Small Business Administration:

Progress Made, but Transformation Could Benefit from Practices Emphasizing Transparency and Communication

GAO-04-76: Published: Oct 31, 2003. Publicly Released: Dec 1, 2003.

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The Small Business Administration (SBA) has recognized that it needs to realign its current organizational structure and processes to improve its ability to fulfill its primary mission--supporting the nation's small businesses. In July 2002, SBA announced that it was initiating a transformation effort to increase the public's awareness of SBA's services and products and make its processes more efficient. GAO evaluated SBA's progress in implementing its transformation initiatives and challenges that have impeded or could impede implementation and whether SBA's transformation incorporates practices GAO has identified in previous work that are important to successful organizational change.

SBA has made some progress in transforming its organization, although efforts could be impeded by budgetary and staffing challenges. SBA started three district office pilots to test marketing and outreach techniques and two pilots to centralize loan processes. However, SBA officials told us that their plans for expanding the pilots and implementing additional initiatives have changed because the agency did not receive any funding for transformation in fiscal year 2003 and may not receive any in fiscal year 2004. GAO found that SBA did not provide consistent, clear budget requests with a detailed plan for transformation results. The challenge of staffing its centralization initiatives, including relocating employees and avoiding undue disruptions to operations, could further complicate SBA's progress. When SBA initially planned and began implementing transformation, it gave some attention to practices important to successful organizational change. SBA drafted a plan and created an implementation team to manage the transformation. However, significant weaknesses in implementation could impede further progress and exacerbate the challenges noted above. The transformation could fail if practices and implementation steps focusing on transparency and communication are not given more attention.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should develop a communication strategy that facilitates and promotes frequent and two-way communication between senior managers and employees and between the agency and its stakeholders, such as Congress and SBA's lenders. For example, SBA could electronically post frequently asked questions and answers on its Intranet.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: For fiscal year 2008, SBA developed a comprehensive communications plan including strategies for improving internal and external communications and detailed steps for making these improvements. It also assigned responsibility for each communication area such as SBA's Web site, marketing, and internal communications to specific individuals within SBA's communications office. SBA has also used e-mail and conference calls to improve its internal communications with employees. For example, SBA distributes agency-wide e-mails on procedural notices. Regular conference calls also provide headquarters and field employees with opportunities to share information. Finally, the Administrator appointed in 2006 sought to improve communication with employees and told employees that they could send him emails directly and in confidence. The Administrator also visited employees in headquarters and field offices and used town hall meetings and video broadcast messages to communicate with all employees.

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should ensure that the new performance management system is clearly linked to well-defined goals to help individuals see the connection of their daily activities and organizational goals and encourage individuals to focus on their roles and responsibilities to help achieve those goals.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: To provide the infrastructure for SBA's performance management efforts, including overseeing SBA's strategic plan and goals, in January 2007, the Administrator implemented a Performance Management Framework and established a new office, the Performance Management Office that oversees and reports on agency performance, including agency priorities and performance goals. This framework links agency-wide goals to individuals' performance through SBA's performance management system that assesses employee performance. The priorities and goals set within SBA's performance management framework are reflected in employee roles and responsibilities and employee personal business commitment plans that serve as individual performance contracts for employees. Employees' performance is assessed based on these personal business commitment plans. For example, the personal business commitment plans of senior officials link their performance to goals in the scorecards for their respective areas, which are then linked to SBA's strategic and performance goals.

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should develop performance goals that reflect the strategic goals for transformation and more clearly link the strategic goals of transformation to existing performance goals. In addition, the Administrator should develop budget requests that clearly link resource needs to achieving these strategic and performance goals.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: To link SBA's performance goals with the goals of the agency's transformation and reform agenda, SBA created a performance management framework in January 2007. At the same time, the Administrator established a new office, the Performance Management Office that reports to the Chief Financial Officer (CFO). The PMO reports on agency performance internally and externally (for example, performance and accountability reports and budget submissions). In the performance management framework, SBA's priorities, including the Administrator's reform agenda and performance goals, form the basis for major area (program and district office) operating plans. In developing its operating plans, SBA looks at the budgetary resources available to accomplish the metrics or milestones for each activity (compliance requirement, goal, or value-added initiative) performed in a given area. In turn, the agency assesses operations by using performance scorecards to track the progress of goals and other activities. Specifically, the scorecard provides detailed information on the progress made toward achieving each metric within the operating plan. SBA senior officials track the progress of performance management priorities monthly and program managers are required to prepare monthly reports on their scorecards and meet with the Administrator and Deputy Administrator to discuss targets that have been met and action plans for addressing outstanding targets. Ultimately, SBA, through the Performance Management Office and CFO, rolls up the information from the operating plans and scorecards to develop its performance reports and budget submissions to Congress. This is reflected in SBA's fiscal year 2008 performance plan and budget submission.

