Chapter 2 Putting Customers First ********************************* We are going to rationalize the way the federal government relates to the American people, and we are going to make the federal government customer friendly. A lot of people don't realize that the federal government has customers. We have customers. The American people. Vice President Al Gore Town Meeting, Department of Housing and Urban Development March 26, 1993 ********************************* All of us--bureaucrat or business owner, cabinet secretary or office clerk--respond to incentives. We do more of what brings us rewards and recognition, less of what brings us criticism. But our government, built around a complex cluster of monopolies, insulates both managers and workers from the power of incentives. We must change the system. We must force our government to put the customer first by injecting the dynamics of the marketplace. The best way to deal with monopoly is to expose it to competition. Let us be clear: this does not mean we should run government agencies exactly like private businesses. After all, many of government's functions are public responsibilities precisely because the private sector cannot, should not, or would not manage them. But we can transplant some aspects of the business world into the public arena. We can create an environment that commits federal managers to the same struggle to cut costs and improve customer service that compels private managers. We can imbue the federal government--from top to bottom--with a driving sense of accountability. Is it really possible to reinvent government in this way? Horror stories about government waste are so abundant that many doubt its ability to change. For some, the only solution is to cut or abolish programs wholesale. In some instances those cuts make sense and we are recommending them. But alone they do not address the problem we face or move us decidedly toward a government that works better and costs less. We propose a different approach. we must make cuts where necessary; we also must make our government effective and efficient. Some programs clearly should be eliminated, others streamlined. We will offer many proposals to do both in chapter 4. But reinventing government isn't just about trimming programs; it's about fundamentally changing the way government does business. By forcing public agencies to compete for their customers--between offices, with other agencies, and with the private sector--we will create a permanent pressure to streamline programs, abandon the obsolete, and improve what's left. This process will be neither quick nor easy. But as it unfolds, a very different type of government will emerge, one that is accountable to its true customers--the public. We propose four specific steps to empower customers, break federal monopolies, and provide incentives for federal employees to better serve their customers. First, we will require that all federal agencies put customers first by regularly asking them how they view government services, what problems they encounter, and how they would like services improved. We will ensure that all customers have a voice, and that every voice is heard. Second, we will make agencies compete for their customers' business. Wherever feasible, we will dismantle government's monopolies, including those that buy goods and services, acquire and maintain office space, and print public documents. These internal monopolies serve their customers--government workers--so poorly, it's no wonder those workers have such trouble serving customers outside government. Third, where competition isn't feasible, we will turn government monopolies into more businesslike enterprises--enterprises in closer touch with both customers and market incentives. Fourth, we will shift some federal functions from old-style bureaucracies to market mechanisms. We will use federal powers to structure private markets in ways that solve problems and meet citizens' needs--such as for job training or safe workplaces--without funding more and bigger public bureaucracies. Together, these strategies will enable us to create a responsive, innovative, and entrepreneurial government. If we inject market mechanisms into federal agencies as we are cutting red tape, we will create new dynamics--and a new dynamism--throughout the federal government. Step 1: --Giving Customers A Voice-- And A Choice Setting Customer Service Standards Long lines, busy signals, bad information, and indifferent workers at front counters-- these are all too common occurrences when customers come in contact with their government. Quite simply, the quality of government service is below what its customers deserve. We propose to set a goal of providing customer services equal to the best in business. Too many agencies have learned to overlook their customers. After all, most of government's customers can't really take their business elsewhere. Veterans who use veterans' hospitals, companies that seek environmental permits, or retirees applying for social security benefits must deal with public agencies that hold monopolies. And monopolies, public or private, have little sensitivity to customer needs. So government agencies must do what many of America's best businesses have done: renew their focus on customers. Some are already trying. The Internal Revenue Service (IRS) and Social Security Administration (SSA) have taken major steps to improve their telephone services to customers. SSA, the U.S. Postal Service (USPS), and the Department of Veterans Affairs are developing a combined government services kiosk, providing a single point of access for services offered by the three agencies. The Library of Congress, the Energy Department, the National Aeronautics and Space Administration, the National Science Foundation, and other federal agencies have placed their materials on Internet, a worldwide computer network.1 Good service means giving people what they need. To do that, however, one must first find out what they want--a step few federal agencies have taken. In the future, federal agencies will ask their customers what they want, what problems they have, and how the agencies can improve their services. Knowing what customers want, public agencies must set clear and specific customer service standards. When Federal Express promises to deliver a package the next day by 10:30 a.m., both customers and employees understand precisely what that means. Similarly, when the Air Force's Tactical Air Command discarded its thick set of specifications about living quarters for visiting pilots and adopted a simple standard- -equivalent to "a moderately priced hotel, like Ramada"--employees understood exactly what it meant.2 Several federal agencies that frequently interact with citizens have launched aggressive customer service initiatives. We endorse strengthening these initiatives--described below- -and expanding them across the federal government. Internal Revenue Service. The IRS, the federal agency most citizens prefer to avoid, might seem the least likely to develop a customer focus. But it's working hard to do just that. Four years ago, the General Accounting Office (GAO) discovered that IRS staff gave a wrong answer to one of every three taxpayers who called with a question. Since then, the agency has improved its accuracy rate to 88 percent.3 And--in a switch that signals a basic change in attitude--agency employees now refer to taxpayers as customers. In IRS pilot projects across the country, employees now have authority to change work processes on their own in order to improve productivity. Front-line workers also have more authority to resolve issues one-on-one with individual taxpayers. The agency is fostering competition among its tax return centers, based on customer service levels and efficiency at handling the 1.7 billion pieces of paper the IRS receives each year. Centers that perform better get higher budgets and workloads, and