Two broad trends—the rise of the market state and the threat of terrorism—will shape the future nature of government and public service.¹ The market state is the product of the global economy; in contrast to the traditional nation-state, it is driven by commerce, not conquest, and it is permeable, not sovereign within its boundaries.² As the global economy and the market state erode the boundary between public and private, we should see dramatic new opportunities to advance the Volcker Commission’s objectives of better structures, leaders, and incentives, perhaps in ways unforeseen by the commission.

The war on terrorism...

A high-performance government must possess the capability to design, choose, and justify policies that stand a reasonable chance of achieving their goals. This challenge becomes more difficult when information to support such policies is ambiguous, a situation that is increasingly a characteristic of our era of rapid and revolutionary change. A salient example is the novel, fast-changing, and unpredictable threat of the new terrorism. Echoing the themes of the Volcker Commission, the September 2002 National Security Strategy argues that “the major institutions of American national security were designed in a different era to meet different requirements. All of them must...

The Volcker Commission’s argument for a mission-based reorganization is logically compelling, almost unassailable. Indeed, the recommendation is so logical that the following question immediately comes to mind: Why is the government not organized along mission lines already? The answer, in brief, is what has been called “structural politics.” Any fundamental reorganization would have to overcome many political obstacles. This essay considers an analogy, the Defense Base Closure and Realignment Act, which created a way to organize for reorganizing that overcame what seemed to be intractable political obstacles. This chapter asks, might a similar process be used to implement the Volcker...

The global spread of technologies, commerce, and investments has made it more and more difficult to define the mission of national security in traditional ways. Borders are disappearing. The influence of multinational and non-governmental organizations is growing. Economic crises, environmental pollution, and infectious diseases now all have global effects, and successful responses must integrate foreign and domestic activities. The direct security threats to individuals have also changed, with terrorism and the proliferation of dangerous weapons now as serious as the rise of hostile states. As al Qaeda has demonstrated, it has the ability to attack anywhere in the world by...

The Volcker Commission recommendations emphasize the value of (1) reorganizing the federal government to improve agency mission focus and (2) improving the operational effectiveness with which agencies pursue their missions. Effective use of public-private partnerships (PPPs) lies at the intersection of these two concerns. It provides a proven way to (1) get agencies out of the day-to-day business of providing services so that they can stay mission-focused on what the American public wants from its government, and (2) simultaneously assure or even improve the cost and quality of the services the government provides to the American public. This chapter describes...

We have two objectives in this chapter. The first is to substantiate the claim of the Volcker Commission that “governments and government agencies can change, even in ways that seem far-reaching, and those changes can produce significant improvements in efficiency and performance” (Chapter 2 of this volume, p. 26). In support of this claim, we present a case study (observed firsthand by us) in which governmental agencies worked together to achieve successful change. This study involved the Velocity Management (VM) initiative, which the U.S. Army began in 1994 to improve its order fulfillment and related processes, and which the National...

In its discussion of the foundation necessary for a high-performance government, the Volcker Commission frequently alludes to the need for federal managers, both career and political, to demonstrate stronger leadership and management skills (see Chapter 2 of this volume). The clearest message on this issue is in a discussion of Recommendation 7: The Senior Executive Service should be divided into an Executive Management Corps and a Professional and Technical Corps (p. 39).¹ The commission urges greater effort to “identify potential managerial talent early in employees’ careers and to nurture it through adequately and consistently funded training, professional development, and subsidized...

Two decades ago, a study looking at skills needed for America to exercise leadership in the world would have focused on the State Department, the Pentagon, the intelligence agencies, and a few other “international” departments of government. It would have concluded by bemoaning the paucity of area and language skills in the country, and might have called for crash national programs to increase the supply of those skills.¹ Leadership is still critical, for America’s ability to shape the world in this century will depend on the quality of its leaders, as the Volcker Commission (see Chapter 2) emphasized.

Yet times...

Efforts are under way to create high-performance government by increasing accountability through strategic human resource plans, goal setting, and metrics of performance. The President’s Management Agenda (U.S. Office of Management and Budget, 2002) requires that all government organizations increase performance through better management of its personnel, i.e., by attracting and retaining talented people and by tying pay to performance, thereby motivating them to use their talents in productive ways. The Department of Homeland Security (DHS) and the Department of Defense (DoD) both have broad new powers to design personnel and compensation systems. At the heart of these efforts are incentives...

Like several earlier reviews of government performance, the Volcker Commission endorses “new personnel management principles that ensure much higher levels of government performance” (see Chapter 2, p. 47). A key component is the aligning of personnel management with performance. That is, more-effective workers should be paid more and promoted faster; ineffective workers should be dismissed.

After a brief overview of performance management and the role of measurement, this chapter examines four issues: (1) net versus gross performance, (2) the precision of measurement, (3) which outcomes to reward, and (4) subversion of measurement. As we will see, the issues are interrelated....

The Volcker Commission’s report calls for better performance measurement and accountability. One of its main conclusions is that attempts to reform government must be characterized by a heightened emphasis on effectiveness. Several aspects of the commission’s vision for the government of the future are captured in this statement:

The government we envision would be organized around critical missions, with managementkeyed to performance. It would be a dynamic government, prepared to meet the multifaceted and evolving needs of a complex modern society. Federal employment would appeal to highly competent people because it wouldencourage and reward their best efforts(Chapter...

The Volcker Commission calls for performance-driven public management. Which performance measures should be chosen? And how should the chosen measures be used?

This chapter looks at a current example, the Millennium Challenge Account, but its goal is more general. It shows how to use performance measures to select a few among many candidates (countries, agencies, programs, people) for special benefits. Choosing and using performance measures has four effects:

1. Allocative efficiency

2. Distributional effects

3. Incentive effects

4. Fundraising effects

Those choosing and using performance measures should analyze all four effects—something that is apparently seldom done in practice or in the academic literature....