pretty difficult. We've had to manage that and make sure 
that they collect it according to our standards and our style 
and the way we treat our customers in South Carolina.
    Mr. Horn. Now, on your out-of-State do you just open for 
bid or contract, or how do you pick the person in Kansas to 
collect that debt for you?
    Mr. Frampton. We will bid with a principal contractor.
    Mr. Horn. Is that a nationwide contractor?
    Mr. Frampton. Yes. They have to have national ability.
    Mr. Horn. Has that contract been let yet?
    Mr. Frampton. We were in our third contract, I believe.
    Mr. Horn. Who has the contract?
    Mr. Frampton. FCA is the current contractor, Financial 
Collection Agencies.
    Mr. Horn. I'm not familiar with them. They are a major 
national firm, I take it, represented in every State in some 
way?
    Mr. Frampton. That's correct.
    Mr. Horn. That's why you picked them.
    What about the situation of deadbeat dads? Some of your 
colleagues who are State commissioners say that our debt 
collection bill, although it didn't apply to the IRS, has 
permitted State tapes to be matched against Federal tapes as to 
where some of these people who have skipped across State lines 
might be when you're trying to enforce a court order issued by 
the State in a divorce case, and they're leaving the State, 
figuring that order won't apply to them anymore. Is that of 
concern in South Carolina? Is that a problem?
    Mr. Frampton. We don't administer the deadbeat dad 
collection process.
    Mr. Horn. Who does?
    Mr. Frampton. Our Division or Department of Social 
Services.
    Mr. Horn. I see. And are they doing what you're doing to 
try and track people down and privatize that operation, or 
what? Because a lot of them are in other States.
    Mr. Frampton. I do not know the answer to that.
    Mr. Horn. OK. Well my staff can perhaps followup with 
social services, since you are privatizing, and we obviously 
had a problem here in Washington with the thought of it even in 
the Internal Revenue Service. So I'm very interested in that. 
When other States are making progress, the Federal Government 
isn't making much, but we'll get there eventually.
    Now let's see if there's anything else I wanted to ask on 
the testimony.
    You note here that, on page 5, through the efforts of the 
entire agency, we've made significant headway on our journey. 
While it is a journey that does not end, we can identify some 
significant milestones. What I was particularly interested in 
was enthusiastic frontline participants. If you could elaborate 
on that a little, in what way were they enthusiastic, and what 
did that do to help achieve the goal of total quality 
management or, as the Navy says, total quality leadership?
    Mr. Frampton. Through two different sources. One, when we 
were casting our last strategic plan, we used some external 
folks from the university to come in and have some focus groups 
with our employees. They reported back to us, and almost to the 
person those individuals who were involved in the quality 
process, involved with teams, been through the training were 
much more engaged and enthusiastic about what they were doing.
    No. 2, in a recent assessment that we've gone through with 
our State Total Quality Forum, which is a Baldrige-like 
assessment process, the folks who came in from the private 
sector, one of the things that they reported back to us was the 
enthusiasm of the randomly sampled frontline participants and 
what was going on in the organization.
    And we feel like that our people really are, throughout top 
to bottom of the organization, real players with us. They feel 
that, they understand that, and they know that. We think the 
enthusiasm comes from the fact that they know they can make a 
substantive change to the organization.
    Mr. Horn. You also noted barriers coming down. What were 
some of the major barriers you and other agencies have faced in 
this regard?
    Mr. Frampton. I think early on, the perception that we were 
moving into some type of process that this would be a 
democracy, and we would take a vote on every decision that was 
made. We had some major rejudgments in that particular area in 
making employees understand that they were going to participate 
in the process, but ultimately somebody had to be responsible 
for a decision. There was a lot of misunderstanding about that 
initially.
    Mr. Horn. That sounds like a university government system. 
And Mr. Calhoun, a citizen of your State, certainly believed 
that if one person objected, why the whole works ought to stop. 
But I take it South Carolina is beyond Calhoun's philosophy at 
this point.
    Mr. Frampton. It really is a new challenge for a lot of our 
leadership. We had to make sure that our people really were up 
to the task of being able to take some fairly direct criticism 
on their style and the way they've done business in the past. 
And that has not always been easy.
    We started early on with some surveys in our process, all 
employee-type surveys, and we didn't find it to be particularly 
productive. In several instances we saw some agencies where the 
survey was used adversely against some of their leadership in a 
political environment. We also saw in some instances where the 
surveys would talk about the management not being up to par, 
and the management being really the group that you need to lead 
this effort. We haven't seen where it really does much good to 
start off calling people names and calling processes bad or 
whatever. That's not a good way to start a process.
    Mr. Horn. I believe you said that you have a number of 
collection agencies in your revenue department, or did I 
misunderstand that? Do you have one collection process within 
the department, or do you have several?
    Mr. Frampton. Yes. We have a basic collection process, but 
it's multifaceted.
    Mr. Horn. Oh, I see. So it's directed by one operation. It 
isn't separate collection agencies within the department?
    Mr. Frampton. No.
    Mr. Horn. I didn't think it was, because I wondered what 
centralization had occurred among those agencies. And on the 
multifaceted side, is any competition ever built in between 
some of the facets of the one collection agency, and is that 
helpful in achieving total quality management, or isn't it?
    Mr. Frampton. We don't have the cost accounting processes 
that we need to really build a competition in yet. I think 
where the competition is going to come down the road is that if 
we don't have good measurement systems in our agency and know 
what our costs are, there will be people from the private 
sector who will. And it's going to be very difficult if you go 
to the table and say, well, you can't measure me, and you've 
got someone there who can measure their effectiveness, I think 
I know who's going to get the business. And that's the message 
we're taking to our professional businesses: You better get 
going because there are other people out there who will be glad 
to do your job for you.
    Mr. Horn. On the collection process, with the other State 
agencies, where debts are incurred and maybe not paid off I 
take it, do you have a responsibility to supervise that 
collection, or is that left to the other State agencies?
    Mr. Frampton. They will certify the debt to us.
    Mr. Horn. I see. They turn it over to you?
    Mr. Frampton. That's correct.
    Mr. Horn. And it then goes through your process?
    Mr. Frampton. That's right. If there's some difficulty with 
the substance of the collection, of accuracy of the debt, then 
that gets referred back to the originating agency.
    Mr. Horn. Now, is there any incentive built into the South 
Carolina debt collection law or laws that would encourage 
agencies to spend more time on debt collection than perhaps 
they have, since often the agency is thinking of, gee, you 
know, forget the debt. This is national experience and Federal 
experience. We're going ahead to do our real mission, and many 
of the agencies do not regard that as part of their mission. 
Obviously a debt collection agency would be part of their 
mission. But the more old line departments, I suspect--I know 
in the Federal Government, and with rare exception, in many 
States, they just say, well, that's getting in my way, we don't 
have time for that; and the debt accumulates.
    I'm curious how you deal with that. Do you give them any 
incentive if they collect the debt or--in other words, if they 
didn't collect it, they wouldn't have any money, but if they 
brought in some money to the Treasury, do you give them a 
percentage or anything like that?
    Mr. Frampton. Well, the dollars usually flow back to the 
agencies, but the incentive really is on our side. We actually 
go out and market our services, particularly the refund offset 
services. We get $25 a match on that particular process, and it 
accounts for now almost 10 percent of our budget. So we're out 
actively marketing that particular service with agencies. And 
you know, it's a what-can-they-lose-type proposition.
    Mr. Horn. And do they get to keep the money----
    Mr. Frampton. Yes.
    Mr. Horn [continuing]. And spend it on anything they want, 
or does the legislature have to reappropriate it?
    Mr. Frampton. It varies from agency to agency and the kind 
of dollars, but generally goes back into their funds available 
to spend.
    Mr. Horn. That's interesting. What we tried to do in the 
Debt Collection Act was stimulate the agencies to improve their 
computerization that helps them collect the debt. And so in 
that sense, it's an incentive. They get a percentage of what 
comes back to them.
    How much of a problem is it in debt collection when people 
take personal bankruptcy in the State of South Carolina? Does 
that just foreclose you from collecting this debt? And how much 
of a problem is that?
    Mr. Frampton. It's always a significant problem in dealing 
with automated systems and people that fall into a bankruptcy-
type position.
    Of course, that prohibits us in post-petition-type 
bankruptcy debts, but we've become heavily involved in making 
sure that the folks stay current, stay on the rolls with us, 
and don't fall off the rolls while they're in the bankruptcy 
process, particularly if they're reorganizing.
    Mr. Horn. Well, that's why I'm thinking if there's a 
pattern and practice of taking personal bankruptcy and then 
popping up somewhere else with a new business, new name, I 
don't know if you go by taxpayer numbers, but maybe a new 
taxpayer number, is there a way the State can get at that so--
or does the judicial proceedings just excuse them from any 
collection of those debts they did under that other name?
    Mr. Frampton. The judicial process really excludes you from 
going after a lot of those debts. But it's not a significant 
problem for us. We haven't seen a major change in that process.
    Mr. Horn. You mean even with the leniency of bankruptcy 
that we have now?
    Mr. Frampton. It hasn't come up as a significant change or 
problem for us.
    Mr. Horn. What percent of your debt is based on personal 
bankruptcy?
    Mr. Frampton. I don't have that number.
    Mr. Horn. OK. Well, if you could get it, let's just put it 
in the record at this point.
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    Mr. Horn. What got me started in all this is the Internal 
Revenue Service having over $100 billion in uncollected debt, 
and which I regard as a national scandal, as you all know I 
regard it. And a lot of that is obviously based on bankruptcy 
of small businesses, individuals, so forth and so on.
    But that's half the budget of Lyndon Johnson when he was 
conducting the Vietnam War, so it's not to be sneezed at. A 
hundred billion is sitting out there, and it's mounting still, 
shall we say.
    My last question to you and my question to Mr. Wall is 
given the active role that Governors from South Carolina have 
played in the National Governors Association, have some of 
these success stories ever been on the panel of the National 
Governors Association? And has the South Carolina experience 
and the Ohio experience been part of that panel? I'm just 
curious how Governors are getting excited in the TQM approach.
    Mr. Frampton. I think Mr. Wall has a good answer for what's 
going to happen in that.
    Mr. Horn. But South Carolina hasn't been on a panel then, I 
take it, to share the good news.
    Mr. Frampton. We've been on various panels, but none of 
that level.
    Mr. Horn. OK.
    Mr. Wall. Yes, Governor Voinovich is going to take over the 
chair in July, and one of the things he's promised to----
    Mr. Horn. He's got to bring this with him.
    Mr. Wall. Well, he'll bring the newest version with him, 
which should be twice as big again, I hope. But he's promised 
that that's going to be one of his major initiatives. And we're 
already working with the NG on how we're going to do that.
    We hosted the National All States Conference on Quality 
where he spoke to the quality coordinators of all the other 
States, and they gave him a standing ovation when he said that 
he was going to try to do that. He got kind of excited about 
that. I'm not sure what kind of events and presentations are 
planned, but I know I'm going to be real busy at that kind of 
thing. It's going to happen.
    Mr. Horn. Well, that's great, because I think the States 
are in the lead here. Justice Brandeis was right when he talked 
about the States as learning laboratories in our representative 
system.
    Let me just take a look at a couple of things here in terms 
of your testimony and clarify those, then we'll get to more 
general questions.
    I take it in Ohio you mentioned the degree of union 
cooperation, and you're heavily organized with employee 
unions----
    Mr. Wall. Right.
    Mr. Horn [continuing]. I assume, just as the California and 
the Federal Government is. What's the best way to get union 
cooperation, in your judgment, after looking at all of these 
different situations? Does something come to you on that?
    Mr. Wall. Well, sir, we started out thinking that we were 
going to get everything planned out and then present it to 
them, and that wasn't the best way to do it. Learning and 
working together, I think, is the best way to do it. They're 
very sensitive to us having a virtual partnership versus a real 
partnership. And we went right off the bat, made sure that they 
had equal representation to our process improvement teams.
    One of the unions' chief concerns is that we're going to go 
out and make things simpler, faster, better, less costly, take 
less people, they're going to lose membership. We put a 
contract provision right in all the contracts which said that 
you can't think yourself out of a job. If you're on a process 
improvement team, and it used to take eight people 15 days to 
do, and now it takes five people 3 days to do, we're not going 
to get rid of everybody else. You're not going to have the same 
job, but you probably wouldn't anyway. We guarantee you a job, 
same kind of a thing. And our commitment is to retrain, move 
people around, deploy them where they're needed. So dealing 
with some of those kind of fears, I think, is the most 
important thing that we did.
    Mr. Horn. I notice on page 6 of your testimony, you noted 
that 85 percent of the work force was taking basic training, up 
from 66 percent a year ago. And I remember you mentioned 3-day 
sessions, I believe?
    Mr. Wall. Correct.
    Mr. Horn. So I'm curious, how long is the typical session? 
Is it 3 days for the average State employee in Ohio?
    Mr. Wall. Or longer, 3 to 3\1/2\. Some even go out to 4 
days, depending on how they make it specific for their agency. 
But it is the full 3 days, and the Governor and Lieutenant 
Governor and all the cabinet members, all the union officials, 
everyone goes through 3 days.
    Mr. Horn. Just once a year, or once----
    Mr. Wall. It's the basic training. You're never done 
learning. You move into other kinds of just-in-time training. 
It's ground school, basically.
    Mr. Horn. Now, does your office administer that training 
program, or does your personnel group in this----
    Mr. Wall. Our office administers it, but we've developed a 
cadre of trainers within the agency, so they develop their own 
training plans. We have one centralized training so we all have 
the same jargon, same examples, so that we can all work 
together. And our trainers are made up of both union and 
management people. And we do a lot of cross-training, but we 
don't do that much of the training. We build capacity for the 
agencies to do it.
    Mr. Horn. What is the typical curriculum for the basic 3-
day----
    Mr. Wall. There's three things. One of them is how to work 
on a team and use interpersonal communication skills to get 
along with each other. That sounds so simple, but that's one of 
the biggest things teams say is that they've never learned to 
work--in school, teamwork was called cheating--and so they're 
not all that good at that kind of a thing.
    No. 2, we spent a lot of time on the actual problem-solving 
process, not skipping steps, starting out identify what you're 
currently doing, what do the customers want, what are the 
causes of the problems, collecting the data.
    And the last thing is that giving them some skills and 
using some of the basic tools, how to use a flowchart, 
histogram, parameter. And then when they end, they go through a 
ready-set-go module where they define a process improvement 
project that has a good likelihood of success.
    Mr. Horn. I notice on the later page on TEAMS chart 1 that 
you moved from the number of team essentially in 1992 to 1993, 
you had 25, and now you have 1,558. I guess I'm curious in 
terms of teams, does a self-selection occur in the sense of a 
really eager State employee who volunteers? Do you put that 
kind of person to work? And how does that person get the 
message up the hierarchy when they're down there maybe at the 
entry level and have a million good ideas after a month----
    Mr. Wall. Right.
    Mr. Horn [continuing]. Six months or a year? How do you 
bring that person into the network and take account of that 
energy and talent and commitment?
    Mr. Wall. And I'm not sure we do it as well as we should. 
But the way the process works is the people on the teams aren't 
just the nice people, aren't the people we like, aren't the 
most interjective people. The people are who does the work and 
who represents the whole system.
    So the first thing you do is you figure out what the 
process is that you want to improve, and then you kind of look 
around and say, how do we make sure that the whole system is 
represented; and then you look around and you say, and who 
should we have on it? And we're careful to make sure that we 
have union representation on it and want to make sure that 
there's equal numbers of different kinds of people on it. But 
the key thing is who does the work. There's two ways that teams 
get formed.
    Mr. Horn. Well, are you saying management, except for the 
union, you're getting in at the beginning is what I'm hearing.
    Mr. Wall. Sometimes it's an all-union team.
    Mr. Horn. Yes.
    Mr. Wall. It would be possible to be an all-management 
team, depending on what the process was. But there's really two 
ways that form the teams.
    Mr. Horn. Are there people right down there on the--let's 
say, with the plant analogy, the people that are on the floor 
that know what people really do and don't do, do they know 
who's conning the boss and----
    Mr. Wall. They would be--85 percent of the teams that are 
representing here are the frontline people.
    Mr. Horn. Right.
    Mr. Wall. Yes.
    Mr. Horn. So how do you get those frontline people on? Does 
management pick those in the initial stage?
