A major thrust of the IRS reorganization was to create an agency-wide shared services group. The national-level entity was charged with providing centralized support for real estate and facilities management, personnel, equal employment opportunity, procurement, and finance. A separate shared service group was established to support the agency's increasingly important IT division.

"This has been one of the most significant reorganizations in the agency's history," says Ron Stephen, director of Real Estate and Facilities Management (REFM) for the IRS.

Stephen's REFM group, which consists of some 1,700 employees, is responsible for site selection and space acquisition, property management, space planning, mail delivery, records management, and security for more than 30 million sf of space distributed in 785 offices across the country. Consequently, REFM has changed drastically in the reorganization.

Places to People

One of the primary objectives in the IRS realignment involved transforming the old geographic-based organization into one that is customer and service oriented.

"In the past, each geographic region was managed separately. That model has been scrapped in favor of a flatter, customer-facing organization," says Stephen.

Now, instead of a network of regional offices, there are four operating divisions based on the types of taxpayers each division works with: wage and investment, which handles basic individual tax returns; small business; large and mid-sized companies; and tax exempt/government entities. This centralized structure eliminates numerous layers of mid-level management, provides better service to IRS employees, and is more efficient.

Organizational Alchemy

Streamlining business operations into customer-oriented divisions was one of five "levers of change" identified by Commissioner Rossotti as integral to revamping the IRS. The other levers were focused implementation of new technologies, clear definition of management roles and responsibilities, revamped business practices, and determining success based on balanced performance measures.

Booz-Allen & Hamilton, a Virginia-based management consulting firm, aided in the transition by bringing a high level of industry expertise to process reengineering, benchmarking, and business improvement.

"Booz-Allen helped us identify the best practices being used in the private sector and in other government agencies," says Stephen. "They've been a major player throughout the whole process."

In the context of IRS modernization, REFM has adopted several elements from corporate models including charge back systems, service level agreements, and a greater focus on customer relationships. For example, in the old system, regional departments could ask for as much space as they wanted without concern for the funds required to implement the initiative. With the new charge back system, business units are given an annual allocation for rent and must make staffing and facility decisions based on those figures. Consequently, "the individual business units are more responsible for the funds they receive and, as a result, are making decisions that have a much better impact on business overall," says Stephen.

Another key element has been the establishment of written service level agreements between REFM and each of the separate operating units. These documents of understanding establish expectations, costs, and time frames for delivery of all services in REFM's portfolio. The agreements also detail the business unit's responsibilities.

Quarterly meetings are held within each division to compare performance against 12 predetermined metrics called balance measures. Balance measures are industry-standard categories for qualifying service based on customer satisfaction, and tangible business results relevant to each department.

Reengineering and Refinement

Process reengineering is a necessary phase of any major organizational improvement. There are five REFM procedures that are slated to be upgraded. The first three-space acquisition/alteration, furniture acquisition, and mail management-have been completed and are now in the implementation stage. The remaining two-security and occupational safety-are expected to be finished shortly.

"We went to our customers, the divisional business executives, and asked which processes were causing the most problems," says Stephen. "These are the ones they cited in priority order."

Consensus and Communication

A governance board has been created under the new system to oversee all resource management decisions and establish continuity across the four operating divisions. The board, which consists of the IRS commissioner and representatives of the business units, allocates funds and facility space for all IRS operations. As director of REFM, Stephen sits with the governance board and provides input regarding the real estate component of long range strategic plans.

To bridge potential gaps between upper management and staff at the divisional level, a customer advocate position was created within each of the separate business units. The customer advocate acts as an REFM liaison to each division, providing input and customer support during the development of new initiatives and making sure that long range plans are being taken into account.

Stephen explains that as a result of the reorganization his group has had to transform "from clairvoyant into consultant." Traditionally, REFM would submit a budget request based on the agency's expected needs and then decide which projects to carry out and how much funding to allocate. Under the shared services model the group functions primarily as a consultant to its internal customers, helping them determine how best to meet their individual needs.

Looking Ahead

Technology and automation have become a major focus for the new IRS. As it moves into the future, REFM is considering a comprehensive five part real estate automation strategy, to be developed in collaboration with the IT department and divisional field staff.

Customer management is also an increasingly important aspect for the agency and, in accord with this approach, an employee resource center was established so that IRS employees can call a toll-free number during business hours to receive assistance from one of 60 operators. In addition, a shared services Web site has been created where employees can find information and request services. A project management site is in development that will allow staff to view new project budget, planning, and scheduling information.

"Establishing clear channels of communication and realigning our focus on the customer end has improved operations immensely," says Stephen. "We've increased accountability across the boards and, certainly, we've increased customer satisfaction."

By Johnathon Allen