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Self-directed Work Teams Untax the IRS

July 1, 1994
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Customer service at the Internal Revenue Service? Most people would argue that's an oxymoron. But to the IRS, customer service over the past seven years has become a strategic business objective. If any governmental agency has benefited from a total quality management environment, it's this one.

Seven years ago, the IRS and the National Treasury Employees Union (NTEU) formed the IRS-NTEU Joint Quality Improvement Process (JQIP). The JQIP was based on material from the Wilton, Connecticut-based Juran Institute, which provides training and consulting for total quality management.

In order to transform the IRS into a total quality organization, then-Commissioner of Internal Revenue Larry Gibbs recognized the need for human resources support. The agency's HR specialists were asked to negotiate with the union and help implement the joint quality improvement agreement. They also were responsible for explaining the agreement to the employees and setting up the training program for managers.

As a result, more than 400 cross-functional teams have been developed in the government agency, which includes seven regions, 10 service centers and 63 district offices. Some of their improvements included:

  • An automated data-base program in Anchorage, Alaska, that identified taxpayers whose state benefits would be withheld if they were still liable for federal taxes.
  • An employee handbook developed in Sacramento, California, for preparing various tax adjustments. The improvement helped employees follow a case step-by-step in an otherwise complicated procedure. It also reduced the number of errors and processing time
  • Extensive changes to Form 1065 (U.S. Partnership Return of Income) in the Laguna Niguel, California, district. The time to prepare an average return was reduced by 41%, significantly reducing the taxpayers' burden.

In addition to these tangible savings and an improved customer focus, the IRS-NTEU project teams also have improved the agency's internal communication. Consequently, many district offices and service centers have reported a greater ability to settle labor-relations disputes informally. Despite its achievements, however, the agency still wanted to get more of its front-line managers and employees involved with improving work systems. But instituting a total quality organization (TQO) among managers and employees is difficult. In fact, many quality-improvement programs fail because organizations don't know what total quality involves or don't know how to attain it. Although the Juran-style teams were formed, the most vital work systems for improvement weren't always selected. For example, one district wanted to solve a parking problem. This issue certainly affects employees' morale. But how does that issue affect collecting taxes and serving customers? Moreover, the majority of projects were being assigned bureaucratically by the joint quality councils formed in each region, district and service center. Many projects were too ambitious, and systems couldn't be easily changed at the local level. As a result, productivity gains dipped. Not surprisingly, interest in quality improvement among front-line managers and employees also declined during this period.

IRS urges regions to experiment with different team-based approaches.
In 1991, the agency decided to reinvigorate the process. The strategic objectives were to meet or exceed customer expectations and to move from simple problem solving to continuous improvement. In addition, the IRS wanted to empower employees by creating an environment in which they could exert more control over their work and also take more responsibility for their decisions. What follows are two examples in which one district in Laguna Niguel, California, and a collection division in San Francisco successfully responded to the call for reinvigoration.

With about 2,200 employees, the IRS Laguna Niguel District Office is one of the largest districts in the United States. It administers tax laws and serves approximately 4.5 million taxpayers in Orange, Riverside, San Bernardino, San Diego and Imperial counties of Southern California. In addition, it serves Southwestern Los Angeles County (in and around the city of Long Beach). Over a year's period, the district's two automated collection sites receive an average of 7,000 phone calls a week. The objectives of promoting employee involvement, enhancing communication and improving work processes in such a large business entity is daunting. However, in 1992, the District Joint Quality Council (JQC), which monitors the quality improvement program, was determined to succeed.

The JQC basic premise was that front-line employees and managers have the best understanding of the work processes for meeting or exceeding business objectives and customer expectations. Therefore, team activity should be emphasized in individual work units, most of which are defined by functions. For example, some work units specialize in tax assessment; others in tax collection. Through training in small group dynamics, the work units slowly transformed from a group of individuals to a work team.

