Arlington, Virginia

Tuesday, June 20, 2000

Mr. Lawrence: Good evening, and welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. The Endowment was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the web at endowment.pwcglobal.com.

The Business of Government H focuses on outstanding government executives who are changing the way government does business. Our special guest tonight is Janice Lachance, Director, Office of Personnel Management. Welcome, Janice.

Ms. Lachance: Thank you, Paul. It's great to be here.

Mr. Lawrence: Thank you for taking time out of your schedule. Well, I'd like to begin by finding out more about the Office of Personnel Management, the federal government's HR agency at some levels. Can you tell us about the mission of OPM?

Ms. Lachance: Certainly. OPM was established to ensure that the civil service system in the United States remained and was above reproach. We are the ones who uphold and enforce the merit system principles all across government to ensure that employees are hired, and treated fairly once they're on the job.

Since then we've also gotten a couple of other jobs. For example, we run the nation's largest employer-sponsored health insurance program. So, we make sure that we are at the forefront of progressive benefit and compensation policies for federal employees, as well as making sure that there are appropriate considerations for balancing work and family.

In addition, we run the retirement system, and always try to make sure that agencies have the flexibilities they need to hire the right kind of people with the right skills and talents at the right time.

Mr. Lawrence: Let's take a minute and find out about your career. I understand you've had some congressional experience and various positions within the government focusing on communication to include even OPM experience. Could you tell us about your career and the different experiences?

Ms. Lachance: I came to OPM in 1993 as its director of communications, and I fell in love with the place and have been very, very fortunate to be able to move up in the ranks. In addition to being director of communications, I was the chief of staff and then the deputy director for a very short time before I was nominated to be director about two and one-half years ago.

Before that I worked for the largest labor union representing federal employees, the American Federation of Government Employees, where I was their communications and political affairs director, making sure that they were well- represented in the media and in the political environment here in Washington, D.C.

Prior to that I've had some congressional experience, including work with now-Senator Tom Daschle, but I worked for him when he was in the House of Representatives as his communications director. I was an administrative assistant to Congresswoman Katie Hall of Indiana, and was a subcommittee staff director for the House Small Business Subcommittee on Antitrust and Restraint of Trade.

Mr. Lawrence: We're getting ready for national party convention time which happens every four years, and I notice that you served as the staff director of the Democratic National Convention in communications in 1996. I wonder if you could tell us about that?

Ms. Lachance: Well, like the federal government, national conventions operate on people, and people with good skills, and skilled people being available to get the work done. I made sure that the 700 volunteers who were needed to run the communications operation at the Democratic National Convention in Chicago were there when they were needed, and that they had the proper credentials to get their job done, and that they'd been trained properly. So, it was an interesting four days, and probably a little bit more complex than I'd ever hope to have to do again.

Mr. Lawrence: I don't know if your experience was similar to mine, but one of the hardest I ever had was with volunteers.

Ms. Lachance: Yes. Well, generally if you're working for a political cause people are there because they're dedicated and devoted to the effort. But it's still a juggling act and something I hope I don't have to repeat.

Mr. Lawrence: You also managed to go to law school, and I'm wondering if you can tell us about your law degree and how it's helped you in your career?

Ms. Lachance: I did go to law school, and it was just a very important part of my training and preparation for the career that I've chosen. I've never practiced law, but I can't think of a single day in my life that having a law degree hasn't helped me.

I think having a law degree helps you think more clearly, gives you the ability to think on your feet, which maybe helps me in this kind of situation as well as congressional hearings on the Hill and other places where you don't have too much time to get prepared. And I think it also helps me analyze and sort through some very complex issues and situations that I'm sometimes faced with as director of OPM.

So, I'm glad I did it, and once in a while I think what it would be like to be Perry Mason or somebody in a courtroom all the time, but I'm happy I chose the course I did.

Mr. Lawrence: You serve as the chairwoman of the National Partnership Council on the President's Task Force on Federal Training Technology. Can you tell us about these committees?