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should finalize the draft transformation plan that clearly states SBA's strategic goals for transformation and includes implementation goals, timeline, and resource requirements, and share the plan with stakeholders and employees.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: SBA came under new leadership in July 2006, and with the appointment of a new administrator, SBA's existing draft transformation plan was never approved. Instead, the Administrator introduced a strategy to carry out remaining transformation objectives in a manner that addressed deficiencies in past implementation efforts and focused on SBA?s mission and priorities. Thus, the Administrator replaced "transformation" with the term "reform agenda" to describe SBA's efforts to move forward although it still aimed at accomplishing important transformation objectives. For example, transformation objectives included (1) focusing on SBA's customers, (2) empowering employees, and (3) becoming more results-driven and performance-based. Similarly, the reform agenda was created on the foundation of SBA being (1) outcomes-driven, (2) customer-focused, (3) employee-enabled, and (4) accountable, efficient, and transparent. Though SBA's earlier transformation strategy remained a draft plan, the new strategy, which has been presented as its performance management framework, has been implemented. In the performance management framework, SBA's priorities, including the Administrator's reform agenda and performance goals, form the basis for major area (program and district office) operating plans. In developing its operating plans, SBA looks at the budgetary resources available to accomplish the metrics or milestones for each activity (compliance requirement, goal, or value-added initiative) performed in a given area. The operating plans reflect SBA's implementation plan for the reform agenda initiatives and the plans are accessible to employees on SBA's intranet Web site.

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should clarify for employees, congressional, and other stakeholders the leadership and implementation team members who are guiding transformation.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: The Administrator of SBA appointed in 2006 took several steps to clarify that he was leading SBA's transformation and reform agenda. Specifically, he communicated his priorities for the agency to all employees through town hall meetings and video broadcast messages, and he visited field offices. In 2007, SBA also created a Performance Management Office and appointed an Associate Administrator for Performance Management who oversees the implementation of the Administrator's initiatives. At SBA, the Chief Financial Officer serves concurrently in this new position. Finally, SBA further encouraged a collaborative approach by designating managers at various levels to lead initiative teams as "champions" or "project owners" of specific activities, thereby allowing them the opportunity to participate in leadership's vision for SBA and addressing employees' concerns about being uninformed and uninvolved in past transformation efforts.

    Recommendation: In order to improve and build on transformation efforts under way at SBA, the Administrator should adopt key practices that have helped other organizations succeed in transforming their organizations. Based on our review of SBA's initial implementation of phase one of its transformation, the Administrator should facilitate employees' involvement by soliciting ideas and feedback from its union and staff, ensuring that their concerns and ideas are considered. For example, SBA could develop employee teams and expand employee feedback mechanisms like those it employed in the pilot training.

    Agency Affected: Small Business Administration

    Status: Closed - Implemented

    Comments: SBA has taken actions to solicit ideas and feedback from employees. SBA's intranet Web site has a "comments and suggestions" tool that all employees can use to submit their ideas to the agency. SBA also developed a 10-member field advisory council (FAC), comprising one district director from each region, which gives district office management an opportunity to communicate field issues and concerns directly to headquarters. To further address employee concerns about their involvement, SBA conducted focus groups in 2008. SBA employees in headquarters and the field offices participated in focus groups in April and June 2008. SBA developed a report on these focus groups and plans to post the report on its intranet Web site. SBA also identified several pilot initiatives, such as an employee engagement guide to provide management with tools to engage employees and an SBA talent map that would promote interaction of employees with agency subject matter experts, to address employee concerns identified in the focus groups. In addition, SBA plans to survey employees to get their input on which pilot initiatives should be given the highest priority.

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