Again, HR specialists were pivotal because they helped to identify which managers would make good team leaders. The criteria included verbal and listening skills and the ability to encourage participation. All of the team leaders were selected from within the agency based on division chiefs' recommendations. The JQC made the final decisions. Those selected then attended a two-week training class on team leadership and facilitation skills during the 1987 to 1991 period. It was important to proceed very slowly to ensure that the team leaders were well qualified.

"In the past, IRS managers had operated in a top-down fashion. As team leaders, managers would have to adapt new styles."

The district JQC and HR specialists decided to pilot only four impact teams and assess their progress over an eight-month period. Impact teams are entities designed to help drive the district's transition to a total quality culture. At that time, a decision to alter, expand or abandon the impact-team concept would be made. Each team was composed of approximately 12 individuals, including a manager. They were determined by division functions such as collection, examination and criminal investigation.

Initially, the union chapter presidents weren't enthusiastic supporters of the concept. The joint quality improvement agreement required consensus decision making. In addition, the union wanted to see a periodic rotation of team leaders, rather than having only the group manager in that role. But after a lively dialogue, the union was won over, and the JQC developed the following impact-team prototype:

  • The group manager is the team leader
  • A structured decision-making model is required. Consensus is encouraged, but not mandatory. Each impact team could make its own choice about how it would make decisions, including a majority-minority rule
  • Each team is assigned a facilitator
  • The impact teams will focus on their own work processes to identify opportunities for improvement, develop solutions, test solutions and monitor results.

Managers had to change their mindsets about how to lead.
The selection process for impact teams was primarily based on the group manager's ability to adapt his or her style as a team leader. In the past, IRS managers operated in a top-down fashion. The managers supposedly knew all the answers and told the employees what to do. Now, managers were required to employ better listening skills, solicit diverse opinions, focus on tasks instead of personalities and help resolve disputes. The goal was to model team behavior in several offices and among different types of employees. The pilot teams selected were two work groups in the Laguna Niguel office and two others in the San Diego area.

After completing two weeks of training on small-group dynamics conducted by line management and HR personnel, the team leaders and facilitators began adopting ground rules, operating procedures and a decision-making model. They also learned how to use different types of quality tools such as brainstorming, selection matrices, flow charts and statistical tabulations. Then the teams began to critically examine specific work processes that merited improvement.

However, team members soon realized that the awareness training didn't stick because opportunities to practice the theory weren't available. To remedy the problem, team leaders and facilitators now train team members in using quality tools on a just-in-time basis. The primary text for this training is the Juran Institute Quality Improvement Tools Desk Guide. Just-in-time training allows team members to immediately learn, practice and apply such tools as flow diagrams and brainstorming in a real work setting. The key objective, according to Peter Senge's book "The Fifth Discipline," is to promote learning "through a continual movement between practice and performance, practice, performance, practice again, performance again." In short, each team is expected to be innovative and flexible by using the most suitable methods available. The ultimate goals are to encourage communication and collaboration.

Impact teams conduct self-assessment.
Eight months after initiating the impact teams, the IRS used a questionnaire to measure the progress in effective small-group dynamics and communication and in the use of quality tools. The team leader and facilitator wrote a narrative assessing their team's strengths, weaknesses and specific accomplishments. Three of the four teams were pleased that their structures enhanced their ability to communicate effectively. Over a period of months, most team members felt very comfortable discussing their work problems. Most team members felt they were learning to think critically. Moreover, they felt they could question a work procedure in a safe and supportive environment. One team produced a video on its own time. The educational aid explained how the team functioned and the value of a team approach in promoting effective communication. In short, most team members said that being able to ask questions was crucial for team formation.

Those teams that first targeted small projects were the most successful. For example, a team of tax examiners who service taxpayers in a high-volume phone center ensured that breaks and lunches were taken on time by synchronizing the office clocks every two weeks. They also developed a better method for prioritizing the numerous technical and administrative tasks. In the past, a manager would distribute several memos without first evaluating their relative importance. Now, managers prioritize memos, and employees know what to review immediately.

