Closing Time
erformance appraisal systems and extrinsic rewards such as pay raises, bonuses, plaques and time-off awards have their uses. But sometimes simply a plain old challenge is the key to improving performance.
In 2001, Jim Lingebach and the rest of the financial management team at the Treasury Department were pretty proud of themselves. They had closed the end-of-year books on time and with a clean opinion from auditors for two years running.
New Treasury Secretary Paul O'Neill was not impressed. O'Neill had seen better at Alcoa, the Pittsburgh-based aluminum company that he headed for 12 years. At Alcoa, the books were closed at the end of the year in eight days. "On time" at Treasury, meanwhile, meant five months after the end of the fiscal year, meaning the information in the report was so old as to be virtually worthless. O'Neill gave the team a new goal: Close the books at the end of the year in 45 days-three times faster than before. O'Neill also told the finance team to close the books each month in three days, since doing monthly reports would help speed up the end-of-year process.
Lingebach and the team drew up a plan and told O'Neill they could meet the goal by 2005. O'Neill said no. They needed to meet the goal by 2002, the following year.
Finance teams throughout the Treasury Department's 22 bureaus and offices got cracking, revamping their processes by cutting out unnecessary steps, speeding up data gathering and developing better estimation processes. Auditors from the inspector general's office got involved to make sure that data quality would not suffer. Lingebach hired Stuart Levy, an experienced private-sector project manager, to oversee the effort. Levy set up a red light-green light tracking system to monitor the bureaus' progress. O'Neill read Levy's tracking reports, congratulating bureau chiefs who were making good progress and cajoling those who were falling behind. Some front-line workers made the project a personal mission.
"The focus throughout was on positive reinforcement," Levy says. "We didn't point out those who were doing poorly. We pointed out those who did well." It wasn't until the 2002 deadline was approaching that officials got on laggards' cases.
O'Neill's direct involvement also motivated bureau chiefs, sending them a message that their actions were indeed being monitored by their boss.
Treasury's bureaus were given no additional money to meet O'Neill's order. They were forced to focus on their processes and on their people. Eileen Powell, acting chief financial officer at the Internal Revenue Service, says employees didn't think O'Neill's goal could be accomplished at first. "The attitude was, 'This is crazy. It's impossible. We can't do it. This is not Alcoa. It's not going to happen. We'll just wait him out,'" Powell says.
To counter that mindset, Powell and other officials explained the benefits of faster monthly closes-more accurate and useful data, easier closing processes at the end of the year, stronger overall financial management. They also wrote the goals of the project into employees' performance plans, setting standards for employees to get "fully successful," "exceeds fully successful" or "outstanding" ratings at the end of the year. "What gets measured gets done," Powell says.
The IRS and all of Treasury's bureaus met O'Neill's goal. The fiscal 2002 books were closed and audited by Nov. 15, 2002. The IRS gave some employees bonuses for coming up with better ways of doing business.
But the project succeeded mainly because O'Neill, who is no longer Treasury secretary, set a goal and kept pressure on to meet it, officials say.
"Pride was a really big motivating factor," Levy says.
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