    Mr. Wall. It works two ways. Sometimes the steering 
committee, which, remember, is part labor, part management, 
charters these teams and prioritizes them depending on what 
they want to do, and even sometimes have a role in selecting 
who the people are. As we evolve and get smarter and trust each 
other more, they just bubble up from the surface. Someone says 
I was on a team last year that did this, and here's another 
problem. We want to form a team to figure it out. It's just a 
way of doing business rather than a special event.
    Mr. Horn. How much help do you get from the union on 
picking people, then? Do you get quite a bit of help?
    Mr. Wall. Yes. And sometimes we put help in parentheses, 
too, because sometimes we get involved in who has power and 
control versus how to serve our customers better. That's one of 
the chief things we are learning to overcome and is sometimes 
we have what's called fair share people that are people who 
benefit from the union's services but have not elected to pay 
the union dues completely, and that causes some problems.
    Mr. Horn. That is the agency shop individual.
    Mr. Wall. Right. Right. So we try to work together on that. 
But it's not an exclusionary process in any way. It's the 
people who do the work.
    Mr. Horn. In other words, the union steward who is on the 
team from the beginning in relation to a particular process 
doesn't have a veto power of who goes----
    Mr. Wall. Doesn't have a veto power. But here's what would 
happen. If I had a history of all the teams that I put together 
only having certain kinds of folks on it, the union would go to 
the steering committee and say, here is a pattern that we 
really don't like. We need to do something about it. And then 
it would change. There is veto power for the steering 
committees, though, by the way.
    Mr. Horn. I see. On the 25 attempts that you had in 1992, 
1993, they are essentially nonexistent now. They solved the 
problem. They were appointed to do something about crawl.
    Mr. Wall. Correct.
    Mr. Horn. They could be on other teams, but not that team.
    Mr. Wall. Hopefully they're on other teams. Hopefully 
they're still monitoring the process and maybe improving it in 
another area with another team.
    Mr. Horn. OK. Were there suggestion boxes in State agencies 
prior to this team effort?
    Mr. Wall. Yeah, there were suggestion boxes, but frankly, 
we looked at the suggestion box as kind of a way of controlling 
suggestions versus encouraging them. And suggestion boxes also 
encourage people to jump to solutions where the improvement 
process asks you to first take a look at the process, define 
what the customers want, define what you're trying to do, look 
for the causes, and then fix what needs to be fixed; not the 
first thing you come up with.
    So we have suggestion boxes. We also have an improvement 
process where we pay people for the amount they saved, and then 
we have the process improvement project, and they all kind of 
work together.
    Mr. Horn. How does an idea get into the system now? Do they 
write you a letter? Where can it be cutoff, I guess is what I'm 
interested in.
    Mr. Wall. Oh, yes. Well, the most common place for it to 
get cutoff would be the frontline supervisor who just doesn't 
want anything to do with it. And that's incredibly frustrating 
to an employee who's got a great idea and new tools and 
knowledge they want to do with. That's one of the advantages of 
having our unions there is they serve as the conscience for us 
sometimes and almost an appeals process, and if something can't 
get done--but it goes to the statewide steering committee. I 
get involved rarely. But the agencies pretty much take care of 
that stuff themselves.
    The other way that it gets cutoff, I guess I would say, 
would be the steering committee can do only so many things, so 
they have a process for prioritizing what they're going to do 
and what they're not going to do. So hopefully a lot of the 
things aren't cutoff, they're just put into the appropriate 
holding pattern sometimes.
    Mr. Horn. Well, does the plane eventually land?
    Mr. Wall. I hope so. And they're landing faster and faster 
all the time.
    One of the things that I'm proud of, and you look at the 
statistics, is that over half of the teams that have ever been 
formed were formed in the last year. We're really making 
progress on getting that rolled out. And the goal wasn't how 
many teams we could do, but how to do it with it well. And to 
begin with, you just start off slowly with limited resources.
    Mr. Horn. And what's the turnover on a process improvement 
team or just leaving in frustration factor, whatever you want 
to call it?
    Mr. Wall. I wouldn't have specific suggestions to that. I 
do know that chartering of the teams takes away a lot of that 
turnover; that having a good facilitator takes away a lot of 
the turnover. I'm only aware personally of 3 formal teams where 
the people just disbanded out of frustration, out of 1,600. Now 
there may be more, but I'm only aware of that.
    Mr. Horn. Is there a time set for a team to finish its 
task?
    Mr. Wall. Usually there's a charter developed with a 
general outline of how long it's going to take, but that's 
negotiable depending on when they start draining the swamp, 
what do they uncover. It might take a little more time.
    Mr. Horn. I found, in doing the reform business, we usually 
underestimate how long it's going to take.
    Mr. Wall. And we underestimate how complicated the project 
we started on was, too.
    Mr. Horn. One of the examples I've got to read on your last 
page, it just was unbelievable to me. And I wondered even under 
the old system, this should have been collected, you said teams 
are doing right by their customers. And at the--and tell me how 
to pronounce it--Massillon Psychiatric Center. M-A-S-S-I-L-L-O-
N.
    Mr. Wall. That's pretty close.
    Mr. Horn. OK. A team looked into the process for getting 
new clothes to patients. When the team started, 55 days passed 
from when a clothing order was placed and the patient received 
new clothes to wear. Now it all happens in the same day. What 
did they do with the poor soul that's wearing the same clothes 
for 55 days?
    Mr. Wall. It's really scary when you start uncovering these 
kinds of things. And, in fact, what you almost want to do is 
you almost want to try to blame people for bad things that 
happen, and that's one of the things you can't do.
    We had another process that got rid of carbon paper, if you 
can imagine that. And my first reaction is why do we have that 
in the first place rather than good process improvement? I'm 
glad we're moving forward.
    Mr. Horn. So you looked in the warehouses of Ohio that 
several tons of carbon paper were still being ordered.
    Mr. Wall. Three different colors.
    Mr. Horn. Three different colors. Great. Great.
    Mr. Wall. Not anymore.
    Mr. Horn. This is like when we took over for the first time 
in 40 years, we found a warehouse of agricultural yearbooks 
that had never been distributed. Plus the ice. I mean, you have 
all heard about that. We don't have ice delivered automatically 
every morning when a lot of us didn't know what to do with it 
and wondered why the ice bucket showed up. Sort of like the 
iceman cometh, to say the least.
    You mentioned, Mr. Wall, a focus on the champions, those 
who embrace change and quality.
    Mr. Wall. Right.
    Mr. Horn. How can you shepherd along those organizations or 
teams so the disease spreads?
    Mr. Wall. Well, I think that's probably one of the most 
important parts of our strategic plan is that we elected to 
really focus on the champions and figure out every way we can. 
I think this results book is a prime example of that. This goes 
to the press. This goes to the legislature. This goes to other 
States. We give it everywhere we possibly can. And people, the 
first thing they do is they look for their team.
    Mr. Horn. Sure.
    Mr. Wall. They look for how many they've got on their team. 
They brag about the whole thing, our Team Up Ohio events, our 
team competitions, our work with the private sectors. What 
we're really trying to do is find the people who want to make 
this work and then encourage them and reward them.
    I just got a call from another State about someone from our 
State who was interested in applying. And they said what made 
them stand out head and shoulders was that they talked about 
their QStP efforts and how they had gotten everybody involved 
in it. And that to me is where we're really going to make some 
progress is where people are hired because of not their crisis 
management skills, but their ability to develop people.
    Mr. Horn. Let me ask you both some of these questions. 
What's the best way to get down to the nitty-gritty as top 
leadership has to run around and do other things and isn't 
always there? How do you structure the agency when the 
Secretary of the Cabinet Department, or whatever, I don't know 
what you call them in Ohio, is off somewhere else? He can't be 
around. Now, there's often a deputy secretary that's supposed 
to worry about the nitty-gritty of the nut and bolts. Where do 
you see these teams reporting? Are they at a much lower level, 
or do they report directly to the chief executive of the 
agency?
    Mr. Wall. I think that frequently the teams ought to report 
right to their direct supervisor, who, instead of being a 
traditional manager, becomes a leader, and their job is to make 
them successful. A lot of the teams, it just gets reported one 
step up.
    Frequently teams also report to the steering committee just 
to educate people to know what's going on, which is kind of a 
cross-section of folks. But regarding your question about where 
it has to go, we've got something we call--a lot of people do--
they call the ``Be'' team. You know, they were there when you 
came, and they'll be there after you left. And the political 
people will come and go. It's those career civil servants that 
have to be the champions and that we have to keep involved in 
it and that are usually considered the guidance teams or the 
sponsors. And if something just isn't going well, that's where 
you need the champions, and that's where you need to build it 
into your legacy almost, so that when you're gone, it will 
continue.
    Mr. Horn. Mr. Frampton.
    Mr. Frampton. One of the ways that we dealt with that was 
that we assign a member of our senior management team to act as 
a liaison to each team, serve several functions. The senior 
member of the management team can clear a lot of brush out of 
the way if the team is having trouble. He can keep them on 
track, and it also keeps that connection into our senior 
management team. We like our teams to report up to the top-
level management.
    Mr. Horn. Would the supervisor involved with the process 
that that team is reviewing and thinks they could do it a 
different way, would he be or she be in the meetings? And would 
that senior management liaison sit in on any of the meetings; 
does she sort of wander around and drop by sometimes when the 
team is meeting? How do they get the communication, what I'm 
after, from presence or from memos?
    Mr. Frampton. The manager of the process is always involved 
in the team. The person responsible for the process is 
involved. The senior management team member assigned to that 
would serve on an as-needed basis. They would come to meetings 
and spot--attend meetings, or if they were requested or needed 
by the team, they would be brought in.
    Mr. Horn. We heard this morning on the Cadillac experience, 
the special office was created reporting directly to the 
chairman CEO. Have you created in some of these cabinet 
departments special offices in South Carolina and in Ohio?
    Mr. Wall. Yes, I guess I would be considered a special 
office, reporting directly to the Governor and serving on the 
cabinet, and then each agency has their own quality 
coordinator. The vast majority of them report directly to the 
director. And I think you can just see which agencies are 
progressing the most versus what kind of champion that person 
is. It makes a huge difference.
    Mr. Horn. What does the actual point in the hierarchy of 
the management connection--have you seen that make a difference 
in Ohio? Or was it strictly the personal skills of the 
individual who was committed to this rather than the 
hierarchial location?
    Mr. Wall. Well, I believe the skill is always critical, but 
it sends a huge message to people that this is important when 
they are in the hierarchy at the level where they're--correct. 
We sort of learn from Xerox that you have to have a vice 
president in charge of quality, so to speak, to really make 
people sit up and take notice.
    Mr. Horn. So who are typically the people in your various 
State agencies that would get this assignment to quality 
control that would report to the Secretary of the Department?
    Mr. Wall. Now they are actually called the agency quality 
directors. They would be people who would serve on the senior 
management team, people who would be at at least bureau chief 
level, probably the division chief level. They would be the 
folks who sit in and have the direct ear of the director.
    Mr. Horn. But they are in the direct hierarchy prior to 
being picked for this assignment. Do you think this is an 
overload assignment or what?
    Mr. Wall. In many times, it was a brand new position that 
got created and people went outside looking for quality 
experts, frequently from the private sector, to come in and 
fill that new role.
    Mr. Horn. What series of characteristics do you think is 
needed to have a potentially effective quality coordinator? 
What type of past experience do they need?
    Mr. Wall. I think that the skills themselves are relatively 
easy to learn. However, it is important to have some experience 
working with change, primarily. Anyone can learn, I think, how 
to use the charts and graphs, and you can get other people to 
be facilitators. But to understand how long organizational 
takes and to have the perseverance and persistence to overcome 
some of the natural frustrations that are going to take place, 
I think that is really critical, someone who has tried to 
shepherd something controversial through the ranks, that is the 
main skill.
    Mr. Horn. Mr. Frampton, do you want to add anything to 
that?
    Mr. Frampton. I would, Mr. Chairman. One of the two main 
traits an individual has to have is basic professional 
knowledge of the skill and process and how to utilize the 
tools; they have to know how to bring that to the table. Social 
skills need to be very, very good, and I think those are a 
risk, if you rely on the power of the position, rather than the 
social skills, it is just terribly important. They need to have 
an appreciation for the problems that senior management has to 
deal with in an organization, and sometimes it is a bit easy to 
say, well, why aren't these folks doing this right now, without 
a real appreciation for some of the problems they may have to 
prevent them from bringing the process forward, like bad 
information systems or other things that could actually be 
tremendous barriers to an agency. So they need an appreciation 
for what top-level management has to deal with.
    Mr. Horn. One underlying assumption of total quality 
management is the usefulness of teams, yet teams are not 
appropriate for every problem and every process. How have you 
handled that? Have you always used teams, or have you gone down 
to the individual taking a look at this thing, making a report 
and changing it?
    Mr. Wall. You are absolutely right, you don't need teams 
for everything. Individuals can use the tools very effectively 
as well, and we have example after example of where a person 
took a look at what they were doing and figured out how to do 
customer expectations and a checklist and figure out how to do 
things better.
    I think a team is used when you have a very complex issue 
or an issue that covers a bigger part of the system. But I 
would guess that most times you don't find a project that runs 
through one person, and if you only have an individual do it, 
they tend to rob Peter to pay Paul rather than fix the whole 
system.
    Mr. Frampton. What we try to emphasize is, the natural team 
is where we want to see most of the progress go on in 
evaluating the systems and using the tools.
    One issue of surface that crossed jurisdictional boundaries 
into another organization or three or four across the entire 
organization, that is when it is brought to the management 
team, the charter group to deal with that and, during that 
chartering process, to evaluate or set the team up for success, 
sometimes it becomes very clear that it just needs to be done, 
and it is through that evaluation.
    Mr. Horn. Is there anything, looking at the reverse, that 
you should be aware of to not appoint a team? What conditions 
have you ever had in that situation where you thought, the less 
we get into this one, the better off we are?
    Mr. Wall. For us, that includes collective bargaining 
issues, that is one of the things we decided right off the bat. 
Hours of pay, wages, those kinds of things aren't going to be 
included in our process improvement projects. And sometimes we 
have taken a look at projects and said what, that is way, way 
too big; let's drop them down into bite-size kind of margins. 
But I don't think we have ever found anything that didn't lend 
itself to this kind of process. We stay away from morale, 
communication, and world hunger, things that are just--you 
know, you just can't deal with.
    Mr. Horn. Is world hunger above or below communications in 
your priority list in Ohio?
    Mr. Wall. They are policies that----
    Mr. Horn. Well, the world hunger threw me for a minute, 
sorry.
    Has the size of the organization affected the 
implementation of quality management? Are there some things you 
just have to either divide it into a lot of pieces to get at 
it, or can someone get a global team for a total large agency?
    Mr. Wall. I guess it would depend on how much time and 
resources and commitment you wanted to put into it. I have seen 
examples; South Carolina has good ones; people have dropped 
everything and trained people for 3 weeks and really done a 
bang up job of things like your Motor Vehicle Bureau. If you 
are willing to put that kind of resources in, you can do it. 
Frequently we don't have time to do those kinds of things to 
divide things up.
    Mr. Horn. Have either one of you had a chance to look at 
how much the average time is between the formation of a team to 
look at a process and when the results are in from the team, 
and when they are finally implemented, and to what degree have 
they not been implemented, even though the team might agree 
that this is the solution that management might have had 
another view and can you give us a sort of feel? Is it a 5-
month gap, or 6-month gap, or 1-year gap, or 24-hour gap?
    Mr. Wall. We actually have studied some of that stuff, and 
for a brand new team that has never done it before and has to 
learn, it's about 8 or 9 months.
    Mr. Horn. For the team to do its work.
    Mr. Wall. But that includes a do phase, where they have 
studied it to some degree, tried it to a small scale, and have 
the data to show whether it is better or worse than what we 
used to be doing.
    As teams get more and more skilled, it goes down, and a 
number of things are done in 3 months routinely. So if I had to 
give you a number, I would say 6 months.
    In terms of what gets implemented, it is kind of hard to 
answer that, because we tell them not to form a team if you are 
not going to implement something. But sometimes they have 37 
different suggestions, and 29 of them were implemented. Did 
they get implemented or not? It is kind of a tough thing to 
call.
    Mr. Horn. Do you want to add anything, Mr. Frampton?
    Mr. Frampton. I do. One of the things that we ran into 
early on is, the team would make recommendations, but senior 
management wouldn't write and implement those recommendations, 
and that became quite a sore spot for us, organizationally. So 
that was part of the reasoning for the liaison function we had 
with senior management participating with the teams.
    Our expectation is, when the team brings a recommendation 
to senior management, it is ready for implementation, consensus 
has been built, that senior management is part of the team in 
the system to this and it is necessary to implement these 
issues.
