[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
U. S. GOVERNMENT PRINTING OFFICE
45-403 WASHINGTON : 1998
____________________________________________________________________________
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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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