Ms. Lachance: Certainly. Well, the National Partnership Council is very, very important to the entire administration's reinvention effort. It was established early on in 1993 as a way to break through some of the bureaucracy that the Clinton-Gore administration thought had paralyzed the government for so long. What we hope to do with the National Partnership Council is support productive labor-management relationships that aren't mired in adversarial relationships, that aren't running off to court every day to sue each other, but a productive environment where both parties are focused on achieving the mission of the agency and also empowering front-line workers, essentially letting them tell the senior managers what they need to get the job done.

The National Partnership Council has been a very effective organization, and I'm very, very proud to be chair of it.

Mr. Lawrence: As you look back at all your experiences, what experience do you think best prepared you to be the leader of a large government organization?

Ms. Lachance: I think it was cumulative. I think working on the Hill was particularly helpful, because I understand how members of Congress think, how their staffs think, what the staff needs to get their job done.

But I was also very, very fortunate to work for two men who were extraordinary leaders, each very different but outstanding in their own ways. One was John Sturdivant who was president of the American Federation of Government Employees when I worked there. He has since passed away, and it's quite a loss not only to the labor movement, but I think to the entire government.

John was an incredible visionary who could lay out a goal for an organization, a democratic organization that was somewhat unwieldy, and really get the entire group of people, no matter where they were coming from, what their own parochial interests were, focused on a goal. I learned a tremendous amount from him about leadership, about where to compromise, about how to work with people to get the ultimate job done.

The other person was my predecessor at OPM, Jim King, who did an extraordinary job in reshaping OPM to be the kind of responsive agency that it is today. Jim took a lot of heat for that kind of courage, but he showed an incredible amount of stamina and the ability to stand up to criticism and unpopularity to do what was right, and at the end of the day OPM is a better agency for it. So, I had the benefit of learning from two really terrific leaders.

Mr. Lawrence: What do you think differentiates the most effective leaders of government organizations?

Ms. Lachance: I think the most important thing you can do as a government leader is set out a goal for the organization. I think if everybody understands the goal, and it's clear and it can be easily enunciated and people can relate to it, then I think that's half the battle.

I think the other part of the battle is leading by example. I think you have to be the kind of person you want your employees to be. If you don't want people leaving at five minutes to 5:00 instead of 5:00, then make sure you're putting in the extra hours as well. I think that there is an extraordinary amount of watching and observing that goes on, and I don't think we should ever undersell the idea of leading by example.

I think those two things are important, coupled with an ability to bring in stakeholders and make them feel as though they're a part of the process. Whether it's elected officials or members of a labor union or a trade organization or a professional organization, get them all at the table, build a consensus toward what you want, get buy-in, and get everybody marching toward that goal or that vision that you set out for the organization.

Mr. Lawrence: You made a interesting point about leading by example, and I'm just wondering, in large organizations like OPM, how many people actually get to observe you to see that leading by example?

Ms. Lachance: More than you'd think, probably. I like to spend a lot of time in the employee cafeteria. Unless I have a business lunch, that's where I eat my lunch. I don't walk up the street to go to a restaurant or anything.

In the hallways, I always try to take a minute to talk with people that I pass in the hallways whether it's just a hello or a goodbye. I think there's lots of opportunity for people to see you in action, and I think that's what really counts -- the ability to have the kind of open communication with your employees. Let them see you as you really are, and let them see what you care about.

Mr. Lawrence: It's time for a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Janice Lachance, Director, Office of Personnel Management.

In this second segment, Janice, let's spend some time talking about your experience at OPM. How has the agency changed since you arrived in 1993?

Ms. Lachance: It's night and day. It's a completely different organization than the one I walked into, but for one factor, and I want to say that first. The level of professionalism at OPM has never changed. The people who work there are extraordinarily dedicated professionals that I am just so proud to count as associates and friends.

