Transforming the IRS
Rossotti
Courtesy HBS Press
When Charles O. Rossotti (MBA ’64) was appointed commissioner of the Internal Revenue Service in 1997, it was the most feared and loathed of all federal government agencies. People told him that he was taking on a no-win situation. But Rossotti saw an opportunity and over the next five years transformed almost every aspect of the sprawling agency, from its antiquated IT systems to its internal management structures. Many Unhappy Returns (HBS Press, 2005) is his insider account of a mission that seemed nearly impossible.
Why did you write this book?
Many Unhappy Returns is a way for me to state my deep conviction that any organization, even a tax collection agency, can serve its stakeholders at higher levels than it ever imagined — if its leaders resolutely and passionately set out to do so.
What did you change at the IRS, and how did you change it?
The IRS is now running more like a 21st-century business than a 1950s-style business. Internally, we implemented a top-to-bottom reorganization and began to bring business practices and technology up-to-date. We also implemented new strategies for service to taxpayers and for enforcing compliance. We upgraded traditional services on the telephones and in local offices, and offered new electronic services for filing, paying, and information.
Why did you change the way the IRS measures employee performance?
Performance measures have an enormous capacity to change an organization — for better or for worse. For decades, the IRS judged employees’ performance by using narrow, unbalanced, and frequently perverse — but easily gathered — statistics that focused almost entirely on revenue coming from audit assessments and property seizures. Devel-oping a more balanced set of measurements, one that included feedback from taxpayers and employees as well as measures of meaningful business results, was a critical step in changing attitudes.
How did you improve customer service?
There were no quick fixes or silver bullets. The IRS had to undertake the same long-term, painstaking process followed by private-sector companies that have achieved quality customer service: understanding customer needs; setting out clear goals; organizing, motivating, and training employees; revamping plans and procedures; upgrading technology; measuring results; and learning from successes and failures. Looking back, I think it’s fair to say that the IRS successfully copied many of the things that well-run big companies do. It’s an objective that’s often articulated but not often implemented in government.
— Ann Cullen
Read the entire HBS Working Knowledge interview with Rossotti