A special agent team, which conducts investigations of alleged criminal tax violations, initially rearranged office furniture to increase its efficiency. Later, the team revised the summons process. It also improved the structure of their search-warrant kit and developed a guide for various procedures used during field investigations. Most recently, it identified two criminal cases for investigation by the team rather than one special agent. The objective was to determine if the team approach reduced the investigative period and enhanced quality. The initial results were encouraging. The team invested 60 staff hours on the cases over three weeks and were prepared to arrest the suspects. Normal cycle time for one special agent conducting similar investigations is 120 to 180 staff hours over six to eight months.

On the other hand, another team used a very structured approach (brainstorming, data collection, selection matrices) to identify their key problems. However, they discovered that none of the recommended solutions for the root problem could be implemented locally. Regulations in the Federal Personnel Manual and district-negotiated agreements with the union precluded their adoption. The lesson was that management must take a proactive and supportive role for each team, especially in its early development stages. This includes ensuring that teams remain focused on work processes that can be changed or reinvented locally. In addition, this type of assistance, when given properly, demonstrates mid- and upper-management's interest in the teams. Communication must be horizontal and vertical.

Another issue was trust between team leaders and team members. The transformation from a group of individuals to a true team called for major changes in behavior. Employees now were expected to consistently and directly contribute ideas about how to improve quality and productivity. They were encouraged strongly to express their feelings about the work environment and team interaction openly and honestly, even if the disclosure pertained to the team leader's behavior. For example, did the manager listen well, encourage participation and focus on tasks? Some employees worried about being disciplined for their candor. But one team leader addressed this concern directly. She said that the team leader must state that any unethical use of the appraisal process is unacceptable. If it did occur, the team concept could never survive. The team leader must model behavior and attitudes that fully support team development.

Lastly, the teams learned that management must market the successes of any team-based approach. One of the district's goals was to have the impact teams sell themselves by word of mouth. This included encouraging team leaders and members to make presentations to other work groups and for mid-level managers to discuss team progress at employee forums. As the marketing proceeded in April and May 1993, approximately 25 managers applied for team-leader facilitation training. Two years earlier, only three managers were in-volved actively in quality team activities. Today, the Laguna Niguel District Office has 16 impact teams and six cross-functional teams. Thus, the district JQC and HR personnel believe a natural migration of impact teams is under way.

Cultural change begins to take hold.
The following benefits from the initial impact teams were evident in the self-assessments and from informal observations made by branch managers:

  • Group decision making and the ability to select their own projects made the use of quality tools relevant to business goals
  • Honest and open communication between team members and the team leader increased
  • Team members more willingly shared information and technical skills with each other. The trust level significantly increased
  • The teams began viewing work from a process perspective in order to achieve business goals.

The overall feedback from team leaders, team members and facilitators was very positive. Currently, all major offices in the Laguna Niguel district have at least one impact team. In June 1993, the district's mid-level managers recommended that all district managers attend team-leader facilitation training and follow the impact team model-the linchpin for a successful transition to a total quality culture. Similar to the Laguna Niguel district employees, the San Francisco Collection Division employees also were dissatisfied with the old system. Their experiment focused on work groups in the context of their particular function. Collection-division compliance officers contact taxpayers-individuals and businesses-that owe back taxes or have not filed their returns. They must collect the money and returns under difficult and adversarial circumstances. Nevertheless, there are signs of improvement in customer focus, employee satisfaction, quality of work and productivity.

"Employees now were expected to contribute ideas about how to improve quality and productivity and were encouraged to express their feelings."

The division implemented the self-directed work teams in three of its 12 field-collection groups. The new work system integrated teams of compliance officers and support personnel to work on a centralized case inventory. This procedure was a major change from the traditional method of handling cases. In the past, compliance officers worked on their cases individually and were evaluated on individual ability and performance. With self-directed work teams, performance is based on the accomplishments of the team.