But first of all, I think the most noticeable change at OPM is that we are half the size that we were in 1993. As you may know, we underwent two very significant privatizations of some major units at OPM, our training function, and our investigations function. As a matter of fact, the investigations function is the government's first ESOP, the government's first employee-owned company, and they're doing so well. All of the former OPM employees are very wealthy now, so we all envy them very much.

I think in addition to just the numbers, the fact that we're half the size that we were, the fact that our budget is one-third lower than it was in 1993. What's most significant is the agency's orientation. We have really changed the definition of "customer."

It used to be that we were very process oriented, that it was all about checking off the boxes. Now we're looking at what our customers want, what they're looking for from us, what we can do for them, and always, always, how we can do it better. So, a complete reversal in our philosophy in looking at the customer and the results that we're getting for the customer. We couldn't be happier in terms of our orientation, trying to be more flexible, trying to provide what people need, while maintaining a very strong foundation in the merit principles, and to me that includes veteran's preference, in maintaining the kind of system that we can all be proud of as American citizens.

Mr. Lawrence: Most leaders when they talk about reductions in budget and decreased head count would not describe it so positively. They would talk about what a challenge it is and how trying it's been, and yet you don't. I'm wondering how did that come about in such a positive frame work?

Ms. Lachance: At OPM we decided we were going to redefine success. You're absolutely right that most of the time you define success by an increase in your budget or by adding more people or starting a new program. At OPM we decided that we were going to be successful if we could have the kind of agency that the American people could be proud of and that our customers valued.

I think we've done that, and it doesn't matter that our budget is lower and that there are fewer people. The fact is we're accomplishing our mission in the most effective and efficient ways possible, and we have every reason to be proud of our record.

Mr. Lawrence: You made an interesting speech on June 13th to the National Academy of Public Administration where you said that the workforce is shifting from process to results, much like you said a minute ago, which has direct implications on organizational design and the use of human resource management systems. Can you tell us more about the shift and how OPM and other agencies are responding?

Ms. Lachance: We have worked very hard over the last several years to make human resources and the people of government an integral part of the government's strategic planning process. I think the entire government has gone through an incredible shift over the last few years from process to results. Even though OPM might have done it a little bit sooner than the rest of the government, the fact is that the one factor that was left out of the process were the people, and we really didn't spend a lot of time thinking about how and what kind of people and what kind of skills you needed to accomplish your mission. We talked about the missions, we talked about the goals we wanted to achieve, and we talked about how to measure it, but nobody talked about how it was going to happen.

Now I think we've been able with the President's memorandum issued last week to really elevate the entire human resources operation in the federal government, bring it to the decision-making table and make it a part of every agency's strategic plan. That's what I talked about at the National Academy, this new approach to making sure that the focus of all our strategic plans and everything we want to get done in government are the people who work for the government, because there are no results without the people.

Mr. Lawrence: Let me ask about the directive. The President has directed the heads of agencies to fully integrate human resource management into planning, budgeting and missions, and more clearly state specific human resource management goals starting October 1, 2000. Could you tell us more about this directive and its impact?

Ms. Lachance: Sure. The directive is really going to mean that, if I can use a colloquialism, we're not going to get caught with our pants down. We have a huge potential retirement bubble coming up in the next several years because of the aging workforce, because of the demographics. We could lose some very talented people.

What the President told the agency heads was stop, look, and listen. Make sure you understand what's happening in your agency. Make sure you know who may be going out the door over the next several years and what kinds of skills and institutional knowledge they're going to take with them. And make sure that you have the plans in place to replace them and bring on the skills that you need to accomplish your mission without any interruption.

So, what he did was force the agencies to start thinking between now and October 1st about how they were going to integrate and incorporate human resources practices and planning into their overall strategic plans. And October 1st they've got to make it happen.

Mr. Lawrence: The President also renamed the Inter-Agency Advisory Group of Federal Personnel Directors as the Human Resource Management Council. Could you tell us about the responsibilities of this new council?