employees get promotion opportunities. The IRS was among the first government agencies to use 800 numbers and automated voice mail systems to increase customer access to information. Today, the IRS is beginning to survey its customers. *********************************** Customer Service Standards: IRS As part of the National Performance Review, the IRS is publishing customer service standards, including these: · If you file a paper return, your refund due will be mailed within 40 days. · If you file an electronic return, your refund due will be sent within 14 days when you specify direct deposit, within 21 days when you request a check. · Our goal is to resolve your account inquiry with one contact; repeat problems will be handled by a Problem Resolution Office in an average of 21 days. · When you give our tax assistors sufficient and accurate information and they give you the wrong answers, we will cancel related penalties. · With your feedback, by 1995 IRS forms and instructions will be so clear that 90 percent of individual tax returns will be error-free. *********************************** In addition, some centers are serving customers in truly astonishing ways. One anecdote makes the point. At the Ogden, Utah Service Center--a winner of the Presidential Award for Quality--a down-on-his-luck man hitchhiked from out of state to get his refund check. As it turns out, this center doesn't issue checks. But IRS employees there discovered that a disbursing center had sent a check to the hitchhiker's old address and that it had been returned. They ordered a new check sent to Ogden and helped the hitchhiker make ends meet until the check arrived. In the end, the IRS's efforts could affect all of us, not only as filers of tax returns but as taxpayers. If IRS forms are easier to understand and use, more taxpayers might file on time. If the IRS develops an image as a more effective, user-friendly agency, more taxpayers might decide to file in the first place. A mere 1-percent increase in voluntary compliance would add $7 billion in government revenue each year.4 Social Security Administration. Every year, more than 47 million Americans come in contact with the Social Security Administration, which administers old-age pensions, survivors' and disability insurance, and the supplemental security income (SSI) program. The agency has 1,300 field offices and receives 60 million calls a year on its toll-free lines. As the nation's population ages, the agency faces an ever-increasing workload. Recently, an inspector general's report showed that customer satisfaction had fallen 4 years in a row due to longer waiting times in offices and increasing problems in reaching someone on the phone.5 Fortunately, the Social Security Administration is strengthening its customer orientation. When Hurricane Andrew struck South Florida, where 367,000 people collect social security and SSI, agency workers took steps to ensure that senior citizens would know how to get their checks despite the devastation. Local offices used television, radio, and loudspeaker trucks touring the area with messages in English, Spanish, and Creole. The agency also hired an airplane to tow a banner with SSA's toll-free 800 telephone number over the hard-hit Homestead area. *********************************** Customer Service Standards: Social Security Administration As part of its participation in the National Performance Review, the Social Security Administration will publish nationally, and post in each of its offices, these performance standards: · You will be treated with courtesy every time you contact us. · We will tell you what benefits you qualify for and give you the information you need to use our programs. · We will refer you to other programs that may help you. · You will reach us the first time you try on our 800 number. ************************************ More generally, the Social Security Administration recently adopted a customer-oriented strategic plan, which includes objectives such as issuing social security numbers orally within 24 hours of an application. Besides pinpointing some of their objectives as standards to reach today, SSA is publishing all 34 of its objectives and seeking customer feedback on whether it set the right targets for service. U.S. Postal Service. The Postal Service, which delivered 166 billion pieces of mail in 1992, has begun improving customer service for a good reason: It has competition. While most people still use the Postal Service to deliver first class mail, the use of private delivery services and electronic mail is rising quickly. *********************************** Customer Service Standards: USPS As part of its participation in the National Performance Review, the USPS will expand its plans to display these standards in post offices: · Your first class mail will be delivered anywhere in the United States within 3 days. · Your local first class mail will be delivered overnight. · You will receive service at post office counters within 5 minutes. · You can get postal information 24 hours a day by calling a local number. ************************************ The Postal Service has decided to meet its competition head-on. Using focus groups, the agency identified service areas where its customers wanted improvement. It found that people wanted shorter waiting lines at counters, better access to postal information, and better responses to their complaints. Using these standards to measure performance, the agency set a long range goal of "100-percent satisfaction" and developed a customer satisfaction index to measure progress toward it. The agency also is providing incentives for employee performance: In cooperation with two postal unions, managers now use customer satisfaction data to help determine employee bonuses. Action: The President should issue a directive requiring all federal agencies that deliver services to the public to create customer service programs that identify and survey customers. The order will establish the following standard for quality: Customer service equal to the best in business.6 The President's directive will lay out principles to govern the provision of customer services. For example, organizations should: · survey their customers frequently to find out what kind and quality of services they want; · post standards and results measured against them; · benchmark performance against "the best in business"; · provide choices in both source of service and delivery means; · make information, services, and complaint systems easily accessible; · handle inquiries and deliver services with courtesy; · provide pleasant surroundings for customers; and · provide redress for poor services. The order will direct all federal agencies that deal with the public to: · immediately identify who their customers are; · survey their customers on services and results desired, and on satisfaction with existing services; · survey front-line employees on barriers to, and ideas for, matching the best in business; · in 6 months, report results on these three steps to the President; and · develop and publish a customer service plan--including an initial set of customer service standards--within 1 year. The customer service plans will address the need to train front-line employees in customer service skills. They will also identify companies that agencies will use to judge how they compare to the "best in business." The directive will ask cabinet secretaries and agency heads to use improvement in customer satisfaction as a primary criterion in judging the performance of agency managers and front-line employees. Action: For voluntary customer surveys, the Office of Management and Budget will delegate its survey approval authority under the Paperwork Reduction Act to departments that are able to comply with the act.7 The public's input is crucial to improving customer service. But current law gives the Office of Management and Budget (OMB