FROM THE OFFICE OF PUBLIC AFFAIRS

Good Morning. Thank you, Bob [O’Neill, President of NAPA] for your kind introduction. And thanks to the National Academy of Public Administration for organizing this conference, and inviting me to speak.

Public administration – I’d prefer to call it public leadership – is an important subject, and it means a lot to me personally. Before my current position as the Treasury Secretary, and before I was a leader in the private sector, I spent fifteen years in the federal government. During that time I also got my master’s degree in public administration from Indiana University.

Having spent that time in the public sector, and then working in two world-class private companies for over two decades, I can say this with confidence:

The U.S. government, and the public sector generally, employs some of the most capable, intelligent and dedicated people in the world. Our human resources are deeper and broader than in any private company.

People in government should outperform their private sector counterparts – government employees on average have more education than their private sector counterparts and their health condition is better because of entry level screening. We should have a leg up.

Yet, in the 2001-2002 Global Competitiveness Report from Harvard’s Center for International Development, out of 75 nations, the U.S. came in 41st for the perception of competence of public officials versus our private sector counterparts. The survey was based on polling of business executives, so it wasn’t exactly even-handed, but even so, some of the criticism is apt.

We simply do not produce value for our taxpayers anywhere near our potential, especially when compared to the way the very best private companies produce value for their customers.

Considering the high quality of government employees and the vast resources available to us, we should be the model for the private sector, not the other way around. Private companies the world over should be visiting our offices to learn our methods and copy us. Our goal should not be to catch up to the productivity and customer service of the best private sector companies – and we’re a long way from that – it should be to exceed them. They should be running to catch up with us.

The shortfall lies not in the quality of our human resources, but in the way we manage our human resources. And part of that problem is that we call our people "human resources," or "human capital", as if people are some kind of purchasing alternative to desktop computers and laser printers. That’s not just offensive, it’s wrong.

People are the organization. Period. Our mission and our people are the same – there is no government, or public service, without public servants.

Public leaders need to treat employees in a way that brings out their potential as individuals. We need that to make the U.S. government the world-class organization that it can be.

In a truly great organization, every person can answer "yes" to the following three questions:

First, "are you treated with dignity and respect every day by everyone?"

Second, "Do you have the tools to make a contribution to your organization that gives meaning to your life?"

And third, "Does someone recognize the contributions you make?"

We must strive toward that ideal in public service. When government employees can answer "yes" to these questions, they are in a position to achieve their potential on the job, and in their lives.

Let me give you an example of how I have approached the first question, of treating people with dignity and respect. When I became the CEO of Alcoa, my first priority was to improve safety for all our 55,000 employees. Not just improve it – I wanted to make it perfect. I didn’t have a profit calculation in mind – I just knew it was the right thing to do. Workplace safety is a key element of treating people with dignity and respect.

Today, Alcoa’s injury rate (as measured by lost workday incidents) is one twentieth of the average U.S. rate. What that means in a world-wide organization of 140,000 people is 140 people experienced an incident that caused them to miss work for a day or more in a year. The Treasury Department is an organization of 160,000 people. Last year we had nearly 2000 lost workday cases.

In government, whether at the local, state, or national level, we give lip service to the idea of putting people first. But we don’t back it up with results. A great organization focuses on employee dignity and respect, including safety.

Let’s set specific goals for a better workplace environment, such as reducing workdays lost to sickness and injury, and then let’s meet and exceed those targets.

A world-class organization also gives people the tools they need to make a difference. Everyone wants to go into work and get something done. No one wants to get up in the morning and say, "I’m looking forward to showing up and doing nothing that matters for nine hours." People want their work to matter. When they have the tools to achieve, they will get the job done.

We have too many managers in government who think that managing means hovering over desks and tracking timecards. They confuse activity with results.

What our government needs is fewer managers and more leaders. Leaders trust their people and treat them like teammates, not underlings. Leaders insist on results and hold people accountable. They encourage creativity and inspire action – and they avoid micromanaging.

Let me give you an example from my recent experience at Treasury. The first thing I did when I arrived at Treasury was to ask every one of our bureaus and offices to review what they do, and why they do it. Early in the review process, I discovered that every year it takes five months for the government to close its books and the Treasury was taking roughly 20 days to close its books at the end of each month and even then the information was incomplete. That just didn’t make sense to me. How can we say to people that their work is important when their product is so untimely that it has no value to the decision-making process?

I know from experience that companies as large as the Treasury Department can close their books in a matter of days. I asked our people to figure out how to close the books faster.

I gave them the freedom to redesign the process to eliminate unproductive work and create a process that is human-friendly. And now we close the books in an average of three days.

The people in every government organization have extraordinary capabilities – public leaders should set a goal, give their people the freedom to accomplish it, and measure the result.

Finally, consider my third question: "does someone recognize your contributions?" There are a lot of ways to recognize achievement – not just awards ceremonies. Sometimes a simple "thank you" is enough, along with sharing the credit for a job well done (when it is well done.) That should happen every day. Another aspect of recognition is compensation, and in this, government procedure truly lags behind the private sector.

Inflexible compensation policies impede our ability to excel. That doesn’t mean everyone should get a raise – I think government overpays for some jobs, and beyond cash terms, we offer excellent benefits and job security. Rather, the key in compensation is to make sure it reflects the mission of the organization and the competition for the skill sets we need to accomplish that mission. It isn’t simply a function of seniority.

Overpaying is a disservice to our taxpayers, and underpaying means the job won’t get done, or won’t get done right.

Consider this: in our economic statistics, productivity is one of the most fundamental measures of output. When U.S. productivity is rising – and it has risen extraordinarily over the past decade – it means we are producing more value with the resources we consume. That means profits, wages, and living standards rise. Government should focus on productivity. Every year, we should be producing more value for our taxpayers. Businesses do it every day – so can we.

That’s the big picture. The brushstrokes in that picture are the every day actions of leaders in public service, and the examples we set.

If you set goals that matter to our customers, the taxpayers, in each and every assignment, give your people the tools they need to meet those goals, and recognize them for the results – not efforts – they will get the job done every time.

I feel strongly that American public sector organizations have the potential to be world-beating at every level, against any competition. I know we do, because we have world-beating people.

Again, thanks to NAPA for calling our attention to these issues. I’m looking forward to your questions.