Ms. Lachance: Sure. Let me talk a little bit about the IAG. For almost 50 years now the IAG has been a wonderful partner for OPM. It's made up of the senior personnel directors at all of the major departments and agencies, and they've been a wonderful advisory committee for us as we developed our policies and our strategies on how we were going to approach HR over the last several years.

What we realized at OPM was that these very talented and dedicated people who had the right focus, who understood that an agency's employees were really the key to getting the work done -- that those people should have a seat at the agency decision-making table. I think very often in the past what would happen is all of the managers would get together with the stakeholders and come up with a strategic plan, and then they'd go to the HR person and say, well, we need 20 accountants and 30 high-tech types, and God knows, probably 60 or 80 lawyers to make it all run, and it was after the fact. It was not always what people were looking for. What they did was reduce the strategic human resources function to one that was a paper pusher, somebody that was oriented in process, somebody who reviewed applications, or put ads in the newspaper.

We want to change that. We want that expertise at the table when the decisions are being made, and that's what this president did.

Mr. Lawrence: It's time for a break. We'll be back in a few minutes with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Janice Lachance, Director, Office of Personnel Management.

In this segment I'd like to talk to you about the employees at OPM. You oversee some 3,700 people with an annual budget of $27 billion. How do you manage an organization of this size?

Ms. Lachance: Mostly I try to get out of the way and let the employees do their jobs. I've mentioned earlier that we had a tremendous number of very, very dedicated individuals who just do a terrific job at OPM, and I think the best thing I can do for them is just let them do their job.

But I think what is important is that every employee at OPM understand our mission and understand how they relate to the agency's mission.

I'm also a big believer in delegating. I have a great leadership team at OPM. I don't have to be right there with them every time. I trust them, and I think it's important for leaders to trust their leadership team. But I also trust my front-line employees. I know that the people who are answering the phone on our retirement customer-service lines are extremely devoted to those annuitants who count on them to give them the right information they need to plan their retirement in some sense of financial security and dignity.

So, I think the best thing to do is delegate, let people do their jobs, and listen. Let them tell you what they need to do their jobs and then go out there and fight to get them the resources to do it.

Mr. Lawrence: I noticed that leaders of large federal government organizations often have a large external focus. I read about you making speeches. You're in the paper, often explaining positions. How much of your time is spent looking externally versus looking internally in dealing with those issues?

Ms. Lachance: I would think it's about half and half. I do spend a lot of time externally because I think OPM is an agency that is somewhat misunderstood. I think we're still carrying some baggage from 8 or 10 years ago when we weren't quite as responsive an agency as we are now. I also think that there's a little bit of a mystery -- what is it, and what do they do exactly. I think once people understand what we do and how we're doing it, it is a tremendous benefit to both the administration and the government as a whole to know that there's such a professional organization working on some of these tough issues.

So, I think it's very, very important to carry the OPM message out to as many people as I can, and I don't mind being on the road and living out of a suitcase. So, if people are willing to listen to me, I try my best to get out there to talk with them.

But I also think that you can't ignore what's going on internally. I have a lot of obligations to the people who work at OPM and who have dedicated their career to the issues that we care about. I want to make sure that I'm not neglecting any of that, so I'm always in touch with my staff. I'm always having meetings with our local union affiliate from AFGE and the local union in Boyers, Pennsylvania, where we have a very large facility, making sure that they have the resources they need to get the jobs done. And I work with the leaders internally to make sure that we've got a good operation and that we're not only doing the right thing, but we're doing it in the right way and that we're as efficient and effective as we can be.

Mr. Lawrence: In our last segment you mentioned the wave of retirements that will be coming shortly and how the government is trying to prepare for that. What I'm wondering about is, how will this affect the SES, and are there different steps being taken to prepare for the wave of retirements in the SES?

Ms. Lachance: Yes. We've been concerned about the aging of the SES for a while, and I just had a birthday on Saturday, so I'm actually adding to that problem instead of helping to solve it.

