washingtonpost.com
The Flow-Chart Fallacy

By Max Stier
Monday, June 8, 2009

Whenever government breaks down, there is tremendous political pressure on our elected leaders to do something about it, lest they be castigated by the voters for sitting on their hands. What do they often wind up doing? Changing the organizational chart.

Consider the response to the failure of federal authorities to connect the dots in a way that might have thwarted the Sept. 11 attacks: We consolidated more than a dozen agencies with about 180,000 employees to create the Department of Homeland Security.

After our intelligence agencies got it wrong on weapons of mass destruction in Iraq, we responded by overhauling the intelligence community and creating the Office of the Director of National Intelligence.

Do such reorganizations make government work better? The results have been mixed, though that assessment might be called overly generous by the people of New Orleans who were stranded at the Superdome while DHS and Federal Emergency Management Agency officials tried to sort out who was calling the shots.

So with new leaders in the White House and in Congress, one might expect a break with the past. Think again.

We know that our government's financial watchdogs failed the public over the past decade, contributing to today's economic mess. In response, the Obama administration is reportedly weighing an overhaul of our financial regulatory apparatus and considering the creation of a mega-regulator that combines many existing agencies.

This news comes on the heels of speculation that we might create a federal food safety agency, which would require a partial restructuring of 15 agencies.

To be clear, government reorganizations themselves are not necessarily a bad thing. And perhaps we should restructure our financial regulatory agencies and consolidate oversight of food safety. But there are two major problems with such reorganizations.

First, they are really, really hard. According to a survey of Fortune 500 executives, more than 70 percent of corporate mergers are doomed to "outright failure." Reorganizations require sustained commitment. In a town with collective attention-deficit disorder, carrying momentum for any reform effort beyond the next election cycle can be a pipe dream. With 535 potential authors of any overhaul, it is hard to achieve consensus and clarity on a plan. And reorganizing agencies should be accompanied by a restructuring of congressional oversight responsibilities so department officials don't have to answer to a dysfunctionally high number of bosses. The fact that DHS falls under the jurisdiction of 86 committees and subcommittees illustrates how agencies are set up for failure if a reasonable oversight structure is not built in.

The bigger problem with reorganizations is that they distract from the real problems.

When government fails, it typically has little to do with the way an agency is organized and almost everything to do with the performance of senior leadership at federal agencies, their ability to effectively manage the people working under them and the culture of the agencies.

The 9/11 Commission summed up this dynamic best when it said, "The quality of the people is more important than the quality of the wiring diagrams."

Case in point: The Securities and Exchange Commission is at the center of the recent reorganization talks, largely because of its poor track record in stopping malfeasance on Wall Street in the run-up to the economic meltdown. But multiple reports have revealed that the SEC's poor performance stemmed from a failure of leadership, not its position on government organizational charts.

Before investing tremendous amounts of energy in major reorganization plans, the Obama administration would be better served by focusing on preparing its political appointees to effectively lead federal agencies. Energized, well-trained leaders have much more potential to turn around a failing agency than a major reshuffling does.

The administration should also invest in developing useful measurement tools to gauge agency performance. The president's budget calls for improved performance measurement in government. His administration should make it a priority to keep this promise.

In the end, the best way for our government to avoid the pitfalls that lie ahead is to resist the temptation to launch major structural overhauls and instead invest in our federal workforce and the quality of its management.

The writer is president and chief executive of the Partnership for Public Service.

View all comments that have been posted about this article.

© 2009 The Washington Post Company