    So we work toward everything being implemented and working 
that out in the process. It is not a, ``Here, you all, let's 
see what you do.''
    Mr. Horn. Let me ask you one last question. People talk 
about stakeholders. Let me name you five possible groups, and 
tell me if there are more. Taxpayers generally; the employees; 
the actual customers of the agency, who could be taxpayers or 
particular clientele among the citizens; unions; and perhaps 
the media.
    Am I missing something there, as a stakeholder, that you 
look to? And if these are the five groups that have the broader 
constituency, the media through its communication skills, to 
what taxpayers, employers, employees, customers, unions, how do 
you prioritize your efforts, and how do you get them involved 
with your teams? Are most of these teams strictly employee 
teams, which include unions, or do we ever reach out and try to 
get some customer off the street or taxpayer?
    They are all taxpayers, I realize, within the agency, but 
do we ever get other people from the broader world of Ohio and 
the broader world of South Carolina to sit in and provide a 
grass roots, what I would call a farmer that came to the 
legislature and they were held spellbound as he told them what 
was really happening out there?
    Mr. Frampton. We think that the definition really could be 
expanded somewhat to include, in our case, we see the Federal 
Government, or the IRS, as a stakeholder, as well as county and 
city government, and we do frequently involve outside folks in 
our teams. A good example was the trucking community, on an 
evaluation of our taxation system of the trucking industry, and 
they were involved with us in a 12-months analysis, with strong 
legislative recommendations to improve that process, which gave 
them a real appreciation of what we have to deal with, as well 
as us, about our appreciation of what the issues were.
    But we frequently have those folks involved with us to 
evaluate whether it is the county association, municipal 
association, all those people who have some say, and whether or 
not we can effectively simplify a system. We bring them to the 
table, gladly.
    Mr. Horn. Mr. Wall.
    Mr. Wall. The only other stakeholders are executive or 
legislative branches of Government are considered to be 
stakeholders, depending on what we are doing, and bringing the 
customers to the table is important.
    Frequently we do have people who are just parents, for 
instance, being on a team dealing with how we are going to deal 
with children and those kinds of things. But probably more 
frequently is when we invite our customers in for portions of 
the team meeting. Rather than being there every Tuesday for 6 
months, they come in when we are really looking at customer 
requirements or we have an idea and want to bounce it off 
people to see if we are on the right track or not.
    Mr. Horn. In the Federal Government, we have a law that 
relates to the degree to which one can close a meeting on 
advisory councils, advisory boards, that many agencies and 
programs have. Do South Carolina and Ohio have a comparable 
law, and do these teams fall under it, where maybe an advisory 
board would fall under it? But to what extent has that been a 
problem?
    I am assuming the teams sort of work without any posted 
agenda, and a lot of people could say, gee, I want to see what 
you are doing, and so forth.
    So has that been a problem?
    Mr. Wall. Actually, the teams are probably the most 
structured meetings I have been to. It doesn't follow Robert's 
Rule of Order, but it does follow very effective rules. They 
have ground rules right off the bat on what gets posted and 
where it goes. It hasn't been a problem. The teams themselves 
determine when they are going to be done and how they are going 
to move forward.
    Mr. Horn. Any problems in South Carolina?
    Mr. Frampton. No problems in South Carolina.
    Mr. Horn. I thank both you gentlemen. It has been helpful. 
You have lived on the firing line with doing an effective, 
impressive job.
    If you have a few of these more to spare, Mr. Wall.
    Mr. Wall. I gave her about 36 of them.
    Mr. Horn. OK. Thank you. We are going to spread that around 
in a few places in this town.
    Mr. Wall. Let me know if you need any more.
    Mr. Horn. We want the new edition when it comes out. How 
many of these did you print?
    Mr. Wall. It is interesting, because we printed about 
5,000, I think. What we do is, our general service agency has 
the orders there, and we let the agencies buy them themselves 
rather than come out of one particular budget, and I know some 
agencies want everyone to have one, so I am not sure how many 
have been printed.
    Mr. Horn. That is a good idea. It spreads the disease. This 
is a good disease. Thanks so much for coming.
    We now have panel four, and that will be Mr. Thomas 
Carroll, National Director for Quality, IRS; David Cooke, 
Director of Administration and Management, Department of 
Defense, who is accompanied by Anne O'Connor, Director of 
Quality Management; Dr. Gerald Kauvar, U.S. Air Force; General 
James Boddie, Jr., U.S. Army, Captain Scott T. Cantfil, U.S. 
Navy; Lieutenant Colonel Tom Sawner, Air National Guard.
    If all those witnesses would come forward, we would 
appreciate it. And as I think a lot of you know, we have a 
tradition here of swearing in the witnesses, so if you would 
rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Horn. Right down the line, I take it everybody is 
affirming.
    We will start, Mr. Carroll, with you, as National Director 
for Quality, Internal Revenue Service. Thank you for coming.

 STATEMENTS OF THOMAS CARROLL, NATIONAL DIRECTOR FOR QUALITY, 
      INTERNAL REVENUE SERVICE; DAVID COOKE, DIRECTOR OF 
     ADMINISTRATION AND MANAGEMENT, DEPARTMENT OF DEFENSE, 
  ACCOMPANIED BY ANNE O'CONNOR, DIRECTOR, QUALITY MANAGEMENT; 
GERALD KAUVAR, U.S. AIR FORCE; BRIGADIER GENERAL JAMES BODDIE, 
   JR., U.S. ARMY; CAPTAIN SCOTT T. CANTFIL, U.S. NAVY; AND 
       LIEUTENANT COLONEL TOM SAWNER, AIR NATIONAL GUARD

    Mr. Carroll. Thank you, Mr. Chairman.
    Mr. Horn. We can't even give you a decent seat there. You 
are next to distinguished company, but you are almost out the 
door.
    Mr. Carroll. It won't be long.
    Mr. Horn. One of these days, if Congress ever has a total 
quality leadership or management team, it is redoing the 
hearing room and the idiocy with which this room was designed. 
But I am not the chairman, so be it.
    Mr. Carroll. Thank you, Mr. Chairman. I am pleased to be 
here today to testify on IRS's total quality management 
approach to the way we deliver products and services to 
taxpayers.
    I would like to summarize my statement in light of the 
number of witnesses that you have, and so just for the sake of 
history, to let you know we have been involved in the business 
improvement process since 1985, when we recognized that in 
order to have sustainable improvements, we needed to have a 
structured approach to those improvements. And we found, for 
us, the structure in the teachings of Dr. Juran. After working 
with him for sometime, we trained about 100,000 employees from 
the front lines to executives in continuous improvement 
techniques.
    One of the issues around that training, just for your 
information, was at that time, in 1985, we did not understand 
that the taxpayers were our customers, and it was a cultural 
shock for us, I think, to go through a learning experience 
about who our customers were and what were our obligations to 
them, and it was in that regard that the training was very 
successful. I believe everybody now recognizes the taxpayer is 
our customer. How well we are servicing them is another 
question, but at least we have gotten over that hurdle.
    In 1992, we created a plan for improving customer 
satisfaction and organizational performance, which is the basis 
for our TQM effort today, and it is focused on a system of 
partnership councils in each of our offices, one a national 
partnership council, and regional and district and local 
councils. Those councils are comprised both of IRS executives 
and the National Treasury Employees Union [NTEU], 
representatives and officials.
    On our journey so far, we have learned some--several--
lessons that I would like to share with you. One is that in 
order for this to succeed, you have to encourage an 
environment, a great environment where improvement can take 
place and ensure that the organization has the tools or the 
infrastructure and the capacity to, in fact, practice quality 
improvement on a regular basis.
    The second lesson we learned was that the management needed 
to have accountability, through establishing appropriate 
outcome measures, along with recognition programs, and just as 
the last panel showed you some books on how they publicize good 
things that are going on, that kind of activity is critical to 
sustain these kinds of efforts.
    I just want to talk about a couple of our efforts here. 
There are many in the testimony, but a couple of them, I 
believe, are particularly significant. One is our TeleFile 
program where we now have 26 million taxpayers able to file 
Form 1040 EZ over the telephone. This year, 5 million of the 26 
million in fact did that, resulting in greater satisfaction on 
their part and significant savings and accuracy in taxpayer 
hours. In takes about 10 minutes for a taxpayer to file their 
return that way.
    The other significant thing that I believe we have done 
through this effort is create our Internet Web site. We used a 
process of actually going out and benchmarking against other 
organizations to see what a good Web site would look like.
    As it turns out, folks are now coming to us to benchmark 
against us, and our Web site, because of the way it gets 
recognized, we have received over 40 industry awards. Last 
year, we had 117 million hits on our Web site, 4 million of 
which occurred April 15th. Taxpayers can get tax returns 
delivered to their home or their office directly through the 
Internet and answers to frequently asked questions.
    Another one of the programs that I just wanted to share 
with you because of its crosscutting nature is, we have been 
concerned for some time with our inability to answer the 
telephone as frequently as taxpayers would like us to, and as 
we, in fact, we would like to answer it. And in looking at the 
problem, what we really found is, to some extent we were 
creating part of that problem ourselves by the notices we were 
sending to taxpayers inviting them to call us.
    And looking through an entirely different process at the 
notice process, and revisiting the actual value that we were 
getting out of them, we were able to eliminate 21 million 
notices to individual taxpayers, with the potential for 
eliminating another 23 million. A fair number of those notices 
would have resulted in calls and other demands for services.
    The third lesson we learned was that you have to have 
alignment around a common management value. We are currently 
opening dialog within the Service, talking about using the 
Baldrige criteria, which you have heard quite a bit about 
today, as a tool to help us assess our becoming a TQM 
organization.
    In the past, we spent quite a bit of time focusing on our 
business results. We spent less time focusing on those other 
aspects of the Baldrige Award--leadership, strategic planning, 
customer focus, information analysis, human resource 
development, and systems management. We believed these would be 
a much more powerful tool for us to be focusing on.
    And the fourth lesson that we learned, and as simple as it 
sounds, is you can't delegate process ownership to somebody 
else and systems improvement to somebody else. If you are 
responsible for the system, you in fact have to be the one that 
is accountable for it and you are the one that has to be the 
leader who can lead the effort.
    In conclusion, I would just like to say that we have had a 
fair number of false starts, and just as private sector 
companies have, we viewed these false starts as opportunities. 
We still have a lot of work to do before the quality principles 
are practiced by all of our employees and all of our offices on 
a daily basis. However, we do believe we are on the road to 
that goal, and we appreciate the opportunity to be here with 
you today.
    Thank you.
    [The prepared statement of Mr. Carroll follows:]
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    Mr. Horn. Well, I thank you very much, Mr. Carroll, and I 
am going to question you now on IRS. There are only a few 
questions I have here. You did a very fine paper, and I enjoyed 
reading it last night.
    If we might, I would like you to stick around though, 
because some of the discussion on defense, I might want your 
perspective as a Federal agency on that. Let's start with one.
    You mentioned the need for an open environment to implement 
quality programs. How have you created an open environment in 
IRS? And I don't say that cynically, but you have, as I 
mentioned earlier, a law on confidentiality, privacy of 
taxpayer returns, and so forth, and various advisory committee 
laws of the Federal Government. So I am just curious, what did 
you do to create the open environment?
    Mr. Carroll. I don't believe it is open enough, and I think 
we need your help. The question you asked of the last group 
about their views of stakeholders and outsiders. Internal 
Revenue has operated in a rather insular way in looking at its 
processes specifically because of the concern about disclosure 
and other things.
    However, I feel very strongly, and I believe the 
organization does as well, that many of our solutions exist 
outside the walls of Internal Revenue, not inside our walls, 
and that is only if we can reach out and participate with other 
parties and other folks about those solutions that we can 
readily deal with the problems and come up with the right 
solutions. So there is a fair amount of openness within 
Internal Revenue.
    But I think that you have hit on a legitimate problem and 
barrier we do have, that we do need more help and advice. We 
are working with many of the States, we are working with the 
different representatives of taxpayers, the ALCPA, the AARP, 
the environmental association, and the like. But getting them 
to commit to full-time participation on a work effort is 
something that we haven't been successful enough at.
    Mr. Horn. OK. I note on page 1 that it says, in the case of 
IRS, you had 2 days of training for about 1,000 people. Is that 
correct? It was 2 days of quality leadership training to all 
15,000 managers and union leaders in the organization and all 
employees, about 100,000 people were fully trained?
    Mr. Carroll. That is correct.
    Mr. Horn. So each was a 2-day training period.
    Mr. Carroll. It was a 2-day training period for all of 
those folks around who is your customer, understanding what 
your customer values, and it was a basic introduction to what 
is TQM and how is it that we want to operate in the future.
    Mr. Horn. This was done at one time the 2 days, or was it 
spread over a long period?
    Mr. Carroll. It was done at one time. Subsequent to that 
though, about training, we have many targeted courses for 
practitioners of quality activities, leadership training 
activities, facilitation training, et cetera, for people using 
the tools.
    Mr. Horn. Did the 15,000 managers and union leaders you 
trained--did they go back and do the training of 100,000, or 
did the same team that did the managers and union leaders do 
the training of the 100,000?
    Mr. Carroll. I can't remember.
    Mr. Horn. Could we put it in the record?
    Mr. Carroll. Yes.
    Mr. Horn. Check with the powers that be at the time. When 
did this training occur, roughly? What year are we talking 
about?
    Mr. Carroll. 1988.
    Mr. Horn. Has anything happened since 1985, any training 
now, or did they train them once and say, ``We have done our 
job''?
    Mr. Carroll. The original training was sensitivity training 
to what TQO was and to what our obligations were. We have since 
conducted, at the local level, many training classes on process 
analysis and all the techniques in systems management and 
improvement. I don't have the numbers for you as to the number 
of students who have attended them.
    Mr. Horn. I take it then, the IRS has been engaged for 12 
years in total quality management? Would you say it started in 
1985?
    Mr. Carroll. We have been on that journey for 12 years.
    Mr. Horn. Did they fully utilize the trained employees of 
100,000 and put them in teams immediately, or was it something 
the training evaporated when nothing happened to it?
    Mr. Carroll. I think they did not go back, all 100,000 
employees, not even a small fraction of those went back and 
actually practiced the training, although the training wasn't 
around practicing the quality techniques, it was sensitizing 
them to understanding who the customer was and the fact they 
would be learning more as time went on about what that meant to 
them.
    Mr. Horn. OK. So this was sort of a human relations 
training and attitude changing training for the total quality 
management. I mean, is that what I am hearing?
    Mr. Carroll. Right. It was training about what total 
quality management is, not training on how to do it.
    Mr. Horn. Now the National Partnership Council, you say on 
page 3, established additional fiscal year 1997 goals to move 
us toward an improvement-focused organization. Now are you the 
repository of these recommendations for this group as well as 
other process-oriented total quality management groups?
    Mr. Carroll. I am on the National Partnership Council, and 
I am the repository, I guess, of their activities. The 
activities that go on around the country, though, at the local 
partnership council levels are not fed back up to me or to the 
National Partnership Council on a routine basis.
    Mr. Horn. Now are those on a regional basis of the IRS? In 
other words, does every regional director have a National 
Partnership Council for his or her region?
    Mr. Carroll. Every regional commissioner has a regional 
partnership council, and then every district director has a 
district partnership council.
    Mr. Horn. How many districts are there now?
    Mr. Carroll. Thirty-three.
    Mr. Horn. And how many regional commissioners?
    Mr. Carroll. Four.
    Mr. Horn. I knew you would reduce the size of some of 
those, but I think you are right on the organization, you can 
spread it out a little more with the responsibility.
    I am curious, though, in terms of those recommendations, 
and now the question I am going to ask you, I don't ask you to 
answer it as an official of IRS, I ask you to answer it simply 
as a human being who has been around there and seen these 
reports come to you in these recommendations.
    At this point, do you as an individual, not speaking for 
the IRS, feel that IRS should undergo major structural changes? 
This isn't related, necessarily, to total quality management, 
it is related to the tremendous size of IRS.
    You are, what, third most Government employees, with the 
Pentagon and Department of Defense overall would be No. 1. 
Forget the Post Office. We don't have anything to do with them 
now, or very little. And we have HHS, I suspect, in there, but 
I would think you are about third, aren't you?
    Mr. Carroll. We have 102,000 employees.
    Mr. Horn. Then you lost 4,000 since last week because I 
have been having 106,000 in my mind.
    You say it is down to 100,000.
    Mr. Carroll. 102 is my understanding.