But the SES needs very special attention. I think overall the government has really been lax in overall workforce planning, and we haven't done a very good job of thinking ahead. I think your natural inclination is always to look at the next vacancy and how we're going to deal with that. What I think we need now is a more comprehensive approach to workforce planning, but with special attention to the SES because they are such a valuable resource, and particularly in this political year, where the role of the SES becomes ever more important to making sure that the policies and the programs of government continue uninterrupted.

We're working very, very hard with all of the agency heads to make sure that they understand that they have to start thinking about the kinds of skills they're going to need, not just next week or next month, but a year from now, five years from now, and even ten years from now, and start today in developing the leaders that they'll need, or knowing where to look for the leaders. They don't all have to be on board now. You have to start thinking about where you're going to go out and recruit them and have them ready when those openings come up and when the agency has those needs.

Mr. Lawrence: That's a good transition to my next question, because I know you've seen the Endowment's report called "Leaders Growing Leaders: Preparing the Next Generation of Public Service Executives" by Ray Blunt, and he talks about the same things you just talked about, current government leaders need to do more to prepare for the next generation. So, I'm just curious, do you agree with his report, and did you have any other reactions?

Ms. Lachance: Absolutely. Ray Blunt is somebody who OPM uses as an adviser and an expert when we try to update some of the competencies that are needed to be a leader in the 21st century government. I think that it's critically important to start thinking ahead. We have an obligation to identify potential leaders very, very early in their career.

We're at a point now where we're hiring people who don't necessarily think that they're going to stay in government for their entire work life. So, if we see somebody with a lot of potential, we'd better identify them, train them, nurture them, and make sure that we can convince them that this is the kind of place they want to work and get them ready for those SES positions.

So, there's a critical responsibility that Ray pointed out there that I'm not sure people have taken seriously until they've started seeing some of these very dramatic numbers of retirements that could happen over the last several years, and I think his work is going to be a big help to us as we're trying to convince people to do this the right way.

Mr. Lawrence: I'd be interested in your reaction to another Endowment grant report called "Reflections on Mobility: Case Studies of Six Federal Executives" by Mike Serlin. Do you agree there should be an increase in mobility among SES members?

Ms. Lachance: Yes. For people who have followed my tenure as director, they will know that I have proposed some very dramatic but not very popular ideas about how to promote mobility in the federal government.

I'm probably the best example of how mobility can help you. I've never been able to hold a job for very long. Even if I was in the same place, I always tried to do different things, and I don't think there is anybody in the federal government or in the private sector who can really reach the pinnacle of their career without having had a broad variety of experiences as they moved up in the ranks.

We have a real issue with mobility in the federal government. I think there are too many people who set their sights on a particular job and then just don't want to let go. But the fact is they'd be so much better and so much more effective if they maybe had a different kind of experience under a different kind of leader with different types of coworkers. Maybe they'd understand the budget process better if they'd spend a little time in a CFO's office. Or they'd be more proficient on their computer if they understood the importance of technology from the perspective of a chief information officer. I think mobility is critical if we're going to continue to have the best SES that we can have.

Mr. Lawrence: You make a compelling case, and your career and your successes are further evidence. Even in Serlin's report he profiles six people who did change jobs and did move up. So, I'm curious, why has there been such resistance?

Ms. Lachance: I think it just comes down to the fact that people have wanted a particular job for so long and once they've got it they want to make sure that they're not letting go. I think too, unfortunately, that we have a tendency in the federal government to move people around only when they're not meeting expectations, and I think that's a tragedy. We have to turn that on its head and make sure that mobility is a reward and it's a signal that you're going to be a star, so you need the broadest kind of experience possible rather than something that may be perceived as being punitive.

So, we have a lot of work to do as government leaders in individual agencies in changing the culture and making mobility something more desirable rather than something to avoid at all costs. I'm looking forward to Mr. Serlin's next report where he can talk about 600 leaders who were mobile and who were successful.

