Under its new Administrator, SBA’s leadership took steps to  increase transparency in the agency’s actions and improve its communication  efforts. Actions to Address Effects of Transformation on Employees Have Had Some Success, but SBA’s Plan for Training and Development Is Limited

After the centralization of loan liquidation and purchase guaranty  functions in 2003, employee morale at SBA declined significantly, as  indicated by employee survey results in 2004 and 2006. SBA officials acknowledged that SBA University was a first step in  developing a training program. District offices also  now have a formal role in providing disaster assistance. SBA further defined the roles and responsibilities of district office  employees through the development of position descriptions and personal  business commitment plans. However, the SBA OIG has found in past audits  that inadequate purchase reviews by SBA employees have resulted in  improper payments and continues to express concern about the quality of  SBA purchase reviews. Moreover, though SBA has measures in place to  track the timeliness of its purchase decisions, it has not yet developed  performance measures to track quality assurance that would help to  ensure that the focus on process efficiency does not come at the expense  of the quality of the purchase reviews. Additionally, neither estimate incorporates  reviews of purchase decisions completed under the recently re-engineered  guaranty purchase process. However, in the past 2 years SBA has made progress in  addressing these negative effects—by applying key practices that support  successful transformations to improve agency operations and taking  actions to address the recommendations we made in our 2003 report. The  Administrator appointed in 2006 emphasized the importance of  transparency in his reform agenda, made a concerted effort to improve  communications across the agency, and engaged employees in improving  the agency. Our meetings with employees affirmed that these efforts had a  positive effect on many employees. We also found that though SBA had  also taken some actions to obtain feedback and ideas from employees,  many employees we interviewed, including union officials, continued to  feel that SBA’s management did not sufficiently consider their ideas and  concerns. SBA recently conducted focus groups to better understand  employee concerns, specifically explored the concerns about employee  involvement, and plans to implement pilot initiatives to address them. SBA’s 2007 employee survey results suggest that recent actions, such as  improving communication and training, have had a positive impact on  employees, but also point to continuing concerns about these issues. Specifically, the  creation of SBA University in 2007 was an important action not only in  terms of providing training and demonstrating that the agency was willing  to commit resources to invest in the development of employees. SBA  officials also have been developing a training program that includes core  curriculums for different staff positions. However, SBA has not developed  a strategic training plan that lays out goals, strategies, and milestones. For instance,  SBA recently determined that district offices still could have a role in the  guaranty purchase review process, despite the centralization of this  function. Specifically, we focused on (1) SBA’s progress in  transforming agency operations and addressing GAO’s recommendations  on key practices for successful transformation, (2) how SBA has  addressed the impacts of transformation on its employees, (3) how SBA  has defined the roles and responsibilities of its district offices, and (4)  SBA’s efforts to assess its initiatives for centralization of its loan functions  and how its approach for implementing centralization has changed since  transformation began. In  addition, we obtained and analyzed    SBA documents related to its new performance management system;   current and previous scorecards that track the performance of agency  components relative to the specific goals on which they are measured;    operating plans that lay out strategies to achieve goals; information illustrating lines of communication and areas covered (for  example, press, marketing, Web development, speechwriting, strategic  alliances with external parties such as trade groups, and multimedia);  and  the agency’s communications plan that discusses its approach for  addressing internal and external communication, along with  descriptions of the responsibilities of its Office of Communication and  Public Liaison, Office of Management and Administration, the Office of  the Congressional Liaison, and the intergovernmental group. We analyzed the information we obtained from these document reviews  and interviews to determine    what actions SBA has taken to incorporate key practices and  implementation steps for organizational transformations,    whether SBA’s transformation laid out goals for the transformation,   what communication strategies SBA used to promote frequent two-way  communication at all levels of the agency and with stakeholders,    what actions SBA has taken to involve employees and ensure that their  concerns and ideas are considered,    how SBA has aligned its transformation activities to achieve agency  performance and strategic goals, and    how SBA’s performance management system linked overall agency  goals to individual goals.
Why GAO Did This Study

Over the past 6 years, the Small Business Administration (SBA) has sought to transform the agency and improve its operations. A major focus of transformation was to centralize the remaining loan functions performed by 68 district offices. SBA's implementation of early transformation efforts did not reflect key practices GAO recommended in a 2003 report as important for successful transformations. Consequently, its centralization of the guaranty purchase process for one of its loan programs resulted in backlogs and other problems reported by SBA's Inspector General. Some of SBA's actions also led to a reduction in staff at district offices and a decline in employee morale. GAO was asked to assess how SBA has (1) responded to GAO's 2003 recommendations, (2) addressed the impacts of transformation on employees, (3) defined the roles and responsibilities of district offices, and (4) assessed the centralization of loan functions. GAO reviewed documents related to SBA's transformation and reform efforts, interviewed SBA officials, and analyzed SBA employee survey data. GAO also visited 10 district offices and two centers and interviewed groups of employees.

What GAO Found

In the past 2 years, SBA has applied key practices that support successful transformations to improve agency operations and, thereby, has taken actions to address recommendations GAO made in its 2003 report, including improving communication, performance management, and employee involvement. The Administrator appointed in 2006 emphasized the importance of transparency in his reform agenda and took actions to improve communications across the agency. The development of a performance management framework was a key step in linking the agency's reforms with strategic goals and employee roles. The Administrator also made a concerted effort to engage SBA's employees in improving the agency, and meetings with employees affirmed that these efforts had a positive effect. Some employees continued to feel that management does not consider their ideas and concerns. SBA recently conducted focus groups to understand these concerns and plans to implement initiatives to address them. SBA senior officials also said that they are taking steps to institutionalize these improvements. SBA leadership's commitment will be important to ensure that the agency's transformation and reforms are successful. SBA took some actions to address its low employee morale, which had declined significantly following the centralization efforts, as shown in the 2004 and 2006 Federal Human Capital Surveys. SBA's 2007 survey results suggest that these recent actions, such as improving communication and training, have had a positive impact on employees. The creation of SBA University in 2007 was an important action since it provided training and also showed that the agency was willing to invest resources in the development of employees. SBA officials said they are developing a core training program. However, SBA has not developed a training plan that lays out goals, strategies, and milestones. Such a plan would help to establish priorities and could assure employees that SBA remains committed to developing its employees. SBA continues to define the roles and responsibilities of the district offices, as evidenced by its recent determination that district offices should retain a role in loan processes that have been centralized. District directors and employees made positive comments about the flexibility they had in using resources to meet office goals. But they also said that they still were adjusting to new responsibilities and the reduction of staff in their offices. SBA recently re-engineered its guaranty purchase process. Its measures to track progress have emphasized the timeliness of the process, completeness of packages lenders submit, and customer service. SBA reviews each purchase decision and is developing a new quality assurance review process, but has not yet developed performance measures to track the quality of its purchase reviews. SBA Inspector General audits have noted concerns about the quality of purchase reviews and found that the center's purchase reviews do not adequately prevent improper payments. Performance measures could provide more attention to the quality of reviews.