    Mr. Horn. Having dealt with all this paper and processes 
and partnership councils, is it obvious that IRS should undergo 
certain major structural changes?
    Mr. Carroll. As a practitioner of quality techniques, I 
think to jump to the solution, without having the data about 
what is driving you there, wouldn't be appropriate. But I would 
say that it is the right question to ask, but I really don't 
have the data to give you an answer to that, either as an IRS 
official or as a human being.
    Mr. Horn. Well, I am not asking as an IRS official. I think 
the President has made a very good selection in terms of the 
proposed potential commissioner, and he comes with a lot of 
executive experience, which is what, in my humble opinion, IRS 
has sorely needed for about 50 years. He comes with an 
understanding of management, and modern techniques, and 
computerization, and so forth.
    So I will let you off the hook on that, but I would think 
you ought to have some view, based on all the things you see 
from quality management improvements, it ought to either be 
obvious that the IRS should split its services and look at 
different aspects and maybe even have a different relationship 
to Treasury, or maybe just have a different relationship within 
itself.
    I will give you an analogy of another agency, almost with 
the same initials, INS, Immigration and Naturalization Service, 
that has been argued for years that maybe they ought to 
separate their enforcement responsibility from their service 
responsibility. That is what I am thinking of.
    Are there missions within IRS that really lead to great 
confusion and great time to--because of that confusion--versus 
a cleaner way to set up the agency to do its prime mission, 
which is collect the money from taxation?
    Now here, as you know, there are numerous ideas you can 
have, a consumption tax, and they think they can exist without 
IRS. I don't see how that is possible. You still have to check, 
is the gross you are turning in the right percent in the 
consumption tax, and you have all the wonderful ideas from the 
Democratic leader at 11 percent, the Republican leader at 17 
percent, of the across-the-board bit that Mr. Forbes made so 
famous, and presumably that will limit what IRS is doing.
    Again, how do you know they paid the 17 percent? To me, it 
is off the wall to think you are not going to need IRS when you 
change the tax laws. Granted, it won't be as complicated. That 
will be the day, I will be on Medicare plus by that time, and 
we will have some sort of cleaner way to do our job. And I just 
wondered if anything comes to mind, since you have seen all 
these ideas on how we can improve this process and that 
process?
    Mr. Carroll. Nothing particular comes to mind.
    Mr. Horn. Nothing comes to mind, OK.
    Now you say at the bottom of 3, ``To support the commitment 
to using systems management, we have tools in place (e.g., 
training and improvement methodologies) to ensure IRS employees 
have the capability to apply total quality management 
principles.''
    Well, let me ask you, the commitment to using systems 
management, was that commitment focused prior to the $4 billion 
spent on computing that is going nowhere? And it seems to me 
that the first thing you would do in any human organization is 
figure out the systems and the logic of the systems before you 
start computerizing, so you know what it is you are 
computerizing.
    So I was excited when I saw that you have all that support 
for using systems management and would assume that some of the 
systems were untangled, so that we didn't have to spend $4 
billion, or was there no relationship between all the systems 
management and the expenditure of $4 billion on computer 
investment that is going nowhere? If the papers are correct, 
and if it is in print, well, then, it must be true.
    Mr. Carroll. My intention in the testimony was to talk 
about what we had today as opposed to what we had some time 
ago, and I do believe today that the--although Arthur Gross, 
our CIO, could better address the issue, I do believe the way 
we are attacking the modernization activity today is, in fact, 
around a TQO systems management environment where, in fact, we 
have a high level of success.
    Mr. Horn. I notice on page 6 that you say, with notices 
reengineering team, ``Notices are computer generated to 
taxpayers about a variety of outstanding issues (e.g.,) 
miscalculation, missing signatures, missing schedules.''
    As I read your reaction, I thought that was terrific. Did 
any of that notices reengineering team get into debt 
collection, by letters, and what the timing is on that?
    Mr. Carroll. Yes, they did. I don't have the information.
    Mr. Horn. Could you furnish that report for the record? 
That will be included at this point, without objection.
    Mr. Carroll. Certainly.
    Mr. Horn. And, let's see here. That is really it. Just a 
few little things I wanted to clarify in that.
    Now we are delighted to have Mr. Cooke here, the long time 
Director of Administration and Management, Department of 
Defense, and those that accompany him.
    We will have questions for all of you. And, Mr. Cooke, 
please proceed.
    Mr. Cooke. Thank you, Mr. Chairman.
    I would like to introduce the Defense members who have 
joined me today. Anne O'Connor is Director of Quality 
Management for the Department and reports to me. Dr. Kauvar is 
Deputy Director of Manpower Organization, quality, for the Air 
Force. Particularly privileged to have with us----
    Mr. Horn. As long as you are going to go down the line, you 
will save me from asking five different questions if they are 
not only introduced but I would like to know to whom do they 
directly report.
    Mr. Cooke. I directly report to the Secretary of Defense.
    Mr. Horn. Right.
    Mr. Cooke. Ann reports directly to me.
    Gerry.
    Mr. Kauvar. I report to the Deputy Chief of Staff for Plans 
and Programs in the Air Force.
    Mr. Horn. Deputy Chief of Staff, Plans and Programs. OK.
    Mr. Cooke. Our next two witnesses, we are particularly 
privileged to have two commanding officers of DOD field 
activities, both of whom have earned Presidential recognition 
in the Presidential Quality Awards Program, because, in our 
judgment, quality management is not an office structured 
someplace, reporting to the Secretary or the Deputy Chief of 
Staff, it is not an end in itself, it is really not a program. 
It is an approach, a means, and statistical tools to optimize 
organizational performance, to meet customer requirements, and 
if quality management works, it is going to be the people in 
the field who undertake it as part of the responsibility for 
field command. It is not a separate thing that can exist in and 
of itself.
    And these two gentlemen, General Boddie, who is Commander 
of the Army Research Development Engineering Center in 
Picatinney and Captain Cantfil, who was the Commander of the 
Naval Station Mayport, two of our military leaders who have 
gotten recognition for what they have done in quality control 
and their commands, and, again, I suggest to this--if this 
works for Defense, it is going to work because of the quality 
of leadership in the field.
    And finally, we are pleased to have Tom Sawner, who is 
Deputy Director of Productivity and Quality Center at the Air 
National Guard.
    Tom, who do you report to?
    Lieutenant Colonel Sawner. I report to General Sheppard, 
Director of Air National Guard.
    Mr. Horn. Sheppard?
    Lieutenant Colonel Sawner. Yes, sir, Director of Air 
National Guard.
    Mr. Horn. Based here in the Pentagon?
    Lieutenant Colonel Sawner. Yes, sir.
    Mr. Horn. Just so I have it straight Captain Cantfil, which 
naval station was it that you were in charge of?
    Captain Cantfil. It was Mayport Naval Station in Florida.
    Mr. Horn. M-A-Y-P-O-R-T?
    Captain Cantfil. Yes, sir.
    Mr. Horn. Where is that located?
    Captain Cantfil. Greater Jacksonville area of northeast 
Florida.
    Mr. Horn. And I wasn't quite clear; General Boddie, to whom 
did you report?
    General Boddie. I report to Major General Andrews, the 
Commander of the Tank Automotive and Armaments Command in 
Warren, MI, which is a subcommand of the Army Materiel Command, 
the General Wilson command here in Alexandria.
    Mr. Horn. I just want to get the hierarchy straight.
    All right. Proceed, Mr. Cooke.
    Mr. Cooke. Defense began using quality management theories 
in the mid-eighties, particularly in the Air Force and the Navy 
and depot operations, and over the next several years its 
application spread from our manufacturing processes to service 
processes, such as hospital and travel pay, and eventually 
quality management theories were even applied to our 
headquarters processes. As a matter of fact, the Joint Staff in 
OSD have used the tools and techniques in the development of 
policy and guidance in the Department.
    Today, most elements in the Department have integrated some 
aspects of this philosophy into their daily operations. Some 
organizations limit their use of quality management to 
activities, such as strategic planning or the use of teams to 
resolve problems, but others use the full range of quality 
theory, including baseline and followup surveys, strategic 
planning, metrics application, and team activities we have. And 
all these quality activities are based primarily on Deming, Dr. 
Deming, with his essentially four interrelated components he 
called System Profound Knowledge, and his famous 14 points were 
based on the four points.
    Now we will say that we have heard, at least since I have 
been here, the IRS saying we followed Dr. Duran. I don't think 
anybody has mentioned Crosby, at least as long as I was here, 
but of the four leaders in quality management, many of their 
thoughts and principles are remarkably light. But in Defense, 
we are basing our defense quality management on Deming.
    My statement gives you a whole series of examples of 
quality management in the field. I think you may wonder, why 
did they all come from the Pacific area? The reason for that 
is, a couple months ago, when we first gave you an example, 
many of them came from Europe and elsewhere. Anne O'Connor got 
back from a swing through the Pacific Rim and came up with 
these current examples of how the commands and activities in 
the Pacific are implementing quality management.
    Very frankly, we tend to focus on the CINC's, HATCOM, UCOM, 
and the rest, and the theory that if we can get the CINC and 
his staff involved in quality management, the subordinate 
component commanders will come along as part of the CINC's 
activities, and that today has worked.
    I will not go through each example listed in the statement. 
However, we are available to respond to questions on any and 
all of them.
    How is our program doing? Well, over the years, I think one 
important measure of that program, there are awards in the 
President's Quality Awards Program. There are two types of 
awards in the program, the Quality Improvement Prototype Award, 
the QIPS, and then the Nation's highest quality award in the 
Federal Government, the Presidential Award for Quality.
    Mr. Horn. Let me just interrupt there, if I might. Just so 
I am clear, who grants these awards? Is it the White House? Is 
it the Department of Defense? What is the body that does these? 
I was rather fascinated by them.
    Mr. Cooke. These are not Defense awards. These are awards 
covering the whole executive branch of the Government.
    Mr. Horn. Who administers them?
    Mr. Cooke. They are administered now by the Office of 
Personnel, the quality office, which is now part of Jim King's 
OPM operation.
    Mr. Horn. OK.
    Mr. Cooke. Applications for the awards are carefully 
screened by panels, just as the counterpart awards are in the 
civilian sector. And I want to boast a little that since the 
inception of this program, DOD units have earned 59 percent of 
the Quality Improvement Prototype Awards and 83 percent of the 
Presidential Awards. That is the highest award that can be 
earned in the Federal Government for quality.
    You have asked what are the factors that contribute to a 
good quality program. One certainly is a commitment of 
leadership, from the top down. Unless we get the commitment of 
leadership up the CINC, General Joulwan in Europe, for example, 
it is not going to work. Another is the commitment and 
empowerment to the people in the field, who, as you have heard 
from our other witnesses here, have any number of good 
suggestions to make, if they are free to make them. Then, 
finally, we found that a facilitating office, in OSD, Anne 
O'Connor's office, is very useful in pulling these things 
together, and there are similar offices like that in the 
military departments and also in the Joint Chiefs.
    Now for all of this improvement, we still have a long way 
to go. There is a change in the Department structure, and now 
the Quadrennial Defense Review, combined with increasingly high 
OPTEMPO, have added new challenges. We are trying to meet them 
in adjusting our implementation approach to them.
    I could go on. We have a wonderful 90-minute video tape on 
quality we use in quality awards, but somehow I forgot to bring 
that.
    Mr. Horn. Well, send it over sometime, and I will be glad 
to look at it.
    Mr. Cooke. We work hard at it; we have. And I would like to 
offer for the record our Federal Quality Conference coming up 
about a month from now. This conference is here in Washington. 
It started out relatively small, and now there are only a few 
hotels in town that can handle the conference. It is a good 
program. We get large inputs from the field, and, again, I am 
not talking Defense alone, I am talking the Federal Government.
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    Mr. Horn. OK. We thank you for that testimony.
    Let me ask you a few questions. Remind me of what is the 
current budget of the Department of Defense.
    Mr. Cooke. The current what?
    Mr. Horn. Budget of the Department of Defense.
    Mr. Cooke. $259 billion.
    Mr. Horn. $259 billion. That is good. Let's round it off at 
$260 billion. It is probably in there somewhere.
    What is the total budget of the total quality management 
efforts made within the Department of Defense, both the 
services as well as all the supporting agencies? Out of the 
$260 billion budget, how many have been affected by the total 
quality management?
    Mr. Cooke. Mr. Chairman, we do not have a single line item 
in the budget. I can tell you how much my own operation is 
costing. I don't know how much the service is, nor do they have 
a single item.
    Mr. Horn. Why don't we get an answer by coordinating 
through your office with the services, file it at this point in 
the record.
    Is it more than $1 billion?
    Mr. Cooke. I don't think the services here at the 
Washington level would have a total figure either.
    Dr. Kauvar.
    Mr. Kauvar. I agree. We don't have a program.
    As Dr. Cooke said, quality is not a program in the Air 
Force. We look at it the way we look at safety. It is something 
you think about all the time. We can give you the budget for 
the number of people, for example, employed at the Air Force 
Center for Quality Management and Improvement.
    Mr. Horn. That is nice, but I am not interested in that. I 
am interested in what degree has total quality management 
permeated the life of the Department of Defense, both civilian 
and military.
    Let's face it, folks. You have a fine bunch of projects 
here; but it has nothing to do with the degree to which the 
Department of Defense, and the services under that Department, 
are really serious about total quality management. Now what it 
sounds like is that, gee, we are concerned about quality, just 
like we are concerned about safety. Everybody that says that 
shows me they really aren't doing much on quality. Otherwise, 
you could put your finger on it.
    If somebody gave a hoot about quality in the Department of 
Defense, they would say, you show me annually where this 
approach to management has been implemented in the Department. 
It is the first thing I would ask if I were Secretary. In fact, 
I will share some of this with the Secretary and say, you know, 
if we are serious about this, you ought to be able to tell me 
we have $20 billion worth of the Department of Defense 
investment in a total management, quality effort.
    I don't think you can tell if it is $1 billion. I am not 
saying you should have it here, but please file it for the 
record in the next 2 weeks or 3 weeks and work with our staff 
to get a figure so we know to what degree is this actually 
taken seriously in the Department of Defense.
    Mr. Cooke. Mr. Chairman, I think the examples we gave you, 
we can triple the number of examples we furnished to your staff 
in this statement or prior without our figures. The fact we 
have one in open competition throughout the executive branch 
with a great majority of quality awards is a demonstration of 
the fact that Defense is committed to quality and is taking it 
seriously.
    Mr. Horn. Well, that is nice to say. The proof in the 
pudding is how many billion dollars has been affected by the 
process, and if it isn't more--you have been at it for--what--8 
years, I believe. Is that correct or am I wrong on that?
    Mr. Cooke. I think probably a little longer than that.
    Mr. Horn. Let me put it to you another way. I want at this 
point in the record, without objection, the amount of the total 
budget affected by the processes of TQM, whatever you want to 
call it, total quality management.
    I can ask this question. Implementation of total quality 
has been a policy, as I understand it, for 8 years. How many 
commands, organizations have genuinely learned and adopted TQ 
as a way of life? In other words, what percent of the total 
organization? I think we need to know that to see if we are 
being taken seriously on this.
    As I said earlier this morning, I am sure it got reported 
to you, we have known for several years there were two agencies 
that will not be able to make the mandate of Congress to show 
us a balance sheet by the fall of 1997, the Internal Revenue 
Service and the Department of Defense. So we have known that 
around here for 5 years. In the 103d Congress, under control of 
the other party, I sat on a relevant committee when the IRS was 
examined on that point.
    It is just that we have had 5 years now elapse? Are we any 
closer, in terms of total quality management, in those 
particular processes?
    I am not saying you are not doing wonderful work in these 
examples. That is wonderful. I give you credit for that. The 
question is, there are huge problems that also need this 
approach; and nothing in that testimony convinced me that the 
Department of Defense was doing anything about it. So I would 
be glad to have it and put it in the record.
    Now, what I am curious about now, if you heard the 
testimony from the State of Ohio, the State of South Carolina 
and with the experts, it is key if we are serious about an 
effort that that person report to the chief executive. So I 
would ask, if you have a total quality office, why isn't that 
structure to report directly to the Secretary of Defense, not 
through the Administrative Assistant to the Secretary of 
Defense or the Director of Administration and Management? I 
guess I want to know, if they are serious, the boss has to 
permeate that through the organization.
    Mr. Cooke. Mr. Chairman, total quality management is not a 
line function that you can order any more than you can order 
the Congress to follow total quality management or, for that 
matter, the Speaker could do that. Total quality management is 
an approach to a problem that we have been following 
assiduously.