We're trying very hard at OPM to foster this kind of atmosphere of mobility, and we're trying to also establish a clearinghouse so that we can connect some hot executives with some hot job opportunities. So, we're working hard with stakeholders on that, and hopefully we'll be able to make a dent in the resistance that we've met so far.

Mr. Lawrence: Let me start this question quickly before we go to break and then we'll follow-up afterwards. You were quoted in the paper talking about the federal government is engaged in a war for talent. I wonder before we go to break, what does that expression mean?

Ms. Lachance: What it means to me is that the federal government unfortunately is no longer the employer of choice. We have to make it that again. We have an obligation to the American people to do that. So, we have to go all out. We have to have a wartime effort of the same levels that we had during World War II to compete with the private and nonprofit sectors for the very, very best and brightest employees.

Mr. Lawrence: Hold that thought. We'll go to a break, and I'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Janice Lachance, Director, Office of Personnel Management.

Janice, before we went to a break we were talking about the war for talent and you were talking about what the definition meant. Now I'm curious, do you think the federal government can win the war for talent?

Ms. Lachance: Yes, we can win it, and here's why. I've been very, very fortunate to be able to benefit from some of the thinking of the best minds in the country on this -- as people are talking to mostly young people who are just entering their careers now and asking them what they value in their jobs, what we're getting is not necessarily "money," because I don't know that the federal government will ever be able to compete dollar for dollar with the private sector. But what we find is that there is still a very, very high percentage of young people and people who are considering making a change in their careers who are interested in public service, who want to do good, who want to make a difference. So that's the kind of population we need to tap into.

Then when you ask people what they want when they get to work, they're talking about a family-friendly environment. People no longer want to spend 12 hours a day chained to the desk. They want flexibility, they want to be able to spend time with their children. They have elderly parents they have to care for and want to care for. We can give them that. We're a large employer. We should be the model in family-friendly policies and flexibilities.

They're looking for someone who won't let their skills go stale. Now remember, this is the generation who grew up with Gameboys and Atari and everything, so they're a lot more familiar with the high-tech world than I am. But I think they also know better than any of us how fast that world changes, and they're very, very concerned about the fact that what they've just learned in college or even in high school or in trade school is going to be obsolete and useless in just a few short years. So, they want an employer who's willing to make an investment in their training.

We can do that as well. That's part of the President's Task Force on Training Technology that you had mentioned earlier where we want to be able to take all of the training that's available, not just traditional classroom training where you go off for two or three days and learn something, but something that you can incorporate into your work life and your work day every day in the office to just constantly be improving your skills.

And finally, they're looking for good leaders who will mentor them. We can also do an extraordinary job with that. We have incredible people who work for the federal government who have a tremendous amount of dedication and expertise who, if they were willing, could take young people under their wings and give them the kind of mentoring and leadership training that they need to be successful.

So, when you look at all of the factors that go into why somebody chooses a particular job, you can see that we can compete on virtually all of them. The one where we're going to come up short is the actual salary, but even there if you look at the benefits package, I'm working very, very hard to make sure that our health insurance that's available to federal employees is reflective of the needs of a 21st century federal worker. We're tying very hard to get long-term care. On January 1st, we're going to have mental-health parity right along with the coverage for a physical ailment. It's going to be the same coverage whether it's a mental issue or a physical issue.

We've implemented the Patient's Bill of Rights. We've improved the kind of health care that a woman gets under the FEHBP. So, we're working very, very hard to make it at least a competitive benefits package, even if we can't perhaps compete on the strict salary. So we can do it.

Mr. Lawrence: What do you think will be the major personnel challenges that the next administration will face?

Ms. Lachance: The next administration is really going to have to look ahead, and I think that's very, very difficult because I think every administration wants to make their mark right then in the present. I think the next administration is really going to have to look a decade out to make a real difference in the administration and the management of federal personnel.

