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Ex-IRS commissioner: performance measurement key to reform

Charles Rossotti says the tax agency suffered from faulty performance metrics.

A former commissioner of the Internal Revenue Service said this week that personnel reform in the federal government must be accompanied by well-developed measurement systems.

Charles Rossotti, who led the agency from 1997 to 2002, said the departments of Defense and Homeland Security should look carefully at the systems they are using to measure employee and organizational performance as they work to overhaul their personnel frameworks.

Under congressional mandates passed in 2003, the Pentagon and DHS are reshaping their human resources systems, scrapping the General Schedule salary arrangement and implementing performance pay.

Rossotti was at the helm of the IRS when Congress passed the legislation that reorganized the agency, increased taxpayer protections and added personnel flexibilities.

"You've got to be very careful to be sure you're measuring what you really want to measure rather than just what's easy to measure," Rossotti said during a luncheon Wednesday hosted by the Partnership for Public Service. "Measurement systems are extremely powerful and that's good, but you just have to be really careful to make sure you're measuring what you really want to measure … because if you don't, you get some very, very bad results."

Rossotti said the IRS attempted to measure performance by using enforcement statistics, such as "how many dollars or how many cases you did of seizing property or auditing or generating audit assessments." The system backfired, he said, because such measures became "an overwhelming driver of what everybody did at the IRS."

"Revenue agents were spending time auditing bankrupt corporations because they were the easiest ones to audit," Rossotti said. "But [the agents] got credits from statistics for doing another audit assessment, or seizing somebody's pickup truck that was broken anyway."

Rossotti said the system became "unbalanced" and led to "some really, really crazy things."

The former commissioner-who was speaking at the lunch to promote his new book Many Unhappy Returns-acknowledged that performance measurement is difficult in the public sector, "where you kind of have to invent your metrics." But Rossotti emphasized that performance measurement can be a powerful driver of employee behavior.

"You just have to be careful to measure what you really want to have happen," he said. "Because it will happen."