    We can give you the percentage and estimates; and we have 
given you the percentage of Army, Navy, Air Force, and Marine 
Corps who have had some quality training. The Marines, last 
time, I think, said 100 percent. The Air Force said 83 percent 
have been trained to some degree.
    Now when I heard the other witnesses, you did not say, how 
many are doing diagrams? How many of this? How many of that?
    Mr. Horn. No, but what you did here is training, isn't 
enough; and what you heard from the witnesses was that if you 
are doing training and then you have no teams to put these 
people on, in essence, you are doing nothing. You can have a 
lot of training, but unless you have a process to feed that 
training into, you have a command--and now we are talking Ohio, 
South Carolina, where they have accomplished these things.
    Mr. Cooke. I heard South Carolina say there is a quality 
office for each subordinate unit of the State, so it doesn't 
quite sound--I certainly don't want to demean the very fine 
progress that the State of South Carolina and Senator 
Thurmond--I have a son who graduated from Clemson, by the way. 
But what I am saying is that we will stack up our quality 
program--we will try to get the figures against any in the 
country.
    Mr. Horn. OK. How do you go about determining--and the 
other services can get into this--determining those that have 
and those that have not adopted total quality? Do we know which 
parts of the organization have not adopted it and which parts 
have adopted it?
    Ms. O'Connor. We do regular reviews in the field to look at 
who has adopted quality and who has not. It might be helpful to 
give you background on how we structure this inside the 
Department. At the OSD level, we have a group called the Joint 
Quality Network, composed of the Army, Navy, Joint Staff, and 
myself.
    Mr. Horn. Who sits on that committee?
    Ms. O'Connor. That is someone from the Army.
    Mr. Horn. Who is the someone?
    Ms. O'Connor. The quality management folks. Tom Kislawski 
right behind me represents the Navy.
    Mr. Horn. What is his title in the Navy?
    Ms. O'Connor. He is director of the TQL office.
    Mr. Horn. That is one who reports to the Under Secretary of 
the Navy.
    Ms. O'Connor. I believe so, yes.
    Mr. Horn. So we know the Navy has an office where there is 
a quality office and it reports directly to the Under 
Secretary, and this is the deputy to the person that reports to 
the Under Secretary of the Navy.
    Ms. O'Connor. Correct.
    Mr. Horn. Presumably, I take it, no one is there from the 
Chief of Naval Operations' Office. Or is the Under Secretary's 
Office expected to deal with that?
    Ms. O'Connor. No, that is correct. The Under Secretary's 
Office coordinates with Chief of Naval Operations' Office.
    Mr. Horn. Give me the next person, and to whom do they 
report?
    Ms. O'Connor. The next person would be Lieutenant Colonel 
Dennis Falencort, who reports to the Air Force office, who 
reports to Mr. Kauvar.
    Mr. Horn. We have to whom you report. That was, as I look 
at my notes, you report to the Deputy Chief of Staff of the Air 
Force for Plans and Programs.
    Ms. O'Connor. Then the third person is Randa Vagnerini, who 
reports to the Director of Management for the Chief of Staff of 
the Army.
    Mr. Horn. Director of Management for the Chief of Staff of 
the Army.
    Presumably--in all these somewhat distant relationships 
with the major people that make a decision, presumably there 
are staff functions here--we aren't talking line functions--
where they can go back and get something done.
    Ms. O'Connor. No, they go back and get quite a bit done, in 
fact.
    Mr. Horn. Well, I would like to hear about it.
    Ms. O'Connor. Good.
    The fourth person is Christine Cavel, who represents the 
joint community. She reports to the Comptroller on the Joint 
Staff, who reports to the Director of the Joint Staff.
    Mr. Horn. We are talking about where?
    Ms. O'Connor. The Joint Staff, as in the Chairman of the 
Joint Staff.
    Mr. Horn. OK.
    Mr. Kauvar. Let me give you examples from the Air Force 
which may clarify that.
    You asked how many people were trained, and the answer is 
100 percent. You asked how can we determine who has adopted 
quality management.
    The answer is twofold. We have a system where every unit 
does a unit self-assessment at least every 18 months, and those 
scores are brought together so we can see not only how they are 
spread across the Air Force, but how individual units have 
improved. Until this year we have had a system of sending the 
IG out to do quality Air Force inspections.
    About 2 years ago, the Chief of Staff of the Air Force 
asked me to come to work for him, because we recognized that 
the Air Force had reached a kind of glass ceiling, a crossroads 
that many companies had reached on a quality journey. After a 
year of work, we made some major changes in the Air Force 
quality program.
    The first thing we did is link it more directly to mission 
outcomes. So we were less interested in evaluating the process 
than we were in enhancing mission accomplishment in the Air 
Force. Second thing we did is take a look at the entire 
spectrum of assessment and inspection and award in the Air 
Force and determined we were spending way too much time on 
auditing when we had the quality indicators in place through 
the unit self-assessment that gave us the answers as to how 
well individual units were doing.
    We just established the Air Force Quality Institute, which 
was our primary schoolhouse and was responsible for, 
essentially, just-in-case training to the application level for 
every individual in the Air Force; and we stood up the Air 
Force center for quality and management innovation in its 
place. At the same time, we merged two career fields, manpower 
and quality, because we wanted to have, at every single unit 
and center, an office responsible for quality management and 
process reengineering. We made a decision that that should 
report to the Director of Plans and Programs in each major 
command or unit, rather than to the Commander, because we 
wanted to have symmetry throughout the organization and an 
individual whose full-time job it was and who does report to 
the Commander to have quality management as a task.
    For the sake of symmetry, we moved it to the newly created 
position of Deputy Chief of Staff of Plans and Programs in the 
Air Force. We have had Baldrige judges and both the Chief of 
Staff Unit Quality Awards and the Secretary of Air Force Team 
Award. We rely heavily on civilians to come in and help us with 
our quality program.
    It is pervasive in the Air Force. It is radically different 
from what it was a year and a half ago. We think we are on the 
springboard to more success than we have had in the past.
    The Chief was intimately involved in every single one of 
these decisions and the direction to operationalize quality in 
the Air Force, so I don't think it lacks for senior leadership 
attention.
    The difficulty I would have in trying to tell you how much 
money is spent is that I would have to go back and try to track 
in on every team chartered on every single base and how much 
instruction they got and how much time it took them to 
accomplish their mission. That is literally thousands of teams 
over a period of years. What is fairly easy to tell you is how 
much money we are spending on the overhead process.
    Mr. Horn. I don't think I am interested in the 8 years or 
10 years or whatever service thinks it has been engaged in 
this. What I am interested in is, where are we now? What 
percent of the military command, what percent of the Air Force 
support systems, be they under the military command or directly 
under the civilian command. I am interested in how far this is 
going now.
    Mr. Kauvar. It is pervasive in every command in every unit 
of the Air Force.
    Mr. Horn. See, when they say pervasive, my suspicions get 
aroused. Because I have never seen it pervasive in much of 
anything, even in the private sector. The way we sort of nibble 
at it in this and many agencies--and there is nothing wrong 
with that.
    Over time, you expect more. In other words, incrementally, 
you move step by step. I am not knocking that. But what I am 
saying is if we had 8 years in this, we must have accomplished 
at least 25 percent of the organization, I would hope; and that 
is setting a very low goal.
    But I realize the world is complex. People sit in 
Washington and think there is something happening and if they 
go to the field and keep their ears open they will know nothing 
is happening or they are just filing the paper. We have all 
been in human organizations where that has happened, and 
usually that is what happened. Nobody wants to tell the boss 
the bad news.
    You mentioned Inspector Generals. It is one of my questions 
here. Are we learning something from the Inspector Generals 
about where some of our shortcomings are? And don't tell me the 
organization has no shortcomings or I will say good-bye. The 
fact is, they have a lot to contribute.
    And I just wonder are we taking advantage of what the 
Inspector Generals are saying----
    Mr. Kauvar. What I tried to do----
    Mr. Horn [continuing]. During the process analysis on those 
problems?
    Mr. Kauvar. To help clarify that, let me submit to you, I 
will be happy to get you more copies of the report of the Chief 
of Staff 's Blue Ribbon Commission on Organizational 
Evaluations and Awards which we started last year. And you'll 
see what the responsibilities of the Inspector General are.
    I think another way to answer your question might be, and 
I'll be happy to provide this for you, is a, across the Air 
Force, listing of the unit self-assessments and the scores over 
a few years so that you can see for any particular unit, for 
example, a wing at Dyess Air Force Base, how it scored on the 
standard Baldrige criteria 3 years ago, last year, and this 
year.
    Mr. Horn. Right. That would be fine.
    Mr. Kauvar. I would be happy to do that.
    Mr. Horn. OK. I realize different services treat things in 
different ways and there are a lot of ways to achieve the goals 
without all following the cookie cutter way. Yes, Ms. O'Connor.
    Ms. O'Connor. To go back to what the joint default network 
does, that network, the folks around that network are the 
people who work this full time. They know the nuances of it. We 
get together every couple of weeks when we're in town, which is 
more often than not. And we discuss what is the best way to set 
policy for this across the department? Is it a directive? Is it 
a support letter? Is it a videotape? Is it going out to the 
field? Is it a data call? And over the years, we continued to 
look at this on an ongoing basis, because we think that it will 
change over time and we will need some additional structure as 
time goes on. But currently we're very pleased with where we 
are right now.
    Now, in addition to the joint quality network, we also have 
what we call the defense quality network. There's some, a 
number of defense agencies in field activities as well as the 
unified commands that will come in for that meeting. Because of 
the number of the people that have to come in we'll hold that 
every 2 or 3 months.
    We've also, to help us in defense, but also the rest of the 
Federal Government reestablished the Federal quality network, 
which has a representative from each of the Federal agencies on 
it. And that meets about quarterly as well. We wondered when we 
brought that back up if anyone was really interested in the 
rest of the Federal Government in continuing this on. And we 
had 35 or 40 people at the first meeting we had. And they've 
continued to stick with us through this. So that's a great 
vehicle for networking back and forth, finding out who is doing 
what and what new ideas there are out there.
    What we found has worked best for us inside the department 
is more of a central support setup but with a decentralized 
implementation. For example, the Air Force has a system by 
which they do this. The Navy has their system. The Army has 
their system as well. And we try and cover on the OSD staff the 
unified commands because we think they're the linchpin to the 
operation here and also defense agencies and field activities.
    What we have tried to do is set up a facilitating mode as 
opposed to a directive mode, because what we found over time is 
that this succeeds based on leaders in the field wanting to do 
this, not because we necessarily set up some program.
    So when they tell us that they need something we try and 
respond to that, and then we also go out into the field, as I 
said, and we do a review, because, as you just mentioned, you 
get data calls up in Washington, and you're not really sure 
what that data means to you by the time it goes all the way up 
the chain of command and shows up here. So we actually go out 
to the field, and we pay particular attention to the overseas 
areas because they tend to be at the far end of the supply line 
for assistance, and have gone over there, looked at what they 
need, asked them if we could do anything for them, particularly 
looking at the unified commands. And in fact, we worked with 
special operations command for a couple of years now. They've 
had some great successes.
    We just started working with European command about 6 or 8 
months ago and they've got their strategic plan now. And we're 
just starting to work with Pacific command. It is a slow 
implementation, but it's a slow implementation by design 
because we think that's the better way to do it in a department 
that is this complex.
    We do a lot of implementation differently than the private 
sector. For example, in the unified commands, we won't send 
these folks off on their 2, 3, 4, or 5-day offsite somewhere, 
because they simply cannot by operational realities be away 
from the office for that length of time. So what we'll do with 
them is we'll have strategic planning sessions that last no 
longer than 4 hours, and they can do them Monday, Wednesday, 
and Friday morning, or they can do them Monday, Tuesday, 
Wednesday, Thursday, Friday, whatever they choose to do. So 
that the senior folks that are sitting around that table from 
the CINC on down can get back to that in-box, get back to those 
phone calls, get back to the operational mission.
    So what we do, and in fact Dr. Kauvar coined this term 
maybe a year ago, is we wedge it in where we can find the 
minimal amount of time that they have in their schedule. We 
attempt to wedge it in to get them started on the things they 
need to be doing, and then move them continually down the road. 
And one of the examples, with the OPTEMPO that we've had, we've 
occasionally just had to stop. We're working with the United 
States, the admin folks in U.S. NATO, and we had gone down the 
path with them and we started to develop their strategic plan 
and then the NATO Summit was announced. Well, they're going to 
be dedicated full-time making sure that that summit goes off, 
so we will just back up from them and we're totally on hold 
until September, the summit will be over, and then a whole 
bunch of people take, use, or lose leave and readjusting and 
clean out in boxes, and then we'll go back in September. So the 
key to the implementation in the department with our OPTEMPO is 
really flexibility, to keep the aim in mind but be flexible 
about how we get there.
    Mr. Horn. Does your office have the responsibility for the 
defense agencies such as Defense Logistics and others such as 
that which aren't under a command and aren't under one of the 
services? Do you have responsibilities with these agencies to--
--
    Ms. O'Connor. We don't have direct responsibility but we 
will help them out. We'll help people----
    Mr. Horn. Who has responsibility for those?
    Ms. O'Connor. That's the responsibility of the Commander of 
Defense Logistic Agency.
    Mr. Horn. Yes and that Commander reports to whom?
    Ms. O'Connor. The Under Secretary for Acquisition and 
Technology.
    Mr. Horn. Mr. Kaminski.
    Ms. O'Connor. Yes, that's true.
    Mr. Horn. OK. To what degree has Mr. Kaminski's people been 
educated in this area?
    Ms. O'Connor. A number of years ago they were very well 
educated. The quality function was located there. We had some 
pretty good successes. In fact, Dr. Kauvar was located in that 
community at the time. And he had some very good successes 
there. They still were--what we will do on the OSD staff is we 
will get--they know we're there. We send out a periodic memo 
that tells them what we're there for, what we do, and to give 
us a call if they need anything. We do get frequent phone calls 
from staff members who are attempting to work on processes and 
to improve the processes, and normally that will be either 
linking with, say, their subordinate commands as DLA or going 
to the Army and the Navy and the Air Force to form up process 
action teams to look at some significant processes.
    Mr. Horn. And has much of that occurred since the function 
now? I am not quite clear. Was it removed from the Kaminski 
shop over to----
    Ms. O'Connor. It was shifted.
    Mr. Horn [continuing]. To Cooke's shop?
    Ms. O'Connor. It was shifted several years ago. And it's 
expanded tremendously.
    Mr. Horn. Why was it shifted?
    Ms. O'Connor. I don't know.
    Mr. Horn. Maybe Mr. Cooke can say.
    Ms. O'Connor. I think it was just a better location for it, 
because under ANT, it was really an acquisition initiative, and 
we didn't want it to have a particular flavor that it was the 
acquisition community, the comptroller community, or the policy 
community. This way it covers the entire department.
    Mr. Horn. OK. Do you feel that since the shop has been 
moved that the acquisition shop has lost interest in total 
quality management?
    Ms. O'Connor. Absolutely not. We have worked with them 
through the acquisition reform effort. We've provided the 
facilitation for that. And we worked with Colleen Preston from 
the time she come on board all the way through.
    We also get regular phone calls from the folks in ANT 
requesting assistance, and we will provide that, but the effort 
has expanded tremendously since it's moved, because people 
realize it's not just an acquisition initiative anymore. This 
is an initiative for the entire Department of Defense. So it's 
expanded across all of the elements of the OSD staff.
    Mr. Horn. Is it your office that will be able to survey the 
defense agencies such as logistics as to the degree to which 
they are involved with total quality management teams and 
success and so forth?
    Ms. O'Connor. If we were to do a survey, we would normally 
survey everyone in the department, including the military 
departments and ask for feedback.
    Mr. Horn. Yes, well fine.
    Ms. O'Connor. That is excessive.
    Mr. Horn. However you do it, that is your business. I am 
confident the military department has got the data. I am just 
wondering who will get the nonmilitary department data, which 
are a whole series of agencies?
    Ms. O'Connor. That's correct, sir.
    Mr. Horn. OK.
    Ms. O'Connor. We would coordinate that as we did for the 
data call you sent us.
    Mr. Horn. Fine. OK. Now that will include who has and who 
does not have any emphasis or projects, however you want to 
define it, on total quality.
    What I understand the original strategy was to build total 
quality organizations command by command with the commanding 
officer being responsible for the success. Then the effort was 
shifted to randomly training individuals at schoolhouses, if 
you will, remote from operational commands.