We have tremendous challenges ahead of us. We have an aging workforce that is not threatening to leave but has the ability to leave if they want to. We have a very low unemployment rate in the private sector which means that the private sector is going to continue to look at the federal government as a place to recruit.

But what's most important, I think, is that the next administration is going to have to articulate its mission, its goals, what it wants, and it's going to have figure out the exact kind of skills and talents that it's going to take to get them there. Then they're going to have to figure out what people have those, and they're going to have to go out and get them, find them wherever they are.

So there's going to have to be a big effort on recruitment. It's not just going to be able to be a seat-of-the-pants operation where you go off to one college every so often. You're really going to have to focus on it, and you're going to have to know what you're looking for, and you're going to have to do your best to sell yourself to the individual so that you'll get them on board.

Mr. Lawrence: Do you see major civil service reform on the horizon?

Ms. Lachance: I do. I wish we could do more right now. We're working very, very hard at OPM to make a difference wherever we can. Civil service reform is a very tough prospect for members of Congress because it's a very difficult subject to untangle. As you know, the last time we took on civil service reform was over 20 years ago, and it was a major legislative effort.

I've spent time on the Hill. I understand that those are very, very busy people who don't have time for very complicated issues. So, what we've tried to do at OPM is to break it up into small pieces where we can make a real difference, but that are also easy to pass.

But I think the next administration is going to really have to look at an overall reform of the system, some way to make it more responsive, more flexible to the agencies' needs. There are a variety of missions across this government, and the idea that one size fits all just doesn't make sense anymore. So, we have to find ways to give agencies the flexibility while maintaining this solid foundation and safety net of the merit principles. I think we shouldn't compromise on those. I don't think they should be updated. I think those are timeless values that are embodied in this system and that we can make work even in this very exciting 21st century.

Mr. Lawrence: Have you covered them all? Are there any other future issues in terms of personnel that I should make sure you address?

Ms. Lachance: I think that what's important as well is to make sure that the benefits package and the compensation does its best to reflect the needs of the new kind of employee, and that includes family-friendly policies, it includes the kinds of changes in health benefits that I'm describing now.

One of my major legislative goals this year is to enact long-term care insurance benefits for federal employees. We're at the point where none of us are getting any younger, and it's getting very, very expensive to life out our later years in dignity and to have the kind of care that we need. Everybody needs it.

We have to make sure that we always keep an ear out for those needs that employees have, and I think the next administration is just going to have to go all out to make sure that the employees have the kind of package they need to feel secure.

Mr. Lawrence: One of the things that comes up when people talk about flexibility is telecommuting. So, I'm curious. The Endowment is actually publishing a forthcoming report on how this is being used in the government. I was wondering if you could tell us the state of telecommuting in the federal government?

Ms. Lachance: Well, I can't wait to see the report because I think it's one area where we do need help. In 1998 there were about 25,000 people who were telecommuting in the federal government. I think that's not nearly enough.

My colleague Dave Barram at GSA does a great job in this area and he has a wonderful perspective, where he says at some point or another every federal employee is telecommuting. When I'm on the road I always bring a staff member with a laptop because I can't quite work the laptop. But I have a pager, I have cell phones. We're all telecommuters in way, and I think we need to just change the way we're thinking about telecommuting.

It's not the kind if situation where you're never going to see the person again, or that somehow or other there will be no accountability because you can't see them. The fact is that we have to find a way to make the federal work place more responsive to the employee, and one of the ways to do that is to let them work from either home or a place closer to home.

Mr. Lawrence: Well, I want to thank you very much, Janice. We're out of time. I've enjoyed our conversation very much.

This has been The Business of Government Hour, a conversation with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government.

To learn more about the Endowment, visit us on the Web at endowment.pwcglobal.com. There you can find copies of the reports we talked about during the interview, "Leaders Growing Leaders" by Ray Blunt, and "Reflections on Mobility" by Mike Serlin. See you next week.