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Laws (Not Administrations) Sustain Reforms

The payoff of wired-for-integration financial systems is great, but so is their cost.

Administrations come and go, but laws
provide sustained momentum for
management reforms in the federal
government. Statutory hammers can drive
home management reforms, and several
mandates did exactly that during the past
decade and a half. However, ambitious
management reforms—frequently
launched on an ad hoc, sporadic and
administration-by-administration basis—can evaporate faster than budget surpluses.

President George H. W. Bush's
Management by Objective program
established much-needed oversight by the
Office of Management and Budget, as well
as prioritization of policy initiatives at major
agencies. But it ended when he left office.

President Bill Clinton and Vice
President Al Gore provided high-level
visibility for programs designed to
improve government services with
technology. The Government
Performance and Results Act (GPRA) of
1993 and the Clinger-Cohen Act of
1996—combined with two terms of
implementation—moved these
technology-focused
management reforms
forward.

President George W.
Bush's program—the
President's Management
Agenda—combines the
evolution of these
management reforms with
heightened presidential
interest and structural
cohesiveness. Building on
prior legislative activity, these
reforms began in earnest with
the Chief Financial Officers
(CFO) Act of 1990 and
continued with GPRA, which
mandated structural processes to
bring strategic planning and
results-oriented management to
the federal sector.

Management reform,
specifically financial management and
accountability, has its roots in the
financial and data integrity provisions of
the CFO Act. The posts of CFO and
deputy CFO were first mandated at the
department level and were created shortly
afterward at the bureau level. Financial
statement requirements, mandated for the
first time in departments, flowed down to
key bureaus.

Since the CFO Act took effect 15 years
ago, the government has developed a
more cohesive approach to financial
information, a growing capacity to use
that information to improve program
management and a high competency level
among CFOs. Even so, it has taken 15
years to get this close to the desired
destination, and roadblocks remain. One
looms more prominently than others: the
balkanization of management through
stovepiped positions of authority.

Taking a Wrong Turn

The federal government has acted on the
increased interest in raising the level of
chief human capital officers (CHCOs)
and CIOs. Some statutory elements
improved the standing of these officers,
but creating more independent and
potentially bureaucratically powerful
fiefdoms is the wrong direction to take in
order to meet the challenges of
government.

The operational issues facing the
federal government are evolving rapidly.
Management chains of command in
departments and agencies should be more
cohesive. They need to be more
integrated, not "chiefed" to death.

I believe financial management is the
most central and potentially the most
integrating function in management. New
financial systems are cross-functional:
They no longer serve only the accountant
in making payments, but also involve
payroll, budget and programmatic
information integration. These systems
are increasingly complex and cannot be
implemented effectively without the joint
support of the entire management team.

For the sake of accountability, one
individual should be the lead on these
projects, but day-to-day implementation
must be a team effort. Unfortunately,
management balkanization has created a
situation in which multiple organizations
are fighting for their own turf.
The potential payoff
of wired-for-integration
financial systems is great,
but so is their cost. And
that raises the stakes.

CFOs have taken
more than a decade to
develop, energize, lead and
move forward with each
administration's
management agenda.
Government cannot
afford to have the two
other critical management
verticals—human resources
and information
management—go their
own separate ways. Nor
can government afford
to let the CIO and CHCO
communities take as much
time as CFOs did to develop
and nurture more service-oriented
organizations.

The current environment calls for an
end to the balkanization of independent
chiefdoms in the management arena.
Organizationally, we need leaders in
finance, HR and information technology,
but we do not need them to report to
department or agency heads.

This is where the Chief Operating
Officer comes in: to bring management
operations under one umbrella with a
single direction and focus. Should
programs or management hierarchies
propose new systems, the COO would be
the single point of review.

This individual could—and in my
mind should—serve as both COO and
CFO. Functioning at his or her best, the
CFO could perform the most integrated
management operations and partner with
program operations day in and day out.

A Place at the Table

Let me draw on my perspective on the
CFO Act and its implementation to
suggest why a CFO is best suited to
handle this assignment:

• The quality of CFOs at the
departmental level is high. The CFO
Act's evolution toward placing CFOs in
positions of significant
authority has enabled
presidents to draw
high-quality leaders
into the federal
financial
environment. As
responsibilities
have grown and
stakes increased,
the quality of deputy CFOs
also has improved
dramatically.
These capable
leaders bring
continuity, history
and a built-in learning
system for new political
leadership.

• The CFO now has a
prominent place at the
management table and
the ear of political leadership.
The value in having a statutory
basis for such broad spans of authority is
indisputable. The CFO Act's requirement
that the departmental CFO report
directly to the agency head has enabled
the CFO to move from the back room to
the government's version of the board
room. The impact has been healthy, and
it often has occurred at the operating
bureau level, as well.

• CFOs are in a position to be key
players in departmental decision-making.
The CFO Act, Clinger-Cohen Act of
1996, GPRA and other laws have given
increasingly powerful authority to the
CFO to integrate financial and
programmatic information, thereby
helping to improve agency operations.

So, let's use that authority to move
beyond creating new bureaucratic entries
in management food chains. The federal
financial and budgetary processes are
fundamental to the operations of a
department and an agency, making the
last 15 years a solid investment in
building capacity and placing CFOs at
the decision-makers' table.

It has been a difficult struggle—one
that has not yet been completed—to
build the capacity, recruit strong financial
talent at the political and career levels,
and look beyond the narrow world of
budgeting and accounting toward agency
mission and results.

We don't need to go further and build
the same type of corporate ladders for
other management elements. Instead, we
should consolidate and support human
resources and IT responsibilities under a
single individual.

We certainly should not stop striving
to improve the quality and the content of
all management operations. But we
should do it by putting our focus and our
energies on management integration, not
on balkanization.

MAKING THE CASE

For Chief Financial
Officers

• The quality of CFOs at the
departmental level is high.

• CFOs have a prominent place
at the management table and at
the ear of political leadership.

• CFOs are in a position to be
key players in departmental
decision-making.

Dec 31 2009

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