    What percentage of those trained do we know, and this I ask 
of the services but I guess you are not necessarily, except for 
Mr. Kauvar, probably able to answer that. What percentage of 
those trained are still on active duty? How many were ever used 
in total quality billets? And has this strategy really worked? 
In other words, at one point there was--and this is certainly 
true of the Navy. I know from my own experiences years ago with 
some people that the commanding officer was properly pinned 
with responsibility for this. And then the effort was to just 
randomly train a lot of people, but there was no place for them 
to go and practice those new found skills, whether they be 2 
days, 4 days, 6 weeks, 2 weeks, whatever.
    So we are just curious as a committee with oversight on 
economy and efficiency the degree to which this operation is 
still running somewhere. And I would be interested in what you 
have to say, Ms. O'Connor.
    Ms. O'Connor. Part of the answer to that rests in how 
quality management started in the Department of Defense. 
Normally when we have an initiative, either you on the Hill or 
the OMB or someone else will say to us, this is what we're 
going to do, or we get an idea to do something at the OSD 
staff. And then hopefully we work with the military departments 
to refine that policy before it goes out.
    In this case, I was in the field when we started 
implementing quality, and what happened was some of the folks 
in the depots with Navy and Air Force saw this MBC white paper 
of Japan ask why can't we feature Dr. Deming. And they 
wondered, why can't we? And so they starting working on trying 
to implement some of those things.
    Now at the time, not just in the Department of Defense but 
even in the private sector, people said, well, this is great, 
it works for manufacturing and that's about the only place it 
applies. So the depots started to work this and they saw some 
very good successes. They didn't say very much to other folks 
even inside the command. And then the command found out that we 
had some successes out in the field and they went out and then 
they created a command-wide program. And so instead of this 
being an implementation that started at the top and went 
downward, it actually started more in the field. A couple of 
years after the field started, then the folks up in OSD formed 
up an office at that point under the Under Secretary for ANT. 
So we had a lot of existing groups in the field and that's 
where you probably heard that we had commands that did this.
    Well, Naval air systems command was one, because they've 
got a lot of depot operations. The old Air Force logistics 
command, of which I was a part at the time, we had a lot of 
depot operations.
    And when we went through this development in the field, 
first we started with, it can't be done anywhere but on a shop 
floor. And then we said, well, really is that true. And the 
Wright Patterson Air Force Base hospital actually revised the 
way they did entire prescription refills. And that may sound 
like a very small thing, but it used to be a 45-minute wait for 
a prescription, and there was never any place to park up front, 
and they were only open during duty hours, and it was really 
quite tedious to get a prescription filled. So when they did 
that, it really sent you, as--it was the shot heard around the 
base, because so many people got prescriptions filled and 
thought this was great, but let's do this in more places. So 
that proved it can be done on the service side of the house.
    Travel voucher processing, it was an instant process at 
AFLC headquarters. You could hand it in, wait 10, 15 minutes, 
the folks in back would add it all up, and you would get your 
money. It was a great setup.
    So that's where it spread.
    Mr. Horn. This was which area?
    Ms. O'Connor. Wright Patterson Air Force Base.
    Mr. Horn. Yes, but what was the subunit there?
    Ms. O'Connor. It would be the headquarters of Air Force 
logistics command.
    Mr. Horn. The finance office or whatever, the travel or----
    Ms. O'Connor. It would be the payroll office at the 
headquarters.
    Mr. Horn. Payroll?
    Ms. O'Connor. Yes, the travel office at the headquarters.
    Mr. Horn. I just wanted to get that straight.
    Ms. O'Connor. And then what we saw in the long run after 
applying this to various service processes, we started looking 
at applying it as well to headquarters processes. Well, a lot 
of things that the headquarters don't measure as easily, and 
things in the services, in the service don't measure as easily 
as the shop floor.
    But we did find that the very process of getting all the 
inputs from the military departments, working the policy, 
putting the information back out, and the tools, the techniques 
that we used in the process action team were invaluable. Even 
at the OSD level and the military department level and the 
major command level as well.
    Mr. Horn. So you printed some of these success stories and 
got them first throughout the Air Force; was it? And did the 
rest of the Department of Defense see some of these, what could 
happen with a little thought that would take a couple----
    Ms. O'Connor. Early on, it was more of an informal system. 
And I was on the IG Air Force logistics command, and we were 
sort of the people who spread the word, which is one of the 
reasons why the Air Force used the IG in this implementation, 
because people respond to what they're graded on to a great 
degree.
    And the IGs were everywhere. Those were the folks who 
actually went out across the command and could see all of this. 
And then they would share the ideas.
    But one of the things we have wrestled with over the years 
is we've got a lot of installations out there. And some of them 
have common processes. And how do we get it from Misawa Air 
Base Japan to--well even to Yokosuka Air Base, or Yokosuka 
Naval Base Japan, or over to the European theater, to Aviano 
Air Base. I mean, how are we going--because the folks at Misawa 
Air Base Japan don't have the travel money to go to Aviano Air 
Base.
    So what we've done is on our web page, we've set up what 
we're calling a best practices data base. We went out with the 
initial data call for folks to send information back up through 
the chain. And we are subcategorizing those under topics such 
as maintenance, and then we'll have a subcategory eventually 
that says flight line maintenance, F-16 maintenance, et cetera, 
to share those ideas back and forth. Because that's one of the 
key issues we're working on is how do we share the ideas.
    Mr. Horn. Yes. And that's a good thing to work on.
    Mr. Cooke. Mr. Chairman.
    Mr. Horn. Excuse me a minute. Since you served on an 
Inspector General's staff, do you get the various Inspector 
Generals into the Pentagon on an annual basis or something and 
sit down and talk out what are the things they are finding that 
are still not straightened out regardless of service and then 
try to encourage teams in this area? How are you doing that? 
How are you using that Inspector General's knowledge and how do 
you hear about it?
    Ms. O'Connor. Well, actually a couple of years ago there 
used to be an IG network forum that reported to the Federal 
Quality Institute that had IGs from across the Federal 
Government on it, and we looked at that. But that has since 
been disbanded as the FQI was disbanded. So at this point, we 
don't have an internal structure, but certainly I work with the 
DOD IG on any issue that they feel that is necessary. So we 
coordinate as necessary with them. But we do not get the IGs 
together specifically, no.
    Mr. Horn. Do they ever come together in a conference within 
the Department of Defense, whether you are there or not?
    Ms. O'Connor. Do we have an IG conference?
    Mr. Cooke. I'm sure there's an IG conference, Mr. Horn.
    Mr. Horn. I would hope so.
    Mr. Cooke. Yes.
    Mr. Horn. OK. Mr. Cooke, sorry to interrupt you.
    Mr. Cooke. I was going to say that the story about quality 
started from the depots and particularly the Air Force and the 
Navy were a little like the same story of how it started in the 
Federal Government, where the word came through, and I was then 
a member of the President's Council and Management Improvement. 
And the council established--in essence, a pool of quality 
experts came. We contributed people from each of the 
departments, which eventually metamorphosized into the Federal 
Quality Institute. And now, of course, have moved over to OPM 
exclusively.
    But I think Anne is quite right. It started because of the 
good things that we were learning about, not only in some of 
the departments, but also in industry, which led to the 
emphasis that the PCMI put on quality training, so it's the 
same process.
    Mr. Kauvar. One of the things that we've done in a number 
of years in the Air Force is to hold an annual quality 
symposium in Montgomery, AL, that's attended by about 2,000 
people and all the four-star Commanders in the Air Force. And 
that's one of the ways that we used to share the experiences 
and the lessons learned. The Department of Air Force Inspector 
General has just finished a worldwide swing to take the results 
of the Blue Ribbon Commission directly to all of the Air Force 
commanders.
    Mr. Horn. OK. How about the Army? General Boddie, do you 
have any thoughts on how the Army does this on a system-wide 
level in terms of either using the IG, having an annual 
conference?
    General Boddie. Sir, I'm a field soldier but I can tell 
you----
    Mr. Horn. I know you are.
    General Boddie [continuing]. But I can tell you that 
General Reimer, Chief of Staff of the Army, General Wilson.
    Mr. Horn. You might pull that microphone closer, it is a 
little hard to hear you.
    General Boddie. OK. And General Wilson, the AMC Commander, 
and my boss are all very much supporters of total quality 
management, supporters of training for total quality 
management. General Wilson has used his IG and AMC to go around 
to see all of those Commanders that are talking about teaming, 
how are they really doing. So he's had the IG look at the 
teaming aspect to make sure that that's truly happening. So 
from my experience, and I'm a big believer in total quality 
management, I've been very fortunate to have my chain of 
command totally supportive of what I believe very strongly in.
    Mr. Horn. Captain Cantfil, are you aware of how the Navy 
spreads the word throughout the Naval establishment?
    Captain Cantfil. Well, Mr. Chairman, I'm actually further 
down the food chain than the General to my right here. But from 
a field activity level, Dr. Doherty, who is the Navy's TQL 
director up in Washington, her office-to-field activities, 
where I was when I was still at the Naval Station, was active 
in terms of sharing information, passing information back and 
forth. So we had a real connectivity back and forth along those 
lines, both in terms of how we set our program up, if we needed 
any help along those lines and stuff.
    Did I ever attend a symposium that the Navy held on 
quality? The answer is no. I don't know that the Navy does it 
annually like the Air Force does or not. Was I ever inspected 
on quality management techniques? I would say the answer is no 
on that also.
    Mr. Horn. Where was your assignment before this current 
assignment at the Naval Station? Where did you have an 
assignment?
    Captain Cantfil. My current assignment is the Deputy 
Director of the Joint Interagency Task Force East in Key West, 
FL.
    Mr. Horn. I see.
    Captain Cantfil. And that----
    Mr. Horn. I met with their group a few months ago on their 
drug eliminations.
    Captain Cantfil. Yes, sir.
    Mr. Horn. Very interesting group.
    Captain Cantfil. That's my current assignment, is a deputy 
down there. Prior to that, I was a CO of the Naval Station at 
Mayport. And prior to that, I was a navigator on the U.S.S. 
Abraham Lincoln, a nuclear carrier out of Alameda, CA.
    Mr. Horn. How much did you hear about quality management in 
those various roles in the Navy? And did you ever go to any 
courses they had on the subject?
    Captain Cantfil. My first experience in TQL was as the CO 
of Naval Station Mayport. That was my first experience with it. 
And I had training prior to getting to the Naval Station back 
in 1994.
    Mr. Horn. Now was that at your initiative or was that at 
the command's initiative to which you reported?
    Captain Cantfil. At the time it was at my initiative. And 
subsequent to that, the Navy has directed that to take command 
of any major installation, you would have to go through senior 
TQ training.
    Mr. Horn. How about you, Lieutenant Colonel Sawner for the 
Air National Guard? What can you tell us about the National 
Guard spreading the word on total quality leadership or 
management, whatever you would like to call it?
    Lieutenant Colonel Sawner. Forgive my cold. We're hooked in 
tight with the Air Force. And because the Air National Guard, 
in Federalized reports to all the different gaining Air Force 
major commands, as we have gone through the last 3 to 4 years 
of quality Air Force assessments, our Air Force Baldrige-based 
assessment, we were tied in with all the different variants 
with this and the different major commands, all very similar 
but at the same time enough differences. And so we ended up 
forming teams that went out to assist our units doing a 
previsit when the commander requested. And during that process 
we brought people from other units that had previously been 
through an assessment or were very knowledgeable to share the 
wealth back and forth. And it would not be a pre-inspection. It 
would be a here is what this means to us, is that what you 
meant to say. And, oh, by the way, most likely, you're doing 
this and this and this, so that that assessment, that unit 
self-assessment was the best possible instrument it could be. 
And so that was one thing that helped a tremendous amount.
    And Tyson's Corner is where the quality center is located. 
It's our schoolhouse. And academic instruction is about 25 
percent of what our organizational energy is focused on. We 
taught about 160 courses last year for about nearly 5,000 
students from all over the Air National Guard. Students come in 
from----
    Mr. Horn. How many in all? How many students, 5,000?
    Lieutenant Colonel Sawner. About 5,000 in the last year.
    Mr. Horn. If I heard it right. There is an echo over here.
    Lieutenant Colonel Sawner. We teach those both at the 
quality center. But the majority of them are taught at the 
unit. We'll send a mobile training team out to do that. But in 
the process of doing that, we've developed a cadre of adjunct 
instructors that are people from the field. They're from the 
operational unit. Most all of the team, they're operationally 
oriented, some line function, and they do this as an additional 
duty because they have an interest in doing it and because they 
like to.
    I wish I was smart enough to say we planned it that way. 
But what's been created is all of these, now over 300 of them, 
and they range in rank from staff sergeants up to major 
generals, that come in and teach with us in a teaming mode, and 
they're fully qualified to teach just as well or in many cases 
better than my staff. That has created a center of expertise at 
the unit level to embed this throughout the organization. And 
it gives that Commander an internal resource. And because one 
of the things that we found early on is a lesson learned was 
that you really had to avoid a concept that I call ``doing'' 
quality. ``Doing'' quality is characterized by how many folks 
you got trained over how many teams you've got without focusing 
on what's actually being improved, how are you helping embed 
this and change a culture of an organization.
    So by putting those centers of expertise out there, that's 
really helped us. And it also shares the wealth big time. 
Because they will go to the different States with us and see 
what's going on there and take it home to their home unit. And 
it's worked very well.
    Mr. Horn. Now, are you full time with that center as a 
regular Air Force officer, or are you part of the Air National 
Guard?
    Lieutenant Colonel Sawner. Sir, I was initially hired as a 
regular Air Force officer. I spent 18 years in the regular Air 
Force. And 3 years ago, General Shepperd invited me to join the 
Air National Guard. So I'm an Air National Guard officer on 
full-time stat tour now.
    Mr. Horn. I see. Let me ask you. It seems to me if I were 
running an organization, as I have run one on the civilian 
side, among the criteria that I had for promotion would be the 
degree of which somebody took care of matters such as quality 
leadership, quality management, whatever word you want to use 
in the improving of one's work force and improving one's 
system.
    To what degree does the Air National Guard have anything to 
do with quality management, quality leadership? Well, I realize 
that is an out--the leadership--obviously, you won't promote 
without some leadership. I am talking about doing for the 
organization they have had the responsibility to head. Is there 
any recognition in the promotion system that, yes, you ought to 
get a few points for that, not just your ability to fly a 
plane, not just your ability to lead a company, your battalion 
or whatever it is, and I realize there are different terms in 
the Air Force, but where is that? Is it in the promotion system 
somewhere that we should give a hoot about quality management, 
quality leadership?
    Lieutenant Colonel Sawner. Well, I can answer that two 
ways, sir. One, we have the same officer rating system that the 
Air Force does. It's identical. And it is weighted. There's a 
specific block in there that talks specifically about impact on 
organizational performance and on teamwork. And that is a 
relatively recent change in the last 4 or 5 years.
    Mr. Horn. Yes.
    Lieutenant Colonel Sawner. More----
    Mr. Horn. On that point, if the services, and coordinated 
by Ms. O'Connor and Mr. Cooke, would give us the actual 
criteria on promotion of all the services so we can see to what 
degree this is a factor and is it weighted, let us know what 
the weighting is. I have seen some of that in some 
organizations, not the services that have been off the wall in 
their weighting some time, it is like 2 percent or something, 
which tells you something. But go ahead.
    Lieutenant Colonel Sawner. Let me give you a little more 
real world actual, and this is what I use, because it's more 
than just anecdotal.
    I mentioned a minute ago that we had right now on the books 
approximately 300 fully qualified adjunct instructors. We're 
constantly growing new ones; we're grooming them all the time, 
anyone that has an interest. It's a pure voluntary kind of a 
thing with their commander's permission. The commanders like 
this. They think this is a real good deal that they're sharing 
their wealth in other places and growing. It's almost classic 
Malcom Knolls adult experiential learning for the instructor. 
And we've discovered in many cases that the instructor gets 
more out of it than the class does in building this functional 
expertise.
    But what I have noted is that my biggest turnover in 
adjunct instructors is they get picked for command.
    Mr. Horn. They can what?
    Lieutenant Colonel Sawner. They get picked up for command 
within their unit.
    Mr. Horn. I see.
    Lieutenant Colonel Sawner. And they don't have nearly as 
much time to be an adjunct instructor then. And so if I'm 
losing adjunct instructors because they are being selected, 
they are being promoted, they are being put in increased 
responsible positions, well, I'm doing my job. And I'll take 
all of those. And I keep getting those calls every day, I'm 
sorry, Tom, I can't come teach for you again, I'm now the 
support squadron commander or this supplier or whatever. And 
that's the proof in the pudding that we're embedding this the 
right way.