This is how the work teams were implemented:

  • Define the purpose and goal
  • Form the sponsor group and the steering committee
  • Form and train the design team
  • Study the current work system and define the work-system requirements
  • Redesign the work system
  • Write a comprehensive guide.

Over a six-month period, the design team (one manager, one secretary and five compliance officers) wrote a comprehensive guide known as the Big Book. It provided a detailed account of the new work system that included job descriptions, team-member rules and responsibilities, employee evaluation criteria, a promotion and recognition system, physical office design and overall working-environment suggestions.

The design team's work resulted in a combined union-management work-system redesign for the collection division. A steering committee, composed of three collection managers, four union officials, one management analyst and the chief of labor relations, was responsible for overseeing the implementation.

The first step was to select the team. Teams were composed of volunteers. However, some tests were conducted to determine which employees were best suited to work together. The teams were provided with three days of Juran quality-team training and the 250-page Big Book. Approximately 50% of the employees in one of the two collection field branches participated in the test. Four teams are located in the district headquarters in San Francisco. Two teams are located in San Mateo, an office 20 miles south of the headquarters. Those that didn't participate in the work teams were used as control groups. Their location was similar to the teams to ensure an equitable distribution and makeup of cases.

Several measures were used to compare the work teams' productivity with that of the control groups. Among them were return on investment, salary-based operating costs, number of tax returns secured and overall productivity. The quality measures focused on the number of errors that were made and the additional work required for processing different types of cases. The teams assessed their progress every six months and-depending on the budget-an organizational-development specialist might be enlisted to identify barriers and make recommendations.

After the first year, it was evident that the startup costs were high. Initially, the work teams showed little or no improvement in quality or productivity. After 18 months, an employee-development specialist and an outside consultant were brought in to troubleshoot the test. This is what the analysis revealed:

  • Although some training had been conducted on quality tools, the sessions overlooked interpersonal skills and communication training. Moreover, conflict resolution and facilitation skills had not been sufficiently addressed
  • Even though the design team's Big Book clearly addressed team-member roles, members did not adhere to those roles
  • Evaluations were sporadic. When information was provided, it was difficult to understand
  • Management applied their hands-off philosophy too prematurely. Management needed to be more involved and supportive in the beginning stages
  • Major changes, such as an evaluation procedure, should have been considered only after a total buy-in of team members.

By May of 1992, the collection division in San Francisco took several steps to refocus their goals. They identified four areas that needed to be monitored: quality, productivity, customer satisfaction and job satisfaction. Quality is determined by the quality assurance division's review of the teams' case work. Customer satisfaction is determined by contacting taxpayers who have worked with the compliance officers. Their feedback on the professionalism, timeliness and overall quality of the contact is rated by a telephone interview. And job satisfaction is determined by a monthly employee survey conducted for each team. Each team meets weekly for one or two hours to evaluate its progress. Rather than just being compared with control groups, the teams also emphasize continuous improvement of their own work.

Since 1993, the IRS has continued to make progress on its journey toward total quality. For example, the agency and the union entered into a partnership that focuses on improvements in four major areas: systems management, employee empowerment, labor relations and quality of work life. Each individual IRS office also is expected to complete a self-assessment of its current quality culture; negotiate an agreement with the local NTEU chapter on how to better involve the union in a total quality culture; and develop a multi-year action plan for continuous improvement in the four areas.

Both the Laguna Niguel and San Francisco districts will complete their self-assessment, NTEU agreement and multi-year action plan by August. This careful planning process and the implementation of goals will continue to require the active support of HR specialists. They will have to lead the change in defining new job descriptions and training managers to approach their responsibilities differently. The future for the IRS holds both challenge and promise. By involving all of our employees in the total quality process, the team concept shouldn't overtax individuals unfairly.

Note: The views expressed in this article are the opinions of the author and do not necessarily represent the views of the IRS.

Personnel Journal, July 1994, Vol. 73, No. 7, pp. 66-71.

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