TheLectern

By Steve Kelman

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Scandalous overrreaction?

risk management

The various scandals over spending on government conferences, and other problems within the IRS, have put a spotlight on an important question: Does the attention given such happenings affect the quality of government management?

For the inspectors general whose reports typically follow these scandals and, I dare say, for the public, the answer is clear: Exposing scandal raises the price for wrongdoing and incompetence, and if you raise the price of something, you get less of it. Exposure of scandals is thus good for government management. QED.

Yet I am guessing that many government managers themselves – and, perhaps more importantly, outside experts on government management – are not so sure.

The downside of scandal was illustrated in concrete terms in a recent op-ed by Defense Logistics Agency manager Joe Bednar, entitled "Enough Bureaucracy Already," appearing in Federal Times. Bednar notes that in his agency, routine actions to complete a financial obligation went through 12 reviews as of 2010. To an outsider, that sounds like a lot. Obviously, there need to be checks and balances on dispersing money – but are 12 approvals really needed?

Wait… that was 2010. Now the number is more than 40!

In 2011, agency financial transactions procedures were revised – with the regulations increasing from 300 pages to 6,000.

A "simple letter to assign specific oversight responsibilities" used to require only one signature – now it requires three signatures, several certifications and reporting responsibilities.

We know where all this comes from. Scandals occur, and either Congress demands or agencies proactively impose new controls – that is, more approvals, documentation and so forth. After the GSA conference scandal last year, bills were introduced in Congress that would actually require the head of an agency to approve personally all conference spending. Though this never passed, the restrictions agencies have implemented on their own are onerous enough.

Maybe one way to answer whether this is too much is if I posed the following hypothetical: if an agency currently requires only two signatures on a financial obligation document, would it be a good idea to double it?

If the document currently requires four signatures, would it be a good idea to double it to eight?

Or if it currently requires 12 signatures – to take the real story from the Bednar column – would it be a good idea to increase it to 40?

The point of all this is that it is always easy to ask for more controls, but at some point this starts adding only marginal additional protection, while costing the organization more and more staff time, slowed decision-making, and staff demoralization. Indeed, when you get to these huge numbers of signatures, the actual control level is likely to be lower than with few signatures – due to the famous "diffusion of responsibility" effect, studied in social psychology. Simply put, people reduce their vigilance when a larger number of people are responsible for some outcome, each one assuming that the others will take a closer look.

Time to say it: Requiring anything even close to 40 reviews for approving a payment is absurd. Will anyone dare call a stop to this?

Posted on Jun 27, 2013 at 1:34 PM


Reader comments

Tue, Jul 2, 2013

Steve, I think the title "Scandalous overrreaction?" says a lot about your article. The fact that the actions of most of the news media, this adminstration, and the other Dems to try to make the whole issue appear as nothing very serious has happened is itself considered a scandal for most conservatives. These conservatives are generally not asking for so much for additional checks and balances (as implied by your article) as they are for accountablity. Because it is these biased checks and balances currently in place that are the cause of the problem. Trying to say otherwise is, in my opinion, attempting to play down the scandal - which is a point I apparently did not make very clear based on your response. Basically, whenever people try to add to the conversation a lot of other information irrelevant to the main problem, it is almost always a "smoke and mirrors" tactic when those people are the ones benefiting from the problem. To be creditable, the news media needs to engage the same level of outrage to the Democrats as they do to the Republicans. And, yes as a CONSERVATIVE, I am outraged at some of the actions the Republicans when they truely are scandalous but it is the responsibility of the media to be non-partisian when looking at the actions of the Government. And because they are not, the Democrats engage in far more scandalous activity because they know that they can get away with it. If the tables were turned, I am sure the opposite would be true.

Tue, Jul 2, 2013 Al

It is also worth noting that the IRS conference scandal and the IRS political enemy targeting scandal are two difference scandals and one is *much* worse than the other. I can't help but notice that the 07/01/2013 commenter is talking about the second and Prof. Kelman is addressing the first. This may explain at least some of the outrage delta. I prefer only one scandal per agency at a time, but that's just me!

Mon, Jul 1, 2013 Steve Kelman

As the last commenter's comment unwittingly makes clear, there are partisans on both sides who fuel real or exaggerated or supposed scandals for partisan purposes. (Was the commenter active in attacking Republican scandals?) I think I am on record as NOT doing that. At the time of the alleged Halliburton/Dick Cheney scandal during the Bush administration, I wrote in the Post denying that anything scandalous had occurred. My blog is trying to make a point about government management, which is the dysfunctional results of scandal obsession. Please read what I actually wrote.

Mon, Jul 1, 2013

The outrageous implication that there has been an overreaction to the IRS scandal can only be made by hypocritic liberal Dems. Most of the news media, including the FCW, are more into trying to cover up this scandal than actual fully report it. This type of reporting is itself scandalous, but unfortunately commonly done as evidenced by this piece. That is the main reason why these scandals are so common when you have Dems in power. I have noticed for decades the double standards in reporting. Repubs are constantly getting attacked and accused of wrong doing for the slightest thing, even if it is nothing more than a false impression created by Dems and their allies, while the reporting on the Dems is filled with excuses and claims of overreaction. The solution to this scandal problem is a combination of proper reporting (which we are not getting) as one of the checks on Government activity and holding the responsible parties accountable. Look at the IRS scandal as a good example. Only one person has resigned a few months earlier than planned, but no one has even been identified, let alone punished, for the obvious illegal activity conducted by the IRS while people like Steve Kelman are suggesting that there has been an over reaction. Looking at the several other scandals by this administration in just this last year, you see the same pattern again and again.

Sun, Jun 30, 2013 Leonard Oestreicher United States

The problem is once a way has been found to successfully game the system, its usage will multiply.

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