    Mr. Horn. Excuse me. That is good news. But then the 
question is 1 year, 2 years, 3 years down the line has it made 
a difference in how they conduct themselves and how they 
analyze and help develop the organization that they are now 
leading?
    Lieutenant Colonel Sawner. I can only give you an 
anecdotal, but my gut is absolutely. Because what we talk about 
a tremendous amount is that the task here is not to do quality, 
it's to change organizational culture. It's to embed in that 
culture systemic and continuous improvement as a mind-set. And 
the only people that can change culture and our literature 
supports this, consciously, is the senior leadership of the 
organization. And so
their task is to embed that culture. And for the record, if it 
could be submitted, we sent a statement.
    Mr. Horn. Without objection, that will be put in the record 
at this point. Hand it to the fine reporter right next to you.
    [The prepared statement of Lieutenant Colonel Sawner 
follows:]
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    Lieutenant Colonel Sawner. But we think that that task of 
leadership--and that gets into a little bit of--Dr. Mangrately 
talks about self-organizing systems. And if the role of the 
leader is to model the behaviors and to model the core values 
that we want that organization to have, so if these commanders, 
these new commanders that have been instructing this, they 
aren't going to instruct it unless they believe it, unless it's 
part of their daily activities. So I would say that's what 
they're going to model. They're going to model, and we're doing 
the right things.
    Now, in the process of doing that, those behaviors are the 
ones that are going to be picked up by the people that are 
working for them. We talked to commanders about signals are 
really critical, because you're sending them all the time. 
People take mental snapshots of every single thing that you do 
as a senior leader. And they watch you all the time, whether 
you're intending to send or not. So you have to be very 
conscious to send those right signals. And the only way to do 
it is to model the behaviors that you want replicated. So we 
think that's working real, real well. And that's a key piece of 
some of our training.
    Mr. Horn. Well, it is very helpful.
    Captain Cantfil, what can you say on the various commands 
you have been through? How serious did the commanding officer 
at some of your previous commands take total quality 
management?
    Captain Cantfil. Well, like I said my first real experience 
is when I came in as the commanding officer myself, but I 
didn't walk in blindly because you asked me, ``Did I get 
training on my own or was it mandated?'' And actually I 
initially got it on my own because the previous commanding 
officer had started the quality initiatives at Mayport to this 
point that by the time I had taken over Mayport it had won a 
quality award from the State of Florida. So clearly he had 
fully embraced the concepts and stuff. And I had hopefully 
slipped in behind it and continued the continuous improvement 
that we're looking at.
    A lot of the premises in quality management have been 
PRECIPS of solid leadership, PRECIPS of really a long time ago. 
So I think the Navy really under--you heard Admiral Schriefer 
earlier this morning. I think it was really Admiral Kelso that 
fully embraced total quality leadership, is how we're going to 
be doing business in the Navy. This is the methodology in which 
we're going to adopt and embrace those ideas.
    And since Admiral Kelso started that, like I said 
initially, the training came into place. And they think that 
that's really started to permeate all the commands as it goes 
along. Again, that's a cultural thing. It's a change and 
adjustment on how we've done business and stuff to date, but I 
think that's clearly been looked at.
    I couldn't have been as successful at Mayport as I was 
unless I had leadership above me that supported me. Clearly, 
the Rear Admiral that I reported to when I was there embraced 
that philosophy also, because it's all synergistic, it's all 
related. You really can't do it out in a void and stuff like 
that. So it's all part of a larger system.
    How quickly we came out of the shoot; I'm not really 
qualified to make a comment. I can tell you, though, that 
certainly in this decade, my experience has been that's how 
we're attacking issues and stuff as we go about it.
    I'm in a joint command now. And certainly the concepts of 
PRECIPS we followed at Naval Station Mayport that I was first 
exposed to, we embrace those and use those as we go about an 
operational command which is counternarcotics at this stage of 
the game.
    Mr. Horn. So when you were at Mayport and you inherited 
what a previous commanding officer had done, did you find some 
of your staff that you inherited also wanted to backtrack on 
the effort? Or did they take it seriously?
    Captain Cantfil. No, absolutely. That was probably one of 
the most difficult aspects to the thing, because initially 
everybody is looking to queue from the new leader. There were 
clearly some that were giving what we used to call TQL, total 
quality lip service. They were really hoping to outlast the 
current commander. I mean how change is.
    Mr. Horn. Right.
    Captain Cantfil. So one of the most difficult aspects of 
that transition, which we've shared our lessons strongly with 
our TQL office, and I know Dr. Doherty has shared them in many 
forums in the public and private sector, was the fact that you 
had to spend a very hard amount of time taking a look at how 
the organization is really structured; who is really 
participating in the quality management and who wasn't. I had 
to spend a lot of adjustment time. Because actually my 
inexperience led me to believe as I took it on face value that 
we were fully committed to total quality, and actually I found 
out it was more my senior leadership and my middle management 
level that was really fighting the concepts and really paying 
the lip service, hoping to outweigh the previous commander 
before we came in.
    Mr. Horn. And did the previous commander brief you on what 
he had done and that is how you knew about at least a partial 
commitment of some of the staff?
    Captain Cantfil. No, actually he said, ``Hey, we won the 
award from the State of Florida, we're good to go, don't mess 
it up.'' And that's really about the way it unfolded. Probably 
about what I did to my relief.
    Mr. Horn. Yes, if you want your own flag, do it again.
    What did you do to get your middle management on board?
    Captain Cantfil. Well, it just goes back again to you heard 
a lot of the testimony earlier. There's nothing magical about 
anything that we've talked about here. Obviously, it starts at 
the top and leadership is a key and I could just talk about it. 
It has to be your behavior activity and things along those 
lines. If you're talking team building, you're talking 
training, you're talking about all those specific issues and 
stuff like that, you have to embrace really what you're taught 
in the quality management forums and training before you get 
there.
    A couple of things we did, again this is getting into the 
nitty-gritty, initially opened a quality academy. You've heard 
training. If you don't train and you don't embrace that, you 
can't start anywhere. I was very suspicious because I had never 
really been exposed to total quality before I got to Mayport, 
is I need to get everybody on board with this concept. So we 
opened a quality academy. And everybody who came to the Naval 
Station, the entire tenure I was there, I'm sure it was 
continuing at this stage again, it doesn't matter if you were a 
captain, a commander, the youngest airman or seaman or a new 
hiree from the civilian work force, you went the very first 
week you spent on board Naval Station Mayport, you went through 
the quality academy and the fundamentals of the TQL course. So 
you went and did that sort of thing.
    Mr. Horn. Was that 1 day or a whole week?
    Captain Cantfil. No, actually it was 5 days.
    Mr. Horn. Five days.
    Captain Cantfil. It was 5 work days. So we spent that.
    The quality academy established--you heard a lot about 
just-in-time training. We spent a lot of time during that, 
also. For instance, when you built teams and you established 
teams and you charter teams, you absolutely had to provide 
training before they went there. And more specialized training, 
whether it was managing variation, whether it was team 
building. So when we went to charter a team, we placed people 
on that. If they hadn't been trained before, they would go on 
and receive training 2 or 3 days right after they were 
chartered. So they would go on the team and be off into the 
running.
    But a large part of it again revolved around you know 
people watched me. I established the executive steering 
committee on the base, which was a cross functional team. That 
was a major decisionmaking body on the base. That was the No. 1 
team we chartered. I forced all major policy decisions and 
resource decisions also into that body. That was met once a 
week.
    From that body, they organized quality management boards 
which looked at the critical processes throughout the base. 
They were, in turn, chartered to establish process action teams 
as they went along.
    So you heard about team building. Team building was 
crucial. I don't share the one comment from the distinguished 
Representative from the State of Ohio who said, I believe it 
was him, said, hey, we didn't go after tough decisions on 
teams. I found that when you had to do tough issues and quality 
management, that's when you wanted to put your cross-functional 
teams on. If you weren't willing to attack morale issues, if 
you weren't willing to attack tough budgetary resource issues, 
it wasn't going to work if you just picked the simple low 
hanging fruit. Those were good too initially as you dabble 
along.
    Again, I didn't take anything from its infancy. I took an 
organization that was already going. So in order to make 
everything work you really had to pay attention to the signals 
and stuff that you gave out as a leader that you were fully 
embracing the principles and stuff that you were taught. 
Because if you didn't follow them yourself, it didn't make any 
difference.
    Mr. Horn. Now, in your new responsibility, I take it the 
deputy director on the Key West group, I have forgotten, remind 
me the name of the team down there, it was about 15 different 
agencies.
    Captain Cantfil. Yes, sir, it's very painful.
    Mr. Horn. I just wonder, how do you give a group like that 
the quality message?
    Captain Cantfil. It is no different. Culture are things 
changing. Had I not had my experience at Naval Station Mayport, 
I think I would have been ill-equipped as a deputy commander 
down there, because, as you said, now that you have a Naval 
culture, you have all four services, you have the Coast Guard, 
you have DEA, Customs, FBI.
    Mr. Horn. CIA.
    Captain Cantfil [continuing]. CIA, the whole organizations. 
And so you have different cultures as seeing there. But there's 
nothing that's really dramatic about all this. Again, it starts 
at the top. If you get everybody in and you build teams--and 
you look at strategic planning is a key. The establishment of 
cross-functional teams are a key. The fact that you empower 
individuals to do these sort of things, and you bring everybody 
together and you've got to train them. If you don't train first 
before you do any of this stuff, you might as well----
    Mr. Horn. But when you did train them, you had a mission 
for them to carry out. It wasn't just training where they could 
forget it and go back to work and go to their area and do 
whatever.
    Captain Cantfil. Actually not. The teams again are very 
critical. Inside Mayport, every department, there were 27 
departments that we had. If it was an intradepartmental effort, 
each department was told, you have a quality council and you 
need to build teams. That just really is established inside 
your individual director or department.
    So everybody who went to the initial training, fundamentals 
of TQL, as they got to the Naval Station at Mayport, then it 
went into--and their department, each of their department heads 
and directors there were told, inside your quality councils you 
need to establish some small teams.
    So as people come out of the training, they were given 
projects and stuff to work on. Some are very simple tasks as 
they went along as they go there. But that built the cadre so 
that when you got to these tough cross-functional issues you 
had a lot that was already there. And some experience already 
established.
    But despite the experience levels, you really had to 
provide training. And we spent a lot of time training. The 
executive steering committee once a year did a self-assessment 
and was provided--we spent money on outside facilitators and 
trainers that come in so we could take a hard look at what we 
were doing, how we were conducting business.
    Mr. Horn. Now, in dealing with the joint teams there, and 
you see sort of the representation of the cultures of various 
other agencies, services, whatever we want to call them, on a 
scale of 1 to 10, with 1 being nonevident and 10 being 
certitude, where would you put the Navy in that particular 
command of 15 different operations that you are now deputy 
director of? Where would you put the Navy in terms of total 
quality management and these other teams in terms of total 
quality management? Give it a 1, a 10, a 5, what?
    Captain Cantfil. Mr. Chairman, I don't know if I would 
break the Navy out specifically when you ask. Because we don't 
actually look at the command as this is a Navy, and this is an 
Army, and the guy here is a Marine. And the teams again are 
built on the--does a person have a piece of that process? I 
mean, does he have a piece of the process, and should he be 
part of that quality action team or not? And again, I find that 
the individuals that we bring to the team. It's really a 
function. Did they get the proper training before they were in 
there? We have a lot of really talented Naval officers and 
chief petty officers that handle the teams exceedingly well.
    I don't actually notice any variance between the different 
groups if they've had prior training. It didn't matter if they 
had Air Force training, Navy training, or any other agency 
training. If they had produced training and they were 
experienced and you reiterated that training, they have no 
trouble working on teams.
    Mr. Horn. Well, let's take the civilian agencies only that 
you have to deal with. You mentioned the drug enforcement, the 
FBI, so forth.
    Captain Cantfil. Right.
    Mr. Horn. To what degree do you think they have had some 
training in this area? Have they, the time they get to your 
level and that team level of----
    Captain Cantfil. My experience is they did not have the 
training. But I didn't specifically ask them. So we made the 
assumption they didn't have training.
    Mr. Horn. OK.
    Captain Cantfil. So typically, when we needed to take a 
look at our own strategic plan, because we had representatives 
from DEA, because we had representatives from Customs and those 
services, we provided training to everybody, making the 
assumption at the baseline nobody had it.
    Mr. Horn. And when you put them to work on the processes, 
do you find you can get some action there from those since they 
are representatives of their agency, they aren't in command of 
their agency? Or am I wrong on that? Have you got the key 
people in that region coming to those meetings?
    Captain Cantfil. Well, we're an outgrowth of the old Joint 
Task Group Four. And one of the reasons I think we went to the 
Joint Interagency Task Force was the fact that DOD used to be 
the one entity. DEA would be an entity, and this 
counternarcotics business, you had all these different agencies 
out there. And they came back to say, hey, really a wave of the 
future ought to be a joint interagency approach to the things. 
And there's no reason why you can't have civilian and military 
organizations blended together.
    I was not there when they had JATF Four. I have been told 
with people who have overlapped the two organizations, because, 
really, Joint Agency Task Force, or Jatafiest, is embryonic. 
It's only been around a couple of years now, is that is a heck 
of a lot better, because embedded inside one organization are 
representatives from all the agencies that are involved in the 
drug wars as opposed to each of the agencies are separate and 
they interface on the exterior. So the fact that we have a true 
interagency with the people embedded inside the organization 
has been tremendous.
    As we've had each of the other countries come through who 
are basically collaborating with us and trying to be 
cooperative in this, and it's really this scourge of drugs 
there, most of them are impressed that we have civilian 
agencies embedded with the military, and it works quite well. 
So I would say it's a success story.
    Mr. Horn. Good.
    General Boddie, in terms of your previous commands, how 
much was total quality management a factor as you worked your 
way up to Brigadier General?
    General Boddie. Sure. Sir, since 1987, it's been a big part 
of every one of my jobs and every one of my chain of commands.
    Mr. Horn. Where were you in 1987?
    General Boddie. 1987, sir, I was commanding the largest 
ammo depot in the Army at McAlester, OK.
    That was when my commander a two-star gave me a copy of Mr. 
Deming's book, Out of Crisis. I probably wouldn't have read all 
the way through that, but the examples Mr. Deming used in the 
book were exactly how we were not doing it. So I thought I 
better read the book. And it had a major impact on me. It was a 
great opportunity to read that book when I was commanding an 
ammo plant.
    Mr. Horn. What was your rank at that time?
    General Boddie. A full colonel, sir.
    Mr. Horn. A full colonel in a slot held for a higher 
officer, I take it. Or was it?
    General Boddie. No. It was a colonel, sir.
    Mr. Horn. It was for a full colonel slot.
    General Boddie. Then my next job was commandant of a school 
in TRADOC. And I had to go through a lot of the cultural change 
part of the TQM business, which is the toughest up-front part. 
Then I went back to where I had all the plants and depots under 
me.
    But the current job has really been an interesting 
experience, because I got there and the cultural change had 
been made. And so I had to learn what to do next. And very much 
like the Captain was talking about, I had an executive 
committee that met every 2 weeks. I was always there to chair 
it or my civilian technical director. That constantly put the 
emphasis from the command on TQM.
    When we started the training business, I had all my 
supervisors go through 3\1/2\ days of training. I exported the 
training into the installation. But I reserved the last hour 
and a half of the training to personally pass out the 
graduation certificates and to share my personal views on total 
quality management. And I did that with the deputy commander 
filled in a couple of times when I was not there, but made 
every one of those.
    And then we had every employee go through 2\1/2\ days of 
training that we brought in. And I also went and did the 
graduation for them. However, that was a little more frequent, 
and it was myself, the deputy and the chief of staff that did 
it. But again to put the emphasis from the command because you 
are in that spotlight.
    But I would like to share what it did for us. I think 
partly the downsizing that we're going through I had a choice, 
we could fight with my four unions over cutting spaces, or I 
could have them sit at the table to help us figure out how to 
run the organization and solve the problem. It was much better 
to have them sit at the table and help me. The command was cut 
from 1990 until today, 34 percent or over 1,700 people. And I 
cut the headquarters by 62 percent. But the good news is in 
that whole process, I've returned over $30 million to my 
customers through reduced rates just by improved processes.
    Let me just share one last thought with you. I have a 
different definition of TQM. I call it to do the right thing, 
do it right the first time, continuously improve focusing on 
the customer.
    We also found out some of the things we were not doing were 
not the right things. We found that in some cases other 
services were doing it, doing it better than us, or private 
industry was. Well, we quit doing those things. And that all 
helped us meet the downsizing requirements that we had. And--
but it took a focus--every one of my development programs is 
done with an integrated product team. Chartered, sign charter, 
and it sounds like a lot of work from the top. But one of the 
advantages, when I was high ranking visitors, I had the 
Assistant Secretary for Research and Development, Mr. Decker, 
in; I had the Secretary of the Air Force in; I did not have to 
prebrief the briefing. Those teams are so empowered and they're 
so proud of what they do, I don't need to see what they're 
going to say. I might need to share with them some political 
things that I might know about their program that they need to 
be incorporated in, but I save a lot of time by that 
empowerment.
    Mr. Horn. Let me ask you, a good part of your laboratories 
have civilian personnel I assume.
    General Boddie. It's mostly civilian, sir.
    Mr. Horn. And they have a fairly high level of education, I 
would think.
    General Boddie. Yes, sir. But I also have an installation 
to run where I have the blue collar workers, also.
    Mr. Horn. Yes. Do you find any differences between the 
eagerness of each group to move forward in a total quality 
management approach between the blue collar and the fairly 
highly educated laboratory people? What has been the difference 
and experiences?
    General Boddie. The blue collar, sir, are so eager to go 
out and really play a bigger part, a bigger role in what they 
do. They're almost more eager than the scientist and engineer. 
They've been hungry for this sort of change a little bit more 
than the scientist and engineer who is often sort of empowered 
in his own way anyway. So I would say just from my R&D center, 
the blue collar worker is very eager for this.
    Mr. Horn. Very good.
    Let me ask a few closing questions here so we won't keep 
you all night. In view of the huge cost and time required to 
train a TQ professional, as well as the high turnover rate in 
some areas and the lack of a TQ career path, it would appear to 
be a great advantage to outsource TQ training to high qualified 
professionals. Would that not both reduce the cost and enhance 
effectiveness of the effort or would that simply mean there 
wouldn't be an effort? I would just be curious what you feel on 
that.
    Mr. Cooke. We use a number of high cost professionals in 
our training. And they're really good. They come very, very 
high; I'm talking several thousand dollars a day. But Anne, do 
you----
    Ms. O'Connor. It varies across the department. On the OSD 
staff, we've outsourced all training and facilitation. And 
we've done that for a couple of reasons. We have very, very 
senior people that we're dealing with and we need to bring in 
folks that have cutting edge experience and actually worked 
directly with Dr. Deming. And we have done that over time. So 
that's one of the reasons we do it.
    The second reason we do it is you know there's that old 
saying about, you know, if you come from more than 100 miles 
away and you carry a briefcase, you're an expert, and a prophet 
in our own land is never heeded. So that helps quite a bit, 
too.
    But in different situations it's handy to have different 
types of setups. For example, overseas you won't necessarily 
find people to outsource this with. So you really do need to 
have that expertise in-house.
    The other thing is it is important for us to maintain a 
level of expertise inside the department on this, because I 
remember the first time we were listening to a contractor's 
pitch on quality management, he gave his spiel, he left and the 
boss said, ``Well, what do you all think?'' And I said, ``The 
only problem with this is we don't know what we're doing.'' So 
how do we know if he knows what he's doing? So we decided to 
keep that in-house, because we just had a more comfortable 
feeling that the tax dollars were going to be better spent if 
we embedded it personally.
    In many of our operations, as General Boddie alluded to, 
the commanders play a key role in a lot of this training, too. 
And we have situations where the supervisors train 
subordinates. And that again, there's no faster way, as I'm 
sure you know, to get familiar with material, that they have to 
teach it. So this really helps perpetuate the learning inside 
of the Department of Defense. So in certain cases, we outsource 
it; in certain cases, we keep it in-house, and that's really 
kind of a commanders prerogative to make that call.
    Mr. Horn. Let me ask you, Ms. O'Connor, you came to the 
Pentagon under, what, Secretary of Defense?
    Ms. O'Connor. Oh.
    Mr. Horn. Dr. Cooke could answer that.
    Ms. O'Connor. He's got a lot more than I do. It would be 
Secretary Carlucci.
    Mr. Horn. OK.
    In the annual commander's meeting that the Secretary has 
with the key commanders around the world, in any of those 
Secretaries you have served with, did they ever mention their 
concern and their commitment to total quality management? Did 
any of them ever mention that?
    Ms. O'Connor. Commanders in the field?
    Mr. Horn. Did any Secretary of Defense ever mention it to 
commanders in the field in his annual meeting? There is an 
annual meeting where the Secretary usually meets with them, as 
I remember, over the years, unless they have stopped that, and 
the Secretary runs around the world on a plane enough. Did 
anyone ever make a personal commitment at the Secretary's 
level?
    Ms. O'Connor. At that time, when I came to the Pentagon, I 
worked under the ANT infrastructure when we had quality in ANT 
and I moved over. So that would have been Secretary Aspin when 
I moved over.
    There's a lot of information that goes up to the Secretary 
about this. And the Secretary has put out policy letters and is 
there whenever we ask him to be there, frankly, for anything we 
ask him to do with regard to quality management to show his 
support. But with regard to that particular meeting, sir, I 
just don't know.
    Mr. Horn. OK.
    Mr. Cooke. I can show you, though, starting with Frank 
Carlucci, because that's when Anne came, a memo to the 
building, signed by Frank Carlucci and taken up through John 
Doyte, John White, Bill Perry right now.
    Mr. Horn. OK.
    Mr. Cooke. So to that extent, in written communications, 
they've strongly supported it.
    Mr. Horn. Getting back to what I mentioned on promotions, 
but putting it another way, it is generally considered 
essential that systems be established to reward leaders who 
were successful in creating a total quality culture. What have 
the various services done to recognize those who have led this 
effort successfully? I got a feel from one service. Why don't 
we ask the Air Force now.
    Mr. Kauvar. Let me elaborate on what Colonel Sawner said 
who told you that there is, in fact, on a promotion form, a 
specific recommendation for that. I want to tell you that the 
enlisted force is equally crucial to our success in quality 
management, because most of the force is enlisted. That's where 
most of the adjusting time training takes place and where most 
of the teams are comprised. Last week we got the promotions for 
staff sergeant and technical sergeant, and the career field 
foreman power and quality got more than the average share of 
promotions.
    I can also just tell you anecdotally some information that 
you will probably find interesting. At the outbreak of Desert 
Shield in, what was it called, in the mobility commander, 
mobility command, Four-Star Commander General H.T. Johnson had 
scheduled 2 days of senior level quality training for his 
leadership. And they went through with it. The people that I 
worked for the most directly, General Handy, who is a director 
of programs and evaluation, and Assistant Vice Chief Three-Star 
General Newton were both promoted this year. And they were 
among the leaders in the quality changes that I described to 
you earlier in my report. Brigadier General Quarter, whose 
installation won the Installation Experience Award for the last 
2 years, was just given a new assignment as the XP in Air Force 
Materiel Command. And of course in that he will be in charge of 
quality for the entire command. So I think we do have a record 
here.
    Mr. Horn. Translate those initials you gave me. XP, was it?
    Mr. Kauvar. Yes, that's the director of programs. And 
that's where the quality function is lodged in the Air Force. 
So he's gone from running an installation with a superb quality 
program to taking over the program for the whole command.
    Mr. Horn. So you say in the enlisted promotion also, you 
called it what, manpower end quality?
    Mr. Kauvar. Manpower end power. It's a combined career 
field now.
    Mr. Horn. And what does the manpower group do? Is that the 
personnel people?
    Mr. Kauvar. No. Personnel is separate. Manpower is 
authorizations and personnel is individuals. But the manpower 
people have always been responsible for process reengineering 
in the Air Force.
    Mr. Horn. Yes. Because I would worry if it is the personnel 
people. Based on the civilian sector, I find they sometimes 
fight these proposals, so I am curious in what the manpower 
slot does in the Air Force. Pardon my ignorance, but I am not 
quite clear on it.
    Mr. Kauvar. It is the management of manpower resources and 
authorizations, as opposed to individuals, that is a 
determination of what is the requirement for manpower at a 
particular location or for a particular function.
    Mr. Horn. So these people operate at a higher command level 
than the ordinary personnel would be.
    Mr. Kauvar. No, you will find them at the wing level and 
the center level as well.
    Mr. Horn. I will have to get familiar with it. If you can 
send me something over on that, it is whatever the description 
is in the Air Force.
    Mr. Kauvar. Absolutely.
    Mr. Horn. General Boddie, do you want to say anything else 
on this subject, in terms of the incentive systems?
    General Boddie. No, sir.
    Mr. Horn. If it isn't promotion, what is it?
    General Boddie. The Army has been very good to me. It is a 
privilege and honor to serve as a general officer, and I think 
my report cards have had mention of total quality management in 
them, for the last number of them; and they got me promoted to 
Brigadier General, which is way past what I ever thought I 
would do.
    Mr. Horn. Captain Cantfil.
    Captain Cantfil. I can only put in a personal sense. When I 
was the commanding officer of the naval station, those who were 
superpractitioners of quality management were my top-graded 
people that I personally graded.
    Mr. Horn. Colonel Sawner.
    Lieutenant Colonel Sawner. The other thing that is a major 
motivation, besides the potential for promotion, which is a 
little different in the Air National Guard, is several 
different witnesses have spoken of the opportunity to change 
something, to make a difference, to improve it and actually see 
it happen; and that is a huge reward system. I think that goes 
across the board.
    Mr. Horn. I think you are right on that.
    Let me close with a couple questions to both the IRS and 
DOD. What should Congress do, if anything, to encourage more 
widespread application of quality principles throughout the 
Federal Government? Mr. Carroll, do you have any thoughts on 
that?
    Mr. Carroll. I hesitate to give you any advice, other than 
I think that hearings like this, keeping these kinds of things 
on the table, is an important issue. Because, as I mentioned 
earlier, agencies, particularly agencies like Internal Revenue, 
have the possibility of being insular in their view about what 
is going on; and the more that we can get advice and guidance 
and other views presented to us, I think that what we are 
finding is that is of value to us.
    Mr. Horn. OK. Any suggestions from the military panel on 
what Congress might do, if anything, to get this further spread 
throughout the executive branch?
    Mr. Cooke. I can hardly improve on Mr. Carroll's answer.
    Mr. Horn. Anybody else have a comment on this? Don't let 
Mr. Cooke shut off all the discussion.
    Mr. Kauvar. Let me try one suggestion for you, sir. The 
Congress took a great step forward with the Government 
Performance and Results Act; and although the implementation of 
GPRA has been different among the different agencies in 
Government, I think that moves the whole process in the right 
direction. The more support we can get for GPRA, I think you 
will find the more support you will have for quality management 
as well.
    Mr. Horn. I think you are right on that. There is a close 
interrelationship here.
    One last thing. You have heard from every panel today and I 
heard from dozens of panels before today, before I came to 
Congress and while I have been here, that one of the great 
problems any person that wants to accomplish something in this 
area faces is the so-called culture of a particular 
institution. And, I guess, how would you encourage workers to 
embrace change? Do any of you have ready experiences where you 
felt some reluctance in the start and what did you do now since 
you are the operators over here in uniform.
    Tell me what happened. What is the key? What would you 
advise, if you had 5 minutes to talk to your successor--after 
going through doing the job in a particular command, what would 
you tell your successor that he ought to watch out for if he is 
getting a new part of the operation that has been untouched by 
total quality management?
    Colonel Sawner, do you want to start that? It is like the 
Supreme Court. We start with the newest justice.
    Lieutenant Colonel Sawner. Yes, sir.
    Sir, what I would say is the senior leadership, as I 
mentioned, but, to elaborate, everyone has talked about some 
kind of executive council--well, just having a council doesn't 
make any difference. The council must do something. They must 
charter teams. They must sanction the training. They must 
support this within the organization.
    Now what happens, in my experience, is what the teams 
accomplish is much less important than the process which 
becomes, in effect, an adult experiential learning process for 
the council as well as for the members of the team. So if you 
don't model that and put the process in action in your 
organization, you are never going to embed it; and you will end 
up doing quality, not improving what you do.
    Mr. Horn. Captain Cantfil.
    Captain Cantfil. I don't think you can really improve too 
much upon the fact senior leadership is always the key. It is 
not just words. It is your behavior. We have heard enough 
examples of that.
    Clearly, the only constant is change. My relief, when he 
took over, they said, I found that quality management 
principles and methodologies is the way I could manage change; 
and I thought that was the best way to go. So if you embrace 
those things through your actions and words, you will get the 
job done right.
    Mr. Horn. General Boddie.
    General Boddie. I go along with the same thing, walk the 
walk, but I think you really have to work hard in the 
communications business. I have breakfasts with the boss, 
breakfasts with the old man, open line TP call-in questions. 
Because the biggest part of the cultural change piece is to 
communicate, and let's see the work force understand you are 
serious.
    But I would also say, once you have done that, it would be 
hard for a commander to come in and change it. Because once the 
people have tasted empowerment and the things, the way we do 
business in total quality management, it would be more 
difficult to bring them back to the old way than it was to turn 
them around to the new way.
    Mr. Horn. I think you are right in the mixed civilian 
military operation that you had, but if you were in an 
exclusively combat arm of the military, do you think if a new 
officer came in that wasn't quite a believer in total quality 
management and would just like giving orders, that they 
wouldn't respond to that and go along with it and say this, 
too, shall pass?
    General Boddie. They would have to respond, but I think 
they would change the new commander over time. I think people 
are people whether they are wearing a green suit or civilian 
coat and tie or blue jeans or whatever. I don't think it makes 
that much difference.
    Mr. Horn. Dr. Kauvar, have you got anything to add to this 
situation in this particular question?
    Mr. Kauvar. I think it is a matter of just saying yes.
    Mr. Horn. Ms. O'Connor.
    Ms. O'Connor. I would just like to expand upon what General 
Boddie said.
    When we face a lot of change in the Department, when we 
have gone out to the field units and talked to them, 
communication is the key. Because the folks that work in the 
organization are convinced that the boss knows something and he 
is just not telling and most of the time the boss really 
doesn't know all that much more about the changes coming at 
them than the workers do, so we encourage everyone to keep the 
open lines of communication.
    Those lunches with the boss are a fabulous, informal way to 
get information to the employees and also for the boss to get 
information back up. Because it is always amazing, the sort of 
things you hear from the work force when you are sitting in an 
informal setting.
    Mr. Horn. Mr. Cooke.
    Mr. Cooke. I share that observation. I think most people in 
uniform, civilian, in Defense, in Government or not, want to do 
a good job. They really want to come home at night and be 
satisfied with the work they have accomplished. I think TQM 
helps supply that job satisfaction if it is carried out.
    What you do thunders so loudly I cannot hear what you say 
to the contrary. I forget the name of the poet. That is to say 
the leader, if he is serious about it, has to act, not just 
talk. Communications is a physical act, not just a verbal, if 
you will.
    We have demonstrated here that we are serious. We may not 
have all the information you have asked for--we are going to 
try to provide most of it, Mr. Chairman--but we do take quality 
management and defense seriously, and we do invest a 
considerable amount of time, time well spent, I will say, on 
implementing and carrying it out.
    Mr. Horn. Mr. Carroll, we are going to give the tax 
collector the last word.
    Mr. Carroll. Thank you. That doesn't happen very often.
    The change is all about resistance and comfort, and we have 
to make it more comfortable to change than it is to stay the 
way we are. It is a hard thing to do; but, until we do that, 
people are going to be continuing to resist.
    Mr. Horn. We thank you all for coming. Sorry to keep you so 
late, but it has been very instructive. I suspect when the 
hearing is published it will be a best seller. Since it is 
free, it will probably run the budget up of this committee.
    Thank you all for coming. This hearing is adjourned.
    Oh, wait, on the staff list, I need to say thank you to--
and we have it here somewhere. Let me say, before we have 
adjourned, that we want to thank the following people.
    Russell George, staff director and chief counsel, in the 
Government Management, Information, and Technology 
Subcommittee; Matt Ryan to my left, the professional staff 
member who put the hearing together; John Hynes, professional 
staff member; Andrea Miller, clerk; Mark Stephenson, 
professional staff member of the minority; Jean Gosa, clerk; 
and interns, Michael Presicci and Melissa Holder; and the court 
reporters, that is Katrina Wright and Vicki Stallsworth.
    [Whereupon, at 5:01 p.m., the subcommittee was adjourned.

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